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2020 New Hampshire Revised Statutes
Title XXXVII - Insurance
Title 402 - Insurance Companies and Agents
Section 402:28 - Types of Investments.
Universal Citation: NH Rev Stat § 402:28 (2020)
402:28 Types of Investments. –
I. Except for those investments which are authorized by RSA 401-B:2, which investments shall be governed exclusively by those sections respectively, every domestic insurance company, other than a life insurance company, shall invest and keep invested all its funds in investments enumerated below, except such cash as may be required in the transaction of its business. Such investments shall include:
(a) Government Obligations. Bonds, notes, or obligations issued, assumed, guaranteed, or insured by the United States, or by any state, territory, or possession thereof, the District of Columbia or by any county, city, town, village, municipality, or district therein or by any political subdivision or public instrumentality of one or more of the foregoing.
(b) Government Agencies. Bonds, notes, obligations, or stock issued, assumed, guaranteed, or insured by the following agencies of the United States or in which such government is a participant, whether or not such obligations are guaranteed by such government:
(1) Farm loan bank.
(2) Commodity credit corporation.
(3) Federal intermediate credit banks.
(4) Federal land banks.
(5) Central bank for cooperatives.
(6) Federal home loan banks and stock of such banks.
(7) Federal national mortgage association and stock of such association.
(8) Government national mortgage association.
(9) Federal home loan mortgage corporation.
(10) International bank for reconstruction and development.
(11) Inter-American development bank.
(12) Asian development bank.
(13) African development bank.
(14) Any other similar agency of, or in which there is participation by, the government of the United States, and the instruments are of similar financial quality.
(c) Business Obligations and Equity Interests. Stock, warrants, rights or other securities, bonds, notes or obligations issued, assumed, guaranteed, insured, or accepted by any solvent corporation, joint-stock association, trust, partnership, joint venture, or other entity or combination of entities incorporated or existing under the laws of the United States or of any state, district, or territory thereof, and any interest in any of the foregoing. An insurer shall not short sell equity investments unless the insurer covers the short sale by owning the equity investment or an unrestricted right to the equity instrument exercisable within 6 months of the short sale.
(d) Limited Partnerships. A domestic company may become a limited partner in a limited partnership on the following conditions:
(1) The partnership shall be organized under the limited partnership laws of the state of the partnership formation.
(2) The company's interest in any one limited partnership shall be subject to the general 5 percent diversification requirement in RSA 402:29-d, I(a).
(3) All investments in limited partnerships shall be subject, as applicable, to the limitations on equity interests in RSA 402:29-d, I(b) and the limitations on interests in mortgage loans and real estate in RSA 402:29-d, IV-VII.
(e) Bank Obligations. Interest-bearing deposits, banks' and bankers' acceptances, including bills of exchange, or certificates of deposit in banks, bank and trust companies, savings banks, savings associations, savings and loan associations or national banking associations, incorporated or existing under the laws of the United States or any state, district, or territory thereof, including branches of any of the foregoing, or foreign banking institutions or branches of such institutions located in the United States or any state, district, or territory thereof.
(f) Revenue Obligations. Obligations or participations in obligations which are not issued, assumed, guaranteed, or accepted by any person described under subparagraph I(c), but are:
(1) Adequately secured by an assignment or right to receive rent or other payment or revenues payable or guaranteed by any one or more persons or entities; or adequately secured by a mortgage, interest in a mortgage pool, or mortgage participation, or lien or security interest in real or personal property or any interest therein.
(2) The obligations or participations in such obligations of any person or entity whose principal assets are any one of the foregoing obligations or participations secured in accordance with subparagraph (f)(1).
(g) Mortgage Backed Securities. Mortgage backed securities include, but are not limited to: mortgage pass-through securities; mortgage backed bonds; collateralized mortgage obligations; and real estate mortgage investments conduits, adequately secured by a pool of mortgages and served by a governmental unit or instrumentality of the United States or any entity incorporated under the laws of the United States or of any state thereof.
