(a) Any life insurance company authorized to do business in this state shall be permitted to issue and deliver individual policies in connection with the payment of benefits against the risk of loss in the value of redeemable securities of the insured investor issued by investment companies regulated by the federal Investment Company Act of 1940, as amended, and whose redeemable securities are registered under the federal Securities Act of 1933, as amended. For purposes of this article, such benefits shall be referred to as “investment return assurance.”
(b) Policies providing such investment return assurance shall provide a benefit equal to the difference between the amount paid for such redeemable securities and the value of such redeemable securities at the earlier of either (1) the end of the policy period, or (2) the date of death of the insured.
(c) To protect the public and policyholders located in this state from hazardous operation by domestic, foreign, or alien companies, and to further the purpose and provision of this part, no domestic, foreign, or alien insurance company shall undertake the issuance of any policy providing for investment return assurance until such company has satisfied the commissioner that its condition or method of operation in connection with the issuance of such policies shall not be such as to render its operation hazardous to the public, or its policyholders in this state, and, whether domestic, foreign, or alien, that it meets the conditions prescribed in Section 717 for the issuance of a certificate of authority. In the determination of the qualification of a company requesting authority to issue policies providing for investment return assurance within this state, the commissioner shall consider, in addition to the requirements of Section 717, (1) the history of the company, (2) the character, responsibility, and general fitness of the officers and directors of the company, (3) the regulation of a foreign or alien company by its state of domicile, (4) the adequacy of the investment management which the company is providing, and (5) the company’s arrangements for the supervision of the marketing of such policies. No company may provide investment return assurance in its policies unless it is an admitted insurer having and maintaining a combined capital and surplus of at least two million dollars ($2,000,000).
(d) In addition to the requirements of subdivision (c), no admitted insurer may provide investment return assurance in its policies unless it establishes a special contingency fund of not less than one million dollars ($1,000,000). This fund shall be deemed to constitute a reserve liability in addition to other reserves of such insurer. In the event such insurer writes investment return assurance both on an individual and a group basis, the special contingency fund shall be one million dollars ($1,000,000) for both.
(Added by Stats. 1971, Ch. 1566.)