Louisiana Revised Statutes 22:601.12 – Foreign investments and foreign currency exposure
Terms Used In Louisiana Revised Statutes 22:601.12
- Admitted assets: means assets permitted to be reported as admitted assets on the statutory financial statement of the insurer most recently required to be filed with the commissioner, but excluding assets of separate accounts, the investments of which are not subject to the provisions of this Subpart. See Louisiana Revised Statutes 22:601.1
- 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.
- bonds: includes the following:
(a) United States Treasury securities. See Louisiana Revised Statutes 22:601.1
- 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 Louisiana Revised Statutes 22:601.1
- Contract: A legal written agreement that becomes binding when signed.
- Foreign currency: means a currency other than that of a domestic jurisdiction. See Louisiana Revised Statutes 22:601.1
- Foreign jurisdiction: means a jurisdiction other than a domestic jurisdiction. See Louisiana Revised Statutes 22:601.1
- Future: means an agreement, traded on a qualified exchange or qualified foreign exchange, to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance, or value of, one or more underlying interests. See Louisiana Revised Statutes 22:601.1
- Government sponsored enterprise: means any of the following:
(a) Governmental agency. See Louisiana Revised Statutes 22:601.1
- Hedging transaction: means a derivative transaction which is entered into and maintained to reduce one of the following:
(a) The risk of a change in the value, yield, price, cash flow, or quantity of assets or liabilities which the insurer has acquired or incurred or anticipates acquiring or incurring. See Louisiana Revised Statutes 22:601.1
- Investment practices: means transactions of the types described in Louisiana Revised Statutes 22:601.1
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- NAIC: means the National Association of Insurance Commissioners. See Louisiana Revised Statutes 22:601.1
- State: means a state, territory, or possession of the United States of America, the District of Columbia, or the Commonwealth of Puerto Rico. See Louisiana Revised Statutes 22:601.1
- SVO: means the Securities Valuation Office of the NAIC or any successor office established by the NAIC. See Louisiana Revised Statutes 22:601.1
A. An insurer may acquire obligations of the government of the Dominion of Canada or of Canadian provinces or municipalities, and in obligations of Canadian corporations as follows:
(1) Obligations issued, assumed, guaranteed, or insured by Canada, or 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. No insurer shall 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 of its admitted assets.
(2) No insurer shall acquire a Canadian investment authorized by this Subsection, if as a result of and after giving effect to the investment, the aggregate amount of Canadian investments not acquired under Paragraph (1) of this Subsection then held by the insurer would exceed twenty-five percent of its admitted assets.
B. In addition to the investments acquired under Subsection A of this Section, an insurer may acquire foreign investments, or engage in investment practices with persons of or in foreign jurisdictions, of substantially the same types as those that an insurer is permitted to acquire under this Subpart, other than of the type permitted pursuant to La. Rev. Stat. 22:601.13, if, as a result and after giving effect to the investment, both of the following conditions are met:
(1) The aggregate amount of foreign investments then held by the insurer under this Subsection does not exceed twenty percent of its admitted assets.
(2) The aggregate amount of foreign investments then held by the insurer under this Subsection in a single foreign jurisdiction does not exceed ten percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO one or five percent of its admitted assets as to any other foreign jurisdiction.
C. An insurer may acquire investments, or engage in investment practices denominated in foreign currencies, whether or not they are foreign investments acquired pursuant to Subsections A and B of this Section, or additional foreign currency exposure as a result of the termination or expiration of a hedging transaction with respect to investments denominated in a foreign currency, if all of the following apply:
(1) The aggregate amount of investments then held by the insurer under this Subsection denominated in foreign currencies does not exceed ten percent of its admitted assets.
(2) The aggregate amount of investments then held by the insurer under this Subsection denominated in the foreign currency of a single foreign jurisdiction does not exceed ten percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO one or three percent of its admitted assets as to any other foreign jurisdiction.
(3) No investment shall be considered denominated in a foreign currency if the acquiring insurer enters into one or more contracts in transactions permitted pursuant to La. Rev. Stat. 22:601.14 and the business entity counterparty agrees under the contract or contracts to exchange all payments made on the foreign currency denominated investment for United States currency at a rate which effectively insulates the investment cash flows against future changes in currency exchange rates during the period the contract or contracts are in effect.
D. In addition to investments permitted pursuant to Subsections A, B, and C of this Section, an insurer authorized to do business in a foreign jurisdiction, or that has outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or located in that foreign jurisdiction and denominated in foreign currency of that jurisdiction, may acquire foreign investments respecting that foreign jurisdiction, and may acquire investments denominated in the currency of that jurisdiction; however, investments made pursuant to this Subsection in obligations of foreign governments, their political subdivisions and government sponsored enterprises shall not be subject to the limitations of La. Rev. Stat. 22:601.6. The aggregate amount of investments acquired by the insurer pursuant to this Subsection shall not exceed the greater of either of one of the following:
(1) The amount the insurer is required by the law of the foreign jurisdiction to invest in the foreign jurisdiction.
(2) One hundred twenty percent of the amount of its reserves, net of reinsurance, and other obligations under the contracts on lives or risks resident or located in the foreign jurisdiction.
E.(1) An insurer may acquire obligations issued by the following international development organizations. No insurer shall acquire an instrument of any one of the following organizations if, as a result of and after giving effect to the investment, the aggregate amount of investments then held in any one organization pursuant to this Subsection would exceed ten percent of its admitted assets:
(a) African Development Bank.
(b) Asian Development Bank.
(c) Inter-American Development Bank.
(d) International Bank for Reconstruction and Development.
(2) A domestic insurer may invest any of its funds in bonds, debentures, notes, or other similar obligations that are not in default and are issued in the United States market, denominated in United States dollars, and are the direct legal obligation of a foreign nation that is a member of the Organisation for Economic Co-operation and Development, for which investments in or business transactions with are not prohibited or restricted by any law, regulation, or rule of the United States or this state, and for which the full faith and credit of such nation has been pledged for the payment of principal and interest, but only if the foreign nation has not defaulted and has met its payment obligations in a timely manner on all similar obligations for a period of at least twenty-five years immediately preceding. Additionally, the debt of the issuing country shall be rated at least A- or better by Standard & Poor’s Global Ratings or A3 or better by Moody’s Investors Service, Inc. or an equivalent investment grade by a securities ratings organization accepted by the NAIC. The total investment in such foreign securities at any one time shall not exceed five percent of an insurer’s admitted assets.
F. Investments acquired pursuant to this Section shall be aggregated with investments of the same types made under all other Sections of this Subpart, and in a similar manner, for purposes of determining compliance with the limitations, if any, contained in the other Sections.
Acts 2021, No. 165, §1, eff. Jan. 1, 2022.