NY State Senate Bill 2013-S2890A

Senate Bill S2890A

Signed By Governor

2013-2014 Legislative Session

Increases the permitted foreign investments by life insurance companies from sixteen to twenty percent of the insurer's assets

download bill text pdf

Archive: Last Bill Status Via A2130 - Signed by Governor

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Nov 13, 2013	signed chap.471
Nov 01, 2013	delivered to governor
Jun 20, 2013	returned to assembly passed senate 3rd reading cal.204 substituted for s2890a
Jun 20, 2013	substituted by a2130a
May 06, 2013	amended on third reading 2890a
Mar 20, 2013	advanced to third reading
Mar 19, 2013	2nd report cal.
Mar 18, 2013	1st report cal.204
Jan 24, 2013	referred to insurance

Votes

- Jun 20, 2013 - Floor Vote
  A2130
  
  60
  
  Aye
  
  3
  
  Nay
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Floor Vote: Jun 20, 2013
      
      aye (60)
      
      Adams
      
      Addabbo Jr.
      
      Avella
      
      Bonacic
      
      Boyle
      
      Breslin
      
      Carlucci
      
      DeFrancisco
      
      Diaz
      
      Dilan
      
      Espaillat
      
      Farley
      
      Felder
      
      Flanagan
      
      Fuschillo
      
      Gallivan
      
      Gianaris
      
      Gipson
      
      Golden
      
      Griffo
      
      Grisanti
      
      Hannon
      
      Hassell-Thompson
      
      Hoylman-Sigal
      
      Kennedy
      
      Klein
      
      Krueger
      
      LaValle
      
      Lanza
      
      Larkin
      
      Latimer
      
      Libous
      
      Little
      
      Marcellino
      
      Martins
      
      Montgomery
      
      Nozzolio
      
      O'Brien
      
      O'Mara
      
      Parker
      
      Peralta
      
      Perkins
      
      Ranzenhofer
      
      Ritchie
      
      Rivera
      
      Robach
      
      Sampson
      
      Sanders Jr.
      
      Savino
      
      Serrano
      
      Seward
      
      Skelos
      
      Smith
      
      Squadron
      
      Stavisky
      
      Stewart-Cousins
      
      Tkaczyk
      
      Valesky
      
      Young
      
      Zeldin
      
      nay (3)
      
      Ball
      
      Marchione
      
      Maziarz
  Mar 18, 2013 - Insurance Committee Vote
  S2890A
  
  17
  
  Aye
  
  0
  
  Nay
  
  2
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Insurance Committee Vote: Mar 18, 2013
      
      aye (17)
      
      Breslin
      
      Carlucci
      
      Espaillat
      
      Flanagan
      
      Golden
      
      Grisanti
      
      LaValle
      
      Lanza
      
      Larkin
      
      Martins
      
      O'Brien
      
      O'Mara
      
      Parker
      
      Seward
      
      Stavisky
      
      Valesky
      
      Young
      
      aye wr (2)
      
      Kennedy
      
      Peralta

Bill Amendments

Original

A (Active)

2013-S2890 - Details

See Assembly Version of this Bill:: A2130
Law Section:: Insurance Law
Laws Affected:: Amd §§1405 & 1410, Ins L
Versions Introduced in 2011-2012 Legislative Session:: A10773

2013-S2890 - Summary

Increases the permitted foreign investments by life insurance companies from sixteen to twenty percent of the insurer's assets.

2013-S2890 - Sponsor Memo

                                BILL NUMBER:S2890

TITLE  OF  BILL:   An act to amend the insurance law, in relation to the
foreign investments of insurance companies

PURPOSE: This bill would amend § 1405 of the insurance law  relating  to
investments  by  life  insurers  to  slightly increase the percentage of
admitted assets that may be invested in foreign  jurisdictions  by  life
insurance  companies,  This  bill  would also create a new percentage of
admitted assets limit for unhedged foreign currency investments by  life
insurers.  This  bill is necessary to enable life insurers authorized to
do business in N.Y. to compete effectively in today's global marketplace
and to provide them with safe and diversified  investment  opportunities
that will ultimately benefit their present and future customers.

