Iowa Administrative Code › Agency 191 - Insurance Division › Insurance Coverage for Pediatric Preventive Services › Chapter 96 - Synthetic Guaranteed Investment Contracts › Rule 191-96.4 - Definitions

Current through Register Vol. 47, No. 3, July 24, 2024
For purposes of this chapter, the following definitions shall
				  apply:
"Account assets"
means the assets in the
				  segregated portfolio plus any assets held in the general account or a separate
				  account to meet the asset maintenance requirements.
"Actuarial opinion and memorandum "
means
				  the opinion and memorandum of the valuation actuary required to be submitted to
				  the commissioner pursuant to subrule 96.10(8).
"Affirmatively approved"
means approval of
				  an insurer's plan of operation for a class of contracts containing the form of
				  contract under review after the plan of operation associated with the class of
				  contracts has been reviewed by the insurer's domiciliary insurance department
				  and the plan of operation has been found to be in compliance with this chapter
				  by the domiciliary insurance department. Affirmatively approved does not mean
				  approval as a result of the deemer provision.
"Appointed actuary "
means the qualified
				  actuary appointed or retained either directly by or by the authority of the
				  board of directors through an executive officer of the company to prepare the
				  annual statement of actuarial opinion for the company as a whole pursuant to
				  Iowa Code section
				  50836..
"Asset maintenance requirement"
means the
				  requirement to maintain assets to fund contract benefits in accordance with
				  rule
				  191-9610.
				  (505,508).
"Class of contracts "
means the set of all
				  contracts to which a given plan of operation pertains.
"Commissioner "
means the Iowa commissioner
				  of insurance.
"Contract value record"
means an accounting
				  record, provided by the contract in relation to a segregated portfolio of
				  assets, that is credited with a fixed rate of return over regular periods and
				  that is used to measure the extent of the insurer's obligation to the contract
				  holder. The fixed rate of return credited to the contract value record is
				  determined by means of a crediting rate formula or declared at the inception of
				  the contract and is valid for the entire term of the contract.
"Crediting rate formula"
means a
				  mathematical formula used to calculate the fixed rate of return credited to the
				  contract value record during any rate period and based in part upon the
				  difference between the contract value record and the market value record
				  amortized over an appropriate period. The fixed rate of return calculated by
				  means of this formula may reflect prior and current market conditions with
				  respect to the segregated portfolio, but may not reference future changes in
				  market conditions.
"Duration "
means, with respect to the
				  segregated portfolio assets or guaranteed contract liabilities, a measure of
				  price sensitivity to changes in interest rates, such as the Macaulay duration
				  or option-adjusted duration.
"Fair market value "
means a reasonable
				  estimate of the amount that a knowledgeable buyer of an asset would be willing
				  to pay, and a knowledgeable seller of an asset would be willing to accept, for
				  the asset without duress in an arm's length transaction. In the case of a
				  publicly traded security, the fair market value is the price at which the
				  security is traded or, if no price is available, a price that appropriately
				  reflects the latest bid and asked prices for the security. For all non-publicly
				  traded assets, fair market value will be determined in accordance with
				  valuation practices customarily used within the financial industry.
"Investment guidelines "
means a set of
				  written guidelines, established in advance by the person with investment
				  authority over the segregated portfolio, to be followed by the investment
				  manager. The guidelines shall include a description of:
1. The segregated portfolio's investment objectives and
				  limitations;
2. The investment manager's degree of discretion;
3. The duration, asset class, quality, diversification, and
				  other requirements of the segregated portfolio; and
4. The manner in which derivative instruments may be used, if
				  at all, in the segregated portfolio.
"Investment manager "
means the person
				  (including the contract holder) responsible for managing the assets in the
				  segregated portfolio in accordance with the investment guidelines in a
				  fiduciary capacity to the owner of the assets.
"Market value record"
means an accounting
				  record provided by the contract to reflect the fair market value of the
				  segregated portfolio.
"NAIC"
means the National Association of
				  Insurance Commissioners.
"Permitted custodial institution"
means a
				  bank, trust company or other licensed fiduciary services provider.
"Plan of operation"
means a written plan
				  meeting the requirements of paragraph 96.5(2)
"a."
"Qualified actuary"
means an individual who
				  meets the qualification standards set forth in 191-paragraph
				  5.34(5)
"b."
"Rate period"
means the period of time
				  during which the fixed rate of return credited to the contract value record is
				  applicable between crediting rate formula adjustments.
"Segregated portfolio"
means:
1. A portfolio or subport folio of assets to which the
				  contract pertains that is held in a custody or trust account by the permitted
				  custodial institution and identified on the records of the permitted custodial
				  institution as special custody assets held for the exclusive benefit of the
				  retirement plans or other entities on whose behalf the contract holder holds
				  the contract; and
2. Any related cash or currency received by the permitted
				  custodial institution for the account of the contract holder and held in a
				  deposit account for the exclusive benefit of the retirement plans or other
				  entities on whose behalf the contract holder holds the contract.
"Spot rate"
means:
1. "Treasury-based spot rate," corresponding to a given time
				  of benefit payment, means the yield on a zero-coupon noncallable and
				  nonprepayable United States government obligation maturing at that time, or the
				  zero-coupon yield implied by the price of a representative sampling of
				  coupon-bearing, noncallable and nonprepayable United States government
				  obligations in accordance with a formula set forth in the plan of
				  operation.
2. "Index spot rate," corresponding to a given time of
				  benefit payment, means the zero-coupon yield implied by (a) the Barclays Short
				  Term Corporate Index for a given time of benefit payment under one year or (b)
				  the zero-coupon yield implied by the Barclays United States Corporate
				  Investment Grade Bond Index for a given time of benefit payment greater than or
				  equal to one year.
3. "Blended spot rate," corresponding to a given time of
				  benefit payment, means a blend of 50 percent each of (a) the treasury-based
				  spot rate, and (b) the index spot rate. To the extent that guaranteed contract
				  liabilities are denominated in the currency of a foreign country rated in one
				  of the two highest rating categories by an independent, nationally recognized
				  United States rating agency acceptable to the commissioner and are supported by
				  investments denominated in the currency of the foreign country, the
				  treasury-based spot rate component of the blended spot rate may be determined
				  by reference to substantially similar obligations of the government of the
				  foreign country. For liabilities other than those described above, the blended
				  spot rate shall be determined on a basis mutually agreed upon by the insurer
				  and the commissioner.
"Synthetic guaranteed investment contract"
or
"contract"
means a group annuity contract or other contract
				  issued in connection with a group annuity contract that establishes the
				  insurer's obligations by reference to a segregated portfolio of assets that is
				  not owned by the insurer. The contract functions as an accounting record for an
				  accumulation fund, and the fixed rate of return credited to the fund reflects
				  an amortization of the segregated portfolio's market gains and losses based on
				  the period specified in the crediting formula, subject to any minimum interest
				  rate guarantee.
"Unilateral contract termination event"
means an event allowing the insurer to unilaterally and immediately terminate
				  the contract, without future liability or obligation to the contract
				  holder.
"United States government obligation "
means
				  a direct obligation issued, assumed, guaranteed or insured by the United States
				  or by an agency or instrumentality of the United States government.
"Valuation actuary"
means the appointed
				  actuary or, alternatively, a qualified actuary designated by the appointed
				  actuary to render the actuarial opinion pursuant to rule
				  191-9610. (505,508).
				  Written documentation of any such designation shall be on file at the company
				  and available for review by the commissioner upon request.
"Value of guaranteed contract liabilities"
means the same as set forth in subrule 96.10(6).