CHAPTER 289

An Act to amend and reenact § 38.1-4 of the Code vo Virginia, relating
to the definition of annuities; and to amend the Code of Virginia by
adding sections numbered 88.1-188.2, $8.1-408 ea $8.1-448 relating,
respectively, to the investment of assets in separate accounts for varta-
ble annuities, to required provisions to be contained in the variable
annuities, and to the establishment of separate accounts for variable

[H 478]

Approved March 31, 1966

Be it enacted by the General Assembly of Virginia:

1. That § 38.1-4 of the Code of Virginia be amended and reenacted and
that the Code of Virginia be amended by adding sections numbered 38.1-
183.2, 38.1-408 and 38.1-443, as follows:

§ 38.1-4. Annuities means and includes all agreements to make
periodical payments in fixed or variable dollar amounts, or both, where
the making or continuance of all or of some of a series of such payments,
or the amount of any such payment, is dependent upon the continuance
of human life, except payments made under the authority of § 38.1-3.

§ 88.1-188.2. Notwithstanding any inconsistent provision of this
title, the amounts allocated to separate accounts for variable annuities,
pursuant to the provisions of § 38.1-448, may be invested and reinvested
any such msurer, in addition to investments authorized by §§ 38.1-179
and $8.1-217, in the common capital stock of any solvent company, which
13 incorporated under the laws of the United States, or any state thereof,
or the Dominion of Canada, or any province thereof, which shall have patd
common stock dividends in cash for not less than three years preceding
the purchase of such stocks, and where the bonds and other evidences of
indebtedness, if any, and the preferred stock, tf any, of such company are
eligible as investments under the provisions ‘of this title.

No such insurer shall invest in excess of five percent of the assets
held by such insurer in such separate account or accounts in any one issue
of such common capital stock.

§ 88.1-408. Any annuity on a variable basis delivered or issued for
delivery in this State, and any certificate evidencing variable benefits issued
pursuant to any such annuity on a group basis, shall contain a statement
of the essential features of the procedure to be followed by the company
in determining the dollar amount of variable benefits or other contractual
paymerts or values thereunder and shall state in clear terms that such
amount may decrease or increase according to such procedure. Any such
annuity delivered or issued for delivery in this State, and any such cer-
tificate, shall contain on its first page, in a prominent position, a clear
statement that the benefits or other contractual payments or values there-
under are on a variable basis.

§ 38.1-448. (a) Every domestic life insurance company which issues
annuities providing for payments which vary directly according to nvest-
ment experience shall establish one or more separate accounts in connec-
tion with such annuities. All amounts received by the company which are
required by contract to be applied to provide such variable payments shall
be added to the appropriate separate account, and the assets of any such
separate account shall not be chargeable with ‘liabilities arising out of any
other business the company may conduct. Any surplus or deficit which
may arise in any such separate account by virtue of mortality experience
shall be adjusted by withdrawals from or additions to such account so that
the assets of such account shall always equal the assets required to satisfy
the company’s obligations for such variable payments.

(b) A foreign or alien life insurance company authorized to do bust-
ness in this State may be authorized to issue or deliver annuities in this
State providing for payments which vary directly according to investment
rig hak ie: only if authorized to issue such annuities under the laws of
4 micile.

(c) No domestic life insurance company shall be authorized to tssue
such variable annuities, and no foreign or alien life insurance company
shall be authorized to issue or deliver such annuities in this State, untt
such company has satisfied the Commission that its condition and methods
of operation in connection with the issuance of such variable annuities will
nol be such as to render its operation hazardous to the public or to tts
policyholders in this State. In determining the qualification of a company to
assue or deliver such variable annuities in this State, the Commission s
consider, among other things, the history and financial condition of the
company; the character, responsibility, and general fitness of the officers
and directors of the company; and, in the case of a foreign or alien com-
pany, whether the regulation provided by the laws of its domicile provides
a degree of protection to policyholders and the public substantially equal to
that provided by this section and the rules and regulations issued by the
Commission pursuant thereto.

(d) Every life insurance company which issues or delivers such vart-
able annuities in this State shall file with the Commission, in addition to
the annual statement required by § 88.1-159, such other periodic or special
reports as the Commission may prescribe.
_(e) The provisions of this section shall not apply to any contracts
which do not provide for payments which vary directly according to invest-

experience.

(f) The Commission shall have the authority to issue such reasonable
rules and regulations as may be necessary to carry out the purposes of
this section.

(g) Any domestic life insurance company which establishes one or
more separate accounts pursuant to this section, may amend its charter to
provide for special voting rights and procedures for the owners of variable
annuities under such separate account relating to investment policy, invest-
ment advisory services and selection of certified public accountants, in re-
lation to the administration of the assets in any such separate account. This
provision shall not in any way effect existing laws pertaining to the voting
rights of the company’s policyholders.