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2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 3 - General Investments › Section 1175.5.

1175.5. Such insurers may invest in bonds of any county water district operating under Division 12 of the Water Code.
(Added by Stats. 1953, Ch. 1653.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 3 - General Investments › Section 1176.5.

1176.5. Such insurers may make, invest in or purchase loans which are guaranteed by the United States or any agency thereof pursuant to the provisions of the “Servicemen’s Readjustment Act of 1944” or any act of Congress supplementary or amendatory thereof.
(Added by Stats. 1945, Ch. 26.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 3 - General Investments › Section 1176.6.

1176.6. None of the provisions of the Insurance Code limiting or restricting loans by insurers or prescribing the security therefor shall apply to any loans which are fully guaranteed by the United States or any agency thereof pursuant to the provisions of the “Servicemen’s Readjustment Act of 1944” or any act of Congress supplementary or amendatory thereof; and in any case in which payment of a portion of any loan is guaranteed by the United States or any agency thereof pursuant to the provisions of the “Servicemen’s Readjustment Act of 1944” or any act of Congress supplementary or amendatory thereof, the guaranteed portion of such loan shall not be deemed a part of said loan for the purposes of any provision of the Insurance Code limiting the amount which may be loaned by an insurer upon the security of real property or improvements thereon shall be applicable to such loan.
(Added by Stats. 1945, Ch. 26.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 3 - General Investments › Section 1177.

1177. Such insurers may invest in notes or bonds secured by mortgage guaranteed as to payment by a policy of mortgage insurance, and mortgage participation certificates issued by a mortgage insurer in accordance with the provisions of this code.
(Enacted by Stats. 1935, Ch. 145.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 3 - General Investments › Section 1178.

1178. Such insurers may invest in collateral trust bonds or notes, secured by any of the following:
(a) A deposit of obligations authorized for investment by this article or Articles 4, 5, or 6 of this chapter having a market value at least fifteen per cent in excess of the par value of the collateral trust bonds or notes issued.
(b) A deposit of obligations authorized for investment by this article or Articles 4, 5, or 6 of this chapter, together with other securities, the combined market value of the deposit being at least twenty per cent in excess of the par value of the collateral trust bonds or notes issued, with the par value of the collateral trust bonds or notes not exceeding the market value of the deposited obligations which are authorized for investment by this article or Articles 4, 5, or 6 of this chapter.
(c) A deposit of obligations authorized for investment by this article, or Articles 4, 5, or 6 of this chapter, together with other securities, and conforming to the following requirements:
(1) The combined market value of the deposit is at least thirty per cent in excess of the par value of the collateral trust bonds or notes issued.
(2) The par value of such collateral trust bonds or notes issued does not exceed the market value of deposited obligations authorized for investment by this article.
(3) The deposited collateral consists of obligations authorized for investment by this article, or Articles 4, 5, or 6 of this chapter, having a market value of at least seventy-five per cent of the par value of such collateral trust bonds or notes issued.
(Amended by Stats. 1937, Ch. 738.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 3 - General Investments › Section 1179.

1179. Such insurers may invest in farm loan bonds, consolidated farm loan bonds, collateral trust debentures, consolidated debentures, or other obligations issued under the Federal Farm Loan Act, approved July 17, 1916, as amended (Title 12 U.S.C. Sections 636 to 1012 inclusive, and Sections 1021 to 1129 inclusive), and the Farm Credit Act of 1933, as amended (Title 12 U.S.C. Sections 1131 to 1138f inclusive), and the Farm Credit Act of 1971 (Title 12 U.S.C. Sections 2001 to 2259 inclusive). Under this section such insurers may invest in farm loan bonds and consolidated farm loan bonds issued by federal land banks, consolidated collateral trust debentures and all other debentures issued by federal intermediate credit banks, debentures issued by the Central Bank for Cooperatives and consolidated debentures issued by banks for cooperatives.
(Amended by Stats. 1973, Ch. 138.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 3 - General Investments › Section 1180.

