Sec. 38a-69. Scope of provisions. Except as otherwise provided in title 38a, sections 38a-11, 38a-50, 38a-52, 38a-70 to 38a-76, inclusive, 38a-81 to 38a-83, inclusive, and 38a-153, and the regulations adopted to implement said sections apply to all insurers, including reinsurers, licensed to do business in this state.
(P.A. 90-243, S. 43; P.A. 98-214, S. 29.)
History: (Revisor's note: In 1995 a reference to Sec. 38a-79 was deleted editorially by the Revisors, that section having been repealed by P.A. 94-39); P.A. 98-214 deleted reference to Sec. 38a-65.

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Sec. 38a-69a. Confidentiality of financial workpapers and operating and financial condition reports. All financial analyses, financial examination workpapers, operating and financial condition reports concerning any insurance company, fraternal benefit society or health care center prepared by or on behalf of or for the use of the Insurance Commissioner or the Insurance Department examiner, shall be confidential unless such documents are otherwise a matter of public record, or the commissioner, in his opinion deems it in the public interest to disclose or otherwise make available for public inspection the information contained in such documents.
(P.A. 92-95.)

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Sec. 38a-70. Accounting standards. When adopting accounting rules, the commissioner shall follow those accounting procedures and practices published in the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, version effective January 1, 2001, and subsequent revisions, and the National Association of Insurance Commissioners Annual Statement Instructions Manual, subject to any deviations the commissioner may prescribe.
(P.A. 90-243, S. 44; P.A. 92-112, S. 4; P.A. 00-30, S. 1, 14.)
History: P.A. 92-112 amended section to require that accounting rules be filed in accordance with standards set by the National Association of Insurance Commissioners; P.A. 00-30 substituted "published in" for "prescribed by", inserted "version effective January 1, 2001, and subsequent revisions" re the practices and procedures manual, and made technical changes for purposes of gender neutrality, effective January 1, 2001.

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Sec. 38a-71. Minimum asset requirements. Minimum capital and minimum surplus requirements. (a) As used in this section:
(1) "Qualified assets" means:
(A) Investments, securities, properties and loans permitted or authorized by law, and the income due thereon;
(B) The net amount of uncollected and deferred premiums for a life insurer which carries the full annual mean tabular reserve liability;
(C) Premiums in the course of collection, other than for life insurance, not more than ninety days past due, with the ninety-day limitation being inapplicable to premiums payable directly or indirectly by the United States government or any of its instrumentalities;
(D) Instalment premiums, other than life insurance premiums, in accordance with the regulations adopted by the commissioner in accordance with the provisions of chapter 54, or in the absence of these regulations then in accordance with practices formulated or adopted by the National Association of Insurance Commissioners;
(E) Notes and similar written obligations which are not past due, taken for premiums other than life insurance premiums, on policies permitted to be issued on that basis, to the extent of the unearned premium reserves carried on the policies;
(F) Amounts recoverable or receivable from reinsurers under a reinsurance contract;
(G) Tangible components of health care delivery systems for health care centers governed by sections 38a-175 to 38a-192, inclusive, with the cost of these assets having a finite useful life being depreciated in full over periods provided by regulations adopted by the commissioner in accordance with the provisions of chapter 54;
(H) Electronic data processing equipment and operating software, the cost of which is depreciated in full over a period not to exceed three years;
(I) Tangible components of the service delivery systems of legal service corporations governed by sections 38a-230 to 38a-245, inclusive, with the cost of these assets having a finite useful life being depreciated in full over periods provided by regulations adopted by the commissioner in accordance with the provisions of chapter 54;
(J) Cash or currency; and
(K) Other assets authorized by regulations adopted by the commissioner in accordance with the provisions of chapter 54.
(2) "Minimum capital and minimum surplus" means the capital and surplus that must constantly be maintained by a stock insurance company as required by section 38a-72.
(3) "Surplus" means total statutory surplus less capital stock, adjusted for the par value of any treasury stock, calculated in accordance with the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, version effective January 1, 2001, and subsequent revisions. Except for assessable mutuals, the minimum surplus of a mutual insurer is essentially the same as the minimum required capital requirement which applies to stock-insurers.
(4) "Capital" means the capital stock component of statutory surplus, as defined in the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, version effective January 1, 2001, and subsequent revisions.
(b) Each insurer authorized to do business in this state shall maintain qualified assets in the amount equal to the total of the insurer's (1) liabilities, and (2) minimum capital and minimum surplus required under section 38a-72.
(P.A. 90-243, S. 45; P.A. 93-239, S. 2; P.A. 00-30, S. 2, 14.)
History: P.A. 93-239 deleted former Subsecs. (c) and (d) re the commissioner's determination of the sufficiency of surplus and the evidence used to evaluate such sufficiency, respectively; P.A. 00-30 amended definition of "qualified assets" in Subsec. (a) to revise the calculation of premium in Subpara. (a)(1)(C) to delete reduction for commissions payable on premiums, and to amend Subpara. (a)(1)(H) to substitute "electronic data processing equipment and operating software" for "electronic and mechanical machines constituting a data processing and accounting system", amended Subdiv. (a)(2) to substitute "minimum capital and minimum surplus" for "minimum capital", amended definition of "surplus" in Subdiv. (a)(3), added Subdiv. (a)(4) to define "capital", and amended Subsec. (b) to substitute "minimum capital and minimum surplus" for "minimum capital or minimum surplus", effective January 1, 2001.

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Sec. 38a-72. (Formerly Sec. 38-93). Financial requirements to license an insurance company. (a) No property or casualty insurance company and no life insurance company shall be licensed initially to do business in this state unless the company complies with the following minimum capital and minimum surplus requirements to write these specified lines of insurance:

Stock Insurance Companies
	Capital	Surplus
Health	$ 500,000	$ 500,000
Life	1,000,000	2,000,000
Liability	500,000	500,000
Fidelity and Surety	500,000	500,000
Financial Guaranty	15,000,000	60,000,000
Marine	500,000	250,000
Mortgage Guaranty	2,000,000	2,000,000
Property	500,000	250,000
Workers' Compensation	500,000	500,000
Title	500,000	500,000
Residual Value	2,000,000	1,000,000
Reinsurance (Property and Casualty)	2,000,000	2,000,000
Reinsurance (Life)	1,000,000	2,000,000

Mutual Insurance Companies
	Surplus
Health	$ 1,000,000
Life	3,000,000
Liability	1,000,000
Fidelity and Surety	1,000,000
Financial Guaranty	75,000,000
Marine	750,000
Mortgage Guaranty	4,000,000
Property	750,000
Workers' Compensation	1,000,000
Title	1,000,000
Residual Value	3,000,000
Reinsurance (Property and Casualty)	4,000,000
Reinsurance (Life)	3,000,000

