Chapter 11

§ 1101 “Assets” defined. In any determination of the financial condition of an insurer, there shall be allowed as assets only such assets as are owned by the insurer and which consist of: (1) Cash in the possession of the insurer or in transit under its control, and including the true balance of any deposit in a solvent bank or trust company; (2) Investments, securities, properties and loans acquired or held in accordance with this title, and in connection therewith the following items: a. Interest due or accrued on any bond or evidence of indebtedness which is not in default and which is not valued on a basis including accrued interest; b. Declared and unpaid dividends on stock and shares, unless such amount has otherwise been allowed as an asset; c. Interest due or accrued upon a collateral loan in an amount not to exceed 1 year’s interest thereon; d. Interest due or accrued on deposits in solvent banks and trust companies, and interest due or accrued on other assets, if such interest is in the judgment of the Commissioner a collectible asset; e. Interest due or accrued on a mortgage loan in an amount not exceeding in any event the amount, if any, of the excess of the value of the property less delinquent taxes thereon over the unpaid principal; f. Rent due or accrued on real property if such rent is not in arrears for more than 3 months, and rent more than 3 months in arrears if the payment of such rent be adequately secured by property held in the name of the tenant and conveyed to the insurer as collateral; g. The unaccrued portion of taxes paid prior to the due date on real property; (3) Premium notes, policy loans, and other policy assets and liens on policies and certificates of life insurance and annuity contracts and accrued interest thereon in an amount not exceeding the legal reserve and other policy liabilities carried on each individual policy; (4) The net amount of uncollected and deferred premiums and annuity considerations in the case of a life insurer; (5) Premiums in the course of collection, other than for life insurance, not more than 3 months past due, less commissions payable thereon. The foregoing limitation shall not apply to premiums payable directly or indirectly by the United States government or by any of its instrumentalities; (6) Installment premiums other than life insurance premiums to the extent of the unearned premium reserve carried on the policy to which premiums apply; (7) Notes and like written obligations not past due, taken for premiums other than life insurance premiums, on policies permitted to be issued on such basis, to the extent of the unearned premium reserves carried thereon; (8) The full amount of reinsurance recoverable by a ceding insurer from a solvent reinsurer and which reinsurance is authorized under § 910 of this title; (9) Amounts receivable by an assuming insurer representing funds withheld by a solvent ceding insurer under a reinsurance treaty; (10) Deposits or equities recoverable from underwriting associations, syndicates and reinsurance funds, or from any suspended banking institution, to the extent deemed by the Commissioner available for the payment of losses and claims and at values to be determined by him or her; (11) All assets, whether or not consistent with the provisions of this section, as may be allowed pursuant to the annual statement form approved by the Commissioner for the kinds of insurance to be reported upon therein; (12) As to a title insurer, its title plant and equipment reasonably necessary for conduct of its abstract or title insurance business; (13) Electronic and mechanical data processing machines and related equipment are allowed as prescribed in the NAIC Accounting Practices and Procedures Manual; (14) Other assets, not inconsistent with this section, deemed by the Commissioner to be available for the payment of losses and claims at values to be determined by him or her. 18 Del. C. 1953, §  1101; 56 Del. Laws, c. 380, §  1 ; 70 Del. Laws, c. 186, §  1 ; 74 Del. Laws, c. 214, §§  1-3 ; § 1102 Assets not allowed. In addition to assets impliedly excluded by § 1101 of this title, the following expressly shall not be allowed as assets in any determination of the financial condition of an insurer: (1) Trade names and other like intangible assets; (2) Advances to officers (other than policy loans) whether secured or not, and advances to employees, agents and other persons on personal security only; (3) Stock of such insurer, owned by it, or any equity therein or loans secured thereby, or any proportionate interest in such stock acquired or held through the ownership by such insurer of an interest in another firm, corporation or business unit; (4) Furniture, fixtures, furnishings, safes, vehicles, libraries, stationery, literature and supplies (other than data processing, recordkeeping and accounting systems authorized under § 1101(13) of this title) and except in the case of title insurers such materials and plants as the insurer is expressly authorized to invest in under § 1322 of this title [repealed]; and except, in the case of any insurer, such personal property as the insurer is permitted to hold pursuant to Chapter 13 of this title, or which is reasonably necessary for the maintenance and operation of real estate lawfully acquired and held by the insurer other than real estate used by it for home office, branch office and similar purposes; (5) The amount, if any, by which the aggregate book value of investments as carried in the ledger assets of the insurer exceeds the aggregate value thereof as determined under this title; (6) With respect to an insurance division of a bank or trust company established pursuant to § 767(a) of Title 5, any assets of the bank or trust company other than those entered on the separate and distinct financial records of such division. 18 Del. C. 1953, §  1102; 56 Del. Laws, c. 380, §  1 ; 67 Del. Laws, c. 223, §  21 ; 74 Del. Laws, c. 214, §  4 ; § 1102A Bank insurance department or division distinct from bank. The assets of any insurance department or division of a bank or trust company established pursuant to § 767(a) of Title 5 shall be liable for and applicable to the payment and satisfaction of the liabilities, obligations and expenses of such insurance department or division only. The liabilities, obligations and expenses of any such insurance department or division shall be applied against and paid and satisfied solely out of the assets of such insurance department or division. 