SUMMARY  OF  PROVISIONS:  This bill would amend section 1405(a)(7)(C) of
the insurance law to establish that the aggregate percentage of admitted
assets of a life insurer that may be invested in a foreign  jurisdiction
rated investment grade or better should be 20% and to establish that the
percentage  of  admitted  assets by such insurer that may be invested in
any one investment grade foreign jurisdiction must be 7% The bill  would
further  amend  section  1405(a)(7)(D) of the insurance law to establish
that the aggregate percentage of admitted assets of life insurers eligi-
ble to be invested in foreign jurisdictions that are other than  invest-
ment  grade  should  not  exceed  6% and that the percentage of admitted
assets by such insurer that may  be  invested  in  any  one  other  than

investment grade foreign jurisdiction must be 4%. Lastly, this bill also
provides  for a new subparagraph (E) of section 1405(a)(7) of the insur-
ance law that establishes a separate limit of 6% of admitted assets  for
unhedged foreign currency investments by life insurers.

EXISTING  LAW:  Section  1405(a)(7)(C)  of  the  insurance law currently
provides that the aggregate percentage of  admitted  assets  of  a  life
insurer  that may be invested in a foreign jurisdiction rated investment
grade or better should be 16% and that the percentage of admitted assets
by such insurer that may be invested in any one investment grade foreign
jurisdiction must be 6%  Section  1405(a)(7)(D)  of  the  insurance  law
currently  provides  that the aggregate percentage of admitted assets of
life insurers eligible to be invested in foreign jurisdictions that  are
other than investment grade should not exceed 4% and that the percentage
of admitted assets that may be invested in any one other than investment
grade  foreign  jurisdiction  must  be  2% Current law also includes the
restrictions on unhedged foreign currency investment under  subparagraph
(D) of section 1405(a)(7) of the insurance law

JUSTIFICATION:  This  legislation is necessary for life insurers in N Y.
to compete effectively in today's global marketplace and to provide them
with safe and diversified investment  opportunities  that  will  benefit
their  present  and  future  customers. The globalization of the world's
economies, and the expansion  of  financing  alternatives,  continue  to
develop  at  an  ever-increasing  pace. The ability of this state's life

insurers to provide their customers with superior, risk-adjusted returns
depends on their ability to make timely  investment  decisions.  Foreign
investments provide safety-enhancing diversification to domestic portfo-
lios and expand investment alternatives, Accordingly, a modest expansion
of  existing  foreign  investment limitations, as contained in this bill
will enable N.Y.  life insurers to maintain their  competitive  position
and  to  continue  to provide their customers with the most popular life
insurance products at affordable prices.

The liberalization of foreign investment regulations, the  lessening  of
international trade barriers, economic reforms, and improved information
technology all have had a significant impact on world markets, resulting
in a tremendous globalization of the financial markets, It is likely the
global  market  will  continue  to  grow, In particular, those countries
previously labeled as "developing" are rapidly closing the economic  gap
with  established  economies. As a result, investors, even those that do
not operate multi-nationally,  have  greater  opportunity  to  diversify
their  portfolios  and  invest  in the most attractive financial markets
This dramatic change in the world's securities marketplace has  resulted
in  an  expansion  of foreign investment opportunities for domestic life
insurers Non-insurers, which in many cases compete directly with  domes-
tic  life  insurers,  have  already responded by dramatically increasing
their non-U.S holdings

Many pension funds and other asset managers have determined that,  as  a
result  of  continued globalization of financial markets, an appropriate
asset mix may include 20% or more  of  assets  in  foreign  markets.  To
require  N.Y.  life  insurers  to limit their foreign holdings to 16% in
investment grade jurisdictions not only places  them  at  a  competitive
disadvantage,  but  also  inhibits  their  ability  to  optimize overall
returns and reduce risks The limitation on foreign investments  proposed
in  this bill will empower this state's life insurers to improve invest-
ment results and reduce risks through broader diversification.