(b) Except with respect to the transaction of life and health insurance, companies desiring to transact more than one of the above forms of insurance shall meet the total minimum requirements, as to capital and surplus, of all forms to be transacted except that a company transacting all lines permitted to be combined need have no more than two million dollars capital and two million dollars surplus in the aggregate. Companies that transact both life and health insurance need have no more than one million dollars capital and two million dollars surplus in the aggregate. The commissioner may license any such company to write additional forms of insurance when the amount of capital and surplus of such company is sufficient by recognized insurance standards to protect the public interest. The commissioner may also license any mutual insurance company to write any or all forms of insurance when the surplus of such company is at least as great as the capital and surplus requirements for companies with capital stock.
(c) No alien property, marine or casualty insurance company shall be licensed to transact business in this state unless it furnishes a certificate showing that it has, for the protection of all policyholders, a cash deposit with the Treasurer of this state, or with the proper officer of some other state, of not less than the minimum capital and surplus requirements for similar foreign insurance companies or seven hundred and fifty thousand dollars, whichever amount is less; nor unless it has a trusteed surplus, as defined in section 38a-74, at least as great as the minimum capital and surplus requirements for similar foreign insurance companies.
(d) No insurance company shall be licensed to transact business in this state or remain so licensed unless (1) its surplus funds bear a reasonable relationship to its liabilities based upon the type, volume and nature of insurance business transacted, and (2) risk-based capital related to its total adjusted capital is adequate for the types of business transacted. As used in this section, "total adjusted capital" means the sum of capital and surplus of an insurer, its asset valuation reserves, and any other item in the nature of capital as deemed appropriate by the commissioner. "Risk-based capital" means the capital and surplus adjusted to recognize the level of risk inherent in its business, including (A) risk with respect to the insurer's assets, (B) the risk of adverse insurance experience with respect to the insurer's liabilities and obligations, (C) the interest rate risk with respect to the insurer's business, and (D) all other business risks and such other relevant risks as the commissioner may determine. The commissioner shall adopt such reasonable regulations, in accordance with the provisions of chapter 54, as are deemed proper to implement the purposes of this section, including but not limited to, provisions concerning: The preparation and filing of reports by insurers of risk-based capital levels and the calculation thereof; the preparation and filing of comprehensive financial plans when such capital levels are reduced below minimum threshold levels; the confidentiality of such reports and plans; and the regulatory corrective actions the commissioner may take in the event minimum risk-based capital levels are not maintained, or the insurer's financial plans filed with the commissioner are deficient, or the insurer fails to otherwise comply with the provisions of the regulations promulgated.
(e) An insurer licensed in this state and issuing or reinsuring in this state policies of financial guaranty insurance, as defined in subdivision (1) of section 38a-92a shall, notwithstanding the provisions of subsection (a) of this section, be deemed to meet the combined capital and surplus requirements for transacting financial guaranty insurance business during the period between October 1, 1993, and July 1, 1995, if it has combined capital and surplus of forty-five million dollars, which includes paid-in capital of at least two million five hundred thousand dollars. On or after July 1, 1995, every licensed financial guaranty insurance corporation must fully comply with the requirements of subsection (a) of this section.
(1949 Rev., S. 6097−6100; 1951, 1953, 1955, S. 2824d; 1967, P.A. 382; P.A. 76-110; P.A. 79-376, S. 57; P.A. 90-243, S. 46; P.A. 92-112, S. 6, 35; P.A. 93-57, S. 5; 93-136, S. 17; 93-239, S. 17; P.A. 94-39, S. 1; P.A. 96-227, S. 3; P.A. 98- 79, S. 1; P.A. 00-30, S. 3, 4, 14.)
History: 1967 act divided section into Subsecs., raised capital requirement for transacting fire or marine insurance or accident and health insurance from two hundred and fifty thousand to five hundred thousand dollars, for liability insurance from three hundred thousand to five hundred thousand dollars and for fidelity and surety business from four hundred thousand to five hundred thousand dollars and required paid-in surplus of two hundred fifty thousand dollars for fire and marine insurance and five hundred thousand dollars for other lines where previously surplus must equal fifty per cent or more of minimum required capital in Subsec. (a) and added exception to requirements for companies transacting all lines in Subsec. (b); P.A. 76-110 imposed capital requirements for transacting workmen's compensation insurance, title insurance and mortgage guaranty insurance and required surplus of two million dollars for mortgage guaranty insurance in Subsec. (a) and raised required capital and surplus for companies transacting all lines in Subsec. (b) from one million five hundred thousand to two million dollars each; P.A. 79-376 replaced "workmen's compensation" with "workers' compensation"; P.A. 90-243 changed the minimum financial requirements for licensing new property, casualty and life insurance companies, specified exceptions with respect to life and health insurance re total combined financial capital and surplus and added Subsec. (d) requiring that company's surplus funds must bear a reasonable relationship to its liabilities in order to obtain or retain its license; Sec. 38-93 transferred to Sec. 38a-72 in 1991; P.A. 92-112 amended Subsec. (d) to require insurers to have sufficient surplus funds based upon the type, volume and nature of the insurance business transacted in order to secure or retain licensing; P.A. 93-57 amended Subsec. (d) to require that risk-based capital of an insurer be related to the total adjusted capital adequate for the type of business the insurer transacts and defined "risk-based capital" and "total adjusted capital"; P.A. 93-136 amended tables in Subsec. (a) to include the minimum required capital and surplus for companies transacting financial guaranty insurance and added a new Subsec. (e) re the minimum required combined capital and surplus requirements for financial guaranty insurance insurers for the period between October 1, 1993, and July 1, 1995; P.A. 93-239 amended Subsec. (b) to eliminate the reduction of certain capital and surplus requirements; P.A. 94- 39 made technical revisions to correct a grammatical error; P.A. 96-227 amended Subsec. (a) to correct the minimum surplus for stock financial guaranty companies from $600,000,000 to $60,000,000; P.A. 98-79 added capital and minimum surplus requirements for residual value insurance, property casualty reinsurance and life reinsurance; P.A. 00-30 amended Subsec. (b) to delete "paid-in" and "net" re surplus, and made technical changes for purposes of gender neutrality and amended Subsec. (d) to delete "statutory" re "capital and surplus", effective January 1, 2001.

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Sec. 38a-72a. Regulations. The Insurance Commissioner shall adopt regulations, in accordance with chapter 54, to establish standards that will govern the reduction of liabilities or establishment of assets in the financial statements of life and accident and health insurers and property and casualty insurers with respect to their accident and health insurance business filed with him for reinsurance ceded to another insurer.
(P.A. 92-112, S. 7, 35; P.A. 93-57, S. 2.)
History: P.A. 93-57 amended the section to include "accident and health" insurers and "property and casualty insurers with respect to accident and health insurance business".

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Sec. 38a-73. (Formerly Sec. 38-110). Limitation of risks. No stock insurance company doing business in this state shall expose itself to loss on any one risk to an amount exceeding ten per cent of its paid-up capital and surplus; but, in determining the amount of such risk, no portion thereof which has been reinsured in any insurance company authorized to do business in this state shall be included. No mutual insurance company doing business in this state shall expose itself to loss on any one risk to an amount exceeding ten per cent of its net surplus which limit on any one risk shall, in no case, exceed the amount authorized by the charter, bylaws or board of directors of the company; but, in determining the amount of such risk, no portion thereof which has been reinsured in any insurance company authorized to do business in this state shall be included.
(1949 Rev., S. 6115; P.A. 90-243, S. 52; P.A. 93-239, S. 18.)
History: P.A. 90-243 deleted the references to "fire" insurance companies; Sec. 38-110 transferred to Sec. 38a-73 in 1991; P.A. 93-239 deleted references limiting applicability to risks "in this state", and eliminated provision including two and one-half times the amount of the total cash premiums or premium deposits in determining a limitation of risks.

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Sec. 38a-74. (Formerly Sec. 38-94). Estimation of trusteed surplus. The trusteed surplus of each alien insurance company transacting or desiring to transact business in this state shall, for all the purposes of the insurance laws of this state, be the aggregate value of its money or securities deposited as provided in section 38a-72, and all sums loaned on real estate security in any state in the United States in conformity with the laws of such state providing for the investment of the assets of insurance companies therein, and all other assets in the United States in which similar domestic insurance companies may invest; provided such real estate securities and assets shall be held in the United States by trustees who are citizens of the United States, approved by the commissioner, for the benefit of all the policyholders and creditors of such company in the United States, after making the same deduction from such aggregate value for losses and liabilities in the United States, and for premiums upon risks therein not expired, as is authorized or required by the laws of this state, or by the regulations of the commissioner, with respect to similar domestic insurance companies.
(1949 Rev., S. 6100; 1951, S. 2825d; P.A. 90-243, S. 48.)
History: P.A. 90-243 substituted "alien" for "foreign" insurance company; Sec. 38-94 transferred to Sec. 38a-74 in 1991.

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Sec. 38a-75. (Formerly Sec. 38-95). Appointment of trustees. Examinations by commissioner. The trustees referred to in section 38a-74 shall be appointed by the directors of such company, and a certified copy of the vote by which they are appointed and of the deed of trust shall be filed in the office of the commissioner; and the commissioner may examine such trustees or the agents of such company, under oath, and its assets, books and accounts in the same manner as he may examine the officers, agents, assets, books and accounts of any company authorized to do an insurance business in this state.
(1949 Rev., S. 6101; 1951, S. 2826d.)
History: Sec. 38-95 transferred to Sec. 38a-75 in 1991.
See notes to Secs. 38a-17, 38a-18.

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Sec. 38a-76. (Formerly Sec. 38-25). Reserves. (a) Each insurance company transacting business in this state shall, at all times, maintain reserves equal in amount to its liability under all its policy contracts, as the same are computed in accordance with the provisions of the statutes or with the requirements of the commissioner adopted upon reasonable consideration of ascertained experience for the purpose of adequately protecting the insured or securing the solvency of such company.
(b) A domestic insurer transacting insurance only in a foreign country may calculate its reserves on insurance written in that foreign country in accordance with the reserve standards required or otherwise approved by such foreign country. For purposes of this section and section 38a-77, (1) a domestic insurer shall be deemed to "transact insurance" or "do business" in a state, district or territory of the United States if, within any state, district or territory of the United States, that insurer sells or issues any policy contract or otherwise makes any solicitation or inducement or engages in any negotiations with respect to the same; but (2) an insurer shall not be deemed to transact insurance or do business in a state, district or territory of the United States by reason of the fact that such insurer (A) holds a license to transact insurance in a state, district or territory of the United States; (B) has issued insurance policies or contracts to residents of a foreign country who subsequently reside in a state, district or territory of the United States; or (C) performs administrative or oversight functions in a state, district or territory of the United States. A domestic insurer transacting insurance only in a foreign country may invest its funds in a manner consistent with the laws, regulations and administrative practices of the foreign country in which it transacts insurance without limitations under sections 38a-102 to 38a-102h, inclusive.
(1949 Rev., S. 6078; P.A. 98-79, S. 2.)
History: Sec. 38-25 transferred to Sec. 38a-76 in 1991; P.A. 98-79 designated existing language as Subsec. (a) and added new Subsec. (b) re calculating reserves and investments for a domestic insurer transacting insurance only in a foreign country.