67 Del. Laws, c. 223, §  22 ; Delaware General Assembly Judicial Executive Contact Twitter Help function submitSearch() { if (!window.location.origin) { window.location.origin = window.location.protocol + "//" + window.location.hostname + (window.location.port ? ':' + window.location.port : ''); } keyword = document.getElementById('srch-term').value; window.location.href = "/Search?query=" + keyword; } document.getElementById('srch-term').onkeyup = function (e) { if (e.keyCode == 13) { submitSearch(); } } § 1103 Liabilities, in general. In any determination of the financial condition of an insurer, capital stock and liabilities to be charged against its assets shall include: (1) The amount of its capital stock outstanding, if any, or capital account required by § 511(a) of this title; (2) The amount, estimated consistent with the provisions of this title, necessary to pay all of its unpaid losses and claims incurred on or prior to the date of statement, whether reported or unreported, together with the expenses of adjustment or settlement thereof; (3) With reference to life insurance policies and annuity contracts, and disability and accidental death benefits in or supplemental thereto: a. The amount of reserves on life insurance policies and annuity contracts in force, valued according to the tables of mortality, rates of interest, and methods adopted pursuant to this title which are applicable thereto; b. Reserves for disability benefits, for both active and disabled lives; c. Reserves for accidental death benefits; d. Any additional reserves which may be required by the Commissioner consistent with applicable customary and general practice in insurance accounting; (4) As to health insurance policies, the reserves required under § 1108 of this title; (5) With reference to insurance other than specified in paragraphs (3) and (4) of this section above, and other than title insurance, the amount of the unearned premium reserves computed in accordance with this subchapter; (6) Taxes, expenses and other obligations due or accrued at the date of the statement; (7) With respect to an insurance division of a bank or trust company established pursuant to § 767(a) of Title 5, only those liabilities enumerated in this section which are entered on the separate and distinct financial records of such department or division. 18 Del. C. 1953, §  1103; 56 Del. Laws, c. 380, §  1 ; 67 Del. Laws, c. 223, §§  23, 24 ; § 1104 Reserves of domestic insurers transacting business in foreign countries only. A domestic insurer transacting insurance in foreign countries only, and not transacting insurance in any state as defined in § 103 of this title, may calculate its reserves on insurance written in each foreign jurisdiction in accordance with the reserve standards required by such jurisdiction; and negotiation and issuance of insurance on subjects of insurance resident, located or to be performed in such foreign jurisdiction, and changes in, communications concerning, and collection of premiums on insurance so issued shall not be deemed to constitute the transaction of insurance in any such state. 18 Del. C. 1953, §  1104; 56 Del. Laws, c. 380, §  1 ; § 1105 Disallowance of “wash” transactions. (a) The Commissioner shall disallow as an asset or as a credit against liabilities any reinsurance found by him or her after a hearing thereon to have been arranged for the purpose principally of deception as to the ceding insurer’s financial condition as at the date of any financial statement of the insurer. Without limiting the general purport of the foregoing provision, reinsurance of any substantial part of the insurer’s outstanding risks contracted for in fact within 4 months prior to the date of any such financial statement and cancelled in fact within 4 months after the date of such statement, or reinsurance under which the reinsurer bears no substantial insurance risk or chance of net loss to itself, shall prima facie be deemed to have been arranged principally for the purpose of deception. (b) The Commissioner shall disallow as an asset any deposit, funds or other assets of the insurer found by him or her after a hearing thereon: (1) Not to be in good faith the property of the insurer; and (2) Not freely subject to withdrawal or liquidation by the insurer at any time for the payment or discharge of claims or other obligations arising under its policies; and (3) To be resulting from arrangements made principally for the purpose of deception as to the insurer’s financial condition as at the date of any financial statement of the insurer. (c) The Commissioner may suspend or revoke the certificate of authority of any insurer which has knowingly been a party to any such deception or attempt thereat. 18 Del. C. 1953, §  1105; 56 Del. Laws, c. 380, §  1 ; 70 Del. Laws, c. 186, §  1 ; § 1106 Unearned premium reserve. (a) As to property, casualty and surety insurance the insurer shall maintain an unearned premium reserve on all policies in force. (b) Except as provided in § 1107 of this title as to marine and transportation risks, the unearned premium shall be equal to the unearned portion of gross premiums in force (after deduction of applicable reinsurance in solvent insurers) computed on an annual, monthly or more frequently pro rata basis. 18 Del. C. 1953, §  1106; 56 Del. Laws, c. 380, §  1 ; § 1107 Unearned premium reserve for marine and transportation insurance. As to marine and transportation insurance, the entire amount of premiums on trip risks not terminated shall be deemed unearned, and the Commissioner may require the insurer to carry a reserve equal to 100% of premiums on trip risks written during the month ended as of the date of statement. 18 Del. C. 1953, §  1107; 56 Del. Laws, c. 380, §  1 ; § 1108 Health insurance policy reserves. For all health insurance policies the insurer shall maintain an active life reserve which shall place a sound value on its liabilities under such policies and be not less than the reserve according to appropriate standards set forth in regulations issued by the Commissioner and, in no event, less in the aggregate than the pro rata gross unearned premiums for such policies. 