§1405. Corporation investments

A. Notwithstanding any other law to the contrary and as long as the full faith and credit guarantee remains in effect, the corporation is hereby authorized and directed to invest, for the benefit of the policyholders, such monies not needed for cash flow purposes, in any of the following obligations:

(1) Direct United States Treasury obligations, the principal and interest of which are fully guaranteed by the government of the United States.

(2) United States government agency obligations, the principal and interest of which are fully guaranteed by the government of the United States, or United States government obligations, the principal and interest of which are guaranteed by any United States government agency, which may include certificates or other evidences of an ownership interest in such obligations, which may consist of specified portions of interest thereon, such as those securities commonly known as CATS, TIGRS, or STRIPS.

(3) Direct security repurchase agreements and reverse direct security repurchase agreements of any federal book entry only securities enumerated in Paragraphs (1) and (2). "Direct security repurchase agreement" means an agreement under which the corporation buys, holds for a specified time, and then sells back those securities and obligations enumerated in Paragraphs (1) and (2). "Reverse direct securities repurchase agreement" means an agreement under which the corporation sells and after a specified time buys back any of the securities and obligations enumerated in Paragraphs (1) and (2).

(4) Time certificates of deposit of state banks organized under the laws of Louisiana, or national banks having their principal offices in the state of Louisiana, savings accounts or shares of savings and loan associations and savings banks, as defined by R.S. 6:703 (16) and 17(a), or share accounts and share certificate accounts of federally or state chartered credit unions issuing time certificates of deposit. For those funds made available for investment in time certificates of deposit, the rate of interest paid by the banks shall be established by contract between the bank and the corporation.

(5) Mutual or trust fund institutions which are registered with the Securities and Exchange Commission under the Securities Act of 1933 and the Investment Act of 1940, and which have underlying investments consisting solely of and limited to securities of the United States government or its agencies.

(6) Funds invested in accordance with the provisions of this Part shall not exceed at any time the amount insured by the Federal Deposit Insurance Corporation in any one banking institution, the Federal Savings and Loan Insurance Corporation in any one savings and loan association, or National Credit Union Administration, unless the uninsured portion is collateralized by the pledge of securities in the manner provided in R.S. 39:1221.

(7) Investment grade corporate bonds rated Baa or higher by Moody's, or rated BBB or higher by Standard and Poor, preferred stock and common stock whose shares are traded on a nationally recognized exchange, such as, but not limited to, the New York Stock Exchange, NASDAQ, or the American Stock Exchange. Investment in such bonds and stocks is restricted to two percent per issue of admitted assets, and not to exceed twenty percent, in aggregate, of admitted assets.

(8) Bonds or other interest-bearing securities of the United States or an agency thereof, including but not limited to the Federal National Mortgage Association.

B. Upon the extinguishment of the full faith and credit guarantee, the provisions of Subsection A of this Section shall cease to have effect and the investments of the corporation shall be made in conformity with the provisions of the Louisiana Insurance Code applicable to domestic insurers as provided in R.S. 22:581 et seq.

Acts 1991, No. 814, §1, eff. Nov. 20, 1991; Acts 1995, No. 891, §1, eff. June 28, 1995; Acts 1999, No. 1256, §1, eff. July 12, 1999; Acts 2008, No. 415, §2, eff. Jan. 1, 2009.