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Sec. 38a-77. (Formerly Sec. 38-130). Valuation of reserve. (a) The commissioner, upon receipt of the annual report of each domestic, foreign and alien life insurance company doing business in this state, as determined under subsection (b) of section 38a-76, shall make a valuation of all its outstanding policies, additions thereto, unpaid dividends and other obligations. The provisions of this section shall not apply to policies or certificates in which the amount of insurance or benefit is determined by an assessment collected from the surviving and associated holders of like policies or certificates, and not by a guaranty or pledge of insurance irrespective of the amount thus collected; provided any amount collected upon such assessments, until expended for the purpose for which it was collected, shall be charged as a liability against the company or association holding the same.
(b) All valuations made by the commissioner or by his authority shall be made upon the net premium basis, according to the standard of valuations adopted by the company for the obligation to be valued, provided, in each case, the standard of valuation employed shall be stated in his annual report. Any company may adopt different standards for obligations of different dates or classes, but, if the total value determined by any such standard for the obligations for which it has been adopted is less than that determined by the legal minimum standard hereinafter prescribed, or, if the company adopts no standard, the legal minimum standard shall be used.
(c) The commissioner may vary the standards of interest and mortality in the case of corporations from foreign countries and in particular cases of invalid lives and other extra hazards, and may value policies in groups, use approximate averages for fractions of a year and otherwise and calculate value by net premiums or otherwise, and accept the valuation of the department of insurance of any other state in place of the valuation herein required if the insurance department of such state accepts as sufficient and valid for all purposes the certificate of valuation of the Insurance Commissioner of this state.
(d) Except as otherwise provided herein, the legal minimum standard for contracts issued before January 1, 1901, shall be the actuaries' or combined experience table of mortality with interest at four per cent per annum and, for contracts issued on or after said day, shall be the "American Experience Table of Mortality" with interest at three and one-half per cent per annum. Any company may adopt as a legal minimum standard the "American Men Ultimate Table of Mortality" with three and one-half per cent per annum interest for contracts issued on or after January 1, 1928, in lieu of said "American Experience Table of Mortality". Any company may adopt as a legal minimum standard the "Commissioners' 1941 Standard Ordinary Table of Mortality" with three and one- half per cent per annum interest for contracts issued on or after January 1, 1945, in lieu of either of the legal minimum standards hereinabove allowed. Any company may adopt as a legal minimum standard any mortality table approved or adopted by the National Association of Insurance Commissioners and certified by the commissioner as adequate with three and one-half per cent per annum interest for contracts issued on or after January 1, 1957; and four per cent per annum interest for contracts issued on or after January 1, 1974, in lieu of any of the legal minimum standards hereinabove allowed. The valuation of contracts on female risks issued on or after January 1, 1957, may be calculated, at the option of the company with approval of the commissioner, according to an age not more than three years younger than the actual age of the insured. All annuity contracts written after January 1, 1973, and prior to January 1, 1981, other than single premium immediate annuity contracts and annuities purchased under group annuity contracts may be valued based on the 1971 individual annuity mortality table with the rate of interest not to exceed four per cent per annum. Single premium immediate annuity contracts and annuities purchased under group annuity contracts after January 1, 1973, and prior to January 1, 1981, may be valued based on the 1971 individual annuity mortality table for individual contracts and the 1971 group annuity mortality table for annuities issued under group contracts with interest not to exceed six per cent per annum. All annuity contracts, both individual and group, issued prior to January 1, 1973, will continue to be reserved on the tables in use prior to January 1, 1973, unless changes in the reserve bases of these annuity contracts are approved by the Insurance Commissioner.
(e) This section shall apply only to those contracts, policies, and annuities to which sections 38a-78, 38a-439 and 38a-440 do not apply.
(1949 Rev., S. 6138; 1957, P.A. 133, S. 1; P.A. 73-181; P.A. 78-312, S. 5; P.A. 90-243, S. 54; P.A. 98-79, S. 3.)
History: P.A. 73-181 imposed four per cent per annum interest for contracts issued on or after January 1, 1974, and added provisions re contracts after January 1, 1973, and before January 1, 1981; P.A. 78-312 added provision limiting application of provisions to "contracts, policies and annuities to which sections 38-130c to 38-130e, inclusive, do not apply"; P.A. 90-243 divided the section into Subsecs. and made technical corrections substituting "foreign" for "nonresident", "alien" for "foreign", "the commissioner" for "him" and "the" for "said"; Sec. 38-130 transferred to Sec. 38a-77 in 1991; P.A. 98-79 amended Subsec. (a) to add reference to Subsec. 38a-76(b) re doing business in this state.
See Sec. 38a-78 re Standard Valuation Law.
See Secs. 38a-438 to 38a-440, inclusive, re Standard Nonforfeiture Law.
Annotation to former section 38-130:
Term "reinsurance reserve" discussed. 71 C. 751.

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Sec. 38a-78. (Formerly Sec. 38-130e). Ascertainment of reserves for life insurance policies and annuity and pure endowment contracts. Annual reporting of reserves to commissioner. Issuance of opinion by qualified actuary. Memorandum in support of opinion. Additional reserves as determined by qualified actuary not deemed a higher standard of valuation. Minimum standards of valuation for health insurance plans. Regulations. (a) 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 except that in the case of an alien company, the valuation shall be limited to its United States business, and may certify the amount of any such reserves, specifying the mortality table or tables, rate or rates of interest, and methods, including net level premium method or other, used in the calculation of such reserves. In calculating such reserves, he may use group methods and approximate averages for fractions of a year or otherwise. In lieu of the valuation of the reserves herein required of any foreign or alien company, he may accept any valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when such valuation complies with the minimum standard herein provided and if the official of such state or jurisdiction accepts as sufficient and valid for all legal purposes the certificate of valuation of the commissioner when such certificate states the valuation to have been made in a specified manner according to which the aggregate reserves would be at least as large as if they had been computed in the manner prescribed by the law of that state or jurisdiction.
(b) (1) 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 which satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this state. The commissioner by regulation shall define the specifics of this opinion and add any other items deemed to be necessary to its scope.
(2) 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, 1991.
(3) 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.
(4) 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.
(5) 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.
(6) 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 regulations the commissioner may prescribe.
(7) 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.
(8) Disciplinary action by the commissioner against the company or the qualified actuary shall be as defined in such regulations by the commissioner.
(9) A memorandum, in form and substance acceptable to the commissioner as specified by regulation, shall be prepared to support each actuarial opinion.
(10) 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 such supporting memorandum as is required by the commissioner.
(11) Any memorandum in support of the opinion, and any other material provided by the company to the commissioner in connection therewith, shall be kept confidential by the commissioner and shall not be made public and shall not be subject to subpoena, other than for the purpose of defending an action seeking damages from any person by reason of any action required by this section or by regulations adopted under this section provided the memorandum or other material may otherwise be released by the commissioner (A) with the written consent of the company or (B) upon the request of the American Academy of Actuaries 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. Once any portion of the confidential memorandum is referred to by the company in its marketing or is referred to before any 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 no longer be confidential.
(12) Any regulation adopted by the commissioner under the provisions of this subsection shall be adopted in accordance with the provisions of chapter 54.
(c) (1) Every life insurance company, except as exempted by or pursuant to regulation, shall annually include in the opinion required by subdivision (1) of subsection (b) 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.
(2) The commissioner may provide by regulation for a transition period for establishing any higher reserves which the qualified actuary may deem necessary in order to render the opinion required by this section.
(d) Except as otherwise provided in subsections (e), (f) and (l) of this section, the minimum standard for the valuation of all such policies and contracts issued prior to the effective date specified in accordance with the provisions of subsection (h) of section 38-130e of the general statutes, revision of 1958, revised to 1981, shall be that provided by the laws in effect immediately prior to such date, except that the minimum standard for the valuation of annuities and pure endowments purchased prior to January 1, 1973, under group annuity and pure endowment contracts shall be the 1971 Group Annuity Mortality Table, or any modification of this table approved by the commissioner, and an interest rate of five per cent per annum. Except as otherwise provided in subsections (e), (f) and (l) of this section, the minimum standard for the valuation of all such policies and contracts issued on and after such effective date shall be the commissioner's reserve valuation methods defined in subsections (g), (h) and (j) of this section, four and one- half per cent interest for all other such policies and contracts, and the following tables: (1) For all ordinary policies of life insurance issued on the standard basis, excluding any disability and accidental death benefits in such policies, the Commissioners' 1958 Standard Ordinary Mortality Table for such policies issued prior to the compliance date established by subdivision (11) of subsection (e) of section 38a-439, provided that for any category of such policies issued on female risks, all modified net premiums and present values referred to in this section may be calculated according to an age not more than six years younger than the actual age of the insured and for such policies issued on or after the compliance date established by subdivision (11) of subsection (e) of section 38a-439, (A) the Commissioners' 1980 Standard Ordinary Mortality Table, or (B) at the election of the company for any one or more specified plans of life insurance, the Commissioners' 1980 Standard Ordinary Mortality Table with ten-year select mortality factors, or (C) any ordinary mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulations adopted by the commissioner in accordance with the provisions of chapter 54 for use in determining the minimum standard of valuation for such policies; (2) for all industrial life insurance policies issued on the standard basis, excluding any disability and accidental death benefits in such policies, the Commissioners' 1961 Standard Industrial Mortality Table or any industrial mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulations adopted by the commissioner in accordance with the provisions of chapter 54 for use in determining the minimum standard of valuation for such policies; (3) for total and permanent disability benefits in or supplementary to ordinary policies or contracts, 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 National Association of Insurance Commissioners, that are approved by regulations adopted by the commissioner in accordance with the provisions of chapter 54 for use in determining the minimum standard of valuation for such policies. These tables shall, for active lives, be combined with a mortality table permitted for calculating the reserves for life insurance policies; (4) for accidental death benefits in or supplementary to policies, the 1959 Accidental Death Benefits Table or any accidental death benefits table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulations adopted by the commissioner in accordance with the provisions of chapter 54 for use in determining the minimum standard of valuation for such policies. These tables shall be combined with a mortality table permitted for calculating the reserves for life insurance policies; and (5) for group life insurance, life insurance issued on the substandard basis and other special benefits, such tables as may be approved by the commissioner.
(e) Except as otherwise provided in subsection (f) of this section, the minimum standard for the valuation of all individual annuity and pure endowment contracts issued on or after the effective date as specified in accordance with the provisions of subsection (h) of section 38-130e of the general statutes, revision of 1958, revised to 1981, and for all annuities and pure endowments purchased on or after such effective date under group annuity and pure endowment contracts, shall be the commissioners reserve valuation methods defined in subsections (g) and (h) of this section and the following tables and interest rates: (1) For individual single premium immediate annuity contracts issued on or after such effective date, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table or any individual annuity mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulations adopted by the commissioner in accordance with the provisions of chapter 54 for use in determining the minimum standard of valuation for such contracts, or any modification of these tables approved by the commissioner, and seven and one-half per cent interest; (2) for individual annuity and pure endowment contracts issued on or after such effective date, other than single premium immediate annuity contracts, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table or any individual annuity mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulations adopted by the commissioner in accordance with the provisions of chapter 54 for use in determining the minimum standard of valuation for such contract, or any modification of these tables approved by the commissioner, and five and one-half per cent interest for single premium deferred annuity and pure endowment contracts and four and one-half per cent interest for all other such annuity and pure endowment contracts; (3) for all annuities and pure endowments purchased on or after such effective date under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts, the 1971 Group Annuity Mortality Table or any group annuity mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulations adopted by the commissioner in accordance with the provisions of chapter 54 for use in determining the minimum standard of valuation for such annuities and pure endowments, or any modification of these tables approved by the commissioner, and seven and one-half per cent interest.
(f) (1) The interest rates used in determining the minimum standard for the valuation of (A) all life insurance policies issued in a particular calendar year, on or after the compliance date established by subdivision (11) of subsection (e) of section 38a-439, (B) all individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1982, (C) all annuities and pure endowments purchased in a particular calendar year on or after January 1, 1982, under group annuity and pure endowment contracts, and (D) the net increase, if any, in a particular calendar year after January 1, 1982, in amounts held under guaranteed interest contracts shall be the calendar year statutory valuation interest rates as defined in this subsection;
(2) The calendar year statutory valuation interest rates, I, shall be determined as follows and the results rounded to the nearest one-quarter of one per cent:
(A) For life insurance,

