Bill No.: SF0019 Drafter: LGC

LSO No.: 06LSO-0146 Effective Date: 7/1/2006

Enrolled Act No.: SEA0003

Chapter No.: 6

Prime Sponsor: Joint Corporations, Elections and Political Subdivisions Interim Committee

Catch Title: Standard nonforfeiture law for deferred annuities.

Subject: Amends nonforfeiture provisions with respect to annuities.

Summary/Major Elements:

· This bill amends the law that sets minimum benefits standards for annuities.

· It has two main features: it adjusts the expense levels allowed by companies and sets a minimum payout.

· This bill is a model law passed by the national association of insurance commissioners (NAIC). The NAIC developed this model to reflect current market conditions. It was drafted in response to the lowering interest rates where companies could only earn one percent but were required to pay out up to three percent. However, the companies are required to match their liabilities with their assets to remain solvent.

Comments:

· Contains delayed effective date: Permits companies to elect to apply these provisions to contracts entered between July 1, 2006 and June 30, 2007. Thereafter the law applies to all contracts entered after July 1, 2007.