Title 3 . Commerce, Community, and Economic Development

Chapter 21 . Miscellaneous

Section 325. General single issuer diversification, medium-grade investments and lower-grade investments, and Canadian investments for a property and casualty insurer

3 AAC 21.325. General single issuer diversification, medium-grade investments and lower-grade investments, and Canadian investments for a property and casualty insurer

(a) Except as otherwise provided in 3 AAC 21.201 - 3 AAC 21.399, a property and casualty 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 property and casualty insurer would hold more than five percent of its admitted assets in investments of all kinds issued, assumed, accepted, insured, or guaranteed by a single person. However,

(1) the five 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 five 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 property and casualty 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 property and casualty insurer's five percent limitation.

(b) A property and casualty insurer may not acquire, hold, or invest in, directly or indirectly through an investment subsidiary, an investment under 3 AAC 21.330, 3 AAC 21.345, or 3 AAC 21.360, or counterparty exposure under 3 AAC 21.365(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 property and casualty insurer would exceed 20 percent of the property and casualty insurer's admitted assets;

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

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

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

(5) medium-grade and lower-grade investments then held by the property and casualty 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 property and casualty insurer's admitted assets;

(6) medium-grade and lower-grade investments then held by the property and casualty 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 property and casualty insurer's admitted assets; or

(7) lower-grade investments then held by the property and casualty 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 property and casualty insurer's admitted assets.

(c) A property and casualty 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 property and casualty insurer would exceed 40 percent of the property and casualty insurer's admitted assets, or if the aggregate amount of Canadian investments then held by the property and casualty insurer that are not acquired under 3 AAC 21.330 would exceed 25 percent of the property and casualty insurer's admitted assets. However, for a property and casualty 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 property and casualty insurer is required by Canadian law to invest in Canada or to be denominated in Canadian currency; or

(2) 125 percent of the amount of the property and casualty 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 each investment and investment practice of a property and casualty insurance company subject to 3 AAC 21.201 - 3 AAC 21.399.

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

Authority: AS 21.06.090

AS 21.18.010

AS 21.18.030

AS 21.18.040

AS 21.18.170

AS 21.21.010

AS 21.21.020

AS 21.21.255

AS 21.21.420