I = .03 + W (R1 − .03) +

W 2

(R2 − .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

R1 is the lesser of R and .09, R2 is the greater of R and .09, R is the reference interest rate defined in subdivision (4) of this subsection and W is the weighting factor defined in subdivision (3) of this subsection.

(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 subparagraph (B), the formula for life insurance stated in subparagraph (A) shall apply to annuities and guaranteed interest contracts with guarantee durations in excess of ten years and the formula for single premium immediate annuities stated in subparagraph (B) shall apply to annuities and guaranteed interest contracts with guarantee durations of ten 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 subparagraph (B) 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 subparagraph (B) shall apply.
(F) If the calendar year statutory valuation interest rate for any life insurance policies issued in any calendar year determined without reference to this subdivision differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than one-half of one per cent, the calendar year statutory valuation interest rate for such life insurance policies shall be equal to the corresponding actual rate for the immediately preceding calendar year. For purposes of applying the foregoing, 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 for 1979 and shall be determined for each subsequent calendar year regardless of the compliance date established by subdivision (11) of subsection (e) of section 38a-439;
(3) The weighting factors referred to in the formulas stated in subdivision (2) of this subsection are given in the following tables:
(A) Weighting Factors For Life Insurance:

Guarantee Duration (Years)	Weighting 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 subparagraph (B), shall be as specified in tables (i), (ii) and (iii) according to the rules and definitions in (iv), (v) and (vi):
(i) For annuities and guaranteed interest contracts valued on an issue year basis:

	Weighting Factor For Plan Type
Guarantee Duration (Years)	A	B	C
5 or less:	.80	.60	.50
More than 5, not more than 10:	.75	.60	.50
More than 10 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 (i) increased by:

	Weighting Factor For Plan Type
More than 10 not more than 20:	A	B	C
More than 10 not more than 20:	.15	.25	.05

(iii) For annuities and guaranteed interest contracts valued on an issue 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 which do not guarantee interest rates on considerations received more than twelve months beyond the valuation date, the factors shown in (i) or derived in (ii) increased by:

