Source: https://development.code.dccouncil.us/dc/council/code/sections/31-1371.02.html
Timestamp: 2019-04-23 04:25:46+00:00

Document:
D.C. Law Library - § 31–1371.02. Definitions.
(D) As to reverse repurchase transactions, cash and cash equivalents.
(2) “Acceptable private mortgage insurance” means insurance written by a private insurer protecting a mortgage lender against loss occasioned by a mortgage loan default and issued by a licensed mortgage insurance company, with an SVO 1 designation or a rating issued by a nationally recognized statistical rating organization equivalent to an SVO 1 designation, that covers losses to an 80% loan-to-value ratio.
(3) “Accident and health insurance” means protection which provides payment of benefits for covered sickness or accidental injury, excluding credit insurance, disability insurance, accidental death and dismemberment insurance, and long-term care insurance.
(4) “Accident and health insurer” means a licensed life or health insurer or health service corporation whose insurance premiums and required statutory reserves for accident and health insurance constitute at least 95% of total premium considerations or total statutory required reserves, respectively.
(5) “Admitted assets” means assets having economic value which can be used to fulfill policy obligations and permitted, as allowed in the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, to be reported as admitted assets on the statutory financial statement of the insurer most recently required to be filed with the Commissioner, but excluding assets of separate accounts, the investments of which are not subject to the provisions of this chapter.
(6) “Affiliate” means, as to any person, another person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the person.
(B) The assets of the trust or other business entity consist solely of interest-bearing obligations or other contractual obligations representing the right to receive payment from the cash flows from the assets or rights; provided, that the existence of credit enhancements, such as letters of credit or guarantees, or support features, such as swap agreements, shall not disqualify the security or other instrument as an asset-backed security.
(8) “Business entity” includes a sole proprietorship, corporation, limited liability company, association, partnership, joint stock company, joint venture, mutual fund, trust, joint tenancy or other similar form of business organization, whether organized for profit or not for profit.
(9) “Cap” means an agreement obligating the seller to make payments to the buyer, with each payment based on the amount by which a reference price or level or the performance or value of one or more underlying interests exceeds a predetermined number, sometimes called the strike rate or strike price.
(10) “Capital and surplus” means the sum of the capital and surplus of the insurer required to be shown on the statutory financial statement of the insurer most recently required to be filed with the Commissioner.
(A) “Short-term” means investments with a remaining term to maturity of 90 days or less.
(B) “Highly rated” means an investment rated P-1 by Moody’s Investors Services, Inc., A-1 by the Standard and Poor’s division of The McGraw Hill Companies, Inc., or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO.
(12) “Class one bond mutual fund” means a bond mutual fund that at all times qualifies for investment using the bond class one reserve factor under the Purposes and Procedures of the Securities Valuation Office of the Securities Valuation Office or any successor publication.
(13) “Class one money market mutual fund” means a money market mutual fund that at all times qualifies for investment using the bond class one reserve factor under the Purposes and Procedures of the Securities Valuation Office of the Securities Valuation Office or any successor publication.
(14) “Code” means the laws relating to insurance which are codified in this title of the D.C. Official Code.
(15) “Collar” means an agreement to receive payments as the buyer of an option, cap, or floor and to make payments as the seller of a different option, cap, or floor.
(16) “Commercial mortgage loan” means a loan secured by a mortgage other than a residential mortgage loan.
(17) “Construction loan” means a loan with a term of less than 3 years made for financing the cost of construction of a building or other improvement to real estate and secured by the real estate to be improved.
(18) “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, 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.
(19)(A) “Counterparty exposure amount” means the net amount of credit risk attributable to a derivative instrument entered into with a business entity other than through a qualified exchange, qualified foreign exchange, or cleared through a qualified clearinghouse (“over-the-counter derivative instrument”).
(II) Zero if the liquidation of the derivative instrument would not result in a final cash payment to the insurer.
(II) The market value of the over-the-counter derivative instruments entered into under the agreement, the liquidation of which would result in a final cash payment by the insurer to the business entity.
(iii) For open transactions, market value shall be determined at the end of the most recent quarter of the insurer’s fiscal year and shall be reduced by the market value of acceptable collateral held by the insurer or placed in escrow by one or both parties.
(20) “Covered” means that, in an income generation transaction, an insurer owns or can immediately acquire, through the exercise of options, warrants, or conversion rights already owned, the underlying interest to fulfill or secure its obligations under a call option, cap, or floor it has written, or has set aside under a custodial or escrow agreement cash or cash equivalents with a market value equal to the amount required to fulfill its obligations under a put option it has written.
