Sec.38a-88-14. Definitions

As used in sections 38a-88-13 to 38a-88-19, inclusive, of the Regulations of Connecticut State Agencies:

(1) “Actuarial method” means the methodology used to determine the required level of primary security, as described in section 38a-88-15 of the Regulations of Connecticut State Agencies.

(2) "Attained-age-based yearly renewable term life insurance policies" means policies where:

(A) The premium rates, on both the initial current premium scale and the guaranteed maximum premium scale, are based upon the attained age of the insured such that the rate for any given policy at a given attained age of the insured is independent of the year the policy was issued; and

(B) The premium rates, on both the initial current premium scale and the guaranteed maximum premium scale, are the same as the premium rates for policies covering all insured of the same sex, risk class, plan of insurance and attained age.

(3) "Covered policies" means the following: Subject to the exemptions described in section 38a-88-17 of the Regulations of Connecticut State Agencies, those policies, other than grandfathered policies, of the following policy types:

(A) Life insurance policies with guaranteed nonlevel gross premiums and/or guaranteed nonlevel benefits, except for flexible premium universal life insurance policies; or

(B) Flexible premium universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period.

(4) "Commissioner" means the Insurance Commissioner of the State of Connecticut.

(5) "Grandfathered policies" means policies of the types described in subdivisions (3)(A) and (3)(B) of this section that were issued prior to January 1, 2015 and ceded, as of December 31, 2014, as part of a reinsurance contract that would not have met one of the exemptions set forth in section 38a-88-17 of the Regulations of Connecticut State Agencies had that section then been in effect.

(6) "NAIC" means the National Association of Insurance Commissioners.

(7) "Non-covered policies" means any policy that does not meet the definition of covered policies, including grandfathered policies.

(8) "n-year renewable term life insurance policies" means policies that meet the following conditions:

(A) The policy consists of a series of n-year periods, including the first period and all renewal periods, where n is the same for each period, except that for the final renewal period, n may be truncated or extended to reach the expiry age, provided that this final renewal period is less than ten (10) years and less than twice the size of the earlier n-year periods, and for each period, the premium rates on both the initial current premium scale and the guaranteed maximum premium scale are level;

(B) The guaranteed gross premiums in all n-year periods are not less than the corresponding net premiums based upon the 1980 Commissioners' Standard Ordinary Table with or without the ten (10) year select mortality factors; and

(C) There are no cash surrender values in any policy year.

(9) "Required level of primary security" means the dollar amount determined by applying the actuarial method to the risks ceded with respect to covered policies, but not more than the total reserve ceded.

(10) "Primary security" means the following forms of security:

(A) Cash meeting the requirements of section 38a-86 of the Connecticut General Statutes;

(B) Securities listed by the NAIC's Securities Valuation Office meeting the requirements of section 38a-86 of the Connecticut General Statutes, but excluding any synthetic letter of credit, contingent note, credit-linked note or other similar security that operates in a manner similar to a letter of credit, and excluding any securities issued by the ceding insurer or any of its affiliates; and

(C) For security held in connection with funds-withheld and modified coinsurance reinsurance treaties:

(i) Commercial loans in good standing of CM3 quality or higher;

(ii) Policy loans; and

(iii) Derivatives acquired in the normal course and used to support and hedge liabilities pertaining to the actual risks in the policies ceded pursuant to the reinsurance contract.

(11) "Other security" means any security acceptable to the Commissioner other than security meeting the definition of primary security.

(12) "Valuation manual" means the valuation manual adopted by the NAIC described in Section 11B(1) of the Standard Valuation Law, with all amendments adopted by the NAIC that are effective for the financial statement date on which credit for reinsurance is claimed.

(13) "VM-20" means "Requirements for Principle-Based Reserves for Life Products", including all relevant definitions, from the valuation manual.

(Effective November 6, 2019)