Louisiana Revised Statutes 22:601.13 – Insurer investment pools
Terms Used In Louisiana Revised Statutes 22:601.13
- 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
- Affiliate: means , as to any person, another person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the person. See Louisiana Revised Statutes 22:601.1
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Attorney-in-fact: A person who, acting as an agent, is given written authorization by another person to transact business for him (her) out of court.
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- 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
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Option: means an agreement giving the buyer the right to buy or receive, known as a "call option" sell or deliver, known as a "put option" enter into, extend or terminate 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
- Person: means an individual, a business entity, a multilateral development bank, or a government or quasi-governmental body, such as a political subdivision or a government-sponsored enterprise. See Louisiana Revised Statutes 22:601.1
- Qualified bank: means any of the following:
(a) A national bank, state bank, or trust company that at all times is no less than adequately capitalized as determined by standards adopted by United States banking regulators and that is either regulated by state banking laws or is a member of the Federal Reserve System. See Louisiana Revised Statutes 22:601.1
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
- Short-term: means investments with a remaining term to maturity of ninety days or less. 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
- Trustee: A person or institution holding and administering property in trust.
A. An insurer may acquire investments in investment pools that:
(1) Invest in only one of the following:
(a) Obligations that are rated one or two by the SVO or have an equivalent of an SVO one or two rating, or, in the absence of a one or two rating or equivalent rating, the issuer has outstanding obligations with an SVO one or two or equivalent rating, by a nationally recognized statistical rating organization recognized by the SVO and have either of the following:
(i) A remaining maturity of three hundred ninety-seven days or less or a put option that entitles the holder to receive the principal amount of the obligation which put option may be exercised through maturity at specified intervals not exceeding three hundred ninety-seven days.
(ii) A remaining maturity of three years or less and a floating interest rate that resets at least quarterly on the basis of a current short-term index, such as federal funds, prime rate, treasury bills, London InterBank Offered Rate, or commercial paper, and is subject to no maximum limit, if the obligations do not have an interest rate that varies inversely to market interest rate changes.
(b) Government money market mutual funds.
(c) Securities lending, repurchase, and reverse repurchase transactions that meet all the requirements of La. Rev. Stat. 22:601.11, except the quantitative limitations of La. Rev. Stat. 22:601.11(4).
(2) Invest in only investments which an insurer may acquire pursuant to this Subpart, if the insurer’s proportionate interest in the amount invested in these investments does not exceed the applicable limits of this Subpart.
B. For an investment in an investment pool to be qualified under this Subpart, the investment pool shall not do any of the following:
(1) Acquire securities issued, assumed, guaranteed, or insured by the insurer or an affiliate of the insurer.
(2) Borrow or incur any indebtedness for borrowed money, except for securities lending and repurchase transactions that meet the requirements of La. Rev. Stat. 22:601.11, except the quantitative limitations of La. Rev. Stat. 22:601.11(4).
(3) Permit the aggregate value of securities then loaned or sold to, purchased from, or invested in any one business entity pursuant to this Section to exceed ten percent of the total assets of the investment pool.
C. The limitations of La. Rev. Stat. 22:601.6 shall not apply to an insurer’s investment in an investment pool. No insurer shall acquire an investment in an investment pool under this Section if, as a result of and after giving effect to the investment, the aggregate amount of investments then held by the insurer pursuant to this Section would do any of the following:
(1) In any one investment pool would exceed ten percent of its admitted assets.
(2) In all investment pools investing in investments permitted pursuant to Paragraph (A)(2) of this Section would exceed twenty-five percent of its admitted assets.
(3) In all investment pools would exceed thirty-five percent of its admitted assets.
D. For an investment in an investment pool to be qualified under this Subpart, the manager of the investment pool shall meet all of the following requirements:
(1) Be organized under the laws of the United States, or by any state, and designated as the pool manager in a pooling agreement.
(2) Be the insurer, an affiliated insurer or a business entity affiliated with the insurer, a qualified bank, a business entity registered pursuant to 15 U.S.C. §§ 80b-1 et seq., as amended or, in the case of a reciprocal insurer or interinsurance exchange, its attorney-in-fact, or in the case of a United States branch of an alien insurer, its United States manager or affiliates or subsidiaries of its United States manager.
(3) Compile and maintain detailed accounting records setting forth all of the following:
(a) The cash receipts and disbursements reflecting each participant’s proportionate investment in the investment pool.
(b) A complete description of all underlying assets of the investment pool, including amount, interest rate, maturity date, if any, and other appropriate designations.
(c) Other records that allow third parties to daily verify each participant’s investment in the investment pool.
(4) Maintain the assets of the investment pool in one or more accounts, in the name of or on behalf of the investment pool, under a custody agreement with a qualified bank. The custody agreement shall do all of the following:
(a) State and recognize the claims and rights of each participant.
(b) Acknowledge that the underlying assets of the investment pool are held solely for the benefit of each participant in proportion to the aggregate amount of its investments in the investment pool.
(c) Contain an agreement that the underlying assets of the investment pool shall not be commingled with the general assets of the custodian qualified bank or any other person.
E. The pooling agreement for each investment pool shall be in writing and shall provide all of the following items:
(1) An insurer and its affiliated insurers or, in the case of an investment pool investing solely in investments permitted pursuant to Paragraph (A)(1) of this Section, the insurer and its subsidiaries, affiliates, or any pension or profit sharing plan of the insurer, its subsidiaries, and affiliates or, in the case of a United States branch of an alien insurer, affiliates, or subsidiaries of its United States manager, shall, at all times, hold one hundred percent of the interests in the investment pool.
(2) No underlying assets of the investment pool shall be commingled with the general assets of the pool manager or any other person.
(3) In proportion to the aggregate amount of each pool participant’s interest in the investment pool, both of the following shall apply:
(a) Each participant owns an undivided interest in the underlying assets of the investment pool.
(b) The underlying assets of the investment pool are held solely for the benefit of each participant.
(4) A participant, or in the event of the participant’s insolvency, bankruptcy or receivership, its trustee, receiver, or other successor-in-interest, may withdraw all or any portion of its investment from the investment pool under the terms of the pooling agreement. The investment shall be considered an asset pursuant to La. Rev. Stat. 22:2034.
(5) Withdrawals may be made on demand without penalty or other assessment on any business day, but settlement of funds shall occur within a reasonable and customary period thereafter, not to exceed five business days. Distributions under this Paragraph shall be calculated in each case net of all then applicable fees and expenses of the investment pool. The pooling agreement shall provide that the pool manager shall distribute to a participant, at the discretion of the pool manager, any of the following:
(a) In cash, the then fair market value of the participant’s pro rata share of each underlying asset of the investment pool.
(b) In kind, a pro rata share of each underlying asset.
(c) In a combination of cash and in-kind distributions, a pro rata share in each underlying asset.
(6) The pool manager shall make the records of the investment pool available for inspection by the commissioner.
F. Transactions between the pool and its participants shall not be subject to La. Rev. Stat. 22:691.7(A)(2). Investment activities of pools and transactions between pools and participants shall be reported annually in the registration statement required by La. Rev. Stat. 22:691.6.
Acts 2021, No. 165, §1, eff. Jan. 1, 2022.