2013 New York Consolidated Laws
ISC - Insurance
Article 14 - (1401 - 1415) INVESTMENTS
1401 - Definitions and rules of general application.

 
    §  1401.  Definitions  and  rules  of general application. (a) In this
  article: (1) "Invested assets" means the admitted assets of  an  insurer
  that conform to the requirements of paragraphs one and two of subsection
  (a)  of  section  one  thousand  three  hundred one of this chapter, but
  excluding the income due or accrued thereon.
    (2) "Mortgage-related security" means an obligation that is  rated  AA
  or  higher  (or  the  equivalent  thereto)  by  a  nationally recognized
  securities rating agency and either:
    (A)  represents  ownership  of  one  or  more  promissory   notes   or
  certificates  of  interest or participation in such notes (including any
  rights designed to assure servicing of, or the receipt or timeliness  of
  receipt  by the holders of such notes, certificates, or participation of
  amounts payable under,  such  notes,  certificates,  or  participation),
  which notes:
    (i)  are  directly  secured by a first lien on a single parcel of real
  estate, including stock allocated to a dwelling unit  in  a  residential
  cooperative  housing  corporation,  upon  which is located a dwelling or
  mixed  residential  and  commercial  structure,  or  on  a   residential
  manufactured  home  as  defined  in  section  5402(6) of Title 42 of the
  U.S.C.A., whether such manufactured home is considered real or  personal
  property under the laws of the state in which it is to be located; and
    (ii)  were originated by a savings and loan association, savings bank,
  commercial bank, credit union, insurance company, or similar institution
  which is supervised and examined by a federal or state authority, or  by
  a  mortgage  approved  by the secretary of housing and urban development
  pursuant to sections 1709 and 1715-b of Title 12 of  the  U.S.C.A.,  or,
  where  such  notes  involve a lien on the manufactured home, by any such
  institution or by any financial institution approved  for  insurance  by
  the  secretary of housing and urban development pursuant to section 1703
  of Title 12 of the U.S.C.A.; or
    (B) is secured by one or more  promissory  notes  or  certificates  of
  interest  or  participations  in such notes (with or without recourse to
  the issuer  thereof)  and,  by  its  terms,  provides  for  payments  of
  principal   in  relation  to  payments,  or  reasonable  projections  of
  payments, or notes meeting the requirements of items  (i)  and  (ii)  of
  subparagraph  (A)  of  this  paragraph  or  certificates  of interest or
  participation in promissory notes meeting such requirements.
    For the purpose of this paragraph the  term  "promissory  note",  when
  used  in connection with a manufactured home, shall also include a loan,
  advance or credit  sale  as  evidence  by  a  retail  installment  sales
  contract or other instrument.
    (3) "Partnership   interests"   when   used  in  connection  with  the
  permissible types of investments made by  any  domestic  insurer,  other
  than a domestic life insurer, means, an interest as a limited partner in
  a  limited  partnership.  A  "limited  partnership"  means a partnership
  formed by two  or  more  persons  pursuant  to  the  provisions  of  the
  applicable  law,  having as members one or more general partners and one
  or more limited partners. The limited partners  as  such  shall  not  be
  bound by the obligations of the partnership.
    (4) "United States" means, when used to signify place, only the states
  of  the  United States, the Commonwealth of Puerto Rico, the District of
  Columbia and includes lands and waters adjacent  to  the  foregoing  and
  under the jurisdiction of the United States.
    (5) "Cap" means an agreement obligating the seller to make payments to
  the  buyer  with  each  payment based on the amount by which a reference
  price or level or the performance or value of  one  or  more  underlying
  interests  exceeds  a  predetermined number, sometimes called the strike
  rate or strike price.

