(a) A domestic life insurer, including for the purposes of this section all domestic fraternal beneficiary associations, societies or companies which operate on a legal reserve basis, may establish 1 or more separate accounts, and may allocate thereto amounts (including without limitation proceeds applied under optional modes of settlement or under dividend options) to provide for life insurance or annuities (and benefits incidental thereto), payable in fixed or variable amounts or both, subject to the following:
(1) 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 insurer.
(2) Except as may be provided with respect to reserves for guaranteed benefits and funds referred to in paragraph (a)(3) of this section,
a. Amounts allocated to any separate account and accumulations thereon may be invested and reinvested without regard to any requirements or limitations prescribed by this title governing the investments of life insurers; and
b. The investments in such separate account or accounts shall not be taken into account in applying the investment limitations otherwise applicable to the investments of the insurer.
(3) Except with the approval of the Commissioner and under such conditions as to investments and other matters as he or she may prescribe, which shall recognize the guaranteed nature of the benefits provided, reserves for:
a. Benefits guaranteed as to dollar amount and duration; and
b. Funds guaranteed as to principal amount or stated rate of interest shall not be maintained in a separate account.
(4) Unless otherwise approved by the Commissioner, assets allocated to a separate account shall be valued at their market value on the date of valuation, or if there is no readily available market, then as provided under the terms of the contract or the rules or other written agreement applicable to such separate account, provided, that unless otherwise approved by the Commissioner, the portion, if any, of the assets of such separate account equal to the insurer's reserve liability with regard to the guaranteed benefits and funds referred to in paragraph (a)(3) of this section shall be valued in accordance with the rules otherwise applicable to the insurer's assets.
(5) Amounts allocated to a separate account in the exercise of the power granted by this section shall be owned by the insurer and the insurer 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 insurer may conduct.
(6) No sale, exchange or other transfer of assets may be made by an insurer between any of its separate accounts or between any other investment account and 1 or more of its separate accounts unless, in case of a transfer into a separate account, such transfer is made solely to establish the account or to support the operation of the contracts with respect to the separate account to which the transfer is made, and unless such transfer, whether into or from a separate account, is made:
a. By a transfer of cash; or
b. By a transfer of securities having a readily determinable market value, provided that such transfer of securities is approved by the Commissioner.
The Commissioner may approve other transfers among such accounts if, in his or her opinion, such transfers would not be inequitable.
(7) To the extent such insurer deems it necessary to comply with any applicable federal or state laws, such insurer, with respect to any separate account, including without limitation any separate account which is a management investment company or a unit investment trust, may provide for persons having an interest therein 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 insurer, to manage the business of such account.
(b) Any contract providing benefits payable in variable amounts delivered or issued for delivery in this State shall contain a statement of the essential features of the procedures to be followed by the insurer in determining the dollar amount of such variable benefits. Any such contract under which the benefits vary to reflect investment experience, including a group contract and any certificate in evidence of variable benefits issued thereunder shall state that such dollar amount will so vary and shall contain on its first page a statement to the effect that the benefits thereunder are on a variable basis.
(c) No insurer 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 Commissioner is satisfied that its condition or method of operation in connection with the issuance of such contracts will not render its operation hazardous to the public or its policyholders in this State. In this connection, the Commissioner shall consider among other things:
(1) The history and financial condition of the insurer;
(2) The character, responsibility and fitness of the officers and directors of the insurer; and
(3) The law and regulation under which the insurer is authorized in the state of domicile to issue variable contracts. If the insurer is a subsidiary of an admitted life insurer or affiliated with such insurer through common management or ownership, it may be deemed by the Commissioner to have met the provisions of this subsection if either it or the parent or the affiliated insurer meets the requirements hereof.
(d) Notwithstanding any other provision of law, the Commissioner shall have sole authority to regulate the issuance and sale of variable contracts, and to issue such reasonable rules and regulations as may be appropriate to carry out the purposes and provisions of this section.
(e) Except for §§ 2919, 2924, 2925 and 2929A of this title, in the case of a variable annuity contract, and §§ 2906, 2911, 2912, 2913, 2929 and 3113 of this title, in the case of a variable life insurance policy, and except as otherwise provided in this section, all pertinent provisions of this title shall apply to separate accounts and contracts relating thereto. Any individual variable life insurance contract delivered or issued for delivery in this State shall contain grace, reinstatement and nonforfeiture provisions appropriate to such a contract. Any individual variable annuity contract delivered or issued for delivery in this State shall contain grace and reinstatement provisions appropriate to such a contract. Any group variable life insurance contract delivered or issued for delivery in this State shall contain a grace provision 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.