Kentucky Statutes 304.7-405 – Rated credit instruments
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Subject to the limitations of subsection (6) of this section, an insurer may acquire rated credit instruments:
(1) Subject to the limitations of KRS § 304.7-403(2), but not the limitations of KRS
304.7-403(1), an insurer may acquire rated credit instruments issued, assumed, guaranteed, or insured by:
(a) The United States; or
(b) A government sponsored enterprise of the United States, if the instruments of the government sponsored enterprise are assumed, guaranteed, or insured by the United States, or are otherwise backed or supported by the full faith and credit of the United States.
(2) (a) Subject to the limitations of KRS § 304.7-403(2), but not to the limitations of KRS § 304.7-403(1), an insurer may acquire rated credit instruments issued, assumed, guaranteed, or insured by:
1. Canada; or
2. A government sponsored enterprise of Canada, if the instruments of the government sponsored enterprise are assumed, guaranteed, or insured by Canada or are otherwise backed or supported by the full faith and credit of Canada;
(b) However, an insurer shall not acquire an instrument under this subsection if, as a result of and after giving effect to the investment, the aggregate amount of investments then held by the insurer under this subsection would exceed forty percent (40%) of its admitted assets.
(3) (a) Subject to the limitations of KRS § 304.7-403(2), but not to the limitations of KRS § 304.7-403(1), an insurer may acquire rated credit instruments, excluding asset-backed securities:
1. Issued by a government money market mutual fund, a class one money market mutual fund, or a class one bond mutual fund;
2. Issued, assumed, guaranteed, or insured by a government sponsored enterprise of the United States other than those eligible under subsection (1) of this section;
3. Issued, assumed, guaranteed, or insured by a state, if the instruments are general obligations of the state; or
4. Issued by a multilateral development bank;
(b) However, an insurer shall not acquire an instrument of any one (1) fund, any one (1) enterprise or entity, or any one (1) state under this subsection if, as a result of and after giving effect to the investment, the aggregate amount of investments then held in any one (1) fund, enterprise, entity, or state under this subsection would exceed ten percent (10%) of its admitted assets.
(4) Subject to the limitations of KRS § 304.7-403, an insurer may acquire preferred stocks that are not foreign investments and that meet the requirements of rated credit instruments if, as a result of and after giving effect to the investment;
(a) The aggregate amount of preferred stocks then held by the insurer under this subsection does not exceed twenty percent (20%) of its admitted assets; and
(b) The aggregate amount of preferred stocks then held by the insurer under this subsection which are not sinking fund stocks or rated P1 or P2 by the SVO does not exceed ten percent (10%) of its admitted assets.
(5) Subject to the limitations of KRS § 304.7-403, in addition to those investments eligible under subsections (1) to (4) of this section, an insurer may acquire rated credit instruments that are not foreign investments.
(6) An insurer shall not acquire special rated credit instruments under this section if, as a result of and after giving effect to the investment, the aggregate amount of special rated credit instruments then held by the insurer would exceed five percent (5%) of its admitted assets.
Effective: July 14, 2000
History: Created 2000 Ky. Acts ch. 388, sec. 9, effective July 14, 2000.
