376.293. Permissible investments--written plan for investments required.
Permissible investments--written plan for investments required.
376.293. 1. (1) Insurers may acquire, hold, or invest ininvestments or engage in investment practices as set forth in this chapteror section 375.345, RSMo. Insurers may also acquire, hold, or invest ininvestments not conforming to the requirements of this section that are nototherwise prohibited by this chapter or section 375.345, RSMo, providedhowever, that investments not conforming to this section shall not beadmitted assets. The provisions and definitions of terms of section375.345, RSMo, related to derivative transactions shall also apply toinvestments under this chapter.
(2) Subject to subdivision (3) of this subsection, an insurer shallnot acquire or hold an investment as an admitted asset unless at the timeof acquisition:
(a) It is eligible for the payment or accrual of interest ordiscount, whether in cash or other forms of income or securities, eligibleto receive dividends or other distributions or is otherwise incomeproducing; or
(b) It is acquired under section 375.345, RSMo, subsection 3 ofsection 376.302, section 376.303 or 376.307 or under the authority ofsections of the code other than sections 376.291 to 376.307.
(3) An insurer may acquire or hold as admitted assets investmentsthat do not otherwise qualify, as provided in sections 376.291 to 376.307,if this insurer has not acquired the assets investments for the purpose ofcircumventing any limitations contained in sections 376.291 to 376.307 andif the insurer acquires the investments in the following circumstances andcomplies with the provisions of sections 376.291 to 376.307 as to theinvestments:
(a) As a payment on account of existing indebtedness or in connectionwith the refinancing, restructuring, or workout of existing indebtedness,if taken to protect the insurer's interest in that investment;
(b) As realization of collateral for indebtedness;
(c) In connection with an otherwise qualified investment orinvestment practice as interest on, or a dividend, or other distributionrelated to the investment or investment practice or in connection with therefinancing of the investment. In each case, no additional or only nominalconsideration is necessary;
(d) Under lawful and bona fide agreement of recapitalization orvoluntary or involuntary reorganization in connection with an investmentheld by the insurer; or
(e) Under a bulk reinsurance, merger, or consolidation transactionapproved by the director if the assets constitute admissible investmentsfor the ceding, merged, or consolidated companies.
(4) An investment or portion of an investment acquired by an insurerunder subdivision (3) of this subsection shall become a nonadmitted assetthree years, or five years in the case of mortgage loans and real estate,from the date of its acquisition unless within that period the investmenthas become a qualified investment under a section of this chapter otherthan subdivision (3) of this subsection, but an investment acquired underan agreement of bulk reinsurance, merger, or consolidation may be qualifiedfor a longer period if so provided in the plan for reinsurance, merger, orconsolidation as approved by the director. Upon application by the insurerand a showing that the nonadmission of an asset held under subdivision (3)of this subsection would materially injure the interests of the insurer,the director may extend the period of admissibility for an additional,reasonable period of time.
(5) Except as provided in subdivisions (6) and (8) of thissubsection, an investment shall qualify under this chapter if on the datethe insurer committed to acquire the investment or on the date of itsacquisition it would have qualified under this chapter. For the purposesof determining limitations contained in this chapter, an insurer shall giveappropriate recognition to any commitments to acquire investments.
(6) (a) An investment held as an admitted asset by an insurer onAugust 28, 2007, which qualified under this chapter, or chapter 375, RSMo,shall remain qualified as an admitted asset.
(b) Each specific transaction constituting an investment practice ofthe type described in this chapter that was lawfully entered into by aninsurer and was in effect on August 28, 2007, shall continue to bepermitted under this chapter until its expiration or termination under itsterms, including any expiration or termination after an extension under itsterms.
(7) Unless otherwise specified, an investment limitation computed onthe basis of an insurer's admitted assets or capital and surplus shallrelate to the amount required to be shown on the statutory balance sheet ofthe insurer most recently required to be filed, annual or last quarter,with the director. Solely for the purposes of computing any limitationbased upon admitted assets, the insurer shall deduct from the amount of itsadmitted assets the amount of the liability recorded on such statutorybalance sheet for:
(a) The return of acceptable collateral received in a reverserepurchase transaction or a securities lending transaction;
(b) Cash received in a dollar-roll transaction; and
(c) The amount reported as borrowed money in such statutory balancesheet to the extent not included in paragraph (b) and this paragraph ofthis subdivision.
(8) An investment qualified, in whole or in part, for acquisition orholding as an admitted asset may be qualified or requalified at the time ofacquisition or a later date, in whole or in part, under any section if therelevant conditions contained in the other section are satisfied at thetime of the qualification or requalification.
(9) An insurer shall maintain documentation demonstrating thatinvestments were acquired in accordance with this chapter.
(10) An insurer shall not enter into an agreement to purchasesecurities in advance of their issuance for resale to the public as part ofa distribution of the securities by the issuer or otherwise guarantee thedistribution, except that an insurer may acquire privately placedsecurities with registration rights.
(11) Notwithstanding the provisions of this chapter, the director,for good cause, may order an insurer to nonadmit, limit, dispose of,withdraw from, or discontinue an investment or investment practice. Theauthority of the director under this subsection is in addition to any otherauthority of the director.
2. (1) Within three months after August 28, 2007, an insurer's boardof directors shall adopt a written plan for acquiring and holdinginvestments and for engaging in investment practices that specifiesguidelines as to the quality, maturity, and diversification of theinvestments and other specifications, including investment strategiesintended to assure that the investments and investment practices areappropriate for the business conducted by the insurer, its liquidity needs,and its capital and surplus. The board shall review and assess theinsurer's technical investment and administrative capabilities andexpertise before adopting a written plan concerning an investment strategyor investment practice.
(2) Investments acquired and held under this chapter and section375.345, RSMo, shall be acquired and held under the supervision anddirection of the board of directors of the insurer. The board of directorsshall evidence by formal resolution at least annually that it hasdetermined whether all investments have been made in accordance withdelegations, standards, limitations, and investment objectives prescribedby the board or a committee of the board charged with the responsibility todirect its investments.
(3) On no less than a quarterly basis and more often if deemedappropriate, an insurer's board of directors or committee of the board ofdirectors shall:
(a) Receive and review a summary report on the insurer's investmentportfolio, its investment activities, and investment practices engaged inunder delegated authority in order to determine whether the investmentactivity of the insurer is consistent with its written plan; and
(b) Review and revise, as appropriate, the written plan.
(4) In discharging its duties under this section, the board ofdirectors shall require that records of any authorization or approvals,other documentation as the board may require, and reports of any actiontaken under authority delegated under the plan referred to in subsection 1of this section shall be made available on a regular basis to the board ofdirectors.
(5) In discharging their duties under this section, the directors ofan insurer shall perform their duties in good faith and with that degree ofcare that ordinarily prudent individuals in like positions would use undersimilar circumstances.
(6) If an insurer does not have a board of directors, all referencesto the board of directors in sections 376.291 to 376.307 shall be deemed tobe references to the governing body of the insurer having authorityequivalent to that of a board of directors.
(L. 2007 S.B. 66)