2023 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.