N.Y. ISC Law § 4310 — New York Code / Act ISC / Article 43 / Section 4310
Investments; financial conditions; reserves
Status: in_force

§ 4310. Investments; financial conditions; reserves. (a) Every\ncorporation subject to the provisions of this article shall annually on\nor before the first day of March file in the office of the\nsuperintendent a statement, verified by at least two of the principal\nofficers of such corporation, showing its condition on the thirty-first\nday of December then next preceding which shall be in such form and\nshall contain such matters as the superintendent shall prescribe.\n  (b) No such corporation shall invest in any securities other than\nthose permitted by the provisions of paragraph two of subsection (a) of\nsection one thousand four hundred three of this chapter, except as\nprovided in paragraphs one and two of this subsection.\n  (1) A corporation (or two or more such corporations under common\nmanagement) with admitted assets of greater than eighty million dollars\nand maintaining cash and reserve investments under subsection (a) of\nsection one thousand four hundred four of this chapter (except\nparagraphs eight and ten of subsection (a) of such section) free from\nany lien or pledge, which, when valued in accordance with the provisions\nof this chapter, seven percent or more of net premium income for the\nmost recent twelve month period, as shown by its last sworn statement,\nannual or quarterly, on file with the superintendent, may also invest\nits funds or otherwise acquire or loan upon investments permitted under\nparagraphs eight and ten of subsection (a) of section one thousand four\nhundred four of this chapter without having to meet the otherwise\napplicable qualitative standards and the otherwise applicable aggregate\nlimitation for such investments, provided that the aggregate amount of\nall such investments shall not exceed the lesser of surplus to\npolicyholders or fifteen percent of its admitted assets as shown by its\nlast statement on file with the superintendent. Any corporation subject\nto the provisions of this article may jointly exercise control of a\nsubsidiary by acting together with one or more other corporations,\nprovided that such other corporations are either corporations subject to\nthis article, foreign corporations which perform similar functions in\nother states or which belong to a national association comprised of\nsimilar corporations to which one or more corporations organized under\nthis article also belong, or an institution controlled by any such\nforeign corporation. No such corporation shall hold a direct or indirect\nownership interest in a risk retention group, as defined in article\nfifty-nine of this chapter, other than in a risk retention group all of\nwhose members are insurance companies. Notwithstanding any other\nprovision of this chapter, including, but not limited to, section one\nthousand four hundred seven of this chapter, any corporation subject to\nthe provisions of this article may also invest, in the aggregate, not\nmore than three percent of its admitted assets in obligations, shares or\nother securities (including certificates of deposit) issued by a parent\ncorporation which is organized as a not for profit entity or a\ncorporation which is an affiliate or will be an affiliate after direct\nor indirect acquisition by the parent corporation; provided, however,\nthat the board of directors of the parent organization is constituted in\naccordance with the requirements of subsection (k) of section four\nthousand three hundred one of this article and, provided further\nhowever, that the investments of the corporation organized under this\narticle in its own subsidiaries shall not be included in that\nlimitation.\n  (2) A corporation maintaining cash and reserve investments under\nsubsection (a) of section one thousand four hundred four of this chapter\n(except paragraphs eight and ten of subsection (a) of such section),\nfree from any lien or pledge, which, when valued in accordance with the\nprovisions of this chapter, equal ten percent or more of net premium\nincome for the most recent twelve month period, as shown by such\ncorporation's last sworn statement, annual or quarterly, on file with\nthe superintendent, may, in addition to the investments permitted by\nparagraph one of this subsection, invest up to fifteen percent of its\nadmitted assets in investments permitted under paragraph two of\nsubsection (a) of section one thousand four hundred four of this\nchapter, provided however that such investments need not meet the\notherwise applicable qualitative standards of such paragraph two so long\nas all such investments are rated at BBB or higher (or the equivalent\nthereto) by a security rating agency recognized by the superintendent.\n  (c) Any such corporation shall be deemed insolvent whenever it is\npresently or prospectively unable to fulfill its outstanding contracts\nand other liabilities and reserves.