PART II GENERAL PROVISIONS APPLICABLE TO INSURERS
Variable life insurance contracts based on segregated funds
109 (1) Any insurer incorporated and licensed under the laws of Ontario to transact the business of life insurance may, (a)  issue policies for which the reserves vary in amount with the market value of a specified group of assets; and (b)  retain for investment, (i)  policy dividends, (ii)  policy proceeds that become payable on surrender or maturity of the policy not less than five years from the date of its issue if the policyholder so directs, and (iii)  policy proceeds that become payable on the death of the policyholder if the policyholder or beneficiary so directs, on the basis that the liability of the insurer in respect thereof varies in amount with the market value of a specified group of assets, and the insurer shall maintain in respect of such policies, dividends and proceeds, as the case may be, one or more separate and distinct funds with separate assets for each such fund.  R.S.O. 1990, c. I.8, s. 109 (1). How fund created (2) For the purpose of creating a separate and distinct fund under subsection (1), an insurer may, if duly authorized by by-law, (a)  make a transfer from the shareholders’ fund but the amounts so transferred shall not exceed the surplus in the shareholders’ fund; and (b)  make a transfer of assets from one or more life insurance funds, but, (i)  the maximum amount that may be transferred from any life insurance fund is the amount by which 25 per cent of the surplus in that fund exceeds the aggregate of all prior transfers from that fund to all such separate and distinct funds under this subsection and clause (3) (b) less the aggregate of all prior transfers to that fund pursuant to clause (5) (a), and (ii)  the maximum amount that may be transferred from all life insurance funds is the amount by which 10 per cent of the surplus in those funds or $2,000,000, whichever is the lesser, exceeds the aggregate of all prior transfers from those funds to all such separate and distinct funds pursuant to this subsection and clause (3) (b) less the aggregate of all prior transfers to all life insurance funds pursuant to clause (5) (a).  R.S.O. 1990, c. I.8, s. 109 (2). Transfers to fund (3) For the purpose of maintaining a separate and distinct fund under subsection (1), an insurer may from time to time make transfers from a life insurance fund, (a)  to the extent that the assets of the separate and distinct fund are not sufficient to provide for any benefits guaranteed under the terms of the policies for which the separate fund is held; or (b)  in any case other than that mentioned in clause (a), if the insurer provides evidence satisfactory to the Chief Executive Officer that such transfers are necessary for the proper administration of the policies or deposits for which the separate fund is held.  R.S.O. 1990, c. I.8, s. 109 (3); 2018, c. 8, Sched. 13, s. 22. Surplus (4) Where for the purposes of subsection (2) the surplus in any fund is required to be determined, the surplus shall be taken as shown in the most recent annual statement filed with the Chief Executive Officer.  R.S.O. 1990, c. I.8, s. 109 (4); 2018, c. 8, Sched. 13, s. 22. Segregation of assets for policies (5) Where a separate and distinct fund is maintained under subsection (1), the assets of such fund shall, subject to subsection (3), be available only to meet the liabilities arising under the policies or deposits in respect of which such fund is maintained, except that, (a)  any amount representing the value of a transfer, or any part thereof, to such separate and distinct fund under subsection (2) or clause (3) (b), may, with the approval of the Chief Executive Officer, be transferred back to the fund or funds from which such transfer was made, and, where there is more than one such fund, the amount transferred back to each shall be that proportion of the whole amount that the amount transferred from that fund to the separate and distinct fund was to the total amount so transferred from all the funds; and (b)  any assets, other than assets in respect of a transfer to the separate and distinct fund under subsection (2) or clause (3) (b), remaining in the separate and distinct fund after the discharge of all the insurer’s liabilities in respect of the policies or deposits for which the fund is maintained, may be transferred to such other fund as the directors may determine.  R.S.O. 1990, c. I.8, s. 109 (5); 2018, c. 8, Sched. 13, s. 22. Value of transfers (6) For the purposes of clause (2) (b), the value of any assets transferred to or from a separate and distinct fund shall be taken as the value thereof at the time of transfer to that fund and, for all other purposes, the value from time to time of any assets that have been transferred to a separate and distinct fund maintained under subsection (1) shall be the market value of such assets.  R.S.O. 1990, c. I.8, s. 109 (6). (7) Repealed:  2006, c. 33, Sched. O, s. 5. Section Amendments with date in force (d/m/y) 2006, c. 33, Sched. O, s. 5 - 05/05/2008 2018, c. 8, Sched. 13, s. 22 - 08/06/2019