Section 402:28 Types of Investments.
I. Except for those investments which are authorized by RSA 401-B:2, which investments shall be governed exclusively by those sections respectively, every domestic insurance company, other than a life insurance company, shall invest and keep invested all its funds in investments enumerated below, except such cash as may be required in the transaction of its business. Such investments shall include:
(a) Government Obligations. Bonds, notes, or obligations issued, assumed, guaranteed or insured by the United States, or by any state, territory or possession thereof, the District of Columbia or by any county, city, town, village, municipality or district therein or by any political subdivision or public instrumentality of one or more of the foregoing.
(b) Government Agencies. Bonds, notes, obligations, or stock issued, assumed, guaranteed or insured by the following agencies of the United States or in which such government is a participant, whether or not such obligations are guaranteed by such government:
(1) Farm loan bank.
(2) Commodity credit corporation.
(3) Federal intermediate credit banks.
(4) Federal land banks.
(5) Central bank for cooperatives.
(6) Federal home loan banks and stock of such banks.
(7) Federal national mortgage association and stock of such association.
(8) Government national mortgage association.
(9) Federal home loan mortgage corporation.
(10) International bank for reconstruction and development.
(11) Inter-American development bank.
(12) Asian development bank.
(13) African development bank.
(14) Any other similar agency of, or in which there is participation by, the government of the United States, and the instruments are of similar financial quality.
(c) Business Obligations and Equity Interests. Stock, warrants, rights or other securities, bonds, notes or obligations issued, assumed, guaranteed, insured or accepted by any solvent corporation, joint-stock association, trust, partnership, joint venture or other entity or combination of entities incorporated or existing under the laws of the United States or of any state, district or territory thereof, and any interest in any of the foregoing.
(d) Limited Partnerships. A domestic company may become a limited partner in a limited partnership on the following conditions:
(1) The partnership shall be organized under the limited partnership laws of the state of the partnership formation.
(2) A company shall not invest more than 5 percent of its capital and surplus in any one such partnership.
(3) The aggregate carrying value of all investments in limited partnerships shall not exceed 5 percent of the company's admitted assets.
(e) Bank Obligations. Interest-bearing deposits, banks' and bankers' acceptances, including bills of exchange, or certificates of deposit in banks, bank and trust companies, savings banks, savings associations, savings and loan associations or national banking associations, incorporated or existing under the laws of the United States or any state, district or territory thereof, including branches of any of the foregoing, or foreign banking institutions or branches of such institutions located in the United States or any state, district or territory thereof.
(f) Revenue Obligations. Obligations or participations in obligations which are not issued, assumed, guaranteed or accepted by any person described under subparagraph I(c), but are:
(1) Adequately secured by an assignment or right to receive rent, or other payment or revenues payable or guaranteed by any one or more persons or entities; or adequately secured by a mortgage, interest in a mortgage pool, or mortgage participation, or lien or security interest in real or personal property or any interest therein.
(2) The obligations or participations in such obligations of any person or entity whose principal assets are any one of the foregoing obligations or participations secured in accordance with subparagraph (f)(1).
(g) Mortgage or Mortgage Participations.
(1) Direct obligations for the payment of money which are adequately secured by first mortgages on real property.
(2) Obligations or mortgage participations in such obligations of any person or entity whose principal assets are any of the foregoing obligations or participations secured by such liens or interests.
(3) Mortgage backed securities, including but not limited to: mortgage pass through securities; mortgage backed bonds; collateralized mortgage obligations; and real estate mortgage investment conduits, adequately secured by a pool of mortgages and serviced by a governmental unit or instrumentality of the United States or any entity incorporated under the laws of the United States or of any state thereof.
(4) No investment in any single issue made under this paragraph except for bonds, notes, or obligations issued, assumed, guaranteed, or insured by any of the entities described in subparagraphs (a) or (b) shall exceed an amount equal to 5 percent of such company's admitted assets.
