Bill Text: IA HSB96 | 2023-2024 | 90th General Assembly | Introduced
Bill Title: A bill for an act relating to investments of funds by life insurers, and including applicability provisions.(See HF 271.)
Spectrum: Committee Bill
Status: (Introduced) 2023-02-13 - Committee report approving bill, renumbered as HF 271. [HSB96 Detail]
Download: Iowa-2023-HSB96-Introduced.html
House
Study
Bill
96
-
Introduced
SENATE/HOUSE
FILE
_____
BY
(PROPOSED
DEPARTMENT
OF
COMMERCE/INSURANCE
DIVISION
BILL)
A
BILL
FOR
An
Act
relating
to
investments
of
funds
by
life
insurers,
and
1
including
applicability
provisions.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
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Section
1.
Section
508.13,
subsection
1,
Code
2023,
is
1
amended
to
read
as
follows:
2
1.
On
receipt
of
an
application
for
a
certificate
of
3
authority
or
renewal
of
a
certificate
of
authority,
the
4
appropriate
fees,
the
deposit
provided
in
section
511.8,
5
subsection
16
,
and
the
statement,
and
the
statement
and
6
evidence
of
investment
of
foreign
companies,
the
commissioner
7
of
insurance
shall
issue
a
certificate
or
a
renewal
of
a
8
certificate
setting
forth
the
corporate
name
of
the
company,
9
its
home
office,
that
it
has
fully
complied
with
the
laws
of
10
the
state
and
is
authorized
to
transact
the
business
of
life
11
insurance
for
the
ensuing
year,
which
certificate
shall
expire
12
on
the
first
day
of
June
of
the
ensuing
year,
or
sooner
upon
13
thirty
days’
notice
given
by
the
commissioner,
of
the
next
14
annual
valuation
of
its
policies.
15
Sec.
2.
Section
508.14,
subsections
1
and
3,
Code
2023,
are
16
amended
to
read
as
follows:
17
1.
Upon
a
failure
of
a
company
organized
under
the
laws
18
of
this
state
to
make
the
deposit
provided
in
section
511.8,
19
subsection
16
,
or
file
the
statement
in
the
time
stated
in
20
section
508.11
,
or
to
file
in
a
timely
manner
any
financial
21
statement
required
by
rule
of
the
commissioner
of
insurance,
22
the
commissioner
of
insurance
shall
notify
the
attorney
general
23
of
the
default,
who
and
the
attorney
general
shall
at
once
24
apply
to
the
district
court
of
the
county
where
the
home
25
office
of
the
company
is
located
for
an
order
requiring
the
26
company
to
show
cause,
upon
reasonable
notice
to
be
fixed
as
27
determined
by
the
court,
why
its
the
company’s
business
shall
28
not
be
discontinued.
If,
upon
the
hearing,
sufficient
cause
is
29
not
shown,
the
court
shall
decree
its
the
dissolution
of
the
30
company
.
31
3.
The
commissioner
may
give
notice
to
a
company
,
which
32
that
has
failed
to
file
evidence
of
deposit
and
all
of
the
33
company’s
delinquent
statements
within
the
required
time
34
fixed,
that
the
company
is
in
violation
of
this
section
.
If
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the
company
fails
to
file
evidence
of
deposit
and
all
of
the
1
company’s
delinquent
statements
within
ten
days
of
the
date
of
2
the
notice,
the
company
is
shall
be
subject
to
an
additional
3
administrative
penalty
of
one
hundred
dollars
for
each
day
the
4
failure
continues.
5
Sec.
3.
Section
508.29,
Code
2023,
is
amended
to
read
as
6
follows:
7
508.29
Authority
to
write
other
insurance.
8
1.
Any
life
insurance
company
organized
on
the
stock
or
9
mutual
plan
,
and
that
is
authorized
by
its
the
company’s
10
charter
or
articles
of
incorporation
so
to
do
,
may
in
addition
11
to
such
life
insurance,
insure,
either
individually
or
on
12
the
group
plan,
the
health
of
persons
and
against
personal
13
injuries,
disablement
or
death,
resulting
from
traveling
or
14
general
accidents
by
land
or
water,
and
insure
employers
15
against
loss
in
consequence
of
accidents
or
casualties
of
any
16
kind
to
employees
or
other
persons,
or
to
property
resulting
17
from
any
act
of
the
employee
or
any
accident
or
casualty
to
18
persons
or
property,
or
both,
occurring
in
or
connected
with
19
the
transaction
of
their
transacting
the
employer’s
business,
20
or
from
the
operation
of
any
machinery
connected
therewith
with
21
transacting
the
employer’s
business
,
but
nothing
contained
22
in
this
section
shall
be
construed
to
authorize
any
life
23
insurance
company
to
insure
against
loss
or
injury
to
person,
24
or
property,
or
both,
growing
out
of
explosion
or
rupture
25
of
steam
boilers.
An
insurer
may
contract
with
health
care
26
service
providers
and
offer
different
levels
of
benefits
to
27
policyholders
based
upon
the
provider
contracts.
28
2.
A
company
insuring
risks
authorized
by
this
section
shall
29
invest
or
hold
in
cash,
funds
equal
to
seventy-five
percent
of
30
the
aggregate
reserves
and
policy
and
contract
claims
for
such
31
risks.
Investments
required
by
this
subsection
shall
only
be
32
made
in
securities
enumerated
in
section
511.8
,
and
are
subject
33
to
the
same
limitations
as
provided
for
the
investment
of
legal
34
reserve,
and
are
subject
to
section
511.8,
subsections
16,
17,
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and
21
.
1
Sec.
4.
Section
508C.8,
subsection
9,
paragraph
c,
Code
2
2023,
is
amended
to
read
as
follows:
3
c.
Borrow
money
to
effect
the
purposes
of
this
chapter
.
Any
4
notes
or
other
evidence
of
indebtedness
of
the
association
held
5
by
domestic
insurers
and
not
in
default
qualify
as
investments
6
eligible
for
deposit
under
section
511.8
,
subsection
16
.
7
Sec.
5.
Section
511.8,
Code
2023,
is
amended
by
striking
the
8
section
and
inserting
in
lieu
thereof
the
following:
9
511.8
Investment
of
funds.
10
1.
Definitions.
As
used
in
this
section
unless
the
context
11
otherwise
requires:
12
a.
