379.083. Insurer investment in investment pools permitted, when--limitations--custodial and pooling agreements.
Insurer investment in investment pools permitted,when--limitations--custodial and pooling agreements.
379.083. 1. As used in this section, the following terms mean:
(1) "Affiliate", as defined in section 382.010, RSMo;
(2) "Business entity", a corporation, limited liability company,association, partnership, joint stock company, joint venture, mutual fundtrust, or other similar form of business organization, including such anentity when organized as a not-for-profit entity;
(3) "Qualified bank", a national bank, state bank or trust company thatat all times is no less than adequately capitalized as determined by thestandards adopted by the United States banking regulators and that is eitherregulated by state banking laws or is a member of the Federal Reserve System.
2. An insurer may acquire investments in investment pools that investonly in investments which an insurer may acquire pursuant to sections 379.080,379.082 and other provisions of law. The insurer's proportionate interest inthe amount invested in these investments shall not exceed the applicablelimits of sections 379.080, 379.082 and other provisions of law. An insurerand its affiliated insurers may invest in a maximum of three investment pools.
3. An investment pool qualified pursuant to this section shall not:
(1) Acquire securities issued, assumed, guaranteed or insured by theinsurer or an affiliate of the insurer;
(2) Borrow or incur an indebtedness for borrowed money, except fortransactions that meet the requirements of sections 379.080, 379.082 and otherprovisions of law;
(3) Permit the aggregate value of securities then loaned or sold to,purchased from or invested in any one business entity, which in no event willbe an affiliated entity of the participant, to exceed ten percent of the totalassets of the investment pool; or
(4) Lend money or other assets to participants in the pool.
4. An insurer shall not acquire an investment in an investment poolpursuant to this section if, as a result of such investment, the aggregateamount of investments then held by the insurer pursuant to this section:
(1) In any one investment pool would exceed ten percent of its admittedassets; or
(2) In all investment pools would exceed thirty percent of its admittedassets.
5. For an investment in an investment pool to be qualified pursuant tothis section, the manager of the investment pool shall:
(1) Be organized under the laws of the United States or an individualstate and be designated as the pool manager in a pooling agreement;
(2) Be the insurer, an affiliated insurer, a qualified bank, a businessentity registered under the federal Investment Advisors Act of 1940 (15 U.S.C. section 80A-1 et seq.) as amended or, in the case of a reciprocal insurer orinterinsurance exchange, its attorney-in-fact;
(3) Compile and maintain detailed accounting records setting forth:
(a) The cash receipts and disbursements reflecting each participant'sproportionate investment in the investment pool;
(b) A complete description of all underlying assets of the investmentpool, including amount, interest rate, maturity date, if any, and otherappropriate designations; and
(c) Other records which, on a daily basis, allow third parties to verifyeach participant's investment in the investment pool; and
(4) Maintain the assets of the investment pool in one custody account,in the name of or on behalf of the investment pool, under a custody agreementwith a qualified bank. All custodial agreements shall be filed with thedepartment of insurance, financial institutions and professional registrationfor prior approval. The custody agreement shall:
(a) State and recognize the claims and rights of each participant;
(b) Acknowledge that the underlying assets of the investment pool areheld solely for the benefit of each participant in proportion to the aggregateamount of its investments in the investment pool; and
(c) Contain an agreement that the underlying assets of the investmentpool shall not be commingled with the general assets of the custodianqualified bank or any other person.
6. The pooling agreement for each investment pool shall be in writingand shall provide that:
(1) An insurer and its affiliated insurers shall, at all times, hold onehundred percent of the interests in the investment pool;
(2) The underlying assets of the investment pool shall not be commingledwith the general assets of the pool manager or any other person;
(3) In proportion to the aggregate amount of each pool participant'sinterest in the investment pool:
(a) Each participant owns an undivided interest in the underlying assetsof the investment pool; and
(b) The underlying assets of the investment pool are held solely for thebenefit of each participant;
(4) A participant or, in the event of the participant's insolvency,bankruptcy or receivership, its trustee, receiver or othersuccessor-in-interest, may withdraw all or any portion of its investment fromthe pool under the terms of the pooling agreement;
(5) Withdrawals may be made upon demand without penalty or otherassessment on any business day, but settlement of funds shall occur within areasonable and customary period thereafter not to exceed five business days.Distributions pursuant to this subdivision shall be calculated in each casenet of all then applicable fees and expenses of the pool. The poolingagreement shall provide that the pool manager shall distribute to aparticipant, at the discretion of the pool manager:
(a) In cash, the then fair market value of the participant's pro ratashare of each underlying asset of the investment pool;
(b) In kind, a pro rata share of each underlying asset; or
(c) In a combination of cash and in-kind distributions, a pro rata sharein each underlying asset; and
(6) The pool manager shall make the records of the investment poolavailable for inspection by the director of the department of insurance,financial institutions and professional registration.
7. The investment pool authorized pursuant to this section shall be abusiness entity.
8. The pooling agreement and any other arrangements or agreementsrelating to an investment pool, and any amendments thereto, shall be submittedto the department of insurance, financial institutions and professionalregistration for prior approval pursuant to section 382.195, RSMo. Individualfinancial transactions between the pool and its participants in the ordinarycourse of the investment pool's operations shall not be subject to theprovisions of section 382.195, RSMo. Investment activities of pools andtransactions between pools and participants shall be reported annually in theregistration statement required by section 382.100, RSMo.
(L. 1997 H.B. 793)