AR Code § 23-81-304 (2020)
2020 Arkansas Code|Title 23 - Public Utilities and Regulated Industries|Subtitle 3 - Insurance|Chapter 81 - Life Insurance Policies And Annuities|Subchapter 3 - Standard Nonforfeiture Law For Individual Deferred Annuities|§ 23-81-304. Minimum values

 (a)  (1) Prior to July 15, 2006, a company may elect to comply with the provisions of:  (A) Subsections (b) and (c) of this section; or  (B) Subsections (d)-(f) of this section.    (2) On and after July 15, 2006, all companies shall comply with the provisions of subsections (d)-(f) of this section.    (b) The minimum values as specified in §§ 23-81-305 — 23-81-308 and 23-81-310 of any paid-up annuity, cash surrender, or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this subchapter.  (c)  (1)  (A) With respect to contracts providing for flexible considerations, the minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time at a rate of interest of one and one-half percent (1.5%) per annum of percentages of the net considerations paid prior to the time, decreased by the sum of:  (i) Any prior withdrawals from or partial surrenders of the contract accumulated at a rate of interest of one and one-half percent (1.5%) per annum; and  (ii) The amount of any indebtedness to the insurer on the contract, including interest due and accrued and increased by any existing additional amounts credited by the insurer to the contract.    (B)  (i) The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount not less than zero (0) and shall be equal to the corresponding gross considerations credited to the contract during that contract year less an annual contract charge of thirty dollars ($30.00) and less a collection charge of one dollar and twenty-five cents ($1.25) per consideration credited to the contract during that contract year.  (ii) The percentages of net considerations shall be sixty-five percent (65%) of the net consideration for the first contract year and eighty-seven and one-half percent (87.5%) of the net considerations for the second and later contract years.  (iii) Notwithstanding the provisions of subdivision (c)(1)(B)(ii) of this section, the percentage shall be sixty-five percent (65%) of the portion of the total net consideration for any renewal contract year that exceeds by not more than two (2) multiplied by the sum of those portions of the net considerations in all prior contract years for which the percentage was sixty-five percent (65%).      (2) With respect to contracts providing for fixed scheduled considerations, minimum nonforfeiture amounts shall be calculated on the assumption that considerations are paid annually in advance and shall be defined as for contracts with flexible considerations that are paid annually, with two (2) exceptions:  (A) The portion of the net consideration for the first contract year to be accumulated shall be the sum of sixty-five percent (65%) of the net consideration for the first contract year plus twenty-two and one-half percent (22.5%) of the excess of the net considerations for the first contract year over the lesser of the net considerations for the second and third contract years; and  (B) The annual contract charge shall be the lesser of thirty dollars ($30.00) or ten percent (10%) of the gross annual consideration.    (3) With respect to contracts providing for a single consideration, minimum nonforfeiture amounts shall be defined as for contracts with flexible considerations, except that the percentage of net consideration used to determine the minimum nonforfeiture amount shall be equal to ninety percent (90%) and the net consideration shall be the gross consideration less a contract charge of seventy-five dollars ($75.00).    (d) On and after July 15, 2006, the minimum values as specified in §§ 23-81-305 — 23-81-308 and 23-81-310 of any paid-up annuity, cash surrender, or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in subsections (e) and (f) of this section.  (e)  (1)  (A) The minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time at a rate of interest as indicated in subdivisions (e)(2) and (3) of this section of the net considerations paid prior to the time, decreased by the sum of:  (i) Any prior withdrawals from or partial surrenders of the contract accumulated at a rate of interest as indicated in subdivisions (e)(2) and (3) of this section;  (ii) An annual contract charge of fifty dollars ($50.00) accumulated at a rate of interest as indicated in subdivisions (e)(2) and (3) of this section;  (iii) Any premium tax paid by the company for the contract accumulated at a rate of interest as indicated in subdivisions (e)(2) and (3) of this section; and  (iv) The amount of an indebtedness to the insurer on the contract, including interest due and accrued.    (B) The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount equal to eighty-seven and one-half percent (87.5%) of gross considerations credited to the contract during that contract year.    (2) The interest rate used in determining minimum nonforfeiture amounts shall be an annual rate of interest equal to the lesser of:  (A) Three percent (3%) per annum; or  (B) The following rate, which shall be specified in the contract if the interest rate is reset:  (i) The five-year Constant Maturity Treasury Rate reported by the Federal Reserve System as of a date or average over a period rounded to the nearest one-twentieth of one percent (.05%) that is specified in the contract no longer than fifteen (15) months prior to the contract issue date or redetermination date under subdivision (e)(3) of this section, reduced by one hundred twenty-five (125) basis points; and  (ii) The resulting interest rate shall not be less than one percent (1%).      (3)  (A) The interest rate under subdivision (e)(2) of this section shall apply for an initial period and may be redetermined for additional periods.  (B)  (i) The redetermination date, basis, and period, if any, shall be stated in the contract.  (ii) The basis is the date or average over a specified period that produces the value of the five-year Constant Maturity Treasury Rate to be used at each redetermination date.        (f)  (1) During the period or term that a contract provides substantive participation in an equity indexed benefit, it may increase the reduction described in subdivisions (e)(2) and (3) of this section by up to an additional one hundred (100) basis points to reflect the value of the equity index benefit.  (2) The present value of the additional reduction at the contract issue date and at each redetermination date shall not exceed the market value of the benefit.  (3)  (A) The Insurance Commissioner may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit.  (B) If no demonstration is acceptable to the commissioner, the commissioner may disallow or limit the additional reduction.      (g) The commissioner may adopt rules to implement the provisions of subsection (d) of this section and to provide for further adjustments to the calculation of minimum nonforfeiture amounts for contracts that provide substantive participation in an equity index benefit and for other contracts for which the commissioner determines adjustments are justified.