SENATORS Nein, Blessing, Robert Gardner, Roberts

To amend sections 3901.321, 3905.45, 3905.451, and

1

3915.073 of the Revised Code relative to insurance

2

policies that are issued, sold, or assigned for

3

the purpose of purchasing funeral or burial goods

4

or services, interest earned under the Standard

5

Nonforfeiture Law for Individual Deferred

6

Annuities, and acquisitions conducted under the

7

Holding Company Systems Law.

8

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 3901.321, 3905.45, 3905.451, and	9
3915.073 of the Revised Code be amended to read as follows:	10

Sec. 3901.321.  (A) For the purposes of this section:

11

(1) "Acquiring party" means any person by whom or on whose	12
behalf a merger or other acquisition of control is to be effected.	13

(2) "Domestic insurer" includes any person controlling a	14
domestic insurer unless the person, as determined by the	15
superintendent of insurance, is either directly or through its	16
affiliates primarily engaged in business other than the business	17
of insurance.	18

(3) "Person" does not include any securities broker holding,	19
in the usual and customary broker's function, less than twenty per	20
cent of the voting securities of an insurance company or of any	21
person that controls an insurance company.	22

(B)(1) Subject to compliance with division (B)(2) of this	23
section, no person other than the issuer shall do any of the	24
following if, as a result, the person would, directly or	25
indirectly, including by means of conversion or the exercise of	26
any right to acquire, be in control of a domestic insurer:	27

(a) Make a tender offer for any voting security of a	28
domestic insurer;	29

(b) Make a request or invitation for tenders of any voting	30
security of a domestic insurer;	31

(c) Enter into any agreement to exchange securities of a	32
domestic insurer;	33

(d) Seek to acquire or acquire, in the open market or	34
otherwise, any voting security of a domestic insurer;	35

(e) Enter into an agreement to merge with, or otherwise to	36
acquire control of, a domestic insurer.	37

(2)(a) No person shall engage in any transaction described	38
in division (B)(1) of this section, unless all of the following	39
conditions are met:	40

(i) The person has filed with the superintendent of	41
insurance a statement containing the information required by	42
division (C) of this section;	43

(ii) The person has sent the statement to the domestic	44
insurer;	45

(iii) The offer, request, invitation, agreement, or	46
acquisition has been approved by the superintendent in the manner	47
provided in division (F) of this section.	48

(b) The requirements of division (B)(2)(a) of this section	49
shall be met at the time any offer, request, or invitation is	50
made, or any agreement is entered into, or prior to the	51
acquisition of the securities if no offer or agreement is	52
involved.	53

(C) The statement required by division (B)(2) of this	54
section shall be made under oath or affirmation, and shall contain	55
all of the following information:	56

(1) The name and address of each acquiring party;

57

(2) If the acquiring party is an individual, the	58
individual's principal occupation and all offices and positions	59
held during the past five years, and any conviction of crimes	60
other than minor traffic violations during the past ten years;	61

(3) If the acquiring party is not an individual, a report of	62
the nature of its business operations during the past five years	63
or for such lesser period as the acquiring party and any of its	64
predecessors shall have been in existence; an informative	65
description of the business intended to be done by the acquiring	66
party and the acquiring party's subsidiaries; and a list of all	67
individuals who are or who have been selected to become directors	68
or executive officers of the acquiring party, who perform or will	69
perform functions appropriate to such positions. The list shall	70
include for each individual the information required by division	71
(C)(2) of this section.	72

(4) The source, nature, and amount of the consideration used	73
or to be used in effecting the merger or other acquisition of	74
control, a description of any transaction in which funds were or	75
are to be obtained for any such purpose, including any pledge of	76
the domestic insurer's stock, or the stock of any of its	77
subsidiaries or controlling affiliates, and the identity of	78
persons furnishing such consideration;	79

(5) Fully audited financial information as to the earnings	80
and financial condition of each acquiring party for its preceding	81
five fiscal years, or for such lesser period as the acquiring	82
party and any of its predecessors shall have been in existence,	83
and similar unaudited information as of a date not earlier than	84
ninety days prior to the filing of the statement;	85

