1240. The following definitions shall apply in this article:
(a) "Foreign currency" means a currency other than that of the
United States.
(b) "Foreign investment" means an investment in a foreign
jurisdiction, or an investment in a person, real estate, or asset
domiciled in a foreign jurisdiction, that is substantially of the
same kind, class, and investment grade as those eligible for
investment under this code, other than under Section 1210 or 1241. An
investment shall not be a foreign investment if the issuing person,
qualified primary credit source, or qualified guarantor is a domestic
jurisdiction or a person domiciled in a domestic jurisdiction,
unless both of the following apply:
(1) The issuing person is a shell business entity.
(2) The investment is not assumed, accepted, guaranteed, or
insured or otherwise backed by a domestic jurisdiction or a person,
that is not a shell business entity, domiciled in a domestic
jurisdiction.
(c) For purposes of subdivision (b), the following definitions
apply:
(1) "Shell business entity" means a business entity having no
economic substance, except as a vehicle for owning interests in
assets issued, owned, or previously owned by a person domiciled in a
foreign jurisdiction.
(2) "Qualified guarantor" means a guarantor against which an
insurer has a direct claim for full and timely payment, evidenced by
a contractual right for which an enforcement action can be brought in
a domestic jurisdiction.
(3) "Qualified primary credit source" means the credit source to
which an insurer looks for payment as to an investment and against
which an insurer has a direct claim for full and timely payment,
evidenced by a contractual right for which an enforcement action can
be brought in a domestic jurisdiction.
(d) "Foreign jurisdiction" means a jurisdiction other than the
United States or any of its political subdivisions.
1241. (a) Subject to the limitation in Section 1242, and except for
those foreign investments permitted under Section 1192.95, a
domestic insurer may acquire foreign investments of substantially the
same type as those that an insurer is permitted to acquire pursuant
to this code, if, as a result of the acquisition and after giving
effect to the investment, both of the following apply:
(1) The aggregate amount of foreign investments then held by the
insurer does not exceed:
(A) Twenty percent of admitted assets, for an insurer with
admitted assets equal to or in excess of five hundred million dollars
($500,000,000).
(B) Five percent of admitted assets, for an insurer with admitted
assets less than five hundred million dollars ($500,000,000).
(2) The aggregate amount of foreign investments then held by the
insurer in a single foreign jurisdiction does not exceed:
(A) Ten percent of admitted assets, for any foreign jurisdiction
that has a sovereign debt rating of SVO 1.
(B) Three percent of admitted assets, for any foreign jurisdiction
that has a sovereign debt rating lower than SVO 1.
(b) Subject to the limitations of Section 1242, an insurer may
acquire investments denominated in foreign currencies, whether or not
they are foreign investments acquired under subdivision (a) of this
section, or additional foreign currency exposure as a result of the
termination or expiration of a hedging transaction as defined in
Section 1211 with respect to investments denominated in a foreign
currency, if the following requirements are met:
(1) The aggregate amount of investments then held by an insurer
under this subdivision denominated in foreign currencies does not
exceed:
(A) Ten percent of admitted assets, for an insurer described in
subparagraph (A) of paragraph (1) of subdivision (a).
(B) Three percent of admitted assets, for an insurer described in
subparagraph (B) of paragraph (1) of subdivision (a).
(2) The aggregate amount of investments then held by an insurer
under this subdivision denominated in the foreign currency of a
single foreign jurisdiction does not exceed:
(A) Ten percent of admitted assets, for an insurer described in
subparagraph (A) of paragraph (1) of subdivision (a) for a foreign
jurisdiction that has a sovereign debt rating of SVO 1 or 3 percent
of admitted assets as to any other foreign jurisdiction.
(B) Three percent of admitted assets, for an insurer described in
subparagraph (B) of paragraph (1) of subdivision (a).
(3) An investment shall not be considered denominated in a foreign
currency if the acquiring insurer enters into one or more contracts
in transactions permitted under Section 1211 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 that effectively insulates the
investment cashflows against future changes in currency exchange
rates during the period the contract or contracts are in effect.
(c) In addition to investments permitted under subdivisions (a)
and (b), a domestic insurer that is authorized to do business in a
foreign jurisdiction, and that has outstanding insurance, annuity, or
reinsurance contracts on lives or risks resident or located in that
foreign jurisdiction and denominated in the foreign currency of that
jurisdiction may acquire foreign investments respecting that
jurisdiction, subject to the limitations of Section 1242. However,
investments made under this subdivision in obligations of foreign
governments, their political subdivisions, and government-sponsored
enterprises shall not be subject to the limitations of Section 1242
if those investments carry an SVO rating of 1 or 2. The aggregate
amount of investments acquired by the insurer shall not exceed the
greater of the following:
(1) The amount that the insurer is required by the law of the
foreign jurisdiction to invest in the foreign jurisdiction.
