(a) Distribution of net investment income shall be made in accordance with section 91.4(c)(2) of this Part or by use of an investment year method in accordance with the following rules, which are designed to assure that a life insurer's use of an investment year method is in accordance with Insurance Law requirements that holders of insurance policies and annuity contracts be treated equitably (§§ 4216, 4224, 4231, 4235, 4238, 4239) and which are subject to subdivision (b) of this section.

1. (1) In the application of the investment year method, suitable adjustment may be made for net investment income from assets that have characteristics to justify allocation by some other method, such as real estate, stocks, short-term notes and bills, and cash and bank deposits.
2. (2) Such method is used for the distribution of net investment income to each major annual statement line of business.
3. (3) Such method or one of the methods described in section 91.4(c)(2) of this Part is used for the distribution of net investment income to each secondary annual statement line of business.
4. (4) The distribution of net investment income within annual statement lines of business is made on an equitable basis, and to the extent feasible by the same method as used for distribution of net investment income to such lines of business.
5. (5) Capital gains and losses are distributed by the same method.
6. (6) Such method treats as a single period all years of investment prior to the year of investment as to which the method first became effective.
7. (7) Such method treats as separate periods of investment either each year of investment commencing with the year as to which the method first became effective, or groups of consecutive investment years having a limited range of differing investment returns, provided, however, that an insurer may transfer one or more years of investment on a first-in, first-out basis to the single period referred to in paragraph (6) of this subdivision after demonstration to the satisfaction of the superintendent that such transfer would be equitable.
8. (8) In computing investment yield rates for each of the periods referred to in paragraphs (6) and (7) of this subdivision, such method takes into account the incidence, by year of investment, of receipt of premiums and considerations and of payout of benefits and expenses, and also takes into account the assets referred to in paragraph (1) of this subdivision that are not subject to the investment year method and funds made available for reinvestment.