	Weighting Factor For Plan Type
More than 10 not more than 20:	A	B	C
More than 10 not more than 20:	.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 twenty years. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the guarantee 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 tables in subparagraph (C) is defined as follows:
a. 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 such adjustment but in installments over five years or more, or (3) as an immediate life annuity, or (4) no withdrawal permitted.
b. 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 such adjustment but in installments over five years or more, or (3) no withdrawal permitted. At the end of the interest rate guarantee, funds may be withdrawn without such adjustment in a single sum or installments over less than five years.
c. 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: (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 subsection, 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. 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 fund;
(4) The reference interest rate referred to in subdivision (2) of this subsection shall be defined as follows: a. For all life insurance, the lesser of the average over a period of thirty-six months and the average over a period of twelve months, ending on June thirtieth of the calendar year next preceding the year of issue, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, 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 twelve months, ending on June thirtieth of the calendar year of issue or year of purchase of Moody's Corporate Bond Yield Average-Monthly Average Corporates, 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 b. above, with guarantee duration in excess of ten years, the lesser of the average over a period of thirty-six months and the average over a period of twelve months, ending on June thirtieth of the calendar year of issue or purchase of Moody's Corporate Bond Yield Average-Monthly Average Corporates, 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 b. above, with guarantee duration of ten years or less, the average over a period of twelve months, ending on June thirtieth of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, 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 twelve months, ending on June thirtieth of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, 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 b. above, the average over a period of twelve months, ending on June thirtieth of the calendar year of the change in the fund, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.
(5) In the event that Moody's Corporate Bond Yield Average-Monthly Average Corporates is no longer published by Moody's Investors Service, Inc., or in the event that the National Association of Insurance Commissioners determines that Moody's Corporate Bond Yield Average-Monthly Average Corporates as published by Moody's Investors Service, Inc. is no longer appropriate for the determination of the reference interest rate, an alternative method for determination of the reference interest rate, which is adopted by the National Association of Insurance Commissioners and approved by regulations adopted by the commissioner in accordance with the provisions of chapter 54, may be substituted.
(g) Except as otherwise provided in subsections (h), (j) and (l) of this section, reserves according to the commissioner's 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 such future guaranteed benefits provided for by such policies, over the then present value of any future modified net premiums therefor. The modified net premiums for any such policy shall be such uniform percentage of the respective contract premiums for such benefits that the present value, at the date of issue of the policy, of all such modified net premiums shall be equal to the sum of the then present value of such 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 such benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per annum payable on the first and each subsequent anniversary of such policy on which a premium falls due; provided such net level annual premium shall not exceed the net level annual premium on the nineteen- year premium whole life plan for insurance of the same amount at an age one year higher than the age at issue of such policy, and (2) a net one year term premium for such benefits provided for in the first policy year provided that for any life insurance policy issued on or after January 1, 1985, 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 such excess and which provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such 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 such excess premium shall, except as otherwise provided in subsection (j) of this section, be the greater of the reserve as of such policy anniversary calculated as described in this subsection and the reserve as of such policy anniversary calculated as described in this subsection but with the value defined in subdivision (1) of this subsection being reduced by fifteen per cent of the amount of such excess first year premium, 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, the policy being assumed to mature on such date as an endowment, and the cash surrender value provided on such date being considered as an endowment benefit. In making the above comparison, the mortality and interest bases stated in subsections (e) and (f) of this section shall be used. Reserves according to the commissioners reserve valuation method for: (A) Life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums; (B) 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 Section 408 of the Internal Revenue Code, as now or hereafter amended; (C) disability and accidental death benefits in all policies and contracts; and (D) 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 this subsection.
(h) This subsection 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 Section 408 of the Internal Revenue Code, as now or hereafter amended. Reserves according to the commissioners annuity reserve method for benefits under annuity or pure endowment contracts, excluding any disability and accidental death benefits in such 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 such contracts at the end of each respective contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future gross considerations, required by the terms of such contract, that become payable prior to the end of such respective contract year. The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate, or rates, specified in such contracts for determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the terms of such contracts to determine nonforfeiture values.
(i) (1) In no event shall a company's aggregate reserves for all life insurance policies, excluding disability and accidental death benefits, issued on or after the effective date as specified in accordance with the provisions of subsection (h) of section 38-130e of the general statutes, revision of 1958, revised to 1981, be less than the aggregate reserves calculated in accordance with the methods set forth in subsections (f), (g), (i) and (k) of this section, and the mortality table or tables and rate or rates of interest used in calculating nonforfeiture benefits for such policies; (2) in no event shall the aggregate reserves for all policies, contracts and benefits be less than the aggregate reserves determined by the qualified actuary to be necessary to render the opinion required by subsection (b) of this section; (3) reserves for any category of policies, contracts or benefits as established by the commissioner may be calculated, at the option of the company, according to any standards which produce greater aggregate reserves for such category than those calculated according to the minimum standard herein provided, but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, shall not be higher than the corresponding rate or rates of interest used in calculating any nonforfeiture benefits provided for therein; (4) any such company which at any time shall have adopted any standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard herein provided may, with the approval of the commissioner, adopt any lower standard of valuation, but not lower than the minimum herein provided; provided, for the purposes of this subsection, the holding of additional reserves previously determined by a qualified actuary to be necessary to render the opinion required by subsection (b) of this section shall not be deemed to be the adoption of a higher standard of valuation.
(j) If in any contract year the gross premium charged by any life insurance company on any policy or contract, in force as of or written after the effective date as specified in accordance with the provisions of subsection (h) of section 38-130e of the general statutes, revision of 1958, revised to 1981, is less than the valuation net premium for the policy or contract calculated by the method used in calculating the reserve thereon but using the most recent minimum valuation standards of mortality and rate of interest, the minimum reserve required for such policy or contract shall be the greater of either the reserve calculated according to the mortality table, rate of interest, and method actually used for such policy or contract, or the reserve calculated by the method actually used for such policy or contract but using the minimum standards of mortality and rate of interest in effect in the year that the policy or contract was issued and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium. The minimum valuation standards of mortality and rate of interest referred to in this subsection are those standards stated in subsections (d) and (f) of this section. For any life insurance policy issued on or after January 1, 1985, for which the gross 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 such excess and which provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such excess premium, the foregoing provisions of this subsection shall be applied as if the method actually used in calculating the reserve for such policy were the method described in subsection (g) of this section. The minimum reserve at each policy anniversary of such policy shall be the greater of the minimum reserve calculated in accordance with subsection (g) of this section and the minimum reserve calculated in accordance with this subsection.
(k) In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurance company based on then estimates of future experience, or in the case of any plan of life insurance or annuity which is of such nature that the minimum reserves cannot be determined by the methods described in subsections (g), (h), and (j) of this section, the reserves which are held under any such plan must be appropriate in relation to the benefits and the pattern of premiums for that plan, and be computed by a method which is consistent with the principles of this standard valuation law, as determined by regulations adopted by the commissioner in accordance with the provisions of chapter 54.
(l) The commissioner shall adopt regulations in accordance with the provisions of chapter 54 containing the minimum standards applicable to the valuation of health insurance plans.
(m) The provisions of sections 38a-77 and 38a-433 shall apply to policies issued by a company before the date of its election to comply with section 38-130e of the general statutes, revision of 1958, revised to 1981, or January 1, 1981, whichever occurred first. The provisions of section 38-130e of the general statutes, revision of 1958, revised to 1981, shall apply to policies issued by a company on and after the date of such election or on and after January 1, 1981, whichever occurred first, and before October 1, 1981.
(P.A. 78-312, S. 4; P.A. 81-170, S. 2; P.A. 90-243, S. 56; P.A. 91-175, S. 2.)
History: P.A. 81-170 authorized the use of new mortality tables, specified the formula used in calculating the interest rate for determining a company's maximum reserves and provided for the reference interest rate as an average over a specified time period of Moody's Corporate Index; P.A. 90-243 made technical corrections substituting "alien" for "foreign", "the" for "such", "foreign" for "nonresident" and amended the method for calculating the reserves on life insurance policies in Subsec. (h); Sec. 38-130e transferred to Sec. 38a-78 in 1991; P.A. 91-175 amended Subsec. (a) to include the phrase "or cause to be valued" to allow the insurance companies to submit to the insurance commissioner an independent evaluation of the reserves, inserted a new Subsec. (b) requiring that every life insurance company annually submit the opinion of a qualified actuary re the computation and adequacy of the reserves, the reserving practices of that particular insurance company and provide a written memorandum to the insurance commissioner, inserted a new Subsec. (c) requiring that the insurance company provide an actuarial opinion to the insurance commissioner which contains a determination of whether the company's reserve and actuarial items which support the policies and contracts are sufficient to meet the company's obligations, relettered former Subsecs. (b) to (f) as (d) to (h) and amended internal references, relettered Subsec. (g) as Subsec. (i), amended all internal references, added a provision re aggregate reserves for all policies, contracts and benefits and added a provision that the adoption of additional reserves determined by a qualified actuary in the rendition of his annual opinion would not heighten the standard of valuation, relettered Subsecs. (h) and (i) as (j) and (k) and amended internal references, added new Subsec. (l) requiring the insurance commissioner to adopt regulations for the minimum standards valuation of health insurance plans and relettered Subsec. (j) as (m) and amended internal references.
See Sec. 38a-77 re Standard Valuation Law.
See Secs. 38a-438 to 38a-440, inclusive, re Standard Nonforfeiture Law.

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Sec. 38a-79. (Formerly Sec. 38-26). Valuation of securities. Section 38a-79 is repealed.
(1949 Rev., S. 6084; P.A. 90-243, S. 10; P.A. 94-39, S. 10.)

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Sec. 38a-79a. Short title: Standard Valuation Law. Sections 38a-77 and 38a- 78 shall be known as the "Standard Valuation Law".
(P.A. 91-175, S. 1.)

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Sec. 38a-80. (Formerly Sec. 38-164). Premium reserve for health, accident and liability business. Each domestic, foreign and alien insurance company which, in this state, makes insurance upon the health of individuals or which, in this state, insures persons against bodily injury or death by accident, or any person, firm or corporation against loss or damage on account of the bodily injury or death by accident of any person for which loss or damage such person, firm or corporation is responsible, shall maintain a premium reserve on all such policies in force, whether issued in this state or elsewhere, calculated in accordance with the accounting requirements of the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, version effective January 1, 2001, and subsequent revisions.
(1949 Rev., S. 6176; P.A. 90-243, S. 67; P.A. 00-30, S. 5, 14.)
History: P.A. 90-243 substituted "foreign" for "nonresident" and "alien" for "foreign" insurance companies; Sec. 38- 164 transferred to Sec. 38a-80 in 1991; P.A. 00-30 substituted "calculated in accordance with the accounting requirements of the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, version effective January 1, 2001, and subsequent revisions" for "equal to the unearned portion of the gross premiums charged for covering the risks", effective January 1, 2001.
See Secs. 38a-199 to 38a-209, inclusive, re hospital service corporations.
See Secs. 38a-214 to 38a-225, inclusive, re medical service corporations.

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Sec. 38a-81. (Formerly Sec. 38-132). Sale of property taken for debts. In any case in which any domestic life insurance company has legally acquired, in payment of a debt previously contracted, any property, real or personal, situated in this state or elsewhere, such company may, upon the sale of such property, take in payment or part payment thereof the stocks or bonds of any company or corporation purchasing such property.
(1949 Rev., S. 6152.)
History: Sec. 38-132 transferred to Sec. 38a-81 in 1991.

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Sec. 38a-82. (Formerly Sec. 38-133). Improvement of real estate. Domestic life insurance companies may improve any real estate obtained in conformity to law whether such estate is situated in this or any other state.
(1949 Rev., S. 6153.)
History: Sec. 38-133 transferred to Sec. 38a-82 in 1991.

