§ 87. Investment of surplus or reserve.
1.Any of the reserve funds\nbelonging to the state insurance fund, by order of the commissioners,\napproved by the superintendent of financial services, may be invested in\nthe types of securities described in subdivisions one, two, three, four,\nfive, six, eleven, twelve, twelve-a, thirteen, fourteen, fifteen,\nnineteen, twenty, twenty-one, twenty-one-a, twenty-four, twenty-four-a,\ntwenty-four-b, twenty-four-c and twenty-five of section two hundred\nthirty-five of the banking law or in paragraph two of subsection (a) of\nsection one thousand four hundred four of the insurance law except that\nup to five percent of such reserve funds may be invested in the\nsecurities of any solvent American institution as described in such\nparagraph irrespectiv
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§ 87. Investment of surplus or reserve. 1. Any of the reserve funds\nbelonging to the state insurance fund, by order of the commissioners,\napproved by the superintendent of financial services, may be invested in\nthe types of securities described in subdivisions one, two, three, four,\nfive, six, eleven, twelve, twelve-a, thirteen, fourteen, fifteen,\nnineteen, twenty, twenty-one, twenty-one-a, twenty-four, twenty-four-a,\ntwenty-four-b, twenty-four-c and twenty-five of section two hundred\nthirty-five of the banking law or in paragraph two of subsection (a) of\nsection one thousand four hundred four of the insurance law except that\nup to five percent of such reserve funds may be invested in the\nsecurities of any solvent American institution as described in such\nparagraph irrespective of the rating of such institution's obligations\nor other similar qualitative standards described therein.\n 2. Any of the surplus funds belonging to the state insurance fund, by\norder of the commissioners, approved by the superintendent of financial\nservices, may be invested in the types of securities described in\nsubdivisions one, two, three, four, five, six, eleven, twelve, twelve-a,\nthirteen, fourteen, fifteen, nineteen, twenty, twenty-one, twenty-one-a,\ntwenty-four, twenty-four-a, twenty-four-b, twenty-four-c and twenty-five\nof section two hundred thirty-five of the banking law or, up to fifty\npercent of surplus funds, in the types of securities or investments\ndescribed in paragraphs two, three, eight and ten of subsection (a) of\nsection one thousand four hundred four of the insurance law, except that\nup to ten percent of surplus funds may be invested in the securities of\nany solvent American institution as described in such paragraphs\nirrespective of the rating of such institution's obligations or other\nsimilar qualitative standards described therein, and up to fifteen\npercent of surplus funds in securities or investments which do not\notherwise qualify for investment under this section as shall be made\nwith the care, prudence and diligence under the circumstances then\nprevailing that a prudent person acting in a like capacity and familiar\nwith such matters would use in the conduct of an enterprise of a like\ncharacter and with like aims as provided for the state insurance fund\nunder this article, but shall not include any direct derivative\ninstrument or derivative transaction except for hedging purposes.\nNotwithstanding any other provision in this subdivision, the aggregate\namount that the state insurance fund may invest in the types of\nsecurities or investments described in paragraphs three, eight and ten\nof subsection (a) of section one thousand four hundred four of the\ninsurance law and as a prudent person acting in a like capacity would\ninvest as provided in this subdivision shall not exceed fifty percent of\nsuch surplus funds.\n 3. Any of the surplus or reserve funds belonging to the state\ninsurance fund, upon like approval of the superintendent of financial\nservices, may be loaned on the pledge of any such securities. The\ncommissioners, upon like approval of the superintendent of financial\nservices, may also sell any of such securities or investments.\n 4. (a) Any securities belonging to the state insurance fund may, by\norder of the commissioners, approved by the superintendent of financial\nservices, be loaned under a security loan agreement, as defined in\nparagraph (b) of this subdivision, entered into with a registered\nbroker-dealer, or a New York state or national bank or trust company,\nwith the custodial bank of the state insurance fund or another person or\nentity, approved by the commissioner of taxation and finance, which\nspecializes in security loan transactions acting as the agent in\narranging such agreement. The commissioners shall monitor the market\nvalue of the loaned securities daily. In no event shall the\ncommissioners allow the value of the collateral posted to fall below the\nmarket value of the loaned securities.\n (b) For purposes of this section, "security loan agreement" shall mean\na written contract, the terms of which have been approved by the\ncommissioner of taxation and finance, whereby the state insurance fund\n(the lender) agrees to lend securities to a broker-dealer, bank or trust\ncompany described in paragraph (a) of this subdivision (the borrower)\nfor a period not to exceed one year. However, such agreement shall be\nsubject to the following limitations: (i) the lender must retain the\nright to collect from the borrower all dividends, interest, premiums,\nrights, and any other distributions to which the lender would otherwise\nhave been entitled; (ii) the lender may waive the right to vote the\nsecurities during the term of such agreement; (iii) the lender must\nretain the right to terminate such agreement upon not more than five\nbusiness days' notice; (iv) the borrower shall provide as collateral to\nthe lender cash or direct obligations of the United States of America or\nany agency or instrumentality thereof or obligations fully guaranteed by\nthe United States of America that are eligible for investment by the\nstate insurance fund under subdivision one of this section, provided\nthat such obligations may in no event consist of derivative securities;\nand (v) such agreement shall provide for payment of additional\ncollateral on a daily basis, or at such time as the value of the loaned\nsecurities increases to agreed upon ratios.\n 5. All such securities or evidences of indebtedness shall be placed in\nthe hands of the commissioner of taxation and finance who shall be the\ncustodian thereof. He or she shall collect the principal and interest\nthereof, when due, and pay the same into the state insurance fund. The\ncommissioner of taxation and finance shall pay all vouchers drawn on the\nstate insurance fund for the making of such investments when signed by\nthe chair of the commissioners, the executive director or a deputy\nexecutive director of the state insurance fund upon delivery of such\nsecurities or evidences of indebtedness to him or her, when there is\nattached to such vouchers the approval of the state superintendent of\nfinancial services.\n 6. For the purposes of this section, the term "reserves" does not\ninclude the estimated value of future discretionary payments that may be\nmade by the state insurance fund under section ninety of this article.\n 7. Notwithstanding any provision in this section, the surplus and\nreserve funds of the state insurance fund shall not be invested in any\ninvestment that has been found by the superintendent of financial\nservices to be against public policy or in any investment prohibited by\nthe provisions of paragraph six of subsection (a) of section one\nthousand four hundred four of the insurance law or by the provisions of\nparagraph one, two, three, four, six, eight, nine or ten of subsection\n(a) of section one thousand four hundred seven of the insurance law.\n