NY Ins L § 1405 (2021)
2021 New York Laws ISC - Insurance Article 14 - Investments 1405 - Investments of Life Insurers.

§  1405.  Investments  of  life insurers. (a) The assets of a domestic insurer that is authorized to make investments under this section may be invested  in  the  following  types  of  investments,  in  addition   to investments  otherwise  authorized,  subject  in the case of investments made under this section to the  limitations  set  forth  below  and  the provisions of subsections (c), (d) and (e) of this section:  (1)  Governmental  obligations.  Obligations,  not in default, issued, assumed, guaranteed or insured by (i) the United States of America or by any agency or instrumentality thereof, (ii)  any  state  of  the  United States of America, (iii) the District of Columbia, (iv) any territory or possession  of  the  United  States of America or any other governmental unit in the United States, or (v) any agency or instrumentality  of  any governmental  unit  referred  to  in  items  (ii), (iii) and (iv) above, provided that, in the case of obligations issued, assumed, guaranteed or insured by any governmental unit referred to in item (iv) above  or  any agency   or   instrumentality  referred  to  in  item  (v)  above,  such obligations are by law (statutory or  otherwise)  payable,  as  to  both principal  and  interest,  from  taxes  levied  or by law required to be levied  or  from  adequate  special  revenues   pledged   or   otherwise appropriated  or  by law required to be provided for the purpose of such payment, but in no event shall obligations be  eligible  for  investment under  this  paragraph  if  payable solely out of special assessments on properties benefited by local improvements.  (2) Obligations and preferred shares  of  American  institutions.  (i) Obligations,  not in default, whether or not secured and with or without recourse, issued, assumed, guaranteed, insured or accepted  by  American institutions  (or  trustees  or  receivers  therefor) and (ii) preferred shares of any such institution, provided,  however,  that  after  giving effect  to  any  such investment in preferred shares of any institution, the  aggregate  amount  of  investments  in  preferred  shares  of  such institution  made under this section shall not exceed two percent of the insurer's admitted assets.  (3)  Obligations  secured  by  real  property  or  interests  therein. Obligations,  or  participations  therein,  secured  by  liens  on  real property or interests therein located within the United States  and  not eligible under paragraph one or two of this subsection, provided that no insurer  making  investments  under  the authority of this section shall invest in or loan upon the security  of  any  one  property,  under  the authority  of  this  paragraph, more than thirty thousand dollars or two percent of admitted assets, whichever is the greater.  (4) Real property or interests therein. Investments in  real  property or  interests  therein  located  in  the United States, held directly or evidenced by partnership interests, stock  of  corporations  (including, without   limitation,   subsidiaries  engaged  or  organized  to  engage exclusively  in  the  ownership  and  management  of  real  property  or interests   therein),  trust  certificates  or  other  instruments,  and acquired (i) as an investment for the production  of  income  or  to  be improved  or  developed  for  such  investment  purpose, or (ii) for the convenient accommodation of the insurer's business; provided that, after giving effect to any such investment, (I) the aggregate amount  of  such investments  made  under  this  paragraph  and then held by such insurer shall not exceed twenty-five percent of the insurer's  admitted  assets, (II)  the  aggregate  amount  of investments made under item (i) of this paragraph and then held by such insurer shall not exceed twenty  percent of  the insurer's admitted assets, and (III) investments held under item (i) above in  each  property  constituting  such  investment  (including improvements  thereon)  shall not in the aggregate exceed two percent of the insurer's admitted assets, and provided, further, that no investment  in real property may be made under item  (ii)  herein,  (aa)  if,  after giving  effect  thereto,  the  aggregate amount of such investments then held by the insurer would exceed ten percent of the  insurer's  admitted assets, (bb) without the prior approval of the superintendent, if, after giving  effect thereto, the aggregate amount of such investments in each property constituting such investment (including  improvements  thereon) then  held  by  such  insurer  would exceed two percent of the insurer's admitted  assets,  and  (cc)  without  the   prior   approval   of   the superintendent,  in  the  case of an investment by a domestic insurer in real property located  outside  this  state,  if,  after  giving  effect thereto,  the  aggregate  amount  of  such  investments  in the property constituting such  investment  (including  improvements  thereon)  would exceed one-fifth of one percent of the insurer's admitted assets.  (5)  Personal  property  or interests therein. Investments in personal property or interests therein located or used wholly or in  part  within the  United States, held directly or evidenced by partnership interests, stock  of  corporations  (including,  without  limitation,  subsidiaries engaged  or  organized  to  engage  exclusively  in  the  ownership  and management  of  personal   property   or   interests   therein),   trust certificates or other instruments, provided that, after giving effect to any  such  investment, (i) the aggregate amount of such investments made under this paragraph and then held by such insurer shall not exceed  ten percent of the insurer's admitted assets and (ii) investments held under this  paragraph  in  the  item  of  personal  property constituting such investment shall  not  in  the  aggregate  exceed  one  percent  of  the insurer's admitted assets.  (6)  Equity  interests. Investments (in addition to investments of the types described in this paragraph but made  or  acquired  under  article seventeen,  section one thousand four hundred three, paragraphs four and five of this subsection or section four thousand two  hundred  forty  of this   chapter)   in   common   shares,   partnership  interests,  trust certificates or other equity interests (other than preferred shares)  of American  institutions,  provided  that,  after  giving  effect  to  any investment made under  this  paragraph,  (i)  the  aggregate  amount  of investments  made  under this paragraph in the institution in which such investment is then being made and then held by such  insurer  shall  not exceed  two  percent  of  the  insurer's  admitted  assets  and (ii) the aggregate amount of all investments made under this paragraph  and  then held  by  such  insurer shall not exceed twenty percent of the insurer's admitted assets.  (7) Foreign investments. (A) Canadian investments substantially of the same types as those eligible for investment under paragraphs one through six of this subsection,  provided  that,  after  giving  effect  to  any investment  made  under  this  subparagraph,  the  aggregate  amount  of investments made under this subparagraph and then held by  such  insurer shall  not  exceed  ten percent of the insurer's admitted assets, except where a greater amount is permitted under  subparagraph  (B)  below  (in which case the provisions of this subparagraph shall not be applicable).  (B)  In  the  case  of  any  domestic insurer that is authorized to do business in a foreign country or possession  of  the  United  States  of America  or  that  has  outstanding  insurance,  annuity  or reinsurance contracts on lives or risks resident or located in such foreign  country or  possession,  investments  in such foreign country or possession that are substantially of the same types as  those  eligible  for  investment under  paragraphs  one  through  six  of this subsection; provided that, except where a greater amount is permitted under subparagraph (A) above, after giving effect  to  any  investment  in  such  foreign  country  or possession made under this subparagraph, the aggregate amount of cash in  the currency of such foreign country or possession and of investments in such foreign country or possession made under this subparagraph and then held  by such insurer shall not exceed one and one-half times the amount of such insurer's reserves and other obligations under such contracts or the  amount  which  such  insurer  is  required by law to invest in such country or possession, whichever shall be greater.  (C)  Investments  in  foreign  countries,  in  addition  to   Canadian investments  and  investments  permitted  by  subparagraph  (B)  of this paragraph, that are substantially of the same types  as  those  eligible for  investment  under  paragraphs  one  through six of this subsection, provided that, after giving effect to any  investment  made  under  this subparagraph,  the  aggregate amount of investments qualified under this subparagraph and then held by  such  insurer  shall  not  exceed  twenty percent of the insurer's admitted assets; and  (i) the issuer or obligor is (I) a jurisdiction, which is rated in one of  the  four  highest  rating  categories by an independent, nationally recognized United States rating agency, (II) any  political  subdivision or  other  governmental  unit of any such jurisdiction, or any agency or instrumentality of any such jurisdiction, political subdivision or other governmental unit or (III) an institution which is organized  under  the laws  of  any such jurisdiction or, in the case of such paragraphs three and four of this subsection, the real property is located  in  any  such jurisdiction; and  (ii)  an  insurer shall not make any investment in any foreign country pursuant to this subparagraph, if such  investment,  together  with  all other  investments  in the same foreign country so made and then held by such insurer, would exceed  seven  percent  of  the  insurer's  admitted assets.  (D)  In  addition  to  the  foreign  investments  permitted  under the preceding subparagraphs of this paragraph, foreign investments that  are substantially  of  the same types as those eligible for investment under paragraphs one through six of  this  subsection,  provided  that,  after giving  effect  to  any  investment  made  under  this subparagraph, the aggregate amount of investments made under this  subparagraph  and  then held  by  such  insurer  shall  not  exceed six percent of the insurer's admitted assets, and provided further that an insurer shall not make any investment in any foreign country pursuant to this subparagraph, if such investment, together with all other  investments  in  the  same  foreign country  so  made  and  then  held  by  such insurer, would exceed three percent of the insurer's admitted assets.  (8) Other investments. Investments that do  not  qualify  or  are  not permitted  under  any other paragraph of this subsection, provided that, after giving effect to any such investment, (i) if such investment is of a type described in paragraph three or five or  item  (i)  of  paragraph four  or  paragraph  six  of  this  subsection,  the aggregate amount of investments of such type made under this paragraph and then held by such insurer shall not exceed five percent of the insurer's admitted  assets, (ii)  if such investment is of a type described in paragraph six of this subsection, the aggregate amount of such  investments  made  under  this paragraph in the institution in which such investment is then being made and  then  held  by  such  insurer  shall  not exceed two percent of the insurer's admitted assets,  (iii)  if  such  investment  is  of  a  type described in paragraph seven of this subsection, the aggregate amount of investments  of  all  types  described  in said paragraph seven and made under this paragraph and then held by such insurer shall not exceed  two percent  of the insurer's admitted assets, and (iv) the aggregate amount of all investments made under this  paragraph  and  then  held  by  such insurer shall not exceed fourteen percent (but not more than ten percent  in  investments in institutions not having their principal operations in this state and in real  and  personal  property  and  interests  therein located  outside this state and in mortgages and security interests with respect to real and personal property located outside this state) of the insurer's admitted assets. Investments that are neither interest bearing nor  income  paying,  made under this paragraph as provided in paragraph one of subsection (d) of section one thousand four hundred three of this article, shall be subject to all the provisions of  this  paragraph  and may  not  be  acquired if the aggregate amount thereof immediately after such acquisition would exceed three percent of  the  insurer's  admitted assets.  (b)  (1)  For  the purposes of this section, article seventeen of this chapter and section one thousand four hundred three of this article,  (A) "aggregate amount" of investments means, subject to the provisions of the final sentence of this subsection, the aggregate depreciated cost thereof, in the case of investments of the types described in paragraphs four and five of subsection (a) of this section, and the aggregate  cost thereof in the case of investments of other types;  (B) "admitted  assets"  means the amount thereof as of the last day of the most  recently  concluded  annual  statement  year  subject  to  the following adjustments;  (i)  assets  held  in separate accounts established under section four thousand two hundred forty of this chapter shall be included only to the extent of amounts  allocated  to  such  separate  accounts  pursuant  to paragraph  three  of  subsection  (a)  of said section four thousand two hundred forty; and  (ii) investments in subsidiaries referred  to  in  subsection  (c)  of section  one  thousand  seven  hundred  four  of  this  chapter shall be excluded; and  (C)  the  eligibility  of  any  investment  under  any  paragraph   of subsection  (a)  of  this  section  shall  be  determined at the time of acquisition thereof, except that (i) any investment  qualified  pursuant to  item  (ii) of subparagraph (C) of paragraph seven of such subsection (a) shall remain so qualified only at such time or times as the  hedging requirements  of  such  item (ii) are met with respect thereto; and (ii) investments qualified under paragraph eight of said subsection  (a)  may be  requalified  at  a  later  date  under  another  paragraph  of  said subsection (a), if the relevant conditions are satisfied at the time  of such  requalification.  In  computing depreciated cost of investments of the types described in paragraphs four and five  of  subsection  (a)  of this  section,  depreciation  may  be computed at a rate no greater than that permitted for federal income tax  purposes  and,  in  the  case  of investments  described in said paragraph four, the cost of an investment shall be depreciated over its estimated useful life, not to exceed fifty years.  (2) In computing the "aggregate amount" of investments, as provided in the first sentence of paragraph one of this subsection, (A) valuation of investments acquired under paragraph four  of  subsection  (a)  of  this section  shall  also  be  subject to any regulation with respect to such valuation that the superintendent may prescribe and (B)  investments  of investment subsidiaries as defined in section one thousand seven hundred two  of  this  chapter  shall be valued as though the parent corporation owned the assets of such subsidiaries directly instead of the  stock  of such  subsidiaries  and shall be subject to the provisions of subsection (d) of section one thousand seven hundred four of this chapter.  (c) In addition to other requirements of law (statutory or  otherwise) that   affect  the  standard  of  care  of  directors  and  officers  of corporations, in making investments under this  section,  directors  and  officers  shall  perform their duties in good faith and with that degree of care that an ordinarily prudent individual in a like  position  would use  under  similar circumstances. In the case of investments made under paragraphs two and six of subsection (a) of this section and investments that  are  substantially  of  the  same  types  as  those  eligible  for investment under such paragraphs, but are made under paragraph seven  of such  subsection, the institution that determines the eligibility of any such investment shall be a solvent  institution  whose  obligations,  if any,  are  not  in  default  as  to  principal  or interest, unless such investment is necessary to protect an investment theretofore made in the securities of such institution.  (d) After giving effect to any investment of a type described in  item (i),  (ii)  or  (iii)  below, the aggregate amount of (i) investments in subsidiaries charged against the limit contained  in  paragraph  one  of subsection  (a)  of  section  one  thousand  seven  hundred five of this chapter, (ii) investments made under item  (i)  of  paragraph  four  and paragraphs  five  and  six  of subsection (a) of this section, and (iii) investments of the types described in said item (i)  of  paragraph  four and such paragraphs five and six but made under paragraph seven or eight of subsection (a) of this section, shall not exceed forty percent of the insurer's   admitted  assets  plus,  to  the  extent  permitted  by  the superintendent, investments (not exceeding five percent of the insurer's admitted assets) of the types referred to  above  in  (I)  new  business enterprises   located   in  the  state;  (II)  technologically  oriented businesses located in the state; (III) minority-owned businesses located in the state; (IV) businesses located in areas in the  state  that  have experienced  a high rate of chronic unemployment; and (V) development of housing in the state for families and persons of low income. If, at  the time  of  the  making of any investment of a type described in item (i), (ii) or (iii) of the first sentence of this  subsection,  the  aggregate amount  of  investments  of  the  types  described in clauses (I), (II), (III), (IV) and (V) of such sentence made by the insurer on or after the date on which this subdivision becomes effective and then  held  by  the insurer  is  one  percent or more of its admitted assets, then the forty percent figure in such sentence shall be deemed to be  increased  by  an equal amount up to a maximum of forty-five percent, thus providing for a maximum  of investments described in items (i), (ii) and (iii) herein of fifty percent of total admitted assets.  (e) No domestic life insurer shall hold a direct or indirect ownership interest in a risk retention group, as defined in article fifty-nine  of this  chapter, other than in a risk retention group all of whose members are insurance companies.  (f) Any investment may be denominated in a currency other than  United States   dollars,  provided  that  the  aggregate  amount  of  all  such investments (other than investments made pursuant to  subparagraphs  (A) and  (B)  of paragraph seven of subsection (a) of this section) that are not effectively hedged, substantially in  their  entirety,  against  the United  States  dollar, reduced, on a currency by currency basis, by the amount of foreign-currency denominated  insurance  liabilities  may  not exceed  four  percent  of  the  insurer's admitted assets. An investment shall be deemed to be effectively hedged, substantially in its entirety, if it has been hedged:  (1) for an insurer that has an  approved  derivative  use  plan  under section  one  thousand  four  hundred  ten  of this article, pursuant to contracts or agreements entered into under and in accordance  with  that derivative  use  plan  and  subject  to the counterparty exposure limits thereunder; or  (2) for  any  other  insurer,  pursuant  to  contracts  or  agreements (derivative  transactions)  which  are  cleared  through  a "derivatives clearinghouse" or entered into with a "qualified counterparty", as those terms are defined pursuant to subsection (f)  of  section  one  thousand four hundred ten of this article.