HB 938 -- ANNUITY CONTRACTS

SPONSOR:  Luetkemeyer

COMMITTEE ACTION:  Voted "do pass by consent" by the Committee on
Financial Services by a vote of 19 to 0.

This bill amends the formula that may be used for determining the
minimum present value of an annuity when it is terminated early.
Current law requires these contracts to offer a minimum interest
rate of 3%.  The bill removes this minimum and allows these
contracts to offer a rate that is tied to the five-year Constant
Maturity Treasury Rate, as reported by the Federal Reserve.  The
bill allows the sellers of annuities to continue to use the
current formula until July 1, 2006.  The current law is set to
expire on July 1, 2004.

FISCAL NOTE:  No impact on General Revenue Fund in FY 2005, FY
2006, and FY 2007.  Total Estimated Net Income on Other State
Funds of $0 to $17,500 in FY 2005, $0 in FY 2006, and $0 in FY
2007.

PROPONENTS:  Supporters say that this change to the minimum
percentage rate on annuities will allow the market to determine
the rate of return.  The provision is taken from model language
provided by the National Association of Insurance Commissioners,
and 14 states have already enacted this legislation.  Without it,
insurers could be forced to withdraw some annuity products from
the market, resulting in Missouri investors having fewer
investment choices.

Testifying for the bill were Representative Luetkemeyer; General
American Mutual Insurance; Metropolitan Life Insurance; Life
Insurance Association; Prudential Insurance; and American
International Group Insurance.

OPPONENTS:  There was no opposition voiced to the committee.

Richard Smreker, Senior Legislative Analyst

Missouri House of Representatives
92nd General Assembly, 2nd Regular Session
Last Updated September 23, 2004 at 11:14 am