An Act to Amend the Law Relating to Annuities LR 1256(02)
Maine Legislature, Session 121, LD 0342
Committee Amendment CA_A_S114 (Senate)
Amends: 24-A MRSA §2544

COMMITTEE AMENDMENT .. A .. to S.P. 121, L.D. 342, Bill, 
Act to Amend the Law Relating to Annuities" 
"An 
Amend the bill by striking out everything after the title 
and before the summary and inserting in its place the following: 
'Emergency preamble. Whereas, Acts of the Legislature do not 
become effective until 90 days after adjournment unless enacted 
as emergencies; and 
Whereas, national financial markets have been severely and 
adversely affected as the result of the events of September 11, 
2001, and those events have affected the economy of the State; and 
Whereas, events surrounding recent improprieties by major 
publicly 
traded 
companies 
such 
as 
Enron 
have 
severely 
and 
adversely affected national financial markets and those events 
have affected the economy of the State; and 
Whereas, as a result of these events, earnings on investment 
vehicles of all types have been significantly reduced, and this 
situation will continue to exist for the foreseeable future; and 
Whereas, one 
financial 
investment 
vehicle 
essential 
to 
citizens of this State is annuities; and 
COMMITTEE AMENDMENT 
~ .... 
COMMITTEE AMENDMENT .. /t .. to S.P. 121, L.D. 342 
VVhereas, the availability of annuity contracts providing 
flexible considerations will become virtually nonexistent if the 
laws of this State are not changed to reflect current market 
conditions; and 
VVhereas, in the judgment of the Legislature, these facts 
create an emergency within the meaning of the Constitution of 
Maine 
and 
require 
the 
following 
legislation 
as 
immediately 
necessary for the preservation of the public peace, health and 
safety; now, therefore, 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 24-A MRSA §2544, as enacted by PL 1979, c. 442, §4, 
is amended to read: 
§2544. Minimum va1ues 
The minimum values as specified in sections 2545 to 2548 and 
section 2550 of any paid-up annuity, cash surrender or death 
benefits available under an annuity contract saa±± must be based 
upon minimum nonforfeiture amounts as defined in this section. 
1. 
W~ea--~~--~~--eeB~~aees--~~~~~-~--E±eH~B±e 
eeBs~Ele~a~.i-&B&r-eae The minimum nonforfeiture amount at any time 
at or prior to the commencement of any annuity payments saa±± 
mY.S..t. be equal to an accumulation up to that time at a rate of 
interest 
ej--~%--pe~--yea~--ej--pe~eeRea~es as 
permitted under 
subsection I-A of the net considerations, as hereinafter defined, 
paid prior to that time, decreased by the sum of: 
A. 
Any prior withdrawals from or partial surrenders of the 
contract accumulated at a rate of interest eE-6%-pe~-yea~ ~ 
permitted under subsection I-A; aREl 
B. 
The amount of any indebtedness to the insurer on the 
contract, including interest due and accrued 
aBEl-~ofl-E!~easeEl. 
By-~~.~~~~-aEl.El4~4eRa~-~~-e~eQi~eEl-~-~~-~RSQ~e~ 
ee-eae-eeRe~aeeTL 
C. 
An annual contract charge of $50. accumulated at a rate 
of interest as permitted under subsection I-A: and 
D. 
Any premium tax paid by the insurer for the contract, 
accumulated at 
a 
rate 
of 
interest 
as 
permitted 
under 
subsection I-A. 
The net considerations for a given contract year used to define 
the minimum nonforfeiture amount saa±± ~ 
be an amount Ree-±ess 
eaaR-~-o--aREl--6h;H+-Be equal to 87 
1/2% of the 
ee~~espeREI.~R~ 
COMMITTEE AMENDMENT 
,.." 
COMMITTEE AMENDMENT "A" to S.P. 121, L.D. 342 
gross 
considerations 
credited 
to 
the 
contract 
during 
that 
contract year less-~~~-eeB~~ae~-~~~~-$~g-~-~-a 
eellee~~eB-~~-~--~,~~-pe~-~B&~~~~&-~~1t~-~~-~Re 
eeB~~ae~--QQ~~B~--~ha~--eeBttaet--yeat. 
~e--peteeBta~es--e~--Bet 
eeBS~Qeta~~eBs-~~~-~-9§%-~~-~~-Bet-~~~~-~~--~Re 
~~ts~-eeB~~ae~-yea~-~~-~~~-~-B&~-e&&&iGe~a~i&&&-~e~-the 
6BQ-~-~~~-eeB~~ae~-~~--Ne~wi~h&~a&Qi~-~£~~~~~-e~ 
~he--~~eeQi~--&&&~~r-~~-~~~-~~--~-~~-e£--~he 
per~~eB-~-~~-teta!-~-~~~~-~eF-~--r~~-eeB~raet 
yeat-~~-eHeeeQS-~-Be~-~~-thaB-~-t~mes-~~-sQffi-~--these 
pert~eBs-~--~he-~-~&&~~~~&&-4B-~~~-p~4e~-~~~--years 
~er-wh~eh-the-peteeBta~e-was-99%T 
1-A. 
The 
rate of interest used in determining 
m~n~mum 
nonforfeiture amounts must be determined in accordance with the 
following reg;uirements and specified in any contract providing 
for recalculation of the rate of interest permitted under this 
subsection. 
A. 
The rate of interest must be an annual rate of interest 
determined as the lesser of 
3~ per annum and the 5-year 
Constant Maturity Treasury Rate reported by the Federal 
Reserye rounded to the nearest 1I20th of l~as of a date, or 
average over a period, specified in the contract that is no 
later than 15 months prior to the contract issue date or the 
redetermination date decreased by 125 basis points as long 
as the resulting rate of interest is not less than 1~. 