“Accounting
practices
and
procedures
manual”
means
the
13
most
recent
edition
of
the
national
association
of
insurance
14
commissioner’s
accounting
practices
and
procedures
manual.
15
b.
“Admitted
assets”
means
the
assets
permitted
to
be
16
reported
as
admitted
assets
on
an
insurer’s
most
recent
17
statutory
financial
statement
required
to
be
filed
with
the
18
commissioner.
“Admitted
assets”
shall
include
reinsurance
funds
19
withheld.
“Admitted
assets”
shall
not
include
assets
held
in
20
nonguaranteed
separate
accounts.
21
c.
“Affiliate
of”
means
the
same
as
defined
in
section
22
521A.1.
23
d.
“Business
entity”
means
a
sole
proprietorship,
24
corporation,
limited
liability
company,
association,
25
partnership,
joint
stock
company,
joint
venture,
mutual
26
fund,
trust,
joint
tenancy
or
other
similar
form
of
business
27
organization,
whether
organized
for-profit
or
not-for-profit.
28
e.
“Capital
and
surplus”
means
the
sum
of
capital
and
29
surplus
of
an
insurer
that
is
required
to
be
shown
on
an
30
insurer’s
most
recent
statutory
financial
statement
required
to
31
be
filed
with
the
commissioner.
32
f.
“Collateral
loan”
means
an
unconditional
obligation
33
for
the
payment
of
money
that
is
secured
by
the
pledge
of
34
any
assets
or
investments
permitted
under
this
section.
A
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collateral
loan
cannot
be
a
mortgage
loan,
rated
credit
1
instrument,
or
other
debt
security
as
defined
in
this
2
subsection.
3
g.
“Commissioner”
means
the
commissioner
of
insurance.
4
h.
“Equity
interest”
means
any
of
the
following:
5
(1)
A
common
stock.
6
(2)
A
trust
certificate.
7
(3)
An
equity
investment
in
an
investment
company
other
than
8
an
SVO-listed
fixed
income
or
preferred
stock
fund.
9
(4)
An
investment
in
a
common
trust
fund
with
a
bank
that
is
10
regulated
by
a
federal
or
state
agency
as
trustee.
11
(5)
An
ownership
interest
in
minerals,
oil,
or
gas,
the
12
rights
to
which
have
been
separated
from
the
underlying
fee
13
interest
in
the
real
estate
where
the
minerals,
oil,
or
gas
are
14
located.
15
(6)
An
instrument
that
is
mandatorily,
or
at
the
option
of
16
the
issuer,
convertible
to
equity.
17
(7)
A
limited
partnership
interest
or
a
general
partnership
18
interest
as
authorized
under
subsection
4.
19
(8)
An
ownership
interest
in
a
limited
liability
company.
20
(9)
A
warrant
or
other
right
to
acquire
an
ownership
21
interest
that
is
created
by
the
person
that
either
owns
or
will
22
issue
the
ownership
interest
to
be
acquired.
23
(10)
An
investment
categorized
as
an
equity
interest
under
24
subsection
5.
25
i.
“Foreign
investment”
means
an
investment
in
a
foreign
26
jurisdiction,
or
an
investment
in
an
entity,
real
estate,
or
27
asset
domiciled
in
a
foreign
jurisdiction.
“Foreign
investment”
28
shall
not
include
any
of
the
following:
29
(1)
An
asset
for
which
the
issuing
person
or
guarantor
is
30
the
United
States
or
Canada,
or
is
domiciled
in
the
United
31
States
or
Canada.
32
(2)
An
asset
for
which
the
issuing
person
is
domiciled
in
a
33
foreign
jurisdiction
that
has
a
sovereign
debt
rating
of
SVO
1,
34
and
the
issuing
person
is
a
fund
or
other
investment
vehicle
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that
invests,
directly
or
indirectly,
substantially
all
of
1
its
assets
in
investments
which
are
not
foreign
investments.
2
If
an
insurer
invests
in
an
asset
under
this
subparagraph,
3
the
commissioner
may
require
the
insurer
to
disclose
to
4
the
commissioner
the
investments
held
by
the
fund
or
other
5
investment
vehicle.
6
j.
“Hedging
transaction”
means
a
derivative
transaction
7
entered
into
and
maintained
by
an
insurer
to
reduce
any
of
the
8
following:
9
(1)
The
risk
of
a
change
in
the
value,
yield,
price,
10
cash
flow,
or
quantity
of
assets
or
liabilities
which
the
11
insurer
has
acquired
or
incurred,
or
anticipates
acquiring
or
12
incurring.
13
(2)
Currency
exchange
rate
risk
or
the
degree
of
exposure
14
as
to
assets
or
liabilities
that
the
insurer
has
acquired
or
15
incurred,
or
anticipates
acquiring
or
incurring.
16
k.
“Income
generation
transaction”
means
a
derivative
17
transaction
that
involves
writing
a
covered
call
option,
18
covered
put
option,
covered
cap,
or
covered
floor,
and
that
is
19
intended
to
generate
income
or
enhance
return.
20
l.
“Insurer”
means
a
company
organized
as
a
life
insurance
21
company
under
chapter
508.
22
m.
“Investment
company”
means
an
investment
company
as
23
defined
in
section
3(a)
of
the
federal
Investment
Company
Act
24
of
1940,
as
amended,
and
as
codified
at
15
U.S.C.
§§80a-3
et
25
seq.,
and
a
person
described
in
section
3(c)
of
the
federal
26
Investment
Company
Act.
27
n.
“Investment
subsidiary”
means
a
subsidiary
of
an
insurer
28
that
is
engaged
or
organized
to
engage
exclusively
in
the
29
ownership
and
management
of
assets
authorized
as
investments
30
for
the
insurer.
31
o.
“Lower
grade
investment”
means
a
rated
credit
instrument
32
that
is
designated
4,
5,
or
6
by
the
SVO.
33
p.
“Medium
grade
investment”
means
a
rated
credit
instrument
34
that
is
designated
3
by
the
SVO.
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q.
“Mortgage
loan”
means
an
obligation
secured
by
a
1
mortgage,
deed
of
trust,
trust
deed,
or
other
consensual
lien
2
on
real
estate.
“Mortgage
loan”
includes
a
leasehold
estate
3
in
real
property
if
fifty
years
or
more
of
the
term,
including
4
renewals,
is
unexpired.