(2) One hundred fifteen percent of the amount of the insurer's
reserves, net of reinsurance and other obligations under the
contracts.
(d) In addition to investments permitted under subdivisions (a)
and (b), an insurer that is not authorized to do business in a
foreign jurisdiction, but that has outstanding insurance, annuity, or
reinsurance contracts on lives or risks resident or located in that
foreign jurisdiction and denominated in the foreign currency of that
jurisdiction may acquire foreign investments respecting that
jurisdiction, and may acquire investments denominated in the currency
of that jurisdiction subject to the limitations of Section 1242.
However, investments made under this subdivision in obligations of
foreign governments, their political subdivisions, and
government-sponsored enterprises shall not be subject to the
limitations of Section 1242 if those investments carry an SVO rating
of 1 or 2. The aggregate amount of investments acquired by the
insurer shall not exceed 105 percent of the amount of the insurer's
reserves, net of reinsurance and other obligations under the
contracts on lives or risks resident or located in the foreign
jurisdiction.
(e) The investments acquired under this section shall be subject
to Sections 1200, 1201, and 1202.
(f) Nothing in this section shall in any way restrict or limit
Canadian investments otherwise permitted by this code. Canadian
investments acquired under other sections of this code shall not be
considered foreign investments for purposes of the limitations set
forth in this section.
(g) Investments made pursuant to Section 1192.9 in investment
companies shall be governed by this article to the extent specified
in Section 1192.9.
1241.1. (a) No domestic insurer shall acquire any investment
respecting a foreign jurisdiction, or any investment denominated in
the currency of that foreign jurisdiction, if that jurisdiction is
designated as a state sponsor of terrorism by the United States
Secretary of State pursuant to Section 6(j) of the Export
Administration Act, Section 40 of the Arms Export Control Act, and
Section 620A of the Foreign Assistance Act.
(b) If any investment made pursuant to Section 1241 later becomes
prohibited by this section, that investment shall not be retained as
an investment made pursuant to this code.
1242. (a) (1) Except as otherwise specified in Section 1241, a
domestic insurer shall not acquire directly or indirectly through an
investment subsidiary, an investment under Section 1241 if, as a
result of and after giving effect to the investment, the insurer
would hold more than 3 percent of its admitted assets in investments
of all kinds issued, assumed, accepted, insured, or guaranteed by a
single person, or 5 percent of its admitted assets in investments in
the voting securities of a depository institution or any company that
controls the institution.
(2) The 3 percent limitation in paragraph (1) shall not apply to
the aggregate amounts insured by a single financial guaranty insurer
with the highest generic rating issued by a nationally recognized
statistical rating organization.
(b) A domestic insurer shall not acquire, directly or indirectly
through an investment subsidiary, an investment under Section 1241
if, as a result of and after giving effect to the investment, the
insurer's aggregate medium and lower grade investments do not comply
with the limitations of Section 1196.1.
1240. The following definitions shall apply in this article:
(a) "Foreign currency" means a currency other than that of the
United States.
(b) "Foreign investment" means an investment in a foreign
jurisdiction, or an investment in a person, real estate, or asset
domiciled in a foreign jurisdiction, that is substantially of the
same kind, class, and investment grade as those eligible for
investment under this code, other than under Section 1210 or 1241. An
investment shall not be a foreign investment if the issuing person,
qualified primary credit source, or qualified guarantor is a domestic
jurisdiction or a person domiciled in a domestic jurisdiction,
unless both of the following apply:
(1) The issuing person is a shell business entity.
(2) The investment is not assumed, accepted, guaranteed, or
insured or otherwise backed by a domestic jurisdiction or a person,
that is not a shell business entity, domiciled in a domestic
jurisdiction.
(c) For purposes of subdivision (b), the following definitions
apply:
(1) "Shell business entity" means a business entity having no
economic substance, except as a vehicle for owning interests in
assets issued, owned, or previously owned by a person domiciled in a
foreign jurisdiction.
(2) "Qualified guarantor" means a guarantor against which an
insurer has a direct claim for full and timely payment, evidenced by
a contractual right for which an enforcement action can be brought in
a domestic jurisdiction.
(3) "Qualified primary credit source" means the credit source to
which an insurer looks for payment as to an investment and against
which an insurer has a direct claim for full and timely payment,
evidenced by a contractual right for which an enforcement action can
be brought in a domestic jurisdiction.
(d) "Foreign jurisdiction" means a jurisdiction other than the
United States or any of its political subdivisions.
