304.7-403 Limits on investments.
(1)
(a)
(b)
(c)
(2)
(a)
(b)
Except as otherwise specified in this subtitle, an insurer shall not acquire,
directly or indirectly through an investment subsidiary, an investment under
this subtitle if, as a result of and after giving effect to the investment, the
insurer would hold more than three percent (3%) of its admitted assets in
investments of all kinds issued, assumed, accepted, insured, or guaranteed by
a single person.
This three percent (3%) limitation 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.
Asset-backed securities shall not be subject to the limitations of paragraph (a)
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 (3%) of
its admitted assets.
An insurer shall not acquire, directly or indirectly through an investment
subsidiary, an investment under KRS 304.7-405, 304.7-411, and 304.7-417, or
counterparty exposure under KRS 304.7-419(4), if, as a a result of and after
giving effect to the investment:
1.
The aggregate amount of medium and lower grade investments then held
by the insurer would exceed twenty percent (20%) of its admitted assets;
2.
The aggregate amount of lower grade investments then held by the
insurer would exceed ten percent (10%) of its admitted assets;
3.
The aggregate amount of investments rated 5 or 6 by the SVO then held
by the insurer would exceed three percent (3%) of its admitted assets;
4.
The aggregate amount of investments rated 6 by the SVO then held by
the insurer would exceed one percent (1%) of its admitted assets; or
5.
The aggregate amount of medium and lower grade investments then held
by the insurer that receive as cash income less than the equivalent yield
for Treasury issues with a comparative average life, would exceed one
percent (1%) of its admitted assets.
An insurer shall not acquire, directly or indirectly through an investment
subsidiary, an investment under KRS 304.7-405, 304.7-411, and 304.7-417, or
counterparty exposure under KRS 304.7-419(4), if, as a result of and after
giving effect to the investment:
1.
The aggregate amount of medium and lower grade investments issued,
assumed, guaranteed, accepted, or insured by any one (1) 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 (1%) of its admitted assets; or
2.
(c)
(3)
(a)
(b)
The aggregate amount of lower grade investments issued, assumed,
guaranteed, accepted, or insured by any one (1) person or, as to assetbacked 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 (0.5%) of its admitted assets.
If an insurer attains or exceeds the limit of any one (1) rating category referred
to in this subsection, the insurer shall not thereby be precluded from acquiring
investments in other rating categories subject to the specific multicategory
limits applicable to those investments.
An insurer shall not acquire, directly or indirectly through an investment
subsidiary, a Canadian investment authorized by this subtitle, 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 (40%) of its
admitted assets, or if the aggregate amount of Canadian investments not
acquired under KRS 304.7-405(2) then held by the insurer would exceed
twenty-five percent (25%) 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 paragraph (a) of this subsection 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 (115%) of the amount of its reserves and
other obligations under contracts on lives or risks resident or located in
Canada.
Effective: July 14, 2000
History: Created 2000 Ky. Acts ch. 388, sec. 8, effective July 14, 2000.
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