2014 Kentucky Revised Statutes CHAPTER 304 - INSURANCE CODE Subtitle 37 - Insurance Holding Company Systems 37.37-110 Subsidiaries that may be organized or acquired by domestic insurer -- Investments of domestic insurers.
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304.37-110 Subsidiaries that may be organized or acquired by domestic
insurer -- Investments of domestic insurers.
(1)
(2)
Any domestic insurer, either by itself or in cooperation with one (1) or more
persons, may organize or acquire one (1) or more subsidiaries engaged in the
following kinds of business:
(a) Any kind of insurance business authorized by the jurisdiction in which it is
incorporated;
(b) Acting as an insurance agent for its parent or any of its parent's insurer
subsidiaries;
(c) Investing, reinvesting, or trading in securities for its own account, that of
its parent, any subsidiary of its parent, or any affiliate or subsidiary;
(d) Management of any investment company subject to or registered
pursuant to the Investment Company Act of 1940, as amended, including
related sales and services;
(e) Acting as a broker-dealer subject to or registered pursuant to the
Securities Exchange Act of 1934, as amended;
(f) Rendering investment advice to governments, government agencies,
corporations, or other organizations or groups;
(g) Rendering other services related to the operations of an insurance
business, such as actuarial, loss prevention, safety engineering, data
processing, accounting, claims, appraisal, and collection services;
(h) Ownership and management of assets which the parent corporation may
own or manage if the aggregate investment by the insurer and its
subsidiaries acquired or organized pursuant to this paragraph shall not
exceed the limitations applicable to these investments by the insurer. This
paragraph shall not prohibit investments permitted under KRS 304.7-120;
(i) Acting as an administrative agent for a governmental instrumentality
which is performing an insurance function;
(j) Financing of insurance premiums, agents, and other forms of consumer
financing;
(k) Any other business activity determined by the commissioner to be
reasonably ancillary to an insurance business; and
(l) Owning a corporation or corporations engaged or organized to engage
exclusively in one (1) or more businesses specified in this section.
In addition to investments in common stock, preferred stock, debt obligations,
and other securities permitted under this chapter, a domestic insurer may also:
(a) Invest, in common stock, preferred stock, debt obligations, and other
securities of one (1) or more subsidiaries, amounts which do not exceed
the lesser of ten percent (10%) of the insurer's assets or fifty percent
(50%) of the insurer's surplus as regards policyholders, if after these
investments, the insurer's surplus as regards policyholders will be
reasonable in relation to the insurer's outstanding liabilities and adequate
to meet its financial needs. In calculating the amount of these
investments, investments in domestic or foreign insurance subsidiaries
shall be excluded, and there shall be included:
1.
(3)
(4)
(5)
Total net moneys or other consideration expended and obligations
assumed in the acquisition or formation of a subsidiary, including all
organizational expenses and contributions to capital and surplus of
the subsidiary whether or not represented by the purchase of capital
stock or issuance of other securities; and
2.
All amounts expended in acquiring additional common stock,
preferred stock, debt obligations, and other securities and all
contributions to the capital or surplus, of a subsidiary subsequent to
its acquisition or formation;
(b) Invest any amount in common stock, preferred stock, debt obligations,
and other securities of one (1) or more subsidiaries engaged or organized
to engage exclusively in the ownership and management of assets
authorized as investments for the insurer, if each subsidiary agrees to
limit its investments in any asset so that the investments will not cause
the amount of the total investment of the insurer to exceed any of the
investment limitations specified in paragraph (a) of this subsection or in
Subtitle 7 of KRS Chapter 304. For the purpose of this paragraph, "the
total investment of the insurer" shall include:
1.
Any direct investment by the insurer in an asset; and
2.
The insurer's proportionate share of any investment in an asset by
any subsidiary of the insurer, which shall be calculated by
multiplying the amount of the subsidiary's investment by the
percentage of the ownership of the subsidiary;
(c) With the approval of the commissioner, invest any greater amount in
common stock, preferred stock, debt obligations, or other securities of
one (1) or more subsidiaries, if after the investment the insurer's surplus
as regards policyholders will be reasonable in relation to the insurer's
outstanding liabilities and adequate to its financial needs.
Investments in common stock, preferred stock, debt obligations, or other
securities of subsidiaries made pursuant to subsection (2) of this section shall
not be subject to any of the otherwise applicable restrictions or prohibitions
contained in this chapter applicable to the investments of insurers.
Whether any investment pursuant to subsection (2) of this section meets the
requirements shall be determined before the investment is made, by
calculating the applicable investment limitations as though the investment had
already been made, taking into account the then outstanding principal balance
on all previous investments in debt obligations, and the value of all previous
investments in equity securities as of the day they were made, net of any return
of capital invested, not including dividends.
If an insurer ceases to control a subsidiary, it shall dispose of any investment
made pursuant to this section within three (3) years of the time of the cessation
of control, or within an extension of time as the commissioner may prescribe,
unless at any time after the investment has been made, the investment has
met the requirements for investment under any other provision of this chapter,
and the insurer has notified the commissioner.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1482, effective July 15, 2010. --
Amended 1998 Ky. Acts ch. 483, sec. 27, effective July 15, 1998. -- Created
1992 Ky. Acts ch. 267, sec. 1, effective July 14, 1992.
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