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§4310
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§4310 . Investments; financial conditions; reserves.
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§4310(a)
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(a) Every corporation subject to the provisions of this article shall annually on or before the 1st day of March file in the office of the superintendent a statement, verified by at least 2 of the principal officers of such corporation, showing its condition on the 31st day of December then next preceding which shall be in such form and shall contain such matters as the superintendent shall prescribe.
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§4310(b)
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(b) No such corporation shall invest in any securities other than those permitted by the provisions of paragraph §1403(a)(2) of this chapter, except as provided in paragraphs (this sub§)(1) and (this sub§)(2) .
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§4310(b)(1)
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(1) A corporation (or 2 or more such corporations under common management) with admitted assets of greater than $80,000,000 and maintaining cash and reserve investments under subsection §1404(a) of this chapter (except paragraphs a8 and a10 such section) free from any lien or pledge, which, when valued in accordance with the provisions of this chapter, 7% or more of net premium income for the most recent 12 month period, as shown by its last sworn statement, annual or quarterly, on file with the superintendent, may also invest its funds or otherwise acquire or loan upon investments permitted under paragraphs §1404(a)(8) and §1404(a)(10) of this chapter without having to meet the otherwise applicable qualitative standards and the otherwise applicable aggregate limitation for such investments, provided that the aggregate amount of all such investments shall not exceed the lesser of surplus to policyholders or 15% of its admitted assets as shown by its last statement on file with the superintendent. Any corporation subject to the provisions of this article may jointly exercise control of a subsidiary by acting together with 1 or more other corporations, provided that such other corporations are either corporations subject to this article, foreign corporations which perform similar functions in other states or which belong to a national association comprised of similar corporations to which 1 or more corporations organized under this article also belong, or an institution controlled by any such foreign corporation. No such corporation shall hold a direct or indirect ownership interest in a risk retention group, as defined in article 59 of this chapter, other than in a risk retention group all of whose members are insurance companies. Notwithstanding any other provision of this chapter, including, but not limited to, §1407 of this chapter, any corporation subject to the provisions of this article may also invest, in the aggregate, not more than 3% of its admitted assets in obligations, shares or other securities (including certificates of deposit) issued by a parent corporation which is organized as a not for profit entity or a corporation which is an affiliate or will be an affiliate after direct or indirect acquisition by the parent corporation; provided, however, that the board of directors of the parent organization is constituted in accordance with the requirements of subsection §4301(k) of this article and, provided further however, that the investments of the corporation organized under this article in its own subsidiaries shall not be included in that limitation.
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§4310(b)(2)
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(2) A corporation maintaining cash and reserve investments under subsection §1404(a) of this chapter (except paragraphs a8 and a10 such section), free from any lien or pledge, which, when valued in accordance with the provisions of this chapter, equal 10% or more of net premium income for the most recent 12 month period, as shown by such corporation's last sworn statement, annual or quarterly, on file with the superintendent, may, in addition to the investments permitted by paragraph (this sub§)(1) ,invest up to 15% of its admitted assets in investments permitted under paragraph §1404(a)(2) of this chapter, provided however that such investments need not meet the otherwise applicable qualitative standards of such (¶ (2)) so long as all such investments are rated at BBB or higher (or the equivalent thereto) by a security rating agency recognized by the superintendent.
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§4310(c)
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(c) Any such corporation shall be deemed insolvent whenever it is presently or prospectively unable to fulfill its outstanding contracts and other liabilities and reserves.
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§4310(d)
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(d) Every such corporation shall maintain a reserve, to be designated as the statutory reserve fund, which shall from time to time during each calendar year be increased in an amount equal to at least 1 of the net premium income of such corporation during such whole calendar year, provided however, that:
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§4310(d)(1)
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(1) if such corporation reinsures part of its risk under any or all of its contracts by means of reinsurance approved by the superintendent as an appropriate substitute for the statutory reserve fund, then the required increase to the statutory reserve fund at the end of any calendar year shall be reduced by the amount of the premium paid by such corporation for such reinsurance during such calendar year or by 1 of the net premium income received by such corporation during such calendar year on its contracts so reinsured for the period during which they are so reinsured, whichever amount is the lesser;
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§4310(d)(2)
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(2) the statutory reserve fund at the end of any calendar year shall not exceed 12 and 0.5 of the net premium income of such calendar year;
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§4310(d)(3)
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(3) every such corporation shall, after the 1st full calendar year of doing business, accumulate and maintain a statutory reserve fund which shall from time to time during each calendar year be increased in an amount equal to at least 5 of the net premium income of such corporation during such whole calendar year until such reserve shall be at least equal to $50,000 and thereafter such reserve shall be accumulated and maintained in the manner prescribed.
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§4310(e)
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(e)
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§4310(e)(1)
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(1) Such statutory reserve fund may, after application therefor by the corporation and approval thereof by the superintendent, be reduced below the amount required to be maintained by (sub§ (d)) hereof, provided that no such reduction, except in the event of an epidemic or other catastrophe resulting in extraordinary hospital or medical utilization, shall, in the case of a corporation having a net premium income for the preceding calendar year of (i) less than $10,000,000 or (ii) $10,000,000 or more, reduce the statutory reserve below an amount equal to 75 and 50, respectively, of the amount required to be maintained by (sub§ (d)) hereof. Any reduction so authorized by the superintendent shall be restored within a period of not more than 3 years, or 6 years in the case of a corporation with a combined premium volume exceeding $2,000,000,000 annually as of December 31st, 1996, in accordance with a plan submitted by the corporation and approved by the superintendent which shall provide that such restoration shall be in addition to, and not in lieu of, the increase in the statutory reserve fund hereinabove required, which increase must be made in every year except the year in which a reduction in the statutory reserve fund is authorized by the superintendent.