\n  (d) Every such corporation shall maintain a reserve, to be designated\nas the statutory reserve fund, which shall from time to time during each\ncalendar year be increased in an amount equal to at least one per centum\nof the net premium income of such corporation during such whole calendar\nyear, provided however, that:\n  (1) if such corporation reinsures part of its risk under any or all of\nits contracts by means of reinsurance approved by the superintendent as\nan appropriate substitute for the statutory reserve fund, then the\nrequired increase to the statutory reserve fund at the end of any\ncalendar year shall be reduced by the amount of the premium paid by such\ncorporation for such reinsurance during such calendar year or by one per\ncentum of the net premium income received by such corporation during\nsuch calendar year on its contracts so reinsured for the period during\nwhich they are so reinsured, whichever amount is the lesser;\n  (2) the statutory reserve fund at the end of any calendar year shall\nnot exceed twelve and one-half per centum of the net premium income of\nsuch calendar year;\n  (3) every such corporation shall, after the first full calendar year\nof doing business, accumulate and maintain a statutory reserve fund\nwhich shall from time to time during each calendar year be increased in\nan amount equal to at least five per centum of the net premium income of\nsuch corporation during such whole calendar year until such reserve\nshall be at least equal to fifty thousand dollars and thereafter such\nreserve shall be accumulated and maintained in the manner prescribed.\n  (e) (1) Such statutory reserve fund may, after application therefor by\nthe corporation and approval thereof by the superintendent, be reduced\nbelow the amount required to be maintained by subsection (d) hereof,\nprovided that no such reduction, except in the event of an epidemic or\nother catastrophe resulting in extraordinary hospital or medical\nutilization, shall, in the case of a corporation having a net premium\nincome for the preceding calendar year of (i) less than ten million\ndollars or (ii) ten million dollars or more, reduce the statutory\nreserve below an amount equal to seventy-five per centum and fifty per\ncentum, respectively, of the amount required to be maintained by\nsubsection (d) hereof. Any reduction so authorized by the superintendent\nshall be restored within a period of not more than three years, or six\nyears in the case of a corporation with a combined premium volume\nexceeding two billion dollars annually as of December thirty-first,\nnineteen hundred ninety-six, in accordance with a plan submitted by the\ncorporation and approved by the superintendent which shall provide that\nsuch restoration shall be in addition to, and not in lieu of, the\nincrease in the statutory reserve fund hereinabove required, which\nincrease must be made in every year except the year in which a reduction\nin the statutory reserve fund is authorized by the superintendent.\n  (2) Any six year plan submitted by a corporation with a combined\npremium volume exceeding two billion dollars annually as of December\nthirty-first, nineteen hundred ninety-six shall also be submitted to the\nspecial advisory review panel created pursuant to section four thousand\nthree hundred nineteen of this chapter. Within sixty days of its receipt\nof the six year plan, such panel shall issue a report to the\nsuperintendent analyzing the six year plan and recommending any changes\nit deems appropriate. The superintendent shall hold public hearings\nregarding any such proposed six year plan and the recommendations of the\npanel. The superintendent shall consider the findings of the panel and\nthe public hearings held on the six year plan during his approval\nprocess for the six year plan.\n  (f) No such corporation shall invest in any real property, except that\nany such corporation may, with the approval of the superintendent,\ninvest in such real property as it may reasonably expect will be\nrequired for its principal office and the principal office or offices of\nany other corporation organized under this article which is affiliated\nwith and which shares such principal office or offices with such\ncorporation, or for such purposes as shall be requisite for the\nconvenient accommodation in the transaction of the business of such\ncorporations, but in no event in excess of the aggregate of eight per\ncentum of the net premium income of such corporations and five per\ncentum of the receipts from any governmental agency for which either of\nsuch corporations acts as fiscal intermediary during the twelve full\nmonths immediately preceding the granting of such approval.