CSSSHB 184(L&C) am: "An Act relating to individual deferred annuities; and providing for an effective date."
00 CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 184(L&C) am 01 "An Act relating to individual deferred annuities; and providing for an effective date." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. AS 21.45.305(c) is repealed and reenacted to read: 04 (c) The minimum values as specified in (d) - (g) and (i) of this section of any 05 paid-up annuity, cash surrender, or death benefits available under an annuity contract 06 shall be based upon minimum nonforfeiture amounts as defined in this section: 07 (1) The minimum nonforfeiture amount at any time at or before the 08 commencement of any annuity payments shall be equal to an accumulation up to that 09 time at a rate of interest established under (2) of this subsection of the net 10 considerations as defined in this paragraph paid before that time, decreased by the sum 11 of (A) any prior withdrawals from or partial surrenders of the contract accumulated at 12 a rate of interest established under (2) of this subsection; (B) the amount of any 13 indebtedness to the company on the contract, including interest due and accrued; (C) 14 an annual contract charge of $50, accumulated at a rate of interest established under 15 (2) of this subsection; and (D) any premium tax paid by the company for the contract,
01 accumulated at a rate of interest established under (2) of this subsection. The net 02 considerations for a given contract year used to define the minimum nonforfeiture 03 amount shall be an amount equal to 87 1/2 percent of the corresponding gross 04 considerations credited to the contract during that contract year. 05 (2) The interest rate used in determining minimum nonforfeiture 06 amounts shall be an annual rate of interest determined as the lesser of three percent a 07 year or the following, which shall be specified in the contract if the interest rate will be 08 reset: (A) the five-year constant maturity treasury rate reported by the federal reserve 09 as of a date, or average over a period, rounded to the nearest 1/20 of one percent, 10 specified in the contract not more than 15 months before the contract issue date or 11 redetermination date under (D) of this paragraph; (B) reduced by 125 basis points; (C) 12 where the resulting interest rate is not less than one percent; and (D) the interest rate 13 must apply for an initial period and may be redetermined for additional periods; the 14 redetermination date, basis and period, if any, must be stated in the contract; the basis 15 is the date or average over a specified period that produces the value of the five-year 16 constant maturity treasury rate to be used at each redetermination date. 17 (3) During the period or term that a contract provides substantive 18 participation in an equity indexed benefit, the contract may increase the reduction 19 described in (2)(B) of this subsection by up to an additional 100 basis points to reflect 20 the value of the equity index benefit. The present value at the contract issue date, and 21 at each following redetermination date, of the additional reduction may not exceed the 22 market value of the benefit. The director may require a demonstration of the present 23 value of the additional reduction and may disallow or limit the additional reduction, if 24 the demonstration does not prove that the present value of the additional reduction 25 does not exceed the market value of the benefit. 26 (4) The director may by regulation provide for further adjustments to 27 the calculation of minimum nonforfeiture amounts for contracts that provide 28 substantive participation in an equity index benefit or for other contracts that the 29 director determines require adjustment. 30 * Sec. 2. The uncodified law of the State of Alaska is amended by adding a new section to 31 read:
01 TRANSITION PERIOD FOR ANNUITY CONTRACTS; APPLICABILITY OF 02 ACT. (a) During the period that begins on the effective date of this Act and ends on the day 03 before the date that is two years after the effective date of this Act, an insurer may elect to 04 comply with this Act for an annuity contract entered into on or after the effective date of this 05 Act. 06 (b) All annuity contracts entered into on or after the date that is two years after the 07 effective date of this Act are subject to this Act. 08 (c) This Act does not apply to an annuity contract entered into before the effective 09 date of this Act, unless provided for by the provisions of that contract. 10 * Sec. 3. This Act takes effect July 1, 2003.