304.7-365 Transactions in which officer or director of insurer has a financial
interest.
(1)
(2)
(a)
Except as provided in subsection (2) of this section, an insurer shall not,
without the prior written approval of the commissioner, directly or indirectly:
1.
Make a loan to or invest in an officer or director of the insurer or a
person in which the officer or director has any direct or indirect financial
interest;
2.
Make a guarantee for the benefit of or in favor of an officer or director
of the insurer or a person in which the officer or director has any direct
or indirect financial interest; or
3.
Enter into an agreement for the purchase or sale of property from or to
an officer or director of the insurer or a person in which the officer or
director has any direct or indirect financial interest.
(b) For purposes of this section, an officer or director shall not be deemed to have
a financial interest by reason of an interest that is held directly or indirectly
through the ownership of equity interests representing less than two percent
(2%) of all outstanding equity interests issued by a person that is a party to the
transaction, or solely by reason of that individual's position as a director or
officer of a person that is a party to the transaction.
(c) This subsection does not permit an investment that is prohibited by KRS
304.7-363.
(d) This subsection does not apply to a transaction between an insurer and any of
its subsidiaries or affiliates that is entered into in compliance with Subtitle 37
of KRS Chapter 304, other than a transaction between an insurer and its
officer or director.
An insurer may make, without the prior written approval of the commissioner:
(a) Policy loans in accordance with the terms of the policy or contract and KRS
304.7-401:
(b) Advances to officers or directors for expenses reasonably expected to be
incurred in the ordinary course of the insurer's business or guarantees
associated with credit or charge cards issued or credit extended for the
purpose of financing these expenses;
(c) Loans secured by the principal residence of an existing or new officer of the
insurer made in connection with the officer's relocation at the insurer's request,
if the loans comply with the requirements of KRS 304.7-413 or 304.7-465,
and the terms and conditions otherwise are the same as those generally
available from unaffiliated third parties;
(d) Secured loans to an existing or new officer of the insurer made in connection
with the officer's relocation at the insurer's request, if the loans:
1.
Do not have a term exceeding two (2) years;
2.
Are required to finance mortgage loans outstanding at the same time on
the prior and new residences of the officer;
3.
(e)
Do not exceed an amount equal to the equity of the officer in the prior
residence; and
4.
Are required to be fully repaid upon the earlier of the end of the two (2)
year period or the sale of the prior residence; and
Loans and advances to officers or directors made in compliance with state or
federal law specifically related to the loans and advances by a regulated
noninsurance subsidiary or affiliate of the insurer in the ordinary course of
business and on terms no more favorable than available to other customers of
the entity.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1014, effective July 15, 2010. -- Created
2000 Ky. Acts ch. 388, sec. 5, effective July 14, 2000.
Legislative Research Commission Note (11/1/2006). 2000 Ky. Acts ch. 388, sec. 5,
made references in subsection (2)(c) to "Sections 13 or 26 of this Act," which were
codified as KRS 304.7-413 and 304.7-465, respectively. Accordingly, the Reviser of
Statutes has corrected a reference in subsection (2)(c) of this section to "304.4-465"
to read "304.7-465" under the authority of KRS 7.136.
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