304.7-469 Foreign investments and foreign currency transactions.
(1)
(2)
(3)
Subject to the limitations of KRS 304.7-455, an insurer may acquire foreign
investments, or engage in investment practices, with persons of or in foreign
jurisdictions of substantially the same types as those that an insurer is permitted to
acquire under this subtitle, other than of the type permitted under KRS 304.7-459,
if, as a result of and after giving effect to the investment:
(a) The aggregate amount of foreign investments then held by the insurer under
this subsection does not exceed twenty percent (20%) of its admitted assets;
and
(b) The aggregate amount of foreign investments then held by the insurer under
this subsection in a single foreign jurisdiction does not exceed ten percent
(10%) of its admitted assets as to a foreign jurisdiction that has a sovereign
debt rating of SVO 1 or five percent (5%) of its admitted assets as to any other
foreign jurisdiction.
Subject to the limitations of KRS 304.7-455, an insurer may acquire investments, or
engage in investment practices denominated in foreign currencies, whether or not
they are foreign investments acquired under subsection (1) of this section, or
additional foreign currency exposure as a result of the termination or expiration of a
hedging transaction with respect to investments denominated in a foreign currency,
if:
(a) The aggregate amount of investments then held by the insurer under this
subsection denominated in foreign currencies does not exceed fifteen percent
(15%) of its admitted assets; and
(b) The aggregate amount of investments then held by the insurer under this
subsection denominated in the foreign currency of a single foreign jurisdiction
does not exceed ten percent (10%) of its admitted assets to a foreign
jurisdiction that has a sovereign debt rating of SVO 1 or five percent (5%) of
its admitted assets as to any other foreign jurisdiction;
(c) However, an investment shall not be considered denominated in a foreign
currency if the acquiring insurer enters into one (1) or more contracts in
transactions permitted under KRS 304.7-471 and the business entity
counterparty agrees under the contract or contracts to exchange all payments
made on the foreign currency denominated investment for United States
currency at a rate that effectively insulates the investment cash flows against
future changes in currency exchange rates during the period the contract or
contracts are in effect.
In addition to investments permitted under subsections (1) and (2) of this section, an
insurer that is authorized to do business in a foreign jurisdiction and that has
outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or
located in a foreign jurisdiction and denominated in foreign currency of that
jurisdiction, may acquire foreign investments respecting that foreign jurisdiction,
and may acquire investments denominated in the currency of that jurisdiction
subject to the limitations set forth in KRS 304.7-455. However, investments made
(4)
(5)
under this subsection in obligations of foreign governments, their political
subdivisions, and government sponsored enterprises shall not be subject to the
limitations of KRS 304.7-455 if those investments carry an SVO rating of 1 or 2.
The aggregate amount of investments acquired by the insurer under this subsection
shall not exceed the greater of:
(a) The amount the insurer is required by law to invest in the foreign jurisdiction;
or
(b) One hundred twenty-five percent (125%) of the amount of its reserves, net of
reinsurance, and other obligations under the contracts.
In addition to investments permitted under subsections (1) and (2) of this section, an
insurer that is not authorized to do business in a foreign jurisdiction but that has
outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or
located in a foreign jurisdiction and denominated in foreign currency of that
jurisdiction, may acquire foreign investments respecting that foreign jurisdiction,
and may acquire investments denominated in the currency of that jurisdiction
subject to the limitations set forth in KRS 304.7-455. However, investments made
under this subsection in obligations of foreign governments, their political
subdivisions, and government sponsored enterprises shall not be subject to the
limitations of KRS 304.7-455 if those investments carry an SVO rating of 1 or 2.
The aggregate amount of investments acquired by the insurer under this subsection
shall not exceed one hundred five percent (105%) of the amount of its reserves, net
of reinsurance, and other obligations under the contracts on risks resident or located
in the foreign jurisdiction.
Investments acquired under this section shall be aggregated with investments of the
same types made under this subtitle, and in a similar manner, for purposes of
determining compliance with the limitations of this subtitle, if any. Investments in
obligations of foreign governments, their political subdivisions, and government
sponsored enterprises of these persons, except for those exempted under subsections
(3) and (4) of this section, shall be subject to the limitations of KRS 304.7-455.
Effective: July 14, 2000
History: Created 2000 Ky. Acts ch. 388, sec. 28, effective July 14, 2000.
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