1241. (a) Subject to the limitation in Section 1242, and except for
those foreign investments permitted under Section 1192.95, a
domestic insurer may acquire foreign investments of substantially the
same type as those that an insurer is permitted to acquire pursuant
to this code, if, as a result of the acquisition and after giving
effect to the investment, both of the following apply:
(1) The aggregate amount of foreign investments then held by the
insurer does not exceed:
(A) Twenty percent of admitted assets, for an insurer with
admitted assets equal to or in excess of five hundred million dollars
($500,000,000).
(B) Five percent of admitted assets, for an insurer with admitted
assets less than five hundred million dollars ($500,000,000).
(2) The aggregate amount of foreign investments then held by the
insurer in a single foreign jurisdiction does not exceed:
(A) Ten percent of admitted assets, for any foreign jurisdiction
that has a sovereign debt rating of SVO 1.
(B) Three percent of admitted assets, for any foreign jurisdiction
that has a sovereign debt rating lower than SVO 1.
(b) Subject to the limitations of Section 1242, an insurer may
acquire investments denominated in foreign currencies, whether or not
they are foreign investments acquired under subdivision (a) of this
section, or additional foreign currency exposure as a result of the
termination or expiration of a hedging transaction as defined in
Section 1211 with respect to investments denominated in a foreign
currency, if the following requirements are met:
(1) The aggregate amount of investments then held by an insurer
under this subdivision denominated in foreign currencies does not
exceed:
(A) Ten percent of admitted assets, for an insurer described in
subparagraph (A) of paragraph (1) of subdivision (a).
(B) Three percent of admitted assets, for an insurer described in
subparagraph (B) of paragraph (1) of subdivision (a).
(2) The aggregate amount of investments then held by an insurer
under this subdivision denominated in the foreign currency of a
single foreign jurisdiction does not exceed:
(A) Ten percent of admitted assets, for an insurer described in
subparagraph (A) of paragraph (1) of subdivision (a) for a foreign
jurisdiction that has a sovereign debt rating of SVO 1 or 3 percent
of admitted assets as to any other foreign jurisdiction.
(B) Three percent of admitted assets, for an insurer described in
subparagraph (B) of paragraph (1) of subdivision (a).
(3) An investment shall not be considered denominated in a foreign
currency if the acquiring insurer enters into one or more contracts
in transactions permitted under Section 1211 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 that effectively insulates the
investment cashflows against future changes in currency exchange
rates during the period the contract or contracts are in effect.
(c) In addition to investments permitted under subdivisions (a)
and (b), a domestic insurer that is authorized to do business in a
foreign jurisdiction, and that has outstanding insurance, annuity, or
reinsurance contracts on lives or risks resident or located in that
foreign jurisdiction and denominated in the foreign currency of that
jurisdiction may acquire foreign investments respecting that
jurisdiction, subject to the limitations of Section 1242. However,
investments made under this subdivision in obligations of foreign
governments, their political subdivisions, and government-sponsored
enterprises shall not be subject to the limitations of Section 1242
if those investments carry an SVO rating of 1 or 2. The aggregate
amount of investments acquired by the insurer shall not exceed the
greater of the following:
(1) The amount that the insurer is required by the law of the
foreign jurisdiction to invest in the foreign jurisdiction.
(2) One hundred fifteen percent of the amount of the insurer's
reserves, net of reinsurance and other obligations under the
contracts.
(d) In addition to investments permitted under subdivisions (a)
and (b), an insurer that is not authorized to do business in a
foreign jurisdiction, but that has outstanding insurance, annuity, or
reinsurance contracts on lives or risks resident or located in that
foreign jurisdiction and denominated in the foreign currency of that
jurisdiction may acquire foreign investments respecting that
jurisdiction, and may acquire investments denominated in the currency
of that jurisdiction subject to the limitations of Section 1242.
However, investments made under this subdivision in obligations of
foreign governments, their political subdivisions, and
government-sponsored enterprises shall not be subject to the
limitations of Section 1242 if those investments carry an SVO rating
of 1 or 2. The aggregate amount of investments acquired by the
insurer shall not exceed 105 percent of the amount of the insurer's
reserves, net of reinsurance and other obligations under the
contracts on lives or risks resident or located in the foreign
jurisdiction.
(e) The investments acquired under this section shall be subject
to Sections 1200, 1201, and 1202.
(f) Nothing in this section shall in any way restrict or limit
Canadian investments otherwise permitted by this code. Canadian
investments acquired under other sections of this code shall not be
considered foreign investments for purposes of the limitations set
forth in this section.