18 Del. C. 1953, §  1108; 56 Del. Laws, c. 380, §  1 ; § 1109 Title insurance reserves. In addition to an adequate reserve as to outstanding losses as required under § 1103 of this title, a title insurer shall maintain a guaranty fund or unearned premium reserve of not less than an amount computed as follows: (1) Ten percent of the total amount of the risk portion of premiums written in the calendar year for title insurance contracts shall be assigned originally to the reserve; (2) During each of the 20 years next following the year in which the title insurance contract was issued, the reserve applicable to the contract may be reduced by 5% of the original amount of such reserve. 18 Del. C. 1953, §  1109; 56 Del. Laws, c. 380, §  1 ; § 1110 Mortgage guaranty contingency reserve. Casualty or surety insurers insuring real property mortgage lenders against loss by reason of nonpayment of the mortgage indebtedness by the borrower shall maintain a contingency reserve for the protection of policyholders against the effects of adverse economic cycles. 18 Del. C. 1953, §  1110; 56 Del. Laws, c. 380, §  1 ; 74 Del. Laws, c. 214, §  5 ; Delaware General Assembly Judicial Executive Contact Twitter Help function submitSearch() { if (!window.location.origin) { window.location.origin = window.location.protocol + "//" + window.location.hostname + (window.location.port ? ':' + window.location.port : ''); } keyword = document.getElementById('srch-term').value; window.location.href = "/Search?query=" + keyword; } document.getElementById('srch-term').onkeyup = function (e) { if (e.keyCode == 13) { submitSearch(); } } § 1111 Title and definitions. (a) This subchapter III shall be known as the “Standard Valuation Law” (the “Act”). (b) For purposes of the Act, the following definitions shall apply on or after the operative date of the valuation manual: (1) “Accident and health insurance” means contracts that incorporate morbidity risk and provide protection against economic loss resulting from accident, sickness, or medical conditions and as may be specified in the valuation manual. (2) “Appointed actuary” means a qualified actuary who is appointed in accordance with the valuation manual to prepare the actuarial opinion required in § 1113(b) of this title. (3) “Company” means an entity, which (A) has written, issued, or reinsured life insurance contracts, accident and health insurance contracts or deposit-type contracts in this State and has at least 1 such policy in force or on claim or (B) has written, issued or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in any state and is required to hold a certificate of authority to write life insurance, accident and health insurance or deposit-type contracts in this State. (4) “Deposit-type contract” means contracts that do not incorporate mortality or morbidity risks and as may be specified in the valuation manual. (5) “Life insurance” means contracts that incorporate mortality risk, including annuity and pure endowment contracts, and as may be specified in the valuation manual. (6) “NAIC” means the National Association of Insurance Commissioners. (7) “Policyholder behavior” means any action a policyholder, contract holder or any other person with the right to elect options, such as a certificate holder, may take under a policy or contract subject to this Act including, but not limited to, lapse, withdrawal, transfer, deposit, premium payment, loan, annuitization, or benefit elections prescribed by the policy or contract but excluding events of mortality or morbidity that result in benefits prescribed in their essential aspects by the terms of the policy or contract. (8) “Principle-based valuation” means a reserve valuation that uses one or more methods or one or more assumptions determined by the insurer and is required to comply with § 1122 of this title as specified in the valuation manual. (9) “Qualified actuary” means an individual who is qualified to sign the applicable statement of actuarial opinion in accordance with the American Academy of Actuaries qualification standards for actuaries signing such statements and who meets the requirements specified in the valuation manual. (10) “Tail risk” means a risk that occurs either where the frequency of low probability events is higher than expected under a normal probability distribution or where there are observed events of very significant size or magnitude. (11) “Valuation manual” means the manual of valuation instructions adopted by the NAIC as specified in this Act or as subsequently amended. 80 Del. Laws, c. 117, §  1 ; § 1112 Reserve valuation. (a) Policies and contracts issued prior to the operative date of the valuation manual. — (1) The Commissioner shall annually value, or cause to be valued, the reserve liabilities (hereinafter called reserves) for all outstanding life insurance policies and annuity and pure endowment contracts of every life insurance company doing business in this state issued on or after 1968 and prior to the operative date of the valuation manual, except that in the case of an alien insurer such valuation shall be limited to its insurance transactions in the United States. In calculating reserves, the Commissioner may use group methods and approximate averages for fractions of a year or otherwise. In lieu of the valuation of the reserves required of a foreign or alien company, the Commissioner may accept a valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when the valuation complies with the minimum standard provided in this Act. (2) The provisions set forth in §§ 1114, 1114A, 1114B, 1115, 1115A, 1116, 1117, 1118, 1119, and 1120 of this title shall apply to all policies and contracts, as appropriate, subject to this Act issued on or after 1968 and prior to the operative date of the valuation manual and the provisions set forth in §§ 1121 and 1122 of this title shall not apply to any such policies and contracts. (3) The minimum standard for the valuation of policies and contracts issued prior to 1968 shall be that provided by the laws in effect immediately prior to that date. (b) Policies and contracts issued on or after the operative date of the valuation manual. — (1) The Commissioner shall annually value, or cause to be valued, the reserve liabilities (hereinafter called reserves) for all outstanding life insurance contracts, annuity and pure endowment contracts, accident and health contracts, and deposit-type contracts of every company issued on or after the operative date of the valuation manual. In lieu of the valuation of the reserves required of a foreign or alien company, the Commissioner may accept a valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when the valuation complies with the minimum standard provided in this Act. (2) The provisions set forth in §§ 1121 and 1122 of this title shall apply to all policies and contracts issued on or after the operative date of the valuation manual. 