§3461b. General limitations and diversification requirements for life and health insurers

Link to law: http://legislature.vermont.gov/statutes/section/08/101/03461b
Published: 2015

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Title

08

:
Banking and Insurance






Chapter

101

:
INSURANCE COMPANIES GENERALLY






Subchapter

004
:
INVESTMENTS AND LOANS










 

§

3461b. General limitations and diversification requirements for life and health

insurers

(a) General

three percent diversification.

(1) Except as

otherwise specified in this subchapter, a domestic life and health 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 three percent of its admitted

assets in investments of all kinds issued, assumed, accepted, insured or

guaranteed by a single person.

(2) This three

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 three 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, a Canadian investment 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 title 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) 115 percent

of the amount of its reserves and other obligations under contracts on lives or

risks resident or located in Canada. (Added 1999, No. 84 (Adj. Sess.), § 3,

eff. April 19, 2000.)
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