Accordingly, this bill is essential to provide New  York  life  insurers
with  the  flexibility  to compete effectively in the global marketplace
and enhance their financial position by realizing  higher  risk-adjusted
returns  on  more diversified portfolios. By doing this, they are better
able to service their customers, the consumers of this state, by  offer-
ing them state-of-the-art products at reasonable prices.

In  1997,  the  National  Association  of Insurance Commissioners (NAIC)
adopted two alternative versions of an Investment of Insurers Model Act.
Both the Defined Limits Version  (DLV)  and  Defined  Standards  Version
(DSV)  of  the  Model  Act  permit life insurers' to invest up to 20% of
their admitted assets in foreign investments under their basic limit, as
well as permitting additional foreign investments under a  basket  limit
of  9% and 11%, for a total of 31% under the DLV Model and 29% under the
DSV Model. Since then, a number of states, including Connecticut  (33%),
Illinois  (30%),  and Texas (25%), have revised their investment laws to
permit their domestic insurers to increase the portion of their admitted
assets invested in foreign investments.

Lastly, this bill conservatively limits permissible investments to allow
for the largest percentage increase to occur only in  foreign  jurisdic-
tions  that  fall  within  the highest ratings categories (A, AA or AAA)
Thus, the law continues to provide for  appropriate  safeguards  against
insurer investments in foreign jurisdictions that are rated in the lower
categories.

LEGISLATIVE HISTORY: A.10773 of 2012

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: This act shall take effect immediately.

2013-S2890 - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  2890

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            January 24, 2013
                               ___________

Introduced  by  Sen.  SEWARD -- read twice and ordered printed, and when
  printed to be committed to the Committee on Insurance

AN ACT to amend the insurance law, in relation to  the  foreign  invest-
  ments of insurance companies

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Paragraph 7 of subsection (a) of section 1405 of the insur-
ance law, subparagraph (C) as amended by chapter 60 of the laws of  2008
and  subparagraph  (D) as amended by chapter 162 of the laws of 1999, is
amended to read as follows:
  (7) Foreign investments. (A) Canadian investments substantially of the
same types as those eligible for investment under paragraphs one through
six of this subsection,  provided  that,  after  giving  effect  to  any
investment made under this subparagraph, the aggregate amount of invest-
ments  made  under this subparagraph and then held by such insurer shall
not exceed ten percent of the insurer's admitted assets, except where  a
greater  amount is permitted under subparagraph (B) below (in which case
the provisions of this subparagraph shall not be applicable).
  (B) In the case of any domestic insurer that is authorized to do busi-
ness in a foreign country or possession of the United States of  America
or  that  has outstanding insurance, annuity or reinsurance contracts on
lives  or  risks  resident  or  located  in  such  foreign  country   or
possession,  investments  in such foreign country or possession that are
substantially of the same types as those eligible for  investment  under
paragraphs  one  through  six  of this subsection; provided that, except
where a greater amount is permitted under subparagraph (A) above,  after
giving  effect  to  any investment in such foreign country or possession
made under this subparagraph,  the  aggregate  amount  of  cash  in  the
currency  of  such  foreign  country or possession and of investments in
such foreign country or possession made under this subparagraph and then
held by such insurer shall not exceed one and one-half times the  amount