(6) Any plans or proposals which each acquiring party may	86
have to liquidate such domestic insurer, to sell its assets or	87
merge or consolidate it with any person, or to make any other	88
material change in its business or corporate structure or	89
management;	90

(7) The number of shares of any security of such issuer or	91
such controlling person that each acquiring party proposes to	92
acquire, and the terms of the offer, request, invitation,	93
agreement, or acquisition, and a statement as to the method by	94
which the fairness of the proposal was determined;	95

(8) The amount of each class of any security of such issuer	96
or such controlling person which is beneficially owned or	97
concerning which there is a right to acquire beneficial ownership	98
by each acquiring party;	99

(9) A full description of any contracts, arrangements, or	100
understandings with respect to any security of such issuer or such	101
controlling person in which any acquiring party is involved,	102
including but not limited to transfer of any of the securities,	103
joint ventures, loan or option arrangements, puts or calls,	104
guarantees of loans, guarantees against loss or guarantees of	105
profits, division of losses or profits, or the giving or	106
withholding of proxies. The description shall identify the	107
persons with whom such contracts, arrangements, or understandings	108
have been made.	109

(10) A description of the purchase of any security of such	110
issuer or such controlling person during the year preceding the	111
filing of the statement, by any acquiring party, including the	112
dates of purchase, names of the purchasers, and consideration paid	113
or agreed to be paid therefor;	114

(11) A description of any recommendations to purchase any	115
security of such issuer or such controlling person made during the	116
year preceding the filing of the statement, by any acquiring	117
party, or by anyone based upon interviews or at the suggestion of	118
the acquiring party;	119

(12) Copies of all tender offers for, requests, or	120
invitations for tenders of, exchange offers for, and agreements to	121
acquire or exchange any securities of such issuer or such	122
controlling person, and, if distributed, of additional	123
solicitation material relating thereto;	124

(13) The terms of any agreement, contract, or understanding	125
made with or proposed to be made with any broker or dealer as to	126
solicitation of securities of such issuer or such controlling	127
person for tender, and the amount of any fees, commissions, or	128
other compensation to be paid to brokers or dealers with regard	129
thereto;	130

(14) With respect to proposed affiliations between depository	131
institutions or any affiliate thereof, within the meaning of Title	132
I, section 104(c) of the "Gramm-Leach-Bliley Act," Pub. L. No.	133
106-102, 113 Stat. 1338 (1999), and a domestic insurer, the	134
proposed effective date of the acquisition or change of control;	135

(15) Such additional information as the superintendent may	136
by rule prescribe as necessary or appropriate for the protection	137
of policyholders of the domestic insurer or in the public	138
interest.	139

(D)(1) If the person required to file the statement required	140
by division (B)(2) of this section is a partnership, limited	141
partnership, syndicate, or other group, the superintendent may	142
require that the information required by division (C) of this	143
section be furnished with respect to each partner of such	144
partnership or limited partnership, each member of such syndicate	145
or group, and each person that controls such partner or member. If	146
any such partner, member, or person is a corporation, or the	147
person required to file the statement is a corporation, the	148
superintendent may require that the information required by	149
division (C) of this section be furnished with respect to the	150
corporation, each officer and director of the corporation, and	151
each person that is directly or indirectly the beneficial owner of	152
more than ten per cent of the outstanding voting securities of the	153
corporation.	154

(2) If any material change occurs in the facts set forth in	155
the statement required by division (B)(2) of this section, an	156
amendment setting forth such change, together with copies of all	157
documents and other material relevant to the change, shall be	158
filed with the superintendent by the person subject to division	159
(B)(2) of this section and sent to the domestic insurer within two	160
business days after such person learns of the occurrence of the	161
material change.	162