5
r.
“NAIC”
means
the
national
association
of
insurance
6
commissioners.
7
s.
“Nonguaranteed
separate
account”
means
a
separate
account
8
for
which
the
insurer’s
general
account
bears
no
risk
related
9
to
performance
of
the
separate
account
assets.
10
t.
“Other
debt
security”
means
an
investment
in
the
form
11
of
a
debt
security
that
does
not
qualify
as
a
bond,
however,
12
the
investment
does
qualify
as
an
admissible
asset
under
the
13
accounting
practices
and
procedures
manual.
14
u.
“Person”
means
an
individual,
a
business
entity,
15
a
multilateral
development
bank,
or
a
governmental
or
16
quasi-governmental
body
such
as
a
political
subdivision
or
a
17
government-sponsored
enterprise.
18
v.
“Rated
credit
instrument”
means
an
investment
that
19
is
qualified
as
a
bond
under
the
accounting
practices
and
20
procedures
manual,
such
as
evidence
of
indebtedness
of
a
21
governmental
unit
or
the
instrumentality
of
the
governmental
22
unit,
or
of
a
private
business
entity.
“Rated
credit
23
instrument”
includes
asset-backed
securities,
bank
loans,
and
24
SVO-listed
funds
that
have
a
SVO
designation,
and
that
qualify
25
as
a
bond
under
the
manual.
26
w.
“Real
estate”
means
any
of
the
following:
27
(1)
Real
property.
28
(2)
Interests
in
real
property
such
as
leaseholds,
and
29
minerals,
oil,
and
gas
that
have
not
been
separated
from
the
30
underlying
fee
interest.
31
(3)
Improvements
and
fixtures
located
on
or
in
the
real
32
property.
33
(4)
The
buyer’s
equity
in
a
contract
providing
for
a
sale
34
of
real
estate.
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(5)
An
investment
categorized
as
real
estate
under
1
subsection
5.
2
x.
“Replication
transaction”
means
a
derivative
transaction
3
entered
into
in
conjunction
with
other
investments
in
order
4
to
reproduce
the
investment
characteristics
of
otherwise
5
permissible
investments.
“Replication
transaction”
does
not
6
include
a
derivative
transaction
that
is
entered
into
as
a
7
hedging
transaction.
8
y.
“Securities
valuation
office”
or
“SVO”
means
the
9
securities
valuation
office
of
the
NAIC,
or
a
successor
entity.
10
z.
“Short-term
investment”
means
a
highly
liquid
investment
11
or
security
that
has
a
remaining
term
of
maturity
between
12
ninety
days
and
three
hundred
sixty-five
days,
and
that
is
13
qualified
as
a
short-term
investment
under
the
accounting
14
practices
and
procedures
manual.
15
2.
Prudence
evaluation
criteria.
16
a.
For
all
investments
under
this
section,
an
insurer
17
shall
perform
the
insurer’s
duties
in
good
faith
and
with
the
18
degree
of
care
that
persons
of
reasonable
prudence
in
a
similar
19
position
exercise
in
a
similar
circumstance.
The
following
20
factors
shall
be
evaluated
by
the
insurer
and
considered
along
21
with
the
insurer’s
business
to
determine
if
an
investment
22
portfolio
or
an
investment
policy
is
prudent:
23
(1)
General
economic
conditions.
24
(2)
The
expected
tax
consequences
of
an
investment
decision
25
or
strategy.
26
(3)
The
fairness
and
reasonableness
of
the
terms
of
an
27
investment
in
relation
to
the
investment’s
risk
and
reward
28
characteristics.
29
(4)
The
effect
of
an
investment
on
the
characteristics
of
30
the
insurer’s
investment
portfolio
as
a
whole.
31
(5)
The
extent
of
the
diversification
of
the
insurer’s
32
investments
among
all
of
the
following:
33
(a)
Individual
investments.
34
(b)
Classes
of
investments.
35
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H.F.
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(c)
Industry
concentrations.
1
(d)
Issuers.
2
(e)
Geographic
areas.
3
(6)
The
economic
substance
of
investments
in
affiliates.
4
(7)
The
investment
exposure
to
each
of
the
following
risks,
5
consistent
with
the
insurer’s
acceptable
risk
level
identified
6
under
subsection
3:
7
(a)
Liquidity.
8
(b)
Credit
and
default.
9
(c)
Market.
10
(d)
Interest
rate,
including
duration
and
convexity.
11
(e)
Currency.
12
(8)
The
amount
of
the
insurer’s
assets,
premium
writings
13
and
insurance
in
force,
level
of
capitalization,
and
other
14
appropriate
characteristics.
15
(9)
The
amount
and
adequacy
of
the
insurer’s
reported
16
liabilities.
17
(10)
The
relationship,
and
the
risk
of
adverse
changes,
18
of
the
expected
cash
flows
of
the
insurer’s
assets
and
19
liabilities.
20
(11)
The
relationship,
and
the
risk
of
adverse
changes,
of
21
the
valuation
of
the
insurer’s
assets
and
liabilities.
22
(12)
The
insurer’s
level
of
expertise
with
various
types
of
23
investments.
24
(13)
The
ability
of
the
insurer
to
model
the
underlying
25
risks
of
an
investment,
with
the
modeling
commensurate
with
the
26
complexity
of
the
investment.
27
(14)
The
overall
maturity
of
the
insurer’s
enterprise
risk
28
management
and
investment
risk
management
frameworks.
29
(15)
The
adequacy
of
the
insurer’s
capital
and
surplus
to
30
secure
the
liabilities
of
the
insurer
in
consideration
of
the
31
risk
and
potential
magnitude
of
adverse
experience
or
economic
32
conditions.
33
(16)
The
professional
standards
required
by
the
insurer
for
34
the
individuals
who
make
day-to-day
investment
decisions
on
35
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H.F.
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behalf
of
the
insurer.
1
(17)
Any
other
factors
relevant
to
whether
an
investment
is
2
prudent.
3
b.
The
commissioner
shall
consider
each
of
the
factors
in
4
paragraph
“a”
,
subparagraphs
(1)
through
(17),
prior
to
making
5
a
determination
that
an
insurer’s
investment
portfolio
or
6
investment
policy
is
not
prudent.
7
3.