80 Del. Laws, c. 117, §  1 ; § 1113 Actuarial opinions of reserves. (a) Actuarial opinion prior to the operative date of the valuation manual. — (1) General. — Every life insurance company doing business in this State shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the Commissioner by regulation are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this State. The Commissioner shall define by regulation the specifics of this opinion and add any other items deemed to be necessary to its scope. (2) Actuarial analysis of reserves and assets supporting reserves. — (A) Every life insurance company, except as exempted by regulation, shall also annually include in the opinion required by paragraph (a)(1) of this section, an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the Commissioner by regulation, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including but not limited to the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company’s obligations under the policies and contracts, including but not limited to the benefits under and expenses associated with the policies and contracts. (B) The Commissioner may provide by regulation for a transition period for establishing any higher reserves that the qualified actuary may deem necessary in order to render the opinion required by this section. (3) Requirement for opinion under paragraph (a)(2) of this section. — Each opinion required by paragraph (a)(2) of this section shall be governed by the following provisions: (A) A memorandum, in form and substance acceptable to the Commissioner as specified by regulation, shall be prepared to support each actuarial opinion. (B) If the insurance company fails to provide a supporting memorandum at the request of the Commissioner within a period specified by regulation or the Commissioner determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the regulations or is otherwise unacceptable to the Commissioner, the Commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the Commissioner. (4) Requirement for all opinions subject to subsection (a) of this section. — Every opinion required by subsection (a) of this section shall be governed by the following provisions: (A) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after December 31, 2014. (B) The opinion shall apply to all business in force including individual and group health insurance plans, in form and substance acceptable to the Commissioner as specified by regulation. (C) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board and on such additional standards as the Commissioner may by regulation prescribe. (D) In the case of an opinion required to be submitted by a foreign or alien company, the Commissioner may accept the opinion filed by that company with the insurance supervisory official of another State if the Commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this State. (E) For the purposes of this section, “qualified actuary” means a member in good standing of the American Academy of Actuaries who meets the requirements set forth in the regulation. (F) Except in cases of fraud or wilful misconduct, the qualified actuary shall not be liable for damages to any person (other than the insurance company and the Commissioner) for any act, error, omission, decision or conduct with respect to the actuary’s opinion. (G) Disciplinary action by the Commissioner against the company or the qualified actuary shall be defined in regulations by the Commissioner. (H) Except as provided in paragraphs (a)(4)(L), (M) and (N) of this section, documents, materials or other information in the possession or control of the Department of Insurance that are a memorandum in support of the opinion, and any other material provided by the company to the Commissioner in connection with the memorandum, shall be confidential by law and privileged, shall not be subject to this State’s Freedom of Information Act (Chapter 100 of Title 29), shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. However, the Commissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the Commissioner’s official duties. (I) Neither the Commissioner nor any person who received documents, materials or other information while acting under the authority of the Commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, materials or information subject to paragraph (a)(4)(H) of this section. (J) In order to assist in the performance of the Commissioner’s duties, the Commissioner: (i) May share documents, materials or other information, including the confidential and privileged documents, materials or information subject to paragraph (a)(4)(H) of this section with other state, federal and international regulatory agencies, with the National Association of Insurance Commissioners and its affiliates and subsidiaries, and with state, federal and international law-enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material or other information; (ii) May receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from the National Association of Insurance Commissioners and its affiliates and subsidiaries, and from regulatory and law-enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and (iii) May enter into agreements governing sharing and use of information consistent with paragraphs (a)(4)(H) to (J) of this section. (K) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the Commissioner under this section or as a result of sharing as authorized in paragraph (a)(4)(J) of this section. (L) A memorandum in support of the opinion, and any other material provided by the company to the Commissioner in connection with the memorandum, may be subject to subpoena for the purpose of defending an action seeking damages from the actuary submitting the memorandum by reason of an action required by this section or by regulations promulgated hereunder. (M) The