(1)As
used in this section, unless the context otherwise requires:
(a)Aggregate amount of medium-grade and lower-grade obligations
means the aggregate statutory statement value of medium-grade and lower-grade
obligations.
(a.3) Domestic obligation means an obligation described in section 10-3-215 (1)(a) to (1)(f).
(a.7) Foreign obligation means an obligation described in section 10-3-215
(b)Lower-grade obligation means an obligation rated four, five, or six by
the securities valuation office of the national association of insurance
commissioners or by any successor entity.
(c)Medium-grade obligation means an obligation rated three by the
securities valuation office of the national association of insurance commissioners or
by any successor entity.
Free access — add to your briefcase to read the full text and ask questions with AI
(1) As
used in this section, unless the context otherwise requires:
(a) Aggregate amount of medium-grade and lower-grade obligations
means the aggregate statutory statement value of medium-grade and lower-grade
obligations.
(a.3) Domestic obligation means an obligation described in section 10-3-215 (1)(a) to (1)(f).
(a.7) Foreign obligation means an obligation described in section 10-3-215
(1)(h) and (1)(i).
(b) Lower-grade obligation means an obligation rated four, five, or six by
the securities valuation office of the national association of insurance
commissioners or by any successor entity.
(c) Medium-grade obligation means an obligation rated three by the
securities valuation office of the national association of insurance commissioners or
by any successor entity.
(d) Obligation means a bond or other type of evidence of indebtedness
referred to in section 10-3-215.
(2) Without the written approval of the commissioner, no domestic insurance
company shall acquire, directly or indirectly, any medium-grade or lower-grade
obligation of any institution if, at the time of acquisition, after giving effect to any
such acquisition:
(a) The aggregate amount of all medium-grade and lower-grade domestic
and foreign obligations then held by the domestic insurance company would
exceed twenty percent of its admitted assets with the aggregate amount of such
foreign obligations being no more than ten percent of its admitted assets; or
(b) The aggregate amount of all lower-grade domestic and foreign
obligations then held by the domestic insurance company would exceed ten
percent of its admitted assets with the aggregate amount of such foreign
obligations being no more than five percent of its admitted assets; or
(c) The aggregate amount of all domestic and foreign obligations held by the
domestic insurance company which were rated five or six by the securities valuation
office of the national association of insurance commissioners or by any successor
entity would exceed three percent of its admitted assets with the aggregate
amount of such foreign obligations being no more than one and one-half percent of
its admitted assets; or
(d) The aggregate amount of all domestic and foreign obligations held by the
domestic insurance company which were rated six by the securities valuation office
of the national association of insurance commissioners or by any successor entity
would exceed one percent of its admitted assets with the aggregate amount of
such foreign obligations being no more than one-half percent of its admitted
assets.
(3) Attaining or exceeding the limit of any one of the categories listed in
paragraphs (a) to (d) of subsection (2) of this section shall not preclude an insurer
from acquiring obligations in other categories subject to the specific and multi-category limits.
(4) Without the written approval of the commissioner, no domestic insurance
company shall acquire, directly or indirectly, any medium-grade or lower-grade
obligation of any institution if, at the time of acquisition, after giving effect to any
such acquisition:
(a) The aggregate amount of all medium-grade and lower-grade obligations
issued, guaranteed, or insured by such institution and held by the domestic
insurance company exceeds one percent of the domestic insurance company's
admitted assets; or
(b) The aggregate amount of all lower-grade obligations issued, guaranteed,
or insured by such institution and held by the domestic insurance company exceeds
one-half of one percent of the domestic insurance company's admitted assets.
(5) Nothing contained in this section shall prohibit a domestic insurance
company from acquiring any obligation which it has committed to acquire if such
insurance company would have been permitted to acquire that obligation pursuant
to this section on the date on which such insurance company committed to
purchase that obligation; and nothing in this section shall require a domestic
insurance company to sell or otherwise dispose of any investment.
(6) Notwithstanding any other provision of this section, a domestic insurance
company may acquire, whether or not through a restructuring, an obligation of an
institution in which such insurance company already has one or more obligations, if
such obligation is acquired in order to protect an investment previously made in the
obligations of such institution so long as all such acquired obligations of an
institution do not exceed one-half of one percent of the insurer's admitted assets.
(7) Nothing contained in this section shall prohibit a domestic insurance
company from acquiring an obligation as a result of a restructuring of a medium- or
lower-grade obligation already held.
(8) The board of directors of any domestic insurance company which
acquires or invests, directly or indirectly, more than two percent of its admitted
assets in medium-grade and lower-grade obligations shall adopt a written plan for
the acquisition of such investments. The plan, in addition to guidelines with respect
to the quality of the issues invested in, shall contain appropriate diversification
standards applied to all of its investments, which may include, for example,
standards for issuer, industry, duration, liquidity, and geographic location.
(9) All obligations acquired by a domestic insurance company shall be rated
in accordance with the standards of the securities valuation office or any successor
entity.
(10) The provisions of this section shall take effect July 1, 1992, and shall
apply to all investments in obligations acquired on or after that date.