New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter IV - Financial Condition Of Insurer and Reports to Superintendent › Subchapter B - Life Insurers › Part 97 - MARKET VALUE SEPARATE ACCOUNTS FUNDING GUARANTEED BENEFITS; SEPARATE ACCOUNTS OPERATIONS AND RESERVE REQUIREMENTS › Section 97.4 - Procedure

Current through Register Vol. 46, No. 28, July 10, 2024
(a) To establish a
				  market-value separate account pursuant to this Part, the insurance company
				  shall file for approval with the superintendent a plan of operations for the
				  separate account, accompanied by the contract or form of contract, or a
				  description thereof, providing for allocation of amounts to the separate
				  account, and an undertaking to file actuarial opinions and memoranda in
				  conformity with the requirements of this Part.
(b) The plan of operations shall include but
				  not be limited to:
(1) a statement of the
				  investment policy for the separate account, including requirements for
				  diversification, maturity, type and quality of assets and, if applicable, for
				  matching guaranteed contract liabilities;
(2) a description of how the market-value of
				  the separate account assets is to be determined, including (but not limited to)
				  a statement of procedures and rules for valuing securities and other separate
				  account assets which are not publicly traded;
(3) a description of how the guaranteed
				  contract liabilities are to be valued, including with respect to fixed or
				  guaranteed minimum 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, provided that the rate or
				  rates used shall not exceed the maximum rates allowed to be used to calculate
				  the minimum value of guaranteed contract liabilities described in section
				  97.5(k) 
				  of this Part, and must conservatively reflect expected investment returns
				  (taking into account foreign exchange risks);
(4) a statement of how the separate accounts
				  operations are designed to provide for payment of contract benefits as they
				  become due, including (but not limited to) a description of the method for
				  estimating the amount and timing of benefit payments, the arrangements
				  necessary to provide liquidity to cover contingencies, and the method to be
				  used to comply with the asset maintenance requirement;
(5) a demonstration that the consideration
				  charged for account contracts is appropriate in view of the risks to the
				  insurance company with respect to such account contracts;
(6) a description of the charges to be made
				  against the separate account assets, and a description of the manner in which
				  the risk charge, if any, payable from separate account assets will be
				  determined;
(7) a description of
				  how any surrender charges under the account contracts are to be
				  computed;
(8) if hedging techniques
				  or dynamic hedging techniques are to be utilized in managing separate account
				  assets a description of such 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 or a subportfolio thereof being
				  duration matched, a description of the method used and assumptions made to
				  determine the durations of separate account assets and guaranteed contract
				  liabilities;
(10) if the amount of
				  the asset maintenance requirement depends on the separate account or a
				  subportfolio thereof being cash-flow matched, a description of the method used
				  to determine the cash inflows to be received from separate account assets and
				  the cash outflows needed to meet guaranteed contract liabilities (including,
				  where applicable, a description of any provisions contained in the account
				  contracts which are designed to transfer substantially all of the investment
				  risk to the contractholder);
(11)
				  if the insurance company proposes to create a duration matched or cash-flow
				  matched subportfolio, a justification for creating such a subportfolio, a
				  description of the method by which the specified guaranteed contract
				  liabilities to be duration or cash-flow matched will be determined and a
				  description of how the duration matched or cash-flow matched subportfolio will
				  be managed separately so as to continue to maintain duration or cash-flow
				  matching;
(12) if a part of the
				  asset maintenance requirement is to be met by maintaining a reserve liability
				  in the general account, a description of:
(i)
				  the circumstances under which increases and decreases in such reserve liability
				  will be made;
(ii) the
				  circumstances under which transfers will be made between the separate account
				  and the general account; and
(iii)
				  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;
(13) a statement as
				  to whether or not the account contracts will provide that the separate account
				  assets shall not be chargeable with liabilities arising out of any other
				  business of the insurance company; and
(14) if any person is empowered under section 4240  of the Insurance Law to authorize,
				  approve or review the acquisition and disposition of investments for the
				  account, a statement of the safeguards adopted by the insurance company to
				  assure that the actions to be taken by such person are appropriate.