                                 CODE OF VIRGINIA

FUNDING AGREEMENTS (§ 38.2-3100.2)

A. Any insurer that is licensed to write life insurance or annuities in the
Commonwealth may deliver, or issue for delivery, funding agreements in the
Commonwealth.

B. As used in this section &#8220;funding agreement&#8221; is inclusive but not
limited to guaranteed investment contracts, guaranteed interest contracts,
unallocated group contracts, investment contracts, or other similar instrument
by whatever name, and means an agreement that authorizes the insurer to accept
funds and that provides for an accumulation of funds for the purpose of making
one or more payments in fixed or variable amounts, or in both, that are not
based on mortality or morbidity contingencies.

C. Funding agreements may be issued to persons to fund (i) benefits under any
employee benefit plan as defined in the federal Employee Retirement Income
Security Act of 1974 (29 U.S.C. &#xA7; 1002 (3)) maintained in the United States
or a foreign country; (ii) the activities of any organization exempt from
taxation under section 501(c) of the Internal Revenue Code or any similar
organization in any foreign country; (iii) any program of the government of the
United States, the government of any state, foreign country, or political
subdivision thereof; (iv) any agreement providing for one or more payments in
satisfaction of a claim; (v) any program of any individual or entity that has
assets in excess of $25,000,000; or (vi) any program of any individual or entity
that is registered with the federal Securities and Exchange Commission.

D. Amounts paid to the insurer and proceeds applied under optional modes of
settlement under a funding agreement may be allocated by the insurer to its
general account and to one or more separate accounts. The assets of any such
separate account shall not be chargeable with liabilities arising out of any
other business that the insurer conducts. Where separate accounts are not
chargeable with liabilities arising out of any other business of the insurer, a
risk charge shall be paid on not less than a quarterly basis from the respective
separate account to the general account to provide appropriate compensation and
to fund an appropriate reserve, if any, for the risks to the general account.

E. No licensed insurer shall make an agreement in the Commonwealth providing for
the allocation of funding agreement amounts to a separate account until such
insurer has filed with the Commission a statement as to its methods of operation
of such separate account and the Commission has approved such statement. Subject
to the approval of the Commission, any such statement may apply to one or more
groups of separate accounts classified by investment policy, number or kinds of
separate account participants, methods of distribution of such agreements or
otherwise. In determining whether or not to approve any such statement, the
Commission shall consider, among other things, the history, reputation and
financial stability of the insurer and the character, experience,
responsibility, competence, and general fitness of the officers and directors of
the insurer. An amendment of any such statement that changes the investment
policy of a separate account shall be treated as an original filing.

F. A funding agreement delivered or issued for delivery in the Commonwealth
shall not qualify as or be considered to be life insurance, an annuity, or any
other form of insurance defined and classified in Article 2 (&#xA7; 38.2-101 et
seq.) of Chapter 1 of this title, but shall constitute transacting an insurance
business in the Commonwealth.

G. For any funding agreement assets held in the insurer&#8217;s general account,
or for any other obligations due under the funding agreement from the
insurer&#8217;s general account, the funding agreement shall be treated as an
insurance contract, and the holder of the funding agreement shall be entitled to
the same priority of distribution as other policyholders for the purposes of
clause (ii) of subdivision B 1 of &#xA7; 38.2-1509.

H. Any domestic insurer that has established separate accounts in connection
with funding agreements and has allocated funds to such separate accounts shall
file with the Commission, in addition to the annual statement required by &#xA7;
38.2-1300, any other periodic or special reports the Commission prescribes.

I. An insurer that has established a separate account pursuant to this section
shall not transfer any assets to such separate account from any of its other
accounts, including its general account, unless the transfer to such separate
account is authorized by the Commission.

HISTORY: 2004, c. 254; 2008, c. 216.