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Sec. 38a-83. (Formerly Sec. 38-43). Securities required by other states deposited with State Treasurer. (a) When any state requires insurance companies of other states to deposit with some officer of such other state securities in trust for policyholders of the companies as a prerequisite to their transacting business in that state, the Treasurer of this state may receive on deposit from any domestic insurance company the securities required by the laws of that other state. The legal title to the securities shall be transferred to the Treasurer in trust for the policyholders of the insurance company, and the Treasurer shall hold the securities in trust for the policyholders. The insurance company may collect and receive the interest and dividends on the securities and may withdraw the securities on depositing with the Treasurer other securities of like character and par value. The Treasurer shall issue a certificate, under seal, of any such deposit for each state which requires such a certificate, which shall state the items and the par value of securities deposited. The Treasurer shall charge a fee of thirty-five dollars to the insurance company for each certificate so issued.
(b) Any insurance company which has deposited securities with the State Treasurer, has caused all of its unexpired policies to be paid, cancelled or reinsured, and all of its liabilities under such policies to be extinguished or to be assumed by some other responsible company having a similar deposit with the treasurer or with the proper officer of some other state, or has subsequently made a similar deposit of the sum required with the proper officer of some other state, may apply to the Treasurer for a return of such deposited securities. The Treasurer, on receipt of an application from the company, verified by the oath of its president or secretary, and on being satisfied by an examination of the company's books, and of its officers under oath, that all of the company's policies are so paid, cancelled, extinguished or reinsured, or that such subsequent deposit was duly made and has not since been withdrawn, as evidenced by a certificate from the proper officer of such other state, shall deliver such securities to the company.
(1949 Rev., S. 6046; P.A. 74-32, S. 1; P.A. 90-243, S. 16; P.A. 91-68, S. 2.)
History: P.A. 74-32 rephrased certificate provisions re par value to delete reference to market value and treasurer's statement that he is satisfied market value is accurately represented; P.A. 90-243 divided section into Subsecs. and authorized state treasurer to receive, on deposit, legal title to securities required to be collected by the laws of other states as a prerequisite of doing business in that state, to hold the securities in trust for the policyholders and to return all deposited securities once all obligations have been met; Sec. 38-43 transferred to Sec. 38a-83 in 1991; P.A. 91-68 imposed a thirty- five dollar fee for each certificate.

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Sec. 38a-84. (Formerly Sec. 38-47). Securities to be delivered to receiver. Whenever a receiver is appointed in this state of any insurance company which has deposited securities with the State Treasurer in trust for the policyholders of such company, the court to which such receiver is accountable shall, after finding that such receiver has qualified, authorize such receiver to receive the securities so deposited; and the State Treasurer, when tendered by such receiver a certified copy of the order authorizing such receiver to receive such securities, shall transfer and deliver such securities to such receiver; and such receiver shall administer the trust fund invested in such securities for the benefit of the policyholders of such company under the orders of the court to which such receiver is accountable.
(1949 Rev., S. 6050.)
History: Sec. 38-47 transferred to Sec. 38a-84 in 1991.
Annotation to former section 38-47:
Disposition of income received after securities delivered to receiver. 78 C. 442. See note to Sec. 38-43 (38a-83).

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Sec. 38a-85. Credit allowed a domestic ceding insurer. (a) Credit for reinsurance shall be allowed a domestic ceding insurer as either an asset or a deduction from liability on account of reinsurance ceded only when the reinsurer meets the requirements of subsection (b), (c), (d), (e) or (f) of this section. If credit is allowed on the basis of meeting the requirements of subsection (d) or (e) of this section, the requirements of subsection (g) of this section shall also be met.
(b) Credit shall be allowed when the reinsurance is ceded to an assuming insurer which is licensed to transact insurance or reinsurance in this state.
(c) Credit shall be allowed when the reinsurance is ceded to an assuming insurer which is accredited as a reinsurer in this state. No credit shall be allowed a domestic ceding insurer, if the assuming insurers' accreditation has been revoked by the commissioner after notice and hearing. An accredited reinsurer is one which (1) files with the commissioner evidence of its submission to this state's jurisdiction, (2) submits to this state's authority to examine its books and records, (3) is licensed to transact insurance or reinsurance in at least one state, or in the case of a United States branch of an alien assuming insurer is entered through and licensed to transact insurance or reinsurance in at least one state and (4) files annually with the commissioner a copy of its annual statement filed with the insurance department of its state of domicile and a copy of its most recent audited financial statement, and either (A) maintains a surplus as regards policyholders in an amount which is not less than twenty million dollars and whose accreditation has not been denied by the commissioner within ninety days of its submission, or (B) maintains a surplus as regards policyholders in an amount less than twenty million dollars and whose accreditation has been approved by the commissioner.
(d) Credit shall be allowed when the reinsurance is ceded to an assuming insurer which is domiciled and licensed in, or in the case of a United States branch of an alien assuming insurer is entered through, a state which employs standards regarding credit for reinsurance substantially similar to those applicable in this state and the assuming insurer or United States branch of an alien assuming insurer (1) maintains a surplus as regards policyholders in an amount not less than twenty million dollars and (2) submits to the authority of this state to examine its books and records. The requirement of subdivision (1) of this subsection does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.
(e) (1) Credit shall be allowed when the reinsurance is ceded to an assuming insurer which maintains a trust fund in a qualified United States financial institution, as defined in subsection (b) of section 38a-87, for the payment of the valid claims of its United States policyholders and ceding insurers, their assigns and successors in interest. The assuming insurer shall report annually to the commissioner information substantially the same as that required to be reported on in the National Association of Insurance Commissioners' Annual Statement form by licensed insurers to enable the commissioner to determine the sufficiency of the trust fund. In the case of a single assuming insurer, the trust shall consist of a trusteed account representing the assuming insurer's liabilities attributable to business written in the United States and, in addition, the assuming insurer shall maintain a trusteed surplus of not less than twenty million dollars. In the case of a group including incorporated and individual unincorporated underwriters, the trust shall consist of a trusteed account representing the group's liabilities attributable to business written in the United States and, in addition, the group shall maintain a trusteed surplus of which one hundred million dollars shall be held jointly for the benefit of United States ceding insurers of any member of the group; the incorporated members of the group shall not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of solvency regulation and control by the group's domiciliary regulator as are the unincorporated members; and the group shall make available to the commissioner an annual certification of the solvency of each underwriter by the group's domiciliary regulator and its independent public accountants.
(2) Such trust shall be established in a form approved by the commissioner. The trust instrument shall provide that contested claims shall be valid and enforceable upon the final order of any court of competent jurisdiction in the United States. The trust shall vest legal title to its assets in the trustees of the trust for its United States policyholders and ceding insurers, their assigns and successors in interest. The trust and the assuming insurer shall be subject to examination as determined by the commissioner. The trust described herein must remain in effect for as long as the assuming insurer shall have outstanding obligations due under the reinsurance agreements subject to the trust.
(3) No later than the first day of March of each year the trustees of the trust shall report to the commissioner in writing setting forth the balance of the trust and listing the trust's investments at the end of the preceding year and shall certify the date of termination of the trust, if so planned, or certify that the trust shall not expire prior to the next following December thirty-first.
(f) Credit shall be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of subsection (b), (c), (d) or (e) of this section but only with respect to the insurance of risks located in jurisdictions where such reinsurance is required by applicable law or regulation of that jurisdiction.
(g) If the assuming insurer is not licensed or accredited to transact insurance or reinsurance in this state, the credit permitted by subsections (d) and (e) of this section shall not be allowed unless the assuming insurer agrees (1) that in the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance agreement, the assuming insurer, at the request of the ceding insurer, shall (A) submit to the jurisdiction of any court of competent jurisdiction in any state of the United States, (B) comply with all requirements necessary to give such court jurisdiction and (C) abide by the final decision of such court or any appellate court in the event of an appeal, and (2) to designate the commissioner or a designated attorney as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the ceding company. This provision is not intended to conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if such an obligation is created in the agreement.
(P.A. 90-41, S. 1, 6; P.A. 94-19.)
History: P.A. 94-19 added a reference in Subdiv. (1) of Subsec. (e) to "incorporated groups" of underwriters and a requirement that incorporated members of the group not be engaged in any business other than underwriting and subjecting such group to the same level of solvency regulation and control as is exercised on unincorporated members.

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Sec. 38a-86. Reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer. A reduction in liability for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of section 38a- 85 shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer and such reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with such assuming insurer as security for the payment of obligations thereunder, if such security is held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer; or, in the case of a trust, held in a qualified United States financial institution, as defined in subsection (b) of section 38a- 87. This security may be in the form of (1) cash, (2) securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners and qualifying as admitted assets, (3) clean, irrevocable, unconditional letters of credit, issued or confirmed by a qualified United States financial institution, as defined in subsection (a) of section 38a-87, not later than December thirty-first in respect of the year for which filing is being made, and in the possession of the ceding company on or before the filing date of its annual statement; provided letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance or confirmation shall, notwithstanding the issuing or confirming institution's subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification or amendment, whichever first occurs or (4) any other form of security acceptable to the commissioner.
(P.A. 90-41, S. 2, 6.)

