N.J. Stat. tit. 17B, ch. 28

in effect

N.J. Stat. § 17B:28-1 Definition

When used in this chapter, the following terms shall have the following respective meanings: a. "Separate account contract" means any contract issued by an insurer under which amount (including without limitation proceeds applied under optional modes of settlement or under dividend options) are allocated by the insurer to one or more separate accounts; b. "Separate account" means any segregated portfolio of investments or designated account of an insurer established pursuant to this chapter; c. "Contract on a variable basis" means any separate account contract providing for the dollar amount of life insurance or annuity benefits or other contractual payments or values thereunder to vary so as to reflect investment results of one or more separate accounts in which amounts with respect to any such contracts shall have been placed; and d. "Variable contract account" means any such separate account. L.1971, c. 144, s. 17B:28-1. Amended by L.1977, c. 37, s. 1, eff. March 10, 1977.

N.J. Stat. § 17B:28-2 Qualification of insurer

No present or future domestic insurer shall undertake the issuance of any contract on a variable basis, and no foreign or alien insurer heretofore or hereafter admitted to transact in this State any class or classes of insurance authorized by this code shall undertake the issuance or delivery of any contract on a variable basis within this State, unless said insurer shall have the authority to write life insurance or annuities or both and until said insurer has satisfied the commissioner that it has been engaged in transacting the business of life insurance for a period of at least 2 years and that its condition or methods of operation in connection with the issuance of such contracts on a variable basis will not be such as would render its operation hazardous to the public or its policyholders in this State. In determining the qualification of an insurer requesting authority to issue or deliver contracts on a variable basis within this State, the commissioner will consider, among other things, the history of the insurer; the character, responsibility and general fitness of the officers and directors of the insurer; and the regulation of such insurer by its jurisdiction of domicile. If the insurer is a subsidiary of an authorized insurer, or affiliated with such authorized insurer by common management or ownership, it may be deemed by the commissioner to have satisfied the aforementioned provisions if either it or such authorized insurer satisfies said provisions. L.1971, c. 144, s. 17B:28-2.