(g) Investments made pursuant to Section 1192.9 in investment
companies shall be governed by this article to the extent specified
in Section 1192.9.
1241.1. (a) No domestic insurer shall acquire any investment
respecting a foreign jurisdiction, or any investment denominated in
the currency of that foreign jurisdiction, if that jurisdiction is
designated as a state sponsor of terrorism by the United States
Secretary of State pursuant to Section 6(j) of the Export
Administration Act, Section 40 of the Arms Export Control Act, and
Section 620A of the Foreign Assistance Act.
(b) If any investment made pursuant to Section 1241 later becomes
prohibited by this section, that investment shall not be retained as
an investment made pursuant to this code.
1242. (a) (1) Except as otherwise specified in Section 1241, a
domestic insurer shall not acquire directly or indirectly through an
investment subsidiary, an investment under Section 1241 if, as a
result of and after giving effect to the investment, the insurer
would hold more than 3 percent of its admitted assets in investments
of all kinds issued, assumed, accepted, insured, or guaranteed by a
single person, or 5 percent of its admitted assets in investments in
the voting securities of a depository institution or any company that
controls the institution.
(2) The 3 percent limitation in paragraph (1) shall not apply to
the aggregate amounts insured by a single financial guaranty insurer
with the highest generic rating issued by a nationally recognized
statistical rating organization.
(b) A domestic insurer shall not acquire, directly or indirectly
through an investment subsidiary, an investment under Section 1241
if, as a result of and after giving effect to the investment, the
insurer's aggregate medium and lower grade investments do not comply
with the limitations of Section 1196.1.
1240. The following definitions shall apply in this article:
(a) "Foreign currency" means a currency other than that of the
United States.
(b) "Foreign investment" means an investment in a foreign
jurisdiction, or an investment in a person, real estate, or asset
domiciled in a foreign jurisdiction, that is substantially of the
same kind, class, and investment grade as those eligible for
investment under this code, other than under Section 1210 or 1241. An
investment shall not be a foreign investment if the issuing person,
qualified primary credit source, or qualified guarantor is a domestic
jurisdiction or a person domiciled in a domestic jurisdiction,
unless both of the following apply:
(1) The issuing person is a shell business entity.
(2) The investment is not assumed, accepted, guaranteed, or
insured or otherwise backed by a domestic jurisdiction or a person,
that is not a shell business entity, domiciled in a domestic
jurisdiction.
(c) For purposes of subdivision (b), the following definitions
apply:
(1) "Shell business entity" means a business entity having no
economic substance, except as a vehicle for owning interests in
assets issued, owned, or previously owned by a person domiciled in a
foreign jurisdiction.
(2) "Qualified guarantor" means a guarantor against which an
insurer has a direct claim for full and timely payment, evidenced by
a contractual right for which an enforcement action can be brought in
a domestic jurisdiction.
(3) "Qualified primary credit source" means the credit source to
which an insurer looks for payment as to an investment and against
which an insurer has a direct claim for full and timely payment,
evidenced by a contractual right for which an enforcement action can
be brought in a domestic jurisdiction.
(d) "Foreign jurisdiction" means a jurisdiction other than the
United States or any of its political subdivisions.
1241. (a) Subject to the limitation in Section 1242, and except for
those foreign investments permitted under Section 1192.95, a
domestic insurer may acquire foreign investments of substantially the
same type as those that an insurer is permitted to acquire pursuant
to this code, if, as a result of the acquisition and after giving
effect to the investment, both of the following apply:
(1) The aggregate amount of foreign investments then held by the
insurer does not exceed:
(A) Twenty percent of admitted assets, for an insurer with
admitted assets equal to or in excess of five hundred million dollars
($500,000,000).
(B) Five percent of admitted assets, for an insurer with admitted
assets less than five hundred million dollars ($500,000,000).
(2) The aggregate amount of foreign investments then held by the
insurer in a single foreign jurisdiction does not exceed:
(A) Ten percent of admitted assets, for any foreign jurisdiction
that has a sovereign debt rating of SVO 1.
(B) Three percent of admitted assets, for any foreign jurisdiction
that has a sovereign debt rating lower than SVO 1.
(b) Subject to the limitations of Section 1242, an insurer may
acquire investments denominated in foreign currencies, whether or not
they are foreign investments acquired under subdivision (a) of this
section, or additional foreign currency exposure as a result of the
termination or expiration of a hedging transaction as defined in
Section 1211 with respect to investments denominated in a foreign
currency, if the following requirements are met:
(1) The aggregate amount of investments then held by an insurer
under this subdivision denominated in foreign currencies does not
exceed:
(A) Ten percent of admitted assets, for an insurer described in
subparagraph (A) of paragraph (1) of subdivision (a).
