New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter VI - AUTHORIZED INVESTMENTS › Part 176 - Investments In "medium Grade" And "lower Grade" Obligations By Domestic Life Insurers › Section 176.4 - Provisions

Current through Register Vol. 46, No. 28, July 10, 2024
(a) Without the
				prior approval of the superintendent, no domestic life insurer shall acquire,
				directly or indirectly, any medium grade or lower grade obligation of any
				institution, if, after giving effect to any such acquisition, the aggregate
				amount of all medium grade or lower grade obligations then held by the domestic
				life insurer would exceed 20 percent of its admitted assets.
(b) Without the prior approval of the
				superintendent, no domestic life insurer shall acquire, directly or indirectly,
				any lower grade obligation of any institution if, after giving effect to any
				such acquisition, the aggregate amount of all lower grade obligations then held
				by the domestic life insurer would exceed 10 percent of its admitted assets
				provided that: no more than three percent of its admitted assets consists of
				obligations rated five or six by the Securities Valuation Office; and no more
				than one percent of its admitted assets consists of obligations rated six by
				the Securities Valuation Office.
(c) Attaining or exceeding the limit of any
				one category referred to in section 176.4(b)  of this Part shall not preclude an
				insurer from acquiring obligations in other categories subject to the specific
				and multi-category limits. Nothing contained in this Part shall prohibit a
				domestic life insurer from acquiring any obligation which it has committed to
				acquire if the insurer would have been permitted to acquire that obligation
				pursuant to this Part on the date on which such insurer committed to purchase
				that obligation. Notwithstanding the foregoing, a domestic life insurer may
				acquire an obligation of an institution in which such insurer already has one
				or more investments, if such obligation is acquired in order to protect an
				investment previously made in the obligations of such institution: provided
				that all such acquired obligations shall not exceed one-half of one percent of
				the insurer's admitted assets.
(d)
				In determining approval, the superintendent, in addition to other requirements
				of law relating to such acquisitions or investments, statutory or otherwise,
				shall review the standard of care of the directors and officers of the domestic
				life insurer in making such investments or acquisitions. Directors and officers
				of domestic life insurers shall perform their duties, in making investments, in
				good faith and with the degree of care that an ordinarily prudent individual in
				a like position would use under similar circumstances.
(e) The board of directors of any domestic
				life insurance company which acquires or invests in, directly or indirectly,
				medium grade or lower grade obligations of any institution, shall adopt a
				written plan for the making of such investments. Such plan, in addition to
				guidelines with respect to the quality of the issues invested in, shall contain
				diversification standards, including but not limited to standards for issuer,
				industry, duration, liquidity and geographic location.
(f) Except as provided in section 4240 (a)(2)(A)  of the
				Insurance Law, this Part shall not apply to investments made for separate
				accounts.
(g) This Part shall take
				effect on February 21, 1991, except that subdivisions (b) and (c) shall take
				effect on January 1, 1992.