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§1403

§1403 . Reserve and other investments; certain requirements.

§1403(a)

(a) If the requirements of §1402 of this article are met:

§1403(a)(1)

(1) any domestic life insurance company may invest its funds in, or otherwise acquire, or loan upon, only the types of investments specified in §1402 , this section, section1405 , §1406 , §1410 , §4240 and article 17 of this chapter, subject to the limitations therein contained. The provisions of §1404 of this article shall not have any application to investments of life insurance companies, except to the extent provided in paragraph §1402(b)(4) of this article;

§1403(a)(2)

(2) any domestic corporation subject to article 43 or 64 of this chapter and any domestic fraternal benefit society subject to article 45 of this chapter may invest its funds in, or otherwise acquire, or loan upon, only the types of investments specified in §1402 , this section and section1404 of this article, except as may be modified by said article 43 or 64 of this chapter as to corporations organized thereunder or by article 45 of this chapter as to societies organized thereunder. Any such corporation subject to article 43 or any such society governed by subsection §4529(a) of this chapter may also invest in, or otherwise acquire, subsidiaries to the extent permitted by subsection §1701(b) of this chapter. Any such fraternal benefit society may also make policy loans under §1406 of this article.

§1403(b)

(b) A domestic charitable annuity society, the investments of which are subject to the provisions of §1110 of this chapter, may invest such of its assets (the investment of which is controlled by §1100 ten) in, or otherwise acquire, or loan upon, only the types securities specified in §1402 , this section and section1404 of this article. A retirement system subject to the provisions of article 46 of this chapter may invest its funds only as provided in article 46 of this chapter. In addition, a retirement system subject to article 46 may acquire subsidiaries under article 17 of this chapter and may establish separate accounts under §4240 of this chapter, in each case to the extent permitted by article 46 of this chapter.

§1403(c)

(c) If the requirements of §1402 of this article are met, any domestic insurer, other than an insurer subject to subsection (this §)(a) or (this §)(b) ,may, except as set forth below, invest its funds in, or otherwise acquire, or loan upon, only the types of investments specified in such section , this section and subsection §1404(a) of this article (except paragraphs a8 and a10 such section); provided that any such domestic insurer may also invest its funds in, or otherwise acquire or loan upon investments permitted under §1407 (including investments of the classes described in paragraphs §1400(a)(8) and §1400(a)(10) four), §1408 of this article and article 16 of this chapter, so long as it maintains cash, investments required by §1402 of this article and reserve investments under subsection §1404(a) of this article, free from any lien or pledge, which, when valued in accordance with the provisions of this chapter, shall at least equal 50% of the aggregate amount of its unearned premium, loss and loss adjustment expense reserves as shown by its last sworn statement, annual or quarterly, on file with the superintendent. If an insurer, other than an accident and health insurance company, maintains cash, investments required by §1402 of this article and reserve investments under subsection §1404(a) of this article, free from any lien or pledge, which, when valued in accordance with the provisions of this chapter, shall at least equal the aggregate of 70% of its loss and loss adjustment expense reserves and 50% of its unearned premium reserves as shown by its last sworn statement, annual or quarterly, on file with the superintendent, then such insurer, other than an accident and health insurance company, may in addition enter into the types of transactions set forth in §1410 of this article, subject to the limitations set forth in such section . The term "lien or pledge" as used in (this sub§) shall not include any deposit of securities or cash with any government, nor trusteed assets, held in trust for the benefit or protection of all or any class of the policyholders, or policyholders and creditors, of such insurer.

§1403(d)

(d)

§1403(d)(1)

(1) Except for investments referred to in subsection (this §)(e) ,investments that are neither interest bearing nor income paying shall be purchased or acquired only under, and to the extent permitted by, subsection §1404(b) of this article (in the case of insurers that make investments under §1404 of this article other than insurers making investments under the authority of subsection thisc section), paragraph §1405(a)(8) of this article (in the case of insurers that make investments under §1400 five) or §1407 of this article (in the case of insurers that make investments under the authority of subsection thisc section), however, a default in interest or income occurring subsequent to the purchase or other acquisition of an investment shall not affect the allowance thereof as an admitted asset at the market value thereof.