\n  (g) A health service corporation, in addition to the investment in\nreal estate provided in subsection (f) of this section, may, with the\napproval of the superintendent, purchase an interest in real estate for\nthe purpose of constructing a hospital or other health facility or\ncenter thereon (in accordance with the requirements of chapter seven\nhundred ninety-five of the laws of nineteen hundred sixty-five), or may\npurchase an existing hospital or facility for the purpose of providing\nhealth services or may make loans to a corporation or corporations under\nits control for the purposes heretofore described, or for the purpose of\norganizing, managing or promoting a health maintenance organization, as\nsuch term is defined in article forty-four of the public health law\nprimarily for the benefit of persons covered under contracts issued by\nsuch corporations, but in no event in excess of an amount equal to ten\nper centum of its annual net premium income during the twelve full\nmonths immediately preceding the granting of such approval. A health\nservice corporation may make expenditures and incur liabilities for the\npurchase of real estate or for loans in excess of sums provided for in\nsubsection (f) hereof and this subsection as permitted by the\nsuperintendent pursuant to paragraph five of subsection (e) of section\nfour thousand three hundred one of this article. A health service\ncorporation, with the approval of the superintendent of financial\nservices, also may enter into agreements for the leasing of hospital\nfacilities.\n  (h) Notwithstanding any other provisions of this chapter, and in\naddition to the provisions for the investment of funds and for the\npurchase of real estate as provided for in this article with the\napproval of the superintendent, a health service corporation may, with\nthe approval of the superintendent, expend sums including loans to a\ncorporation or corporations under its control to implement the program\ndescribed herein for the amortization of capital costs for the purchase\nor construction of facilities in its operations, including a hospital or\nmedical service center, and for the implementation of its program, but\nnot in excess of an amount equal to five percentum of its net premium\nincome during the twelve full months immediately preceding the granting\nof such approval.\n  (i) If a loan is made with the approval of the superintendent, to a\ncorporation under the control of a health service corporation, it shall\nbe made on condition that the superintendent may conduct an examination\npursuant to sections three hundred nine and three hundred ten of this\nchapter into the affairs of such corporation.\n  (j) Every corporation subject to the provisions of this article,\nincluding a health service corporation or any of its instrumentalities\nor any hospital, facility or center directly operated by any such health\nservice corporation, shall be exempt from every state, county, municipal\nand school tax.\n  (k) Notwithstanding the provisions of any other law, a corporation\nsubject to the provisions of this article which has admitted assets\ngreater than five hundred million dollars on its last annual report\nfiled with the superintendent may enter into a transaction for an\ninterest rate swap in an amount not to exceed the amount of debt on the\nbooks of the corporation on the effective date of this subsection that\nwas incurred within twelve months of the construction of the\ncorporation's home office, provided that such interest rate swap shall\nprovide an initial new interest rate that is at least two hundred basis\npoints lower than the interest rate on the existing debt. The\ncounterparty to this transaction shall meet the qualifications of a\nqualified counterparty as provided in subparagraph (A) of paragraph\nthree of subsection (f) of section fourteen hundred ten of this chapter\nexcept that, notwithstanding clause (iv) of subparagraph (C) of such\nparagraph, in the event that such counterparty is a qualified bank, such\nbank shall be rated A or better (or the equivalent thereto) by two\nindependent nationally recognized rating organizations. Any such\ntransaction shall be approved by the corporation's board of directors\nprior to its implementation.\n  (l) Notwithstanding any other provisions of this chapter to the\ncontrary, in determining the financial condition of corporations subject\nto the provisions of this article and not-for-profit corporations\nauthorized pursuant to article forty-four of the public health law, the\ndepartment shall include real estate, including buildings, property,\ncapital improvements and appurtenances owned and held that are utilized\nin the ordinary course of the business of such entities, provided that\nsuch real estate may be valued by the corporation at either its current\namortized book value or at ninety percent of its current market value,\nas determined by an independent appraisal undertaken annually and in\naccordance with regulations promulgated by the superintendent.\n