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02686-01-3

S. 2890                             2

of such insurer's reserves and other obligations under such contracts or
the amount which such insurer is required by law to invest in such coun-
try or possession, whichever shall be greater.
  (C)  Investments in foreign countries, in addition to Canadian invest-
ments and investments permitted by subparagraph (B) of  this  paragraph,
that  are  substantially of the same types as those eligible for invest-
ment under paragraphs one through six of this subsection, provided that,
after giving effect to any investment made under this subparagraph,  the
aggregate  amount  of  investments qualified under this subparagraph and
then held by such insurer shall not exceed [sixteen] TWENTY  percent  of
the insurer's admitted assets; and
  (i) the issuer or obligor is (I) a jurisdiction, which is rated in one
of  the  four  highest  rating  categories by an independent, nationally
recognized United States rating agency, (II) any  political  subdivision
or  other  governmental  unit of any such jurisdiction, or any agency or
instrumentality of any such jurisdiction, political subdivision or other
governmental unit or (III) an institution which is organized  under  the
laws  of  any such jurisdiction or, in the case of such paragraphs three
and four of this subsection, the real property is located  in  any  such
jurisdiction; and
  (ii)  [if  the  investment  is  denominated in any currency other than
United States dollars, the investment is  effectively  hedged,  substan-
tially in its entirety, against the United States dollar:
  (I)  for  an  insurer  that  has an approved derivative use plan under
section one thousand four hundred  ten  of  this  article,  pursuant  to
contracts  or  agreements entered into under and in accordance with that
derivative use plan and subject  to  the  counterparty  exposure  limits
thereunder; or
  (II)  for any other insurer, pursuant to contracts or agreements which
are: (aa) issued by or traded on a securities exchange or board of trade
regulated under the laws of the United States or Canada  or  a  province
thereof  or (bb) entered into with: (aaa) a United States banking insti-
tution which has assets in excess of five billion dollars and which  has
obligations  outstanding,  or  has  a parent corporation which has obli-
gations outstanding, which are rated in one of the  two  highest  rating
categories  by  an  independent,  nationally  recognized,  United States
rating agency; (bbb) a broker-dealer registered with the Securities  and
Exchange Commission which has net capital in excess of two hundred fifty
million dollars; or
  (ccc) any other banking institution which has assets in excess of five
billion  dollars  and which has obligations outstanding, or has a parent
corporation which has obligations outstanding, which are rated in one of
the two highest rating categories by an independent,  nationally  recog-
nized, United States rating agency and which is organized under the laws
of  a jurisdiction which is rated in one of the two highest rating cate-
gories by an independent, nationally recognized,  United  States  rating
agency; and
  (iii)  provided  that] an insurer shall not make any investment in any
foreign country pursuant  to  this  subparagraph,  if  such  investment,
together  with all other investments in the same foreign country so made
and then held by such insurer, would exceed [six] SEVEN percent  of  the
insurer's admitted assets.
  (D) In addition to the foreign investments permitted under the preced-
ing  subparagraphs  of  this  paragraph,  foreign  investments  that are
substantially of the same types as those eligible for  investment  under
paragraphs  one  through  six  of  this subsection, provided that, after

S. 2890                             3

giving effect to any investment made under this subparagraph, the aggre-
gate amount of investments made under this subparagraph and then held by
such insurer shall not exceed [four] SIX percent of the insurer's admit-
ted  assets,  and  provided  further  that an insurer shall not make any
investment in any foreign country pursuant to this subparagraph, if such
investment, together with all other  investments  in  the  same  foreign
country  so  made and then held by such insurer, would exceed [two] FOUR
percent of the insurer's admitted assets.
  (E) ANY INVESTMENT MAY BE DENOMINATED IN A CURRENCY OTHER THAN  UNITED
STATES  DOLLARS,  PROVIDED THAT THE AGGREGATE AMOUNT OF ALL SUCH INVEST-
MENTS (OTHER THAN INVESTMENTS MADE PURSUANT TO SUBPARAGRAPH (A) OF  THIS
PARAGRAPH)  THAT  ARE  NOT  EFFECTIVELY  HEDGED,  SUBSTANTIALLY IN THEIR
ENTIRETY, AGAINST THE UNITED STATES DOLLAR, REDUCED, ON  A  CURRENCY  BY
CURRENCY  BASIS, BY THE AMOUNT OF FOREIGN-CURRENCY DENOMINATED INSURANCE
LIABILITIES MAY NOT EXCEED SIX PERCENT OF THE INSURER'S ADMITTED ASSETS.
AN INVESTMENT SHALL BE DEEMED TO BE EFFECTIVELY HEDGED, SUBSTANTIALLY IN
ITS ENTIRETY, IF IT HAS BEEN HEDGED:
  (I) FOR AN INSURER THAT HAS AN  APPROVED  DERIVATIVE  USE  PLAN  UNDER
SECTION  ONE  THOUSAND  FOUR  HUNDRED  TEN  OF THIS ARTICLE, PURSUANT TO
CONTRACTS OR AGREEMENTS ENTERED INTO UNDER AND IN ACCORDANCE  WITH  THAT
DERIVATIVE  USE  PLAN  AND  SUBJECT  TO THE COUNTERPARTY EXPOSURE LIMITS
THEREUNDER; OR
  (II) FOR ANY  OTHER  INSURER,  PURSUANT  TO  CONTRACTS  OR  AGREEMENTS
(DERIVATIVE  TRANSACTIONS)  WHICH  ARE: (AA) CLEARED THROUGH A QUALIFIED
CLEARINGHOUSE OR TRADED ON OR THROUGH  A  QUALIFIED  EXCHANGE  PROVIDING
CLEARING  SERVICES  OR (BB) ENTERED INTO WITH A "QUALIFIED COUNTERPARTY"
AS THAT TERM IS DEFINED PURSUANT TO SUBSECTION (F) OF SECTION ONE  THOU-
SAND FOUR HUNDRED TEN OF THIS ARTICLE.
  S 2. This act shall take effect immediately.