(h) Collateral Loans. Direct obligations for the payment of money adequately secured by the pledge of any property which would be authorized as an investment under this subdivision.
(i) Direct Real Estate Holdings. A domestic company may, by itself, or in combination with one or more other persons or entities, except that no domestic company may participate as a general partner, acquire by purchase, lease or otherwise, or receive, hold, or convey, real estate, or any interest therein:
(1) Required for its convenient accommodation in the transaction of its business, including home office, regional offices, or other office locations, and residential real estate purchased from employees who are transferred or are about to be transferred to new places or employment with such company.
(2) Conveyed to it in satisfaction of debts previously contracted in the course of its dealing.
(3) Purchased at sales upon judgments, decrees, or mortgages, obtained or made for debts due the company, or for debts due other persons where said company may have liens or encumbrances on the same, and the purchase is deemed necessary to save the company from loss. Any real estate purchased, received, or acquired which has been held for a period of more than 5 years from the date of its purchase, receipt, or acquisition, shall be sold and disposed of within a period of 6 months after due notice to the company from the commissioner to sell and convey the same. The commissioner may extend the time for such disposition if he believes the interest of the company shall suffer materially by a forced sale.
(4) Reasonably necessary for the purpose of maintaining or enhancing the sale value of real property previously acquired or held by it under this paragraph.
(j) Exchange Traded Financial Futures Contracts. The investment practice of financial futures contracts issued under terms and conditions regulated by a federal regulatory agency is authorized on the following conditions:
(1) A company shall not enter into a financial futures contract except as a hedging transaction as that term is defined in a rule adopted pursuant to this subdivision.
(2) A company shall not have initial or maintenance margin outstanding under this paragraph of more than 10 percent of the excess of its capital and surplus over the minimum requirements of a new stock or mutual company to qualify for a certificate of authority to write the kind of insurance which the company is authorized to write.
(k) Exchange Traded Put and Call Options. The investment practice of put options and call options issued under terms and conditions regulated by, or substantially similar to those terms and conditions required by, a National Securities Exchange registered under the Securities Exchange Act of 1934, as amended, or any board of trade designated as a contract market by the Commodity Futures Trading Commission under the Commodity Exchange Act, as amended, is authorized on the following conditions:
(1) A company shall not sell a call option on either:
(A) Securities it does not own, or
(B) In an amount greater than securities which it presently owns.
(2) In the case of financial futures contracts and stock or bond index contracts where it is not feasible to own the underlying security, a company may sell a call option only in connection with a hedging transaction.
(3) A company shall not sell a put option unless its obligations under such put option are fully secured by a deposit by the company with a bank or other custodian of cash or cash equivalents.
(4) A company shall not purchase as opening transactions under this paragraph more than 10 percent of the excess of its capital and surplus over the minimum requirements of a new stock or mutual company to qualify for a certificate of authority to write the kind of insurance which the company is authorized to write.
(l) Options and Futures Contracts. Options or futures contracts traded in markets regulated under the laws of the United States, or by an agency thereof, and other contracts or instruments for the purpose of reducing the company's economic risk in connection with potential changes in the value of specifically identified assets which the company owns or could reasonably expect to acquire, or specifically identified liabilities which the company has or reasonably expects to incur. The aggregate cost of investments held under this paragraph shall not exceed 5 percent of the company's admitted assets.
(m) Securities Lending. The investment practice of lending securities, and entering into repurchase agreements and reverse repurchase agreements is authorized on the following conditions:
(1) ""Lending of securities'' means an investment other than a repurchase agreement, whereby an agreement is entered into which transfers ownership rights and possession of securities to the borrower of such securities with the agreement providing for a return of ownership rights and possession of the securities to the lender at a specified date or upon demand.
(2) ""Repurchase agreement'' means a bilateral agreement whereby a company purchases securities with a related agreement that the seller will purchase or repurchase at a specified price the equivalent or similar securities within a specified period of time or on demand.
