Section 2528 - Separate Account or AccountsA domestic insurer issuing variable contracts shall establish one or more separate accounts pursuant to Section 10506 of the Insurance Code, subject to the following provisions:
(a) Except as may be provided with respect to reserves for guaranteed benefits and funds referred to in Paragraph (b), (i) amounts allocated to any separate account and accumulations thereon may be invested and reinvested without regard to any requirements or limitations prescribed by the laws of this State governing the investments of life insurance companies and (ii) 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 company.(b) Reserves for (i) benefits guaranteed as to dollar amount and duration and(ii) funds guaranteed as to principal amount or stated rate of interest may be maintained in a separate account if a portion of the assets of such separate account at least equal to such reserve liability is invested in accordance with the laws and regulations of this State governing the investments of life insurance companies. Such portion of the assets also shall not be taken into account in applying the investment limitations otherwise applicable to the investments of the company. If a variable contract includes incidental minimum guarantees as referred to in Section 2530(d) (3), this paragraph shall apply only to the reserve for any excess of such minimum guarantees over the reserves for the benefits that would be payable under the contract if there were no such minimum guarantees.(c) With respect to 75% of the market value of the total assets in a separate account no insurer shall purchase or otherwise acquire the securities of any insurer, other than securities issued or guaranteed as to principal or interest by the United States, if immediately after such purchase or acquisition the market value of such investment, together with prior investments of such separate account in such security taken at market, would exceed 10% of the market value of the assets of said separate account; provided, however, that the Commissioner may waive such limitation if, in his opinion, such waiver will not render the operation of such separate account hazardous to the public or the policyholders in this State.(d) Unless otherwise permitted by law or approved by the Commissioner, no insurer shall purchase or otherwise acquire for its separate accounts the voting securities of any issuer if as a result of such acquisition the insurance company and its separate accounts, in the aggregate, will own more than 10% of the total issued and outstanding voting securities of such issuer; provided, that the foregoing shall not apply with respect to securities held in separate accounts, the voting rights in which are exercisable only in accordance with instructions from persons having interests in such accounts.(e) The same separate account may not be used for both variable annuities and variable life insurance.(f) The limitations provided in Paragraphs (c), (d), and (e) above shall not apply to the investment with respect to a separate account in the securities of an investment company registered under the Investment Company Act of 1940, Section 1, et seq., Title 15, USC, provided that the investments of such investment company comply in substance with Paragraphs (c) and (d) hereof.(g) 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 benefits and funds referred to in clauses (i) and (ii) of Paragraph (b) shall be valued in accordance with the rules otherwise applicable to the insurer's assets.(h) If and to the extent so provided under the applicable contacts, 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.(i) Notwithstanding any other provisions of law an insurer may (1) with respect to any separate account registered with the Securities and Exchange Commission as a unit investment trust exercise voting rights in connection with any securities of a regulated investment company registered under the Investment Company Act of 1940 and held in such separate accounts in accordance with instructions from persons having interest in such accounts ratably as determined by the company, or(2) with respect to any separate account registered with the Securities and Exchange Commission as a management investment company, establish for such account a committee, board, or other body, the members of which may or may not be otherwise affiliated with such company and may be elected to such membership by the vote of persons having interests in such account ratably as determined by the company. Such committee, board or other body may have the power, exercisable alone or in conjunction with others to manage such separate account and the investment of its assets.(j) 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 one 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 (i) by a transfer of cash, or (ii) by a transfer of securities having a valuation which could be readily determined in the market place, provided that such transfer of securities is approved by the Commissioner. The Commissioner may authorize other transfers among such accounts if, in his opinion, such transfers would not be inequitable.(k) The insurer shall maintain in each such separate account assets with a value at least equal to the reserves and other contract liabilities with respect to such account, except as may otherwise be approved by the Commissioner.(l) The provisions of Sections 1101 through 1106 of the Insurance Code relating to conflicts in interest of officers and directors and other persons with authority in the management of the insurer's funds shall, in substance and insofar as they are reasonably applicable, apply to the investments of separate accounts and to members of any separate account's committee, board or body who have any function in relation to the investment of the account assets. No officer or director of such insurer nor any member of the committee, board or body of a separate account shall receive directly or indirectly any commission or any other compensation with respect to the purchase or sale of assets of such separate account.Cal. Code Regs. Tit. 10, § 2528
1. Amendment of subsections (i) and (l) filed 7-19-72; effective thirtieth day thereafter (Register 72, No. 30). 1. Amendment of subsections (i) and (l) filed 7-19-72; effective thirtieth day thereafter (Register 72, No. 30).