Delaware Code Title 18 Sec. 4976 – Closed block of business for participating life policies
(a) A plan that is adopted by a mutual company that is a life insurance company which issues participating life policies shall provide that participating life policies in force on the effective date of the conversion shall be operated by the converted stock company for dividend purposes as a closed block of participating business, except that any and all classes of group participating policies may be excluded from the closed block.
Terms Used In Delaware Code Title 18 Sec. 4976
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Commissioner: means the Insurance Commissioner of this State. See Delaware Code Title 18 Sec. 4972
- Converted stock company: means a stock insurer that converted from a mutual insurer under this chapter, or under the laws of any other jurisdiction, or any successor thereto provided that not less than a majority of the shares of voting stock of such successor are owned by a mutual holding company. See Delaware Code Title 18 Sec. 4972
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Mutual company: means a mutual insurer that is seeking to convert to a stock insurer under this chapter, including a captive insurance company (notwithstanding § 6916 of this title) that is incorporated as a nonstock corporation and including a foreign mutual insurer that has applied to redomesticate to this State with an intent to file an application to convert from mutual to stock form under this chapter. See Delaware Code Title 18 Sec. 4972
- plan: means a plan adopted by a mutual company's governing body to convert the mutual company into a stock company in accordance with the requirements of this chapter. See Delaware Code Title 18 Sec. 4972
- Stock company: means a stock insurer that meets all of the current requirements for admission to do business as a domestic Delaware insurer. See Delaware Code Title 18 Sec. 4972
- Year: means a calendar year, and is equivalent to the words "year of our Lord. See Delaware Code Title 1 Sec. 302
(b) The plan shall provide that sufficient assets of the mutual company shall be allocated for the benefit of the closed block of business so that the assets, together with the revenue from the closed block of business, are sufficient to support the closed block, including, but not limited to, the payment of claims, expenses, taxes, and any dividends that are provided for under the terms of the participating policies, with appropriate adjustments in the dividends for experience changes. The plan shall be accompanied by an opinion of a qualified actuary, or an appointed actuary, who meets the standards set forth in the insurance laws or regulations of this State for the submission of actuarial opinions as to the adequacy of reserves or assets. The opinion shall relate to the adequacy of the assets allocated in support of the closed block of business. The actuarial opinion shall be based on methods of analysis deemed appropriate for those purposes by the Actuarial Standards Board.
(c) The amount of assets allocated for the benefit of the closed block shall be based upon the mutual life insurance company’s last annual statement, updated to the last day of the quarter immediately preceding the effective date of the conversion.
(d) The converted stock company shall keep a separate accounting for the closed block and shall make and include in the annual statement to be filed with the Commissioner each year a separate statement showing the gains, losses, and expenses properly attributable to the closed block.
(e) The assets and liabilities allocated to the closed block may be periodically reviewed by the Commissioner or the Commissioner’s designee. The converted stock company shall bear the cost of any such review. If, as a result of such review, the Commissioner determines that the assets allocated to the closed block are insufficient to support the remaining policies in the closed block, the Commissioner may issue an order directing the converted stock company to allocate additional assets to the closed block sufficient to support the remaining policies in the closed block and the converted stock company shall comply with such order within 30 days of the date thereof. If, as a result of such review, or as a result of a review initiated by the converted stock company and accepted by the Commissioner, assets allocated to the closed block are in excess of the amount necessary to support the remaining policies, then upon application made to the Commissioner by the converted stock company, the Commissioner may issue an order permitting such excess assets in the closed block to revert to the benefit of the converted stock company.
(f) The Commissioner may waive the requirement for establishing a closed block of business if, in the Commissioner’s discretion, it is in the best interests of policyholders to do so. The Commissioner may waive from inclusion in the closed block of participating policies those participating policies for which there is no expectation of dividends being paid if, in the Commissioner’s discretion, it is fair and equitable to do so.