(a) Domestic insurers may acquire, hold, or invest in investments or engage in investment practices as set forth in this chapter. In addition to investments conforming to this act, domestic insurers may also invest in securities of one or more subsidiaries of the insurer to the extent permitted by § 31-702.
(b) Subject to subsection (c) of this section, an insurer shall not acquire or hold an investment as an admitted asset unless, at the time of acquisition, it is:
(1) Eligible for the payment or accrual of interest or discount, whether in cash or other securities; eligible to receive dividends or other distributions; or is otherwise income-producing; or
(2) Acquired under §§ 31-1372.07(c), 31-1372.08, 31-1372.10, 31-1372.12, 31-1373.08(c), 31-1373.09, 31-1373.11, or 31-1373.12, or under other provisions of District of Columbia law other than this chapter.
(c) An insurer may acquire or hold as admitted assets investments that do not otherwise qualify as provided in this chapter if the insurer has not acquired them for the purpose of circumventing any limitations contained in this chapter, the insurer complies with the provisions of §§ 31-1371.04 and 31-1371.06 as to the investments, and the insurer acquires the investments in the following circumstances:
(1) As payment on account of existing indebtedness or in connection with the refinancing, restructuring, or workout of existing indebtedness, if taken to protect the insurer's interest in that investment;
(2) As realization on collateral for an obligation;
(3) In connection with an otherwise qualified investment or investment practice, (A) as interest on or a dividend or other distribution related to the investment or investment practice or in connection with the refinancing of the investment, and (B) for no additional or only nominal consideration;
(4) Under a lawful and bona fide agreement of recapitalization or voluntary or involuntary reorganization in connection with an investment held by the insurer; or
(5) Under a bulk reinsurance, merger, or consolidation transaction approved by the Commissioner if the assets constitute admissible investments for the ceding, merged, or consolidated companies.
(d) Unless within the period the investment has become a qualified investment under a section of this chapter other than subsection (c) of this section, an investment, or portion of an investment, acquired by an insurer under subsection (c) of this section shall become a nonadmitted asset 3 years (or 5 years in the case of mortgage loans and real estate) from the date of its acquisition; provided, that an investment acquired under an agreement of bulk reinsurance, merger, or consolidation may be qualified for a long period if so provided in the plan for reinsurance, merger, or consolidation as approved by the Commissioner. Upon application by the insurer and a showing that the nonadmission of an asset held under subsection (c) of this section would materially injure the interests of the insurer, the Commissioner may extend the period for admissibility for an additional reasonable period of time.
(e) Except as provided in subsections (f) and (h) of this section, an investment shall qualify under this chapter if, on the date that the insurer committed to acquire the investment or on the date of its acquisition, it would have qualified under this chapter. For the purposes of determining limitations contained in this chapter, an insurer shall give appropriate recognition to any commitments to acquire investments.
(f)(1) An investment held as an admitted asset by an insurer on April 11, 2003, which qualified under § 31-4435, and § 31-2502.18, shall remain qualified as an admitted asset under this chapter.
(2) Each specific transaction constituting an investment practice of the type described in this chapter that was lawfully entered into by an insurer and was in effect on April 11, 2003, shall continue to be permitted under this chapter until its expiration or termination under its terms.
(g) Unless otherwise specified, an investment limitation computed on the basis of an insurer's admitted assets or capital and surplus shall relate to the amount required to be shown on the statutory balance sheet of the insurer most recently required to be filed with the Commissioner. For purposes of computing any limitation based upon admitted assets, the insurer shall deduct from the amount of its admitted assets the amount of the liability recorded on its statutory balance sheet for:
(1) The return of acceptable collateral received in a reverse repurchase transaction or a securities lending transaction;
(2) Cash received in a dollar roll transaction; and
(3) The amount reported as borrowed money in the most recently filed financial statement to the extent not included in paragraphs (1) and (2) of this subsection.
(h) An investment qualified, in whole or in part, for acquisition or holding as an admitted asset may be qualified or requalified at the time of acquisition or a later date, in whole or in part, under any other section, if the relevant conditions contained in the other section are satisfied at the time of qualification or requalification.
(i) An insurer shall maintain documentation demonstrating that investments were acquired in accordance with this chapter and specifying the section of this chapter under which they were acquired.
(j) An insurer shall not enter into an agreement to purchase securities in advance of their issuance for resale to the public as part of a distribution of the securities by the issuer or otherwise guarantee the distribution, except that an insurer may acquire privately placed securities with registration rights.
(k) Notwithstanding any provision of this chapter, the Commissioner may, by rule or order, permit an insurer to nonadmit, limit, dispose of, withdraw from, or discontinue an investment or investment practice to the extent the Commissioner finds that the investment or investment practice endangers the solvency of the insurer or is otherwise hazardous to policyholders, creditors, or the public in the District of Columbia. The authority of the Commissioner under this subsection shall be in addition to any other authority of the Commissioner.
(l) Insurance future and insurance futures options shall not be considered investments or investment practices for purposes of this chapter.
CREDIT(S)
(Apr. 11, 2003, D.C. Law 14-297, § 103, 50 DCR 330.)
HISTORICAL AND STATUTORY NOTES
Legislative History of Laws
For Law 14-297, see notes following § 31-1371.01.