memorandum or other material may otherwise be released by the Commissioner with the written consent of the company or to the American Academy of Actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the Commissioner for preserving the confidentiality of the memorandum or other material. (N) Once any portion of the confidential memorandum is cited by the company in its marketing or is cited before a governmental agency other than a state insurance department or is released by the company to the news media, all portions of the confidential memorandum shall be no longer confidential. (b) Actuarial opinion of reserves after the operative date of the valuation manual. — (1) General. — Every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this State and subject to regulation by the Commissioner shall annually submit the opinion of the appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this State. The valuation manual will prescribe the specifics of this opinion including any items deemed to be necessary to its scope. (2) Actuarial analysis of reserves and assets supporting reserves. — Every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this State and subject to regulation by the Commissioner, except as exempted in the valuation manual, shall also annually include in the opinion required by paragraph (b)(1) of this section, an opinion of the same appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified in the valuation manual, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including but not limited to the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company’s obligations under the policies and contracts, including but not limited to the benefits under and expenses associated with the policies and contracts. (3) Requirements for opinions subject to paragraph (b)(2) of this section. — Each opinion required by paragraph (b)(2) of this section shall be governed by the following provisions: (A) A memorandum, in form and substance as specified in the valuation manual, and acceptable to the Commissioner, shall be prepared to support each actuarial opinion. (B) If the insurance company fails to provide a supporting memorandum at the request of the Commissioner within a period specified in the valuation manual or the Commissioner determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the valuation manual or is otherwise unacceptable to the Commissioner, the Commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the Commissioner. (4) Requirement for all opinions subject to this subsection (b). — Every opinion shall be governed by the following provisions: (A) The opinion shall be in form and substance as specified in the valuation manual and acceptable to the Commissioner. (B) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after the operative date of the valuation manual. (C) The opinion shall apply to all policies and contracts subject to paragraph (b)(2) of this section, plus other actuarial liabilities as may be specified in the valuation manual. (D) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board or its successor, and on such additional standards as may be prescribed in the valuation manual. (E) In the case of an opinion required to be submitted by a foreign or alien company, the Commissioner may accept the opinion filed by that company with the insurance supervisory official of another State if the Commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this State. (F) Except in cases of fraud or wilful misconduct, the appointed actuary shall not be liable for damages to any person (other than the insurance company and the Commissioner) for any act, error, omission, decision or conduct with respect to the appointed actuary’s opinion. (G) Disciplinary action by the Commissioner against the company or the appointed actuary shall be defined in regulations by the Commissioner. 80 Del. Laws, c. 117, §  1 ; § 1114 Computation of minimum standard. Except as provided in §§ 1114A, 1114B and 1120 of this title, the minimum standard for the valuation of policies and contracts issued prior to 1968, shall be that provided by the laws in effect immediately prior to 1968. Except as otherwise provided in §§ 1114A, 1114B and 1120 of this title, the minimum standard for the valuation of all policies and contracts issued on or after 1968 shall be the Commissioners reserve valuation methods defined in §§ 1115, 1115A, 1118 and 1120 of this title, 3 1 / 2 % interest, or in the case of life insurance policies and contracts, other than annuity and pure endowment contracts, issued on or after June 21, 1973, 4% interest for policies issued prior to July 8, 1980, and 4 1 / 2 % interest for all other policies issued on and after July 8, 1980, and the following tables: (a) For ordinary policies of life insurance issued on the standard basis, excluding any disability and accidental death benefits in the policies: the Commissioners 1941 Standard Ordinary Mortality Table for policies issued prior to the operative date of § 2929(e) of this title, the Commissioners 1958 Standard Ordinary Mortality Table for policies issued on or after the operative date of § 2929(e) of this title and prior to the operative date of § 2929(g) of this title, provided that for any category of policies issued on female risks, all modified net premiums and present values referred to in this Act may be calculated according to an age not more than 6 years younger than the actual age of the insured; and for policies issued on or after the operative date of § 2929(g) of this title: (1) The Commissioners 1980 Standard Ordinary Mortality Table; (2) At the election of the company for any 1 or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors; or (3) Any ordinary mortality table, adopted after 1980 by the NAIC, which is approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for such policies; (b) For industrial life insurance policies issued on the standard basis, excluding any disability and accidental death benefits in the policies: the 1941 Standard Industrial Mortality Table for policies issued prior to the operative date of § 2929(f) of this title, and for policies issued on or after the operative date of § 2929(f) of this title, the Commissioners 1961 Standard Industrial Mortality Table or any industrial mortality table adopted after 1980 by the NAIC that is approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for the policies; (c) For individual annuity and pure endowment contracts, excluding any disability and accidental death benefits in the policies: the 1937 Standard Annuity Mortality Table, or at the option of the company, the Annuity Mortality Table for 1949, Ultimate, or any modification of either of these tables approved by the Commissioner; (d) For group annuity and pure endowment contracts, excluding any disability and accidental death benefits in the policies: (i) the Group Annuity Mortality Table for 1951 or any modification of the table approved by the Commissioner, (ii) at the option of the company, the 1971 Group Annuity Mortality Table or any modification of such table approved by the Commissioner in which event 5% interest shall be used in determining the minimum standard for the valuation of such contracts, or (iii) at the option of the company, any of the tables or modifications of tables specified for individual annuity and pure endowment contracts; (e) For total and permanent disability benefits in or supplementary to ordinary policies or contracts: for policies or contracts issued on or after January 1, 1966, the tables of Period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 Disability Study of the Society of Actuaries, with due regard to the type of benefit or any tables of disablement rates and termination rates adopted after 1980 by the NAIC, that are approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for those policies; for policies or contracts issued on or after January 1, 1961, and prior to January 1, 1966, either those tables or, at the option of the company, the Class (3) Disability Table (1926); and for policies issued prior to January 1, 1961, the Class (3) Disability Table (1926). Any such table shall, for active lives, be combined with a mortality table permitted for calculating the reserves for life insurance policies; (f) For accidental death benefits in or supplementary to policies issued on or after January 1, 1966: the 1959 Accidental Death Benefits Table or any accidental death benefits table adopted after 1980 by the NAIC that is approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for those policies, for policies issued on or after January 1, 1961, and prior to January 1, 1966, either that table or, at the option of the company, the Inter-Company Double Indemnity Mortality Table; and for policies issued prior to January 1, 1961, the Inter-Company Double Indemnity Mortality Table. Either table shall be combined with a mortality table for calculating the reserves for life insurance policies; and (g) For group life insurance, life insurance issued on the substandard basis and other special benefits: tables approved by the Commissioner. 80 Del. Laws, c. 117, §  1 ; § 1114A Computation of minimum standards for annuities. (a) Except as provided in § 1114B of this title, the minimum standard of valuation for individual annuity and pure endowment contracts issued on or after the operative date of this section and for annuities and pure endowments purchased on or after the operative date under group annuity and pure endowment contracts, shall be the Commissioners reserve valuation methods defined in §§ 1115 and 1115A of this title and the following tables and interest rates: (1) For individual annuity and pure endowment contracts issued prior to July 8, 1980, excluding any disability and accidental death benefits in those 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 single premium immediate annuity contracts issued on or after July 8, 1980, excluding any disability and accidental death benefits in those contracts: the 1971 Individual Annuity Mortality Table or any individual annuity mortality table adopted after 1980 by the NAIC that is approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for these contracts, or any modification of these tables approved by the Commissioner, and 7 1 / 2 % interest; (3) For individual annuity and pure endowment contracts issued on or after July 8, 1980, other than single premium immediate annuity contracts, excluding any disability and accidental death benefits in those contracts: the 1971 Individual Annuity Mortality Table or any individual annuity mortality table adopted after 1980 by the NAIC, that is approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for those contracts, or any modification of these tables approved by the Commissioner, and 5 1 / 2 % interest for single premium deferred annuity and pure endowment contracts and 4 1 / 2 % interest for all other individual annuity and pure endowment contracts; (4) For annuities and pure endowments purchased prior to July 8, 1980, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under those contracts: the 1971 Group Annuity Mortality Table or any modification of this table approved by the Commissioner, and 6% interest; and (5) For annuities and pure endowments purchased on or after July 8, 1980, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under those contracts: the 1971 Group Annuity Mortality Table, or any group annuity mortality table adopted after 1980 by the NAIC that is approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for annuities and pure endowments, or any modification of these tables approved by the Commissioner, and 7 1 / 2 % interest; (b) After June 21, 1973, any company may file with the Commissioner a written notice of its election to comply with the provisions of this section after a specified date before January 1, 1979, which shall be the operative date of this section for that company, provided that a company may elect a different operative date for individual annuity and pure endowment contracts from that elected for group annuity and pure endowment contracts. If a company makes no election, the operative date of this section for that company shall be January 1, 1979. 