(E) If any offer, request, invitation, agreement, or	163
acquisition described in division (B)(1) of this section is	164
proposed to be made by means of a registration statement under the	165
"Securities Act of 1933," 48 Stat. 74, 15 U.S.C.A. 78a, or in	166
circumstances requiring the disclosure of similar information	167
under the "Securities Exchange Act of 1934," 48 Stat. 881, 15	168
U.S.C.A. 78a, or under a state law requiring similar registration	169
or disclosure, the person required to file the statement required	170
by division (B)(2) of this section may use such documents in	171
furnishing the information required by that statement.	172

(F)(1) The superintendent shall approve any merger or other	173
acquisition of control described in division (B)(1) of this	174
section unless, after a public hearing, the superintendent finds	175
that any of the following apply:	176

(a) After the change of control, the domestic insurer would	177
not be able to satisfy the requirements for the issuance of a	178
license to write the line or lines of insurance for which it is	179
presently licensed;	180

(b) The effect of the merger or other acquisition of control	181
would be substantially to lessen competition in insurance in this	182
state or tend to create a monopoly;	183

(c) The financial condition of any acquiring party is such	184
as might jeopardize the financial stability of the domestic	185
insurer, or prejudice the interests of its policyholders;	186

(d) The plans or proposals that the acquiring party has to	187
liquidate the domestic insurer, sell its assets, or consolidate or	188
merge it with any person, or to make any other material change in	189
its business or corporate structure or management, are unfair and	190
unreasonable to policyholders of the domestic insurer and not in	191
the public interest;	192

(e) The competence, experience, and integrity of those	193
persons that would control the operation of the domestic insurer	194
are such that it would not be in the interest of policyholders of	195
the domestic insurer and of the public to permit the merger or	196
other acquisition of control;	197

(f) The acquisition is likely to be hazardous or prejudicial	198
to the insurance-buying public.	199

(2)(a) Chapter 119. of the Revised Code, except for section	200
119.09 of the Revised Code, applies to the notice of any hearing	201
held under division (F)(1) of this section, including the notice	202
of the hearing, the conduct of the hearing, the orders issued	203
pursuant to it, the review of the orders, and all other matters	204
relating to the holding of the hearing, but only to the extent	205
that Chapter 119. of the Revised Code is not inconsistent or in	206
conflict with this section.	207

(b) The notice of a hearing required under this division	208
shall be transmitted by personal service, certified mail, e-mail,	209
or any other method designed to ensure and confirm receipt of the	210
notice, to the persons and addresses designated to receive notices	211
and correspondence in the information statement filed under	212
division (B)(2) of this section. Confirmation of receipt of the	213
notice, including electronic "Read Receipt" confirmation, shall	214
constitute evidence of compliance with the requirement of this	215
section. The notice of hearing shall include the reasons for the	216
proposed action and a statement informing the acquiring party that	217
the party is entitled to a hearing. The notice also shall inform	218
the acquiring party that at the hearing the acquiring party may	219
appear in person, by attorney, or by such other representative as	220
is permitted to practice before the superintendent, or that the	221
acquiring party may present its position, arguments, or	222
contentions in writing, and that at the hearing the acquiring	223
party may present evidence and examine witnesses appearing for and	224
against the acquiring party. A copy of the notice also shall be	225
transmitted to attorneys or other representatives of record	226
representing the acquiring party.	227

(c) The hearing shall be held at the offices of the	228
superintendent within ten calendar days, but not earlier than	229
seven calendar days, of the date of transmission of the notice of	230
hearing by any means, unless it is postponed or continued; but in	231
no event shall the hearing be held unless notice is received at	232
least three days prior to the hearing. The superintendent may	233
postpone or continue the hearing upon receipt of a written request	234
by an acquiring party, or upon the superintendent's motion,	235
provided, however, a hearing in connection with a proposed change	236
of control involving a depository institution or any affiliate	237
thereof, within the meaning of Title I, section 104(c) of the	238
"Gramm-Leach-Bliley Act," Pub. L. No. 106-102, 113 Stat. 1338	239
(1999), and a domestic insurer, may be postponed or continued only	240
upon the request of an acquiring party, or upon the	241
superintendent's motion when the acquiring party agrees in writing	242
to extend the sixty-day period provided for in section 104(c) of	243
the "Gramm-Leach-Bliley Act," by a number of days equal to the	244
number of days of such postponement or continuance.	245

