Section 376.297

Title XXIV BUSINESS AND FINANCIAL INSTITUTIONS

Chapter 376

Effective - 28 Aug 2007   

  376.297.  Investment subsidiaries not permitted, when. — 1.  (1)  Except as otherwise specified in this chapter, an insurer shall not acquire an investment directly or indirectly through an investment subsidiary if, as a result of and after giving effect to the investment, the insurer would hold more than three percent of its admitted assets in the investments of all kinds issued, assumed, accepted, insured, or guaranteed by a single person, or five percent of its admitted assets in investments in the voting securities of a depository institution or any company that controls the institution.

  (2)  The three percent limitation described in subdivision (1) of this subsection shall not apply to the aggregate amounts insured by a single financial guaranty insurer with the highest generic rating issued by a nationally recognized statistical rating organization.

  (3)  Asset-backed securities shall not be subject to the limitations of subdivision (1) of this subsection; however, an insurer shall not acquire an asset-backed security if as a result of and after giving effect to the investment the aggregate amount of asset-backed securities secured by or evidencing an interest in a single asset or single pool of assets held by a trust or other business entity then held by the insurer would exceed three percent of its admitted assets.

  2.  (1)  An insurer shall not acquire directly or indirectly through an investment subsidiary an investment under sections 376.298, 376.301, and 376.304, or counterparty exposure under subdivision (6) of subsection 2 of section 375.345, if as a result of and after giving effect to the investment:

  (a)  The aggregate amount of medium and lower grade investments then held by the insurer would exceed twenty percent of its admitted assets;

  (b)  The aggregate amount of lower grade investments then held by the insurer would exceed ten percent of its admitted assets;

  (c)  The aggregate amount of investments rated "5" or "6" by the SVO then held by the insurer would exceed three percent of its admitted assets;

  (d)  The aggregate amount of investments rated "6" by the SVO then held by the insurer would exceed one percent of its admitted assets; or

  (e)  The aggregate amount of lower grade investments then held by the insurer that receive cash income less than the equivalent yield for treasury issues with a comparative average life would exceed one percent of its admitted assets.

  (2)  An insurer shall not acquire directly or indirectly through an investment subsidiary an investment under sections 376.298, 376.301, and 376.304, or counterparty exposure under subdivision (6) of subsection 2 of section 375.345, if as a result of and after giving effect to the investment:

  (a)  The aggregate amount of medium and lower grade investments issued, assumed, accepted, guaranteed, or insured by any one person or as to asset-backed securities secured by or evidencing an interest in a single asset or pool of assets then held by the insurer would exceed one percent of its admitted assets; or

  (b)  The aggregate amount of lower grade investments issued, assumed, accepted, guaranteed, or insured by any one person or as to asset-backed securities secured by or evidencing an interest in a single asset or pool of assets then held by the insurer would exceed one-half of one percent of its admitted assets.

  (3)  If an insurer attains or exceeds the limit of any one rating category referred to in this subsection, the insured shall not thereby be precluded from acquiring investments in other rating categories subject to the specific and multicategory limits applicable to those investments.

  3.  An insurer shall not acquire directly or indirectly through an investment subsidiary a Canadian investment authorized by this chapter, if as a result of and after giving effect to the investment, the aggregate amount of these investments then held by the insurer would exceed forty percent of its admitted assets or if the aggregate amount of Canadian investments not acquired under subsection 2 of section 376.298 then held by the insurer would exceed twenty-five percent of its admitted assets.  However, as to an insurer that is authorized to do business in Canada or that has outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or located in Canada and denominated in Canadian currency, the limitations of this section shall be increased by the greater of:

  (1)  The amount the insurer is required by Canadian law to invest in Canada or to be denominated in Canadian currency; or

  (2)  One hundred fifteen percent of the amount of its reserves and other obligations under contracts on lives or risks resident or located in Canada.

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(L. 2007 S.B. 66)