Administrative History Effective date: August 14, 1995 (22:16 Md. R. 1221) —————— Chapter recodified from COMAR 09.31.03 to COMAR 31.09.07 effective September 7, 1998 (25:18 Md. R. 1439) Regulation .02B amended effective April 6, 2020 (47:7 Md. R. 385) Regulation .03C amended effective November 7, 2016 (43:22 Md. R. 1223) Regulation .03D amended effective April 6, 2020 (47:7 Md. R. 385) Regulation .04B amended effective December 19, 2016 (43:25 Md. R. 1386) Authority Insurance Article, §§ 2-109 and 16-114 , Annotated Code of Maryland

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.01 Applicability. A. This chapter is applicable to annuity agreements issued to donors who are Maryland residents, under a special permit in accordance with Insurance Article, §16-114, Annotated Code of Maryland . B. This chapter is applicable to any charitable gift annuity issued to a Maryland resident after the effective date of these regulations. C. This chapter is applicable to organizations in or outside Maryland if the organization solicits annuity agreements in Maryland.

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.02 Definitions. A. In this chapter, the following terms have the meanings indicated. B. Terms Defined. (1) “Commissioner” means the Insurance Commissioner of Maryland. (2) “Organization” means every educational or religious organization, hospital, or community foundation authorized to issue annuities under a permit issued in accordance with Insurance Article, §16-114(b), Annotated Code of Maryland . (3) “Qualified actuary” means an individual who is a member in good standing of the American Academy of Actuaries and is qualified to sign statements of actuarial opinion in accordance with the American Academy of Actuaries’ standards.

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.03 Required Reserves. A. The organization shall maintain assets at least equal to the sum of the reserves on its outstanding annuity agreements. B. The reserves on the outstanding annuity agreements shall be consistent with the assumptions underlying the rates adopted by the American Council on Gift Annuities which are in effect at the time of issuance of the gift annuity. C. In determining the appropriate reserves, a deduction shall be made for all or any portion of an annuity risk which is reinsured by an authorized insurer or accredited reinsurer. D. As part of the organization’s annual audit report, the organization shall submit a statement by a certified public accountant or qualified actuary verifying the existence of adequate reserves among the organization’s assets. E. The statement required under §D of this regulation may be incorporated into a certified public accountant's annual audit report.

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.04 Investment Requirements. A. The reserve assets shall be segregated. B. The segregated reserve assets shall be invested in the same manner and subject to the same standards as are applicable under Estates and Trust Article, §15-402, Annotated Code of Maryland. C. The general assets of the organization shall be liable for annuity agreements to the extent that the segregated fund is inadequate.

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.05 Disclosure Requirements. A. Before accepting consideration for an annuity agreement the organization shall obtain separate signed statements from a prospective donor acknowledging that the prospective donor has been informed that: (1) Payments made under charitable gift annuities are backed solely by the full faith and credit of the organization; and (2) Payments made under charitable gift annuities are not insured or otherwise guaranteed by any government entity. B. The requirement under §A of this regulation may be satisfied by having the acknowledgement be part of the annuity agreement which is signed by the donor. C. The organization shall retain the annuity agreement or, if applicable, the separate signed statement for so long as the obligation to pay annuity benefits continues.

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.06 Filing Requirements for Special Permits. The following material shall be submitted by an organization applying for a special permit to issue charitable gift annuities: A. Proof of exemption under §501 of the Internal Revenue Code; B. Description of the organization's activities and number of years of active operation in this State; C. Copy of the most recent independently audited financial statement; D. Payout rates proposed to be provided under the charitable immediate and deferred gift annuity agreements; E. Description of the proposed investment of contributed funds; F. Copy of the organization's bylaws; G. Copy of the statement required by Regulation .05A of this chapter ; H. Copy of the organization's forms used as charitable gift annuity contracts; I. Copies of any solicitation material or descriptive literature proposed to be used with charitable gift annuities; and J. Other material requested by the Commissioner in order to determine that the applicant is an organization which is eligible for the special permit in accordance with Insurance Article, §16-114(b), Annotated Code of Maryland .

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.07 Withdrawal of Permit. The permit issued to an organization may be withdrawn by the Commissioner upon a finding that the organization failed to comply with the standards established by this chapter after an appropriate notice to and opportunity for the organization to conform to the standards set forth.

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Previous Chapter 06 Notice of Nonforfeiture Provisions in Lapsed Life Policies

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Next Chapter 08 Group Annuity Contracts

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