Section 1405. Investments of life insurers

(a) The assets of a domestic
  insurer that is authorized to make investments under this section may be
  invested  in  the  following  types  of  investments,  in  addition   to
  investments  otherwise  authorized,  subject  in the case of investments
  made under this section to the  limitations  set  forth  below  and  the
  provisions of subsections (c), (d) and (e) of this section:
    (1)  Governmental  obligations.  Obligations,  not in default, issued,
  assumed, guaranteed or insured by (i) the United States of America or by
  any agency or instrumentality thereof, (ii)  any  state  of  the  United
  States of America, (iii) the District of Columbia, (iv) any territory or
  possession  of  the  United  States of America or any other governmental
  unit in the United States, or (v) any agency or instrumentality  of  any
  governmental  unit  referred  to  in  items  (ii), (iii) and (iv) above,
  provided that, in the case of obligations issued, assumed, guaranteed or
  insured by any governmental unit referred to in item (iv) above  or  any
  agency   or   instrumentality  referred  to  in  item  (v)  above,  such
  obligations are by law (statutory or  otherwise)  payable,  as  to  both
  principal  and  interest,  from  taxes  levied  or by law required to be
  levied  or  from  adequate  special  revenues   pledged   or   otherwise
  appropriated  or  by law required to be provided for the purpose of such
  payment, but in no event shall obligations be  eligible  for  investment
  under  this  paragraph  if  payable solely out of special assessments on
  properties benefited by local improvements.
    (2) Obligations and preferred shares  of  American  institutions.  (i)
  Obligations,  not in default, whether or not secured and with or without
  recourse, issued, assumed, guaranteed, insured or accepted  by  American
  institutions  (or  trustees  or  receivers  therefor) and (ii) preferred
  shares of any such institution, provided,  however,  that  after  giving
  effect  to  any  such investment in preferred shares of any institution,
  the  aggregate  amount  of  investments  in  preferred  shares  of  such
  institution  made under this section shall not exceed two percent of the
  insurer's admitted assets.
    (3)  Obligations  secured  by  real  property  or  interests  therein.
  Obligations,  or  participations  therein,  secured  by  liens  on  real
  property or interests therein located within the United States  and  not
  eligible under paragraph one or two of this subsection, provided that no
  insurer  making  investments  under  the authority of this section shall
  invest in or loan upon the security  of  any  one  property,  under  the
  authority  of  this  paragraph, more than thirty thousand dollars or two
  percent of admitted assets, whichever is the greater.
    (4) Real property or interests therein. Investments in  real  property
  or  interests  therein  located  in  the United States, held directly or
  evidenced by partnership interests, stock  of  corporations  (including,
  without   limitation,   subsidiaries  engaged  or  organized  to  engage
  exclusively  in  the  ownership  and  management  of  real  property  or
  interests   therein),  trust  certificates  or  other  instruments,  and
  acquired (i) as an investment for the production  of  income  or  to  be
  improved  or  developed  for  such  investment  purpose, or (ii) for the
  convenient accommodation of the insurer's business; provided that, after
  giving effect to any such investment, (I) the aggregate amount  of  such
  investments  made  under  this  paragraph  and then held by such insurer
  shall not exceed twenty-five percent of the insurer's  admitted  assets,
  (II)  the  aggregate  amount  of investments made under item (i) of this
  paragraph and then held by such insurer shall not exceed twenty  percent
  of  the insurer's admitted assets, and (III) investments held under item
  (i) above in  each  property  constituting  such  investment  (including
  improvements  thereon)  shall not in the aggregate exceed two percent of
  the insurer's admitted assets, and provided, further, that no investment

  in real property may be made under item  (ii)  herein,  (aa)  if,  after
  giving  effect  thereto,  the  aggregate amount of such investments then
  held by the insurer would exceed ten percent of the  insurer's  admitted
  assets, (bb) without the prior approval of the superintendent, if, after
  giving  effect thereto, the aggregate amount of such investments in each
  property constituting such investment (including  improvements  thereon)
  then  held  by  such  insurer  would exceed two percent of the insurer's
  admitted  assets,  and  (cc)  without  the   prior   approval   of   the
  superintendent,  in  the  case of an investment by a domestic insurer in
  real property located  outside  this  state,  if,  after  giving  effect
  thereto,  the  aggregate  amount  of  such  investments  in the property
  constituting such  investment  (including  improvements  thereon)  would
  exceed one-fifth of one percent of the insurer's admitted assets.