Insurer
investment
policies.
In
acquiring,
investing,
8
exchanging,
holding,
selling,
and
managing
investments,
9
an
insurer
shall
establish
and
follow
one
or
more
written
10
investment
policies
that
shall
be
annually
reviewed
and
11
approved
by
the
insurer’s
board
of
directors
or
the
board
of
12
directors’
designee.
The
content
and
format
of
an
insurer’s
13
investment
policies
are
at
the
insurer’s
discretion;
however,
14
the
investment
policies
must
include
written
guidelines
and
15
controls
appropriate
to
the
insurer’s
business.
An
insurer
16
shall
consider
all
of
the
following:
17
a.
Permissible
asset
types,
including
maximum
or
minimum
18
internal
limits
regarding
the
composition
of
classes
of
19
investments.
20
b.
Periodic
evaluation
of
the
investment
portfolio
as
to
the
21
portfolio’s
risk
and
reward
characteristics.
22
c.
The
relationship
of
investments
to
the
insurer’s
23
insurance
products
and
liabilities.
24
d.
The
manner
in
which
the
insurer
intends
to
implement
25
subsection
2.
26
e.
The
appropriate
level
of
risk,
based
on
quantitative
27
measures,
given
the
level
of
capitalization
and
expertise
28
available
to
the
insurer.
29
4.
Prohibited
investments.
An
insurer
shall
not,
directly
30
or
indirectly,
do
any
of
the
following:
31
a.
Except
as
provided
in
subsection
5,
invest
in
an
32
obligation
or
security,
or
make
a
guarantee
for
the
benefit
of
33
or
in
favor
of
an
officer
or
director
of
the
insurer.
34
b.
Except
as
provided
in
chapter
521A
or
subsection
5,
35
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H.F.
_____
invest
in
an
obligation
or
security
of,
make
a
guarantee
for
1
the
benefit
of
or
in
favor
of,
or
make
other
investments
in,
2
a
business
entity
in
which
ten
percent
or
more
of
the
voting
3
securities
or
equity
interests
are
owned
directly
or
indirectly
4
by
or
for
the
benefit
of
one
or
more
officers
or
directors
of
5
the
insurer.
6
c.
Engage
on
the
insurer’s
own
behalf,
or
through
one
or
7
more
affiliates,
in
a
transaction
or
series
of
transactions
8
intended
to
evade
the
prohibited
investments
under
this
9
subsection.
10
d.
Act
or
invest
as
a
general
partner,
with
the
following
11
exceptions:
12
(1)
If
all
other
partners
in
the
partnership
are
13
subsidiaries
of
the
insurer.
14
(2)
For
the
purpose
of
any
of
the
following:
15
(a)
Meeting
cash
calls
committed
to
by
the
partnership
prior
16
to
July
1,
2023.
17
(b)
Completing
specific
projects
or
activities
of
the
18
partnership
in
which
the
insurer
was
a
general
partner
before
19
July
1,
2023,
and
that
had
been
undertaken
before
July
1,
2023.
20
(c)
Making
capital
improvements
to
property
owned
by
the
21
partnership
before
July
1,
2023,
if
the
insurer
was
a
general
22
partner
before
July
1,
2023.
23
e.
Notwithstanding
paragraphs
“c”
and
“d”
,
a
subsidiary
or
24
an
affiliate
of
an
insurer
shall
not
be
prohibited
from
acting
25
or
investing
as
a
general
partner.
26
f.
(1)
Invest
in
or
lend
the
insurer’s
funds
upon
the
27
security
of
shares
of
the
insurer’s
own
stock,
except
that
an
28
insurer
may
acquire
shares
of
its
own
stock
for
any
of
the
29
following
purposes:
30
(a)
Conversion
of
a
stock
insurer
into
a
mutual
or
31
reciprocal
insurer,
or
a
mutual
or
reciprocal
insurer
into
a
32
stock
insurer.
33
(b)
Issuance
to
the
insurer’s
officers,
employees,
or
34
agents
in
connection
with
a
plan
for
converting
a
publicly
35
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H.F.
_____
held
insurer
into
a
privately
held
insurer,
as
approved
by
the
1
commissioner
under
section
508B.7,
or
in
connection
with
other
2
stock
option
and
employee
benefit
plans.
3
(c)
In
accordance
with
any
other
plan
approved
by
the
4
commissioner.
5
(2)
Stocks
acquired
by
an
insurer
under
subparagraph
(1)
6
shall
not
be
admitted
assets
of
the
insurer.
7
5.
Valuation
and
categorization
of
investments.
8
a.
Unless
otherwise
specified
in
this
section,
the
9
valuation
and
categorization
of,
or
the
amount
of,
an
insurer’s
10
investment
acquired
or
held
under
subsections
6
through
20,
11
shall
be
the
classification
and
value
at
which
the
assets
of
an
12
insurer
are
required
to
be
reported
for
statutory
accounting
13
purposes,
as
determined
in
accordance
with
the
accounting
and
14
valuation
standards
of
the
NAIC
including
all
of
the
following:
15
(1)
The
most
recently
published
purposes
and
procedures
16
manual
of
the
NAIC
investment
analysis
office,
or
any
successor
17
purposes
and
procedures
adopted
by
the
NAIC
investment
analysis
18
office.
19
(2)
The
most
recently
published
valuation
of
securities
20
manual,
or
any
successor
valuation
of
securities
procedures
21
adopted
by
the
NAIC.
22
(3)
The
most
recently
published
accounting
practices
and
23
procedures
manual,
or
any
successor
accounting
practices
and
24
procedures
adopted
by
the
NAIC.
25
(4)
The
most
recently
published
annual
statement
26
instructions,
or
any
successor
annual
statement
instructions
27
adopted
by
the
NAIC.
28
(5)
Any
successor
valuation
procedures
adopted
by
the
NAIC.
29
b.
Upon
approval
of
the
commissioner,
an
insurer’s
30
investment
in
the
equity
interests
of
a
business
entity
whose
31
primary
purpose
is
to
directly
or
indirectly
invest
in
and
32
maintain
assets
and
investments
on
behalf
of
the
insurer
and
33
the
insurer’s
affiliates,
or
on
behalf
of
the
insurer
or
the
34
insurer’s
affiliates,
may
be
deemed
to
be
the
insurer
itself
35
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H.F.