(h) Mortgage Loans.
(1) Subject to the limitations of RSA 402:29-d, I(a), an insurer may acquire, either directly, indirectly through limited partnership interests, joint ventures, stock of an investment subsidiary, or membership interests in a limited liability company, trust certificates, or other similar instruments, obligations secured by mortgages on real estate situated within a domestic jurisdiction, but a mortgage loan which is secured by other than a first lien shall not be acquired unless the insurer is the holder of the first lien. The obligations held by the insurer and any obligations with an equal lien priority, shall not, at the time of acquisition of the obligation, exceed:
(A) Ninety percent of the fair market value of the real estate, if the mortgage loan is secured by a purchase money mortgage or like security received by the insurer upon disposition of the real estate;
(B) Eighty percent of the fair market value of the real estate, if the mortgage loan requires immediate scheduled payment in periodic installments of principal and interest, has an amortization period of 30 years or less and periodic payments made no less frequently than annually. Each periodic payment shall be sufficient to assure that at all times the outstanding principal balance of the mortgage loan shall not be greater than the outstanding principal balance that would be outstanding under a mortgage loan with the same original principal balance, with the same interest rate and requiring equal payments of principal and interest with the same frequency over the same amortization period. Mortgage loans permitted under this subparagraph are permitted notwithstanding the fact that they provide for a payment of the principal balance prior to the end of the period of amortization of the loan. For residential mortgage loans, the 80 percent limitation may be increased to 97 percent if acceptable private mortgage insurance has been obtained; or
(C) Seventy-five percent of the fair market value of the real estate for mortgage loans that do not meet the requirements of subparagraphs (1) and (2).
(2) For the purposes of subparagraph (1), the amount of an obligation required to be included in the calculation of the loan-to-value ratio may be reduced to the extent the obligation is insured by the Federal Housing Administration or guaranteed by the Administrator of Veterans Affairs, or their successors.
(3) A mortgage loan that is held by an insurer as an admitted asset on December 31, 2016 and is restructured in a manner that meets the requirements of a restructured mortgage loan in accordance with the NAIC Accounting Practices and Procedures Manual or successor publication shall continue to qualify as a mortgage loan under this subparagraph.
(4) Subject to the limitations of RSA 402:29-d, I(a), credit lease transactions that do not qualify as rated securities under subparagraph (n) with the following characteristics shall be exempt from the provisions of subparagraph (1).
(A) The loan amortizes over the initial fixed lease term at least in an amount sufficient so that the loan balance at the end of the lease term does not exceed the original appraised value of the real estate;
(B) The lease payments cover or exceed the total debt service over the life of the loan;
(C) A tenant or its affiliated entity whose rated credit instruments have a SVO 1 or 2 designation from the Securities Valuation Office of the National Association of Insurance Commissioners or a comparable rating from a nationally recognized statistical rating organization recognized by the Securities Valuation Office has a full faith and credit obligation to make the lease payments;
(D) The insurer holds or is the beneficial holder of the first lien mortgage on the real estate;
(E) The expenses of the real estate are passed through to the tenant, excluding exterior, structural, parking, and heating, ventilation, and air conditioning replacement expenses, unless annual escrow contributions, from cash flows derived from the lease payments, cover the expense shortfall; and
(F) There is a perfected assignment of the rents due pursuant to the lease to, or for the benefit of, the insurer.
(i) Income Producing Real Estate.
(1) An insurer may acquire, manage, and dispose of real estate situated in a domestic jurisdiction either directly or indirectly through limited partnership interests, joint ventures, stock of an investment subsidiary or membership interests in a limited liability company, trust certificates, or other similar instruments. The real estate shall be income producing or intended for improvement or development for investment purposes under an existing program in which case the real estate shall be deemed to be income producing.
