senate Bill S5213

2011-2012 Legislative Session

Relates to investments by charitable gift annuity corporations or associations

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 04, 2012 referred to insurance
Jun 24, 2011 committed to rules
Jun 06, 2011 advanced to third reading
Jun 02, 2011 2nd report cal.
Jun 01, 2011 1st report cal.901
May 03, 2011 referred to insurance

Votes

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Jun 1, 2011 - Insurance committee Vote

S5213
15
0
committee
15
Aye
0
Nay
2
Aye with Reservations
1
Absent
0
Excused
0
Abstained
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Insurance Committee Vote: Jun 1, 2011

aye wr (2)
absent (1)

Co-Sponsors

S5213 - Bill Details

See Assembly Version of this Bill:
A7951
Current Committee:
Senate Insurance
Law Section:
Insurance Law
Laws Affected:
Amd §1110, Ins L

S5213 - Bill Texts

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Relates to investments by charitable gift annuity corporations or associations.

view sponsor memo
BILL NUMBER:S5213

TITLE OF BILL:
An act to amend the insurance law, in relation to investments by
charitable gift annuity corporations or associations

PURPOSE:
To authorize non-profit corporations and associations to combine
charitable gift annuity reserve funds with other funds for purposes of
management and investment.

SUMMARY OF PROVISIONS:
Section 1 of the bill would amend Insurance Law § 1110 (b) to
authorize charitable, non-profit corporations and associations to pool
charitable gift annuity reserve funds for purposes of management and
investment.

EXISTING LAW:
Section 1110 of the Insurance Law requires charities to have a permit
to issue gift annuities in New York. The statute further requires the
size of the annuity to be calculated so that, upon the donor's death,
the charity will have a reserve of at least equal to half of the
original value of the gift. Charities issuing annuities must maintain
reserves that are invested using the prudent investor standard so as
to protect the value of the donor's annuity. Finally, the statute
requires such reserves to be "segregated as separate and distinct
funds," independent of other funds of the charity and can only be used
to pay annuity benefits.

JUSTIFICATION:
A charitable gift annuity is a contract pursuant to which a charity,
in return for a donor transferring a "gift" of cash or other property
to the charity, agrees to pay a fixed sum of money over the lifetime
of the donor or his nominee. Upon the death of the donor or his
nominee, the charity may use the remainder of the gift for its own
charitable purposes.

The purpose of this bill is to amend the "separate and distinct"
requirement in existing statute which has been interpreted to require
that gift annuity reserves must not only be segregated by custodian
accounts, but must be invested in assets different from a charity's
other assets. However, these small, segregated reserve fund
investments generally are outperformed by investment pools - which are
more highly diversified and have less administrative costs. As a
result, investment "pools" have the advantage of enhancing the margin
of reserve to ensure payment of donors' annuities while simultaneously
increasing the value of the reserve that ultimately inures to the
benefit of the charity.

Further, this bill would only authorize charities to pool the
charitable gift annuity reserves for management and investment
purposes and would not diminish the individual reserve obligations.
Charities would continue to be required to separately hold and account
for each charitable gift annuity reserve to ensure that each such
reserve has sufficient funds to pay the relevant annuity benefits.
This approach is consistent with accepted accounting and custodian


practices related to investment pools through which many charitable
organizations manage and invest their endowments, annuities, and other
reserves.

LEGISLATIVE HISTORY:
This is a new bill.

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
This bill shall take effect immediately.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5213

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               May 3, 2011
                               ___________

Introduced  by  Sen.  SEWARD -- read twice and ordered printed, and when
  printed to be committed to the Committee on Insurance

AN ACT to amend the insurance law, in relation to investments by  chari-
  table gift annuity corporations or associations

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision (b) of section 1110 of the  insurance  law,  as
amended  by  chapter  419  of  the  laws  of 2001, is amended to read as
follows:
  (b) Every such domestic  corporation  or  association  shall  maintain
admitted  assets  at  least  equal  to the greater of (i) the sum of its
reserves on its outstanding agreements, calculated  in  accordance  with
section  four  thousand  two  hundred  seventeen  of this chapter, and a
surplus of ten per centum of such reserves, or (ii) the  amount  of  one
hundred thousand dollars. In determining such reserves a deduction shall
be  made for all or any portion of an annuity risk which is reinsured by
a life insurance company authorized to do business in  this  state.  The
required  admitted  assets  shall  be  invested  in  accordance with the
prudent investor standard as defined in section 11-2.3 of  the  estates,
powers and trusts law and shall not be subject to the investment limita-
tions  set  forth  in  this  chapter. Such assets shall be segregated as
separate and distinct funds, independent of  all  other  funds  of  such
corporation  or  association,  and shall not be applied to pay its debts
and  obligations  or  for  any  purpose  except  the  aforesaid  annuity
benefits;  PROVIDED  HOWEVER,  THE CORPORATION OR ASSOCIATION MAY INVEST
AND MANAGE THE ADMITTED ASSETS IN COMBINATION WITH OTHER ASSETS  OF  THE
ORGANIZATION, PROVIDED FURTHER, THAT THERE IS A SEPARATE CUSTODY ACCOUNT
FOR THE INTEREST OF THE ADMITTED ASSETS IN ANY SUCH COMBINED FUND.
  S 2. This act shall take effect immediately.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11425-01-1

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