S-1804.1 _______________________________________________
SUBSTITUTE SENATE BILL 5506
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State of Washington 57th Legislature 2001 Regular Session
By Senate Committee on Labor, Commerce & Financial Institutions (originally sponsored by Senator Jacobsen)
READ FIRST TIME 02/22/01.
AN ACT Relating to the separate reserve fund maintained by a charitable gift annuity business; and amending RCW 48.38.020.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1. RCW 48.38.020 and 1998 c 284 s 2 are each amended to read as follows:
(1) Upon granting to such insurer or institution under RCW 48.38.010 a certificate of exemption to conduct a charitable gift annuity business, the insurance commissioner shall require it to establish and maintain a separate reserve fund adequate to meet the future payments under its charitable gift annuity contracts.
(2) The assets of the separate reserve fund:
(a) Shall be held legally and physically segregated from the other assets of the certificate of exemption holder;
(b) Shall be invested in the same manner that persons of reasonable prudence, discretion, and intelligence exercise in the management of a like enterprise, not in regard to speculating but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital. Investments shall be of sufficient value, liquidity, and diversity to assure the insurer or institution's ability to meet its outstanding obligations; and
(c) Shall not be liable for any debts of the insurer or institution holding a certificate of exemption under this chapter, other than those incurred pursuant to the issuance of charitable gift annuities.
(3) The amount of the separate reserve fund shall be:
(a) For contracts issued prior to July 1, 1998, not less than an amount computed in accordance with the standard of valuation based on the 1971 individual annuity mortality table with six percent interest for single premium immediate annuity contracts and four percent interest for all other individual annuity contracts;
(b) For contracts issued on or after July 1, 1998, in an amount not less than the aggregate reserves calculated according to the standards set forth in RCW 48.74.030 for other annuities with no cash settlement options;
(c) Plus a surplus of ten percent of the combined amounts under (a) and (b) of this subsection.
(4) The general assets of the insurer or institution holding a certificate of exemption under this chapter shall be liable for the payment of annuities to the extent that the separate reserve fund is inadequate.
(5) For any failure on its part to establish and maintain the separate reserve fund, the insurance commissioner shall revoke its certificate of exemption.
(6) In determining the minimum reserves that must be maintained by an institution holding a certificate of exemption under RCW 48.38.010, a deduction shall be made for the minimum reserve amount that would be required for a gift annuity, if the institution has purchased from an insurance company licensed in the state of Washington a life annuity that pays the amount stipulated in the gift annuity agreement.
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