2013-S2890A (ACTIVE) - Details

See Assembly Version of this Bill:: A2130
Law Section:: Insurance Law
Laws Affected:: Amd §§1405 & 1410, Ins L
Versions Introduced in 2011-2012 Legislative Session:: A10773

2013-S2890A (ACTIVE) - Summary

Increases the permitted foreign investments by life insurance companies from sixteen to twenty percent of the insurer's assets.

2013-S2890A (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S2890A           REVISED MEMO 05/21/13

TITLE OF BILL:  An act to amend the insurance law, in relation to the
foreign investments of insurance companies

PURPOSE:

This bill would amend § 1405 of the insurance law relating to
investments by life insurers to slightly increase the percentage of
admitted assets that may be invested in foreign jurisdictions by life
insurance companies. This bill would also create a new percentage of
admitted assets limit for unhedged foreign currency investments by
life insurers. This bill is necessary to enable life insurers
authorized to do business in N.Y. to compete effectively in today's
global marketplace and to provide them with safe and diversified
investment opportunities that will ultimately benefit their present
and future customers.

SUMMARY OF PROVISIONS:

This bill would amend section 1405(a)(7)(C) of the insurance law to
establish that the aggregate percentage of admitted assets of a life
insurer that may be invested in a foreign jurisdiction rated
investment grade or better should be 20% and to establish that the
percentage of admitted assets by such insurer that may be invested in
any one investment grade foreign jurisdiction must be 7%. The bill

would further amend section 1405(a)(7)(D) of the insurance law to
establish that the aggregate percentage of admitted assets of life
insurers eligible to be invested in foreign jurisdictions that are
other than investment grade should not exceed 6% and that the
percentage of admitted assets by such insurer that may be invested in
any one other than investment grade foreign jurisdiction must be 3%.
Lastly, this bill also provides for a new section 1405(f) of the
insurance law that establishes a separate limit of 4% of admitted
assets for unhedged foreign currency investments by life insurers.

EXISTING LAW:

Section 1405(a)(7)(C) of the insurance law currently provides that the
aggregate percentage of admitted assets of a life insurer that may be
invested in a foreign jurisdiction rated investment grade or better
should be 16% and that the percentage of admitted assets by such
insurer that may be invested in any one investment grade foreign
jurisdiction must be 6%. Section 1405(a)(7)(D) of the insurance law
currently provides that the aggregate percentage of admitted assets of
life insurers eligible to be invested in foreign jurisdictions that
are other than investment grade should not exceed 4% and that the
percentage of admitted assets that may be invested in any one other
than investment grade foreign jurisdiction must be 2%. Current law
also includes the restrictions on unhedged foreign currency investment
under subparagraph (D) of section 1405(a)(7) of the insurance law.