1180. Such insurers may invest in bonds issued under the “Home Owners’ Loan Act of 1933”; bonds, debentures and notes issued by any federal home loan bank, or consolidated federal home loan bank notes, bonds and debentures issued by the Federal Home Loan Bank Board in accordance with the provisions of the Federal Home Loan Bank Act, and mortgage, mortgage participation, pass-through or trust certificates, or obligations or other securities issued or guaranteed by the Federal Home Loan Mortgage Corporation, pursuant to Section 305 or Section 306 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. Secs. 1454, 1455), by the Government National Mortgage Association, pursuant to Section 306 or Section 313 or Title III of the National Housing Act (12 U.S.C. Secs. 1721, 1723(e)), or by the Federal National Mortgage Association pursuant to 12 U.S.C. Sections 1717–1719.
(Amended by Stats. 1980, Ch. 811, Sec. 2. Effective July 28, 1980.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 3 - General Investments › Section 1181.

1181. Such insurers may also invest in registered warrants of this State, issued pursuant to law.
(Added by Stats. 1937, Ch. 738.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 3 - General Investments › Section 1182.

1182. Domestic incorporated insurers may invest in an account or accounts in one or more banks, savings and loan associations, or credit unions to the extent the account or accounts are insured by an agency or instrumentality of the federal government. As used in this section, an account may include a certificate of deposit.
(Amended by Stats. 2009, Ch. 234, Sec. 8. (AB 299) Effective January 1, 2010.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 3.5 - Disclosure of Material Transactions › Section 1185.

1185. (a) Every domestic incorporated insurer shall file a report with the commissioner disclosing material acquisitions and dispositions of assets or material nonrenewals, cancellations, or revisions of ceded reinsurance agreements unless the acquisitions and dispositions of assets or material nonrenewals, cancellations, or revisions of ceded reinsurance agreements have been submitted to the commissioner for review, approval, or information purposes pursuant to other provisions of this code, laws, regulations, or other requirements.
(b) The report shall be filed within 15 days after the end of the calendar month in which any of the foregoing transactions occur.
(c) One complete copy of the report, including any exhibits or other attachments filed as part thereof, shall be filed with the department and the National Association of Insurance Commissioners.
(d) All reports obtained by, or disclosed to the commissioner pursuant to this article, shall be given confidential treatment and shall not be subject to subpoena and shall not be made public by the commissioner, the National Association of Insurance Commissioners, or any other person, except to insurance departments of other states, without the prior written consent of the insurer to which it pertains unless the commissioner, after giving the insurer who would be affected thereby, notice and an opportunity to be heard, determines that the interest of policyholders, shareholders, or the public will be served by the publication thereof, in which event the commissioner may publish all or any part thereof in such manner as he or she may deem appropriate.
(Added by Stats. 1994, Ch. 662, Sec. 1. Effective January 1, 1995.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 3.5 - Disclosure of Material Transactions › Section 1186.

1186. (a) No acquisitions or dispositions of assets shall be reported pursuant to Section 1185 if the acquisitions or dispositions are not material. For purposes of this article, a material acquisition (or the aggregate of any series of related acquisitions during any 30-day period) or disposition (or the aggregate of any series of related dispositions during any 30-day period) is one that is nonrecurring and not in the ordinary course of business and involves more than 5 percent of the reporting insurer’s total admitted assets as reported in its most recent statutory statement filed with the insurance department of the insurer’s state of domicile.
(b) Asset acquisitions subject to this article include every purchase, lease, exchange, merger, consolidation, succession, or other acquisition other than the construction or development of real property by or for the reporting insurer or the acquisition of materials for that purpose. Asset dispositions also include every sale, lease, exchange, merger, consolidation, mortgage, hypothecation, assignment (whether for the benefit of creditors or otherwise), abandonment, destruction, or other disposition.
(c) The following information is required to be disclosed in any report of a material acquisition or disposition of assets:
(1) Date of the transaction.
(2) Manner of acquisition or disposition.
(3) Description of the assets involved.
(4) Nature and amount of the consideration given or received.
(5) Purpose of, or reason for, the transaction.
(6) Manner by which the amount of consideration was determined.
(7) Gain or loss recognized or realized as a result of the transaction.
(8) Name of the person from whom the assets were acquired or to whom they were disposed.
(d) Insurers shall report material acquisitions and dispositions on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers which utilizes a pooling arrangement or 100 percent reinsurance agreement that affects the solvency and integrity of the insurer’s reserves and that insurer ceded substantially all of its direct and assumed business to the pool. An insurer is deemed to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than one million dollars ($1,000,000) total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than 5 percent of the insurer’s capital and surplus.
(Added by Stats. 1994, Ch. 662, Sec. 1. Effective January 1, 1995.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1190.