(21) “Credit tenant loan” means a mortgage loan which is made primarily in reliance on the credit standing of a major tenant, structured with an assignment of the rental payments to the lender, and is secured by a first lien on the real estate.
(iii) That has a price, performance, value, or cash flow based primarily upon the actual or expected price, level, performance, value, or cash flow of one or more underlying interests.
(B) Derivative instruments shall include options, warrants used in a hedging transaction and not attached to another financial instrument, caps, floors, collars, swaps, forwards, and futures; any other agreements, options, or instruments substantially similar thereto, or any series or combination thereof; and any agreements, options, or instruments permitted under regulations adopted under § 31-1375.01. Derivative instruments shall not include an investment authorized by §§ 31-1372.03 through 31-1372.09, 31-1372.11, and 31-1373.04 through 31-1373.10.
(23) “Derivative transaction” means a transaction involving the use of one or more derivative instruments.
(24) “Direct” or “directly”, when used in connection with an obligation, means that the designated obligor is primarily liable on the instrument representing the obligation.
(B) Other asset-backed securities referred to in section 106 of the Secondary Mortgage Market Enhancement Act of 1984, approved October 3, 1984 (98 Stat. 1691; 15 U.S.C. § 77r-1).
(26) “Domestic jurisdiction” means the United States, Canada, the District of Columbia, any state, any province of Canada, or any political subdivision of any of the foregoing.
(K) Instruments that would be rated credit instruments except as excluded by paragraph (71)(B) of this section.
(C) In a reverse repurchase transaction, securities that are identical to the sold securities in all features, including the amount of the sold securities, except as to the certificate number if held in physical form.
(29) “Floor” means an agreement obligating the seller to make payments to the buyer in which each payment is based on the amount by which a predetermined number, sometimes called the floor rate or price, exceeds a reference price, level, performance, or value of one or more underlying interests.
(30) “Foreign currency” means a currency other than that of a domestic jurisdiction.
(ii) The investment is not assumed, accepted, guaranteed, insured, or otherwise backed by a domestic jurisdiction or a person, that is not a shell business entity, domiciled in a domestic jurisdiction.
(i) “Shell business entity” means a business entity having no economic substance except as a vehicle for owning interests in assets issued, owned, or previously owned by a person domiciled in a foreign jurisdiction.
(ii) “Qualified guarantor” means a guarantor against which an insurer has a direct claim under contract for full and timely payment for which an enforcement action can be brought in a domestic jurisdiction.
(iii) “Qualified primary credit source” means the credit source to which an insurer looks for payment as to an investment and against which an insurer has a direct claim under contract for full and timely payment for which an enforcement action can be brought in a domestic jurisdiction.
(32) “Foreign jurisdiction” means a jurisdiction other than a domestic jurisdiction.
(33) “Forward” means an agreement (other than a future) to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance, or value of, one or more underlying interests.
(34) “Future” means an agreement, traded on a qualified exchange or qualified foreign exchange, to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance or value of, one or more underlying interests.
(B) Qualified for investment without a reserve under the Purposes and Procedures of the Securities Valuation Office of the Securities Valuation Office or any successor publication.
(B) Corporation, limited liability company, association, partnership, joint stock company, joint venture, trust, or other entity or instrumentality organized under the laws of any domestic jurisdiction to accomplish a public policy or other governmental purpose; provided, that this subparagraph shall not apply to any entity or instrumentality which qualifies for exemption under section 501(c)(3) of the Internal Revenue Code of 1986, approved October 26, 1986 (68A Stat. 163; 26 U.S.C. § 501(c)(3)).
(B) Be unconditionally obligated until the obligation is repaid to maintain in the obligor a minimum net worth, fixed charge coverage, minimum stockholders’ equity, or sufficient liquidity to enable the obligor to pay the obligation in full.
(B) The currency exchange rate risk or the degree of exposure as to assets or liabilities which an insurer has acquired or incurred, or anticipates acquiring or incurring.
(39) “High grade investment” means a rated credit instrument rated 1 or 2 by the SVO.
(40) “Income” means, as to a security, interest, accrual of discount, dividends, or other distributions, such as rights, tax or assessment credits, warrants, and distributions in kind.
(41) “Income generation transaction” means a derivative transaction involving the writing of covered call option, covered put options, covered caps, or covered floors that is intended to generate income or enhance return.
(42) “Initial margin” means the amount of cash, securities, or other consideration initially required to be deposited to establish a futures position.