    (6) "Collar" means an agreement to receive payments as the buyer of an
  option, cap or floor and to make payments as the seller of  a  different
  option, cap or floor.
    (7)  "Derivative instrument" means an agreement, option, instrument or
  a series or combination thereof:
    (A) to make or take delivery of, or assume or relinquish, a  specified
  amount of one or more underlying interests, or to make a cash settlement
  in lieu thereof; or
    (B)  that has a price, performance, value or cash flow based primarily
  upon the actual or expected price, level,  performance,  value  or  cash
  flow of one or more underlying interests.
    The  term  "derivative  instrument"  includes options, warrants, caps,
  floors, collars, swaps, swaptions, forwards, and futures.
    (8) "Derivative transaction" means a transaction involving the use  of
  one or more derivative instruments.
    (9)  "Floor" means an agreement obligating the seller to make payments
  to the buyer in which each payment is based on the  amount  by  which  a
  predetermined  number, sometimes called the floor rate or price, exceeds
  a reference price, level, performance or value of one or more underlying
  interests.
    (10) "Forward" means an agreement (other than a  future)  to  make  or
  take  delivery  in  the  future  of one or more underlying interests, or
  effect a cash settlement, based on the actual or expected price,  level,
  performance or value of such underlying interests, but shall not mean or
  include  spot transactions effected within customary settlement periods,
  when-issued purchases, or other similar cash market transactions.
    (11) "Future" means agreement traded on a futures exchange, to make or
  take delivery of, or effect a cash settlement based  on  the  actual  or
  expected  price,  level, performance or value of, one or more underlying
  interests.
    (12) "Hedging transaction" means a  derivative  transaction  which  is
  entered into and at all times maintained to reduce:
    (A)  the  risk  of  economic loss due to a change in the value, yield,
  price, cash flow or quantity of assets or liabilities which the  insurer
  has acquired or incurred or anticipates acquiring or incurring; or
    (B)  the risk of economic loss due to changes in the currency exchange
  rate or the degree of exposure as to assets or  liabilities  denominated
  in  a  foreign  currency  which  an  insurer has acquired or incurred or
  anticipates acquiring or incurring.
    (13) "Option" means an agreement giving the buyer the right to buy  or
  receive (a "call option"), sell or deliver (a "put option"), enter into,
  extend  or  terminate or effect a cash settlement based on the actual or
  expected price, spread, level, performance  or  value  of  one  or  more
  underlying interests.
    (14)  "Swap"  means an agreement to exchange or to net payments at one
  or more times based on the  actual  or  expected  price,  yield,  level,
  performance or value of one or more underlying interests.
    (15)  "Swaption" means an option to purchase or sell a swap at a given
  price and time or at a series of prices and times. A swaption  does  not
  mean a swap with an embedded option.
    (16)  "Underlying  interest"  means  the  assets,  liabilities,  other
  interests, or a combination thereof, underlying a derivative instrument,
  such  as  any  one  or  more  securities,  currencies,  rates,  indices,
  commodities or derivative instruments.
    (17)  "Warrant" means an instrument that gives the holder the right to
  purchase or sell the underlying interest at a given price and time or at
  a series of prices and times outlined in the warrant agreement.

    (18) "Replication  transaction"  means  a  derivative  transaction  or
  combination  of derivative transactions effected either separately or in
  conjunction with cash  market  investments  included  in  the  insurer's
  investment portfolio in order to replicate the investment characteristic
  of  another  authorized  transaction,  investment  or  instrument and/or
  operate as a substitute  for  cash  market  transactions.  A  derivative
  transaction  entered  into  by  the  insurer as a hedging transaction or
  income generation transaction authorized pursuant to this section  shall
  not be considered a replication transaction.
    (b)  All  financial tests and other requirements for the making of any
  investment are satisfied if complied with on the date of acquisition  by
  the  insurer,  except  as  otherwise  permitted  by  this  chapter or by
  regulation.
    (c) None of the financial tests or other requirements for  the  making
  of  any  investment under this article, or as otherwise required by this
  chapter or by regulation promulgated pursuant thereto, are preempted  by
  the  provisions  of  section  106  of  Title I of the Secondary Mortgage
  Market Enhancement  Act  of  1984  (15  U.S.C.  §  77r-1)("SMMEA").  The
  provisions  of  this  chapter  and  any  regulation promulgated pursuant
  thereto that pertain to investments  in  the  categories  of  securities
  specified  in paragraphs one and two of subsection (a) of section 106 of
  such act shall remain in  full  force  and  effect  notwithstanding  the
  enactment of SMMEA.