[§431:6-602]  Securities lending,
repurchase, reverse repurchase, and dollar roll; investment pools.  (a) 
For purposes of this section, "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.



(b)  This section is applicable to investment
pools under section 431:6-601.



(c)  An insurer may enter into securities
lending, repurchase, reverse repurchase, and dollar roll transactions with
business entities, subject to the requirements of this section.



(d)  The board of directors shall adopt a
written plan which shall include at least the following:



(1)  A description of how cash received will be
invested or used for general corporate purposes of the insurer;



(2)  Operational procedures to manage interest rate
risk, counterparty default risk, the conditions under which proceeds from reverse
repurchase transactions may be used in the ordinary course of business and the
use of acceptable collateral in a manner that reflects the liquidity needs of
the transaction; and



(3)  The extent to which the insurer may engage in
these transactions.



(e)  The insurer shall enter into a written
agreement for all transactions authorized in this section other than dollar
roll transactions.  The written agreement shall require that each transaction
terminate no more than one year from its inception or upon the earlier demand
of the insurer.  The agreement shall be with the business entity counterparty,
but for securities lending transactions, the agreement may be with an agent
acting on behalf of the insurer, if the agent is a qualified business entity,
and if the agreement:



(1)  Requires the agent to enter into separate
agreements with each counterparty that are consistent with the requirements of
this section; and



(2)  Prohibits securities lending transactions under
the agreement with the agent or its affiliates.



(f)  Cash received in a transaction under this
section shall be invested in accordance with section 431:6-601, and in a manner
that recognizes the liquidity needs of the transaction or used by the insurer
for its general corporate purposes.  For so long as the transaction remains
outstanding, the insurer, its agent, or custodian shall maintain acceptable
collateral received in a transaction under this section, either physically or
through the book entry systems of the Federal Reserve, Depository Trust
Company, Participants Trust Company, or other securities depositories approved
by the commissioner.



(g)  In a securities lending transaction, the
insurer shall receive acceptable collateral having a market value as of the
transaction date, at least equal to one hundred two per cent of the market
value of the securities loaned by the insurer in the transaction as of that
date.  If at any time the market value of the acceptable collateral is less
than the market value of the loaned securities, the business entity
counterparty shall be obligated to deliver additional acceptable collateral,
the market value of which, together with the market value of all acceptable
collateral then held in connection with the transaction, at least equals one
hundred two per cent of the market value of the loaned securities.



(h)  In a reverse repurchase transaction, other
than a dollar roll transaction, the insurer shall receive acceptable collateral
having a market value as of the transaction date at least equal to ninety-five per
cent of the market value of the securities transferred by the insurer in the
transaction as of that date.  If at any time the market value of the acceptable
collateral is less than ninety-five per cent of the market value of the
securities so transferred, the business entity counterparty shall be obligated
to deliver additional acceptable collateral, the market value of which,
together with the market value of all acceptable collateral then held in
connection with the transaction, at least equals ninety-five per cent of the
market value of the transferred securities.



(i)  In a dollar roll transaction, the insurer
shall receive cash in the amount at least equal to the market value of the
securities transferred by the insurer in the transaction as of the transaction
date.



(j)  In a repurchase transaction, the insurer
shall receive as acceptable collateral transferred securities having a market
value at least equal to one hundred two per cent of the purchase price paid by
the insurer for the securities.  If at any time the market value of the
acceptable collateral is less than one hundred per cent of the purchase price
paid by the insurer, the business entity counterparty shall be obligated to
provide additional acceptable collateral, the market value of which, together
with the market value of all acceptable collateral then held in connection with
the transaction, at least equals one hundred two per cent of the purchase
price.  Securities acquired by an insurer in a repurchase transaction shall not
be sold in a reverse repurchase transaction, loaned in a securities lending
transaction, or otherwise pledged. [L 1997, c 233, pt of §1]