80 Del. Laws, c. 117, §  1 ; § 1114B Computation of minimum standard by calendar year of issue. (a) The interest rates used in determining the minimum standard for the valuation of the following shall be the calendar year statutory valuation interest rates as defined in this section: (1) Life insurance policies issued in a particular calendar year, on or after the operative date of § 2929(g) of this title; (2) Individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1984; (3) Annuities and pure endowments purchased in a particular calendar year on or after January 1, 1984, under group annuity and pure endowment contracts; and (4) The net increase, if any, in a particular calendar year after January 1, 1984, in amounts held under guaranteed interest contracts. (b) Calendar year statutory valuation interest rates. — (1) The calendar year statutory valuation interest rates, I , shall be determined as follows and the results rounded to the nearer ¼ of 1% (A) For life insurance: I = .03 + W ( R 1 - .03 ) + W / 2 ( R 2 - .09 ) (B) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options: I = .03 + W ( R - .03 ) Where R 1 is the lesser of R and .09, R 2 is the greater of R and .09, R is the reference interest rate defined in this section, and is the weighting factor defined in this section; (C) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis, except as stated in paragraph (b)(1)(B) of this section, the formula for life insurance stated in paragraph (b)(1)(A) of this section shall apply to annuities and guaranteed interest contracts with guarantee durations in excess of 10 years and the formula for single premium immediate annuities stated in paragraph (b)(1)(B) of this section shall apply to annuities and guaranteed interest contracts with guarantee duration of 10 years or less; (D) For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single premium immediate annuities stated in paragraph (b)(1)(B) of this section shall apply. (E) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the formula for single premium immediate annuities stated in paragraph (b)(1)(B) of this section shall apply. (2) However, if the calendar year statutory valuation interest rate for a life insurance policy issued in any calendar year determined without reference to this sentence differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than 1 / 2 of 1%, the calendar year statutory valuation interest rate for the life insurance policies shall be equal to the corresponding actual rate for the immediately preceding calendar year. For purposes of applying the immediately preceding sentence, the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year shall be determined for 1980 (using the reference interest rate defined in 1979) and shall be determined for each subsequent calendar year regardless of when § 2929(g) of this title becomes operative. (c) Weighting factors. — (1) The weighting factors referred to in the formulas stated above are given in the following tables: (A) Weighting factors for life insurance: Guarantee  Duration Weighting Years Factors 10 or less .50 More than 10, but not more than 20 .45 More than 20 .35 For life insurance, the guarantee duration is the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates or nonforfeiture values or both which are guaranteed in the original policy; (B) Weighting factor for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options: .80. (C) Weighting factors for other annuities and for guaranteed interest contracts, except as stated in paragraph (c)(1)(B) of this section, shall be as specified in paragraphs (c)(1)(C)(i), (ii) and (iii) of this section below, according to the rules and definitions in paragraphs (c)(1)(C)(iv), (v) and (vi) of this section below: (i) For annuities and guaranteed interest contracts valued on an issue year basis: Guarantee Weighting Factor Duration for Plan Type Years A B C 5 or less: .80 .60 .50 More than 5, but not more than 10: .75 .60 .50 More than 10, but not more than 20: .65 .50 .45 More than 20: .45 .35 .35 (ii) For annuities and guaranteed interest contracts valued on a change in fund basis, the factors shown in paragraph (c)(1)(C)(i) of this section above increased by: Plan Type A B C .15 .25 .05 (iii) For annuities and guaranteed interest contracts valued on an issue year basis (other than those with no cash settlement options) that do not guarantee interest on considerations received more than 1 year after issue or purchase and for annuities and guaranteed interest contracts valued on a change in fund basis that do not guarantee interest rates on considerations received more than 12 months beyond the valuation date, the factors shown in paragraph (c)(1)(C)(i) of this section or derived in paragraph (c)(1)(C)(ii) of this section increased by: Plan Type A B C .05 .05 .05 (iv) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the guarantee duration is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance policies with guarantee duration in excess of 20 years. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the guaranteed duration is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence. (v) “Plan type” as used in the above tables is defined as follows: Plan type A: — At any time policyholder may withdraw funds only (1) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) without an adjustment but installments over 5 years or more, or (3) as an immediate life annuity, or (4) no withdrawal permitted. Plan type B: — Before expiration of the interest rate guarantee, policyholder may withdraw funds only (1) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) without an adjustment but in installments over 5 years or more, or (3) no withdrawal permitted. At the end of interest rate guarantee, funds may be withdrawn without an adjustment in a single sum or installments over less than 5 years. Plan type C: — Policyholder may withdraw funds before expiration of interest rate guarantee in a single sum or installments over less than 5 years either (1) without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund. (vi) A company may elect to value guaranteed interest contracts with cash settlement options and annuities with cash settlement options on either an issue year basis or on a change in fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with no cash settlement options must be valued on an issue year basis. As used in this section, an “issue year basis of valuation” refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract, and the change in fund basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund. (d) Reference interest rate. — (1) The reference interest rate referred to in subsection (b) of this section shall be defined as follows: (A) For life insurance, the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30 of the calendar year preceding