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Sec. 38a-87. Qualified United States financial institutions. (a) For purposes of subdivision (3) of section 38a-86, a "qualified United States financial institution" means an institution that (1) is organized or, in the case of a United States office of a foreign banking organization, licensed, under the laws of the United States or any state thereof, (2) is regulated, supervised and examined by federal or state authorities having regulatory authority over banks and trust companies and (3) has been determined by either the commissioner, or the Securities Valuation Office of the National Association of Insurance Commissioners, to meet such standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the commissioner.
(b) For purposes of those provisions of sections 38a-85 to 38a-89, inclusive, specifying those institutions that are eligible to act as a fiduciary of a trust, "qualified United States financial institution" means an institution that (1) is organized, or, in the case of a United States branch or agency office of a foreign banking organization, licensed, under the laws of the United States or any state thereof and has been granted authority to operate with fiduciary powers and (2) is regulated, supervised and examined by federal or state authorities having regulatory authority over banks and trust companies.
(P.A. 90-41, S. 3, 6.)

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Sec. 38a-88. Regulations. The commissioner shall adopt regulations in accordance with the provisions of chapter 54 to implement the provisions of sections 38a-85 to 38a-89, inclusive.
(P.A. 90-41, S. 4, 6.)

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Sec. 38a-88a. Connecticut insurance reinvestment funds, authorized. Tax credits. Regulations. (a) As used in this section:
(1) "Facility" means an insurance business facility;
(2) "Insurance business" means a business engaged in the business of insuring risks or of providing services necessary to the business of insuring risks;
(3) "New job" means a job that did not exist in the business of a subject insurance business in this state prior to the subject insurance business's application to the commissioner for an eligibility certificate under this section for a new facility and that is filled by a new employee, but does not include a job created when an employee is shifted from an existing location of the subject insurance business in this state to a new facility;
(4) "New employee" means a person hired by a subject insurance business to fill a position for a new job or a person shifted from an existing location of the subject insurance business outside this state to a new facility in this state, provided (A) in no case shall the total number of new employees allowed for purposes of this credit exceed the total increase in the taxpayer's employment in this state, which increase shall be the difference between (i) the number of employees employed by the subject insurance business in this state at the time of application for an eligibility certificate to the commissioner plus the number of new employees who would be eligible for inclusion under the credit allowed under this section without regard to this calculation and (ii) the highest number of employees employed by the subject insurance business in this state in the year preceding the subject insurance business's application for an eligibility certificate to the commissioner and (B) a person shall be deemed to be a "new employee" only if such person's duties in connection with the operation of the facility are on a regular, full-time, or equivalent thereof, and permanent basis;
(5) "New facility" means a facility which (A) is acquired by, leased to, or constructed by, a subject insurance business on or after the date of the subject insurance business's application to the commissioner for an eligibility certificate under this section, unless, upon application of the subject insurance business and upon good and sufficient cause shown, the commissioner waives the requirement that such activity take place after the application and (B) was not in service or use during the one-year period immediately prior to the date of the subject insurance business's application to said commissioner for an eligibility certificate under this section, unless upon application of the subject insurance business and upon good and sufficient cause shown, the commissioner consents to waiving the one-year period;
(6) "Related person" means (A) a corporation, limited liability company, partnership, association or trust controlled by the taxpayer or subject insurance business, as the case may be, (B) an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer or subject insurance business, as the case may be, (C) a corporation, limited liability company, partnership, association or trust controlled by an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer or subject insurance business, as the case may be, or (D) a member of the same controlled group as the taxpayer or subject insurance business, as the case may be. For purposes of this section, "control", with respect to a corporation, means ownership, directly or indirectly, of stock possessing fifty per cent or more of the total combined voting power of all classes of the stock of such corporation entitled to vote. "Control", with respect to a trust, means ownership, directly or indirectly, of fifty per cent or more of the beneficial interest in the principal or income of such trust. The ownership of stock in a corporation, of a capital or profits interest in a partnership or association or of a beneficial interest in a trust shall be determined in accordance with the rules for constructive ownership of stock provided in Section 267(c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, other than paragraph (3) of such section;
(7) "Moneys of the taxpayer" means all amounts invested in a fund, directly or indirectly, on behalf of a taxpayer, including but not limited to (A) direct investments made by the taxpayer and (B) loans made to the fund for the benefit of the taxpayer which loans are guaranteed by the taxpayer, provided no amounts represented by any such loan shall be used for the purpose of obtaining any tax credit by any person making such loan against any tax levied by this state;
(8) "Income year" means (A) with respect to corporations subject to taxation under chapter 208, the income year as determined under said chapter, (B) with respect to insurance companies, hospital and medical services corporations subject to taxation under chapter 207, the income year as determined under said chapter, and (C) with respect to taxpayers subject to taxation under chapter 229, the taxable year determined under said chapter;
(9) "Taxpayer" means any person as defined in section 12-1, whether or not subject to any taxes levied by this state; and
(10) "Commissioner" means the Commissioner of Economic and Community Development.
(b) On or before July 1, 2000, the commissioner shall register managers of funds created for the purpose of investing in insurance businesses. Any manager registered under this subsection shall have its primary place of business in this state. Each applicant shall submit an application under oath to the commissioner to be registered and shall furnish evidence satisfactory to the commissioner of its financial responsibility, integrity, and professional competence to manage investments. Failure to maintain adequate fiduciary standards shall constitute cause for the commissioner to revoke, after hearing, any registration granted under this section. The fund manager shall make a report on or before the first day of March in each year, under oath, to the Commissioner of Revenue Services specifying the name, address and Social Security number or employer identification number of each investor, the year during which each investment was made by each investor, the amount of each investment and a description of the fund's investment objectives and relative performance.
(c) There shall be allowed as a credit against the tax imposed under chapter 207, 208 or 229 or section 38a-743 an amount equal to the following percentage of the moneys of the taxpayer invested through a fund manager in an insurance business with respect to the following income years of the taxpayer: (1) With respect to the income year in which the investment in the subject insurance business was made and the two next succeeding income years, zero per cent; (2) with respect to the third full income year succeeding the year in which the investment in the subject insurance business was made and the three next succeeding income years, ten per cent; (3) with respect to the seventh full income year succeeding the year in which the investment in the subject insurance business was made and the two next succeeding income years, twenty per cent. The sum of all tax credit granted pursuant to the provisions of this section shall not exceed fifteen million dollars with respect to investments made by a fund or funds in any single insurance business, and with respect to all investments made by a fund shall not exceed the total amount originally invested in such fund. Any fund manager may apply to the Commissioner of Economic and Community Development for a credit that exceeds the limitations established by this subsection. The commissioner shall evaluate the benefits of such application and make recommendations to the General Assembly if he determines that the proposal would be of economic benefit to the state.
(d) The credit allowed by this section may be claimed only by a taxpayer who has invested in an insurance business through a fund (1) which has a total asset value of not less than thirty million dollars for the income year for which the initial credit is taken; (2) has not less than three investors who are not related persons with respect to each other or to any insurance business in which any investment is made other than through the fund at the date the investment is made and (3) which invests only in insurance businesses that are not related persons with respect to each other.
(e) The credit allowed by this section may be claimed only with respect to a subject insurance business which (1) occupies the new facility for which an eligibility certificate has been issued by the Insurance Commissioner and with respect to which the certification required under subsection (g) of this section has been issued as its home office, and (2) employs not less than twenty-five per cent of its total work force in new jobs.
(f) The credit allowed by this section may be claimed only with respect to an income year for which a certification of continued eligibility required under subsection (g) of this section has been issued. If, with respect to any year for which a tax credit is claimed, any subject insurance business ceases at any time to employ at least twenty-five per cent of its total work force in new jobs, then, except as provided in subsection (g) of this section, the entitlement to the credit allowed by this section shall not be allowed for the taxable year in which such employment ceases, and there shall not be a pro rata application of the credit to such taxable year; provided, if the reason for such cessation is the dissolution of such insurance business in bankruptcy or delinquency proceeding, as defined in section 38a-905, the credit shall be allowed.
(g) The commissioner, upon application, shall issue an eligibility certificate for an insurance business occupying a new facility in this state and employing new employees, after it has been established, to his satisfaction, that subject insurance business has complied with the provisions of this section. If the commissioner determines that such requirements have been met as a result of transactions with a related person for other than bona fide business purposes, he shall deny such application. The commissioner shall require the subject insurance business to submit annually such information as may be necessary to determine whether the appropriate occupancy and employment requirements have been met at all times during an income year. If the commissioner determines that such requirements have been so met, he shall issue a certification of continued eligibility to that effect to the subject insurance business on or before the first day of the third month following the close of the subject insurance business's income year.
(h) Each taxpayer claiming the credit allowed under this section shall submit to the Commissioner of Revenue Services a copy of the eligibility certificate and the certification required under subsection (g) of this section with its tax return for each taxable year for which a credit is claimed.
(i) (1) If (A) the number of new employees on account of which a taxpayer claimed the credit allowed by this section decreases to less than twenty-five per cent of its total work force for more than sixty days during any of the taxable years for which a credit is claimed, (B) those employees are not replaced by other employees who have not been shifted from an existing location of the subject insurance business in this state and (C) the subject insurance business has relocated operations conducted in the new facility to a location outside this state, the taxpayer shall be required to recapture a percentage, as determined under the provisions of subdivision (2) of this subsection, of the credit allowed under this section on its tax return and no subsequent credit shall be allowed. If the credit claimed by the taxpayer under this section is attributable to investments made in more than one insurance business, the credit recaptured and disallowed under this subsection shall be that portion of the credit attributable to the investment in the insurance business as described in subparagraphs (A) to (C), inclusive, of subdivision (1) of this subsection. (2) If the taxpayer is required under the provisions of subdivision (1) of this subsection to recapture a portion of the credit during (A) the first year such credit was claimed, then ninety per cent of the credit allowed shall be recaptured on the tax return required to be filed for such year, (B) the second of such years, then sixty-five per cent of the credit allowed for the entire period of eligibility shall be recaptured on the tax return required to be filed for such year, (C) the third of such years, then fifty per cent of the credit allowed for the entire period of eligibility shall be recaptured on the tax return required to be filed for such year, (D) the fourth of such years, then thirty per cent of the credit allowed for the entire period of eligibility shall be recaptured on the tax return required to be filed for such year, (E) the fifth of such years, then twenty per cent of the credit allowed for the entire period of eligibility shall be recaptured on the tax return required to be filed for such year and (F) the sixth or subsequent of such years, then ten per cent of the credit allowed for the entire period of eligibility shall be recaptured on the tax return required to be filed for such year. Any credit recaptured pursuant to this subsection shall not be in excess of the credit that would be allowed for the applicable investment. The Commissioner of Revenue Services may recapture such credits from the taxpayer who has claimed such credits. If the commissioner is unable to recapture all or part of such credits from such taxpayer, the commissioner may seek to recapture such credits from any taxpayer who has assigned such credits to another taxpayer. If the commissioner is unable to recapture all or part of such credits from any such taxpayer, the commissioner may recapture such credits from the fund.
(j) The tax credit allowed by this section shall only be available for investments in funds that are not open to additional investments or investors beyond the amount subscribed at the formation of the fund. No credits shall be allowed under this section for investments in any fund created on or after July 1, 2000.
(k) (1) The Commissioner of Revenue Services may treat one or more corporations that are properly included in a combined corporation business tax return under section 12-223 as one taxpayer in determining whether the appropriate requirements under this section are met. Where corporations are treated as one taxpayer for purposes of this subsection, then the credit shall be allowed only against the amount of the combined tax for all corporations properly included in a combined return that, under the provisions of subdivision (2) of this subsection, is attributable to the corporations treated as one taxpayer. (2) The amount of the combined tax for all corporations properly included in a combined corporation business tax return that is attributable to the corporations that are treated as one taxpayer under the provisions of this subsection shall be in the same ratio to such combined tax that the net income apportioned to this state of each corporation treated as one taxpayer bears to the net income apportioned to this state, in the aggregate, of all corporations included in such combined return. Solely for the purpose of computing such ratio, any net loss apportioned to this state by a corporation treated as one taxpayer or by a corporation included in such combined return shall be disregarded.
(l) Any taxpayer allowed a credit under this section may assign such credit to another person, provided such person may claim such credit only with respect to a calendar year for which the assigning taxpayer would have been eligible to claim such credit. The fund manager shall include in the report filed with the Commissioner of Revenue Services in accordance with subsection (b) of this section information requested by the commissioner regarding such assignments including the current holders of credits as of the end of the preceding calendar year.
(m) No taxpayer shall be eligible for a credit under this section and either section 12-217e or section 12-217m for the same investment. No two taxpayers shall be eligible for any tax credit with respect to the same investment, employee or facility.
(n) Any tax credit not used in the income year for which it was allowed may be carried forward for the five immediately succeeding income years until the full credit has been allowed.
(o) The commissioner, with the approval of the Commissioner of Revenue Services and the Secretary of the Office of Policy and Management, may adopt regulations in accordance with chapter 54 to carry out the purposes of this section.
(P.A. 94-214, S. 1, 4; P.A. 95-79, S. 139, 189; 95-303, S. 2, 3; P.A. 97-292, S. 1, 4; P.A. 98-214, S. 31; P.A. 00-170, S. 30, 31, 42.)
History: P.A. 94-214, effective June 7, 1994, and applicable (1) to income years of corporations under chapter 208 commencing on or after January 1, 1994, (2) to income years of insurance companies, hospital and medical services corporations under chapter 207 commencing on or after January 1, 1994, or (3) taxable years of taxpayers under chapter 229 commencing on or after January 1, 1994, as the case may be; P.A. 95-79 redefined "related person" to include a limited liability company, effective May 31, 1995; P.A. 95-303 amended Subsec. (a) to add new Subdiv. (7) defining "moneys of the taxpayer" and Subdiv. (8) defining "income year", Subsec. (c) to add reference to Sec. 38a-743, deleted Subdivs. (1) and (2) of Subsec. (c) and added new Subdivs. (1) to (3) re amount of credit, made technical changes to Subsec. (d), added proviso to Subsec. (f) re dissolution as the result of bankruptcy or delinquency proceeding, added provision to Subsec. (i) re credit claimed which is attributable to investments in more than one insurance business, deleted reference to Ch. 207 in Subsec. (l), and made technical changes to Subsec. (m), effective July 6, 1995, and applicable (1) to income years of corporations under Ch. 208 commencing on or after January 1, 1995, (2) to income years of insurance companies, hospital and medical services corporations under Ch. 207 commencing on or after January 1, 1995, or (3) to taxable years of taxpayers under Ch. 229 commencing on or after January 1, 1995, as the case may be; P.A. 97-292 amended Subsec. (a), to add Subdivs. (9) and (10) defining "taxpayer" and "commissioner", Subsec. (b) to transfer from Insurance Commissioner to the Commissioner of Economic and Community Development responsibility for registration of fund managers, added application requirements, Subsec. (c) to add cap for sum of all tax credit granted and provision for application for credit to exceed cap, Subsec. (d) to prohibit investments by related persons, Subsec. (e) to delete requirement of incorporation in this state, Subsec. (i) to allow Commissioner of Revenue Services to recapture credits from any taxpayer who has assigned credits to another taxpayer or from the fund, Subsec. (j) to delete existing language and to provide that tax credit is only available for investments in fund not open to additional investments beyond the amount subscribed at formation of fund, Subsec. (l) to add requirement re reporting of assignments and made technical changes, effective July 8, 1997, and applicable to income years commencing on or after January 1, 1997; P.A. 98-214 amended Subsec. (f) to delete reference to "subsection (d)" of Sec. 38a-905; P.A. 00-170 amended Subsec. (b) to provide that registration of fund managers be accomplished prior to July 1, 2000, and amended Subsec. (j) to restrict the applicability of the tax credit under this section to funds created prior to July 1, 2000, effective May 26, 2000.
See Sec. 38a-88b re applicability of this section.

