Nebraska Administrative Code › Topic - INSURANCE, DEPARTMENT OF › Title 210 - NEBRASKA DEPARTMENT OF INSURANCE › Chapter 80 - SYNTHETIC GUARANTEED INVESTMENT CONTRACTS › Section 210-80-005 - Financial Requirements and Plan of Operation

Current through June 17, 2024
005.01 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 Subsection 005.02 of this
				section. In addition, a domestic insurer 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 insurer has satisfied the requirements of
				Subsection 005.03 of this section with respect to that class of
				contracts.
005.02 An insurer will
				be financially qualified under this section if its most recent statutory
				financial statements on file with the Director reflect that it meets the
				financial requirements of Neb. Rev. Stat. §
									44-708.01,
				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 Director as having been deemed necessary or appropriate in a
				particular case to protect the insurer's policyholders and the
				public.
005.03 A domestic insurer
				will satisfy the requirements of this section with respect to a class of
				contracts if the insurer has filed a plan of operation pertaining to the class
				of contracts, together with copies of the forms of the contract in the class,
				with the Director, and the filing of the plan of operation has been approved.
005.03A The plan of operation for a class of
				contracts shall describe the financial implications for the insurer of the
				issuance of the contracts in the class, and shall include at least the
				following:
005.03A(1) A statement that the
				plan of operation will be administered in accordance with the requirements
				prescribed by the Director pursuant to this regulation, along with a statement
				that the insurer will comply with the plan of operation in its administration
				of the contract;
005.03A(2) A
				statement describing the methods and procedures used to value statutory
				liabilities for purposes of Section 010;
005.03A(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 its wholly owned subsidiary;
005.03A(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;
005.03A(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, 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 reasonably anticipated
				deposits to and withdrawals from the segregated portfolio by the contract
				holder, as well as any advances made by the insurer to the contract holder. The
				sample contracts must be chosen to reasonably represent the range of results
				that could be expected from possible combinations of contract provisions of all
				contracts in the class. The demonstration shall include at least three (3)
				hypothetical return scenarios (level, increasing and decreasing) and for each
				of these scenarios, at least three (3) withdrawal scenarios (zero, moderate and
				high) shall be modeled. The Director may require additional scenarios if deemed
				necessary to fully understand the risks under the class of contracts. The
				demonstration period must be the greater of five (5) years or the minimum
				period the insurer must underwrite the risk;
005.03A(6) A statement that all contracts in
				the class of contracts satisfy the requirement of Section 009 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;
005.03A(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 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.
005.03A(8) 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;
005.03A(9) A description
				of risk-mitigation techniques used by the insurer in connection with contracts
				issued to pooled funds representing multiple employer-sponsored
				plans;
005.03A(10) An unqualified
				opinion by a qualified actuary with expertise in these matters as to 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;
005.03A(11) A
				statement that the actuarial opinion and memorandum required by Section 010
				shall include, with respect to the class of contracts to which the plan of
				operation applies:
005.03A(11)(i) 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
005.03A(11)(ii) An
				inventory of all material unilateral contract termination events in the class
				of contracts that have not been cured within the time period specified and that
				have occurred during the prior reporting period but where the company decided
				not to terminate the contract.