(B) Three percent of admitted assets, for an insurer described in
subparagraph (B) of paragraph (1) of subdivision (a).
(2) The aggregate amount of investments then held by an insurer
under this subdivision denominated in the foreign currency of a
single foreign jurisdiction does not exceed:
(A) Ten percent of admitted assets, for an insurer described in
subparagraph (A) of paragraph (1) of subdivision (a) for a foreign
jurisdiction that has a sovereign debt rating of SVO 1 or 3 percent
of admitted assets as to any other foreign jurisdiction.
(B) Three percent of admitted assets, for an insurer described in
subparagraph (B) of paragraph (1) of subdivision (a).
(3) An investment shall not be considered denominated in a foreign
currency if the acquiring insurer enters into one or more contracts
in transactions permitted under Section 1211 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 that effectively insulates the
investment cashflows against future changes in currency exchange
rates during the period the contract or contracts are in effect.
(c) In addition to investments permitted under subdivisions (a)
and (b), a domestic insurer that is authorized to do business in a
foreign jurisdiction, and that has outstanding insurance, annuity, or
reinsurance contracts on lives or risks resident or located in that
foreign jurisdiction and denominated in the foreign currency of that
jurisdiction may acquire foreign investments respecting that
jurisdiction, subject to the limitations of Section 1242. However,
investments made under this subdivision in obligations of foreign
governments, their political subdivisions, and government-sponsored
enterprises shall not be subject to the limitations of Section 1242
if those investments carry an SVO rating of 1 or 2. The aggregate
amount of investments acquired by the insurer shall not exceed the
greater of the following:
(1) The amount that the insurer is required by the law of the
foreign jurisdiction to invest in the foreign jurisdiction.
(2) One hundred fifteen percent of the amount of the insurer's
reserves, net of reinsurance and other obligations under the
contracts.
(d) In addition to investments permitted under subdivisions (a)
and (b), an insurer that is not authorized to do business in a
foreign jurisdiction, but that has outstanding insurance, annuity, or
reinsurance contracts on lives or risks resident or located in that
foreign jurisdiction and denominated in the foreign currency of that
jurisdiction may acquire foreign investments respecting that
jurisdiction, and may acquire investments denominated in the currency
of that jurisdiction subject to the limitations of Section 1242.
However, investments made under this subdivision in obligations of
foreign governments, their political subdivisions, and
government-sponsored enterprises shall not be subject to the
limitations of Section 1242 if those investments carry an SVO rating
of 1 or 2. The aggregate amount of investments acquired by the
insurer shall not exceed 105 percent of the amount of the insurer's
reserves, net of reinsurance and other obligations under the
contracts on lives or risks resident or located in the foreign
jurisdiction.
(e) The investments acquired under this section shall be subject
to Sections 1200, 1201, and 1202.
(f) Nothing in this section shall in any way restrict or limit
Canadian investments otherwise permitted by this code. Canadian
investments acquired under other sections of this code shall not be
considered foreign investments for purposes of the limitations set
forth in this section.
(g) Investments made pursuant to Section 1192.9 in investment
companies shall be governed by this article to the extent specified
in Section 1192.9.
1241.1. (a) No domestic insurer shall acquire any investment
respecting a foreign jurisdiction, or any investment denominated in
the currency of that foreign jurisdiction, if that jurisdiction is
designated as a state sponsor of terrorism by the United States
Secretary of State pursuant to Section 6(j) of the Export
Administration Act, Section 40 of the Arms Export Control Act, and
Section 620A of the Foreign Assistance Act.
(b) If any investment made pursuant to Section 1241 later becomes
prohibited by this section, that investment shall not be retained as
an investment made pursuant to this code.
1242. (a) (1) Except as otherwise specified in Section 1241, a
domestic insurer shall not acquire directly or indirectly through an
investment subsidiary, an investment under Section 1241 if, as a
result of and after giving effect to the investment, the insurer
would hold more than 3 percent of its admitted assets in investments
of all kinds issued, assumed, accepted, insured, or guaranteed by a
single person, or 5 percent of its admitted assets in investments in
the voting securities of a depository institution or any company that
controls the institution.
(2) The 3 percent limitation in paragraph (1) shall not apply to
the aggregate amounts insured by a single financial guaranty insurer
with the highest generic rating issued by a nationally recognized
statistical rating organization.
(b) A domestic insurer shall not acquire, directly or indirectly
through an investment subsidiary, an investment under Section 1241
if, as a result of and after giving effect to the investment, the
insurer's aggregate medium and lower grade investments do not comply
with the limitations of Section 1196.1.