    (5)  Personal  property  or interests therein. Investments in personal
  property or interests therein located or used wholly or in  part  within
  the  United States, held directly or evidenced by partnership interests,
  stock  of  corporations  (including,  without  limitation,  subsidiaries
  engaged  or  organized  to  engage  exclusively  in  the  ownership  and
  management  of  personal   property   or   interests   therein),   trust
  certificates or other instruments, provided that, after giving effect to
  any  such  investment, (i) the aggregate amount of such investments made
  under this paragraph and then held by such insurer shall not exceed  ten
  percent of the insurer's admitted assets and (ii) investments held under
  this  paragraph  in  the  item  of  personal  property constituting such
  investment shall  not  in  the  aggregate  exceed  one  percent  of  the
  insurer's admitted assets.
    (6)  Equity  interests. Investments (in addition to investments of the
  types described in this paragraph but made  or  acquired  under  article
  seventeen,  section one thousand four hundred three, paragraphs four and
  five of this subsection or section four thousand two  hundred  forty  of
  this   chapter)   in   common   shares,   partnership  interests,  trust
  certificates or other equity interests (other than preferred shares)  of
  American  institutions,  provided  that,  after  giving  effect  to  any
  investment made under  this  paragraph,  (i)  the  aggregate  amount  of
  investments  made  under this paragraph in the institution in which such
  investment is then being made and then held by such  insurer  shall  not
  exceed  two  percent  of  the  insurer's  admitted  assets  and (ii) the
  aggregate amount of all investments made under this paragraph  and  then
  held  by  such  insurer shall not exceed twenty percent of the insurer's
  admitted assets.
    (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
  investments 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
  business 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
  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
  country or possession, whichever shall be greater.
    (C)  Investments  in  foreign  countries,  in  addition  to   Canadian
  investments  and  investments  permitted  by  subparagraph  (B)  of this
  paragraph, 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  aggregate amount of investments qualified under this
  subparagraph and then held by such  insurer  shall  not  exceed  sixteen
  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,
  substantially 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
  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  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
  recognized, United States rating agency and which is organized under the
  laws  of  a jurisdiction which is rated in one of the two highest rating
  categories 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 percent of the insurer's
  admitted assets.
    (D) In  addition  to  the  foreign  investments  permitted  under  the
  preceding  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
  aggregate  amount  of  investments made under this subparagraph and then
  held  by  such  insurer  shall  not exceed four percent of the insurer's
  admitted 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 percent
  of the insurer's admitted assets.
    (8) Other investments. Investments that do  not  qualify  or  are  not
  permitted  under  any other paragraph of this subsection, provided that,
  after giving effect to any such investment, (i) if such investment is of
  a type described in paragraph three or five or  item  (i)  of  paragraph
  four  or  paragraph  six  of  this  subsection,  the aggregate amount of
  investments of such type made under this paragraph and then held by such
  insurer shall not exceed five percent of the insurer's admitted  assets,
  (ii)  if such investment is of a type described in paragraph six of this
  subsection, the aggregate amount of such  investments  made  under  this
  paragraph in the institution in which such investment is then being made
  and  then  held  by  such  insurer  shall  not exceed two percent of the
  insurer's admitted assets,  (iii)  if  such  investment  is  of  a  type
  described in paragraph seven of this subsection, the aggregate amount of
  investments  of  all  types  described  in said paragraph seven and made
  under this paragraph and then held by such insurer shall not exceed  two
  percent  of the insurer's admitted assets, and (iv) the aggregate amount
  of all investments made under this  paragraph  and  then  held  by  such
  insurer shall not exceed fourteen percent (but not more than ten percent
  in  investments in institutions not having their principal operations in
  this state and in real  and  personal  property  and  interests  therein
  located  outside this state and in mortgages and security interests with
  respect to real and personal property located outside this state) of the
  insurer's admitted assets. Investments that are neither interest bearing
  nor income paying, made under this paragraph as  provided  in  paragraph
  one of subsection (d) of section one thousand four hundred three of this
  article,  shall  be  subject to all the provisions of this paragraph and
  may not be acquired if the aggregate amount  thereof  immediately  after
  such  acquisition  would  exceed three percent of the insurer's admitted
  assets.