N.J. Stat. § 17B:28-3 Certificate to sell

17B:28-3. a. No agent or solicitor employed by an agent heretofore or hereafter licensed shall be authorized to sell or act or aid in any manner in the negotiation of a contract on a variable basis until he has received a certificate to sell contracts on a variable basis from the commissioner, which certificate shall not be issued by the commissioner until such agent or solicitor has qualified by personal examination, to the satisfaction of the commissioner, as to his trustworthiness and competence to act as such agent or solicitor. b. Before a first-time applicant for a license to solicit and negotiate contracts on a variable basis shall be admitted to the examination, the applicant shall be required to concurrently hold an agent's license granting authority to solicit and negotiate contracts of life insurance in this State or hold a license to act as a solicitor for such an agent. Application for a license must be made on such forms as the commissioner may prescribe. c. The examination fee shall be $25.00 for each examination scheduled and such examination fee shall not be returned for any reason. The licensee fee shall be $25.00. A renewal license shall be issued biennially subject to the payment of the renewal license fee as required by this section and upon request of the insurer. Licenses issued in accordance with this section shall expire on April 30 of each odd numbered year. d. No written examination shall be required of: (1) An applicant who is the holder of a valid agent's or solicitor's license issued pursuant to this section by the commissioner or an applicant for a renewal of such license, except in a case where the commissioner has good and sufficient cause to believe that the applicant for renewal has demonstrated incompetence in the conduct of his business as such agent or solicitor to the detriment of the public; (2) An applicant whose license to do business as an agent or solicitor issued pursuant to this section has expired less than 3 years prior to the date of application. If the applicant has permitted his license to lapse for a period of more than 3 years he must submit to and pass an examination in the same manner as a new applicant, except where the applicant is a veteran who meets the requirements of subsection (4) hereunder, when no re-examination shall be required; (3) An applicant whose previous license issued pursuant to this section has been revoked or suspended; provided this examination exemption is only at the discretion of the commissioner; (4) An applicant who is a citizen of New Jersey and has served in the Armed Forces of the United States, including a citizen of New Jersey who served as a member of the American Merchant Marine during World War II and is declared by the United States Department of Defense to be eligible for federal veterans' benefits, and has been honorably discharged or released under conditions other than dishonorable and was the holder at any time of a license in New Jersey which authorized the applicant to solicit or negotiate contracts on a variable basis; (5) Any individual seeking a variable license who, in the discretion of the commissioner, has satisfied the requirements and successfully passed all the examinations of the National Association of Securities Dealers, required to secure a registration to sell securities by the National Association of Securities Dealers in compliance and conformity with the rules and regulations promulgated by the Federal Securities and Exchange Commission. e. The commissioner may issue a nonresident agent's or solicitor's license upon the application of a nonresident who is duly licensed under the law of the state of his residence or domicile to act as an agent or solicitor for contracts on a variable basis if said state does not prohibit residents of this State from acting as nonresident agents or solicitors therein, when: (1) The applicant has shown by a statement from the proper official of the state in which he has his resident license that he is authorized to do business as an agent or solicitor in such state with authority for which the applicant is to be licensed under the New Jersey nonresident license. (2) The applicant has paid the annual license fee as provided for in this section. (3) The applicant has no place of business in this State. (4) The commissioner may enter into reciprocal agreements with the appropriate supervisory insurance official of any other state waiving the written examination of any applicant resident in such other state, provided: (a) A written examination is required of applicants for an agent's or solicitor's license in such other state. (b) The appropriate supervisory insurance official of such other state certifies that the applicant holds a currently valid license as an agent or solicitor in such other state, and either, (i) Passed a written examination, (ii) Was the holder of an agent's or solicitor's license prior to the time a written examination was required, or (iii) Was not required to take such examination by reason of provisions of the applicable agent's or solicitor's licensing law. (c) That in such other state, a resident of this State is privileged to procure such an agent's or solicitor's license upon the foregoing conditions and without discrimination as to fees or otherwise in favor of residents of such other state. If the laws of another state require the sharing of commissions with resident agents or solicitors of that state on applications for contracts on a variable basis written by nonresident agent or solicitors, then the same provision shall apply when resident agents or solicitors of that state, licensed as nonresident agents or solicitors of New Jersey write applications for contracts on a variable basis in this State. L.1971, c.144; amended 1977,c.37,s.2; 1979,c.312,s.7; 1981,c.355,s.1; 1983,c.533,s.21; 1991,c.389,s.1.

N.J. Stat. § 17B:28-4 Required statements; procedure

Any contract on a variable basis delivered or issued for delivery in this State, and any certificate evidencing variable benefits issued pursuant to any such contract on a group basis, shall contain a statement of the essential features of the procedure to be followed by the insurer in determining the dollar amount of variable benefits or other contractual payments or values thereunder and shall state in clear terms that such amount may decrease or increase according to such procedure. Any such contract delivered or issued for delivery in this State, and any such certificate, shall contain on its first page, in a prominent position, a clear statement that the benefits or other contractual payments or values thereunder are on a variable basis. L.1971, c. 144, s. 17B:28-4.

