CHAPTER 92

FORMERLY

HOUSE BILL NO. 120

AS AMENDED BY SENATE AMENDMENTS NO. 1 AND 3

AND HOUSE AMENDMENT NO. 1

AN ACT TO AMEND TITLE 18, BY AMENDING CHAPTERS 11 AND 29 TO INCREASE THE INTEREST RATE USED FOR CALCULATING MINIMUM RESERVES FOR LIFE INSURANCE AND ANNUITY CONTRACTS, UPDATING ANNUITY MORTALITY TABLES FOR COMPUTING SUCH RESERVES, AND INCREASING THE INTEREST RATE USED FOR CALCULATING MINIMUM NONFORFEITURE BENEFITS UNDER LIFE INSURANCE POLICIES.

Be it enacted by the General Assembly of the State of Delaware:

Section 1. Subsection (e), Section 1112, Chapter 11, Title 18, Delaware Code, is amended by striking the first word "The", and by inserting in lieu thereof the following:

Except as otherwise provided in paragraph (B), subsection (b), section 1113 for group annuity and pure endowment contracts, the.

Section 2. Subsection (a), Section 1113, Chapter 11, Title 18, Delaware Code, is amended by inserting after the word "title" and before the period the following:

except as otherwise provided in paragraph (B), subsection (b) of this section for group annuity and pure endowment contracts issued prior to such operative date.

Section 3. The introductory clause of Subsection (b), Section 1113, Chapter 11, Title 18, Delaware Code, is amended to read as follows:

(b) (A) Except as otherwise provided in paragraph (B) of this subsection, the minimum standard for the valuation of all policies and contracts to which this section applies shall be the Commissioners reserve valuation method defined in subsection (c) of this section, 3 ½ % interest, or in the case of policies and contracts, other than annuity and pure endowment contracts, issued on or after the effective date of this amendatory act of 1973 and prior to January 1, 1986, 4% interest, and the following tables:

Section 4. Subsection (b), Section 1113, Chapter 11, Title 18, Delaware Code, is amended by adding a new paragraph to be designated (B) to read as follows:

(B) The minimum standard for the valuation of all individual annuity and pure endowment contracts issued on or after the operative date of this paragraph (B), as defined herein, and for all annuities and pure endowments purchased on or after such operative date under group annuity and pure endowment contracts, shall be the Commissioners reserve valuation method defined in subsection (c) of this section and the following tables and interest rates:

(1) For individual annuity and pure endowment contracts issued prior to January 1, 1986, excluding any disability and accidental death benefits in such contracts—the 1971 Individual Annuity Mortality Table, or any modification of this table approved by the Commissioner, and 6% interest for single premium immediate annuity Contracts, and 4% interest for all other individual annuity and pure endowment contracts.

(2) For individual annuity and pure endowment contracts issued on or after January 1, 1986, excluding any disability and accidental death benefits in such contracts—the 1971 Individual Annuity Mortality Table, or any modification of this table approved by the Commissioner, and 3 ½ % interest.

(3) For all annuities and pure endowments purchased prior to January 1, 1986 under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts—the 1971 Group Annuity Mortality Table, or any modification of this table approved by the Commissioner and 6% interest.

(4) For all annuities and pure endowments purchased on or after January 1, 1986 under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts—the 1971 Group Annuity Mortality Table, or any modification of this table approved by the Commissioner, and 3 ½ % interest.

After the effective date of this amendatory act of 1973, any insurer may file with the Commissioner a written notice of its election to comply with the provisions of this paragraph (B) after a specified date before January 1, 1979, which shall be the operative date of this paragraph for such insurer, provided that an insurer may elect a different operative date for individual annuity and pure endowment contracts from that elected for group annuity and pure endowment contracts. If an insurer makes no such election, the operative date of this paragraph for such insurer shall be January 1, 1979.

Section 5. The first sentence of Subsection (d-1), Section 2929, Chapter 29, Title 18, Delaware Code, is amended to read as follows:

(d-1) In the case of ordinary policies issued on or after the operative date of this subsection, as defined herein, all adjusted premiums and present values referred to in this section shall be calculated on the basis of the Commissioners 1958 Standard Ordinary Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid-up non-forfeiture benefits provided that such rate of interest shall not exceed 3 ½ % per annum except that a rate of interest not exceeding 4% per annum may be used for policies issued on or after the effective date of this amendatory act of 1973 and prior to January 1, 1986 and, provided that for any category of ordinary insurance issued on female risks, adjusted premiums and present values may be calculated according to an age not more than three years younger than the actual age of the insured; provided, however, that in calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1958 Extended Term Insurance Table.

Section 6. The first sentence of Subsection (d-2), Section 2929, Chapter 29, Title 18, Delaware Code, is amended to read as follows:

(d-2) In the case of industrial policies issued on or after the operative date of this subsection, as defined herein, all adjusted premiums and present values referred to in this section shall be calculated on the basis of the Commissioners 1961 Standard Industrial Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits provided that such rate of interest shall not exceed 3 ½ % per annum except that a rate of interest not exceeding 4% per annum may be used for policies issued on or after the effective date of this amendatory act of 1973 and prior to January 1, 1986.

Section 7. Amend Title 18 of the Delaware Code, by adding a new §1113 A to read as follows:

§ 1113 A. Reduction on premiums

Any reduction in minimum reserves effected by any above provision of this Act after June 30, 1973 which results in increased availability to insurance companies of funds for investment or expenditure under this Title shall be applied toward a prorata reduction in premiums for all policyholders of said companies affected by this Act.

The Insurance Commissioner is authorized to promulgate such rules and regulations as necessary to carry this provision into effect.

Approved June 21, 1973.