    (b) (1) For the purposes of this section, article  seventeen  of  this
  chapter and section one thousand four hundred three of this article,
    (A) "aggregate amount" of investments means, subject to the provisions
  of the final sentence of this subsection, the aggregate depreciated cost
  thereof, in the case of investments of the types described in paragraphs
  four  and five of subsection (a) of this section, and the aggregate cost
  thereof in the case of investments of other types;
    (B) "admitted assets" means the amount thereof as of the last  day  of
  the  most  recently  concluded  annual  statement  year  subject  to the
  following adjustments;
    (i) assets held in separate accounts established  under  section  four
  thousand two hundred forty of this chapter shall be included only to the
  extent  of  amounts  allocated  to  such  separate  accounts pursuant to
  paragraph three of subsection (a) of  said  section  four  thousand  two
  hundred forty; and
    (ii)  investments  in  subsidiaries  referred  to in subsection (c) of
  section one thousand  seven  hundred  four  of  this  chapter  shall  be
  excluded; and
    (C)   the  eligibility  of  any  investment  under  any  paragraph  of
  subsection (a) of this section  shall  be  determined  at  the  time  of

  acquisition  thereof,  except that (i) any investment qualified pursuant
  to item (ii) of subparagraph (C) of paragraph seven of  such  subsection
  (a)  shall remain so qualified only at such time or times as the hedging
  requirements  of  such  item (ii) are met with respect thereto; and (ii)
  investments qualified under paragraph eight of said subsection  (a)  may
  be  requalified  at  a  later  date  under  another  paragraph  of  said
  subsection (a), if the relevant conditions are satisfied at the time  of
  such  requalification.  In  computing depreciated cost of investments of
  the types described in paragraphs four and five  of  subsection  (a)  of
  this  section,  depreciation  may  be computed at a rate no greater than
  that permitted for federal income tax  purposes  and,  in  the  case  of
  investments  described in said paragraph four, the cost of an investment
  shall be depreciated over its estimated useful life, not to exceed fifty
  years.
    (2) In computing the "aggregate amount" of investments, as provided in
  the first sentence of paragraph one of this subsection, (A) valuation of
  investments acquired under paragraph four  of  subsection  (a)  of  this
  section  shall  also  be  subject to any regulation with respect to such
  valuation that the superintendent may prescribe and (B)  investments  of
  investment subsidiaries as defined in section one thousand seven hundred
  two  of  this  chapter  shall be valued as though the parent corporation
  owned the assets of such subsidiaries directly instead of the  stock  of
  such  subsidiaries  and shall be subject to the provisions of subsection
  (d) of section one thousand seven hundred four of this chapter.
    (c) In addition to other requirements of law (statutory or  otherwise)
  that   affect  the  standard  of  care  of  directors  and  officers  of
  corporations, in making investments under this  section,  directors  and
  officers  shall  perform their duties in good faith and with that degree
  of care that an ordinarily prudent individual in a like  position  would
  use  under  similar circumstances. In the case of investments made under
  paragraphs two and six of subsection (a) of this section and investments
  that  are  substantially  of  the  same  types  as  those  eligible  for
  investment  under such paragraphs, but are made under paragraph seven of
  such subsection, the institution that determines the eligibility of  any
  such  investment  shall  be  a solvent institution whose obligations, if
  any, are not in  default  as  to  principal  or  interest,  unless  such
  investment is necessary to protect an investment theretofore made in the
  securities of such institution.
    (d)  After giving effect to any investment of a type described in item
  (i), (ii) or (iii) below, the aggregate amount  of  (i)  investments  in
  subsidiaries  charged  against  the  limit contained in paragraph one of
  subsection (a) of section  one  thousand  seven  hundred  five  of  this
  chapter,  (ii)  investments  made  under  item (i) of paragraph four and
  paragraphs five and six of subsection (a) of  this  section,  and  (iii)
  investments  of  the  types described in said item (i) of paragraph four
  and such paragraphs five and six but made under paragraph seven or eight
  of subsection (a) of this section, shall not exceed forty percent of the
  insurer's  admitted  assets  plus,  to  the  extent  permitted  by   the
  superintendent, investments (not exceeding five percent of the insurer's
  admitted  assets)  of  the  types  referred to above in (I) new business
  enterprises  located  in  the  state;  (II)   technologically   oriented
  businesses located in the state; (III) minority-owned businesses located
  in  the  state;  (IV) businesses located in areas in the state that have
  experienced a high rate of chronic unemployment; and (V) development  of
  housing  in the state for families and persons of low income. If, at the
  time of the making of any investment of a type described  in  item  (i),
  (ii)  or  (iii)  of the first sentence of this subsection, the aggregate
  amount of investments of the  types  described  in  clauses  (I),  (II),

  (III), (IV) and (V) of such sentence made by the insurer on or after the
  date  on  which  this subdivision becomes effective and then held by the
  insurer is one percent or more of its admitted assets,  then  the  forty
  percent  figure  in  such sentence shall be deemed to be increased by an
  equal amount up to a maximum of forty-five percent, thus providing for a
  maximum of investments described in items (i), (ii) and (iii) herein  of
  fifty percent of total admitted assets.
    (e) No domestic life insurer shall hold a direct or indirect ownership
  interest  in a risk retention group, as defined in article fifty-nine of
  this chapter, other than in a risk retention group all of whose  members
  are insurance companies.