Page:United States Statutes at Large Volume 110 Part 5.djvu/355

 PUBLIC LAW 104-290—OCT. 11, 1996 110 STAT. 3429 SEC. 205. VARIABLE INSURANCE CONTRACTS. (a) UNIT INVESTMENT TRUST TREATMENT.— Section 26 of the Investment Company Act of 1940 (15 U.S.C. 80a-26) is amended by adding at the end the following new subsection: "(e) EXEMPTION.— "(1) IN GENERAL. —Subsection (a) does not apply to any registered separate account funding variable insurance contracts, or to the sponsoring insurance company and principal underwriter of such account. "(2) LIMITATION ON SALES.— It shall be unlawful for any registered separate account funding variable insurance contracts, or for the sponsoring insurance company of such account, to sell any such contract— "(A) unless the fees and charges deducted under the contract, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the insurance company, and, beginning on the earlier of August 1, 1997, or the earliest i, effective date of any registration statement or amendment thereto for such contract following the date of enactment of this subsection, the insurance company so represents in the registration statement for the contract; and "(B) unless the insurance company— "(i) complies with all other applicable provisions of this section, as if it were a trustee or custodian of the registered separate account; "(ii) files with the insurance regulatory authority of the State which is the domiciliary State of the insurance company, an annual statement of its financial condition, which most recent statement indicates that the insurance company has a combined capital and surplus, if a stock company, or an unassigned surplus, if a mutual company, of not less than $1,000,000, or such other amount as the Commission may from time to time prescribe by rule, as necessary or appropriate in the public interest or for the protection of investors; and "(iii) together with its registered separate accounts, is supervised and examined periodically by the insurance authority of such State. "(3) FEES AND CHARGES.—For purposes of paragraph (2), the fees and charges deducted under the contract shall include all fees and charges imposed for any purpose and in any manner. "(4) REGULATORY AUTHORITY.—The Commission may issue such rules and regulations to carry out paragraph (2)(A) as it determines are necessary or appropriate in the public interest or for the protection of investors.". (b) PERIODIC PAYMENT PLAN TREATMENT.— Section 27 of the Investment Company Act of 1940 (15 U.S.C. 80a-27) is amended by adding at the end the following new subsection: "(i)(l) This section does not apply to any registered separate account funding variable insurance contracts, or to the sponsoring insurance company and principal underwriter of such account, except as provided in paragraph (2). "(2) It shall be unlawful for any registered separate account funding variable insurance contracts, or for the sponsoring

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