California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 11.1 - Separate Account or Accounts-Variable Life Insurance Contracts › Section 2534.5 - Separate Accounts

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The following requirements apply to the establishment and
					 administration of variable life insurance separate accounts:
(a) Establishment and Administration of
				  Separate Accounts. An insurer issuing variable life insurance in this State
				  shall establish one or more separate accounts pursuant to Section
				  10506 of
				  the Insurance Code of this State.
(1) If no
				  law or other regulation provides for the custody of separate account assets and
				  if the insurer itself is not the custodian of such assets, all contracts for
				  such custody shall be in writing and the Commissioner of the insurer's state of
				  domicile shall approve of both the terms of any such contract and the proposed
				  custodian prior to the transfer of custody.
(2) An insurer shall not, without the prior
				  written approval of the Commissioner, employ in any material connection with
				  the handling of separate account assets any person who:
(A) Within the last ten years has been
				  convicted of any felony or a misdemeanor arising out of such persons conduct
				  involving embezzlement, fraudulent conversion, or misappropriation of funds or
				  securities or involving violation of Sections
				  1341,
				  1342, or
				  1343 of Title 18, United States
				  Code, or
(B) Within the last ten
				  years has been found by any state regulatory authority to have violated or has
				  acknowledged violation of any provision of any state insurance law involving
				  fraud, deceit or knowing misrepresentation, or
(C) Within the last ten years has been found
				  by federal or state regulatory authorities to have violated or has acknowledged
				  violation of any provision of federal or state securities laws involving fraud,
				  deceit or knowing misrepresentation.
(3) All persons with access to the cash,
				  securities or other assets of the separate account shall be under bond in an
				  amount of not less than the following amounts for each separate account:
TOTAL ASSETS
MINIMUM AMOUNT OF BOND
Under $100,000
$10,000
But Not
More Than:
More Than:
$100,000
$600,000
$10,000 plus 4% of assets over $100,000
600,000
1,200,000
$30,000 plus 3-1/3% of assets over
								$600,000
1,200,000
3,200,000
$50,000 plus 2-1/2% of assets over
								$1,200,000
3,200,000
4,450,000
$100,000 plus 2% of assets over
								$3,200,000
4,450,000
6,450,000
$125,000 plus 1-1/4% of assets over
								$4,450,000
6,450,000
90,450,000
$150,000 plus 5/8% of assets over
								$6,450,000
90,450,000
350,450,000
$675,000 plus 3/8% of assets over
								$90,450,000
350,450,000
1,070,450,000
$1,625,000 plus 3/16% of assets over
								$350,450,000
1,070,450,000
----
$3,075,000 plus 3/32% of assets over $1,070,450,000
								until total bond equals $5,000,000
(4)
				  If an insurer establishes more than one separate account for variable life
				  insurance, justification for the establishment of each additional separate
				  account shall also be filed with the Commissioner and shall be subject to his
				  approval. The creation of additional separate accounts to avoid lower maximum
				  charges against the separate account is prohibited.
(5) The assets of such separate accounts
				  established for variable life insurance policies shall be valued at least as
				  often as variable benefits are determined but in any event at least
				  monthly.
(6) The same separate
				  account shall not be used to fund both variable life insurance policies which
				  are exempt pursuant to Section
				  3(c)(11) of the
				  Investment Company Act of 1940 because of their tax qualified status and other
				  variable life insurance policies not so exempt.
(7) Except as provided in Section
				  2534.3(e)(3)(F),
				  variable life insurance separate accounts shall not be used for variable
				  annuities or for the investment of funds corresponding to dividend
				  accumulations or other policyholder liabilities not involving life
				  contingencies.