JUSTIFICATION:

This legislation is necessary for life insurers in N.Y. to compete
effectively in today's global marketplace and to provide them with
safe and diversified investment opportunities that will benefit their


present and future customers. The globalization of the world's
economies, and the expansion of financing alternatives, continue to
develop at an ever-increasing pace The ability of this state's life
insurers to provide their customers with superior, risk-adjusted
returns depends on their ability to make timely investment decisions.
Foreign investments provide safety-enhancing diversification to
domestic portfolios and expand investment alternatives. Accordingly, a
modest expansion of existing foreign investment limitations, as
contained in this bill will enable N.Y.  life insurers to maintain
their competitive position and to continue to provide their customers
with the most popular life insurance products at affordable prices.

The liberalization of foreign investment regulations, the lessening of
international trade barriers, economic reforms, and improved
information technology all have had a significant impact on world
markets, resulting in a tremendous globalization of the financial
markets. It is likely the global market will continue to grow. In
particular, those countries previously labeled as "developing" are
rapidly closing the economic gap with established economies. As a
result, investors, even those that do not operate multi-nationally,
have greater opportunity to diversify their portfolios and invest in
the most attractive financial markets. This dramatic change in the
world's securities marketplace has resulted in an expansion of foreign
investment opportunities for domestic life insurers.  Non-insurers,
which in many cases compete directly with domestic life insurers, have
already responded by dramatically increasing their non-U.S. holdings.

Many pension funds and other asset managers have determined that, as a
result of continued globalization of financial markets, an appropriate
asset mix may include 20% or more of assets in foreign markets. To
require N.Y. life insurers to limit their foreign holdings to 16% in
investment grade jurisdictions not only places them at a competitive
disadvantage, but also inhibits their ability to optimize overall
returns and reduce risks. The limitation on foreign investments
proposed in this bill will empower this state's life insurers to
improve investment results and reduce risks through broader
diversification.

Accordingly, this bill is essential to provide New York life insurers
with the flexibility to compete effectively in the global marketplace
and enhance their financial position by realizing higher risk-adjusted
returns on more diversified portfolios By doing this, they are better
able to service their customers, the consumers of this state, by
offering them state-of-the-art products at reasonable prices.

In 1997, the National Association of Insurance Commissioners (NAIC)
adopted two alternative versions of an Investment of Insurers Model
Act. Both the Defined Limits Version (DLV) and Defined Standards
Version (DSV) of the Model Act permit life insurers' to invest up to
20% of their admitted assets in foreign investments under their basic
limit, as well as permitting additional foreign investments under a
basket limit of 9% and 11%, for a total of 31% under the DLV Model and
29% under the DSV Model. Since then, a number of states, including
Connecticut (33%), Illinois (30%), and Texas (25%), have revised their
investment laws to permit their domestic insurers to increase the
portion of their admitted assets invested in foreign investments.


Lastly, this bill conservatively limits permissible investments to
allow for the largest percentage increase to occur only in foreign
jurisdictions that fall within the highest ratings categories (A, AA
or AAA). Thus, the law continues to provide for appropriate safeguards
against insurer investments in foreign jurisdictions that are rated in
the lower categories.

LEGISLATIVE HISTORY:

A.10773 of 2012

FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

This act shall take effect immediately.

2013-S2890A (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 2890--A
    Cal. No. 204

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            January 24, 2013
                               ___________

Introduced  by  Sen.  SEWARD -- read twice and ordered printed, and when
  printed to be committed to the  Committee  on  Insurance  --  reported
  favorably  from  said  committee,  ordered to first and second report,
  ordered to a third reading, amended and ordered  reprinted,  retaining
  its place in the order of third reading

AN  ACT  to  amend the insurance law, in relation to the foreign invest-
  ments of insurance companies

