Iowa Administrative Code › Agency 191 - Insurance Division › Insurance Coverage for Pediatric Preventive Services › Chapter 96 - Synthetic Guaranteed Investment Contracts › Rule 191-96.5 - Financial Requirements and Plan of Operation

Current through Register Vol. 47, No. 3, July 24, 2024
A contract may not be delivered or issued for delivery in
				  this state unless the issuing insurer is licensed as a life insurance company
				  in this state and is financially qualified under the provisions of subrule
				  96.5(1). In addition, a domestic insurer may not deliver or issue for delivery,
				  either in this state or outside this state, a contract unless the insurer has
				  satisfied the requirements of subrule 96.5(2) with respect to the class of
				  contracts to which the contract belongs.
(1) An insurer will be financially qualified
				under this rule if its most recent statutory financial statements reflect at
				least $1 billion in admitted assets or $100 million in capital and surplus, and
				its risk-based capital results do not place it at a regulatory level of action.
				In lieu of the requirements in the preceding sentence, the insurer may be
				required to satisfy such other financial qualification requirements set forth
				by the commissioner as having been deemed necessary or appropriate in a
				particular case to protect the insurer's policyholders and the
				public.
(2) A domestic insurer will
				satisfy the requirements of this subrule with respect to a class of contracts
				if the insurer has filed with the commissioner a plan of operation pertaining
				to the class of contracts, together with copies of the forms of contract in the
				class, and the filing of the plan of operation has been approved or has not
				been disapproved within the 60-day period following the date of filing, in
				which event the plan of operation shall be deemed approved.
a. The plan of operation for a class of
				contracts shall describe the financial implications for the insurer of the
				issuance of contracts in the class and shall include at least the following:
(1) A statement that the plan of operation
				will be administered in accordance with the requirements prescribed by the
				commissioner pursuant to this chapter, along with a statement that the insurer
				will comply with the plan of operation in its administration of the
				contract;
(2) A statement
				describing the methods and procedures used to value statutory liabilities for
				purposes of rule
				191-9610.
				(505,508);
(3) A description of the
				criteria used by the insurer in approving the investment manager for the
				segregated portfolio of assets associated with a contract in the class, if the
				investment manager is an entity other than the insurer or is controlling,
				controlled by or under common control with the insurer;
(4) A description of the insurer's
				requirement for reports concerning the assets in each segregated portfolio and
				transactions involving the assets and a description of how the insurer can use
				the information in a report to determine that the segregated portfolio is being
				managed in accordance with its investment guidelines. The insurer shall require
				that the report be prepared no less frequently than quarterly and include a
				complete statement of segregated portfolio holdings and their fair market
				value;
(5) A demonstration of
				financial results for one or more sample contracts from the class of contracts
				showing, at a minimum, the projected contract value records, the applicable
				fixed rate or rates of return, and the projected market value records and
				describing how the investments in the segregated portfolio reflect provision
				for benefits insured by the contract and how the contract value and market
				values and the rates of return may be affected by changes in the investment
				returns of the segregated portfolio and by reasonably anticipated deposits to
				and withdrawals from the segregated portfolio by the contract holder, and any
				advances made by the insurer to the contract holder. The sample contracts shall
				be chosen to reasonably represent the range of results that could be expected
				from possible combinations of contract provisions of all contracts within the
				class. The demonstration shall include at least three hypothetical return
				scenarios: level, increasing, and decreasing. For each of these scenarios, at
				least three withdrawal scenarios shall be modeled: zero, moderate, and high.
				The commissioner may require additional scenarios if deemed necessary to fully
				understand the risks under the class of contracts. The demonstration period
				shall be the greater of five years or the minimum period the insurer must
				underwrite the risk;
(6) A
				statement that all contracts in the class of contracts satisfy the requirement
				of rule
				191-969.
				(505,508) regarding unilateral contract terminations, together with a
				description of all termination events, discontinuation triggers and options,
				notice requirements, corrective action procedures, all other contract
				safeguards, and the procedures to be followed when a unilateral contract
				termination event occurs;
(7) A
				description of the allowable investment parameters (such as objectives,
				derivative strategies, asset classes, quality, duration and diversification
				requirements applied to the assets held within the segregated portfolio) to be
				reflected in the investment guidelines applicable to each contract issued in
				the class to which the submitted plan of operation applies; and a description
				of the procedures that will be followed by the insurer in evaluating the
				appropriateness of any specific investment guidelines submitted by the contract
				holder. If the insurer chooses to operate a contract in accordance with
				investment guidelines that do not conform to the criteria established pursuant
				to this subparagraph, the nonconforming set of investment guidelines shall be
				filed with the commissioner in accordance with the filing requirements of this
				subrule;
(8) For contract forms
				filed on or after January 1, 2017, a description of the criteria used by the
				insurer in approving for contract issuance a pooled fund representing multiple
				employer-sponsored plans and in approving the investment manager for the
				segregated portfolio of assets associated with such pooled fund
				contract;
(9) For contract forms
				filed on or after January 1, 2017, a description of risk-mitigation techniques
				used by the insurer in connection with contracts issued to pooled funds
				representing multiple employer-sponsored plans;
(10) An unqualified opinion by a qualified
				actuary with expertise to evaluate the adequacy of the consideration charged by
				the insurer for the risks it has assumed with respect to the contracts in the
				class to which the plan of operation applies;
(11) A statement that the actuarial opinion
				and memorandum required by rule
				191-9610. (505,508)
				shall include, with respect to the class of contracts to which the plan of
				operation applies:
1. If a payment has been
				made by the insurer in the prior reporting period under a contract in the
				class, the amount of aggregate risk charges (net of administrative expenses)
				for contracts in the class and the aggregate amount of any losses incurred;
				and
2. An inventory of all material
				unilateral contract termination events in the class that have not been cured
				within the time period specified and that have occurred during the prior
				reporting period for which the company decided not to terminate the
				contract.