the year of issue, of the monthly average of the composite yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc. (B) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the average over a period of 12 months, ending on June 30 of the calendar year of issue or year of purchase, of the monthly average of the composite yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc. (C) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in paragraph (d)(1)(B) of this section, with guarantee duration in excess of 10 years, the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of the monthly average of the composite yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc. (D) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in paragraph (d)(1)(B) of this section, with guarantee duration of 10 years or less, the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of the monthly average of the composite yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc. (E) For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of the monthly average of the composite yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc. (F) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, except as stated in paragraph (d)(1)(B) of this section, the average over a period of 12 months, ending on June 30 of the calendar year of the change in the fund, of the monthly average of the composite yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc. (e) Alternative method for determining reference interest rates. — In the event that the monthly average of the composite yield on seasoned corporate bonds is no longer published by Moody’s Investors Service, Inc. or in the event that the NAIC determines that the monthly average of the composite yield on seasoned corporate bonds as published by Moody’s Investors Service, Inc. is no longer appropriate for the determination of the reference interest rate, then an alternative method for determination of the reference interest rate adopted by the NAIC and approved by regulation promulgated by the Commissioner may be substituted. 80 Del. Laws, c. 117, §  1 ; § 1115 Reserve valuation method—Life insurance and endowment benefits. (a) Except as otherwise provided in §§ 1115A, 1118 and 1120 of this title, reserves according to the Commissioners reserve valuation method, for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums shall be the excess, if any, of the present value, at the date of valuation, of the future guaranteed benefits provided for by those policies, over the then present value of any future modified net premiums therefor. The modified net premiums for a policy shall be the uniform percentage of the respective contract premiums for the benefits such that the present value, at the date of issue of the policy, of all modified net premiums shall be equal to the sum of the then present value of the benefits provided for by the policy and the excess of (1) over (2), as follows: (1) A net level annual premium equal to the present value, at the date of issue, of the benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of 1 per annum payable on the first and each subsequent anniversary of the policy on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the 19-year premium whole life plan for insurance of the same amount at an age 1 year higher than the age at issue of the policy. (2) A net 1-year term premium for the benefits provided for in the first policy year. (b) For a life insurance policy issued on or after January 1, 1987, for which the contract premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for the excess and which provides an endowment benefit or a cash surrender value or a combination in an amount greater than the excess premium, the reserve according to the Commissioners reserve valuation method as of any policy anniversary occurring on or before the assumed ending date defined herein as the first policy anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than the excess premium shall, except as otherwise provided in § 1118 of this title, be the greater of the reserve as of the policy anniversary calculated as described in the preceding paragraph and the reserve as of the policy anniversary calculated as described in that paragraph, but with (i) the value defined in subsection (a) of this section being reduced by 15% of the amount of such excess first year premium, (ii) all present values of benefits and premiums being determined without reference to premiums or benefits provided for by the policy after the assumed ending date, (iii) the policy being assumed to mature on that date as an endowment, and (iv) the cash surrender value provided on that date being considered as an endowment benefit. In making the above comparison the mortality and interest bases stated in §§ 1114 and 1114B of this title shall be used. (c) Reserves according to the Commissioners reserve valuation method shall be calculated by a method consistent with the principles of the preceding paragraphs of this section for: (1) Life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums; (2) Group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under § 408 of the Internal Revenue Code [26 U.S.C. § 408], as now or hereafter amended; (3) Disability and accidental death benefits in all policies and contracts; and (4) All other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other annuity and pure endowment contracts, shall be calculated by a method consistent with the principles of the preceding paragraphs of the subsection, (5) Notwithstanding the paragraphs in this subsection, any extra premiums charged because of impairments or special hazards shall be disregarded in the determination of modified net premiums. 80 Del. Laws, c. 117, §  1 ; § 1115A Reserve valuation method—Annuity and pure endowment benefits. (a) This section shall apply to all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under § 408 of the Internal Revenue Code [26 U.S.C. § 408], as now or hereafter amended. (b) Reserves according to the Commissioners annuity reserve method for benefits under annuity or pure endowment contracts, excluding any disability and accidental death benefits in the contracts, shall be the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by the contracts at the end of each respective contract year, over the present value, at the date of valuation, of any