§ 27-1-12-2.4 — Participation in certain investment pools; requirements for pooling agreements

Indiana § 27-1-12-2.4

• Jurisdiction: Indiana
• Title 27: INSURANCE
• Art. 1: DEPARTMENT OF INSURANCE
• Ch. 12: Life Insurance Company Powers and Policy

Text

4. (a) The following definitions apply to this
section:
(1) "Admitted assets" means a life insurance company's assets
permitted to be reported as admitted assets on the statutory
financial statement of the insurer most recently required to be
filed with the commissioner.
(2) "Affiliate" means, as to any person, another person that,
directly or indirectly, through one (1) or more intermediaries:
(A) controls;
(B) is controlled by; or
(C) is under common control with;
the person.
(3) "Business entity" means:
(A) a sole proprietorship;
(B) a corporation;
(C) a limited liability company;
(D) an association;
(E) a partnership;
(F) a joint stock company;
(G) a joint venture;
(H) a mutual fund;
(I) a trust;
(J) a joint tenancy; or
(K) another, similar form of business organization;
whether organized for-profit or not-for-profit.
(4) "Cash" means any of the following:
(A) United States denominated paper currency and coins.
(B) Negotiable money orders and checks.
(C) Funds held in any time or demand deposit in any depository
institution, the deposits of which are insured by the Federal
Deposit Insurance Corporation.
(5) "Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting
securities, by contract (other than a commercial contract for goods
or non-management services), or otherwise, unless the power is
the result of an official position with or corporate office held by
the person. Control shall be presumed to exist if a person, directly
or indirectly, owns, controls, holds with the power to vote or holds
proxies representing ten percent (10%) or more of the voting
securities of another person. This presumption may be rebutted by
a showing that control does not exist in fact. The commissioner
may determine, after furnishing all interested persons notice and
an opportunity to be heard and making specific findings of fact to
support the determination, that control exists in fact,
notwithstanding the absence of a presumption to that effect.
(6) "Fixed charges" includes interest on funded and unfunded
debt, amortization of debt discount, and rentals for leased
property.
(7) "Guaranteed or insured," when used in connection with an
obligation acquired under this section, means that the guarantor
or insurer has agreed to:
(A) perform or insure the obligation of the obligor or purchase
the obligation; or
(B) be unconditionally obligated until the obligation is repaid
to maintain in the obligor a minimum net worth, fixed charge
coverage, stockholders' equity or sufficient liquidity to enable
the obligor to pay the obligation in full.
(8) "Investment company" means an investment company as
defined in Section 3(a) of the Investment Company Act of 1940
(15 U.S.C. 80a-1, et seq.) and a person described in Section 3(c)
of the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.).
(9) "Investment company series" means an investment portfolio
of an investment company that is organized as a series company
and to which assets of the investment company have been
specifically allocated.
(10) "Market value" means:
(A) as to cash, cash equivalents, and letters of credit, the
amounts thereof; and
(B) as to a security as of any date, the price for the security on
that date obtained from a generally recognized source or the
most recent quotation from such a source or, to the extent no
generally recognized source exists, the price for the security as
determined in good faith by the parties to a transaction, plus
accrued but unpaid income on the security to the extent not
included in the price as of that date.
(11) "Multilateral development bank" means an international
development organization of which the United States is a
member.
(12) "Mutual fund" means:
(A) an investment company; or
(B) in the case of an investment company that is organized as
a series company, an investment company series;
that is registered with the United States Securities and Exchange
Commission under the Investment Company Act of 1940 (15
U.S.C. 80a-1 et seq.).
(13) "Obligation" means any of the following:
(A) A bond.
(B) A note.
(C) A debenture.
(D) Any other form of evidence of debt.
(14) "Person" means an individual, a business entity, a
multilateral development bank or a government or
quasi-governmental body, such as a political subdivision or a
government sponsored enterprise.
(15) "Qualified bank" means a national bank, state bank, or trust
company that:
(A) at all times is not less than adequately capitalized, as
determined by standards adopted by United States banking
regulators; and
(B) is regulated by state banking laws or is a member of the
Federal Reserve System.
(16) "Series company" means an investment company that is
organized as a series company, as defined in 17 CFR
270.18f-2(a).
(b) In addition to the authority to participate in investment pools
