NY Ins L § 1403 (2021)
2021 New York Laws ISC - Insurance Article 14 - Investments 1403 - Reserve and Other Investments; Certain Requirements.

§  1403.  Reserve  and other investments; certain requirements. (a) If the requirements of section  one  thousand  four  hundred  two  of  this article are met:  (1)  any  domestic  life insurance company may invest its funds in, or otherwise acquire, or loan upon, only the types of investments specified in section one thousand four hundred two,  this  section,  sections  one thousand  four hundred five, one thousand four hundred six, one thousand four hundred ten, four thousand two hundred forty and article  seventeen of  this  chapter,  subject  to  the  limitations therein contained. The provisions of section one thousand four hundred  four  of  this  article shall  not  have  any  application  to  investments  of  life  insurance companies, except to the extent provided in paragraph four of subsection (b) of section one thousand four hundred two of this article;  (2)  any  domestic  corporation  subject  to  article  forty-three  or sixty-four  of  this  chapter and any domestic fraternal benefit society subject to article forty-five of this chapter may invest its  funds  in, or  otherwise  acquire,  or  loan  upon,  only  the types of investments specified in section one thousand four hundred  two,  this  section  and section one thousand four hundred four of this article, except as may be modified by said article forty-three or sixty-four of this chapter as to corporations  organized  thereunder  or  by  article  forty-five of this chapter as to  societies  organized  thereunder.  Any  such  corporation subject   to  article  forty-three  or  any  such  society  governed  by subsection (a) of section forty-five hundred twenty-nine of this chapter may also invest in, or otherwise acquire,  subsidiaries  to  the  extent permitted by subsection (b) of section one thousand seven hundred one of this  chapter.  Any  such fraternal benefit society may also make policy loans under section one thousand four hundred six of this article.  (b) A domestic charitable annuity society, the  investments  of  which are  subject  to  the  provisions  of section eleven hundred ten of this chapter, may invest such of its  assets  (the  investment  of  which  is controlled  by  section eleven hundred ten) in, or otherwise acquire, or loan upon, only  the  types  of  securities  specified  in  section  one thousand  four  hundred  two, this section and section one thousand four hundred four of  this  article.  A  retirement  system  subject  to  the provisions  of  article  forty-six  of this chapter may invest its funds only as provided in article forty-six of this chapter.  In  addition,  a retirement  system subject to article forty-six may acquire subsidiaries under article seventeen of  this  chapter  and  may  establish  separate accounts  under section four thousand two hundred forty of this chapter, in each case to the  extent  permitted  by  article  forty-six  of  this chapter.  (c)  If  the  requirements of section one thousand four hundred two of this article are met,  any  domestic  insurer,  other  than  an  insurer subject  to  subsection  (a)  or (b) of this section, may, except as set forth below, invest its funds in, or otherwise acquire,  or  loan  upon, only  the  types  of investments specified in such section, this section and subsection (a) of section one thousand four  hundred  four  of  this article  (except  paragraphs  eight  and  ten  of subsection (a) of such section); provided that any such domestic insurer may  also  invest  its funds  in, or otherwise acquire or loan upon investments permitted under sections one thousand four hundred seven (including investments  of  the classes  described  in  paragraphs  eight  and  ten of subsection (a) of section one thousand four  hundred  four),  section  one  thousand  four hundred  eight  of  this article and article sixteen of this chapter, so long as it maintains cash, investments required by section one  thousand four   hundred  two  of  this  article  and  reserve  investments  under subsection (a) of  section  one  thousand  four  hundred  four  of  this  article,  free from any lien or pledge, which, when valued in accordance with the provisions of this chapter, shall at least equal fifty  percent of  the  aggregate  amount  of  its  unearned  premium,  loss  and  loss adjustment expense reserves as shown by its last sworn statement, annual or quarterly, on file with the superintendent. If an insurer, other than an  accident  and  health insurance company, maintains cash, investments required by section one thousand four hundred two of  this  article  and reserve  investments  under  subsection (a) of section one thousand four hundred four of this article, free from any lien or pledge, which,  when valued in accordance with the provisions of this chapter, shall at least equal  the  aggregate of seventy percent of its loss and loss adjustment expense reserves and fifty percent of its unearned premium  reserves  as shown by its last sworn statement, annual or quarterly, on file with the superintendent,  then  such  insurer,  other than an accident and health insurance company, may in addition enter into the types of  transactions set  forth  in  section  one  thousand four hundred ten of this article, subject to the limitations set forth in such section. The term "lien  or pledge"  as  used  in  this  subsection shall not include any deposit of securities or cash with any government, nor  trusteed  assets,  held  in trust  for  the  benefit  or  protection  of  all  or  any  class of the policyholders, or policyholders and creditors, of such insurer.  (d) (1) Except for investments referred to in subsection (e)  of  this section, investments that are neither interest bearing nor income paying shall  be  purchased or acquired only under, and to the extent permitted by, subsection (b) of section one thousand four  hundred  four  of  this article (in the case of insurers that make investments under section one thousand  four  hundred  four of this article other than insurers making investments under the authority of  subsection  (c)  of  this  section), paragraph  eight  of subsection (a) of section one thousand four hundred five of this article (in the case  of  insurers  that  make  investments under  section  one  thousand four hundred five) or section one thousand four hundred seven of this article (in the case of  insurers  that  make investments  under  the  authority  of  subsection (c) of this section), however, a default in interest or income  occurring  subsequent  to  the purchase  or  other  acquisition  of  an investment shall not affect the allowance thereof as an admitted asset at the market value thereof.  (2)(A) Notwithstanding any other provision of this article, a domestic insurer making investments pursuant to paragraph two of  subsection  (a) of  this section, a domestic charitable annuity society and a retirement system making investments pursuant to subsection (b)  of  this  section, and  a  domestic accident and health insurer making investments pursuant to subsection (c) of this section may sell call options  on  securities, provided that:  (i)  such options are traded on a securities exchange registered under the laws of the United States, and  (ii) the  insurer  holds,  or  can  immediately  acquire  through  the exercise   of   warrants   or  conversion  rights  already  owned  at  a contractually specified price,  the  underlying  securities  during  the entire period the option is outstanding.  (B)  An  insurer  selling  call  options  on  securities  pursuant  to subparagraph (A) of this paragraph  may  purchase  any  such  option  to offset an outstanding option previously sold by the insurer for the same kind and amount of securities.  (e)   (1)  Nothing  contained  in  this  chapter  shall  prohibit  the acquisition by any insurer of other securities or property (i)  received as  a  dividend or pursuant to a judicial or lawful non-judicial plan of reorganization or dissolution or pursuant to  a  lawful  and  bona  fide agreement of bulk reinsurance or consolidation; or (ii) received through  the  exercise  of  rights of conversion, stock warrants or stock options acquired by it  in  accordance  with  this  subsection  or  section  one thousand four hundred four, one thousand four hundred five, one thousand four hundred seven or one thousand four hundred ten of this article. Nor shall anything in this chapter prohibit acquisition of (1) an investment permitted  under  section  one  thousand four hundred four, one thousand four hundred five, one thousand four hundred seven or one thousand  four hundred  ten of this article because such investment is convertible into other securities in which such insurer is not permitted to invest  under this  chapter,  or because such insurer receives in connection with such investment stock warrants, whether detachable or  non-detachable,  stock options,  stock,  property  interests or other assets of any kind or (2) securities or property  (real  or  personal)  or  any  interest  therein received  in satisfaction of a debt previously owing to such insurer. If any securities or other property received by any insurer  in  accordance with  the  first sentence of this paragraph shall consist in whole or in part of shares of any institution or of obligations  or  other  property not  meeting  the  requirements  specified  in section one thousand four hundred four (in the case  of  insurers  making  investments  under  the authority  of  section  one  thousand  four hundred four) or section one thousand four hundred five (in the case of insurers  making  investments under  the  authority of section one thousand four hundred five) of this article, then any such shares and any such obligations  or  property  so received  shall  be  disposed  of  within  five  years  from the time of acquisition or before the expiration of such further period  or  periods of time as may be prescribed in writing by the superintendent, unless at any  time  after  such  acquisition such shares, obligations or property shall have met such  requirements  and  the  insurer  has  notified  the superintendent thereof.  (2)  Except  as  otherwise  specifically  provided  in  this  chapter, investments in subsidiaries are not subject to the  provisions  of  this section,  section  one thousand four hundred four (except paragraph nine of subsection (a) thereof) or one thousand four  hundred  five  of  this article.  (f)  (1)  Subsidiaries  of  domestic life insurance companies, whether acquired under subsection (e) of this  section,  sections  one  thousand four  hundred five, four thousand two hundred forty, or otherwise, shall be subject to the provisions of article seventeen of this chapter to the extent therein provided.  (2)  Subsidiaries  of  domestic  corporations   subject   to   article forty-three  of this chapter and of domestic retirement systems, whether acquired under subsection (e) of this section, section one thousand four hundred four, four thousand two hundred forty (in the case of retirement systems), or otherwise, shall be subject to the  provisions  of  article seventeen of this chapter to the extent therein provided.  (g) This section does not prohibit any domestic insurance company from acquiring  shares  under  article  seventy-one  of  this  chapter or any domestic life insurance company from acquiring shares of its own capital stock pursuant to section seven  thousand  three  hundred  two  of  this chapter.  (h)  With  respect  to all transactions between a domestic insurer and any person, five percent or more of whose voting  securities  are  held, directly  or indirectly, by such insurer, but which is not a subsidiary, the insurer shall maintain books, accounts  and  records  that  disclose clearly and accurately the nature and detail of such transactions.  (i)  (1)  Except  as  provided in subparagraph (A) of paragraph two of subsection (a) of section  four  thousand  two  hundred  forty  of  this chapter,  investments made for separate accounts under the provisions of  section four thousand  two  hundred  forty  of  this  chapter  shall  be disregarded, and shall be excluded from admitted assets, in applying the quantitative  investment  limitations contained in this chapter to other investments.  (2)  Except  as  provided  in  subparagraph  (A)  of  paragraph two of subsection (a) or paragraph four  of  subsection  (a)  of  section  four thousand   two   hundred   forty  of  this  chapter,  the  restrictions, limitations and other provisions relating to  investments  specified  in this  chapter  shall not apply to investments made for separate accounts under the provisions of section four thousand two hundred forty of  this chapter.