California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 10.1 - Investment Annuities › Section 2522.5 - Qualification to Transact Investment Annuity Business in this State

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) No investment
				  annuity policy shall be delivered or issued for delivery in this State by an
				  insurer until the Commissioner is satisfied that the issuance of such policy is
				  not hazardous to either the public or to the annuitants of such insurer. An
				  insurer shall not be authorized to deliver or issue for delivery in this State
				  an investment annuity policy unless the insurer has filed in form and
				  substance, to the satisfaction of the Commissioner, the following:
(1) A statement of the actuarial assumptions
				  upon which the investment annuities are to be issued and the plan and methods
				  of administration and marketing of investment annuities, including advertising
				  materials;
(2) A statement of the
				  method of control, management and administration of the segregated custodian
				  accounts, including the account reporting procedures to annuitants and to
				  policyowners, if the policyowner has the investment discretion as to the
				  account;
(3) Evidence of compliance
				  with relevant tax laws and regulations and any relevant federal securities laws
				  and regulations. Such evidence of compliance must be to the satisfaction of the
				  Insurance Commissioner, and different standards of compliance may be required
				  depending upon the scope of the Accepted Assets List and the types of assets
				  appearing on such list, and the arrangement, if any, to offer or sell assets to
				  fund the custodian account or accounts, or provide investment advice or
				  investment management with respect to such assets (this includes affiliated
				  broker-dealers licensed as life insurance agents);
(4) A full disclosure statement with respect
				  to any person (including life agents) associated with the insurer and any
				  broker-dealer who may recommend securities to annuitants, effect securities
				  transactions on their behalf, or undertake to act as investment manager to the
				  annuitant, in connection with the funding or maintaining of the segregated
				  custodian accounts, and a commitment to provide disclosure with respect to any
				  changes in such relationships;
(5)
				  A full disclosure statement revealing the relationship with such custodian or
				  any organization that may sell, issue or provide securities or other assets
				  which may be held in any custodian account of any officers, directors or person
				  owning or controlling 10% or more of the stock of the insurer or the proposed
				  custodian and a commitment to provide disclosure of any subsequent changes in
				  such relationships;
(6) A
				  certification that there is no commitment, nor will the insurer at any time
				  enter into a commitment, with any person to subsidize in any manner or by any
				  means the cost of producing or handling the investment annuity business
				  (including the custodian, transfer agent, service organizations but excluding
				  any commission or other compensation to the producing life agent);
(7) A five (5) year projection, in a form
				  prescribed by the Insurance Commissioner, of the development of statutory
				  surplus arising from the operations of investment annuity contracts, which must
				  include, but not necessarily be limited to, sufficient details of the methods
				  employed in determining the separate items to enable the Department of
				  Insurance to independently verify the application of the assumptions. The
				  financial projections shall include the cost of commissions, data processing,
				  salaries, general administration, and the resultant effect on surplus, and be
				  based upon three separate assumptions with respect to the rate of writings:
(A) As developed assuming a level annual
				  dollar amount of investment over the initial five (5) year period;
(B) Assuming an increase in the annual dollar
				  amount of investment over the initial five (5) years increasing at the rate of
				  20% per year compounded annually;
(C) Assuming a decrease in the annual dollar
				  amount of investment over the initial five (5) years, at the rate of 20% so
				  that each year's dollar amount is 80% of the previous year's dollar amount of
				  investment as each relates to the previous year's dollar amount of investment,
				  as each relates to the consideration received by the insurer;
				  and
(8) A statement that
				  the insurer has complied with all of the other requirements of this
				  Article.