OWNERSHIP OR ORGANIZATIONAL STRUCTURE OF THE ENTITY
J. The minimum standard by calendar year of issue shall be computed as 10
written notice of its election to comply with subsection H of this section on 2
a specified date before January 1, 1979, which shall be the operative date of 3
subsection H of this section for that insurer if the insurer elects a 4
different operative date for individual annuity and pure endowment contracts 5
from the date that is elected for group annuity and pure endowment 6
contracts. If an insurer does not make an election pursuant to this 7
subsection, the operative date of subsection L of this section shall be 8
January 1, 1979.
9
J. The minimum standard by calendar year of issue shall be computed as 10
follows:
11
1. The interest rates that are used in determining the minimum 12
standard for the valuation of the following shall be the calendar year 13
statutory valuation interest rates as defined in this subsection:
14
(a) All life insurance policies that are issued in a particular 15
calendar year on or after the operative date of section 20-1231.01.
16
(b) All individual annuity and pure endowment contracts that are 17
issued in a particular calendar year on or after January 1, 1983.
18
(c) All annuities and pure endowments that are purchased in a 19
particular calendar year on or after January 1, 1983 under group annuity and 20
pure endowment contracts.
21
(d) The net increase, if any, in a particular calendar year after 22
January 1, 1983 in the amounts that are held under guaranteed interest 23
contracts.
24
2. As used in this paragraph:
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(a) R1 is the lesser of R and 0.09, R2 is the greater of R and 0.09, R 26
is the reference interest rate defined in this subsection and W is the 27
weighting factor defined in this subsection, the calendar year statutory 28
valuation interest rates, or I, shall be determined as follows and the 29
results shall be rounded to the nearer one-quarter of one per cent:
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(i) For life insurance:
31
I = .03 + W(R1 - .03) + W/2 (R2 - .09).
32
(ii) For single premium immediate annuities and for annuity benefits 33
involving life contingencies arising from other annuities with cash 34
settlement options and from guaranteed interest contracts with cash 35
settlement options:
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I = .03 + W(R - .03).
37
(iii) Except pursuant to item (ii) of this subdivision, for other 38
annuities with cash settlement options and guaranteed interest contracts with 39
cash settlement options that are valued on an issue year basis, the formula 40
for life insurance under item (i) of this subdivision applies to annuities 41
and guaranteed interest contracts with guarantee durations of more than ten 42
years and the formula for single premium immediate annuities under item (ii) 43
of this subdivision applies to annuities and guaranteed interest contracts 44
with guarantee durations of ten years or less.
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(iv) For other annuities with no cash settlement options and 1
guaranteed interest contracts with no cash settlement options, the formula 2
for single premium immediate annuities under item (ii) of this subdivision 3
applies.
4
(v) For other annuities with cash settlement options and guaranteed 5
interest contracts with cash settlement options that are valued on a change 6
in fund basis, the formula for single premium immediate annuities under item 7
(ii) of this subdivision applies.
8
(b) If the calendar year statutory valuation interest rate for any 9
life insurance policies issued in any calendar year determined without 10
reference to this subdivision differs from the corresponding actual rate for 11
similar policies issued in the immediately preceding calendar year by less 12
than one-half of one per cent, the calendar year statutory valuation interest 13
rate for those life insurance policies shall be equal to the corresponding 14
actual rate for the immediately preceding calendar year. For the purposes of 15
applying the immediately preceding sentence, the calendar year statutory 16
valuation interest rate for life insurance policies issued in a calendar year 17
shall be determined for 1980 using the reference interest rate defined in 18
1979 and shall be determined for each subsequent calendar year regardless of 19
the operative date of section 20-1231.01.
20
3. For the purposes of this subsection, the weighting factors referred 21
to in the formulas stated above are given in the following tables:
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(a) Weighting factors for life insurance:
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Guarantee 24
Duration Weighting 25
(Years) Factors 26
Ten years or less .50
27
More than ten years, but not more than 20 years .45 28
More than twenty years .35
29
(b) For life insurance under subdivision (a) of this paragraph, the 30
guarantee duration is the maximum number of years the life insurance can 31
remain in force on a basis guaranteed in the policy or under options to 32
convert to plans of life insurance with premium rates or nonforfeiture 33
values, or both, that are guaranteed in the original policy.
34
(c) The weighting factor for single premium immediate annuities and 35
for annuity benefits involving life contingencies arising from other 36
annuities with cash settlement options and guaranteed interest contracts with 37
cash settlement options: .80 38
(d) Except pursuant to subdivision (c) of this paragraph, weighting 39
factors for other annuities and for guaranteed interest are as specified and 40
in accordance with this subdivision:
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(i) For annuities and guaranteed interest contracts valued on an issue 1
year basis:
2
Guarantee Weighting Factor
3
Duration for plan type
4
(Years) A B C
5
Five years or less .80 .60 .50
6
More than five years, but not more than ten years .75 .60 .50 7
More than ten years, but not more than twenty years .65 .50 .45 8
More than twenty years .45 .35 .35
9
(ii) For annuities and guaranteed interest contracts valued on a 10
change in fund basis, the factors listed in item (i) of this subdivision 11
increased by 12
Plan type 13
A B C 14
.15 .25 .05 15
(iii) For annuities and guaranteed interest contracts valued on an 16
issue year basis other than those with no cash settlement options that do not 17
guarantee interest on considerations received more than one year after issue 18
or purchase and for annuities and guaranteed interest contracts valued on a 19
change in fund basis that do not guarantee interest rates on considerations 20
received more than twelve months after the valuation date, the factors shown 21
in item (i) of this subdivision or derived in item (ii) of this subdivision 22
increased by 23
Plan type 24
A B C 25
.05 .05 .05 26
(iv) For other annuities with cash settlement options and guaranteed 27
interest contracts with cash settlement options, the guarantee duration is 28
the number of years for which the contract guarantees interest rates in 29
excess of the calendar year statutory valuation interest rate for life 30
insurance policies with guarantee duration of more than twenty years. For 31
other annuities with no cash settlement options and for guaranteed interest 32
contracts with no cash settlement options, the guarantee duration is the 33
number of years from the date of issue or date of purchase to the date 34
annuity benefits are scheduled to begin.
35
(v) A company may elect to value guaranteed interest contracts with 36
cash settlement options and annuities with cash settlement options on either 37
an issue year basis or on a change in fund basis. Guaranteed interest 38
contracts with no cash settlement options and other annuities with no cash 39
settlement options shall be valued on an issue year basis. As used in this 40
subsection, "issue year basis" means a valuation basis under which the 41
interest rate used to determine the minimum valuation standard for the entire 42
duration of the annuity or guaranteed interest contract is the calendar year 43
valuation interest rate for the year of issue or year of purchase of the 44
annuity or guaranteed interest contract and "change in fund basis" means a 45
valuation basis under which the interest rate used to determine the minimum 46
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valuation standard applicable to each change in the fund held under the 1
annuity or guaranteed interest contract is the calendar year valuation