1190. Any domestic incorporated insurer, which maintains in cash on hand or on deposit in a national or state bank, or in securities specified in Article 3 (commencing with Section 1170), an amount equal to its required minimum paid-in capital, may invest the remainder of its assets in the purchase of, or loans upon the securities set forth in this article. The investments are known as excess funds investments and are subject to the restrictions set forth in this article.
(Amended by Stats. 1983, Ch. 142, Sec. 83.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1191.

1191. Excess funds investments may be made in the stock of any corporation organized and carrying on business under the laws of this or any other state, or of the United States, or of the District of Columbia, or of the Dominion of Canada or of any province of the Dominion of Canada.
(Amended by Stats. 1951, Ch. 567.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1191.1.

1191.1. Excess fund investments may be made in the purchase and sale of exchange traded call options on common stock pursuant to this section.
An insurer may sell exchange traded call options only through an exchange and only with respect to stock which it owns. Common stock that is obligated under an unexpired written call option shall not be sold unless the insurer first enters into a closing purchase transaction. An insurer shall not sell any other options pursuant to this section.
An insurer may purchase exchange traded call options only through an exchange and only for the purpose of a closing purchase transaction. An insurer shall not purchase any other options pursuant to this section.
(Added by Stats. 1980, Ch. 814, Sec. 1.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1191.5.

1191.5. (a)Excess fund investments may be made by a domestic life insurer having admitted assets aggregating in value not less than one hundred million dollars ($100,000,000) in the purchase and sale of call options on interest-bearing obligations pursuant to subdivision (b) or (c). These investments may be made only in options on interest-bearing obligations issued by the United States of America, or any of its agencies or instrumentalities specified in Section 1180.
(b) An insurer may purchase call options pursuant to this section for the sole purpose of executing a closing purchase transaction for the interest-bearing obligation subject to the option. An insurer shall not purchase any other options pursuant to this section.
(c) An insurer may sell call options pursuant to this section only on interest-bearing obligations that it owns. An insurer shall not sell an interest-bearing obligation subject to an unexpired written call option sold by it except pursuant to a closing purchase transaction under the call option.
(Added by Stats. 1989, Ch. 1129, Sec. 2.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1192.

1192. Excess funds investments may be made in:
(a) Interest-bearing obligations issued by a nonaffiliate institution, as defined in paragraph (5) of subdivision (f) of Section 1196.1, organized under the laws of any state, or of the United States, or of the District of Columbia, or of the Dominion of Canada or of any province of the Dominion of Canada, or interest-bearing obligations registered with the Securities and Exchange Commission and publicly traded issued by an affiliate corporation organized under the laws of any state, or of the United States, or of the District of Columbia, or of the Dominion of Canada or of any province of the Dominion of Canada, or interest-bearing obligations issued by an authority established pursuant to the California Industrial Development Financing Act provided for in Title 10 (commencing with Section 91500) of the Government Code, to which the corporation is obligated with respect to payment, or
(b) Equipment trust obligations or certificates, or other adequately secured instruments, evidencing an interest in or lien upon transportation equipment used or to be used by a common carrier or common carriers and a right to receive determined portions of fixed obligatory payments for the use or purchase of this equipment, when the obligations, certificates, or instruments are issued by a corporation specified in subdivision (a) or are unconditionally guaranteed or assumed by the corporation as to principal and as to interest or dividends and as to the payment of the fixed obligatory payments or the payment of the determined portions thereof.
(Amended by Stats. 2020, Ch. 370, Sec. 216. (SB 1371) Effective January 1, 2021.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1192.1.