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investing
in
such
assets
and
investments
of
the
business
entity
1
based
on
the
insurer’s
pro-rata
equity
interest
in
the
business
2
entity.
3
6.
General
five-percent
diversification.
4
a.
Except
as
otherwise
specified
in
this
section,
an
insurer
5
shall
not
directly
or
indirectly
acquire
an
investment
under
6
this
section
if,
as
a
result
of
and
after
giving
effect
to
the
7
investment,
the
insurer
will
hold
more
than
five
percent
of
the
8
insurer’s
admitted
assets
in
investments
of
all
kinds
issued,
9
assumed,
accepted,
insured,
or
guaranteed
by
a
single
person.
10
b.
Notwithstanding
paragraph
“a”
,
an
insurer
shall
not
11
acquire
an
asset-backed
security
if,
as
a
result
of
and
after
12
giving
effect
to
the
investment,
the
aggregate
amount
of
13
asset-backed
securities
secured
by
or
evidencing
an
interest
14
in
a
single
asset
or
single
pool
of
assets
held
by
a
trust
or
15
other
business
entity
then
held
by
the
insurer
will
exceed
five
16
percent
of
the
insurer’s
admitted
assets.
17
c.
Notwithstanding
paragraph
“a”
,
an
insurer
shall
not
18
acquire
a
mortgage
loan
under
subsection
12
if,
as
a
result
of
19
and
after
giving
effect
to
the
investment,
the
aggregate
amount
20
of
mortgage
loans
covering
any
one
secured
location
will
exceed
21
five
percent
of
the
insurer’s
admitted
assets.
22
7.
Medium
and
lower
grade
investments.
23
a.
An
insurer
shall
not
acquire
an
investment
under
this
24
section,
including
counterparty
exposure
net
of
collateral
25
held,
if,
as
a
result
of
and
after
giving
effect
to
the
26
investment
any
of
the
following
apply:
27
(1)
The
aggregate
amount
of
medium
and
lower
grade
28
investments
then
held
by
the
insurer
will
exceed
twenty
percent
29
of
the
insurer’s
admitted
assets.
30
(2)
The
aggregate
amount
of
lower
grade
investments
then
31
held
by
the
insurer
will
exceed
ten
percent
of
the
insurer’s
32
admitted
assets.
33
(3)
The
aggregate
amount
of
investments
designated
5
or
6
by
34
the
SVO
then
held
by
the
insurer
will
exceed
three
percent
of
35
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the
insurer’s
admitted
assets.
1
(4)
The
aggregate
amount
of
investments
designated
6
by
the
2
SVO
then
held
by
the
insurer
will
exceed
one
percent
of
the
3
insurer’s
admitted
assets.
4
b.
An
insurer
shall
not
acquire
an
investment
under
this
5
section,
including
counterparty
exposure
net
of
collateral
6
held,
if,
as
a
result
of
and
after
giving
effect
to
the
7
investment
all
of
the
following
apply:
8
(1)
The
aggregate
amount
of
medium
and
lower
grade
9
investments
issued,
assumed,
guaranteed,
accepted,
or
insured
10
by
any
one
person
or,
as
to
asset-backed
securities
secured
11
by
or
evidencing
an
interest
in
a
single
asset
or
pool
of
12
assets,
then
held
by
the
insurer
will
exceed
one
percent
of
the
13
insurer’s
admitted
assets.
14
(2)
The
aggregate
amount
of
lower
grade
investments
issued,
15
assumed,
guaranteed,
accepted,
or
insured
by
any
one
person
16
or,
as
to
asset-backed
securities
secured
by
or
evidencing
an
17
interest
in
a
single
asset
or
pool
of
assets,
then
held
by
the
18
insurer
will
exceed
one-half
of
one
percent
of
the
insurer’s
19
admitted
assets.
20
c.
If
an
insurer
attains
or
exceeds
the
limit
of
any
21
one
designation
category
under
this
subsection,
the
insurer
22
shall
not
be
precluded
from
acquiring
investments
in
23
other
designation
categories,
subject
to
the
specific
and
24
multi-category
limits
applicable
to
each
of
those
investments.
25
8.
Cash
or
cash
equivalents.
An
insurer
may
acquire,
26
without
limitation,
cash
and
cash
equivalents
as
such
terms
are
27
defined
in
the
accounting
practices
and
procedures
manual.
28
9.
Rated
credit
instruments
and
short-term
investments.
An
29
insurer
may
acquire
the
following
rated
credit
instruments
and
30
short-term
investments
subject
to
all
of
the
following:
31
a.
The
following
credit
instruments
acquired
under
this
32
subsection
shall
be
subject
to
subsection
6,
paragraphs
“b”
and
33
“c”
,
and
to
subsection
7:
34
(1)
Credit
instruments
issued,
assumed,
guaranteed,
or
35
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H.F.
_____
insured
by
the
United
States
or
Canada.
1
(2)
Credit
instruments
issued,
assumed,
guaranteed,
or
2
insured
by
a
government-sponsored
enterprise
of
the
United
3
States
or
Canada,
if
the
credit
instruments
are
assumed,
4
guaranteed,
or
insured
by
the
United
States
or
Canada,
or
are
5
otherwise
backed
or
supported
by
the
full
faith
and
credit
of
6
the
United
States
or
Canada.
7
(3)
Credit
instruments,
excluding
asset-backed
securities
8
that
are
any
of
the
following:
9
(a)
Issued,
assumed,
guaranteed,
or
insured
by
a
10
government-sponsored
enterprise
of
a
government
other
than
the
11
United
States
or
Canada.
12
(b)
Issued,
assumed,
guaranteed,
or
insured
by
a
state,
if
13
the
instruments
are
general
obligations
of
the
state.
14
b.
Short-term
investments
acquired
under
this
subsection
15
shall
be
subject
to
subsection
6.
16
c.
All
other
rated
credit
instruments
acquired
under
this
17
subsection
shall
be
subject
to
subsections
6
and
7.
18
d.
Foreign
investments
acquired
under
this
subsection
shall
19
be
subject
to
subsection
15.
20
10.
Equity
interests.
An
insurer
may
acquire
equity
21
interests
subject
to
all
of
the
following:
22
a.