(2) The real estate may be subject to mortgages, liens, or other encumbrances, the amount of which shall, to the extent that the obligations secured by the mortgages, liens, or encumbrances are without recourse to the insurer, be deducted from the amount of the investment of the insurer in the real estate for purposes of determining compliance with RSA 402:29-d, IV and V.
(j) Real Estate for the Accommodation of Business. An insurer may acquire, manage, and dispose of real estate for the convenient accommodation of the insurer, which may include its affiliates, business operations, including home office, branch office and field office operations.
(1) Real estate acquired under this subparagraph may include excess space for rent to others, if the excess space, valued at its fair market value, would otherwise be a permitted investment under subparagraph (i) of this section and is so qualified by the insurer;
(2) The real estate acquired under this subparagraph may be subject to one or more mortgages, liens, or other encumbrances, the amount of which shall, to the extent that the obligations secured by the mortgages, liens, or encumbrances are without recourse to the insurer, be deducted from the amount of the investment of the insurer in the real estate for purposes of determining compliance with RSA 402:29-d, V; and
(3) For purposes of this subparagraph, business operations shall not include that portion of real estate used for the direct provision of health care services by an insurer whose insurance premiums and required statutory reserves for accident and health insurance constitute at least 95 percent of total premium considerations or total statutory required reserves, respectively. An insurer may acquire real estate used for these purposes under RSA 402:28, I(h) and subject to the limitations set out in RSA 402:29-d, V.
(k) Collateral Loans. Direct obligations for the payment of money adequately secured by the pledge of any property which would be authorized as an investment under this subdivision.
(l) Exchange Traded Financial Futures Contracts. The investment practice of financial futures contracts issued under terms and conditions regulated by a federal regulatory agency is authorized on the following conditions:
(1) A company shall not enter into a financial futures contract except as a hedging transaction as that term is defined in a rule adopted pursuant to this subdivision.
(2) A company shall not have initial or maintenance margin outstanding under this paragraph of more than 10 percent of the excess of its capital and surplus over the minimum requirements of a new stock or mutual company to qualify for a certificate of authority to write the kind of insurance which the company is authorized to write.
(m) Exchange Traded Put and Call Options. The investment practice of put options and call options issued under terms and conditions regulated by, or substantially similar to those terms and conditions required by, a National Securities Exchange registered under the Securities Exchange Act of 1934, as amended, or any board of trade designated as a contract market by the Commodity Futures Trading Commission under the Commodity Exchange Act, as amended, is authorized on the following conditions:
(1) A company shall not sell a call option on either:
(A) Securities it does not own; or
(B) In an amount greater than securities which it presently owns.
(2) In the case of financial futures contracts and stock or bond index contracts where it is not feasible to own the underlying security, a company may sell a call option only in connection with a hedging transaction.
(3) A company shall not sell a put option unless its obligations under such put option are fully secured by a deposit by the company with a bank or other custodian of cash or cash equivalents.
(4) A company shall not purchase as opening transactions under this paragraph more than 10 percent of the excess of its capital and surplus over the minimum requirements of a new stock or mutual company to qualify for a certificate of authority to write the kind of insurance which the company is authorized to write.
(n) Options and Futures Contracts. Options or futures contracts traded in markets regulated under the laws of the United States, or by an agency thereof, and other contracts or instruments for the purpose of reducing the company's economic risk in connection with potential changes in the value of specifically identified assets which the company owns or could reasonably expect to acquire, or specifically identified liabilities which the company has or reasonably expects to incur. The aggregate cost of investments held under this paragraph shall not exceed 5 percent of the company's admitted assets.
(o) Securities Lending. The investment practice of lending securities and entering into repurchase agreements and reverse repurchase agreements is authorized on the following conditions:
(1) "Lending of securities" means an investment other than a repurchase agreement, whereby an agreement is entered into which transfers ownership rights and possession of securities to the borrower of such securities with the agreement providing for a return of ownership rights and possession of the securities to the lender at a specified date or upon demand.