1192.1. Excess funds investments may be made in bonds, notes or other obligations issued, assumed or guaranteed by the International Bank for Reconstruction and Development, or the Inter-American Development Bank, or the Government Development Bank for Puerto Rico, or the Asian Development Bank, the International Finance Corporation, or the African Development Bank. Investments held under the authority of this section at any one time shall not be in excess of 2
1
/
2
percent of the insurer’s admitted assets or an amount equal to 25 percent of the total of the capital and surplus of such insurer, whichever is the lesser. Percentage or dollar value of assets and surplus as provided herein shall be determined by the insurer’s last preceding annual statement of conditions and affairs filed with the commissioner pursuant to law.
(Amended by Stats. 1991, Ch. 1206, Sec. 8.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1192.3.

1192.3. Excess fund investments may be made by a life insurer having admitted assets aggregating in value not less than two hundred million dollars ($200,000,000) in the following:
(a) Equipment obligations, securities, or certificates of any equipment trust evidencing rights to receive partial payments agreed to be made upon any contract of leasing or conditional sale.
(b) The purchase and ownership of machinery or equipment, which is or will within 30 days after acquisition become subject to contracts for sale or use under which contractual payments may reasonably be expected to return the principal of and provide earnings on the investment within the anticipated useful life of the property which shall be not less than five years.
Except upon the prior approval, in writing, of the commissioner, an investment may not be made under the authority of this section if at the time of the making of such investment it would result in such insurer then owning such obligations, securities, certificates, machinery and equipment in an amount exceeding five percent of such insurer’s admitted assets as determined by the insurer’s last preceding annual statement filed with the commissioner.
Any investment in a single piece of machinery or equipment shall not be made in excess of one percent of the insurer’s admitted assets or 10 percent of the aggregate of the insurer’s capital paid-up and unassigned surplus, whichever is larger.
(Added by Stats. 1980, Ch. 1049, Sec. 1.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1192.4.

1192.4. No domestic insurer shall have more than 10 percent of its capital and surplus invested in stock of corporations organized under the laws of the Dominion of Canada or of any province of the Dominion of Canada, but this limitation shall not affect the authority conferred by Sections 1172, 1199 and 1240.
(Amended by Stats. 1955, Ch. 206.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1192.5.

1192.5. Excess funds investments may be made in all deposits and debt obligations of banks or savings and loan associations whose accounts are insured by an agency or instrumentality of the federal government including accounts or certificates of deposit not subject to Section 1182, bankers’ acceptances, and commercial paper.
(Amended by Stats. 1991, Ch. 539, Sec. 10.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1192.6.

1192.6. (a) An insurer, except an insurer authorized to transact mortgage guaranty insurance as defined in Section 119, may invest in a mortgage, mortgage-backed bond, or a mortgage participation, pass-through, conventional pass-through, trust or participation certificate, which is secured by or represents an undivided interest in any loan secured by real property if the loan is a permitted investment for the insurer or in a pool of those loans if each is a permitted investment for an insurer; and for which there exists, at the time of making the investment, a resale market.
(b) If the loan or pools of loans have been transferred or contributed by an insurer to a corporation, all the voting securities of which are owned by the insurer, then the mortgage, mortgage-backed bond, or mortgage participation, pass-through, conventional pass-through, trust or participation certificate secured by or representing an undivided interest in the loan or pool of loans shall not be revalued solely due to that transfer. Any subsequent transfer to an affiliate from the wholly owned subsidiary shall be valued at the lower of book value or market value.
(Added by Stats. 1987, Ch. 242, Sec. 2.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1192.7.

1192.7. (a) A domestic insurer having admitted assets aggregating in value not less than one hundred million dollars ($100,000,000) may make excess funds investments in participation certificates (1) which represent an undivided interest in an interest-bearing obligation issued by a corporation and (2) for which a resale market exists at the time the investment is made.
(b) No investment in a participation certificate may be made pursuant to this section unless the entire obligation is a form of investment which the insurer would be authorized to acquire pursuant to subdivision (a) of Section 1192.
(c) An investment may not be made under the authority of this section if at the time of making the investment it would result in the insurer then owning participation certificates described in this section in an amount exceeding 4 percent of the insurer’s admitted assets as determined by the insurer’s last preceding annual statement filed with the commissioner.
(Amended by Stats. 1993, Ch. 616, Sec. 1. Effective January 1, 1994.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1192.8.

