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The Vermont Statutes Online



Title

08

:
Banking and Insurance






Chapter

101

:
INSURANCE COMPANIES GENERALLY






Subchapter

004
:
INVESTMENTS AND LOANS










 

§

3461a. General limitations and diversification requirements for property and

casualty, financial guaranty and mortgage guaranty

insurers

(a) General five

percent diversification.

(1) Except as

otherwise specified in this subchapter, a domestic property and casualty,

financial guaranty or mortgage guaranty insurer shall not acquire directly or

indirectly through an investment subsidiary an investment under this subchapter

if, as a result of and after giving effect to the investment, the insurer would

hold more than five percent of its admitted assets in investments of all kinds

issued, assumed, accepted, insured or guaranteed by a single person.

(2) This five

percent limitation 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.

(3) Asset-backed

securities shall not be subject to the limitations of subdivision (1) of this

subsection; however, an insurer shall not acquire an asset-backed security if,

as a result of and after giving effect to the investment, the aggregate amount

of asset-backed securities secured by or evidencing an interest in a single

asset or single pool of assets held by a trust or other business entity then

held by the insurer would exceed five percent of its admitted assets.

(b) An insurer

subject to this section shall comply with applicable regulations addressing

investments in lower and medium grade obligations.

(c) Canadian

investments.

(1) An insurer subject

to this section shall not acquire, directly or indirectly through an investment

subsidiary, any Canadian investments authorized by this subchapter, if, as a

result of and after giving effect to the investment, the aggregate amount of

these investments then held by the insurer would exceed 40 percent of its

admitted assets or if the aggregate amount of Canadian investments not acquired

under subdivision 3461c(2) of this subchapter then held by the insurer would

exceed 25 percent of its admitted assets.

(2) However, as

to an insurer that is authorized to do business in Canada or that has

outstanding insurance, annuity or reinsurance contracts on lives or risks

resident or located in Canada and denominated in Canadian currency, the

limitations of subdivision (1) of this subsection shall be increased by the

greater of:

(A) The amount

the insurer is required by Canadian law to invest in Canada or to be

denominated in Canadian currency; or

(B) 125 percent

of the amount of its reserves and other obligations under contracts on risks

resident or located in Canada. (Added 1999, No. 84 (Adj. Sess.), § 2, eff.

April 19, 2000.)