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Paragraph 7 of subsection (a) of section 1405 of the insur-
ance  law, subparagraph (C) as amended by chapter 60 of the laws of 2008
and subparagraph (D) as amended by chapter 162 of the laws of  1999,  is
amended to read as follows:
  (7) Foreign investments. (A) Canadian investments substantially of the
same types as those eligible for investment under paragraphs one through
six  of  this  subsection,  provided  that,  after  giving effect to any
investment made under this subparagraph, the aggregate amount of invest-
ments made under this subparagraph and then held by such  insurer  shall
not  exceed ten percent of the insurer's admitted assets, except where a
greater amount is permitted under subparagraph (B) below (in which  case
the provisions of this subparagraph shall not be applicable).
  (B) In the case of any domestic insurer that is authorized to do busi-
ness  in a foreign country or possession of the United States of America
or that has outstanding insurance, annuity or reinsurance  contracts  on
lives   or  risks  resident  or  located  in  such  foreign  country  or
possession, investments in such foreign country or possession  that  are
substantially  of  the same types as those eligible for investment under
paragraphs one through six of this  subsection;  provided  that,  except
where  a greater amount is permitted under subparagraph (A) above, after
giving effect to any investment in such foreign  country  or  possession
made  under  this  subparagraph,  the  aggregate  amount  of cash in the

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.

                                                           LBD02686-02-3

S. 2890--A                          2

currency of such foreign country or possession  and  of  investments  in
such foreign country or possession made under this subparagraph and then
held  by such insurer shall not exceed one and one-half times the amount
of such insurer's reserves and other obligations under such contracts or
the amount which such insurer is required by law to invest in such coun-
try or possession, whichever shall be greater.
  (C)  Investments in foreign countries, in addition to Canadian invest-
ments and investments permitted by subparagraph (B) of  this  paragraph,
that  are  substantially of the same types as those eligible for invest-
ment under paragraphs one through six of this subsection, provided that,
after giving effect to any investment made under this subparagraph,  the
aggregate  amount  of  investments qualified under this subparagraph and
then held by such insurer shall not exceed [sixteen] TWENTY  percent  of
the insurer's admitted assets; and
  (i) the issuer or obligor is (I) a jurisdiction, which is rated in one
of  the  four  highest  rating  categories by an independent, nationally
recognized United States rating agency, (II) any  political  subdivision
or  other  governmental  unit of any such jurisdiction, or any agency or
instrumentality of any such jurisdiction, political subdivision or other
governmental unit or (III) an institution which is organized  under  the
laws  of  any such jurisdiction or, in the case of such paragraphs three
and four of this subsection, the real property is located  in  any  such
jurisdiction; and
  (ii)  [if  the  investment  is  denominated in any currency other than
United States dollars, the investment is  effectively  hedged,  substan-
tially in its entirety, against the United States dollar:
  (I)  for  an  insurer  that  has an approved derivative use plan under
section one thousand four hundred  ten  of  this  article,  pursuant  to
contracts  or  agreements entered into under and in accordance with that
derivative use plan and subject  to  the  counterparty  exposure  limits
thereunder; or
  (II)  for any other insurer, pursuant to contracts or agreements which
are: (aa) issued by or traded on a securities exchange or board of trade
regulated under the laws of the United States or Canada  or  a  province
thereof  or (bb) entered into with: (aaa) a United States banking insti-
tution which has assets in excess of five billion dollars and which  has
obligations  outstanding,  or  has  a parent corporation which has obli-
gations outstanding, which are rated in one of the  two  highest  rating
categories  by  an  independent,  nationally  recognized,  United States
rating agency; (bbb) a broker-dealer registered with the Securities  and
Exchange Commission which has net capital in excess of two hundred fifty
million dollars; or
  (ccc) any other banking institution which has assets in excess of five
billion  dollars  and which has obligations outstanding, or has a parent
corporation which has obligations outstanding, which are rated in one of
the two highest rating categories by an independent,  nationally  recog-
nized, United States rating agency and which is organized under the laws
of  a jurisdiction which is rated in one of the two highest rating cate-
gories by an independent, nationally recognized,  United  States  rating
agency; and
  (iii)  provided  that] an insurer shall not make any investment in any
foreign country pursuant  to  this  subparagraph,  if  such  investment,
together  with all other investments in the same foreign country so made
and then held by such insurer, would exceed [six] SEVEN percent  of  the
insurer's admitted assets.