(43) “Insurance future” means a future relating to an index or pool that is based on insurance-related items.
(44) “Insurance futures option” means an option on an insurance futures contract.
(45) “Investment company” means an investment company as defined in section 3(a)(1) of the Investment Company Act of 1940, approved August 20, 1940 (56 Stat. 867; 15 U.S.C. § 80a-3(a)(1)), and a person described in section 3(c) of the Investment Company Act of 1940, approved August 20, 1940 (56 Stat. 867; 15 U.S.C.§ 80a-3(c)).
(46) “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.
(47) “Investment practices” means transactions of the types described in § 31-1372.08, § 31-1372.10, § 31-1373.09, or § 31-1373.11.
(B) The insurer’s proportionate share of an investment in an asset by an investment subsidiary of the insurer, which share shall be calculated by multiplying the amount of the subsidiary’s investment by the percentage of the insurer’s ownership interest in the subsidiary.
(49) “Investment strategy” means the techniques and methods used by an insurer to meet its investment objectives, such as active bond portfolio management, passive bond portfolio management, interest rate anticipation, growth investment, and value investing.
(50) “Letter of credit” means a clean, irrevocable, and unconditional letter of credit issued or confirmed by, and payable and presentable at, a financial institution on the list of financial institutions meeting the standards for issuing letters of credit under the Purposes and Procedures of the Securities Valuation Office of the Securities Valuation Office of the Securities Valuation Office, or any successor publication. To constitute acceptable collateral for the purposes of § 31-1372.08 and § 31-1373.02, a letter of credit shall have an expiration date beyond the term of the subject transaction.
(51) “Limited liability company” means an entity that is an unincorporated association, having perpetual duration, having one or more members that is organized and existing under Chapter 8 of Title 29, or under the laws of the United States or any state thereof that limits the personal liability of each member to the equity investment of the member in the business entity.
(52) “Lower grade investment” means a rated credit instrument rated 4, 5, or 6 by the SVO.
(B) As to a security, as of any date, the price of 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 thereon to the extent not included in the price as of that date.
(54) “Medium grade investment” means a rated credit instrument rated 3 by the SVO.
(55) “Modified guaranteed contracts” means a modified guaranteed annuity or modified guaranteed life insurance policy or contract.
(56) “Money market mutual fund” means a mutual fund that meets the conditions of 17 C.F.R. § 270.2a-7.
(57) “Mortgage loan” means an obligation secured by a mortgage, deed of trust, trust deed, or other consensual lien on real estate.
(58) “Multilateral development bank” means an international development organization of which the United States is a member.
(59) “Mutual fund” means an investment company or, 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, approved August 20, 1940 (56 Stat. 789; 15 U.S.C. § 80a-1 et seq.).
(60) “NAIC” means the National Association of Insurance Commissioners.
(61) “Obligation” means a bond, note, debenture, trust certificate, including an equipment certificate, production payment, negotiable bank certificate of deposit, bankers’ acceptance, credit tenant loan, loan secured by financing, net leases and other evidence of indebtedness for the payment of money (or participations, certificates, or other evidences of an interest in any of the foregoing), whether constituting a general obligation of the issuer or payable only out of certain revenues or certain funds pledged or otherwise dedicated for payment.
(62)(A) “Option” means an agreement giving the buyer the right to buy or receive, sell or deliver, enter into, extend or terminate or effect a cash settlement based on the actual or expected price, level, performance, or value of one or more underlying interests.
(B) “Call option” means the right of the buyer to buy or receive the option.
(C) “Put option” means the right of the buyer to sell or deliver the option.
(63) “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.
(64) “Potential exposure” means the amount determined in accordance with the NAIC Annual Statement Instructions.
(65) “Preferred stock” means stock of a business entity, which stock has a preference in liquidation over the common stock of the business entity.
(B) A bank or trust company incorporated or organized under the laws of a country other than the United States that is regulated as a bank or trust company by that country’s government or an agency thereof and that at all times is no less than adequately capitalized as determined by the standards adopted by international banking authorities.
(B) A primary dealer in United States government securities, recognized by the Federal Reserve Bank of New York.
(68) “Qualified clearinghouse” means a clearinghouse for, and subject to the rules of, a qualified exchange or a qualified foreign exchange, which provides clearing services, including acting as a counterparty to each of the parties to a transaction such that the parties no longer have credit risk as to each other.
(E) A qualified foreign exchange.
