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304.7-469 Foreign investments and foreign currency transactions.
(1)
(2)
(3)
Subject to the limitations of KRS 304.7-455, 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 304.7-459, 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 five percent (5%) of its admitted assets
as to any other foreign jurisdiction.
Subject to the limitations of KRS 304.7-455, 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 fifteen
percent (15%) 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 to a
foreign jurisdiction that has a sovereign debt rating of SVO 1 or five
percent (5%) 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 304.7-471 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 a 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 set forth in KRS 304.7-455.
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 304.7-455 if those
investments carry an SVO rating of 1 or 2. The aggregate amount of
(4)
(5)
investments acquired by the insurer under this subsection shall not exceed the
greater of:
(a) The amount the insurer is required by law to invest in the foreign
jurisdiction; or
(b) One hundred twenty-five percent (125%) of the amount of its reserves,
net of reinsurance, and other obligations under the contracts.
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 a 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 set forth in KRS 304.7-455.
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 304.7-455 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 risks resident or located in the
foreign jurisdiction.
Investments acquired under this section shall be aggregated with investments
of the same types made under this subtitle, and in a similar manner, for
purposes of determining compliance with the limitations of this subtitle, if any.
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 304.7-455.
Effective:July 14, 2000
History: Created 2000 Ky. Acts ch. 388, sec. 28, effective July 14, 2000.
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