3 AAC 21.231. General single issuer diversification, medium-grade investments and lower-grade investments, and Canadian investments for a life and health insurer

(a) Except as otherwise provided in 3 AAC 21.201 - 3 AAC 21.399, a life and health insurer may not acquire, hold, or invest in, directly or indirectly through an investment subsidiary, an investment under 3 AAC 21.201 - 3 AAC 21.399 if, as a result of and after giving effect to the investment, the life and health insurer would hold more than three percent of its admitted assets in investments of all kinds issued, assumed, accepted, insured, or guaranteed by a single person. However,

(1) the three percent limitation of this subsection does not apply to the aggregate amounts insured by a single financial guaranty insurer with the highest rating issued by a nationally recognized statistical rating organization; and

(2) an asset-backed security is not subject to the three percent limitation of this subsection, except that an insurer may not acquire, hold, or invest in an asset-backed security if, as a result of and after giving effect to the investment, the aggregate amount of asset-backed securities then held by the life and health insurer and secured by or evidencing an interest in a single asset or single pool of assets held by a trust or other business entity would exceed the life and health insurer's three percent limitation.

(b) A life and health insurer may not acquire, hold, or invest in, directly or indirectly through an investment subsidiary, an investment under 3 AAC 21.236, 3 AAC 21.251, or 3 AAC 21.266, or counterparty exposure under 3 AAC 21.271(e) if, as a result of and after giving effect to the investment the aggregate amount of

(1) medium-grade and lower-grade investments then held by the life and health insurer would exceed 20 percent of the life and health insurer's admitted assets;

(2) lower grade investments then held by the life and health insurer would exceed 10 percent of the life and health insurer's admitted assets;

(3) investments then held by the life and health insurer and rated five or six by the securities valuation office would exceed three percent of the life and health insurer's admitted assets;

(4) investments then held by the life and health insurer and rated six by the securities valuation office would exceed one percent of the life and health insurer's admitted assets;

(5) medium-grade and lower-grade investments then held by the life and health insurer that receive as cash income less than the equivalent yield for United States Treasury issues with a comparative average life would exceed one percent of the life and health insurer's admitted assets;

(6) medium-grade and lower-grade investments then held by the life and health insurer that are issued, assumed, guaranteed, accepted, or insured by one person or asset-backed securities that are secured by or evidencing an interest in a single asset or pool of assets would exceed one percent of the life and health insurer's admitted assets; or

(7) lower-grade investments then held by the life and health insurer that are issued, assumed, guaranteed, accepted, or insured by one person or asset-backed securities that are secured by or evidencing an interest in a single asset or pool of assets would exceed one-half of one percent of the life and health insurer's admitted assets.

(c) A life and health insurer may not acquire, hold, or invest in, directly or indirectly through an investment subsidiary, a Canadian investment authorized by 3 AAC 21.201 - 3 AAC 21.399 if, as a result of and after giving effect to the investment, the aggregate amount of Canadian investments then held by the life and health insurer would exceed 40 percent of the life and health insurer's admitted assets, or if the aggregate amount of Canadian investments then held by the life and health insurer that are not acquired under 3 AAC 21.236 would exceed 25 percent of the life and health insurer's admitted assets. However, for a life and health insurer that is authorized to do business in Canada or that has outstanding insurance, annuity, or reinsurance contracts, denominated in Canadian currency, and issued on lives or risks resident or located in Canada, the limitations of this subsection shall be increased by the greater of

(1) the amount the life and health insurer is required by Canadian law to invest in Canada or to be denominated in Canadian currency; or

(2) 115 percent of the amount of the life and health insurer's reserves and other obligations under contracts on lives or risks resident or located in Canada.

(d) Except as otherwise provided in 3 AAC 21.201 - 3 AAC 21.399, this section applies to investments and investment practices of life and health insurance companies subject to 3 AAC 21.201 - 3 AAC 21.399.

History: Eff. 12/28/2001, Register 160

Authority: AS 21.06.090

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