(1) Subject to the limitations of KRS § 304.7-403(2), but not the limitations of KRS
Terms Used In Kentucky Statutes 304.7-405
- Admitted assets: means assets permitted to be reported as admitted assets in accordance with Subtitle 6 of KRS Chapter 304 on the statutory financial statement of the insurer most recently required to be filed with the commissioner, but excluding assets of separate accounts. See Kentucky Statutes 304.7-012
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Class one bond mutual fund: means a mutual fund that at all times qualifies for investment using the bond class one reserve factor under the Purposes and Procedures of the Securities Valuation Office, or any successor publication. See Kentucky Statutes 304.7-012
- Class one money market mutual fund: means a money market mutual fund that at all times qualifies for investment using the bond class one reserve factor under the Purposes and Procedures of the Securities Valuation Office, or any successor publication. See Kentucky Statutes 304.7-012
- Foreign: when applied to a corporation, partnership, limited partnership, business trust, statutory trust, or limited liability company, includes all those incorporated or formed by authority of any other state. See Kentucky Statutes 446.010
- Government money market mutual fund: means a money market mutual fund that at all times:
(a) Invests only in obligations issued, guaranteed, or insured by the federal government of the United States or collateralized repurchase agreements composed of these obligations. See Kentucky Statutes 304.7-012 - Government sponsored enterprise: means a: (a) Governmental agency. See Kentucky Statutes 304.7-012
- Multilateral development bank: means an international development organization
of which the United States is a member. See Kentucky Statutes 304.7-012 - State: means a state, territory, or possession of the United States, the District of
Columbia, or the Commonwealth of Puerto Rico. See Kentucky Statutes 304.7-012 - SVO: means the Securities Valuation Office of the NAIC or any successor office established by the NAIC. See Kentucky Statutes 304.7-012
304.7-403(1), an insurer may acquire rated credit instruments issued, assumed, guaranteed, or insured by:
(a) The United States; or
(b) A government sponsored enterprise of the United States, if the instruments of the government sponsored enterprise are assumed, guaranteed, or insured by the United States, or are otherwise backed or supported by the full faith and credit of the United States.
(2) (a) Subject to the limitations of KRS § 304.7-403(2), but not to the limitations of KRS § 304.7-403(1), an insurer may acquire rated credit instruments issued, assumed, guaranteed, or insured by:
1. Canada; or
2. A government sponsored enterprise of Canada, if the instruments of the government sponsored enterprise are assumed, guaranteed, or insured by Canada or are otherwise backed or supported by the full faith and credit of Canada;
(b) However, an insurer shall not acquire an instrument under this subsection if, as a result of and after giving effect to the investment, the aggregate amount of investments then held by the insurer under this subsection would exceed forty percent (40%) of its admitted assets.
(3) (a) Subject to the limitations of KRS § 304.7-403(2), but not to the limitations of KRS § 304.7-403(1), an insurer may acquire rated credit instruments, excluding asset-backed securities:
1. Issued by a government money market mutual fund, a class one money market mutual fund, or a class one bond mutual fund;
2. Issued, assumed, guaranteed, or insured by a government sponsored enterprise of the United States other than those eligible under subsection (1) of this section;
3. Issued, assumed, guaranteed, or insured by a state, if the instruments are general obligations of the state; or
4. Issued by a multilateral development bank;
(b) However, an insurer shall not acquire an instrument of any one (1) fund, any one (1) enterprise or entity, or any one (1) state under this subsection if, as a result of and after giving effect to the investment, the aggregate amount of investments then held in any one (1) fund, enterprise, entity, or state under this subsection would exceed ten percent (10%) of its admitted assets.
(4) Subject to the limitations of KRS § 304.7-403, an insurer may acquire preferred stocks that are not foreign investments and that meet the requirements of rated credit instruments if, as a result of and after giving effect to the investment;
(a) The aggregate amount of preferred stocks then held by the insurer under this subsection does not exceed twenty percent (20%) of its admitted assets; and
(b) The aggregate amount of preferred stocks then held by the insurer under this subsection which are not sinking fund stocks or rated P1 or P2 by the SVO does not exceed ten percent (10%) of its admitted assets.
(5) Subject to the limitations of KRS § 304.7-403, in addition to those investments eligible under subsections (1) to (4) of this section, an insurer may acquire rated credit instruments that are not foreign investments.
(6) An insurer shall not acquire special rated credit instruments under this section if, as a result of and after giving effect to the investment, the aggregate amount of special rated credit instruments then held by the insurer would exceed five percent (5%) of its admitted assets.
Effective: July 14, 2000
History: Created 2000 Ky. Acts ch. 388, sec. 9, effective July 14, 2000.