(3) ""Reverse repurchase agreement'' means a bilateral agreement whereby a company:
(A) Sells securities with a related agreement to purchase or repurchase at a specified price the equivalent or similar securities within a specified period of time or upon demand, or
(B) Borrows funds and transfers securities to the lender with a related agreement that equivalent or similar securities shall be returned to the company upon repayment of the loan within a specified period of time or on demand.
(4) Lending of securities, repurchase agreements and reverse repurchase agreements are authorized on the following conditions:
(A) The agreement for each transaction or the master agreement for a series of transactions shall be reduced to writing.
(B) Securities acquired by a company owned subject to reacquisition pursuant to an outstanding repurchase agreement may not be sold pursuant to a reverse repurchase agreement nor lent pursuant to a lending of securities agreement. Consideration, or collateral, received from a reverse repurchase agreement or lending of securities agreement may be used to acquire securities which are equivalent or similar to the securities transferred pursuant to such repurchase agreement or lending of securities agreement; however, such acquired securities may not be sold pursuant to a reverse repurchase agreement nor lent pursuant to a lending of securities agreement.
(C) A company is limited to no more than 10 percent of its admitted assets being subject to lending of securities, repurchase agreements or reverse repurchase agreements transactions outstanding with any one entity under this paragraph.
(D) A company may engage in lending its securities or repurchase or reverse repurchase agreements not to exceed 40 percent of its admitted assets, provided, however, that such transactions are collateralized 102 percent of the market value of loaned securities at the close of every business day in which such agreement remains open.
(n) Rated Securities. Obligations which are rated by a securities rating agency, which agency is acceptable to the commissioner, and which securities are rated so as to be in one of the highest 4 generic lettered rating classifications, or awarded a ""yes'' rating by the Securities Valuation Office of the National Association of Insurance Commissioners.
(o) Basket Provision. Any investment of any kind not otherwise authorized by this subdivision up to an amount not exceeding in the aggregate 10 percent of such company's admitted assets.
(p) Mutual Funds. Equity interest in an open-ended investment company registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) as amended, provided that substantially all the investments of such mutual funds are traded on a nationally recognized stock exchange or on the NASDAQ system.
(q) With approval of the commissioner, funds loaned to the New Hampshire Insurance Guaranty Association pursuant to RSA 404-H:8, II(b).
II. (a) Foreign Securities; Insurance Policy Related. A domestic company which is lawfully doing business in any foreign country may also invest its funds in:
(1) Bonds, notes, or obligations of such foreign country, or of a political subdivision, governmental corporation or agency, of such foreign country.
(2) Stocks, warrants, rights or other securities, bonds, notes, or obligations of any business entity formed or located in such foreign country, which are of the same kinds, classes and grades as those eligible for investments under this subdivision.
(b) The aggregate carrying value of all investments under this paragraph shall not exceed 150 percent of the liabilities arising from the outstanding policies of insurance issued or delivered in such foreign country.
III. United States Dollar Denominated Foreign Investments. A domestic company may invest in stocks, warrants, rights or other securities, bonds, notes, or obligations, of foreign entities which are denominated in United States dollars, which are of the same kind, class and grade of United States investments which are authorized under any other provision of this subdivision. Any investment authorized under this paragraph shall be aggregated with United States investments of the same category in determining compliance with percentage limitations, if any, contained in other provisions of this subdivision.
IV. Foreign Investments Denominated in Foreign Currency. A domestic company may invest in stocks, warrants, rights or other securities, bonds, notes, or obligations, of foreign entities which are denominated in a foreign currency, which are of the same kind, class and grade of United States investments which are authorized under any other provision of this subdivision. The aggregate carrying value of all investments under this paragraph shall be 10 percent of such company's admitted assets.
Source. 1917, 30:4. PL 273:23. RL 323:28. RSA 402:28. 1975, 232:1. 1977, 334:1. 1991, 372:2. 1997, 221:4. 2004, 197:3, eff. Aug. 6, 2004.