20:06:30:13Definitions.

The following definitions apply to §§ 20:06:30:13 to 20:06:30:20, inclusive: (1) “Actuarial method,” the methodology used to determine the required level of primary security, as described in § 20:06:30:14; (2) “Covered policy,” subject to the exemptions described in § 20:06:30:18, a policy, other than a grandfathered policy, that is: (a) A life insurance policy with either guaranteed nonlevel gross premiums or guaranteed nonlevel benefits, or with both, except for flexible premium universal life insurance policy; or (b) A flexible premium universal life insurance policy with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period; (3) “Grandfathered policy,” a covered policy that was: (a) Issued prior to January 1, 2015; and (b) Ceded, as of December 31, 2014, as part of a reinsurance treaty that would not have met one of the exemptions set forth in § 20:06:30:18, had that section then been in effect; (4) “Non-covered policy,” any policy that does not meet the definition of a covered policy, including grandfathered policy; (5) “Other security,” any security acceptable to the director, other than primary security; (6) “Primary security,”: (a) Cash meeting the requirements of SDCL 58-14-16; (b) Securities listed by the National Association of Insurance Commissioners Securities Valuation Office and meeting the requirements of SDCL 58-14-16, but excluding any synthetic letter of credit, contingent note, credit-linked note, or other similar security that operates in a manner similar to a letter of credit, and excluding any securities issued by the ceding insurer or any of its affiliates; and (c) For security held in connection with funds withheld and modified coinsurance reinsurance treaties: (i) Commercial loans in good standing of CM3 quality and higher, as defined in the Valuation Manual; (ii) Policy loans; and (iii) Derivatives acquired in the normal course and used to support and hedge liabilities pertaining to the actual risks in the policies ceded pursuant to the reinsurance treaty; (7) “Required level of primary security,” the dollar amount determined by applying the actuarial method to the risks ceded with respect to a covered policy, but not more than the total reserve ceded; (8) “Valuation Manual,” the manual adopted by the director under § 20:06:59:01 and SDCL 58-26-45.1, with all amendments adopted by the National Association of Insurance Commissioners that are effective for the financial statement date on which credit for reinsurance is claimed; and (9) “VM-20,” the definition of “Requirements for Principle-Based Reserves for Life Products” from the Valuation Manual, including all relevant definitions.

Source: 49 SDR 9, effective August 9, 2022.