1192.8. (a) A domestic life insurer having admitted assets aggregating in value not less than one hundred million dollars ($100,000,000) may make excess fund investments pursuant to this section in interest-bearing notes, bonds, or obligations issued by (1) any operating business trust or limited partnership organized under the laws of any state of the United States, the District of Columbia, the Dominion of Canada, any province of the Dominion of Canada or (2) an authority established pursuant to the California Industrial Development Financing Act, Title 10 (commencing with Section 91500) of the Government Code. The issuer of the notes, bonds, or obligations through itself or its paying agent shall be obligated thereunder to make payments, with respect to the notes, bonds, or other obligations, directly to the insurer or the insurer’s nominee.
(b) Except upon the prior written approval of the commissioner, an investment may not be made under the authority of this section unless the note, bond, or obligation is exchange-traded. “Exchange-traded,” as used in this subdivision, means listed and traded on the National Market System of the NASDAQ Stock Market or on a securities exchange subject to regulation, supervision, or control under a statute of the United States and acceptable to the commissioner.
(c) Without the prior written consent of the commissioner, an investment made pursuant to this section shall not exceed in the aggregate 10 percent of the life insurer’s policyholder surplus.
(d) A request to the commissioner for (1) approval pursuant to subdivision (b) to invest in notes, bonds, or obligations that are not exchange-traded or (2) consent to exceed the 10 percent limitation set forth in subdivision (c), shall be in writing and shall be accompanied by any supporting data and documentation that the commissioner may require. The commissioner shall require the payment of a fee of seven thousand four hundred seventy-two dollars ($7,472), in advance, for the determination of whether to approve or disapprove each request. Each request shall be in writing and shall be deemed approved unless the commissioner disapproves it within 60 days with respect to requests under subdivision (c) or 20 days with respect to requests under subdivision (b), after the request has been filed in the commissioner’s office.
(e) This section shall not be construed to increase or reduce the authority to invest in any operating business trust or limited partnership specifically permitted in other sections of this code.
(Amended by Stats. 2017, Ch. 534, Sec. 26. (AB 1699) Effective January 1, 2018.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1192.10.

1192.10. (a) Excess funds investments may be made in securities evidencing an undivided interest in, the right to receive payments from, or payable primarily from distributions on a pool of financial assets held by an unaffiliated business entity, other than those authorized by Section 1192.6, if all of the following conditions are met:
(1) The business entity is not a sole proprietorship and is established solely for the purpose of acquiring specific types of financial assets, issuing securities representing an undivided interest in, or right to receive cash flows from, those assets, and engaging in related activities.
(2) The pool of assets consists solely of interest-bearing obligations or other contractual obligations representing the right to receive payment from the assets.
(3) The investment is rated in one of the three highest rating categories by at least one nationally recognized statistical rating organization approved by the Securities and Exchange Commission and within one of the two highest categories established by the securities valuation office of the National Association of Insurance Commissioners.
(b) No investment under this section may be made if, as a result of giving effect to that investment, the aggregate amount of investments then held by the insurer under this section would exceed 10 percent of its admitted assets.
(c) Investments authorized by this section shall not be subject to subdivision (c) of Section 1196.
(Added by Stats. 1993, Ch. 512, Sec. 1. Effective January 1, 1994.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1193.