(2) "Repurchase agreement" means a bilateral agreement whereby a company purchases securities with a related agreement that the seller will purchase or repurchase at a specified price the equivalent or similar securities within a specified period of time or on demand.
(3) "Reverse repurchase agreement" means a bilateral agreement whereby a company:
(A) Sells securities with a related agreement to purchase or repurchase at a specified price the equivalent or similar securities within a specified period of time or upon demand; or
(B) Borrows funds and transfers securities to the lender with a related agreement that equivalent or similar securities shall be returned to the company upon repayment of the loan within a specified period of time or on demand.
(4) Lending of securities, repurchase agreements, and reverse repurchase agreements are authorized on the following conditions:
(A) The agreement for each transaction or the master agreement for a series of transactions shall be reduced to writing.
(B) Securities acquired by a company owned subject to reacquisition pursuant to an outstanding repurchase agreement may not be sold pursuant to a reverse repurchase agreement nor lent pursuant to a lending of securities agreement. Consideration, or collateral, received from a reverse repurchase agreement or lending of securities agreement may be used to acquire securities which are equivalent or similar to the securities transferred pursuant to such repurchase agreement or lending of securities agreement; however, such acquired securities may not be sold pursuant to a reverse repurchase agreement nor lent pursuant to a lending of securities agreement.
(C) A company is limited to no more than 10 percent of its admitted assets being subject to lending of securities, repurchase agreements or reverse repurchase agreements transactions outstanding with any one entity under this paragraph.
(D) A company may engage in lending its securities or repurchase or reverse repurchase agreements not to exceed 40 percent of its admitted assets, provided, however, that such transactions are collateralized 102 percent of the market value of loaned securities at the close of every business day in which such agreement remains open.
(p) Rated Securities. Obligations which are rated by a securities rating agency, which agency is acceptable to the commissioner, and which securities are rated so as to be in one of the highest 4 generic lettered rating classifications, or awarded a "yes" rating by the Securities Valuation Office of the National Association of Insurance Commissioners.
(q) Basket Provision. Any investment of any kind not otherwise authorized by this subdivision up to an amount not exceeding in the aggregate 10 percent of such company's admitted assets.
(r) Mutual Funds. Equity interest in an open-ended investment company registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. section 80a-1 et seq.) as amended, provided that substantially all the investments of such mutual funds are traded on a nationally recognized stock exchange or on the NASDAQ system.
(s) With approval of the commissioner, funds loaned to the New Hampshire Insurance Guaranty Association pursuant to RSA 404-H:8, II(b).
II. (a) Foreign Securities; Insurance Policy Related. A domestic company which is lawfully doing business in any foreign country may also invest its funds in:
(1) Bonds, notes, or obligations of such foreign country, or of a political subdivision, governmental corporation or agency, of such foreign country.
(2) Stocks, warrants, rights or other securities, bonds, notes, or obligations of any business entity formed or located in such foreign country, which are of the same kinds, classes and grades as those eligible for investments under this subdivision.
(b) The aggregate carrying value of all investments under this paragraph shall not exceed 150 percent of the liabilities arising from the outstanding policies of insurance issued or delivered in such foreign country.
III. United States Dollar Denominated Foreign Investments. A domestic company may invest in stocks, warrants, rights or other securities, bonds, notes, or obligations, of foreign entities which are denominated in United States dollars, which are of the same kind, class and grade of United States investments which are authorized under any other provision of this subdivision. Any investment authorized under this paragraph shall be aggregated with United States investments of the same category in determining compliance with percentage limitations, if any, contained in other provisions of this subdivision.
IV. Foreign Investments Denominated in Foreign Currency. A domestic company may invest in stocks, warrants, rights or other securities, bonds, notes, or obligations, of foreign entities which are denominated in a foreign currency, which are of the same kind, class and grade of United States investments which are authorized under any other provision of this subdivision. The aggregate carrying value of all investments under this paragraph shall be 10 percent of such company's admitted assets.