S. 2890--A                          3

  (D) In addition to the foreign investments permitted under the preced-
ing  subparagraphs  of  this  paragraph,  foreign  investments  that are
substantially of the same types as those eligible for  investment  under
paragraphs  one  through  six  of  this subsection, provided that, after
giving effect to any investment made under this subparagraph, the aggre-
gate amount of investments made under this subparagraph and then held by
such insurer shall not exceed [four] SIX percent of the insurer's admit-
ted  assets,  and  provided  further  that an insurer shall not make any
investment in any foreign country pursuant to this subparagraph, if such
investment, together with all other  investments  in  the  same  foreign
country  so made and then held by such insurer, would exceed [two] THREE
percent of the insurer's admitted assets.
  S 2. Section 1405 of the insurance law is  amended  by  adding  a  new
subsection (f) to read as follows:
  (F)  ANY INVESTMENT MAY BE DENOMINATED IN A CURRENCY OTHER THAN UNITED
STATES DOLLARS, PROVIDED THAT THE AGGREGATE AMOUNT OF ALL  SUCH  INVEST-
MENTS (OTHER THAN INVESTMENTS MADE PURSUANT TO SUBPARAGRAPHS (A) AND (B)
OF  PARAGRAPH  SEVEN  OF  SUBSECTION  (A)  OF THIS SECTION) THAT ARE NOT
EFFECTIVELY HEDGED, SUBSTANTIALLY IN THEIR ENTIRETY, AGAINST THE  UNITED
STATES  DOLLAR,  REDUCED, ON A CURRENCY BY CURRENCY BASIS, BY THE AMOUNT
OF FOREIGN-CURRENCY DENOMINATED INSURANCE  LIABILITIES  MAY  NOT  EXCEED
FOUR  PERCENT  OF  THE INSURER'S ADMITTED ASSETS. AN INVESTMENT SHALL BE
DEEMED TO BE EFFECTIVELY HEDGED, SUBSTANTIALLY IN ITS  ENTIRETY,  IF  IT
HAS BEEN HEDGED:
  (1)  FOR  AN  INSURER  THAT  HAS AN APPROVED DERIVATIVE USE PLAN UNDER
SECTION ONE THOUSAND FOUR HUNDRED  TEN  OF  THIS  ARTICLE,  PURSUANT  TO
CONTRACTS  OR  AGREEMENTS ENTERED INTO UNDER AND IN ACCORDANCE WITH THAT
DERIVATIVE USE PLAN AND SUBJECT  TO  THE  COUNTERPARTY  EXPOSURE  LIMITS
THEREUNDER; OR
  (2) FOR ANY OTHER INSURER, PURSUANT TO CONTRACTS OR AGREEMENTS (DERIV-
ATIVE  TRANSACTIONS)  WHICH ARE CLEARED THROUGH A "DERIVATIVES CLEARING-
HOUSE" OR ENTERED INTO WITH A "QUALIFIED COUNTERPARTY", AS  THOSE  TERMS
ARE  DEFINED  PURSUANT  TO  SUBSECTION  (F) OF SECTION ONE THOUSAND FOUR
HUNDRED TEN OF THIS ARTICLE.
  S 3. Paragraph 2 of subsection (c) of section 1410  of  the  insurance
law,  as added by chapter 650 of the laws of 1998, is amended to read as
follows:
  (2) Transactions entered into to effectively hedge the  currency  risk
of  investments  denominated  in  a  currency  other  than United States
dollars, pursuant to [subparagraph (C) of paragraph seven of  subsection
(a)]  SUBSECTION  (F)  of section one thousand four hundred five of this
article, shall not be included in the limits under paragraph one of this
subsection.
  S 4. This act shall take effect immediately.

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