N.J. Stat. § 17B:28-5 Form of contract

17B:28-5. (a) No contract on a variable basis shall be delivered or issued for delivery in this State by any insurer until a copy of the form (and, in the case of a contract on a group basis, the form of any certificate evidencing variable benefits issued pursuant thereto) and any form of application for such contract shall have been filed with the commissioner in accordance with the provisions of section 16 of P.L.1995, c.73 (C.17B:25-18.2). The commissioner shall disapprove or withdraw approval of any contract form, application or certificate if: (i) The form contains provisions which are unjust, unfair, inequitable, ambiguous, misleading, likely to result in misrepresentation or contrary to law, or (ii) Sales of contracts in such form are being solicited by any means of advertising, communication or dissemination of information which involves misleading or inadequate description of the provisions of the contract. He shall notify the insurer, specifying particulars, of his disapproval. It shall be unlawful for such insurer thereafter to issue any contract or certificate thereunder or use any application in the form so disapproved unless it is resubmitted and approved in accordance with the provisions of subsections b., c., and d. of section 16 of P.L.1995, c.73 (C.17B:25-18.2). Such disapproval of the commissioner shall be subject to review in accordance with the procedure described in the "Administrative Procedure Act" P.L.1968, c.410 (C.52:14B-1 et seq.) and any rules adopted thereunder. Any such form which is filed by the commissioner or deemed filed may be so delivered or issued for delivery until such time as any subsequent withdrawal of the filing by the commissioner, following an opportunity for a hearing held in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) and any rules adopted thereunder, becomes final in accordance therewith. (b) Illustrations of benefits payable under any contract on a variable basis shall not involve projections of past investment experience into the future and shall conform with reasonable regulations promulgated by the commissioner. (c) No individual annuity contract on a variable basis shall be delivered or issued for delivery in this State unless it contains in substance the following provisions: (i) That, in the event of default in the payment of any consideration beyond the period of grace allowed by the contract for the payment thereof, the insurer will make payment of the value of the contract, in accordance with a plan provided by the contract, commencing not later than the date contractual payments by the insurer were otherwise to have commenced in accordance with the contract; (ii) That, upon request of the contract holder received by the insurer at least 4 months prior to the date contractual payments by the insurer were otherwise to have commenced, the insurer will make payment of the value of the contract in accordance with a plan provided by the contract and selected by the contract holder, commencing as of the first day of the first month which is at least 4 months after the date of receipt of such request, unless another date of commencement is requested by the contract holder and agreed to by the insurer; (iii) That the insurer will mail to the contract holder at least once in each contract year after the first, at his last address known to the insurer, a report in a form approved by the commissioner, which shall include a statement of the number of units credited to such contract and the dollar value of a unit as of a date not more than 2 months previous to the date of mailing and a statement in a form and of a date approved by the commissioner of the investments held in the variable contract account designated in such contract. (d) Any individual contract on a variable basis delivered or issued for delivery in this State shall stipulate the investment increment factors to be used in computing the dollar amount of variable benefits or other contractual payments or values thereunder, and shall guarantee that expense and mortality results shall not adversely affect such dollar amounts, except that such guarantee need not apply to any investment management fee which is subject to change with the approval by vote of the persons having beneficial interests in the variable contract account in which such contract participates. The mortality and investment increment factors used in computing the dollar amount of variable benefits or other contractual payments or values under an individual annuity contract on a variable basis shall not produce a larger initial payment than would be produced by the use of the mortality table or tables specified in N.J.S. 17B:19-8 (the Standard Valuation Law), as amended, and as such provision may be amended from time to time, as acceptable minimum mortality standards for the valuation of the reserve liabilities of individual annuity and pure endowment contracts, and an annual investment increment assumption of 5%. Any group contract on a variable basis delivered or issued for delivery in the State shall stipulate the expense, mortality and investment increment factors to be used in computing the dollar amount payable with respect to a unit of variable benefits purchased thereunder and shall guarantee that expense and mortality results shall not adversely affect such dollar amounts, except that such guarantee need not apply to any investment management fee which is subject to change with the approval by vote of the persons having beneficial interests in the variable contract account in which such contract participates. "Expense," as used in this subsection (d), may exclude some or all taxes, as stipulated in the contract. (e) (Deleted by amendment). L.1971, c.144; amended 1977,c.37,s.3; 1995,c.73,s.22.

N.J. Stat. § 17B:28-6 Administration

Any insurer maintaining one or more separate accounts shall submit annually to the commissioner a report of the business of its separate accounts. Such report shall be made either by a separate annual statement for such business or by suitable additions to such insurer's regular annual statement, in either case on a form prescribed by the commissioner, and shall include details as to all of the income, disbursements, assets and liability items associated with the separate accounts. The commissioner shall make a separate valuation of the assets of the separate accounts and a copy of such valuation shall be filed in the commissioner's office as a public document. Such valuation shall be in accordance with section 17B:28-10. The commissioner shall further prescribe by regulation the steps to be taken by the insurer in disposing of those holdings which at any time subsequent to purchase fail to meet the standards and regulations for new investments. L.1971, c. 144, s. 17B:28-6. Amended by L.1977, c. 37, s. 4, eff. March 10, 1977.

