2023 New York Laws › ISC - Insurance › Article 14 - Investments › 1407 - Non-Reserve and Prohibited Investments for Property/casualty and Certain Other Insurers.

§  1407.  Non-reserve and prohibited investments for property/casualty
and certain other insurers. (a) Any insurer that makes investments under
the authority of subsection (c) of section  one  thousand  four  hundred
three  of this article and meets the requirements of such subsection (c)
and section one thousand four hundred two of this article may invest in,
or otherwise acquire or loan upon, directly or indirectly,  any  of  the
types of investments described in section one thousand four hundred four
of  this  article, but without having to meet the applicable qualitative
standards or quantitative limitations which are set forth in  subsection
(a)  of  section  one thousand four hundred four of this article, except
the following prohibited investments:
(1) Obligations, shares or other securities of any  institution  which
is insolvent at the time of the investment.
(2)  Obligations secured by real property or real property or interest
therein, which are  either  not  eligible  under  or  which  exceed  the
investment limitations under paragraph four or five of subsection (a) of
section one thousand four hundred four of this article.
(3)  Shares  of  stock  of the investing insurer, except to the extent
permitted by the provisions of subsection (d) of  section  one  thousand
four hundred eleven of this article.
(4) Obligations, shares or other securities (including certificates of
deposit)  issued  by  a  parent corporation or a corporation which is an
affiliate or will be an affiliate after direct or  indirect  acquisition
by the insurer. Nothing in this paragraph shall be deemed to prevent any
investment in obligations, shares or other securities of:
(A) another insurance corporation within the limitations prescribed in
section one thousand four hundred eight of this article,
(B)  a  subsidiary organized to engage exclusively in the acquisition,
ownership  or  management  of  investments  of  the  type  described  in
paragraphs  one,  two, three, six, seven, eight or ten of subsection (a)
of section one thousand four hundred four of this article, provided such
subsidiary is wholly-owned by two or more insurance companies  domiciled
in the United States who are members of the same holding company system,
as such term is defined in article fifteen of this chapter. Furthermore,
each  individual  insurer's  share  of  the  net investment made by such
subsidiary shall be:
(i) computed in proportion to its equity interests in such subsidiary,
and
(ii) included when computing any applicable investment limitations, or
(C) subsidiaries subject to and within the limitations  prescribed  in
article sixteen of this chapter.
(5)  Investments  made  under  the  leeway  provision, as set forth in
subsection (b) of  section  one  thousand  four  hundred  four  of  this
article,  if  the  aggregate  amount  of  such investments exceed twelve
percent of the insurer's invested assets as shown by its last  statement
on  file  with  the  superintendent;  or  if  the  aggregate  amount  of
investments that are neither interest-bearing nor  income-paying  exceed
three  percent  of  the  insurer's  invested assets as shown by its last
statement on file with the superintendent.
(6) Obligations, shares or other securities issued by  a  corporation,
if  a  majority  of  the  shares  having  voting  powers of such issuing
corporation is owned directly or indirectly by or for the benefit of one
or more officers or directors of the insurer.
(7)  Foreign  investments,  meaning  obligations,  shares   or   other
securities  of  any  person  or governmental or business unit of or in a
foreign country or of any person or business unit of or in a  possession
of  the  United  States,  except  such as conform substantially with the
limitations imposed by this section upon like domestic investments;  but

the  aggregate  amount  of  foreign investments including obligations of
American institutions payable outside of  the  United  States  and  cash
deposited in a bank, trust company or thrift institution located outside
of  the  United  States  held  at  any  time  by such insurer under this
paragraph and under paragraph six  of  subsection  (a)  of  section  one
thousand four hundred four of this article shall not exceed the greatest
of  (i)  twelve percent of the insurer's admitted assets as shown by its
last statement on file with the superintendent, (ii) fifteen percent  of
the  insurer's  invested  assets  as shown by its last statement on file
with the superintendent, or (iii) one and one-half times the  amount  of
its  reserves  and other obligations under its insurance and reinsurance
contracts on risks resident or located in  such  foreign  countries  and
subdivisions  thereof.  An investment in the shares of an alien insurer,
which results in the control of such insurer by the  investing  insurer,
shall  not  be  included  when  calculating  the  limitations under this
paragraph,  but  such  an  investment  shall  only  be  subject  to  the
limitations of section one thousand four hundred eight of this article.
(8) 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,  in  which
case  any  investment in such a risk retention group shall be subject to
the limitations prescribed in section one thousand four hundred eight of
this article.
(9) Acquiring any interest in an  investment  through  a  partnership,
other  than  an  interest  acquired  as  a  limited partner in a limited
partnership.
(10) Any investment found by the superintendent to be  against  public
policy or designed to evade any prohibition of this chapter.
(b)  This  section  shall not prohibit any such insurer from accepting
securities, otherwise ineligible, which may be distributed  pursuant  to
any   judicial   or   lawful  non-judicial  plan  of  reorganization  or
dissolution.
(c) Any investment pursuant to the provisions of this section shall be
subject to other requirements  of  law  (statutory  or  otherwise)  that
affect  the  standard of care of directors and officers of corporations,
and in making investments under this section the insurer's 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.