2006 Louisiana Laws - RS 22:844.3 — Loaning of securities

§844.3.  Loaning of securities

A.  A domestic insurer may lend securities held by it to any member of the National Association of Securities Dealers having a net worth of at least one hundred million dollars, under this Part, if:

(1)  Simultaneously with the delivery of the securities, the insurer receives from the borrower collateral consisting of cash or of securities issued, assumed, or guaranteed by the United States, by any agency of the United States, or by any state having a present market value including accrued interest of not less than one hundred two percent of the then market value of the securities loaned.

(2)  The securities are loaned only for the purpose of making delivery of securities in the case of short sales, in the case of failure to receive securities requested for delivery, or in other similar cases.

(3)  The borrower furnishes the insurer, or a custodian of the insurer, prior to the loan the most recent statement of the borrower's financial condition and a representation by the borrower that there has been no material adverse change in its financial condition since the date of that statement.

(4)  The insurer receives a reasonable fee related to the value of the borrowed securities and to the duration of the loan.

(5)  The loan is made pursuant to a written loan agreement.

(6)  The borrower is required to furnish by the close of each business day during the term of the loan a report of the market value of all collateral and the market value of all borrowed securities as of the close of trading on the previous business day.  If at the close of any business day the market value of the collateral is less than one hundred two percent of the market value of the securities loan, then the borrower is required to deliver by the close of the next business day an additional amount of cash or securities, the market value of which, together with the market value of all previously delivered collateral, equals at least one hundred two percent of the market value of the securities loaned.  Securities on loan that clear through the Federal Reserve System shall be marked to market when the collateral level is less than one hundred percent.  At that time, a one hundred two percent margin shall be reestablished by close of the next business day.

B.  Securities used for collateral in this Section must not be in default, and the entity which issued, assumed, or guaranteed the security shall not be in default in the payment of its debt securities, either principal or interest, while the securities are used as collateral for securities loaned.

Acts 1984, No. 591, §1; Acts 2003, No. 126, §1.