§ 20-651 — Establishment of separate accounts; income, gains and losses; variable benefits; requirements; reserves

A. Any legal reserve life insurance company, except a limited capital stock company, may establish one or more separate accounts, and may allocate amounts thereto, including without limitation proceeds applied under optional modes of settlement or under dividend options, to provide for life insurance, guaranteed investment contracts or annuities, and benefits incidental thereto, payable in fixed or in variable dollar amounts or in both.

B. The income, gains and losses, realized or unrealized, from assets allocated to a separate account shall be credited to or charged against the account, without regard to other income, gains or losses of the company.

C. Except with the approval of the director and under such conditions as to investments and other matters as the director may prescribe, which shall recognize the guaranteed nature of the benefits provided, reserves for benefits guaranteed as to dollar amount and duration and funds guaranteed as to principal amount or stated rate of interest shall not be maintained in a separate account.

D. Amounts allocated to a separate account in the exercise of the power granted by this section shall be owned by the company and the company shall not be, nor hold itself out to be, a trustee with respect to such amounts. If and to the extent so provided under the applicable contracts, that portion of the assets of any such separate account equal to the reserves and other contract liabilities with respect to such account shall not be chargeable with liabilities arising out of any other business the company may conduct.

E. To the extent such company deems it necessary to comply with any applicable federal or state laws, such company, with respect to any separate account, including without limitation any separate account that is a management investment company or a unit investment trust, may provide for persons having an interest in the account appropriate voting and other rights and special procedures for the conduct of the business of such account, including without limitation special rights and procedures relating to investment policy, investment advisory services, selection of independent public accountants, and the selection of a committee, the members of which need not be otherwise affiliated with such company, to manage the business of such account.

F. Any contract providing benefits payable in variable amounts that is delivered or issued for delivery in this state shall contain a statement of the essential features of the procedures to be followed by the company in determining the dollar amount of such variable benefits. Any contract under which the benefits vary to reflect investment experience, including a group contract and any certificate in evidence of variable benefits issued under the contract, shall state that such dollar amount will so vary and shall contain on its first page a statement to the effect that the benefits under the contract are on a variable basis.

G. Except for sections 20-1219, 20-1223, 20-1224, 20-1225, 20-1271 and 20-1274 in the case of a variable annuity contract and sections 20-1203, 20-1207, 20-1209, 20-1212, 20-1213, 20-1231, 20-1231.01 and 20-1259 in the case of a variable life insurance policy and except as otherwise provided in this section and in sections 20-515 and 20-536.01, all pertinent provisions of this title shall apply to separate accounts and contracts relating to separate accounts. Any individual variable life insurance contract or variable annuity contract delivered or issued for delivery in this state shall contain grace, reinstatement and nonforfeiture provisions appropriate to such a contract, and if participating, an appropriate dividend provision. Any group variable life insurance contract or variable annuity contract delivered or issued for delivery in this state shall contain grace and nonforfeiture provisions appropriate to such a contract. The reserve liability for variable contracts shall be established in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees.

H. No company shall deliver or issue for delivery within this state variable contracts unless it is licensed or organized to do a life insurance or annuity business in this state, and the director is satisfied that its condition or methods of operation in connection with the issuance of such variable contracts will not render its operation hazardous to the public or its policyholders in this state. In this connection, the director shall consider, among other things, all of the following:

1. The history and financial condition of the company.

2. The character, responsibility and fitness of the officers and directors of the company.

3. In the case of a company other than a domestic company, whether the statutes and regulations of the jurisdiction of its incorporation provide a degree of protection to policyholders and the public that is substantially equal to that provided by this section and the rules issued under this section. If the company is a subsidiary of an admitted life insurance company or affiliated with such company through common management or ownership, it may be deemed by the director to have met the provisions of this subsection if either it or the parent or the affiliated company meets the requirements of this section.

I. Notwithstanding any other law, the director shall have sole authority to regulate the issuance and sale of variable contracts and to issue such reasonable rules as may be appropriate to carry out the purposes and provisions of this section and sections 20-515 and 20-536.01.