I. Except for those investments which are authorized by RSA 401-B:2, which investments shall be governed exclusively by those sections respectively, every domestic insurance company, other than a life insurance company, shall invest and keep invested all its funds in investments enumerated below, except such cash as may be required in the transaction of its business. Such investments shall include:
(a) Government Obligations. Bonds, notes, or obligations issued, assumed, guaranteed, or insured by the United States, or by any state, territory, or possession thereof, the District of Columbia or by any county, city, town, village, municipality, or district therein or by any political subdivision or public instrumentality of one or more of the foregoing.
(b) Government Agencies. Bonds, notes, obligations, or stock issued, assumed, guaranteed, or insured by the following agencies of the United States or in which such government is a participant, whether or not such obligations are guaranteed by such government:
(1) Farm loan bank.
(2) Commodity credit corporation.
(3) Federal intermediate credit banks.
(4) Federal land banks.
(5) Central bank for cooperatives.
(6) Federal home loan banks and stock of such banks.
(7) Federal national mortgage association and stock of such association.
(8) Government national mortgage association.
(9) Federal home loan mortgage corporation.
(10) International bank for reconstruction and development.
(11) Inter-American development bank.
(12) Asian development bank.
(13) African development bank.
(14) Any other similar agency of, or in which there is participation by, the government of the United States, and the instruments are of similar financial quality.
(c) Business Obligations and Equity Interests. Stock, warrants, rights or other securities, bonds, notes or obligations issued, assumed, guaranteed, insured, or accepted by any solvent corporation, joint-stock association, trust, partnership, joint venture, or other entity or combination of entities incorporated or existing under the laws of the United States or of any state, district, or territory thereof, and any interest in any of the foregoing. An insurer shall not short sell equity investments unless the insurer covers the short sale by owning the equity investment or an unrestricted right to the equity instrument exercisable within 6 months of the short sale.
(d) Limited Partnerships. A domestic company may become a limited partner in a limited partnership on the following conditions:
(1) The partnership shall be organized under the limited partnership laws of the state of the partnership formation.
(2) The company's interest in any one limited partnership shall be subject to the general 5 percent diversification requirement in RSA 402:29-d, I(a).
(3) All investments in limited partnerships shall be subject, as applicable, to the limitations on equity interests in RSA 402:29-d, I(b) and the limitations on interests in mortgage loans and real estate in RSA 402:29-d, IV-VII.
(e) Bank Obligations. Interest-bearing deposits, banks' and bankers' acceptances, including bills of exchange, or certificates of deposit in banks, bank and trust companies, savings banks, savings associations, savings and loan associations or national banking associations, incorporated or existing under the laws of the United States or any state, district, or territory thereof, including branches of any of the foregoing, or foreign banking institutions or branches of such institutions located in the United States or any state, district, or territory thereof.
(f) Revenue Obligations. Obligations or participations in obligations which are not issued, assumed, guaranteed, or accepted by any person described under subparagraph I(c), but are:
(1) Adequately secured by an assignment or right to receive rent or other payment or revenues payable or guaranteed by any one or more persons or entities; or adequately secured by a mortgage, interest in a mortgage pool, or mortgage participation, or lien or security interest in real or personal property or any interest therein.
(2) The obligations or participations in such obligations of any person or entity whose principal assets are any one of the foregoing obligations or participations secured in accordance with subparagraph (f)(1).
(g) Mortgage Backed Securities. Mortgage backed securities include, but are not limited to: mortgage pass-through securities; mortgage backed bonds; collateralized mortgage obligations; and real estate mortgage investments conduits, adequately secured by a pool of mortgages and served by a governmental unit or instrumentality of the United States or any entity incorporated under the laws of the United States or of any state thereof.
(h) Mortgage Loans.