N.J. Stat. § 17B:28-7 Separate accounts; approval by commissioner

17B:28-7. Separate accounts; approval by commissioner. Any present or future domestic insurer shall have authority to establish and operate one or more separate accounts and to issue separate account contracts, whether or not contracts on a variable basis, with the approval of the commissioner, and the issuance or delivery of such contracts in this State by any foreign or alien insurer shall be subject to like approval. The commissioner, in granting or withholding any such approval, shall consider in addition to the matters referred to in N.J.S.17B:28-2, 17B:28-5, and 17B:28-15, if applicable, the following: a. The type or types of contracts the funds from which will be placed in the separate accounts; b. The extent to which, if any, the dollar amount of benefits or other contractual payments or values under such contracts will be guaranteed; c. The investment limitations that will be applicable to the separate account; d. The manner of valuing the assets of the account and the method or methods to be used to compute the liabilities arising from the contracts described in subsection a. of this section; e. If such contracts are annuity contracts, whether or not they will be participating; and f. Such other matters as the commissioner shall deem relevant. Any such approval by the commissioner may be subject to such conditions as he may impose as being necessary for the protection of the public or of such insurer's policyholders. Any approval by the commissioner pursuant to this section may be granted with respect to a single separate account or a class of separate accounts having common characteristics. For any separate account established and maintained solely for one or more employer group contracts sold to fund an employee benefit plan, which contracts constitute group contracts for the purposes of paragraph (v) of subsection a. of N.J.S.17B:28-9, an insurer may establish and maintain such account 45 days after filing its request for the commissioner's approval, unless within that time the commissioner shall have approved or disapproved the account, provided that neither the insurer nor any such contract shall provide a guaranty, including any index guaranty, of the dollar amount of benefits or other contractual payments or values under such contract. Any disapproval shall state in writing the grounds therefor in such detail as reasonable to inform the insurer thereof. The disapproval by the commissioner of any such account may be on the ground that the account is contrary to law or the public policy of this State. Any disapproval shall be subject to review in accordance with the procedure set forth in the "Administrative Procedure Act," P.L.1968, C.410 (C.52:14B-1 et seq.), and any rules or regulations adopted thereunder. L.1971, c.144; amended 1977, c.37, s.5; 1989,c.267,s.4.

N.J. Stat. § 17B:28-8 Amounts placed in account; liabilities

Except as may be otherwise specifically provided by the contract, all amounts with respect to any contract on a variable basis shall be placed in the variable contract account designated in such contract, and all liabilities on any such contract shall be set up in said account. L.1971, c. 144, s. 17B:28-8. Amended by L.1977, c. 37, s. 6, eff. March 10, 1977.

