(A) Subject to the limitations of Section 38-12-430, an insurer may acquire, directly or indirectly through an investment affiliate, foreign investments or engage in investment practices with persons of or in foreign jurisdictions, of substantially the same types as those that an insurer is permitted to acquire pursuant to this chapter, other than the type permitted pursuant to Section 38-12-450, if as a result and after giving effect to the investment the aggregate amount of foreign investments then held and foreign investment practices then engaged in by the insurer pursuant to this subsection:

(1) does not exceed twenty percent of its admitted assets; and

(2) in a single foreign jurisdiction does not exceed ten percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO 1, or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO, or five percent of its admitted assets as to any other foreign jurisdiction.

(B) Subject to the limitations of Section 38-12-430, an insurer may acquire investments and engage in investment practices denominated in foreign currencies, whether or not they are foreign investments acquired or foreign investment practices engaged in pursuant to subsection (A), or additional foreign currency exposure as a result of the termination or expiration of a hedging transaction with respect to investments denominated in a foreign currency, if as a result of and after giving effect to the transaction the aggregate amount of investments then held by the insurer and investment practices then engaged in by the insurer pursuant to this subsection:

(1) denominated in foreign currencies does not exceed fifteen percent of its admitted assets; and

(2) denominated in foreign currency of a single foreign jurisdiction does not exceed ten percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO 1, or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO, or five percent of its admitted assets as to any other foreign jurisdiction.

An investment is not considered denominated in a foreign currency if the acquiring insurer enters into one or more hedging transactions permitted pursuant to Section 38-12-510 to hedge the foreign currency exchange rate risk associated with the investment or investment practice.

(C) In addition to investments permitted by subsections (A) and (B), an insurer that is authorized to do business in a foreign jurisdiction and that has outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or located in that foreign jurisdiction and denominated in foreign currency of that jurisdiction, may acquire foreign investments and engage in foreign investment practices respecting that foreign jurisdiction, and may acquire investments and engage in investment practices denominated in the currency of that jurisdiction, subject to the limitations of Section 38-12-430. Investments made pursuant to this subsection in obligations of foreign governments, their political subdivisions, and government sponsored enterprises are not subject to the limitations of Section 38-12-430 if those investments carry an SVO rating of 1 or 2 or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO. The aggregate amount of investments acquired and investment practices engaged in by the insurer pursuant to this subsection may not exceed the greater of:

(1) the amount the insurer is required by the law of the foreign jurisdiction to invest in the foreign jurisdiction; or

(2) one hundred twenty-five percent of the amount of its reserves, net of reinsurance, and other obligations under the contracts on lives or risks resident or located in the foreign jurisdiction.

(D) In addition to investments permitted pursuant to subsections (A), (B), and (C), an insurer that is not authorized to do business in a foreign jurisdiction but that has outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or located in that foreign jurisdiction and denominated in foreign currency of that jurisdiction, may acquire foreign investments and engage in foreign investment practices respecting that foreign jurisdiction, and may acquire investments and engage in investment practices denominated in the currency of that jurisdiction, subject to the limitations of Section 38-12-430. Investments made and investment practices engaged in pursuant to this subsection in obligations of foreign governments, their political subdivisions, and government sponsored enterprises are not subject to the limitations of Section 38-12-430 if those investments and investment practices carry a SVO rating of 1 or 2 or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO. The aggregate amount of investments acquired and investment practices then engaged in by the insurer pursuant to this subsection may not exceed one hundred five percent of the amount of its reserves, net of reinsurance, and other obligations under the contracts on lives or risks resident or located in the foreign jurisdiction.

(E) Investments acquired and investment practices engaged in by an insurer pursuant to this section must be aggregated with investments of the same types made pursuant to all other sections of this chapter, and in a similar manner, for purposes of determining compliance with the limitations, if any, contained in other sections. Investments in and investment practices engaged in with respect to obligations of foreign governments, their political subdivisions, and government sponsored enterprises of these persons, except for those exempted pursuant to subsections (C) and (D), are subject to the limitations of Section 38-12-430.

HISTORY: 2002 Act No. 319, Section 2, eff June 3, 2002.