054.00.33-VI. SEPARATE ACCOUNTS
AR ADC 054.00.33-VIArkansas Administrative Code
Ark. Admin. Code 054.00.33-VI
054.00.33-VI. SEPARATE ACCOUNTS
The following requirements apply to the establishment and administration of variable life insurance separate accounts by any domestic insurer:
Any domestic insurer issuing variable life insurance shall establish one or more separate accounts pursuant to Sections 66-3337 of the Insurance Laws of this state.
a. If no law other regulation provides for the custody of separate accounts assets and if such insurer is not the custodian of such separate account assets, all contracts for custody of such assets shall be in writing and the Commissioner shall have authority to review and approve of both the terms of any such contract and the proposed custodian prior to the transfer of custody.
The insurer shall maintain in each separate account assets with a value at least equal to the greater of the valuation reserves for the variable portion of the variable life insurance policies or the benefit base for such policies.
(2 ) such transfer, whether into or from a separate account, is made by a transfer of cash; but other assets may be transferred if approved by the Commissioner in advance.
a. A separate account shall not purchase or otherwise acquire the securities of any issuer, other than securities issued or guaranteed as to principal and interest by the United States, if immediately after such purchase or acquisition the value of such investment, together with prior investments of such account in such security valued as required by these regulations, would exceed 10% of the value of the assets of the separate account. The Commissioner may waive this limitation in writing if she believes such waiver will not render the operation of the separate account hazardous to the public or the policyholders in this state.
b. No separate account shall purchase or otherwise acquire the voting securities of any issuer if as a result of such acquisition the insurer and its separate accounts in the aggregate, will own more than 10% of the total issued and outstanding voting securities of such issuer. The Commissioner may waive this limitation in writing if he believes such waiver will not render the operation of the separate account hazardous to the public or the policyholders in this State or jeopardize the independent operation of the issuer of such securities.
c. The percentage limitation specified in subsection (a) of this Section shall not be construed to preclude the investment of the assets of separate accounts in shares of investment companies registered pursuant to the Investment Company Act of 1940 or other pools of investment assets if the investments and investment policies of such investment companies or asset pools comply substantially with the provisions of Section 3 of this Article and other applicable portions of this regulation.
Investments of the separate account shall be valued at their market value on the date of valuation, or at amortized cost if it approximates market value.
The investment policy of a separate account operated by a domestic insurer filed under Section 2c of Article III shall not be changed without first filing such change with the Insurance Commissioner.
(1) Any change filed pursuant to this Section shall be effective sixty days after the date it was filed with the Commissioner, unless the Commissioner notifies the insurer before the end of such sixty-day period of her disapproval of the proposed change. At any time the Commissioner may, after notice and public hearing, disapprove any change that has become effective pursuant to this Section.
The insurer must disclose in writing, prior to or contemporaneously with delivery of the policy, all charges that may be made against the separate account, including, but not limited to, the following:
Every insurer seeking approval to enter into the variable life insurance business in this State shall adopt by formal action of its Board of Directors a written statement specifying the Standards of Conduct of the insurer, its officers, directors, employees, and affiliates with respect to the purchase or sale of investments of separate accounts. Such Standards of Conduct shall be binding on the insurer and those to whom it refers. A code or codes of ethics meeting the requirements of Section 17j under the Investment Company Act of 1940 and applicable rules and regulations thereunder shall satisfy the provisions of this Section.
Rules under any provision of the Insurance Laws of this State or any regulation applicable to the officers and directors of insurance companies with respect to conflicts of interest shall also apply to members of any separate account's committee or other similar body.
An insurer shall not enter into a contract under which any person undertakes, for a fee, to regularly furnish investment advise to such insurer with respect to its separate accounts maintained for variable life insurance policies unless:
(i) has been convicted within ten years of any felony or misdemeanor arising out of such person's conduct as an employee, salesman, officer or director of an insurance company, a banker, an insurance agent, a securities broker, or an investment advisor involving embezzlement, fraudulent conversion, or misappropriation of funds or securities, or involving the violation of Sections 1341, 134231 1343 of Title 18 of United States Code;
(ii) has been permanently or temporarily enjoined by an order, judgement, or decree of any court of competent jurisdiction from acting as an investment advisor, underwriter, broker, or dealer, or as an affiliated person or as an employee of any investment company, bank, or insurance company, or from engaging in or continuing any conduct or practice in connection with any such activity;
The Commissioner may, after the notice and opportunity for hearing, by order require such investment advisory contract to be terminated if she deems continued operation thereunder to be hazardous to the public or the insurer's policyholders.
Current with amendments received through February 15, 2024. Some sections may be more current, see credit for details.
Ark. Admin. Code 054.00.33-VI, AR ADC 054.00.33-VI
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