N.J. Stat. § 17B:28-9 Investment of assets; eligibility; definition

17B:28-9. Investment of assets; eligibility; definition. a. The assets held in a separate account, or any part thereof, may be invested in: (i) Common stock or shares of any investment company specified in the contract or contracts participating in such separate account, and registered under the Investment Company Act of 1940, whether or not such stock or shares satisfy the dividend or earnings history requirements now or hereafter contained in the provisions of this title that regulate investments by domestic insurers; provided that at the time of the first purchase of such stock or shares of any such investment company, the insurer which maintains such account, or a subsidiary or affiliate of such insurer, shall be the investment manager or investment adviser of such investment company and, as long as such insurer which maintains such account, or any subsidiary or affiliate of such insurer, shall continue as such investment manager or investment adviser, the investments acquired by such investment company shall be such as would be eligible for investment of separate account assets by domestic insurers under the provisions of this section excluding this paragraph (i); (ii) Other investments made eligible for investment by domestic insurers by the provisions of this title that regulate investments by domestic insurers, except for investments made eligible by the provision of chapter 20 of this title which permits a domestic insurer to make loans or investments not otherwise expressly qualified or permitted up to 5% of total admitted assets, as such provision may be amended from time to time, or any similar or superseding provision corresponding in substance thereto; (iii) Investments authorized, specifically or by classes or otherwise, by the commissioner as appropriate to the nature and purpose of such separate account; and (iv) Investments not otherwise eligible under the preceding clauses of this subsection, provided that at the time of making any such investment, and immediately after giving effect thereto, the aggregate cost of all investments held in such separate account pursuant to this paragraph (iv) shall not exceed 5% of the aggregate market value of the assets held in such separate account; provided that (A) any common stock or shares, other than common stock or shares referred to in paragraph (i) of this subsection issued by an open-end investment company, shall be (1) common stock or shares which are listed or admitted to trading on a securities exchange in the United States of America or Canada, or (2) common stock or shares which are included on the National Association of Securities Dealers' national price listings of "over-the-counter" securities, or (3) other common stock or shares which the commissioner shall have determined are publicly held and traded and as to which market quotations shall be available; (B) the quantitative investment limitations now or hereafter contained in this title regulating investments by domestic insurers shall not be applicable to investments for separate account, subject to the qualification that the provision contained in this title limiting the percentage of voting stock of any one corporation that may be purchased or acquired by a domestic insurer, as such provision may be amended from time to time, or any similar or superseding provision corresponding in substance thereto, shall apply (subject to the provisions of N.J.S.17B:20-3 as such provisions may be amended from time to time, or any similar or superseding provisions corresponding in substance thereto), with respect to the aggregate of the voting stock of any one corporation held in all accounts of such insurer, except for all such stock that may be voted at the direction of a person or persons, other than such insurer or any subsidiary or affiliate of such insurer; and provided further that, subject to the next succeeding paragraph of this subsection, no domestic insurer shall purchase for any separate account any security (other than common stock or shares referred to in paragraph (i) of this subsection issued by an open-end investment company) of any corporation, if after such purchase more than 10% of the market value of the assets of such separate account would be invested in the securities of such corporation. (v) Notwithstanding the foregoing provisions of this section or any other provision of law, a domestic insurer may invest the assets, or any part thereof, held in a separate account established and maintained solely for one or more group contracts in any investment or investments authorized by the contract or contracts participating in such account, subject only to subparagraph (B) of paragraph (iv) of this subsection relating to the percentage of voting stock of any one corporation that may be purchased or acquired. For the purpose of this paragraph, a group contract shall not include, (1) a contract which provides benefits to individuals based upon the investment results of such an account unless such contract implements a plan (a) which covers at least 100 individuals at the time of execution of such contract and (b) under which, if the crediting to such an account of the contributions made by any individual would affect his benefits under the plan, no portion of his contributions in excess of 50% is so credited, unless he is offered an alternative to having such portion so credited or, (2) except with the consent of the commissioner, a contract the holder of which is an association of individuals or the representative thereof. Except as otherwise provided in this subsection, the investments held in the separate accounts of any domestic insurer shall be disregarded in determining whether the other investments of such insurer comply with the provisions of this title that regulate investments by domestic insurers as such provisions may be amended from time to time, or any similar or superseding provisions corresponding in substance thereto. b. Notwithstanding any other provision of law, a domestic insurer may, with respect to any separate account or any portion thereof (i) Exercise any voting rights of any stock or shares in accordance with instructions from the person or persons specified in, or designated pursuant to, the contract or contracts participating in such account, or (ii) Establish a committee for such account, the members of which may be directors or officers or other employees of such insurer, or persons having no such relationship to such insurer, or any combination thereof, who may be elected to such membership by the vote of the persons having the beneficial interests in such account ratably according to their respective interests in such account or in such other manner as the insurer shall deem appropriate. Such committee may have the power, which may be exercisable alone or in conjunction with others, or which may be delegated to such insurer or any other person, as investment manager or investment adviser, to authorize purchases and sales of investments for such account and to take such other action with respect to account investments as it shall deem appropriate, provided that as long as such insurer or any subsidiary or affiliate of such insurer shall be the investment manager or investment adviser of such account, the investments of such account shall be eligible under the provisions of subsection a. of this section. Such insurer may establish such a committee for only a portion of a separate account, and its members may be similarly elected. Any such committee for only a portion of a separate account may be given the further power to require the subdivision of such account into two accounts so that the portion with respect to which such committee shall be acting shall constitute a separate account. If such committee shall so require, the insurer shall segregate from the account being so subdivided a portion of the assets held with respect to the reserve liabilities of such account. Such portion shall be in the same proportion to the total of such asset as the reserve liability for the portion of the account with respect to which such committee is acting bears to the total reserve liability of such account; and notwithstanding any other provision of law, the assets so segregated shall be transferred to a separate account with respect to which such committee shall act. c. The investments held in a separate account and the liabilities chargeable against it shall at all times be clearly identifiable and distinguishable from the other investments and liabilities of the insurer. To the extent provided in the applicable contract or contracts, assets held in a separate account shall not be chargeable with liabilities arising out of any other business of the corporation. No sale, transfer or exchange of investments may be made between a separate account and any other investment account of the insurer, except with the prior consent of the commissioner, and no investments held in a separate account, other than an account of the kind described in paragraph (v) of subsection a. of this section, shall be pledged or transferred as collateral for a loan. d. The term "Investment Company Act of 1940" as used in this section shall mean an act of Congress approved August 22, 1940 entitled "Investment Company Act of 1940" as amended from time to time, or any similar statute enacted in substitution therefor. L.1971, c.144; amended 1977, c.37, s.7; 1989,c.267,s.5.