(d) For the purpose of conducting any hearing held under	246
this section, the superintendent may require the attendance of	247
such witnesses and the production of such books, records, and	248
papers as the superintendent desires, and may take the depositions	249
of witnesses residing within or without the state in the same	250
manner as is prescribed by law for the taking of depositions in	251
civil actions in the court of common pleas, and for that purpose	252
the superintendent may, and upon the request of an acquiring party	253
shall, issue a subpoena for any witnesses or a subpoena duces	254
tecum to compel the production of any books, records, or papers,	255
directed to the sheriff of the county where such witness resides	256
or is found, which shall be served and returned in the same manner	257
as a subpoena in a criminal case is served and returned. The fees	258
and mileage of the sheriff and witnesses shall be the same as that	259
allowed in the court of common pleas in criminal cases. Fees and	260
mileage shall be paid from the fund in the state treasury for the	261
use of the superintendent in the same manner as other expenses of	262
the superintendent are paid. In any case of disobedience or	263
neglect of any subpoena served on any person or the refusal of any	264
witness to testify in any matter regarding which the witness may	265
lawfully be interrogated, the court of common pleas of any county	266
where such disobedience, neglect, or refusal occurs or any judge	267
thereof, on application by the superintendent, shall compel	268
obedience by attachment proceedings for contempt, as in the case	269
of disobedience of the requirements of a subpoena issued from the	270
court or a refusal to testify therein.	271

In any hearing held under this section, a record of the	272
testimony, as provided by stenographic means or by use of audio	273
electronic recording devices, as determined by the superintendent,	274
and other evidence submitted shall be taken at the expense of the	275
superintendent. The record shall include all of the testimony and	276
other evidence, and rulings on the admissibility thereof,	277
presented at the hearing.	278

The superintendent shall pass upon the admissibility of	279
evidence, but a party to the proceedings may at that time object	280
to the rulings of the superintendent, and if the superintendent	281
refuses to admit evidence, the party offering the evidence shall	282
proffer the evidence. The proffer shall be made a part of the	283
record of the hearing.	284

In any hearing held under this section, the superintendent	285
may call any person to testify under oath as upon	286
cross-examination. The superintendent, or any one delegated by	287
the superintendent to conduct a hearing, may administer oaths or	288
affirmations.	289

In any hearing under this section, the superintendent may	290
appoint a hearing officer to conduct the hearing; the hearing	291
officer has the same powers and authority in conducting the	292
hearing as is granted to the superintendent. The hearing officer	293
shall have been admitted to the practice of law in the state and	294
be possessed of any additional qualifications as the	295
superintendent requires. The hearing officer shall submit to the	296
superintendent a written report setting forth the hearing	297
officer's finding of fact and conclusions of law and a	298
recommendation of the action to be taken by the superintendent. A	299
copy of the written report and recommendation shall, within seven	300
days of the date of filing thereof, be served upon the acquiring	301
party or the acquiring party's attorney or other representative of	302
record, by personal service, certified mail, e-mail, or any other	303
method designed to ensure and confirm receipt of the report. The	304
acquiring party may, within three days of receipt of the copy of	305
the written report and recommendation, file with the	306
superintendent written objections to the report and	307
recommendation, which objections the superintendent shall	308
consider before approving, modifying, or disapproving the	309
recommendation. The superintendent may grant extensions of time	310
to the acquiring party within which to file such objections. No	311
recommendation of the hearing officer shall be approved, modified,	312
or disapproved by the superintendent until after three days	313
following the service of the report and recommendation as provided	314
in this section. The superintendent may order additional	315
testimony to be taken or permit the introduction of further	316
documentary evidence. The superintendent may approve, modify, or	317
disapprove the recommendation of the hearing officer, and the	318
order of the superintendent based on the report, recommendation,	319
transcript of testimony, and evidence, or the objections of the	320
acquiring party, and additional testimony and evidence shall have	321
the same effect as if the hearing had been conducted by the	322
superintendent. No such recommendation is final until confirmed	323
and approved by the superintendent as indicated by the order	324
entered in the record of proceedings, and if the superintendent	325
modifies or disapproves the recommendations of the hearing	326
officer, the reasons for the modification or disapproval shall be	327
included in the record of proceedings.	328