(1) Subject to the limitations of RSA 402:29-d, I(a), an insurer may acquire, either directly, indirectly through limited partnership interests, joint ventures, stock of an investment subsidiary, or membership interests in a limited liability company, trust certificates, or other similar instruments, obligations secured by mortgages on real estate situated within a domestic jurisdiction, but a mortgage loan which is secured by other than a first lien shall not be acquired unless the insurer is the holder of the first lien. The obligations held by the insurer and any obligations with an equal lien priority, shall not, at the time of acquisition of the obligation, exceed:
(A) Ninety percent of the fair market value of the real estate, if the mortgage loan is secured by a purchase money mortgage or like security received by the insurer upon disposition of the real estate;
(B) Eighty percent of the fair market value of the real estate, if the mortgage loan requires immediate scheduled payment in periodic installments of principal and interest, has an amortization period of 30 years or less and periodic payments made no less frequently than annually. Each periodic payment shall be sufficient to assure that at all times the outstanding principal balance of the mortgage loan shall not be greater than the outstanding principal balance that would be outstanding under a mortgage loan with the same original principal balance, with the same interest rate and requiring equal payments of principal and interest with the same frequency over the same amortization period. Mortgage loans permitted under this subparagraph are permitted notwithstanding the fact that they provide for a payment of the principal balance prior to the end of the period of amortization of the loan. For residential mortgage loans, the 80 percent limitation may be increased to 97 percent if acceptable private mortgage insurance has been obtained; or
(C) Seventy-five percent of the fair market value of the real estate for mortgage loans that do not meet the requirements of subparagraphs (1) and (2).
(2) For the purposes of subparagraph (1), the amount of an obligation required to be included in the calculation of the loan-to-value ratio may be reduced to the extent the obligation is insured by the Federal Housing Administration or guaranteed by the Administrator of Veterans Affairs, or their successors.
(3) A mortgage loan that is held by an insurer as an admitted asset on December 31, 2016 and is restructured in a manner that meets the requirements of a restructured mortgage loan in accordance with the NAIC Accounting Practices and Procedures Manual or successor publication shall continue to qualify as a mortgage loan under this subparagraph.
(4) Subject to the limitations of RSA 402:29-d, I(a), credit lease transactions that do not qualify as rated securities under subparagraph (n) with the following characteristics shall be exempt from the provisions of subparagraph (1).
(A) The loan amortizes over the initial fixed lease term at least in an amount sufficient so that the loan balance at the end of the lease term does not exceed the original appraised value of the real estate;
(B) The lease payments cover or exceed the total debt service over the life of the loan;
(C) A tenant or its affiliated entity whose rated credit instruments have a SVO 1 or 2 designation from the Securities Valuation Office of the National Association of Insurance Commissioners or a comparable rating from a nationally recognized statistical rating organization recognized by the Securities Valuation Office has a full faith and credit obligation to make the lease payments;
(D) The insurer holds or is the beneficial holder of the first lien mortgage on the real estate;
(E) The expenses of the real estate are passed through to the tenant, excluding exterior, structural, parking, and heating, ventilation, and air conditioning replacement expenses, unless annual escrow contributions, from cash flows derived from the lease payments, cover the expense shortfall; and
(F) There is a perfected assignment of the rents due pursuant to the lease to, or for the benefit of, the insurer.
(i) Income Producing Real Estate.
(1) An insurer may acquire, manage, and dispose of real estate situated in a domestic jurisdiction either directly or indirectly through limited partnership interests, joint ventures, stock of an investment subsidiary or membership interests in a limited liability company, trust certificates, or other similar instruments. The real estate shall be income producing or intended for improvement or development for investment purposes under an existing program in which case the real estate shall be deemed to be income producing.
(2) The real estate may be subject to mortgages, liens, or other encumbrances, the amount of which shall, to the extent that the obligations secured by the mortgages, liens, or encumbrances are without recourse to the insurer, be deducted from the amount of the investment of the insurer in the real estate for purposes of determining compliance with RSA 402:29-d, IV and V.
