§ 1411 — Authorization of, and restrictions on, investments

New York § 1411

• Jurisdiction: New York
• Law ISC: Insurance
• Art. 14: Investments

Text

§ 1411. Authorization of, and restrictions on, investments. (a) No\ndomestic insurer shall make any loan or investment, except as provided\nin subsection (h) hereof, unless authorized or approved by its board of\ndirectors or a committee thereof responsible for supervising or making\nsuch investment or loan. The committee's minutes shall be recorded and a\nreport submitted to the board of directors at its next meeting.\n (b) No such insurer shall participate in any underwriting of the\npurchase or sale of securities in advance of their issuance. Any such\ninsurer may enter into any agreement to sell or withhold from sale any\nof its property as long as the insurer is not participating in an\nunderwriting. The disposition of its property shall be the\nresponsibility of its board of directors, in accordance with its charter\nand by-laws.\n (c) Except as otherwise specifically provided in this chapter, no\ndomestic insurer shall pledge or transfer any securities as collateral\nfor a loan (including a sale of securities subject to an unconditional\nobligation to repurchase the same) if such loan and all other\noutstanding loans secured by pledge or deposit of its securities will\nexceed, when the loan is made, five percent of its admitted assets as\nshown by its last sworn statement to the superintendent, unless the\nsuperintendent shall first give his permission for such loan as\nnecessary in the conduct of the insurer's business. No pledge or\ntransfer of securities for a loan shall be made if the insurer does not\nreceive the loan's proceeds. Nothing in this section shall be construed\nas prohibiting an insurer from selling or purchasing individually or on\nits account jointly with one or more of its subsidiaries the securities\nof any investment company to which the insurer or any of its\nsubsidiaries renders management, investment advisory or sales services,\nnor from participating in such sales or purchases jointly with any\nperson in the insurer's holding company system, as defined in section\none thousand five hundred one of this chapter.\n (d) No domestic stock insurer shall purchase its own capital shares\nexcept pursuant to section seven thousand three hundred two of this\nchapter or pursuant to a plan of stock redemption and retirement\napproved by the superintendent as reasonable and equitable. No domestic\ninsurer shall enter into any agreement in connection with the sale of\nany property to repurchase such property or any part thereof, except\nthat such an insurer may (subject to the provisions of subsection (b) of\nthis section) sell securities subject to an unconditional obligation to\nrepurchase the same on a date not more than one year from the date of\nsale. This subsection shall not apply to the purchase or sale of\ndirectors' qualifying shares.\n (e) No director or officer of an insurer doing business in this state\nshall receive, in addition to his fixed salary or compensation, any\nmoney or valuable thing, directly or indirectly, or through any\nsubstantial interest in any other corporation or business unit, for\nnegotiating, procuring, recommending or aiding in any purchase or sale\nof property, or loan, made by such insurer or any affiliate or\nsubsidiary thereof; nor shall he be pecuniarily interested, as\nprincipal, co-principal, agent or beneficiary, directly or indirectly,\nor through any substantial interest in any other corporation or business\nunit, in any such purchase, sale or loan. This subsection shall not\nprohibit:\n (1) a member of the board of directors of an insurer, other than life,\nfrom receiving his share of the usual commission earnings of a stock\nexchange firm of which he is a partner;\n (2) an insurer, other than life, or any life insurer all of whose\nshares (except directors' qualifying shares) is owned by any corporation\norganized primarily for, and engaged primarily in the business of,\nproviding support, relief, pensions, annuities or insurance for the\npriests, clergy or ministers of any religious denomination or their\ndependents, from paying any corporation or partnership in which any\ndirector of the insurer has an interest or is an officer or director or\npartner, a reasonable fee for investment advice, provided such\ncompensation is not in excess of the amounts customarily charged for the\nsame type of service; or\n (3) any transaction or class of transactions which comply with section\none thousand five hundred five or article sixteen of this chapter.\n (f) (1) No insurer doing business in this state shall, except as\nprovided in subsection (h) hereof, make any loan to any of its directors\nor officers, directly or indirectly, or through its subsidiaries; nor\nshall any such director or officer accept any such loan directly or\nindirectly.\n (2) No such insurer shall make any advance to any of its directors or\nofficers for future services to be performed beyond a period of one year\nfrom the date of making such advance.\n (g) No insurer doing business in this state, nor any affiliate or\nsubsidiary thereof, shall directly or indirectly guarantee the financial\nobligation of any director or officer of such insurer, affiliate or\nsubsidiary, and any such guaranty shall be void. In this subsection,\n"guarantee" shall not include the making of a contract of insurance of\nthe kind specified in paragraphs thirteen, fourteen, fifteen or sixteen\nof subsection (a) of section one thousand one hundred thirteen of this\nchapter.\n (h) Nothing contained in this chapter shall prohibit a life insurance\ncompany from making a policy loan upon its policy or contract in an\namount not exceeding the net reserve value of the policy or contract, or\nany insurer from:\n (1) Acquiring (i) in the case of an insurer making investments under\nthe authority of section one thousand four hundred four of this article,\nsuch real property serving as the residence of a non-director officer as\nmay be acquired under the provisions of paragraph five of subsection (a)\nof section one thousand four hundred four of this article, or (ii) in\nthe case of an insurer making investments under the authority of section\none thousand four hundred five of this article, real property serving as\nthe residence of a non-director officer, under the provisions of\nparagraph four of subsection (a) of section one thousand four hundred\nfive of this article and with the approval of the superintendent in the\ncase of domestic insurers, in connection with the relocation by the\ninsurer of the place of employment of such officer (including any\nrelocation in connection with initial employment), at a purchase price\nnot exceeding the lesser of the value of such property as determined by\nan independent appraiser for the purpose of such acquisition or one\nhundred fifty thousand dollars, provided such officer has made\nreasonable efforts otherwise to dispose of such property for a period of\nnot less than one month immediately prior to such acquisition; or\n (2) Making a loan to a non-director officer secured by real property\nowned by such officer and improved with a one-family dwelling, which is\nto serve as such officer's residence, provided that (i) such loan\nqualifies under paragraph four of subsection (a) of section one thousand\nfour hundred four (in the case of an insurer that makes investments\nunder the authority of section one thousand four hundred four) or\nparagraph three of subsection (a) of section one thousand four hundred\nfive (in the case of an insurer that makes investments under the\nauthority of section one thousand four hundred five) of this article,\n(ii) such loan is made in connection with the relocation by the insurer\nof the place of employment of such officer (including any relocation in\nconnection with initial employment), and (iii) in the case of a domestic\ninsurer, such loan is approved by the superintendent.\n For the purposes of paragraphs one and two of this subsection,\nparagraphs four and five of subsection (a) of section one thousand four\nhundred four and paragraphs three and four of subsection (a) of section\none thousand four hundred five of this article, real property shall\ninclude a condominium unit and stock of a cooperative apartment\ncorporation, if such stock entitles the holder thereof to a proprietary\nlease of a one-family apartment serving as the residence of the officer.\n