After the order is entered, the superintendent shall	329
transmit in the manner and by any of the methods set forth in	330
division (F)(2)(b) of this section a certified copy of the order	331
and a statement of the time and method by which an appeal may be	332
perfected. A copy of the order shall be mailed to the attorneys	333
or other representatives of record representing the acquiring	334
party.	335

(e) An order of disapproval issued by the superintendent	336
may be appealed to the court of common pleas of Franklin county by	337
filing a notice of appeal with the superintendent and a copy of	338
the notice of appeal with the court, within fifteen calendar days	339
after the transmittal of the copy of the order of disapproval. The	340
notice of appeal shall set forth the order appealed from and the	341
grounds for appeal, in accordance with section 119.12 of the	342
Revised Code.	343

(3) The superintendent may retain at the acquiring party's	344
expense any attorneys, actuaries, accountants, and other experts	345
not otherwise a part of the superintendent's staff as may be	346
reasonably necessary to assist the superintendent in reviewing the	347
proposed acquisition of control.	348

(G) This section does not apply to either of the following:

349

(1) Any transaction that is subject to section 3907.09,	350
3907.10, 3907.11, or 3921.14, or sections 3925.27 to 3925.31,	351
3941.35 to 3941.46, or section 3953.19 of the Revised Code;	352

(2) Any offer, request, invitation, agreement, or	353
acquisition that the superintendent by order exempts from this	354
section on either of the following bases:	355

(a) It has not been made or entered into for the purpose and	356
does not have the effect of changing or influencing the control of	357
a domestic insurer;	358

(b) It is not otherwise comprehended within the purposes of	359
this section.	360

(H) Nothing in this section or in any other section of Title	361
XXXIX of the Revised Code shall be construed to impair the	362
authority of the attorney general to investigate or prosecute	363
actions under any state or federal antitrust law with respect to	364
any merger or other acquisition involving domestic insurers.	365

(I) In connection with a proposed change of control	366
involving a depository institution or any affiliate thereof,	367
within the meaning of Title I, section 104(c) of the	368
"Gramm-Leach-Bliley Act," Pub. L. No. 106-102, 113 Stat. 1338	369
(1999), and a domestic insurer, not later than sixty days after	370
the date of the notification of the proposed change in control	371
submitted pursuant to division (B)(2) of this section, the	372
superintendent shall make any determination that the person	373
acquiring control of the insurer shall maintain or restore the	374
capital of the insurer to the level required by the laws and	375
regulations of this state.	376

Sec. 3905.45. No insurer engaged in the business of	377
providing(A) If an insurance policy has been issued, sold, or	378
assigned for the paymentpurpose of purchasing any funeral or	379
burial goods or services, the insurer shall not pay the benefits	380
of the insurance policy, including the cash surrender value, to	381
any funeral director or funeral home, licensed under Chapter 4717.	382
of the Revised Codeprovider of such goods or services, unless the	383
insurer, as a condition to paying the benefits of the insurance	384
policy, is provided byreceives from the funeral director or	385
funeral home withprovider a certified copy of the certificate of	386
death of the insured, or other evidence of death satisfactory to	387
the insurer, and a certificate of completion. The certificate of	388
completion shall be signed by the funeral director,provider and	389
shall certify that the funeral director or funeral homeprovider	390
has provideddelivered all the goods and performed all the	391
services contracted for, by, or on behalf of the insured.	392