§1403(d)(2)

(2)

§1403(d)(2)(A)

(A) Notwithstanding any other provision of this article, a domestic insurer making investments pursuant to paragraph (this §)(a)(2) ,a domestic charitable annuity society and a retirement system making investments pursuant to subsection (this §),(b) and a domestic accident and health insurer making investments pursuant to subsection (this §)(c) may sell call options on securities, provided that:

§1403(d)(2)(A)(i)

(i) such options are traded on a securities exchange registered under the laws of the United States, and

§1403(d)(2)(A)(ii)

(ii) the insurer holds, or can immediately acquire through the exercise of warrants or conversion rights already owned at a contractually specified price, the underlying securities during the entire period the option is outstanding.

§1403(d)(2)(B)

(B) An insurer selling call options on securities pursuant to subparagraph (this ¶)(A) may purchase any such option to offset an outstanding option previously sold by the insurer for the same kind and amount of securities.

§1403(e)

(e)

§1403(e)(1)

(1) Nothing contained in this chapter shall prohibit the acquisition by any insurer of other securities or property (i) received as a dividend or pursuant to a judicial or lawful non-judicial plan of reorganization or dissolution or pursuant to a lawful and bona fide agreement of bulk reinsurance or consolidation; or (ii) received through the exercise of rights of conversion, stock warrants or stock options acquired by it in accordance with this subsection or section1404 , §1405 , §1407 or §1410 of this article. Nor shall anything in this chapter prohibit acquisition of (1) an investment permitted under §1404 , §1405 , §1407 or §1410 of this article because such investment is convertible into other securities in which such insurer is not permitted to invest under this chapter, or because such insurer receives in connection with such investment stock warrants, whether detachable or non-detachable, stock options, stock, property interests or other assets of any kind or (2) securities or property (real or personal) or any interest therein received in satisfaction of a debt previously owing to such insurer. If any securities or other property received by any insurer in accordance with the 1st sentence of (this ¶) shall consist in whole or in part of shares of any institution or of obligations or other property not meeting the requirements specified in §1404 (in the case of insurers making investments under the authority of §1400 four) or §1405 (in the case of insurers making investments under the authority of §1400 five) this article, then any such shares any such obligations or property so received shall be disposed within 5 years from the time of acquisition or before the expiration of such further period or periods of time as may be prescribed in writing by the superintendent, unless at any time after such acquisition such shares, obligations or property shall have met such requirements and the insurer has notified the superintendent thereof.

§1403(e)(2)

(2) Except as otherwise specifically provided in this chapter, investments in subsidiaries are not subject to the provisions of this section, section1404 (except paragraph (sub§ (a))(9) thereof) or 1405 of this article.

§1403(f)

(f)

§1403(f)(1)

(1) Subsidiaries of domestic life insurance companies, whether acquired under subsection this section, section1405e , §4240 , or otherwise, shall be subject to the provisions of article 17 of this chapter to the extent therein provided.

§1403(f)(2)

(2) Subsidiaries of domestic corporations subject to article 43 of this chapter and of domestic retirement systems, whether acquired under subsection this section, section1404e , §4240 (in the case of retirement systems), or otherwise, shall be subject to the provisions of article 17 of this chapter to the extent therein provided.

§1403(g)

(g) (this §) does not prohibit any domestic insurance company from acquiring shares under article 71 of this chapter or any domestic life insurance company from acquiring shares of its own capital stock pursuant to §7302 of this chapter.

§1403(h)

(h) With respect to all transactions between a domestic insurer and any person, 5% or more of whose voting securities are held, directly or indirectly, by such insurer, but which is not a subsidiary, the insurer shall maintain books, accounts and records that disclose clearly and accurately the nature and detail of such transactions.

§1403(i)

(i)

§1403(i)(1)

(1) Except as provided in subparagraph §4240(a)(2)(A) of this chapter, investments made for separate accounts under the provisions of §4240 of this chapter shall be disregarded, and shall be excluded from admitted assets, in applying the quantitative investment limitations contained in this chapter to other investments.

§1403(i)(2)

(2) Except as provided in subparagraph §4240(a)(a)(2)(A) of this chapter, the restrictions, limitations and other provisions relating to investments specified in this chapter shall not apply to investments made for separate accounts under the provisions of §4240 of this chapter.
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