(j) Real Estate for the Accommodation of Business. An insurer may acquire, manage, and dispose of real estate for the convenient accommodation of the insurer, which may include its affiliates, business operations, including home office, branch office and field office operations.
(1) Real estate acquired under this subparagraph may include excess space for rent to others, if the excess space, valued at its fair market value, would otherwise be a permitted investment under subparagraph (i) of this section and is so qualified by the insurer;
(2) The real estate acquired under this subparagraph may be subject to one or more mortgages, liens, or other encumbrances, the amount of which shall, to the extent that the obligations secured by the mortgages, liens, or encumbrances are without recourse to the insurer, be deducted from the amount of the investment of the insurer in the real estate for purposes of determining compliance with RSA 402:29-d, V; and
(3) For purposes of this subparagraph, business operations shall not include that portion of real estate used for the direct provision of health care services by an insurer whose insurance premiums and required statutory reserves for accident and health insurance constitute at least 95 percent of total premium considerations or total statutory required reserves, respectively. An insurer may acquire real estate used for these purposes under RSA 402:28, I(h) and subject to the limitations set out in RSA 402:29-d, V.
(k) Collateral Loans. Direct obligations for the payment of money adequately secured by the pledge of any property which would be authorized as an investment under this subdivision.
(l) Exchange Traded Financial Futures Contracts. The investment practice of financial futures contracts issued under terms and conditions regulated by a federal regulatory agency is authorized on the following conditions:
(1) A company shall not enter into a financial futures contract except as a hedging transaction as that term is defined in a rule adopted pursuant to this subdivision.
(2) A company shall not have initial or maintenance margin outstanding under this paragraph of more than 10 percent of the excess of its capital and surplus over the minimum requirements of a new stock or mutual company to qualify for a certificate of authority to write the kind of insurance which the company is authorized to write.
(m) Exchange Traded Put and Call Options. The investment practice of put options and call options issued under terms and conditions regulated by, or substantially similar to those terms and conditions required by, a National Securities Exchange registered under the Securities Exchange Act of 1934, as amended, or any board of trade designated as a contract market by the Commodity Futures Trading Commission under the Commodity Exchange Act, as amended, is authorized on the following conditions:
(1) A company shall not sell a call option on either:
(A) Securities it does not own; or
(B) In an amount greater than securities which it presently owns.
(2) In the case of financial futures contracts and stock or bond index contracts where it is not feasible to own the underlying security, a company may sell a call option only in connection with a hedging transaction.
(3) A company shall not sell a put option unless its obligations under such put option are fully secured by a deposit by the company with a bank or other custodian of cash or cash equivalents.
(4) A company shall not purchase as opening transactions under this paragraph more than 10 percent of the excess of its capital and surplus over the minimum requirements of a new stock or mutual company to qualify for a certificate of authority to write the kind of insurance which the company is authorized to write.
(n) Options and Futures Contracts. Options or futures contracts traded in markets regulated under the laws of the United States, or by an agency thereof, and other contracts or instruments for the purpose of reducing the company's economic risk in connection with potential changes in the value of specifically identified assets which the company owns or could reasonably expect to acquire, or specifically identified liabilities which the company has or reasonably expects to incur. The aggregate cost of investments held under this paragraph shall not exceed 5 percent of the company's admitted assets.
(o) Securities Lending. The investment practice of lending securities and entering into repurchase agreements and reverse repurchase agreements is authorized on the following conditions:
(1) "Lending of securities" means an investment other than a repurchase agreement, whereby an agreement is entered into which transfers ownership rights and possession of securities to the borrower of such securities with the agreement providing for a return of ownership rights and possession of the securities to the lender at a specified date or upon demand.
(2) "Repurchase agreement" means a bilateral agreement whereby a company purchases securities with a related agreement that the seller will purchase or repurchase at a specified price the equivalent or similar securities within a specified period of time or on demand.