(B) A provider of funeral or burial goods or services shall	393
not pledge, assign, transfer, borrow from, or otherwise encumber	394
an insurance policy described in division (A) of this section	395
prior to delivering all the goods and performing all the services	396
contracted for, by, or on behalf of the insured. However, a	397
provider may assign or otherwise transfer such a policy to another	398
provider of funeral or burial goods or services in conjunction	399
with the assumption by the other provider of the contractual	400
obligation to provide the goods or services.	401

Sec. 3905.451. The sale of aA life insurance policy that is	402
issued, sold, or assigned for the benefitspurpose of which are	403
payable to the provider ofpurchasing funeral or burial goods or	404
services as payment for these, and the contractual obligation to	405
provide the goods or services is, are not the sale of a preneed	406
funeral contract as defined insubject to section 1111.19 of the	407
Revised Code.	408

Sec. 3915.073.  (A) This section shall be known as the	409
standard nonforfeiture law for individual deferred annuities.	410

(B) This section does not apply to any reinsurance, group	411
annuity purchased under a retirement plan or plan of deferred	412
compensation established or maintained by an employer, including a	413
partnership or sole proprietorship, or by an employee	414
organization, or by both, other than a plan providing individual	415
retirement accounts or individual retirement annuities under	416
section 408 of the Internal Revenue Code of 1954, 26 U.S.C.A. 408,	417
as amended, premium deposit fund, variable annuity, investment	418
annuity, immediate annuity, any deferred annuity contract after	419
annuity payments have commenced, or reversionary annuity, nor to	420
any contract which is delivered outside this state through an	421
agent or other representative of the company issuing the contract.	422

(C) In the case of contracts issued on or after the	423
operative date of this section as defined in division (L) of this	424
section, no contract of annuity, except as stated in division (B)	425
of this section shall be delivered or issued for delivery in this	426
state unless it contains in substance the following provisions, or	427
corresponding provisions that in the opinion of the superintendent	428
are at least as favorable to the contractholder, upon cessation of	429
payment of consideration under the contract:	430

(1) That upon cessation of payment of considerations under a	431
contract, the company will grant a paid-up annuity benefit on a	432
plan stipulated in the contract of such value as is specified in	433
divisions (E), (F), (G), (H), and (J) of this section;	434

(2) If a contract provides for a lump sum settlement at	435
maturity, or at any other time, that upon surrender of the	436
contract at or prior to the commencement of any annuity payments,	437
the company will pay in lieu of any paid-up annuity benefit a cash	438
surrender benefit of such amount as is specified in divisions (E),	439
(F), (H), and (J) of this section. The company shall reserve the	440
right to defer the payment of such cash surrender benefit for a	441
period of six months after demand therefor with surrender of the	442
contract.	443

(3) A statement of the mortality table, if any, and interest	444
rates used in calculating any minimum paid-up annuity, cash	445
surrender, or death benefits that are guaranteed under the	446
contract, together with sufficient information to determine the	447
amounts of such benefits;	448

(4) A statement that any paid-up annuity, cash surrender, or	449
death benefits that may be available under the contract are not	450
less than the minimum benefits required by any statute of the	451
state in which the contract is delivered and an explanation of the	452
manner in which such benefits are altered by the existence of any	453
additional amounts credited by the company to the contract, any	454
indebtedness to the company on the contract, or any prior	455
withdrawals from or partial surrenders of the contract.	456

Notwithstanding the requirements of this section, any	457
deferred annuity contract may provide that if no considerations	458
have been received under a contract for a period of two full years	459
and the portion of the paid-up annuity benefit at maturity on the	460
plan stipulated in the contract arising from considerations paid	461
prior to such period would be less than twenty dollars monthly,	462
the company may at its option terminate such contract by payment	463
in cash of the then present value of such portion of the paid-up	464
annuity benefit, calculated on the basis of the mortality table,	465
if any, and interest rate specified in the contract for	466
determining the paid-up annuity benefit, and by such payment shall	467
be relieved of any further obligation under such contract.	468