1193. Excess funds investments may be made in bonds of any permanent road division, or any district of any state when such bonds are legal investments for savings banks of this State, or have been certified as legal investments for savings banks pursuant to Division 10 of the Water Code, or when the statutes or laws providing for the issuance of such bonds, provide that such bonds shall be entitled to the same force or value or use as bonds issued by any municipality, or such law specifically states that such bonds shall be legal investments for either savings banks, insurance companies, all trust funds, state school funds or any funds which may be invested in bonds of cities, counties, cities and counties, school districts, or municipalities in the State, or when such bonds have been investigated and approved by a commission or board now or hereafter authorized by law to conduct such investigation and give such approval when such law specifies that upon such approval said bonds are legal investments for insurers, or which the commissioner approves in writing as legal for investment of the funds of insurers. The commissioner in determining whether to approve any bonds as legal investments which do not otherwise qualify as such, shall make, upon the request of any insurer, at such insurer’s expense, an investigation and finding as provided for in Section 1175.
(Amended by Stats. 1953, Ch. 1653.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1194.

1194. Excess funds investments may be made in bonds issued by any county, municipality, or school district in this State to represent assessments for local improvements authorized by law. At the date of such investment the purchase price or principal loaned shall not exceed fifty per cent of the market value of the real property or of the real property together with the improvements thereon, upon which the bond is the first lien.
(Enacted by Stats. 1935, Ch. 145.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1194.1.

1194.1. Excess funds investments may be made in bonds issued pursuant to the Improvement Bond Act of 1915.
(Added by Stats. 1957, Ch. 659.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1194.5.

1194.5. Excess funds investments may be made in any debt obligation issued by the United States, a federal agency or entity authorized to issue debt obligations by federal statute; the Commonwealth of Puerto Rico, its agencies and political subdivisions; any state, its agencies or political subdivisions, or by any city, county, or city and county, or by any department or board of such city, county, or city and county, whether issued in bearer, registered or book entry form.
(Amended by Stats. 1983, Ch. 115, Sec. 2.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1194.6.

1194.6. (a) Excess funds investments may be made by an insurer in bonds, notes, or other evidences of indebtedness payable in United States dollars, and issued by a corporation incorporated under the laws of an alien government provided all of the following conditions are met:
(1) All the stock of the corporation is owned and ultimately controlled by a domestic corporation.
(2) Payment in full of any bond, note, or other evidence of indebtedness is guaranteed by the domestic corporation.
(3) Any bond, note, or other evidence of indebtedness is evaluated by the National Association of Insurance Commissioners as a bond which may be carried at amortized cost.
(b) Excess fund investments may be made by a life insurer in bonds, notes, or other evidence of indebtedness payable in a currency other than United States dollars and issued by a corporation incorporated under the laws of an alien government provided all the following conditions are met:
(1) All of the stock of the corporation is owned and ultimately controlled by a domestic corporation.
(2) Payment in full of any bond, note, or other evidence of indebtedness is guaranteed by the domestic corporation.
(3) Any bond, note, or other evidence of indebtedness is evaluated by the National Association of Insurance Commissioners as a bond which may be carried at amortized cost.
(4) The life insurer shall, prior to or within five business days after purchase, enter into a contract with a qualified bank pursuant to which the bank agrees to exchange the payments made on the nondollar denominated investment for the full term to maturity of the investment for United States currency at a rate approximating the prevailing exchange rate at the time of the purchase. For purposes of this subdivision, a qualified bank means a bank the accounts of which are insured by an agency or instrumentality of the federal government or which is a member of the Federal Reserve System and a bank that has a net worth equal to or in excess of two hundred fifty million dollars ($250,000,000) as shown on its most recently published financial statements.
(c) “Domestic,” as used in this section, means organized under the laws of any state, or of the United States or of the District of Columbia.
(Amended by Stats. 1991, Ch. 539, Sec. 11.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1194.7.

1194.7. Excess funds investments may be made in the stock of a Federal home loan bank. Any domestic incorporated insurer investing in the stock of a Federal home loan bank and thereby becoming a member thereof shall have power (a) to obtain advances from, and (b) to pledge collateral as security for such advances from such Federal home loan bank.
(Added by Stats. 1937, Ch. 738.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1194.82.