B. 
The rate of interest applies for an initial period and 
may 
be 
redetermined 
for 
additional 
periods. 
The 
redetermination date, basis and period, if any, must be 
stated in the contract. 
The basis is the date or average 
over a 
specified period that produces the value of the 
5-year Constant Maturity Treasury Rate to be used at each 
redetermination date. 
C. 
During the period or term that a 
contract provides 
substantive participation in an eg;uity indexed benefit, the 
contract may increase the reduction described in paragraph A 
by up to an additional 100 basis points to reflect the value 
of the eg;uity indexed benefit. 
The present value at the 
contract 
issue 
date, 
and 
at 
each 
redetermination 
date 
thereafter, of the additional reduction may not exceed the 
market value of the benefit. 
The superintendent may reg;uire 
a demonstration that the present value of the additional 
reduction does not exceed the market value of the benefit 
and 
may 
disallow 
or 
limit 
the 
reduction 
if 
such 
a 
demonstration is not accepted. 
COMMITTEE AMENDMENT 
~." 
COMMITTEE AMENDMENT .. A, to S.P. 121, L.D. 342 
D. 
The superintendent may adopt rules to implement this 
subsection and to provide for further adjustments to the 
minimum nonforfeiture amounts for contracts providing for 
substantive participation in an eguity indexed benefit and 
for 
contracts 
for 
which 
the 
superintendent 
determines 
adjustments are appropriate. 
Rules adopted pursuant to this 
subsection are routine technical rules as def ined in Ti tIe 
5. chapter 375. subchapter 2-A. 
3T--WJ~£-~~--~-e9B~Fae~S-p£~4~£~-~~--~~~-seaeeQ*ee 
e9BsieeFa~i9BsT-m4£4~-~~~~~~~~~~~~-~-ea*eQ*a~ea 
9B--~ae--assQMP~i9B--~aa~--e9BsieeFa~i9Bs--aFe--paie--aBBQa**y--iB 
aevaBee-~BG-~~~-~-ee~4Bee--a&--~~-~~~~-w4~£--~*eHiB*e 
e9BsieeFa~i9Bs-waiea-aFe-paie-aBBQa**y-wi~a-a-eHeep~i9BS+ 
AT---~a&-~~-~-~--~he--B&~-~~~~-~~--~£€--~iFS~ 
e9B~Fae~-yea~-~~-B&-aeeQmQ*a~ee-~~-~-~h&-sQm-~-~~~-9~ 
~ae-~--e9B&ie&Fa~i9B-~~--~a&-~4~s~-~~~-yea£-~~-aa 
l~a%-~--~a&-e~eess-~--~ae-~-~&&ia&Pa~~&-~e£-~~-~iFs~ 
e9B~Fae~-y~-~-~-1&&&&F-9~-~~~~&&ia&Pa~~&&-~9F 
~ae-aBe-aBe-~Fe-e9B~Fae~-yeaFSt-aBQ 
gT--~he-aBBQa~-e~~~ae~-e~~~~-~~~~~~~~-$&G-9F 
19%-9~-~ae-~F9ss-aBBQa*-e9BsieeFa~i9BT 
3T---W4~h--~es~~--~~-~~~~-~~~--~~--a--siB~*e 
e9BsieeFa~i9BT-~~~~~it~~-am9aB~&-sha~~-~~~~-as 
~9F--e9B~Fae~s--wi~a--~*eHiB*e--e9BsieeFa~i9BsT--eHeep~--~aa~--~ae 
peFeeB~a~e-~-~--e&&&iQe~a~i&B-~-~e-~~~~B&-~~-miBimQM 
B9B~9F~ei~QFe--~--~~~--Be--~~--~~--9g%--~-~~--Be~ 
e9BsieeFa~i9B-~-Be-~~-~F9SS-~~~~-*ess-~-e9B~Fae~ 
eaaF~e-9~-$+&T 
4. 
Notwithstanding this section. an insurer may elect to 
apply provisions of this section related to the rate of interest 
used to determine minimum nonforfeiture amounts on a contract 
form basis. 
This subsection is repealed 2 years from the effective date of 
this subsection. 
Emergency clause. 
In view of the emergency ci ted in the 
preamble, this Act takes effect when approved.' 
SUMMARY 
This amendment replaces the bill. 
The amendment decreases 
the rate-of-return requirements for annuity considerations from 
3.0'\ to the lesser of 3'\ or an interest rate indexed to the 
COMMITTEE AMENDMENT 
f 
COMMITTEE AMENDMENT "A" to S.P. 121, L.D. 342 
5-year Constant Maturity Treasury Rate of the Federal Reserve. 
The amendment also permits an insurer to apply the interest rate 
provision annuity contracts on a contract form basis until 2 
years after the effective date of the provision. 
The amendment 
also adds an emergency preamble and emergency clause. 
FISCAL NOTE REQUIRED 
(See attached) 
COMMITTEE AMENDMENT 
Fiscal Detail and Notes 
Revised: 04/22/03 :/JPac::.. 
Office of Fiscal and Program Review 
LD342 
An Act to Amend the Law Relating to Annuities 
LR 1256(02) 
Fiscal Note for Bill as Amended by Committee Amendment '4'S-lllJ 
Committee: Insurance and Financial Services 
Fiscal Note Required: Yes 
Fiscal Note 
Minor cost increase - General Flll1d 
Any additional costs to the Department of Professional and Financial Regulation in implementing this bill can be 
absorbed by the Department utilizing existing budgeted resources. 
LR12S6(2) - Fiscal Note - Page 1 of 1