(D) The minimum values as specified in divisions (E), (F),	469
(G), (H), and (J) of this section of any paid-up annuity, cash	470
surrender, or death benefits available under an annuity contract	471
shall be based upon minimum nonforfeiture amounts as defined in	472
this section.	473

(1) With respect to contracts providing for flexible	474
considerations, the minimum nonforfeiture amount at any time at or	475
prior to the commencement of any annuity payments shall be equal	476
to an accumulation up to such time at a rate of interest of three	477
per cent per annum of percentages of the net considerations, as	478
defined in this section, paid prior to such time, decreased by the	479
sum of:	480

(a) Any prior withdrawals from or partial surrenders of the	481
contract accumulated at a rate of interest of three per cent per	482
annum; and	483

(b) The amount of any indebtedness to the company on the	484
contract, including interest due and accrued; and increased by any	485
existing additional amounts credited by the company to the	486
contract.	487

The net considerations for a given contract year used to	488
define the minimum nonforfeiture amount shall be an amount not	489
less than zero and shall be equal to the corresponding gross	490
considerations credited to the contract during that contract year	491
less an annual contract charge of thirty dollars and less a	492
collection charge of one dollar and twenty-five cents per	493
consideration credited to the contract during that contract year.	494
The percentages of net considerations shall be sixty-five per cent	495
of the net consideration for the first contract year and	496
eighty-seven and one-half per cent of the net considerations for	497
the second and later contract years. Notwithstanding the	498
provisions of the preceding sentence, the percentage shall be	499
sixty-five per cent of the portion of the total net consideration	500
for any renewal contract year that exceeds by not more than two	501
times the sum of those portions of the net considerations in all	502
prior contract years for which the percentage was sixty-five per	503
cent.	504

Notwithstanding any other provision of this section, for any	505
contract issued on or after the effective date of this amendment,	506
and before September 1, 2004, the interest rate at which net	507
considerations, partial withdrawals, and partial surrenders shall	508
be accumulated for purposes of determining minimum nonforfeiture	509
amounts shall be one and one-half per cent per annum.	510

(2) With respect to contracts providing for fixed scheduled	511
considerations, minimum nonforfeiture amounts shall be calculated	512
on the assumption that considerations are paid annually in advance	513
and shall be defined as for contracts with flexible considerations	514
which are paid annually with two exceptions:	515

(a) The portion of the net consideration for the first	516
contract year to be accumulated shall be the sum of sixty-five per	517
cent of the net consideration for the first contract year plus	518
twenty-two and one-half per cent of the excess of the net	519
consideration for the first contract year over the lesser of the	520
net considerations for the second and third contract years;	521

(b) The annual contract charge shall be the lesser of (i)	522
thirty dollars or (ii) ten per cent of the gross annual	523
consideration.	524

(3) With respect to contracts providing for a single	525
consideration, minimum nonforfeiture amounts shall be defined as	526
for contracts with flexible considerations except that the	527
percentage of net consideration used to determine the minimum	528
nonforfeiture amount shall be equal to ninety per cent and the net	529
consideration shall be the gross consideration less a contract	530
charge of seventy-five dollars.	531

(E) Any paid-up annuity benefit available under a contract	532
shall be such that its present value on the date annuity payments	533
are to commence is at least equal to the minimum nonforfeiture	534
amount on that date. Such present value shall be computed using	535
the mortality table, if any, and the interest rate specified in	536
the contract for determining the minimum paid-up annuity benefits	537
guaranteed in the contract.	538

(F) For contracts which provide cash surrender benefits,	539
such cash surrender benefits available prior to maturity shall not	540
be less than the present value as of the date of surrender of that	541
portion of the maturity value of the paid-up annuity benefit that	542
would be provided under the contract at maturity arising from	543
considerations paid prior to the time of cash surrender reduced by	544
the amount appropriate to reflect any prior withdrawals from or	545
partial surrenders of the contract, such present value being	546
calculated on the basis of an interest rate not more than one per	547
cent higher than the interest rate specified in the contract for	548
accumulating the net considerations to determine such maturity	549
value, decreased by the amount of any indebtedness to the company	550
on the contract, including interest due and accrued, and increased	551
by any existing additional amounts credited by the company to the	552
contract. In no event shall any cash surrender benefit be less	553
than the minimum nonforfeiture amount at that time. The death	554
benefit under such contracts shall be at least equal to the cash	555
surrender benefit.	556

