40-2a27. Same; limitations; exceptions; insurance company required to adopt written investment plan.
40-2a27
40-2a27. Same; limitations; exceptions; insurancecompany required toadopt written investment plan.(a) No insurance company shall acquire, directly or indirectly, any mediumgrade or lower grade obligation of any institution if, after giving effect toany such acquisition, the aggregate amount of all medium grade and lower gradeobligations then held by such insurer would exceed 20% of its admitted assets.Within this limitation no more than 10% of its admitted assets shall consist oflower grade obligations; no more than three percent of its admitted assetsshall consist of obligations designated "5" or "6" in the valuations ofsecurities manual; and, no more than one percent of its admitted assets shallconsist of obligations designated "6" in the valuations of securities manual.Attaining or exceeding the limit of any one category shall not preclude aninsurer from acquiring obligations in other categories subject to the specificand multi-category limits.
(b) No insurer organized under the laws of this state may invest more thanone percent of its admitted assets in medium grade obligations issued,guaranteed or insured by any one institution nor may it invest more thanone-half of one percent of its admitted assets in lower grade obligationsissued, guaranteed or insured by any one institution. In no event, shall suchinsurer invest more than one percent of its admitted assets in any medium orlower grade obligations issued, guaranteed or insured by any one institution.
(c) Nothing contained in this act shall prohibit an insurer from acquiringany obligations which it has committed to acquire if the insurer would havebeen permitted to acquire that obligation pursuant to this act on the date onwhich such insurer committed to purchase that obligation.
(d) Notwithstanding the limitations of subsection (b) an insurer mayacquire an obligation of an institution in which the insurer already has one ormore obligations, if the obligation is acquired in order to protect aninvestment previously made in the obligations of the institution, except allsuch acquired obligations shall not exceed one-half of one percent of theinsurer's admitted assets.
(e) Nothing contained in this act shall prohibit an insurer to which thisact applies from acquiring an obligation as a result of a restructuring of amedium or lower grade obligation already held or require such insurer to sellor otherwise dispose of any obligation legally acquired prior to the effectivedate of this act.
(f) Nothing contained in this act shall permit or be construed as permittingan insurer to exceed, alter or otherwise circumvent any of the limitations orrestrictions applicable to the investments authorized by K.S.A. 40-2a01 etseq. and amendments thereto.
(g) Notwithstanding the provisions of K.S.A. 40-2a16 and amendmentsthereto, the total investment in medium and lower grade securities shall notexceed the limitations set forth in this section.
(h) The board of directors of any insurance company organized under the lawsof this state which acquires or invests, directly or indirectly, more than twopercent of its admitted assets in medium grade and lower grade obligations,shall adopt a written plan for the making of such investments. The plan, inaddition to guidelines with respect to the quality of the issues invested in,shall contain diversification standards acceptable to the commissioner whichmay include, but not be limited to, standards for issuer, industry, duration,liquidity and geographic location.
History: L. 1992, ch. 121, § 2;L. 2005, ch. 87, § 1; July 1.