under section 2(b)(31) of this chapter, a life insurance company may
participate in investment pools that:
(1) are qualified under this section; and
(2) invest only in investments that an insurer may acquire under
section 2 of this chapter;
if the company's proportionate interest in the amount invested in these
investments does not exceed the applicable limits of section 2 of this
chapter.
(c) For an investment pool to be qualified under this section, the
investment pool shall not:
(1) acquire securities issued, assumed, guaranteed, or insured by
the insurer or an affiliate of the insurer; or
(2) borrow or incur any indebtedness for borrowed money, except
for securities lending, reverse repurchase, and dollar roll
transactions that meet the requirements of section 2(b)(29) of this
chapter.
(d) A life insurance company shall not participate in an investment
pool qualified under this section if, as a result of the participation and
after giving effect to the participation, the aggregate amount of
participation then held by the insurer in all investment pools under this
section and under section 2(b)(31) of this chapter would exceed
thirty-five percent (35%) of the admitted assets of the insurer.
(e) For an investment pool to be qualified under this section:
(1) the manager of the investment pool:
(A) must be organized under the laws of the United States, a
state or territory of the United States, or the District of
Columbia;
(B) must be designated as the pool manager in a pooling
agreement; and
(C) must be:
(i) the insurer;
(ii) an affiliated insurer;
(iii) a business entity affiliated with the insurer;
(iv) a qualified bank; or
(v) a business entity registered under the Investment Advisors
Act of 1940 (15 U.S.C. 80b-1 et seq.);
(2) the pool manager or an entity of the type referred to in
subdivision (1)(C) that is designated by the pool manager must
compile and maintain detailed accounting records setting forth:
(A) the cash receipts and disbursements reflecting each
participant's proportionate participation in the investment pool;
(B) a complete description of all underlying assets of the
investment pool (including the amount, interest rate, maturity
date (if any) and other appropriate designations); and
(C) other records that, on a daily basis, allow third parties to
verify each participant's interest in the investment pool; and
(3) the assets of the investment pool must be held in one (1) or
more accounts, in the name of or on behalf of the investment pool,
in a qualified bank under a custody agreement or trust agreement
that:
(A) states and recognizes the claims and rights of each
participant;
(B) acknowledges that the underlying assets of the investment
pool are held solely for the benefit of each participant in
proportion to the aggregate amount of the participant's
participation in the investment pool; and
(C) contains an agreement that the underlying assets of the
investment pool shall not be commingled with the general
assets of the qualified bank or the assets of any other person.
(f) The pooling agreement for an investment pool that is qualified
under this section must be in writing and must provide the following:
(1) Insurers, subsidiaries, or affiliates of insurers holding interests
in the pool, or any pension or profit sharing plan of the insurers or
their subsidiaries or affiliates, must at all times hold one hundred
percent (100%) of the interests in the investment pool.
(2) The underlying assets of the investment pool must not be
commingled with the general assets of the pool manager or any
other person.
(3) In proportion to the aggregate amount of each pool
participant's interest in the investment pool:
(A) each participant owns an undivided interest in the
underlying assets of the investment pool; and
(B) the underlying assets of the investment pool are held solely
for the benefit of each participant.
(4) A participant or (in the event of the participant's insolvency,
bankruptcy, or receivership) its trustee, receiver, or other
successor-in-interest may withdraw all or any portion of its
participation from the investment pool under the terms of the
pooling agreement.
(5) Withdrawals may be made on demand without penalty or
other assessment on any business day, but settlement of funds
shall occur within a reasonable and customary period thereafter.
Payments upon withdrawals under this paragraph shall be
calculated in each case net of all then applicable fees and
expenses of the investment pool. The pooling agreement shall
provide for such payments to be made to the participants in one
(1) of the following forms, at the discretion of the pool manager:
(A) in cash, the then fair market value of the participant's pro
rata share of each underlying asset of the investment pool;
(B) in kind, a pro rata share of each underlying asset; or
(C) in a combination of cash and in kind distributions, a pro
rata share in each underlying asset.
(6) The records of the investment pool shall be made available for
inspection by the commissioner.

Legislative History

As added by P.L.186-1997, SEC.3. Amended by P.L.124-2018, SEC.14.