An
insurer
shall
not
acquire
an
investment
under
this
23
subsection,
if,
as
a
result
of
and
after
giving
effect
to
the
24
investment
the
aggregate
amount
of
investments
then
held
by
25
the
insurer
will
exceed
ten
percent
of
the
insurer’s
admitted
26
assets.
27
b.
Foreign
investments
acquired
under
this
subsection
shall
28
be
subject
to
subsection
15.
29
c.
Equity
interests
in
subsidiary
corporations,
as
30
authorized
by
section
508.33,
shall
be
eligible
investments
31
if
the
total
investment
does
not
exceed
five
percent
of
the
32
insurer’s
admitted
assets.
Upon
application
to
and
approval
33
of
the
commissioner,
an
insurer
may
acquire
additional
equity
34
interests
in
direct
or
indirect
subsidiary
insurance
companies
35
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that
are
domiciled
in
the
United
States,
not
to
exceed
an
1
additional
two
percent
of
the
insurer’s
admitted
assets.
2
d.
In
addition
to
the
investments
authorized
in
paragraphs
3
“a”
,
“b”
,
and
“c”
,
an
insurer
may
acquire
equity
interests
in
4
subsidiary
entities
as
permitted
by,
and
as
subject
to
the
5
limitations
of,
section
521A.2.
6
11.
Tangible
personal
property.
7
a.
An
insurer
may
acquire
obligations
secured
by
tangible
8
personal
property
that
is
under
contract
of
sale
or
lease
for
9
which
contractual
payments
may
reasonably
be
expected
to
return
10
the
principal
of,
and
provide
earnings
on,
the
investment
11
within
the
anticipated
useful
life
of
the
tangible
personal
12
property.
13
b.
An
insurer
shall
not
acquire
an
obligation
under
14
paragraph
“a”
,
if,
as
a
result
of
and
after
giving
effect
to
15
the
investment,
the
aggregate
amount
of
investments
then
held
16
by
the
insurer
under
this
subsection
will
exceed
either
of
the
17
following:
18
(1)
Two
percent
of
the
insurer’s
admitted
assets.
19
(2)
One-half
of
one
percent
of
the
insurer’s
admitted
assets
20
as
to
any
single
item
of
tangible
personal
property.
21
12.
Mortgage
loans.
22
a.
An
insurer
may
acquire
obligations
secured
by
a
mortgage
23
or
deed
of
trust
that
is
a
first
or
second
lien
upon
otherwise
24
unencumbered
real
estate,
or
upon
leasehold
estates
in
real
25
property
if
fifty
years
or
more
of
the
term
including
renewals
26
is
unexpired,
or
other
similar
instruments,
including
mezzanine
27
loans
provided
all
of
the
following
apply:
28
(1)
The
amount
loaned
by
the
insurer,
together
with
any
29
amount
secured
by
an
equal
or
prior
security
interest,
whether
30
of
the
insurer
or
another
party,
does
not
exceed
ninety
percent
31
of
the
appraised
value
of
the
real
estate
and
improvements
at
32
the
time
the
insurer
makes
the
investment,
as
evidenced
by
a
33
current
qualified
external
appraisal
or
an
internal
appraisal
34
conducted
using
standards
comparable
to
an
external
appraisal.
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(2)
The
amount
of
an
obligation
required
to
be
included
in
1
the
calculation
of
the
loan-to-value
ratio
may
be
reduced
to
2
the
extent
the
obligation
is
insured
or
guaranteed
by
an
agency
3
of
the
United
States
government.
4
(3)
A
mezzanine
loan
acquired
under
this
subsection
shall
5
not
exceed
four
percent
of
an
insurer’s
admitted
assets.
6
b.
This
subsection
shall
not
be
construed
to
prevent
any
7
amount
invested
under
this
subsection
that
exceeds
ninety
8
percent
of
the
appraised
value
of
the
real
estate
from
being
9
an
authorized
asset
under
subsection
10,
paragraph
“a”
,
or
10
subsection
20,
subject
to
the
limitations
of
subsection
10,
11
paragraph
“a”
,
and
subsection
20.
12
13.
Real
estate.
An
insurer
may
acquire
real
estate
either
13
directly
or
through
certificates
evidencing
participation
with
14
other
investors.
15
a.
An
insurer
may
acquire
real
estate
required
for
the
16
insurer’s
home
offices,
or
to
be
otherwise
occupied
by
the
17
insurer
or
the
insurer’s
employees
in
transacting
the
insurer’s
18
business,
and
the
insurer
may
lease
any
unused
space
to
19
other
occupants.
The
value
of
an
insurer’s
investments
under
20
this
paragraph
shall
not
exceed
ten
percent
of
the
insurer’s
21
admitted
assets.
22
b.
Excluding
investments
under
paragraph
“b”
,
an
insurer’s
23
investments
under
this
subsection
shall
not
exceed
fifteen
24
percent
of
the
insurer’s
admitted
assets.
25
c.
An
insurer’s
aggregate
investments
under
this
subsection
26
and
subsection
12
shall
not
exceed
forty-five
percent
of
the
27
insurer’s
admitted
assets.
28
14.
Securities
lending,
repurchase,
reverse
repurchase,
29
and
dollar
roll
transactions.
An
insurer
may
enter
into
30
securities
lending,
repurchase,
reverse
repurchase,
and
dollar
31
roll
transactions
with
business
entities,
provided
that
the
32
insurer’s
board
of
directors,
or
the
board
of
directors’
33
designee,
adopts
a
written
plan
that
is
consistent
with
the
34
insurer’s
investment
policies
under
subsection
3,
and
that
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specifies
guidelines
and
objectives
including
all
of
the
1
following:
2
a.
A
description
of
how
any
cash
received
will
either
be
3
invested
or
used
for
the
insurer’s
general
corporate
purposes.
4
b.
Operational
procedures
to
manage
interest
rate
risk,
5
counterparty
default
risk,
the
conditions
under
which
proceeds
6
from
repurchase
transactions
may
be
used
in
the
ordinary
course
7
of
business,
and
the
use
of
acceptable
collateral
in
a
manner
8
that
reflects
the
liquidity
needs
of
the
transaction.
9
c.
The
extent
to
which
the
insurer
may
engage
in
10
transactions
under
this
subsection.
11
15.
Foreign
investments.
