31A-5-217.5.   Variable contract law.
     (1) This section applies to all separate accounts that are used to support any one or more of the following:
     (a) variable life insurance policies that satisfy the requirements of Section 817, Internal Revenue Code;
     (b) variable annuity contracts, including modified guaranteed annuities; or
     (c) benefits under plans governed by the Employee Retirement Income Security Act of 1974.
     (2) In the event of a conflict between this section and any other section of this title as it relates to these accounts, this section prevails.
     (3) A domestic life insurance company may establish one or more separate accounts, and may allocate to those accounts amounts, which include proceeds applied under optional modes of settlement or under dividend options, to provide for life insurance or annuities, and benefits incidental to life insurance or annuities, payable in fixed or variable amounts or both, subject to the following:
     (a) The income, gains, and losses, realized or unrealized, from assets allocated to a separate account shall be credited to or charged against the account, without regard to other income, gains, or losses of the company.
     (b) Except as may be provided with respect to reserves for guaranteed benefits and funds referred to in Subsection (c):
     (i) amounts allocated to any separate account and accumulations on such amounts 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 any such separate account may not be taken into account in applying the investment limitations that otherwise apply to the investments of the company.
     (c) Except with the approval of the commissioner and under any conditions as to investments and other matters as he may prescribe, which shall recognize the guaranteed nature of the benefits provided, reserves for benefits guaranteed as to dollar amount and duration, and funds guaranteed as to principal amount or stated rate of interest may not be maintained in a separate account.
     (d) 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 that applies to the separate account. However, unless otherwise approved by the commissioner, the portion of any of the assets of the separate account equal to the company's reserve liability with regard to the guaranteed benefits and funds referred to in Subsection (c) shall be valued in accordance with the rules that otherwise apply to the company's assets.
     (e) Amounts allocated to a separate account in the exercise of the power granted by this section shall be owned by the company, and the company may not be, nor hold itself out to be, a trustee with respect to those amounts. If, and to the extent provided under the applicable contracts, that portion of the assets of any separate account that is equal to the reserves and other contract liabilities with respect to the account may not be chargeable with liabilities arising out of any other business the company may conduct.
     (f) A sale, exchange, or other transfer of assets may not be made by a company 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, the 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 the transfer, whether into or from a separate account, is made by a transfer of cash, or by a transfer of securities having a readily determinable market value, if the transfer of securities is approved by the commissioner. The commissioner may approve other transfers among such accounts if, in his opinion, the transfers would not be inequitable.
     (g) To the extent a company considers it necessary to comply with any applicable federal or state laws, the company, with respect to any separate account, including any separate account which is a management investment company or a unit investment trust, may provide for persons having an interest in the account appropriate voting and other rights and special procedures for the conduct of the business of the account, including special rights and procedures relating to investment policy, investment advisory services, selection of independent public accountants, and the selection of a committee, the members of which need not be otherwise affiliated with the company, to manage the business of the account.
     (4) Any contract providing benefits payable in variable amounts delivered or issued for delivery in this state shall contain a statement of the essential features of the procedures to be followed by the insurance company in determining the dollar amount of the variable benefits. Any contract under which the benefits vary to reflect investment experience, including a group contract and any certificate in evidence of variable benefits issued under a group contract, shall state that the dollar amount will vary according to investment experience. The contract shall contain on its first page a statement to the effect that the benefits under the contract are on a variable basis.
     (5) (a) A company may not deliver or issue for delivery within this state variable contracts unless it is licensed or organized to do a life insurance or annuity business in this state, and the commissioner is satisfied that its condition or method of operation in connection with the issuance of such contracts will not render its operation hazardous to the public or its policyholders in this state. In this connection, the commissioner shall consider among other things:
     (i) the history and financial condition of the company;
     (ii) the character, responsibility, and fitness of the officers and directors of the company; and
     (iii) (A) the law and regulation under which the company is authorized in the state of domicile to issue variable contracts.
     (B) The state of entry of an alien company shall be considered its place of domicile for the purposes of Subsection (iii)(A).
     (b) If the company is a subsidiary of an admitted life insurance company, or affiliated with such a company through common management or ownership, it may be considered by the commissioner to have met the provisions of this section if either it or the parent or the affiliated company meets the requirements of this section.
     (6) Notwithstanding any other provision of law, the commissioner shall have sole authority to regulate the issuance and sale of variable contracts, and to make rules necessary and appropriate to carry out the purposes and provisions of this chapter.
     (7) (a) Except for Sections 31A-22-402, 31A-22-407, and 31A-22-409, in the case of a variable annuity contract and Sections 31A-22-402, 31A-22-407, and 31A-22-408 in the case of a variable life insurance policy, and except as otherwise provided in this chapter, all pertinent

provisions of this title apply to separate accounts and contracts relating to the separate accounts. Any individual variable life insurance contract, delivered or issued for delivery in this state shall contain grace, reinstatement, and nonforfeiture provisions appropriate to the contract.
     (b) The reserve liability for variable contracts shall be established in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees.

Enacted by Chapter 230, 1992 General Session
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Last revised: Thursday, May 28, 2009