Final answer:
A domestic insurer requires permission from policyholders and insurance regulators to transfer assets out of separate accounts, which are protected from the insurer's general creditors and regulated by both state and federal laws.
Step-by-step explanation:
In order for a domestic insurer to transfer cash or securities out of separate accounts, permission is typically required from policyholders and potentially state insurance regulators. Separate accounts are investment options offered by insurance companies, commonly associated with variable life and variable annuity products, where the funds are kept segregated from the insurer's general account. This segregation offers policyholders a level of protection, as the assets in separate accounts are not subject to the claims of the insurer's general creditors.
The primary regulatory body overseeing insurance companies in the United States is the state insurance department where the insurer is domiciled. When an insurer seeks to transfer assets out of a separate account, they may be required to obtain approval from the state insurance commissioner or another designated regulatory authority. This process is intended to ensure that the transfer is in the best interests of the policyholders, maintaining the solvency and the financial integrity of the separate account.
Additionally, the transfer might also need to be in accordance with the terms of the contract governing the separate account. Any such transfer that contravenes the contractual terms or state regulations can lead to legal repercussions for the insurance company. Moreover, if the separate accounts are structured as part of a variable insurance product, they are also subject to regulation by the Securities and Exchange Commission (SEC), which could require additional permissions or notifications.