376.311. Investment of capital reserve and surplus of life insurance companies in investment pools--definitions--qualifications--requirements.
Investment of capital reserve and surplus of life insurance companiesin investment pools--definitions--qualifications--requirements.
376.311. 1. In addition to the investments permitted by otherprovisions of the laws, the capital reserve and surplus of all life insurancecompanies of whatever kind and character, organized or doing business pursuantto this chapter, may be invested in an investment pool meeting therequirements set out below, and any other provision of law relating toinvestments made by life insurance companies.
2. As used in this section, the following terms mean:
(1) "Business entity", a corporation, limited liability company,association, partnership, joint stock company, joint venture, mutual fundtrust, or other similar form of business organization, including such anentity when organized as a not-for-profit entity;
(2) "Qualified bank", a national bank, state bank or trust company thatat all times is no less than adequately capitalized as determined by thestandards adopted by the United States banking regulators and that is eitherregulated by state banking laws or is a member of the Federal Reserve System.
3. (1) Qualified investment pools shall invest only in investmentswhich an insurer may acquire pursuant to this chapter and other provisions oflaw. The insurer's proportionate interest in these investments may not exceedthe applicable limits of this section and other provisions of law.
(2) An insurer shall not acquire an investment in an investment poolpursuant to this subsection if, after giving effect to the investment, theaggregate amount of investments in all investment pools then held by theinsurer would exceed thirty percent of its assets.
(3) For an investment in an investment pool to be qualified pursuant tothis chapter, the investment pool shall not:
(a) Acquire securities issued, assumed, guaranteed or insured by theinsurer or an affiliate of the insurer;
(b) Borrow or incur any indebtedness for borrowed money, except forsecurities lending and reverse repurchase transactions;
(c) Lend money or other assets to participants in the pool.
(4) For an investment pool to be qualified pursuant to this chapter, themanager of the investment pool shall:
(a) Be organized pursuant to the laws of the United States or a stateand designated as the pool manager in a pooling agreement;
(b) Be the insurer; an affiliated insurer; a business entity affiliatedwith the insurer; a qualified bank; a business entity registered pursuant tothe Investment Advisors Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.) as amended;or, in the case of a reciprocal insurer or interinsurance exchange, itsattorney-in-fact.
(5) The pool manager, or an agent designated by the pool manager, shallcompile and maintain detailed accounting records setting forth:
(a) The cash receipts and disbursements reflecting each participant'sproportionate investment in the investment pool;
(b) A complete description of all underlying assets of the investmentpool including amount, interest rate, maturity date (if any) and otherappropriate designations; and
(c) Other records which, on a daily basis, allow third parties to verifyeach participant's investments in the investment pool.
(6) The pool manager shall maintain the assets of the investment pool inone or more custody accounts, in the name of or on behalf of the investmentpool, under one or more custody agreements with a qualified bank. Eachcustody agreement shall:
(a) State and recognize the claims and rights of each participant;
(b) Acknowledge that the underlying assets of the investment pool areheld solely for the benefit of each participant in proportion to the aggregateamount of its investments in the investment pool; and
(c) Contain an agreement that the underlying assets of the investmentpool shall not be commingled with the general assets of the qualified bank orany other person.
(7) The pooling agreement for each investment pool shall be in writingand shall provide that:
(a) An insurer and its affiliates shall, at all times, hold one hundredpercent of the interests in the investment pool;
(b) The underlying assets of the investment pool shall not be commingledwith the general assets of the pool manager or any other person;
(c) The aggregate amount of each pool participant's interest in theinvestment pool shall be in proportion to:
a. Each participant's undivided interest in the underlying assets of theinvestment pool; and
b. The underlying assets of the investment pool held solely for thebenefit of each participant;
(d) A participant or, in the event of the participant's insolvency,bankruptcy or receivership, its trustee, receiver, conservator or othersuccessor-in-interest may withdraw all or any portion of its investment fromthe investment pool under the terms of the pooling agreement;
(e) Withdrawals may be made on demand without penalty or otherassessment on any business day, but settlement of funds shall occur within areasonable and customary period thereafter, provided:
a. In the case of publicly traded securities, settlement shall notexceed five business days; and
b. In the case of all other securities and investments, settlement shallnot exceed ten business days.
Distributions pursuant to this paragraph shall be calculated in each case netof all then applicable fees and expenses of the investment pool.
(8) The pooling agreement shall provide that the pool manager shalldistribute to a participant, at the discretion of the pool manager:
(a) In cash, the then fair market value of the participant's pro ratashare of each underlying asset of the investment pool; or
(b) In-kind, a pro rata share of each underlying asset; or
(c) In a combination of cash and in-kind distributions, a pro rata sharein each underlying asset;
(9) The pool manager shall make the records of the investment poolavailable for inspection by the director.
4. The pooling agreement and any other arrangements or agreementsrelating to an investment pool, and any amendments thereto, shall be submittedto the department of insurance, financial institutions and professionalregistration for prior approval pursuant to section 382.195, RSMo. Individualfinancial transactions between the pool and its participants in the ordinarycourse of the investment pool's operations shall not be subject to theprovisions of section 382.195, RSMo. Investment activities of pools andtransactions between pools and participants shall be reported annually in theregistration statement required by section 382.100, RSMo.
(L. 1997 H.B. 793, A.L. 2002 H.B. 1568 merged with S.B. 1009)