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Current through October 23, 2012
(a) Every domestic life insurance company which issues contracts providing for payments which vary directly according to investment experience shall establish 1 or more separate accounts in connection with such contracts, as directed by the Commissioner. All amounts received by the company which are required by contract to be applied to provide such variable payments shall be added to the appropriate separate account, and the assets of any such separate account shall not be chargeable with liabilities arising out of any other business the company may conduct. Any surplus or deficit which may arise in any such separate account by virtue of mortality experience shall be adjusted by withdrawals from or additions to such account so that the assets of such account shall always equal the assets required to satisfy the company's obligations for such variable payments.
(a-1) Every domestic life insurance company that issues modified guaranteed contracts may establish 1 or more separate accounts in connection with these types of contracts. All amounts received by the company to provide benefits under contracts for which separate accounts have been established shall be added to the appropriate separate account. Amounts allocated by the company to separate accounts for modified guaranteed contracts shall be owned by the company, the assets therein shall be the property of the company, and no company by reason of such account shall be or hold itself out to be a trustee. The assets of any such separate account shall not be chargeable with liabilities arising out of any other business the company may conduct. For the purposes of this section, the term:
(1) "Modified guaranteed annuity" means any group or individual contract for an annuity in which the benefits are guaranteed if held for specified periods and nonforfeiture values are based upon a market-value adjustment formula if held for shorter periods. The formula may or may not reflect the investment experience of any separate account. The assets underlying the annuity contract must be maintained by the insurance company in a separate account during the period, or periods, when the annuity becomes payable.
(2) "Modified guaranteed contracts" means a modified guaranteed annuity or modified guaranteed life insurance policy or contract.
(3) "Modified guaranteed life insurance" means any group or individual policy of life insurance, the underlying assets of which are held in a separate account, in which the benefits are guaranteed if held for specified periods and nonforfeiture values are based upon a market-value adjustment formula if held for shorter periods. The formula may or may not reflect the investment experience of any separate account. The assets underlying the policy must be maintained by the insurance company in a separate account during the period, or periods, when the policyholder can surrender the policy.
(b) A foreign or alien life insurance company authorized to do business in the District may be authorized to issue or deliver contracts in the District providing for payments which vary directly according to investment experience only if authorized to issue such contracts under the laws of its domicile.
(c) No domestic life insurance company shall be authorized to issue such variable contracts or modified guaranteed contracts, and no foreign or alien life insurance company shall be authorized to issue or deliver such contracts in the District, until such company has satisfied the Commissioner that its condition and methods of operation in connection with the issuance of such variable contracts or modified guaranteed contracts will not be such as to render its operation hazardous to the public or to its policyholders in the District. In determining the qualification of a company to issue or deliver such variable contracts or modified guaranteed contracts in the District, the Commissioner shall consider, among other things, the history and financial condition of the company; the character, responsibility, and general fitness of the officers and directors of the company; and, in the case of a foreign or alien company, whether the regulation provided by the laws of its domicile provides a degree of protection to policyholders and the public substantially equal to that provided by this section and the rules and regulations issued by the Commissioner pursuant thereto.
(d) Every life insurance company which issues or delivers such variable contracts or modified guaranteed contracts in the District shall file with the Commissioner, in addition to the annual statement required by § 31-4307, such other periodic or special reports as the Commissioner may prescribe.
(e) The provisions of this section shall not apply to any contracts which do not provide for payments which vary directly according to investment experience other than modified guaranteed contracts and shall not apply to contracts issued pursuant to subsection (l) of this section.
(f) The Commissioner shall have the authority to issue such reasonable rules and regulations as may be necessary to carry out the purposes of this section.
(g) Repealed.
(h) Unless otherwise approved by the Commissioner, separate accounts relating to modified guaranteed contracts will be subject to investment laws applicable to a life insurance company's general asset account.
(i) Any modified guaranteed contract delivered or issued for delivery in the District, and any certificate evidencing nonforfeiture benefits that vary according to market-value adjustment formula issued pursuant to any life insurance or annuity contract issued on a group basis shall contain, on its first page, a prominent statement that the nonforfeiture value may increase or decrease, based on the market-value adjustment formula in the contract, and, for modified guaranteed life insurance only, be accompanied by a written disclosure to the purchaser of the policy's interest adjusted net cost index in compliance with regulations or forms approved by the Commissioner.
(j) To the extent necessary to comply with the Investment Company Act of 1940, (15 U.S.C. 80a-1 et seq.) as now or later amended, or any rules issued thereunder, the insurance company may adopt special procedures for the conduct of the business and affairs of the modified guaranteed contract separate accounts, and may, for persons having beneficial interests therein, provide special voting and other rights, including special rights and procedures relating to investment policy, investment advisory services, selection of certified public accountants, and selection of a committee, the members of which need not be otherwise affiliated with the corporation, to manage the business and affairs of the account.
