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304.7-417 Foreign investments and foreign currency transactions.
(1)
(2)
(3)
Subject to the limitations of KRS 304.7-403, 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 304.7-407,
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 three percent (3%) of its admitted assets as to any
other foreign jurisdiction.
Subject to the limitations of KRS 304.7-403, 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 ten percent
(10%) 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 as to a foreign
jurisdiction that has a sovereign debt rating of SVO 1 or three percent (3%) 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 304.7-419 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 that foreign jurisdiction and denominated in foreign currency of that
jurisdiction, may acquire foreign investment respecting that foreign jurisdiction, and
may acquire investments denominated in the currency of that jurisdiction, subject to
the limitations of KRS 304.7-403. However, investments made under this
(4)
(5)
subsection in obligations of foreign governments, their political subdivisions, and
government sponsored enterprises shall not be subject to the limitations of KRS
304.7-407 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 the law of the foreign jurisdiction to
invest in the foreign jurisdiction; or
(b) One hundred fifteen percent (115%) of the amount of its reserves, net of
reinsurance, and other obligations under the contracts on lives or risks resident
or located in the foreign jurisdiction.
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 that 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 of KRS 304.7-403. 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
304.7-403 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 lives or risks resident or located in the
foreign jurisdiction.
Investments acquired under this section shall be aggregated with investments of the
same types made in accordance with this subtitle, and in a similar manner, for
purposes of determining compliance with the limitations, if any, contained in this
subtitle. 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 304.7-403.
Effective: July 14, 2000
History: Created 2000 Ky. Acts ch. 388, sec. 15, effective July 14, 2000.
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