(C) Upon which foreign stock index futures contracts are listed that are the subject of no-action relief issued by the Office of General Counsel of the Commodity Futures Trading Commission; provided, that an exchange, board of trade, or contract market that is a qualified foreign exchange under this subparagraph shall only be a qualified foreign exchange as to foreign stock index futures contracts that are the subject of no-action relief.
(v) Is a share of a money market mutual fund.
(ii) A security that has a par value and whose terms provide that the issuer’s net obligation to repay all or part of the security’s par value is determined by reference to the performance of an equity, a commodity, a foreign currency, or an index of equities, commodities, foreign currencies, or combinations thereof.
(iv) The seller’s equity in a contract providing for a deed of real estate.
(B) As to a mortgage on a leasehold estate, real estate shall include the leasehold estate only if it has an unexpired term, including renewal options exercisable at the option of the lessee, extending beyond the scheduled maturity date of the obligation that is secured by a mortgage on the leasehold estate by a period equal to the greater of 20% of the original term of the obligation or 10 years.
(73) “Replication transaction” means a derivative transaction that is intended to replicate the performance of one or more assets that an insurer may acquire under this chapter. A derivative transaction that is entered into as a hedging transaction shall not be considered a replication transaction.
(74) “Repurchase transaction” means a transaction in which an insurer purchases securities from a business entity that is obligated to repurchase the purchased securities or equivalent securities from the insurer at a specified price, either within a specified period of time or upon demand.
(75) “Required liabilities” means total liabilities required to be reported on the statutory financial statement of the insurer most recently required to be filed with the Commissioner.
(76) “Residential mortgage loan” means a loan primarily secured by a mortgage on real estate improved with a residence for up to 4 families.
(77) “Reverse repurchase transaction” means a transaction in which an insurer sells securities to a business entity and is obligated to repurchase the sold securities or equivalent securities from the business entity at a specified price, either within a specified period of time or upon demand.
(78) “Secured location” means the contiguous real estate owned by one person.
(79) “Securities lending transaction” means a transaction in which securities are loaned by an insurer to a business entity that is obligated to return the loaned securities or equivalent securities to the insurer, either within a specified period of time or upon demand.
(80) “Series company” means an investment company that is organized as a series company, as defined in SEC Rule 18f-2(a), 17 C.F.R. § 270.18f-2.
(B) Provides for mandatory sinking fund installments or open market purchases commencing not more than 10.5 years from the date of issue, with the sinking fund installments providing for the purchase or redemption, on a cumulative basis commencing 10 years from the date of issue, of at least 2.5% per year of the original number of shares of that issue of preferred stock.
(bb) Another prepayment threshold assumption specified by the Commissioner by regulation promulgated under § 31-1375.01.
(ii) For the purposes of this subparagraph, if the asset-backed security is purchased in combination with one or more other asset-backed securities that are supported by identical underlying collateral, the insurer may calculate the rate of return for these specific combined asset-backed securities in combination; provided, that the insurer shall maintain documentation demonstrating that the securities were acquired and are continuing to be held in combination.
(83) “State” means any of the several states, the District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of Northern Mariana Islands.
(84) “Substantially similar securities” means securities that meet all criteria for substantially similar specified in the NAIC Accounting Practices and Procedures Manual, and in an amount that constitutes good delivery form as determined from time to time by the Public Securities Administration.
(85) “SVO” means the Securities Valuation Office of the NAIC, or any successor office established by the NAIC.
(86) “Swap” means an agreement to exchange or to net payments at one or more times based on the actual or expected price, level, performance, or value of one or more underlying interests.
(87) “Variable contracts” means a variable annuity or a variable life insurance policy.
(88) “Underlying interest” means the assets, liabilities, other interests or a combination thereof underlying a derivative instrument, such as any one or more securities, currencies, rates, indices, commodities, or derivative instruments.
(89) “Unrestricted surplus” means the amount by which total admitted assets exceed 125% of the insurer’s required liabilities.
(90) “Warrant” means an instrument that gives the holder the right to purchase an underlying financial instrument at a given price and time or at a series of prices and times outlined in the warrant agreement. Warrants may be issued alone or in connection with the sale of other securities or to facilitate divestiture of the securities of another business entity.
D.C. Law 18-378, in par. (51), substituted “Chapter 8 of Title 29” for “Chapter 10 of Title 29”.

References: § 31
 § 31
 § 77
 § 501
 § 80
 § 31
 § 31
 § 31
 § 31
 § 31
 § 31
 § 270
 § 80
 § 270
 § 31