2007 California Insurance Code Article 6. Foreign Investments

CA Codes (ins:1240-1241.1)

1240.  Any domestic incorporated insurer which is authorized to do
business in a territory or possession of the United States or in a
foreign country, or which has outstanding insurance, annuity or
reinsurance contracts on lives or risks resident or located in a
territory or possession of the United States or in a foreign country,
may invest in or otherwise acquire or loan upon securities and
investments in such territory, possession or foreign country which
are substantially of the same kinds, classes and investment grades as
those eligible for investment under this code; but the aggregate
amount of such investments in a territory or possession of the United
States or in a foreign country and of cash in the currency of such
territory, possession or foreign country which is at any time held by
such insurer shall not exceed the amount which such insurer is
required by law to invest in such territory, possession or foreign
country or one and one-half times the amount of its reserves and
other obligations under such contracts, whichever shall be greater.
Such investments shall be subject to the limitations imposed by this
code.  Nothing herein shall in any way restrict or limit Canadian
investments otherwise permitted by this code.



1241.  In addition to the permission granted by Section 1240, an
insurer, whether or not it is authorized to do business in, or has
outstanding insurance contracts on lives or risks in any foreign
country, may invest in or otherwise acquire or loan upon securities
and investments in that foreign country  that are substantially of
the same kinds, classes, and investment grades as those eligible for
investment under this code, subject to the following conditions:
   (a) The investments shall not exceed in the aggregate 4 percent of
the capital and surplus or 2 percent of the total admitted assets of
the insurer, whichever is less.
   (b) The investments are to be classified as excess investments.
   (c) Only those of the investments as are listed and traded on a
securities exchange subject to regulation, supervision, or control
under a statute of the United States of America, or if the securities
shall be subject to an annual evaluation by the National Association
of Insurance Commissioners' Evaluation Committee, shall be allowed
as admitted assets.  The expense of an evaluation by the committee
shall be borne by the insurer making the investments.



1241.1.  In addition to the permission granted by Sections 1240 and
1241:
   (a) A domestic insurer with admitted assets in excess of five
hundred million dollars (0,000,000) may acquire, directly or
indirectly, any foreign investment, if, after giving effect to that
acquisition and subject to the limitations of subdivisions (b) and
(c), the foreign investments then held by the domestic insurer would
not exceed in the aggregate 12 percent of the total admitted assets
of the insurer; provided that the insurer's investments do not exceed
the following limitations:
   (1) No more than 7.5 percent of the insurer's admitted assets
consist of foreign investments rated two through six by the National
Association of Insurance Commissioners Securities Valuation Office.
   (2) No more than 3 percent of the insurer's admitted assets
consist of foreign investments rated three through six by the
National Association of Insurance Commissioners Securities Valuation
Office.
   (3) No more than 1.5 percent of the insurer's admitted assets
consist of foreign investments rated four through six by the National
Association of Insurance Commissioners Securities Valuation Office.

   (b) A domestic insurer with admitted assets in excess of five
hundred million dollars (0,000,000) may acquire, directly or
indirectly, any foreign investment, if, after giving effect to that
acquisition, the investments in entities organized under the laws of
a single country, or issued and guaranteed by the sovereign
government of a country, then held by the insurer, would not exceed
the following limitations:
   (1) No more than 6 percent of its admitted assets if the
jurisdiction is rated one by the National Association of Insurance
Commissioners Securities Valuation Office.
   (2) No more than 3 percent of its admitted assets if the
jurisdiction is rated two by the National Association of Insurance
Commissioners Securities Valuation Office.
   (3) No more than 1 percent of its admitted assets if the
jurisdiction is rated three by the National Association of Insurance
Commissioners Securities Valuation Office.
   (4) No more than .75 percent of its admitted assets if the
jurisdiction is rated four by the National Association of Insurance
Commissioners Securities Valuation Office.
   (5) No more than .5 percent of its admitted assets if the
jurisdiction is rated five or six by the National Association of
Insurance Commissioners Securities Valuation Office.
   (c) A domestic insurer with admitted assets in excess of five
hundred million dollars (0,000,000) may acquire, directly or
indirectly, any foreign investment, if, after giving effect to that
acquisition, the investments then held by the insurer from a single
issuer, other than a sovereign government, would not exceed  the
following limitations:
   (1) No more than 2 percent of its admitted assets if the issuer is
rated one by the National Association of Insurance Commissioners
Securities Valuation Office.
   (2) No more than 1 percent of its admitted assets if the issuer is
rated two by the National Association of Insurance Commissioners
Securities Valuation Office.
   (3) No more than .75 percent of its admitted assets if the issuer
is rated three by the National Association of Insurance Commissioners
Securities Valuation Office.
   (4) No more than .5 percent of its admitted assets if the issuer
is rated four through six by the National Association of Insurance
Commissioners Securities Valuation Office.
   (d) A domestic insurer with admitted assets of between one hundred
million dollars (0,000,000) and five hundred million dollars
(0,000,000) may also make the investments in subdivisions (a),
(b), and (c), provided that each percentage limitation of admitted
assets in those subdivisions shall be multiplied by  the following:
   (1) A factor of .833 if admitted assets are less than five hundred
million dollars (0,000,000) but at least four hundred million
dollars (0,000,000).
   (2) A factor of .667 if admitted assets are less than four hundred
million dollars (0,000,000) but at least three hundred million
dollars (0,000,000).
   (3) A factor of .5 if admitted assets are less than three hundred
million dollars (0,000,000) but at least two hundred million
dollars (0,000,000).
   (4) A factor of .333 if admitted assets are less than two hundred
million dollars (0,000,000) but at least one hundred million
dollars (0,000,000).
   (e) For the purpose of Section 1241 and this section, "admitted
assets" has the same meaning as in paragraph (3) of subdivision (f)
of Section 1196.1.
   (f) The statement value of the foreign investments, held by an
insurer pursuant to this section, that are denominated in foreign
currencies not hedged pursuant to arrangements complying with the
requirements of paragraph (4) of subdivision (b) of Section 1194.6,
shall not exceed one-third of each respective amount authorized by
this section.
   (g) Nothing in this section shall restrict or limit investments
otherwise authorized by this code, including but not limited to the
investments authorized by Sections 1173, 1192.4, and 1194.6.
   (h) Investments made pursuant to this section shall be classified
as excess funds investments and shall be subject to the provisions of
Article 4 (commencing with Section 1190) including, but not limited
to, Sections 1195, 1196, 1196.1, 1198, 1200, 1201, and 1202.
   (i) The limits imposed by subdivisions (a), (b), and (c) do not
apply to a property and casualty insurer that has admitted assets in
excess of five hundred million dollars (0,000,000) and foreign
investments that do not exceed 4 percent of its total admitted
assets.