Kentucky Statutes 304.7-363 – Prohibited actions of insurers
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An insurer shall not, directly or indirectly:
(1) Invest in an obligation or security or make a guarantee for the benefit of or in favor of an officer or director of the insurer, except as provided in KRS § 304.7-365;
(2) Invest in an obligation or security, make a guarantee for the benefit of or in favor of, or make other investments in a business entity of which ten percent (10%) or more of the voting securities or equity interests are owned directly or indirectly by or for the benefit of one (1) or more officers or directors of the insurer, except as authorized in KRS § 304.37-110, or provided in KRS § 304.7-365;
(3) Engage on its own behalf or through one (1) or more affiliates in a transaction or series of transactions designed to evade the prohibitions of this subtitle;
(4) (a) Invest in a partnership as a general partner, except that an insurer may make an investment as a general partner:
1. If all other partners in the partnership are subsidiaries of the insurer;
2. For the purpose of:
a. Meeting cash calls committed to prior to July 14, 2000;
b. Completing those specific projects or activities of the partnership in which the insurer was a general partner as of July 14, 2000 that had been undertaken as of that date; or
c. Making capital improvements to property owned by the partnership on July 14, 2000 if the insurer was a general partner as of that date; or
3. In accordance with KRS § 304.7-014(3).
(b) This subsection shall not prohibit a subsidiary or other affiliate of the insurer from becoming a general partner; or
(5) Invest in or lend its funds upon the security of shares of its own stock, except that an insurer may acquire shares of its own stock for the following purposes, but the shares shall not be admitted assets of the insurer:
(a) Conversion of a stock insurer into a mutual or reciprocal insurer or a mutual or reciprocal insurer into a stock insurer;
(b) Issuance to the insurer’s officers, employees, or agents in connection with a plan approved by the commissioner for converting a publicly held insurer into a privately held insurer or in connection with other stock option and employee benefit plans; or
(c) In accordance with any other plan approved by the commissioner.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1013, effective July 15, 2010. — Created
2000 Ky. Acts ch. 388, sec. 4, effective July 14, 2000.
(1) Invest in an obligation or security or make a guarantee for the benefit of or in favor of an officer or director of the insurer, except as provided in KRS § 304.7-365;
Terms Used In Kentucky Statutes 304.7-363
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Business entity: includes a sole proprietorship, corporation, limited liability company, association, partnership, joint stock company, joint venture, mutual fund, trust, joint tenancy, or other similar form of business organization, whether organized for profit or not-for-profit. See Kentucky Statutes 304.7-012
- directly: when used in connection with an obligation, means that the designated obligor is primarily liable on the instrument representing the obligation. See Kentucky Statutes 304.7-012
- Directors: when applied to corporations, includes managers or trustees. See Kentucky Statutes 446.010
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Option: means an agreement giving the buyer the right to buy or receive (a "call option"), sell or deliver (a "put option"), enter into, extend, terminate, or effect a cash settlement based on the actual or expected price level, performance or value of one (1) or more underlying interests. See Kentucky Statutes 304.7-012
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Partnership: includes both general and limited partnerships. See Kentucky Statutes 446.010
(2) Invest in an obligation or security, make a guarantee for the benefit of or in favor of, or make other investments in a business entity of which ten percent (10%) or more of the voting securities or equity interests are owned directly or indirectly by or for the benefit of one (1) or more officers or directors of the insurer, except as authorized in KRS § 304.37-110, or provided in KRS § 304.7-365;
(3) Engage on its own behalf or through one (1) or more affiliates in a transaction or series of transactions designed to evade the prohibitions of this subtitle;
(4) (a) Invest in a partnership as a general partner, except that an insurer may make an investment as a general partner:
1. If all other partners in the partnership are subsidiaries of the insurer;
2. For the purpose of:
a. Meeting cash calls committed to prior to July 14, 2000;
b. Completing those specific projects or activities of the partnership in which the insurer was a general partner as of July 14, 2000 that had been undertaken as of that date; or
c. Making capital improvements to property owned by the partnership on July 14, 2000 if the insurer was a general partner as of that date; or
3. In accordance with KRS § 304.7-014(3).
(b) This subsection shall not prohibit a subsidiary or other affiliate of the insurer from becoming a general partner; or
(5) Invest in or lend its funds upon the security of shares of its own stock, except that an insurer may acquire shares of its own stock for the following purposes, but the shares shall not be admitted assets of the insurer:
(a) Conversion of a stock insurer into a mutual or reciprocal insurer or a mutual or reciprocal insurer into a stock insurer;
(b) Issuance to the insurer’s officers, employees, or agents in connection with a plan approved by the commissioner for converting a publicly held insurer into a privately held insurer or in connection with other stock option and employee benefit plans; or
(c) In accordance with any other plan approved by the commissioner.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1013, effective July 15, 2010. — Created
2000 Ky. Acts ch. 388, sec. 4, effective July 14, 2000.