1194.82. (a) An insurer may invest in notes or bonds secured by second mortgages or other second liens, including all inclusive or wraparound mortgages or liens, upon real property encumbered only by a first mortgage or lien which meets the requirements set forth in Section 1194.81, subject to either of the following conditions:
(1) The insurer also owns the note or bond secured by the prior first mortgage or lien and the aggregate value of both loans does not exceed the loan to market value ratio requirements of Section 1194.81.
(2) The note or bond is secured by an “all-inclusive” or “wraparound” lien or mortgage which conforms to the requirements specified in subdivision (b), provided that the aggregate value of the resulting loan does not exceed the loan to market value ratio requirements of Section 1194.81.
(b)  “Wraparound” and “all-inclusive” lien or mortgage refer to a loan made by an insurer to a borrower on the security of a mortgage or lien on real property other than property containing a residence of one to four units or upon which a residence of one to four units is to be constructed, where the real property is encumbered by a first mortgage or lien and which loan is subject to all of the following:
(1) There is no more than one preexisting mortgage or lien on the real property.
(2) The total amount of the obligation of the borrower to the insurer under the loan is not less than the sum of the amount disbursed by the insurer on account of the loan and the outstanding balance of the obligation secured by the preexisting lien or mortgage.
(3) The instrument evidencing the lien or mortgage by which the obligation of the borrower to the insurer under the loan is secured, is recorded, and the lien is insured under a policy of title insurance in an amount not less than the total amount of the obligation of the borrower to the insurer under the loan.
(4) The insurer either (A) pursuant to Section 2924b of the Civil Code, files for record in the office of the recorder of the county in which the real property is located a duly acknowledged request for a copy of any notice of default or of sale under the preexisting lien, (B) otherwise arranges with the recorder of any county in which the real property is located to be advised in case of the filing for record of any notice of default or of sale with respect to any obligation secured by the preexisting lien, or (C) is entitled under applicable law to receive notice of default, sale, and foreclosure of the preexisting lien.
(5) The amount disbursed by an insurer under any single wraparound or all-inclusive loan made pursuant to this section shall not exceed the greater of 1 percent of the insurer’s admitted assets or 10 percent of the aggregate of the insurer’s capital paid-up and unassigned surplus.
(Amended by Stats. 2007, Ch. 130, Sec. 183. Effective January 1, 2008.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1194.85.

1194.85. In any case in which a domestic insurer has requested the approval of the commissioner to make the investments specified in subdivision (a) or (c) of Section 1194.8, that insurer shall reimburse the department for all actual expenses, not to exceed seven hundred forty-eight dollars ($748), incurred by it in making a determination of whether to approve or disapprove that request.
(Amended by Stats. 2017, Ch. 534, Sec. 27. (AB 1699) Effective January 1, 2018.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1194.86.

1194.86. Every admitted incorporated insurer may purchase, hold, or convey real estate only for the following purposes and in the following manner:
(a) The building in which it has its principal office and the land upon which that building stands.
(b) Real estate requisite for its accommodation in the convenient transaction of its business.
(c) Real estate acquired by it, or by any person for it, to secure the payment of loans previously contracted or for moneys due.
(d) Real estate purchased at sales upon deeds of trust or upon judgments or decrees obtained for those loans or debts.
(e) Real estate conveyed to it in satisfaction of debts previously contracted in the course of its dealings.
(f) Real estate acquired by gift or devise.
(g) Real estate acquired in part payment of the consideration of the sale of real property owned by it, if each such transaction shall not effect an increase in its investment in such real property.
(h) Upon the written approval of the Insurance Commissioner, real estate requisite or desirable for the protection or enhancement of the value of other real or personal property owned by the insurers.
(i) Real estate and improvements thereon which domestic insurers are permitted to invest pursuant to the provisions and subject to the conditions and limitations of Section 1194.8 or Section 1210.
(Added by Stats. 1991, Ch. 539, Sec. 15.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1194.87.

