☰ Revisor of Missouri

Title XXIV BUSINESS AND FINANCIAL INSTITUTIONS

Chapter 376

Effective - 28 Aug 2007 bottom

  376.293.  Permissible investments — written plan for investments required. — 1.  (1)  Insurers may acquire, hold, or invest in investments or engage in investment practices as set forth in this chapter or section 375.345.  Insurers may also acquire, hold, or invest in investments not conforming to the requirements of this section that are not otherwise prohibited by this chapter or section 375.345, provided however, that investments not conforming to this section shall not be admitted assets.  The provisions and definitions of terms of section 375.345 related to derivative transactions shall also apply to investments under this chapter.

  (2)  Subject to subdivision (3) of this subsection, an insurer shall not acquire or hold an investment as an admitted asset unless at the time of acquisition:

  (a)  It is eligible for the payment or accrual of interest or discount, whether in cash or other forms of income or securities, eligible to receive dividends or other distributions or is otherwise income producing; or

  (b)  It is acquired under section 375.345, subsection 3 of section 376.302, section 376.303 or 376.307 or under the authority of sections of the code other than sections 376.291 to 376.307.

  (3)  An insurer may acquire or hold as admitted assets investments that do not otherwise qualify, as provided in sections 376.291 to 376.307, if this insurer has not acquired the assets investments for the purpose of circumventing any limitations contained in sections 376.291 to 376.307 and if the insurer acquires the investments in the following circumstances and complies with the provisions of sections 376.291 to 376.307 as to the investments:

  (a)  As a payment on account of existing indebtedness or in connection with the refinancing, restructuring, or workout of existing indebtedness, if taken to protect the insurer's interest in that investment;

  (b)  As realization of collateral for indebtedness;

  (c)  In connection with an otherwise qualified investment or investment practice as interest on, or a dividend, or other distribution related to the investment or investment practice or in connection with the refinancing of the investment.  In each case, no additional or only nominal consideration is necessary;

  (d)  Under lawful and bona fide agreement of recapitalization or voluntary or involuntary reorganization in connection with an investment held by the insurer; or

  (e)  Under a bulk reinsurance, merger, or consolidation transaction approved by the director if the assets constitute admissible investments for the ceding, merged, or consolidated companies.

  (4)  An investment or portion of an investment acquired by an insurer under subdivision (3) of this subsection shall become a nonadmitted asset three years, or five years in the case of mortgage loans and real estate, from the date of its acquisition unless within that period the investment has become a qualified investment under a section of this chapter other than subdivision (3) of this subsection, but an investment acquired under an agreement of bulk reinsurance, merger, or consolidation may be qualified for a longer period if so provided in the plan for reinsurance, merger, or consolidation as approved by the director.  Upon application by the insurer and a showing that the nonadmission of an asset held under subdivision (3) of this subsection would materially injure the interests of the insurer, the director may extend the period of admissibility for an additional, reasonable period of time.

  (5)  Except as provided in subdivisions (6) and (8) of this subsection, an investment shall qualify under this chapter if on the date the insurer committed to acquire the investment or on the date of its acquisition it would have qualified under this chapter.  For the purposes of determining limitations contained in this chapter, an insurer shall give appropriate recognition to any commitments to acquire investments.

  (6)  (a)  An investment held as an admitted asset by an insurer on August 28, 2007, which qualified under this chapter, or chapter 375, shall remain qualified as an admitted asset.

  (b)  Each specific transaction constituting an investment practice of the type described in this chapter that was lawfully entered into by an insurer and was in effect on August 28, 2007, shall continue to be permitted under this chapter until its expiration or termination under its terms, including any expiration or termination after an extension under its terms.

  (7)  Unless otherwise specified, an investment limitation computed on the basis of an insurer's admitted assets or capital and surplus shall relate to the amount required to be shown on the statutory balance sheet of the insurer most recently required to be filed, annual or last quarter, with the director.  Solely for the purposes of computing any limitation based upon admitted assets, the insurer shall deduct from the amount of its admitted assets the amount of the liability recorded on such statutory balance sheet for:

  (a)  The return of acceptable collateral received in a reverse repurchase transaction or a securities lending transaction;

  (b)  Cash received in a dollar-roll transaction; and

  (c)  The amount reported as borrowed money in such statutory balance sheet to the extent not included in paragraph (b) and this paragraph of this subdivision.

  (8)  An investment qualified, in whole or in part, for acquisition or holding as an admitted asset may be qualified or requalified at the time of acquisition or a later date, in whole or in part, under any section if the relevant conditions contained in the other section are satisfied at the time of the qualification or requalification.

  (9)  An insurer shall maintain documentation demonstrating that investments were acquired in accordance with this chapter.

  (10)  An insurer shall not enter into an agreement to purchase securities in advance of their issuance for resale to the public as part of a distribution of the securities by the issuer or otherwise guarantee the distribution, except that an insurer may acquire privately placed securities with registration rights.

  (11)  Notwithstanding the provisions of this chapter, the director, for good cause, may order an insurer to nonadmit, limit, dispose of, withdraw from, or discontinue an investment or investment practice.  The authority of the director under this subsection is in addition to any other authority of the director.

  2.  (1)  Within three months after August 28, 2007, an insurer's board of directors shall adopt a written plan for acquiring and holding investments and for engaging in investment practices that specifies guidelines as to the quality, maturity, and diversification of the investments and other specifications, including investment strategies intended to assure that the investments and investment practices are appropriate for the business conducted by the insurer, its liquidity needs, and its capital and surplus.  The board shall review and assess the insurer's technical investment and administrative capabilities and expertise before adopting a written plan concerning an investment strategy or investment practice.

  (2)  Investments acquired and held under this chapter and section 375.345 shall be acquired and held under the supervision and direction of the board of directors of the insurer.  The board of directors shall evidence by formal resolution at least annually that it has determined whether all investments have been made in accordance with delegations, standards, limitations, and investment objectives prescribed by the board or a committee of the board charged with the responsibility to direct its investments.

  (3)  On no less than a quarterly basis and more often if deemed appropriate, an insurer's board of directors or committee of the board of directors shall:

  (a)  Receive and review a summary report on the insurer's investment portfolio, its investment activities, and investment practices engaged in under delegated authority in order to determine whether the investment activity of the insurer is consistent with its written plan; and

  (b)  Review and revise, as appropriate, the written plan.

  (4)  In discharging its duties under this section, the board of directors shall require that records of any authorization or approvals, other documentation as the board may require, and reports of any action taken under authority delegated under the plan referred to in subsection 1 of this section shall be made available on a regular basis to the board of directors.

  (5)  In discharging their duties under this section, the directors of an insurer shall perform their duties in good faith and with that degree of care that ordinarily prudent individuals in like positions would use under similar circumstances.

  (6)  If an insurer does not have a board of directors, all references to the board of directors in sections 376.291 to 376.307 shall be deemed to be references to the governing body of the insurer having authority equivalent to that of a board of directors.

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(L. 2007 S.B. 66)


---- end of effective   28 Aug 2007 ----

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