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304.24-621 Use of closed block to preserve dividend expectations.
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(2)
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(5)
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(8)
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The provisions of this section apply if a closed block is used for the
preservation of the reasonable dividend expectations of eligible members and
other policyholders.
The converting mutual shall prepare a written plan of operation for the closed
block, consistent with the requirements of this section and the other applicable
requirements of KRS 304.24-600 to 304.24-625.
The closed block shall be operated for the exclusive benefit of policies and
contracts included in it. No costs or expenses incurred in connection with the
conversion shall be charged to the closed block.
The assets allocated to the closed block, together with the revenue from the
closed block, shall be calculated to be reasonably sufficient to support the
business in the closed block until the last policy in the closed block has
terminated, including payment of claims and those expenses and taxes as are
specified in the plan of conversion, and to provide for continuation of dividend
scales in effect on the adoption date of the plan of conversion, if the experience
underlying those scales continues and for appropriate adjustments in the
scales if the experience changes.
The assets to a closed block shall be specified in the plan of operation and
must consist of:
(a) A list of designated assets of the converting mutual's general account or
specified segments, which list shall change periodically to reflect the
acquisition and disposition of assets;
(b) A designated portion of each asset of the converting mutual's general
account or specified segments thereof, which portion shall change
periodically to reflect the cash flows of the closed block; or
(c) Assets designated by a combination of the methods described in
paragraphs (a) and (b) of this subsection.
The plan of operation shall specify which of those methods of assignment of
closed block assets is being used and shall set forth the methods by which the
designations referred to in subsection (5) of this section are changed during the
course of closed block operations.
The former mutual shall submit to the commissioner annual reports, in a form
acceptable to the commissioner, that account for and describe the operations
of the closed block; and as specified in the plan of operation provide for annual
reviews of, and reports and opinions on, the closed block by an independent
actuary.
The plan of operation shall provide for the conditions under which the former
mutual may terminate the closed block.
The former mutual shall not distribute any residual assets of the closed block
until the plan for distribution of the residual assets is approved by the
commissioner.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1359, effective July 15, 2010. -Created 2000 Ky. Acts ch. 42, sec. 12, effective July 14, 2000.
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