1194.87. If, after a hearing, the commissioner is satisfied that an insurer is carrying upon its books any parcel or parcels of real estate at values exceeding the sound market value thereof, he or she may order the insurer to:
(a) Create an adequate contingency reserve against the book value of the parcel or parcels, or
(b) Reduce the book value of the parcel or parcels by a corresponding amount.
In the case of real estate, not of a character described in subdivision (a), (b), (h), or (i) of Section 1194.86, which has been held by the insurer for more than five years, the commissioner may order the insurer to dispose of the real estate within six months if, after a hearing, the commissioner is satisfied that:
(1) The insurer has refused reasonable offers for the sale of the real estate, or
(2) The real estate may be disposed of without undue hardship to the insurer.
For the purpose of enabling him or her to determine whether to issue an order pursuant to this section, the commissioner, if he or she is not satisfied with the appraisal furnished at his or her request by the insurer, may appraise the real estate at the expense of the insurer.
The commissioner may suspend or revoke the certificate of authority of an insurer failing to comply with any order issued under this section.
(Amended by Stats. 1992, Ch. 427, Sec. 115. Effective January 1, 1993.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1194.88.

1194.88. Every admitted incorporated insurer may, for the protection or enhancement of the value of real property acquired under the provisions of Section 1194.86, use its funds in the manner as it shall deem proper to repair, alter, remodel, rehabilitate, demolish, purchase furnishings or other personal property for use in or otherwise to improve the real estate.
(Added by Stats. 1991, Ch. 539, Sec. 17.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1194.9.

1194.9. If the commissioner shall decide, after due notice and hearing that the interest of any company having real estate acquired pursuant to the provisions of Section 1194.8 requires that any specific parcel or parcels of such real estate be disposed of, then such insurance company shall dispose of such real estate within such reasonable time as the commissioner shall direct.
(Added by Stats. 1945, Ch. 1073.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1194.95.

1194.95. Excess funds investments may be made in an electronic computer or data processing machine or system to be used in connection with the business of the insurer; provided, however, that this machine or system shall have an original cost of at least two hundred fifty thousand dollars ($250,000) and shall be amortized in full over a period not to exceed four full calendar years.
(Amended by Stats. 1991, Ch. 539, Sec. 18.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1195.

1195. This article does not authorize investments in any obligation unless the obligation is interest or income-bearing or dividend-paying.
An obligation is interest or income-bearing within the meaning of this section if it is not in default in payment of interest or income on the date of acquisition by the insurer and if no such default was imminent on such date.
Nothing in this section contained, however, shall limit or affect the authority conferred by section 1191 of this code.
(Amended by Stats. 1939, Ch. 480.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1196.

1196. Excess funds investments shall not be made in any stock or obligation unless:
(a) The stock or obligation qualifies as a sound investment.
(b) In case of a purchase, the price paid for the security is not in excess of the current market value at the date of purchase.
(c) In case of a loan, the amount loaned does not exceed eighty-five per cent of the market value, at the date of the loan, of the collateral taken as security.
(Amended by Stats. 1937, Ch. 738.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1197.

1197. Excess funds investments shall not be made in a loan or any other obligation to any one borrower or obligor, including all affiliates which shall be treated as one borrower or obligor, in an amount exceeding 10 percent of the capital stock and surplus or 1 percent of the admitted assets of the lending insurer, whichever amount is greater.
(Amended by Stats. 2009, Ch. 234, Sec. 9. (AB 299) Effective January 1, 2010.)
2023 California Code › Insurance Code - INS › DIVISION 1 - GENERAL RULES GOVERNING INSURANCE › PART 2 - THE BUSINESS OF INSURANCE › CHAPTER 2 - Incorporated Insurers › ARTICLE 4 - Property Authorized for Excess Funds Investments › Section 1198.

1198. Excess funds investments shall not be made in purchases of or loans upon shares of the capital stock of any one corporation in an amount exceeding 10 percent of the excess of the admitted assets of the investing insurer over the liabilities and required reserves of such insurer.
Nor shall the excess amount of any such investment over and above 25 percent of the excess of the admitted assets of the owner thereof over the liabilities and required reserves of such owner be retained. The commissioner may determine the retention of such excess amount over said 25 percent to be a violation of the provisions of this article within the meaning of and subject to all the provisions of Section 1202.
No investment which is permitted under Section 1199 shall be prohibited or its retention limited by this section.
(Amended by Stats. 1963, Ch. 1974.)