Senate Bill S5730

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5730
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               May 13, 2019
                                ___________
 
 Introduced  by  Sen. BRESLIN -- 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  reserve  investments
   for certain insurers in exchange-traded funds
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subsection (a) of section 1401  of  the  insurance  law  is
 amended by adding a new paragraph 19 to read as follows:
   (19)  "BOND EXCHANGE-TRADED FUND" MEANS AN EXCHANGE-TRADED FUND REGIS-
 TERED UNDER THE FEDERAL INVESTMENT COMPANY ACT OF 1940, AS AMENDED, THAT
 HAS A PRINCIPAL INVESTMENT STRATEGY OF  INVESTING  PRIMARILY  IN  BONDS,
 LOANS OR OTHER DEBT INSTRUMENTS.
   §  2.  Paragraph 10 of subsection (a) of section 1404 of the insurance
 law, as added by chapter 324 of the laws of 1992, is amended to read  as
 follows:
   (10)  Investment companies.   (A) Securities of any investment company
 registered pursuant to the federal Investment Company Act  of  1940,  15
 U.S.C.  §  802,  AS  AMENDED,  INCLUDING  EXCHANGE-TRADED FUNDS, if such
 company:
   (i) invests at least ninety percent of its  assets  in  the  types  of
 securities  which  qualify  as  a  reserve  investment  pursuant  to the
 provisions of paragraph one, two or three of this  subsection  or  which
 invest  in  securities  which are determined by the superintendent to be
 substantively similar to the types of securities set forth in such para-
 graphs; [or]
   (II) INVESTS IN BOND EXCHANGE-TRADED FUNDS, PROVIDED THAT  SUCH  FUNDS
 HAVE  RECEIVED  A VALID DESIGNATION FROM THE SECURITIES VALUATION OFFICE
 OF THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS SUCH THAT IT  MAY
 BE  FILED  ON  THE  STATUTORY  LONG-TERM BOND OBLIGATION SCHEDULE D-1 AS
 PROMULGATED BY THE SECURITIES VALUATION OFFICE; OR
   [(ii)] (III) invests at least ninety percent  of  its  assets  in  the
 types of equity interests which qualify as a reserve investment pursuant
 to the provisions of paragraph eight of this subsection.
 
              

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD11664-01-9

 S. 5730                             2
 
   (B) Investment limitations.  Investments made by an insurer subject to
 the  provisions  of paragraph two of subsection (a) or subsection (b) of
 section one thousand four hundred three of this article shall not exceed
 the following limitations:
   (i)  in  any  investment company qualifying under item (i) of subpara-
 graph (A) hereof, ten percent of such insurer's admitted assets as shown
 by its last statement on file with the superintendent and the  aggregate
 amount  of  investment in such qualifying investment companies shall not
 exceed twenty-five percent of such insurer's admitted assets as shown by
 its last statement on file with the superintendent AND THE COST OF  SUCH
 INVESTMENTS  SHALL  NOT  BE  INCLUDED  WHEN  CALCULATING THE PERMISSIBLE
 AGGREGATE VALUE OF  EQUITY  INTERESTS  PURSUANT  TO  THE  PROVISIONS  OF
 SUBPARAGRAPH (B) OF PARAGRAPH EIGHT OF THIS SUBSECTION; [and]
   (II)  IN  ANY  SINGLE  BOND  EXCHANGE-TRADED  FUND  UNDER ITEM (II) OF
 SUBPARAGRAPH (A) HEREOF, FIFTEEN  PERCENT  OF  SUCH  INSURER'S  ADMITTED
 ASSETS  AS  SHOWN  BY ITS LAST STATEMENT ON FILE WITH THE SUPERINTENDENT
 AND THE COST OF SUCH INVESTMENTS SHALL NOT BE INCLUDED WHEN  CALCULATING
 THE  PERMISSIBLE  AGGREGATE  VALUE  OF  EQUITY INTERESTS PURSUANT TO THE
 PROVISIONS OF SUBPARAGRAPH (B) OF PARAGRAPH EIGHT  OF  THIS  SUBSECTION;
 AND
   [(ii)]  (III)  in  any investment company qualifying under item [(ii)]
 (III) of subparagraph (A) hereof, five percent of such insurer's  admit-
 ted  assets  as shown by its last statement on file with the superinten-
 dent and the aggregate amount of investment in such  qualifying  invest-
 ment  companies  shall  be  included  when  calculating  the permissible
 aggregate value of  equity  interests  pursuant  to  the  provisions  of
 subparagraph (B) of paragraph eight of this subsection.
   § 3. Subsection (a) of section 1405 of the insurance law is amended by
 adding a new paragraph 9 to read as follows:
   (9)  INVESTMENT  COMPANIES.  (A)  SECURITIES OF ANY INVESTMENT COMPANY
 REGISTERED PURSUANT TO THE FEDERAL INVESTMENT COMPANY ACT  OF  1940,  15
 U.S.C.  §  802,  AS  AMENDED,  INCLUDING  EXCHANGE-TRADED FUNDS, IF SUCH
 COMPANY:
   (I) INVESTS AT LEAST NINETY PERCENT OF ITS  ASSETS  IN  THE  TYPES  OF
 SECURITIES  WHICH  QUALIFY  AS  A  RESERVE  INVESTMENT  PURSUANT  TO THE
 PROVISIONS OF PARAGRAPH ONE, TWO OR THREE OF THIS  SUBSECTION  OR  WHICH
 INVEST  IN  SECURITIES  WHICH ARE DETERMINED BY THE SUPERINTENDENT TO BE
 SUBSTANTIVELY SIMILAR TO THE TYPES OF SECURITIES SET FORTH IN SUCH PARA-
 GRAPHS;
   (II) INVESTS IN BOND EXCHANGE-TRADED FUNDS, PROVIDED THAT  SUCH  FUNDS
 HAVE  RECEIVED  A VALID DESIGNATION FROM THE SECURITIES VALUATION OFFICE
 OF THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS SUCH THAT IT  MAY
 BE  FILED  ON  THE  STATUTORY  LONG-TERM BOND OBLIGATION SCHEDULE D-1 AS
 PROMULGATED BY THE SECURITIES VALUATION OFFICE; OR
   (III) INVESTS AT LEAST NINETY PERCENT OF ITS ASSETS IN  THE  TYPES  OF
 EQUITY  INTERESTS  WHICH QUALIFY AS A RESERVE INVESTMENT PURSUANT TO THE
 PROVISIONS OF PARAGRAPH EIGHT OF THIS SUBSECTION.
   (B) INVESTMENTS MADE PURSUANT TO ITEM (III)  OF  SUBPARAGRAPH  (A)  OF
 THIS PARAGRAPH SHALL BE INCLUDED WHEN CALCULATING THE PERMISSIBLE AGGRE-
 GATE  VALUE  OF  EQUITY INTERESTS PURSUANT TO THIS SECTION.  INVESTMENTS
 MADE PURSUANT TO ITEMS (I) AND (II) OF SUBPARAGRAPH (A)  OF  THIS  PARA-
 GRAPH  SHALL  NOT BE INCLUDED WHEN CALCULATING THE PERMISSIBLE AGGREGATE
 VALUE OF EQUITY INTERESTS PURSUANT TO THIS SECTION.
   § 4. This act shall take effect immediately.