(3) "Reverse repurchase agreement" means a bilateral agreement whereby a company:
(A) Sells securities with a related agreement to purchase or repurchase at a specified price the equivalent or similar securities within a specified period of time or upon demand; or
(B) Borrows funds and transfers securities to the lender with a related agreement that equivalent or similar securities shall be returned to the company upon repayment of the loan within a specified period of time or on demand.
(4) Lending of securities, repurchase agreements, and reverse repurchase agreements are authorized on the following conditions:
(A) The agreement for each transaction or the master agreement for a series of transactions shall be reduced to writing.
(B) Securities acquired by a company owned subject to reacquisition pursuant to an outstanding repurchase agreement may not be sold pursuant to a reverse repurchase agreement nor lent pursuant to a lending of securities agreement. Consideration, or collateral, received from a reverse repurchase agreement or lending of securities agreement may be used to acquire securities which are equivalent or similar to the securities transferred pursuant to such repurchase agreement or lending of securities agreement; however, such acquired securities may not be sold pursuant to a reverse repurchase agreement nor lent pursuant to a lending of securities agreement.
(C) A company is limited to no more than 10 percent of its admitted assets being subject to lending of securities, repurchase agreements or reverse repurchase agreements transactions outstanding with any one entity under this paragraph.
(D) A company may engage in lending its securities or repurchase or reverse repurchase agreements not to exceed 40 percent of its admitted assets, provided, however, that such transactions are collateralized 102 percent of the market value of loaned securities at the close of every business day in which such agreement remains open.
(p) Rated Securities. Obligations which are rated by a securities rating agency, which agency is acceptable to the commissioner, and which securities are rated so as to be in one of the highest 4 generic lettered rating classifications, or awarded a "yes" rating by the Securities Valuation Office of the National Association of Insurance Commissioners.
(q) Basket Provision. Any investment of any kind not otherwise authorized by this subdivision up to an amount not exceeding in the aggregate 10 percent of such company's admitted assets.
(r) Mutual Funds. Equity interest in an open-ended investment company registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. section 80a-1 et seq.) as amended, provided that substantially all the investments of such mutual funds are traded on a nationally recognized stock exchange or on the NASDAQ system.
(s) With approval of the commissioner, funds loaned to the New Hampshire Insurance Guaranty Association pursuant to RSA 404-H:8, II(b).
II. (a) Foreign Securities; Insurance Policy Related. A domestic company which is lawfully doing business in any foreign country may also invest its funds in:
(1) Bonds, notes, or obligations of such foreign country, or of a political subdivision, governmental corporation or agency, of such foreign country.
(2) Stocks, warrants, rights or other securities, bonds, notes, or obligations of any business entity formed or located in such foreign country, which are of the same kinds, classes and grades as those eligible for investments under this subdivision.
(b) The aggregate carrying value of all investments under this paragraph shall not exceed 150 percent of the liabilities arising from the outstanding policies of insurance issued or delivered in such foreign country.
III. United States Dollar Denominated Foreign Investments. A domestic company may invest in stocks, warrants, rights or other securities, bonds, notes, or obligations, of foreign entities which are denominated in United States dollars, which are of the same kind, class and grade of United States investments which are authorized under any other provision of this subdivision. Any investment authorized under this paragraph shall be aggregated with United States investments of the same category in determining compliance with percentage limitations, if any, contained in other provisions of this subdivision.
IV. Foreign Investments Denominated in Foreign Currency. A domestic company may invest in stocks, warrants, rights or other securities, bonds, notes, or obligations, of foreign entities which are denominated in a foreign currency, which are of the same kind, class and grade of United States investments which are authorized under any other provision of this subdivision. The aggregate carrying value of all investments under this paragraph shall be 10 percent of such company's admitted assets.
Source. 1917, 30:4. PL 273:23. RL 323:28. RSA 402:28. 1975, 232:1. 1977, 334:1. 1991, 372:2. 1997, 221:4. 2004, 197:3. 2016, 254:1, eff. Aug. 9, 2016.
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