(G) For contracts that do not provide cash surrender	557
benefits, the present value of any paid-up annuity benefit	558
available as a nonforfeiture option at any time prior to maturity	559
shall not be less than the present value of that portion of the	560
maturity value of the paid-up annuity benefit provided under the	561
contract arising from considerations paid prior to the time the	562
contract is surrendered in exchange for, or changed to, a deferred	563
paid-up annuity, such present value being calculated for the	564
period prior to the maturity date on the basis of the interest	565
rate specified in the contract for accumulating the net	566
considerations to determine such maturity value, and increased by	567
any existing additional amounts credited by the company to the	568
contract. For contracts that do not provide any death benefits	569
prior to the commencement of any annuity payments, such present	570
values shall be calculated on the basis of such interest rate and	571
the mortality table specified in the contract for determining the	572
maturity value of the paid-up annuity benefit. However, in no	573
event shall the present value of a paid-up annuity benefit be less	574
than the minimum nonforfeiture amount at that time.	575

(H) For the purpose of determining the benefits calculated	576
under divisions (F) and (G) of this section, in the case of	577
annuity contracts under which an election may be made to have	578
annuity payments commence at optional maturity dates, the maturity	579
date shall be deemed to be the latest date for which election	580
shall be permitted by the contract, but shall not be deemed to be	581
later than the anniversary of the contract next following the	582
annuitant's seventieth birthday or the tenth anniversary of the	583
contract, whichever is later.	584

(I) Any contract that does not provide cash surrender	585
benefits or does not provide death benefits at least equal to the	586
minimum nonforfeiture amount prior to the commencement of any	587
annuity payments shall include a statement in a prominent place in	588
the contract that such benefits are not provided.	589

(J) Any paid-up annuity, cash surrender, or death benefits	590
available at any time, other than on the contract anniversary	591
under any contract with fixed scheduled considerations, shall be	592
calculated with allowance for the lapse of time and the payment of	593
any scheduled considerations beyond the beginning of the contract	594
year in which cessation of payment of considerations under the	595
contract occurs.	596

(K) For any contract that provides, within the same contract	597
by rider or supplemental contract provision, both annuity benefits	598
and life insurance benefits that are in excess of the greater of	599
cash surrender benefits or a return of the gross considerations	600
with interest, the minimum nonforfeiture benefit shall be equal to	601
the sum of the minimum nonforfeiture benefits for the annuity	602
portion and the minimum nonforfeiture benefits, if any, for the	603
life insurance portion computed as if each portion were a separate	604
contract. Notwithstanding the provisions of divisions (E), (F),	605
(G), (H), and (J) of this section, additional benefits payable:	606

(1) In the event of total and permanent disability;

607

(2) As reversionary annuity or deferred reversionary annuity	608
benefits; or	609

(3) As other policy benefits additional to life insurance,	610
endowment and annuity benefits, and considerations for all such	611
additional benefits shall be disregarded in ascertaining the	612
minimum nonforfeiture amounts, paid-up annuity, cash surrender,	613
and death benefits that may be required by this section.	614

The inclusion of such additional benefits shall not be	615
required in any paid-up benefits, unless such additional benefits	616
separately would require minimum nonforfeiture amounts, paid-up	617
annuity, cash surrender, and death benefits.	618

(L) Any company may file with the superintendent a written	619
notice of its election to comply with the provisions of this	620
section on or before July 1, 1980. The date specified in the	621
notice shall be the operative date of this section for such	622
company. If a company makes no such election, the operative date	623
of this section for the company shall be July 1, 1980.	624

Section 2. That existing sections 3901.321, 3905.45,	625
3905.451, and 3915.073 of the Revised Code are hereby repealed.	626