A. General 5% diversification.
        (1) Except as otherwise specified in this Article, an
    
insurer shall not acquire directly or indirectly through an investment subsidiary an investment under this Article if, as a result of and after giving effect to the investment, the insurer would hold more than 5% of its admitted assets in investments of all kinds issued, assumed, accepted, guaranteed, or insured by a single person.
        (2) This 5% limitation shall not apply to the
    
aggregate amounts insured by a single financial guaranty insurer with the highest generic rating issued by a nationally recognized statistical rating organization.
        (3) Asset-backed securities shall not be subject to
    
the limitations of paragraph (1) of this subsection, however, except as permitted by subsection A(4) of this Section, an insurer shall not acquire an asset-backed security if, as a result of and after giving effect to the investment, the aggregate amount of asset-backed securities secured by or evidencing an interest in a single asset or single pool of assets held by a trust or other business entity, then held by the insurer would exceed 5% of its admitted assets.
        (4) A company’s investments in mortgage related
    
securities, as defined by the Secondary Mortgage Market Enhancement Act of 1984 (United States Public Law 98-440, 12 U.S.C. § 24, 1451, 1454 et seq.), that are backed by any single pool of mortgages and made pursuant to the authority of that Act, shall not exceed 5% of its admitted assets.
    B. Medium and lower grade investments.
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Terms Used In Illinois Compiled Statutes 215 ILCS 5/126.23

  • Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Public law: A public bill or joint resolution that has passed both chambers and been enacted into law. Public laws have general applicability nationwide.

        (1) An insurer shall not acquire, directly or
    
indirectly through an investment subsidiary, an investment under Sections 126.24, 126.27, and 126.30 or counterparty exposure under Section 126.31D if, as a result of and after giving effect to the investment:
            (a) The aggregate amount of all medium and lower
        
grade investments then held by the insurer would exceed 20% of its admitted assets;
            (b) The aggregate amount of lower grade
        
investments then held by the insurer would exceed 10% of its admitted assets;
            (c) The aggregate amount of investments rated 5
        
or 6 by the SVO then held by the insurer would exceed 5% of its admitted assets;
            (d) The aggregate amount of investments rated 6
        
by the SVO then held by the insurer would exceed 1% of its admitted assets; or
            (e) The aggregate amount of lower grade
        
investments then held by the insurer that receive as cash income less than the equivalent yield for Treasury issues with a comparative average life, would exceed 1% of its admitted assets.
        (2) An insurer shall not acquire, directly or
    
indirectly through an investment subsidiary, an investment under Sections 126.24, 126.27, and 126.30 or counterparty exposure under Section 126.31D if, as a result of and after giving effect to the investment:
            (a) The aggregate amount of medium and lower
        
grade investments issued, assumed, accepted, guaranteed, or insured by any one person or, as to asset-backed securities secured by or evidencing an interest in a single asset or pool of assets, then held by the insurer would exceed 1% of its admitted assets; or
            (b) The aggregate amount of lower grade
        
investments issued, assumed, accepted, guaranteed, or insured by any one person or, as to asset-backed securities secured by or evidencing an interest in a single asset or pool of assets, then held by the insurer would exceed 0.5% of its admitted assets.
        (3) If an insurer attains or exceeds the limit of any
    
one rating category referred to in this subsection, the insurer shall not thereby be precluded from acquiring investments in other rating categories subject to the specific and multi-category limits applicable to those investments.
    C. Canadian investments.
            (1) An insurer shall not acquire, directly or
        
indirectly through an investment subsidiary, any Canadian investments authorized by this Article, if as a result of and after giving effect to the investment, the aggregate amount of these investments then held by the insurer would exceed 40% of its admitted assets, or if the aggregate amount of Canadian investments not acquired under Section 126.24B then held by the insurer would exceed 25% of its admitted assets.
            (2) However, as to an insurer that is authorized
        
to do business in Canada or that has outstanding insurance, annuity or reinsurance contracts on lives or risks resident or located in Canada and denominated in Canadian currency, the limitations of paragraph (1) of this subsection shall be increased by the greater of:
                (a) The amount the insurer is required by
            
Canadian law to invest in Canada or to be denominated in Canadian currency; or
                (b) 125% of the amount of its reserves and
            
other obligations under contracts on risks resident or located in Canada.
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