Connecticut Administrative Code › Title 38a - Insurance Department › 459 - Synthetic Guaranteed Investment Contracts › Separate Accounts Funding Guaranteed Minimum Benefits Under Group Contracts › Section 38a-459-12 - Plan of operations requirements

Current through July 10, 2024
(a) A contract may
				not be delivered or issued for delivery in this state unless the issuing
				insurance company is licensed to do life insurance business in this state
				pursuant to section 38a-41 of the Connecticut General Statutes. In addition, a
				domestic insurance company may not deliver or issue for delivery, either in
				this state or outside this state, a contract belonging to a specific class of
				contracts unless the insurance company has satisfied the requirements of
				subsection (b) of this section with respect to that class.
(b) A domestic insurance company satisfies
				the requirements of this section with respect to a class of contracts if the
				insurance company has filed a plan of operations pertaining to the class of
				contracts, together with copies of forms of the contracts in the class, with
				the insurance commissioner and the filing has been approved or has not been
				disapproved within a sixty-day period following the date of the filing, in
				which event the plan of operations shall be deemed approved.
(c) The plan of operations for a class of
				contracts shall describe the financial implications for the insurance company
				of the issuance of contracts in the class, and shall include at least the
				following:
(1) A description of the class of
				contracts to which the plan of operations pertains, including a description of
				the products, the markets to which the products will be sold, and the benefits
				that are being offered (including whether those benefits will be paid on a
				market or book value basis);
(2) A
				statement that the plan of operations shall be administered in accordance with
				the requirements prescribed by the insurance commissioner pursuant to sections
				38a-459-10
				to
				38a-459-20,
				inclusive, of the Regulations of Connecticut State Agencies, along with a
				statement that the insurance company shall comply with the plan of operations
				in its administration of the contract;
(3) A statement of the investment policy for
				the separate account and any supplemental account, including requirements for
				diversification, maturity, type and quality of assets, and, as applicable,
				target duration for matching guaranteed contract liabilities or the degree to
				which the investment policy is likely to match the performance of an interest
				rate series or index on which contract benefits are based;
(4) A description of how the value of the
				separate account assets and any supplemental account is to be determined,
				including but not limited to, a statement of procedures and rules for valuing
				securities and other assets that are not publicly traded;
(5) A description of how the guaranteed
				contract liabilities are to be valued, including, if applicable, with respect
				to guaranteed minimum benefits or other benefits, a description of the
				methodology for calculating spot rates and the rates proposed to be used to
				discount guaranteed contract liabilities if higher than the applicable spot
				rates, but the rate or rates used shall not exceed the blended spot rate,
				except that if the expected time of payment of a contract benefit is more than
				30 years, the guaranteed minimum benefits or other benefits shall be discounted
				from the expected time of payment to year 30 at a rate of no more than 80
				percent of the thirty year blended spot rate and from year 30 to the date of
				valuation at a rate not greater than the thirty year blended spot rate, and
				shall accurately reflect expected investment returns (taking into account
				foreign exchange risks);
(6) A
				statement of how the separate account's operations are designed to provide for
				payment of contract benefits as they become due, including but not limited to:
(A) A description of the method for
				estimating the amount and timing of benefit payments;
(B) The arrangements necessary to provide
				liquidity to cover contingencies:
(C) The method to be used to comply with the
				asset maintenance requirement;
(D)
				The manner in which account assets shall be allocated between the separate
				account, any supplemental account, and the general account;
(E) If applicable, the deductions to be used
				in determining the market value of an asset when determining the asset
				maintenance requirement when the investment policy of the separate account and
				any supplemental accounts is not likely to match the performance of an interest
				rate series or index on which contract benefits are based; and
(F) For index contracts, the deductions to be
				used for replicated (synthetic asset) transactions in determining the market
				value of the separate account.
(G)
				For market value separate accounts supporting contracts other than index
				contracts:
(i) A description of the criteria
				used by the insurance company in approving issuance of a contract to a pooled
				fund representing multiple employer-sponsored plans; and
(ii) a description of risk-mitigation
				techniques used by the insurance company in connection with contracts issued to
				pooled funds representing multiple employer-sponsored
				plans.
(7) An
				unqualified opinion by a qualified actuary with expertise in such matters as to
				the adequacy of the consideration charged by the insurance company for the
				risks it has assumed with respect to the contracts in the class to which the
				plan of operations pertains;
(8) If
				hedging transactions are to be utilized in managing separate account or any
				supplemental account assets, a description of the instruments and techniques
				and an explanation of how they are intended to reduce risk of loss;
(9) If the amount of the asset maintenance
				requirement depends on the separate account, any supplemental account or a
				subportfolio of either being duration matched, a description of the method used
				to determine the durations of separate account and any supplemental account
				assets and guaranteed contract liabilities;
(10) If a part of the asset maintenance
				requirement is to be met by maintaining a reserve liability in the general
				account, a description of:
(A) The
				circumstances under which increases and decreases in the general account
				portion of the reserve liability shall be made;
(B) The circumstances under which transfers
				shall be made between the separate account and the general account;
				and
(C) Any arrangements needed to
				provide sufficient liquidity in the general account to enable the insurance
				company to make transfers to the separate account when due.
(11) A statement as to the extent
				to which the contracts in the class shall provide that the separate account
				assets shall not be chargeable with liabilities arising out of any other
				business of the insurance company; and
(12) If any person other than the insurance
				company may authorize, approve, or review the acquisition and disposition of
				investments for the separate account or any supplemental account, a statement
				of the safeguards adopted by the insurance company to assure that the actions
				to be taken by these persons are appropriate, including a description of the
				criteria used by the insurance company in selecting the person.