(a) Chapter 864 of the Laws of 1985 amended section 4223 of the Insurance Law, among other things, to authorize a new form of individual deferred annuity contract and group annuity certificate that guarantees cash surrender benefits at maturity and other specified times (not less frequently than once every 10 years) but otherwise provides for the determination of such benefits based on a market value adjustment formula. The chapter defines market-value adjustment formula to mean a formula which is described in the contract for increasing and decreasing the actual accumulation amount under the contract in order to determine cash surrender benefits and which takes into account (1) changes in interest rates on publicly traded debt obligations or other investments or in interest rates provided in, or declared pursuant to, contracts of the same class as the contract being surrendered; and (2) the length of time between the date on which the contract is surrendered and the next date on which the contract would have provided cash surrender benefits determined without the use of any market-value adjustment formula. The chapter authorized the superintendent to promulgate reasonable regulations to define permissible forms of market-value adjustment formulae.

(b) The chapter also modified the withdrawal charges and required such charges be reduced to zero after several years in any contract having cash values subject to market-value adjustment.

(c) The chapter also permitted contracts with cash values to limit their availability to once every 10 years. This was intended to permit insurers to safely invest in longer-term assets and offer higher interest guarantees to contractholders.