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§4310(e)(2)
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(2) Any 6 year plan submitted by a corporation with a combined premium volume exceeding $2,000,000,000 annually as of December 31st, 1996 shall also be submitted to the special advisory review panel created pursuant to §4319 of this chapter. Within 60 days of its receipt of the 6 year plan, such panel shall issue a report to the superintendent analyzing the 6 year plan and recommending any changes it deems appropriate. The superintendent shall hold public hearings regarding any such proposed 6 year plan and the recommendations of the panel. The superintendent shall consider the findings of the panel and the public hearings held on the 6 year plan during his approval process for the 6 year plan.
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§4310(f)
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(f) No such corporation shall invest in any real property, except that any such corporation may, with the approval of the superintendent, invest in such real property as it may reasonably expect will be required for its principal office and the principal office or offices of any other corporation organized under this article which is affiliated with and which shares such principal office or offices with such corporation, or for such purposes as shall be requisite for the convenient accommodation in the transaction of the business of such corporations, but in no event in excess of the aggregate of 8 of the net premium income of such corporations and 5 of the receipts from any governmental agency for which either of such corporations acts as fiscal intermediary during the 12 full months immediately preceding the granting of such approval.
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§4310(g)
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(g) A health service corporation, in addition to the investment in real estate provided in subsection (this §)(f) ,may, with the approval of the superintendent, purchase an interest in real estate for the purpose of constructing a hospital or other health facility or center thereon (in accordance with the requirements of chapter 795 of the laws of 1900 5), or may purchase an existing hospital or facility for the purpose providing health services or may make loans to a corporation or corporations under its control for the purposes heretofore described, or for the purpose organizing, managing or promoting a health main10ance organization, as such term is defined in article 44 of the public health law primarily for the benefit of persons covered under contracts issued by such corporations, but in no event in excess of an amount equal to 10 of its annual net premium income during the 12 full months immediately preceding the granting of such approval. A health service corporation may make expenditures and incur liabilities for the purchase of real estate or for loans in excess of sums provided for in (sub§ (f)) hereof and (this sub§) as permitted by the superintendent pursuant to paragraph §4301(e)(5) of this article. A health service corporation, with the approval of the superintendent of insurance, also may enter into agreements for the leasing of hospital facilities.
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§4310(h)
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(h) Notwithstanding any other provisions of this chapter, and in addition to the provisions for the investment of funds and for the purchase of real estate as provided for in this article with the approval of the superintendent, a health service corporation may, with the approval of the superintendent, expend sums including loans to a corporation or corporations under its control to implement the program described herein for the amortization of capital costs for the purchase or construction of facilities in its operations, including a hospital or medical service center, and for the implementation of its program, but not in excess of an amount equal to 5 percentum of its net premium income during the 12 full months immediately preceding the granting of such approval.
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§4310(i)
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(i) If a loan is made with the approval of the superintendent, to a corporation under the control of a health service corporation, it shall be made on condition that the superintendent may conduct an examination pursuant to §309 and §310 of this chapter into the affairs of such corporation.
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§4310(j)
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(j) Every corporation subject to the provisions of this article, including a health service corporation or any of its instrumentalities or any hospital, facility or center directly operated by any such health service corporation, shall be exempt from every state, county, municipal and school tax.
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§4310(k)
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(k) Notwithstanding the provisions of any other law, a corporation subject to the provisions of this article which has admitted assets greater than $500,000,000 on its last annual report filed with the superintendent may enter into a transaction for an interest rate swap in an amount not to exceed the amount of debt on the books of the corporation on the effective date of (this sub§) that was incurred within 12 months of the construction of the corporation's home office, provided that such interest rate swap shall provide an initial new interest rate that is at least 200 basis points lower than the interest rate on the existing debt. The counterparty to this transaction shall meet the qualifications a qualified counterparty as provided in (sub¶ (A)) 3 of subsection §1410(f) of this chapter except that, notwithstanding clause Civ such paragraph ,in the event that such counterparty is a qualified bank, such bank shall be rated A or better (or the equivalent thereto) by 2 independent nationally recognized rating organizations. Any such transaction shall be approved by the corporation's board of directors prior to its implementation.
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§4310(l)
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(l) Notwithstanding any other provisions of this chapter to the contrary, in determining the financial condition of corporations subject to the provisions of this article and not-for-profit corporations authorized pursuant to article 44 of the public health law, the department shall include real estate, including buildings, property, capital improvements and appurtenances owned and held that are utilized in the ordinary course of the business of such entities, provided that such real estate may be valued by the corporation at either its current amortized book value or at 90% of its current market value, as determined by an independent appraisal undertaken annually and in accordance with regulations promulgated by the superintendent. Source Data downloaded: 2009-04-09 15: 12: 49; Processed: 2009-05-08 15: 36: 09
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