Cal. Code Regs. Tit. 10, § 2528 - Separate Account or Accounts
A domestic insurer issuing variable contracts shall establish one or more separate accounts pursuant to Section 10506 of the Insurance Code, subject to the following provisions:
(a) Except as may be provided with respect to
reserves for guaranteed benefits and funds referred to in Paragraph (b), (i)
amounts allocated to any separate account and accumulations thereon may be
invested and reinvested without regard to any requirements or limitations
prescribed by the laws of this State governing the investments of life
insurance companies and (ii) the investments in such separate account or
accounts shall not be taken into account in applying the investment limitations
otherwise applicable to the investments of the company.
(b) Reserves for
(i) benefits guaranteed as to dollar amount
and duration and
(ii) funds
guaranteed as to principal amount or stated rate of interest may be maintained
in a separate account if a portion of the assets of such separate account at
least equal to such reserve liability is invested in accordance with the laws
and regulations of this State governing the investments of life insurance
companies. Such portion of the assets also shall not be taken into account in
applying the investment limitations otherwise applicable to the investments of
the company. If a variable contract includes incidental minimum guarantees as
referred to in Section
2530(d) (3), this
paragraph shall apply only to the reserve for any excess of such minimum
guarantees over the reserves for the benefits that would be payable under the
contract if there were no such minimum guarantees.
(c) With respect to 75% of the market value
of the total assets in a separate account no insurer shall purchase or
otherwise acquire the securities of any insurer, other than securities issued
or guaranteed as to principal or interest by the United States, if immediately
after such purchase or acquisition the market value of such investment,
together with prior investments of such separate account in such security taken
at market, would exceed 10% of the market value of the assets of said separate
account; provided, however, that the Commissioner may waive such limitation if,
in his opinion, such waiver will not render the operation of such separate
account hazardous to the public or the policyholders in this State.
(d) Unless otherwise permitted by law or
approved by the Commissioner, no insurer shall purchase or otherwise acquire
for its separate accounts the voting securities of any issuer if as a result of
such acquisition the insurance company and its separate accounts, in the
aggregate, will own more than 10% of the total issued and outstanding voting
securities of such issuer; provided, that the foregoing shall not apply with
respect to securities held in separate accounts, the voting rights in which are
exercisable only in accordance with instructions from persons having interests
in such accounts.
(e) The same
separate account may not be used for both variable annuities and variable life
insurance.
(f) The limitations
provided in Paragraphs (c), (d), and (e) above shall not apply to the
investment with respect to a separate account in the securities of an
investment company registered under the Investment Company Act of 1940, Section
1, et seq., Title 15, USC, provided that the investments of such investment
company comply in substance with Paragraphs (c) and (d) hereof.
(g) Unless otherwise approved by the
Commissioner, assets allocated to a separate account shall be valued at their
market value on the date of valuation, or if there is no readily available
market, then as provided under the terms of the contract or the rules or other
written agreement applicable to such separate account; provided, that unless
otherwise approved by the Commissioner, the portion, if any, of the assets of
such separate account equal to the insurer's reserve liability with regard to
the benefits and funds referred to in clauses (i) and (ii) of Paragraph (b)
shall be valued in accordance with the rules otherwise applicable to the
insurer's assets.
(h) If and to the
extent so provided under the applicable contacts, that portion of the assets of
any such separate account equal to the reserves and other contract liabilities
with respect to such account shall not be chargeable with liabilities arising
out of any other business the insurer may conduct.
(i) Notwithstanding any other provisions of
law an insurer may
(1) with respect to any
separate account registered with the Securities and Exchange Commission as a
unit investment trust exercise voting rights in connection with any securities
of a regulated investment company registered under the Investment Company Act
of 1940 and held in such separate accounts in accordance with instructions from
persons having interest in such accounts ratably as determined by the company,
or
(2) with respect to any separate
account registered with the Securities and Exchange Commission as a management
investment company, establish for such account a committee, board, or other
body, the members of which may or may not be otherwise affiliated with such
company and may be elected to such membership by the vote of persons having
interests in such account ratably as determined by the company. Such committee,
board or other body may have the power, exercisable alone or in conjunction
with others to manage such separate account and the investment of its
assets.
(j) No sale,
exchange or other transfer of assets may be made by an insurer between any of
its separate accounts or between any other investment account and one or more
of its separate accounts unless, in case of a transfer into a separate account,
such transfer is made solely to establish the account or to support the
operation of the contracts with respect to the separate account to which the
transfer is made, and unless such transfer, whether into or from a separate
account, is made (i) by a transfer of cash, or (ii) by a transfer of securities
having a valuation which could be readily determined in the market place,
provided that such transfer of securities is approved by the Commissioner. The
Commissioner may authorize other transfers among such accounts if, in his
opinion, such transfers would not be inequitable.
(k) The insurer shall maintain in each such
separate account assets with a value at least equal to the reserves and other
contract liabilities with respect to such account, except as may otherwise be
approved by the Commissioner.
(l)
The provisions of Sections
1101
through
1106 of the
Insurance Code relating to conflicts in interest of officers and directors and
other persons with authority in the management of the insurer's funds shall, in
substance and insofar as they are reasonably applicable, apply to the
investments of separate accounts and to members of any separate account's
committee, board or body who have any function in relation to the investment of
the account assets. No officer or director of such insurer nor any member of
the committee, board or body of a separate account shall receive directly or
indirectly any commission or any other compensation with respect to the
purchase or sale of assets of such separate account.
Notes
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