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Guidelines For The Preparation Of Plans Of Operation For Separate Accounts
(April, 2014)

In submitting for the Department’s approval plans of operation for Separate Accounts, the following guidelines should apply.  However, the Department will not be limited to the items listed should the review of the submission indicate that more information should be required.

I.  Included should be:

  1. A statement that the plan will be operated in compliance with the requirements of Section 4240 of the New York Insurance Law, including appropriate regulations thereof;
  2. A description of the investment objectives of each investment division of the account, including requirements for diversification, type and quality of assets and the name(s) of the Investment Manager or Advisor;
  3. A statement as to the type of contracts which will be funded, e.g. (a) qualified or non-qualified pension or profit-sharing plans; (b) eligible deferred compensation plans; (c) IRC Section 401(K) plans; (d) IRC Section 457 governmental plans; etc…;
  4. Acknowledgment that the “prudent man rule” will be followed;
  5. A statement as to whether “seed money” will be infused initially, and, if so, the dollar amount of such seed money and the plan for reimbursement to the general account of the advance.  It should also be acknowledged that such advances will be invested in accordance with the requirements of Section 1405 of the New Insurance Law;
  6. A statement as to which of the three items in paragraph five of Section 4240 NYIL will apply to the separate account under consideration.  If sections 4240(a)(5)(ii) or (iii) apply, Regulation 128 must be carefully followed;
  7. A display of management fees and expense charges which will be deducted from separate account considerations, including a statement that in no respect will allocations be made which discriminate unfairly between separate accounts or between separate or other accounts;
  8. A statement as to what charges, if any, will be made to establish contingency reserves for expense or mortality fluctuations and whether such reserves will be held in the separate or general account;
  9. A statement as to method of periodic valuation of separate account assets, including the frequency of such valuations;
  10. A statement as to the method of determining separate account unit values both initially, at the time which subsequent contributions are made to the account, and at termination;
  11. Acknowledgment that the company will maintain separate account assets at least equal to the fun accumulation and reserves for variable annuities in course of payment;
  12. Acknowledgment that no account assets will be transferred between separate accounts or between separate and other accounts without previous approval by the Superintendent.  This rule will not apply to the transfer of separate account considerations paid into the general accounts nor to accounts transferred to the general account for setting up reserves or payment of charges which are not directly disbursed from the separate account;
  13. A statement that assets supporting reserves which do not vary with investment experience and which are maintained in the separate account will have their value determined in accordance with Section 1414 of the New York Insurance Law.
  14. A statement that if one separate account is permitted to invest in one or more other separate accounts there will be no double counting of assets and liabilities;
  15. A statement that assets allocated by the insurer to a separate account shall be owned by the insurer and assets therein shall be the property of the insurer, which shall not be or hold itself out to be a trustee of such assets;
  16. A statement as to whether the separate account contract states that the assets in the separate account shall not be chargeable with liabilities arising out of any other business of the insurer.  In this connection refer to Section 7435(b), NYIL;

II. In following these guidelines companies should give sufficient detail that follow-up correspondence can be limited.

 

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