An
insurer
may
acquire
foreign
12
investments,
or
engage
in
investment
practices
with
persons
13
or
business
entities
of
or
in
foreign
jurisdictions
of
14
substantially
the
same
types
as
those
investments
that
an
15
insurer
is
permitted
to
acquire
under
this
subsection,
if,
as
a
16
result
and
after
giving
effect
to
the
investment
the
following
17
apply:
18
a.
The
aggregate
amount
of
foreign
investments
then
held
19
by
the
insurer
under
this
subsection
does
not
exceed
twenty
20
percent
of
the
insurer’s
admitted
assets.
21
b.
The
aggregate
amount
of
foreign
investments
under
22
this
subsection
then
held
by
the
insurer
in
a
single
foreign
23
jurisdiction
that
has
a
sovereign
debt
rating
of
SVO
1
does
not
24
exceed
ten
percent
of
the
insurer’s
admitted
assets,
or
does
25
not
exceed
three
percent
of
the
insurer’s
admitted
assets
as
to
26
any
other
foreign
jurisdiction.
27
c.
Investments
acquired
under
this
subsection
shall
be
28
aggregated
with
investments
of
the
same
type
made
in
a
similar
29
manner
under
any
other
subsection
of
this
section
for
purposes
30
of
determining
compliance
with
any
limitations
contained
in
any
31
other
subsection
of
this
section.
32
d.
This
subsection
shall
not
authorize
investments
issued,
33
assumed,
or
guaranteed
by
a
foreign
government
which
has
34
engaged
in
a
consistent
pattern
of
gross
violations
of
human
35
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rights.
1
16.
Derivative
transactions.
An
insurer
may
engage
in
2
derivative
transactions
if
the
insurer
complies
with
all
of
the
3
following
conditions:
4
a.
The
insurer
shall
include
all
counterparty
exposure
5
amounts,
net
of
collateral
held,
in
determining
compliance
with
6
the
limitations
of
subsections
6
and
7.
7
b.
The
insurer
shall
have
sufficient
experience
with
8
derivatives
such
that
the
insurer’s
performance
and
procedures
9
reflect
all
of
the
following:
10
(1)
That
the
insurer
has
a
successful
history
of
adequately
11
identifying,
measuring,
monitoring,
and
limiting
exposures
12
associated
with
derivative
transactions.
13
(2)
That
the
insurer
has
adequate
corporate
controls
over
14
the
activities
in
subparagraph
(1).
15
(3)
That
the
insurer
has
sufficient
staff
who
are
16
knowledgeable,
competent,
and
skilled
in
the
use
of
the
17
sophisticated
financial
instruments
necessary
to
execute
18
subparagraph
(1).
19
c.
Prior
to
engaging
in
a
derivative
transaction
under
20
this
subsection,
the
insurer
shall
develop
guidelines
and
21
internal
control
procedures
pursuant
to
rules
promulgated
by
22
the
commissioner.
23
d.
An
insurer
may
use
derivative
instruments
to
engage
in
24
any
of
the
following:
25
(1)
Hedging
transactions,
provided
that
the
insurer
shall
26
be
able
to
demonstrate
the
intended
hedging
characteristics
27
and
the
ongoing
effectiveness
of
the
derivative
transaction
or
28
combination
of
transactions
through
cash
flow
testing
or
other
29
appropriate
analysis.
30
(2)
Income
generation
transactions,
provided
that
the
31
transaction
is
one
of
the
following:
32
(a)
A
sale
of
a
call
option
on
assets,
if
during
the
entire
33
period
the
option
is
outstanding,
the
insurer
holds,
or
has
a
34
currently
exercisable
right
to
acquire,
the
underlying
assets.
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(b)
A
sale
of
a
put
option
on
assets,
if
during
the
entire
1
period
the
option
is
outstanding,
the
insurer
holds
sufficient
2
short-term
liquidity
to
purchase
the
underlying
assets
on
3
exercise
of
the
option,
the
insurer
has
the
ability
to
hold
the
4
underlying
assets
in
the
insurer’s
portfolio,
and
the
total
5
market
value
of
the
put
options
sold
by
the
insurer
does
not
6
exceed
two
percent
of
the
insurer’s
admitted
assets.
7
(c)
A
sale
of
a
covered
cap
or
floor,
if
the
insurer
holds
8
in
the
insurer’s
portfolio
the
investments
generating
the
9
cash
flow
necessary
to
make
the
required
payments
under
the
10
cap
or
floor
during
the
complete
term
that
cap
or
floor
is
11
outstanding.
12
(3)
Replication
transactions,
provided
that
all
of
the
13
following
apply:
14
(a)
The
insurer
is
otherwise
authorized
to
invest
in
the
15
asset
being
replicated.
16
(b)
The
asset
being
replicated
is
subject
to
this
section
17
as
if
the
transaction
constitutes
a
direct
investment
by
the
18
insurer
in
the
replicated
asset.
19
(c)
The
transaction
is
filed
timely
with
the
SVO
as
a
20
replicated
synthetic
asset
transaction.
21
17.
Policy
loans.
An
insurer
may
make
a
loan
on
any
of
the
22
insurer’s
policies
in
an
amount
not
to
exceed
the
reserve
that
23
the
insurer
is
required
to
maintain
on
the
policy
on
which
a
24
loan
is
made.
25
18.
Preferred
stock.
An
insurer
may
acquire
preferred
26
stock,
if,
as
a
result
of
and
after
giving
effect
to
the
27
investment,
the
aggregate
amount
of
preferred
stock
held
by
the
28
insurer
does
not
exceed
twenty-five
percent
of
the
insurer’s
29
admitted
assets,
and
the
aggregate
amount
of
preferred
stocks
30
held
by
the
insurer
that
are
not
designated
P1
or
P2
by
the
SVO
31
does
not
exceed
ten
percent
of
the
insurer’s
admitted
assets.
32
19.
Collateral
loans
and
other
debt
securities
secured
by
33
collateral.
An
insurer
may
acquire
collateral
loans
or
other
34
debt
securities
secured
by
collateral
consisting
of
any
assets
35
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or
investments
permitted
under
this
section,
provided
that
1
the
amount
of
the
loan
is
not
in
excess
of
ninety
percent
of
2
the
value
of
the
collateral.
For
the
purpose
of
determining
3
compliance
with
the
quantitative
limits
in
this
subsection,
the
4
collateral
pledged
to
the
insurer
shall
be
aggregated
with
the
5
insurer’s
direct
investments.