(k) Reasonable actuarial expenses incurred in connection with approval of a modified guaranteed contract shall be paid by the person seeking approval of such a contract.
(l)(1) Every domestic life insurance company which issues modified guaranteed contracts in connection with a pension, retirement, or profit sharing plan may, after adoption of a resolution by its board of directors and delivery of certification of that adoption to the Commissioner, establish 1 or more separate accounts in connection with these types of contracts. The contracts may provide for payments and nonforfeiture values which vary according to investment experience of the accounts, for guaranteed payments and nonforfeiture values, for payments and nonforfeiture values that are subject to a market value adjustment formula, or for any other type of payments or incidental benefits. Any income and any realized or unrealized gain or loss on each separate account established pursuant to this paragraph shall be credited to or charged against that separate account in accordance with the terms of the contract without regard to the other income, gains, or losses of the company. Amounts allocated to the separate account shall be owned by the company, the assets therein shall be the property of the company, and no company by reason of such account shall be or hold itself out to be trustee. Unless the contract provides otherwise, the assets of any such separate account shall not be chargeable with liabilities arising out of any other business the company may conduct.
(2) Repealed.
(June 19, 1934, ch. 672, ch. III, § 41; June 12, 1960, 74 Stat. 218, Pub. L. 86-520, § 1; Mar. 22, 1994, D.C. Law 10-95, § 2, 41 DCR 503; Apr. 9, 1997, D.C. Law 11-255, § 38, 44 DCR 1271; May 21, 1997, D.C. Law 11-268, § 10(k), 44 DCR 1730; Apr. 11, 2003, D.C. Law 14-297, § 401(e)(2), 50 DCR 330.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 35-639.
1973 Ed., § 35-541.
Effect of Amendments
D.C. Law 14-297 repealed subsecs. (g) and (l)(2) which had read as follows:
"(g) In the case of a domestic life insurance company which issues contracts providing for payments which vary directly according to investment experience, except modified guaranteed contracts unless otherwise provided by rules and regulations promulgated by the Commissioner:
"(1) The 2% limitation of § 31-4435(a)(7)(A)(i), shall be enlarged to include an additional 2% of the assets held by such company in the separate account or accounts established pursuant to subsection (a) of this section;
"(2) The 1% limitation of § 31-4435(a)(9) shall be enlarged to include an additional 2% of the assets held by such company in the separate account or accounts established pursuant to subsection (a) of this section; and
"(3) The 1% limitation of § 31-4435(a)(10) shall be enlarged to include an additional 2% of the assets held by such company in the separate account or accounts established pursuant to subsection (a) of this section."
"(l)(2) Notwithstanding any other provision of this chapter, the amounts accumulated in or allocated to separate accounts established pursuant to this subsection may be invested and reinvested in any kinds of investment. The investments shall not be taken into account in applying the investment limitations of § 31-4435 to investments made by the company."
Temporary Amendments of Section
For temporary (225 day) amendment of section, see § 3(b) of Modified Guaranteed Contracts Temporary Amendment Act of 1993 (D.C. Law 10-85, March 19, 1994, law notification 41 DCR 1635).
Legislative History of Laws
Law 10-95, the "Modified Guaranteed Contracts Amendment Act of 1994," was introduced in Council and assigned Bill No. 10-364, which was referred to the Committee on Consumer and Regulatory Affairs. The Bill was adopted on first and second readings on December 7, 1993, and January 4, 1994, respectively. Signed by the Mayor on January 21, 1994, it was assigned Act No. 10-172 and transmitted to both Houses of Congress for its review. D.C. Law 10-95 became effective on March 22, 1994.
Law 11-255, the "Second Technical Amendments Act of 1996," was introduced in Council and assigned Bill No. 11-905, which was referred to the Committee of the Whole. The Bill was adopted on first and second readings on November 7, 1996, and December 3, 1996, respectively. Signed by the Mayor on December 24, 1996, it was assigned Act No. 11-519 and transmitted to both Houses of Congress for its review. D.C. Law 11-255 became effective on April 9, 1997.
For legislative history of D.C. Law 11-268, see Historical and Statutory Notes following § 31-4402.
For Law 14-297, see notes following § 31-1371.01.
References in Text
"Section 31-4307," referred to in (d), was repealed by D.C. Law 10-42, § 7(b), 40 DCR 6020, effective October 21, 1993.
Miscellaneous Notes
Department of Insurance abolished: See Historical and Statutory Notes following § 31-4402.
