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304.7-403 Limits on investments.
(1)
(a)
(b)
(c)
(2)
(a)
(b)
Except as otherwise specified in this subtitle, an insurer shall not acquire,
directly or indirectly through an investment subsidiary, an investment
under this subtitle if, as a result of and after giving effect to the
investment, the insurer would hold more than three percent (3%) of its
admitted assets in investments of all kinds issued, assumed, accepted,
insured, or guaranteed by a single person.
This three percent (3%) limitation shall not apply to the aggregate
amounts insured by a single financial guaranty insurer with the highest
generic rating issued by a nationally recognized statistical rating
organization.
Asset-backed securities shall not be subject to the limitations of
paragraph (a) of this subsection, however an insurer shall not acquire an
asset-backed security if, as a result of and after giving effect to the
investment, the aggregate amount of asset-backed securities secured by
or evidencing an interest in a single asset or single pool of assets held by
a trust or other business entity, then held by the insurer would exceed
three percent (3%) of its admitted assets.
An insurer shall not acquire, directly or indirectly through an investment
subsidiary, an investment under KRS 304.7-405, 304.7-411, and
304.7-417, or counterparty exposure under KRS 304.7-419(4), if, as a a
result of and after giving effect to the investment:
1.
The aggregate amount of medium and lower grade investments
then held by the insurer would exceed twenty percent (20%) of its
admitted assets;
2.
The aggregate amount of lower grade investments then held by the
insurer would exceed ten percent (10%) of its admitted assets;
3.
The aggregate amount of investments rated 5 or 6 by the SVO then
held by the insurer would exceed three percent (3%) of its admitted
assets;
4.
The aggregate amount of investments rated 6 by the SVO then held
by the insurer would exceed one percent (1%) of its admitted assets;
or
5.
The aggregate amount of medium and lower grade investments
then held by the insurer that receive as cash income less than the
equivalent yield for Treasury issues with a comparative average life,
would exceed one percent (1%) of its admitted assets.
An insurer shall not acquire, directly or indirectly through an investment
subsidiary, an investment under KRS 304.7-405, 304.7-411, and
304.7-417, or counterparty exposure under KRS 304.7-419(4), if, as a
result of and after giving effect to the investment:
1.
The aggregate amount of medium and lower grade investments
issued, assumed, guaranteed, accepted, or insured by any one (1)
person or, as to asset-backed securities secured by or evidencing
an interest in a single asset or pool of assets, then held by the
insurer would exceed one percent (1%) of its admitted assets; or
2.
(c)
(3)
(a)
(b)
The aggregate amount of lower grade investments issued,
assumed, guaranteed, accepted, or insured by any one (1) person
or, as to asset-backed securities secured by or evidencing an
interest in a single asset or pool of assets, then held by the insurer
would exceed one-half of one percent (0.5%) of its admitted assets.
If an insurer attains or exceeds the limit of any one (1) rating category
referred to in this subsection, the insurer shall not thereby be precluded
from acquiring investments in other rating categories subject to the
specific multicategory limits applicable to those investments.
An insurer shall not acquire, directly or indirectly through an investment
subsidiary, a Canadian investment authorized by this subtitle, if as a
result of and after giving effect to the investment, the aggregate amount of
these investments then held by the insurer would exceed forty percent
(40%) of its admitted assets, or if the aggregate amount of Canadian
investments not acquired under KRS 304.7-405(2) then held by the
insurer would exceed twenty-five percent (25%) of its admitted assets.
However, as to an insurer that is authorized to do business in Canada or
that has outstanding insurance, annuity, or reinsurance contracts on lives
or risks resident or located in Canada and denominated in Canadian
currency, the limitations of paragraph (a) of this subsection shall be
increased by the greater of:
1.
The amount the insurer is required by Canadian law to invest in
Canada or to be denominated in Canadian currency; or
2.
One hundred fifteen percent (115%) of the amount of its reserves
and other obligations under contracts on lives or risks resident or
located in Canada.
Effective:July 14, 2000
History: Created 2000 Ky. Acts ch. 388, sec. 8, effective July 14, 2000.
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