                                 CODE OF VIRGINIA

COMPUTATION OF MINIMUM STANDARD BY CALENDAR YEAR OF ISSUE (§ 38.2-1371)

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
determined as provided in subsection B:

   1. Life insurance policies issued in a particular calendar year on or after
   the operative date of &#xA7; 38.2-3209;

   2. Individual annuity and pure endowment contracts issued in a particular
   calendar year on or after January 1, 1983, except that an insurer may elect
   for this to apply to all individual annuity and pure endowment contracts
   issued after July 1, 1982;

   3. Annuities and pure endowments purchased in a particular calendar year on or
   after January 1, 1983, under group annuity and pure endowment contracts; and

   4. The net increase, if any, in a particular calendar year after January 1,
   1983, in amounts held under guaranteed interest contracts.

B. The calendar year statutory valuation interest rates, referred to in this
section as &#8220;I,&#8221; shall be determined as follows and the results
rounded to the nearer one-quarter of one percent:

   1. For life insurance:
   				I =.03 + W(R1 -.03) + (W/2)(R2 -.09);

   2. 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).
   				For purposes of subdivisions 1 and 2:
   				R1 is the lesser of R and.09;
   				R2 is the greater of R and.09;
   				R is the reference interest rate defined in this section; and
   				W is the weighting factor defined in this section;

   3. 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 subdivision 2, the formula for life insurance stated in
   subdivision 1 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 subdivision 2 shall apply to annuities and
   guaranteed interest contracts with guarantee duration of 10 years or less;

   4. 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 subdivision 2 shall apply; and

   5. 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 subdivision 2 shall
   apply.
   				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 one-half of one
   percent, 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 &#xA7;
   38.2-3209 becomes operative.

C. The weighting factors referred to in the formulas stated in subsection B are
given in the following tables:

   1. Weighting factors for life insurance:
   				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, that are guaranteed in the original policy.

   2. 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:

   3. Weighting factors for other annuities and for guaranteed interest
   contracts, except as stated in subdivision 2, shall be as specified in tables
   a, b, and c of this subdivision, according to the rules and definitions in
   subdivisions d, e, and f of this subdivision:
   				a. For annuities and guaranteed interest contracts valued on an issue year
   basis:
   				b. For annuities and guaranteed interest contracts valued on a change in
   fund basis, the factors shown in table a increased by:
   				&#xA0;
   				&#xA0;
   				c. 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 one 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 table a or
   derived in table b increased by:
   				&#xA0;
   				&#xA0;
   				d. 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.
   				e. &#8220;Plan Type&#8221; as used in tables a, b, and c is defined as
   follows:
   				Plan Type A: At any time policyholder (i) may withdraw funds only with an
   adjustment to reflect changes in interest rates or asset values since receipt
   of the funds by the insurance company, (ii) may withdraw funds without an
   adjustment but in installments over five years or more, (iii) may withdraw
   funds as an immediate life annuity, or (iv) is not permitted to withdraw
   funds.
   				Plan Type B: Before expiration of the interest rate guarantee,
   policyholder may withdraw funds only (i) with an adjustment to reflect changes
   in interest rates or asset values since receipt of the funds by the insurance
   company, (ii) without an adjustment but in installments over five years or
   more, or (iii) 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 five years.
   				Plan Type C: Policyholder may withdraw funds before expiration of interest
   rate guarantee in a single sum or installments over less than five years
   either (i) without adjustment to reflect changes in interest rates or asset
   values since receipt of the funds by the insurance company or (ii) subject
   only to a fixed surrender charge stipulated in the contract as a percentage of
   the fund.
   				f. An insurer 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. The reference interest rate referred to in subsection B shall be defined as
follows:

   1. 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&#8217;s Investors
   Service, Inc.

   2. 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&#8217;s Investors Service, Inc.

   3. 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 subdivision 2, 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&#8217;s Investors Service, Inc.

   4. 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 subdivision 2, 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&#8217;s Investors
   Service, Inc.

   5. 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&#8217;s Investors Service, Inc.

   6. 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 subdivision 2, 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&#8217;s Investors Service, Inc.

E. In the event that the monthly average of the composite yield on seasoned
corporate bonds is no longer published by Moody&#8217;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&#8217;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 adopted
by the Commission may be substituted.

HISTORY: 2014, c. 571.