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Sec. 38a-88b. Applicability of section 38a-88a. (a) The provisions of section 38a- 88a of the general statutes, revision of 1958, revised to January 1, 1997, shall apply to any fund established prior to June 1, 1997, or to any fund which is formed on or after June 1, 1997, in connection with a memorandum of understanding executed by and among the fund manager, the investors and either the Commissioner of Revenue Services or the Insurance Commissioner prior to June 1, 1997.
(b) The provisions of section 38a-88a, as amended by section 1 of public act 97- 292, shall only apply to any fund established under section 38a-88a of the general statutes, revision of 1958, revised to January 1, 1997, to investments made by such a fund and to credits earned by such a fund if the fund manager of such fund notifies the Commissioner of Economic and Community Development that such fund wishes to be designated as a fund subject to said section 38a-88a, as amended by section 1 of public act 97-292.
(c) Notwithstanding the provisions of subsection (a) of this section, the provisions of subsections (b) and (l) of section 38a-88a, as amended by section 1 of public act 97- 292, shall be applicable to all funds.
(P.A. 97-292, S. 3, 4; 97-295, S. 22, 25; P.A. 98-262, S. 14, 22.)
History: P.A. 97-292 effective July 8, 1997, and applicable to income years of taxpayers commencing on or after January 1, 1997; P.A. 97-295 amended Subsec. (a) to specify execution of memorandum of understanding by either Commissioner of Revenue Services or Insurance Commissioner rather than by both commissioners, effective July 8, 1997, and applicable to income years commencing on or after January 1, 1998; P.A. 98-262 revised effective date of P.A. 97-295, but without affecting this section.

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Sec. 38a-89. Reinsurance agreements affected. Sections 38a-85 to 38a-88, inclusive, shall apply to reinsurance agreements which have had an inception, anniversary or renewal date not less than six months after January 1, 1991, with respect to all cessions under such agreements after such inception, anniversary or renewal date.
(P.A. 90-41, S. 5, 6.)

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PART IIa
MANAGING GENERAL AGENTS
AND CONTROLLED INSURERS