6
20.
Additional
authorized
investments.
An
insurer
may
7
acquire
investments
not
otherwise
authorized
under
this
8
section,
or
that
exceed
the
limitation
of
this
section
in
9
an
amount
in
the
aggregate
not
exceeding
ten
percent
of
the
10
insurer’s
admitted
assets.
11
a.
Investments
authorized
under
this
subsection
shall
not
12
include
investments
prohibited
under
subsection
4.
13
b.
An
insurer
shall
not
make
investments
under
this
14
subsection
if
the
insurer
fails
to
maintain
at
least
company
15
action
level
risk-based
capital
as
defined
by
the
NAIC.
16
c.
This
subsection
shall
not
be
construed
to
permit
any
17
asset
not
allowed
as
an
admitted
asset
under
the
requirements
18
of
the
accounting
practices
and
procedures
manual
to
be
19
considered
an
admitted
asset
under
this
section.
20
21.
Application
of
limitations.
An
investment
qualified,
21
in
whole
or
in
part,
for
acquisition
or
holding
as
an
admitted
22
asset
may
be
qualified
or
requalified,
in
whole
or
in
part,
by
23
the
insurer
at
either
the
time
of
acquisition
or
a
later
date
24
under
any
subsection
of
this
section
if
the
relevant
conditions
25
contained
in
the
applicable
subsection
are
satisfied
at
the
26
time
of
the
insurer’s
qualification
or
requalification.
27
22.
Rules.
The
commissioner
may
adopt
rules
pursuant
to
28
chapter
17A
to
administer
this
section.
29
23.
Enforcement.
Investments
not
conforming
to
this
section
30
shall
not
be
admitted
assets.
The
commissioner
may
take
any
31
enforcement
action
under
the
commissioner’s
authority
to
32
enforce
compliance
with
this
section.
33
Sec.
6.
Section
511.8A,
Code
2023,
is
amended
to
read
as
34
follows:
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H.F.
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511.8A
Agricultural
land.
1
Agricultural
land,
as
defined
in
section
9H.1
,
acquired
as
2
provided
in
section
511.8,
subsection
10
,
paragraph
“b”
,
a
3
result
of
foreclosure
or
in
settlement
or
in
satisfaction
of
4
any
indebtedness
by
a
life
insurance
company
or
association
5
incorporated
by
or
organized
under
the
laws
of
this
or
any
6
other
state,
shall
be
sold
or
otherwise
disposed
of
by
the
7
company
or
association
within
five
years
after
title
is
vested
8
in
the
company
or
association.
A
life
insurance
company
or
9
association
is
a
corporation
for
purposes
of
chapter
9H
.
10
Sec.
7.
Section
512B.21,
Code
2023,
is
amended
to
read
as
11
follows:
12
512B.21
Investments.
13
A
society
shall
invest
its
the
society’s
funds
only
as
14
authorized
by
the
laws
of
this
state
for
the
investment
of
15
assets
of
life
insurers
and
subject
to
the
same
limitations.
A
16
foreign
or
alien
society
permitted
or
seeking
to
do
business
in
17
this
state
which
invests
its
funds
in
accordance
with
the
laws
18
of
the
state
or
nation
in
which
it
the
foreign
or
alien
society
19
is
incorporated,
shall
be
held
to
meet
the
requirements
of
this
20
section
for
the
investment
of
funds.
A
society
organized
under
21
the
laws
of
this
state
shall
deposit
securities
as
required
of
22
life
insurance
companies
pursuant
to
section
511.8,
subsection
23
16
.
24
Sec.
8.
Section
514B.15,
Code
2023,
is
amended
to
read
as
25
follows:
26
514B.15
Investments.
27
With
the
exception
of
investments
made
in
accordance
with
28
section
514B.6
,
the
investable
funds
of
a
health
maintenance
29
organization
shall
be
invested
only
in
securities
or
other
30
investments
permitted
by
section
511.8
for
the
investment
31
of
assets
constituting
the
legal
reserves
of
life
insurance
32
companies
or
such
other
securities
or
investments
as
the
33
commissioner
may
permit.
For
purposes
of
this
section
,
34
investable
funds
of
a
health
maintenance
organization
are
35
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S.F.
_____
H.F.
_____
all
moneys
held
in
trust
for
the
purpose
of
fulfilling
the
1
obligations
incurred
by
a
health
maintenance
organization
in
2
providing
health
care
services
to
enrollees.
3
Sec.
9.
Section
521A.2,
subsection
1,
paragraph
c,
Code
4
2023,
is
amended
to
read
as
follows:
5
c.
Investing,
reinvesting,
or
trading
in
securities
and
6
financial
instruments
as
defined
in
derivative
transactions
7
pursuant
to
section
511.8,
subsection
22
16
,
for
its
the
8
domestic
insurer’s
own
account,
that
of
its
parent,
any
9
subsidiary
of
its
parent,
or
any
affiliate
or
subsidiary.
10
Sec.
10.
Section
521A.2,
subsection
3,
paragraph
d,
Code
11
2023,
is
amended
to
read
as
follows:
12
d.
Invest,
reinvest,
and
trade
in
financial
instruments
as
13
defined
in
derivative
transactions
pursuant
to
section
511.8,
14
subsection
22
16
,
for
its
the
domestic
insurer’s
own
account,
15
that
of
its
parent,
any
subsidiary
of
its
parent,
or
any
16
affiliate
or
subsidiary.
17
EXPLANATION
18
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
19
the
explanation’s
substance
by
the
members
of
the
general
assembly.
20
This
bill
relates
to
investments
of
funds
by
life
insurers.
21
The
bill
strikes
and
replaces
Code
section
511.8,
and
makes
22
changes
to
the
investments
that
life
insurance
companies
23
organized
under
Code
chapter
508
are
allowed
to
acquire.
24
The
commissioner
of
insurance
may
adopt
rules
to
administer
25
the
bill
and
may
take
any
enforcement
action
under
the
26
commissioner’s
authority
to
enforce
compliance
with
the
bill.
27
The
bill
makes
conforming
changes
to
Code
sections
28
508.13(1),
508.14(1),
508.14(3),
508.29,
508C.8(9)(c),
511.8A,
29
512B.21,
514B.15,
521A.2(1)(c),
and
521A.2(3)(d).
30
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