N.J. Stat. § 17B:28-10 Valuation of assets

Except as the commissioner may require or permit a different basis of valuation, the valuation of separate account assets for all purposes, including annual reports of the insurer to the commissioner, shall be determined in accordance with the market value of such assets notwithstanding the application of other valuation methods to assets of the insurer other than the assets of separate accounts. If there shall be no readily available market for any such assets, their market value may be determined by reference to opinions or estimates based upon reasonably current transactions in similar investments with such adjustments, if any, as shall be deemed appropriate to take into account any dissimilarities in the investment being valued, or such other method as shall reflect what a willing buyer, under no pressure to buy, would pay a willing seller, under no pressure to sell, for such investment. The net asset value of common stock or shares of any investment company which is an open-end company shall be deemed to be the market value thereof. Such valuation may be made as of such valuation dates as the insurer shall establish from time to time, except as otherwise required for such annual reports to the commissioner. L.1971, c. 144, s. 17B:28-10. Amended by L.1977, c. 37, s. 8, eff. March 10, 1977.

N.J. Stat. § 17B:28-11 Reserve liability

The reserve liability for contracts on a variable basis shall be established by the commissioner pursuant to the requirements of section 17B:19-8 (the Standard Valuation Law) in accordance with actuarial procedures that recognize the variable nature of the benefits provided. L.1971, c. 144, s. 17B:28-11.

N.J. Stat. § 17B:28-12 Annuities

Any insurer which establishes one or more variable contract accounts and issues variable annuity contracts may in its discretion, but need not, require in any case the purchase of annuities which provide for benefits of predetermined dollar amount in specified proportions in combination with the purchase of annuities providing for benefits of variable dollar amount. L.1971, c. 144, s. 17B:28-12.

N.J. Stat. § 17B:28-14 Regulation of separate account contracts, insurers issuing the same and sales agents

The commissioner shall have the sole and exclusive authority to regulate the issuance and sale of separate account contracts; and such contracts, the insurers which issue them and the agents, solicitors or other persons who sell them shall not be subject to the Uniform Securities Law (1967) (P.L.1967, c. 93) as amended or supplemented, in the issuance or sale of such contracts. L.1971, c. 144, s. 17B:28-14. Amended by L.1977, c. 37, s. 10, eff. March 10, 1977; L.1981, c. 355, s. 2.

N.J. Stat. § 17B:28-15 Application to separate accounts and separate account contracts of Title 17B; required provisions for variable life insurance contracts

Except for N.J.S. 17B:25-3, 17B:25-8, 17B:25-9, 17B:25-13, 17B:25-19 and 17B:27-11, in the case of a variable life insurance policy and except as otherwise provided in this act, all pertinent provisions of Title 17B of the New Jersey Statutes 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 loan, grace, reinstatement and nonforfeiture provisions acceptable to the commissioner. 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 commissioner shall have the sole authority to issue such reasonable rules and regulations as may be appropriate to carry out the purposes and provisions of this act. L.1977, c. 37, s. 11, eff. March 10, 1977.

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