2023 New York Laws › ISC - Insurance › Article 14 - Investments › 1411 - Authorization Of, and Restrictions On, Investments.

§  1411.  Authorization  of,  and restrictions on, investments. (a) No
domestic insurer shall make any loan or investment, except  as  provided
in  subsection (h) hereof, unless authorized or approved by its board of
directors or a committee thereof responsible for supervising  or  making
such investment or loan. The committee's minutes shall be recorded and a
report submitted to the board of directors at its next meeting.
(b)  No  such  insurer  shall  participate  in any underwriting of the
purchase or sale of securities in advance of their issuance.   Any  such
insurer  may  enter into any agreement to sell or withhold from sale any
of its property as long as  the  insurer  is  not  participating  in  an
underwriting.   The   disposition   of   its   property   shall  be  the
responsibility of its board of directors, in accordance with its charter
and by-laws.
(c) Except as otherwise specifically  provided  in  this  chapter,  no
domestic  insurer  shall pledge or transfer any securities as collateral
for a loan (including a sale of securities subject to  an  unconditional
obligation   to  repurchase  the  same)  if  such  loan  and  all  other
outstanding loans secured by pledge or deposit of  its  securities  will
exceed,  when  the  loan is made, five percent of its admitted assets as
shown by its last sworn statement  to  the  superintendent,  unless  the
superintendent  shall  first  give  his  permission  for  such  loan  as
necessary in the conduct of  the  insurer's  business.    No  pledge  or
transfer  of securities for a loan shall be made if the insurer does not
receive the loan's proceeds.  Nothing in this section shall be construed
as prohibiting an insurer from selling or purchasing individually or  on
its  account jointly with one or more of its subsidiaries the securities
of  any  investment  company  to  which  the  insurer  or  any  of   its
subsidiaries  renders management, investment advisory or sales services,
nor from participating in such  sales  or  purchases  jointly  with  any
person  in  the  insurer's holding company system, as defined in section
one thousand five hundred one of this chapter.
(d) No domestic stock insurer shall purchase its  own  capital  shares
except  pursuant  to  section  seven  thousand three hundred two of this
chapter or pursuant  to  a  plan  of  stock  redemption  and  retirement
approved  by the superintendent as reasonable and equitable. No domestic
insurer shall enter into any agreement in connection with  the  sale  of
any  property  to  repurchase  such property or any part thereof, except
that such an insurer may (subject to the provisions of subsection (b) of
this section) sell securities subject to an unconditional obligation  to
repurchase  the  same  on a date not more than one year from the date of
sale. This subsection shall  not  apply  to  the  purchase  or  sale  of
directors' qualifying shares.
(e)  No director or officer of an insurer doing business in this state
shall receive, in addition to his  fixed  salary  or  compensation,  any
money  or  valuable  thing,  directly  or  indirectly,  or  through  any
substantial interest in any other  corporation  or  business  unit,  for
negotiating,  procuring,  recommending or aiding in any purchase or sale
of property,  or  loan,  made  by  such  insurer  or  any  affiliate  or
subsidiary   thereof;   nor  shall  he  be  pecuniarily  interested,  as
principal, co-principal, agent or beneficiary, directly  or  indirectly,
or through any substantial interest in any other corporation or business
unit,  in  any  such  purchase,  sale or loan. This subsection shall not
prohibit:
(1) a member of the board of directors of an insurer, other than life,
from receiving his share of the usual commission  earnings  of  a  stock
exchange firm of which he is a partner;
(2)  an  insurer,  other  than  life, or any life insurer all of whose
shares (except directors' qualifying shares) is owned by any corporation

organized primarily for, and  engaged  primarily  in  the  business  of,
providing  support,  relief,  pensions,  annuities  or insurance for the
priests, clergy or ministers of  any  religious  denomination  or  their
dependents,  from  paying  any  corporation  or partnership in which any
director of the insurer has an interest or is an officer or director  or
partner,   a   reasonable  fee  for  investment  advice,  provided  such
compensation is not in excess of the amounts customarily charged for the
same type of service; or
(3) any transaction or class of transactions which comply with section
one thousand five hundred five or article sixteen of this chapter.
(f) (1) No insurer doing business  in  this  state  shall,  except  as
provided in subsection (h) hereof, make any loan to any of its directors
or  officers,  directly  or indirectly, or through its subsidiaries; nor
shall any such director or officer accept  any  such  loan  directly  or
indirectly.
(2)  No such insurer shall make any advance to any of its directors or
officers for future services to be performed beyond a period of one year
from the date of making such advance.
(g) No insurer doing business in this  state,  nor  any  affiliate  or
subsidiary thereof, shall directly or indirectly guarantee the financial
obligation  of  any  director  or  officer of such insurer, affiliate or
subsidiary, and any such guaranty shall be  void.  In  this  subsection,
"guarantee"  shall  not include the making of a contract of insurance of
the kind specified in paragraphs thirteen, fourteen, fifteen or  sixteen
of  subsection  (a) of section one thousand one hundred thirteen of this
chapter.
(h) Nothing contained in this chapter shall prohibit a life  insurance
company  from  making  a  policy  loan upon its policy or contract in an
amount not exceeding the net reserve value of the policy or contract, or
any insurer from:
(1) Acquiring (i) in the case of an insurer making  investments  under
the authority of section one thousand four hundred four of this article,
such real property serving as the residence of a non-director officer as
may be acquired under the provisions of paragraph five of subsection (a)
of  section  one  thousand four hundred four of this article, or (ii) in
the case of an insurer making investments under the authority of section
one thousand four hundred five of this article, real property serving as
the residence  of  a  non-director  officer,  under  the  provisions  of
paragraph  four  of  subsection (a) of section one thousand four hundred
five of this article and with the approval of the superintendent in  the
case  of  domestic  insurers,  in  connection with the relocation by the
insurer of the place  of  employment  of  such  officer  (including  any
relocation  in  connection with initial employment), at a purchase price
not exceeding the lesser of the value of such property as determined  by
an  independent  appraiser  for  the  purpose of such acquisition or one
hundred  fifty  thousand  dollars,  provided  such  officer   has   made
reasonable efforts otherwise to dispose of such property for a period of
not less than one month immediately prior to such acquisition; or
(2)  Making  a loan to a non-director officer secured by real property
owned by such officer and improved with a one-family dwelling, which  is
to  serve  as  such  officer's  residence,  provided  that (i) such loan
qualifies under paragraph four of subsection (a) of section one thousand
four hundred four (in the case of  an  insurer  that  makes  investments
under  the  authority  of  section  one  thousand  four hundred four) or
paragraph three of subsection (a) of section one thousand  four  hundred
five  (in  the  case  of  an  insurer  that  makes investments under the
authority of section one thousand four hundred five)  of  this  article,
(ii)  such loan is made in connection with the relocation by the insurer

of the place of employment of such officer (including any relocation  in
connection with initial employment), and (iii) in the case of a domestic
insurer, such loan is approved by the superintendent.
For  the  purposes  of  paragraphs  one  and  two  of this subsection,
paragraphs four and five of subsection (a) of section one thousand  four
hundred  four and paragraphs three and four of subsection (a) of section
one thousand four hundred five of  this  article,  real  property  shall
include  a  condominium  unit  and  stock  of  a  cooperative  apartment
corporation, if such stock entitles the holder thereof to a  proprietary
lease of a one-family apartment serving as the residence of the officer.