Section 500.856. Separate accounts; investments.

All of the following provisions apply to investments of separate accounts of variable life insurance:

(a)   A sale, exchange, or other transfer of assets shall not be made by an insurer or any of its affiliates between any of its  separate  accounts  or between any other investment account and 1 or more  of  its   separate accounts unless both of the following requirements are satisfied:

(i)   In case of a transfer into a separate account, such transfer is made solely to establish the  account  or  to   support  the  operation   of   the policies with respect to the separate account to  which   the  transfer   is made.

(ii)   Such transfer, whether into or from a separate account, is made by a transfer of cash; but other assets may be transferred  if  approved  by the commissioner in advance.

(b)   Assets allocated to a variable life insurance separate account shall be held in cash or investments having a  reasonably   ascertainable  market  price.  For  purposes  of  this subdivision, only the following shall be considered investments having a reasonably ascertainable market price:

(i)    Liens in favor  of  the   insurer  against  separate  account  policy reserves resulting from use by policyholders of cash values.

(ii)   Securities listed and traded on the New York stock exchange, the American stock exchange, or regional stock exchanges or successors to such exchanges having the same or similar qualifications.

(iii)    Securities listed on the national association   of  securities dealers automated quotations system.

(iv)      Shares  of  an  investment   company  registered    pursuant    to    the provisions of 15

U.S.C. S80a-1 et seq. Where such    an   investment   company issues book shares instead of share certificates, such book  shares  shall be deemed to be adequate evidence of ownership.

(v)    Obligations of, or guaranteed by, the United States government, the Canadian government,  any state,  or any  municipality  or   governmental subdivision of a state.

(vi)    Commercial paper issued by business corporations when the total of such paper issued by the corporation does not exceed in  value a  guaranteed short line of credit by a bank.

(vii)   Certificates of deposit issued by financial institutions, the deposits of which are insured by the federal deposit insurance corporation or the federal savings and loan insurance corporation.

(viii)    New bond or debt issues which may reasonably be expected to be listed on an exchange regulated by the securities exchange act  of 1934, 15 U.S.C. S78a et seq.

(ix)    Financial futures contracts  issued  under  terms  and  conditions regulated by a federal regulatory agency  and  in   compliance  with  the requirements of section 943 of Act No. 218 of the Public Acts of 1956, as amended, being S500.943 of the Michigan Compiled Laws.

(c)   Assets allocated to a variable life insurance separate account shall not be invested in any of the following:

(i)   Letter or restricted stock, except through shares of an investment company registered under the provisions of 15 U.S.C. S80a-1 et seq.

(ii)   Units or other evidences of ownership  or a   separate  account  of

another insurer, except those registered under the provisions of 15 U.S.C.S80a-1 et seq.

(iii)    Real estate other than shares of a real estate investment trust listed as described in subdivision (b)(ii) of this rule.

(d)    The separate account shall have sufficient net investment income and readily marketable assets to meet anticipated withdrawals  under  policies funded by the account.

History: 1979 AC; 1988 AACS.