KRS 304.7-365: Transactions in which officer or director of insurer has a financial

interest.

(1) (a) Except as provided in subsection (2) of this section, an insurer shall not,

without the prior written approval of the commissioner, directly or indirectly:

1. Make a loan to or invest in an officer or director of the insurer or a

person in which the officer or director has any direct or indirect financial

interest;

2. Make a guarantee for the benefit of or in favor of an officer or director

of the insurer or a pers on in which the officer or director has any direct

or indirect financial interest; or

3. Enter into an agreement for the purchase or sale of property from or to

an officer or director of the insurer or a person in which the officer or

director has any direct or indirect financial interest.

(b) For purposes of this section, an officer or director shall not be deemed to have

a financial interest by reason of an interest that is held directly or indirectly

through the ownership of equity interests representing less than two percent

(2%) of all outstanding equity interests issued by a person that is a party to the

transaction, or solely by reason of that individual's position as a director or

officer of a person that is a party to the transaction.

(c) This subse ction does not permit an investment that is prohibited by KRS

304.7-363.

(d) This subsection does not apply to a transaction between an insurer and any of

its subsidiaries or affiliates that is entered into in compliance with Subtitle 37

of KRS Chapter 304 , other than a transaction between an insurer and its

officer or director.

(2) An insurer may make, without the prior written approval of the commissioner:

(a) Policy loans in accordance with the terms of the policy or contract and KRS

304.7-401:

(b) Advances to officers or directors for expenses reasonably expected to be

incurred in the ordinary course of the insurer's business or guarantees

associated with credit or charge cards issued or credit extended for the

purpose of financing these expenses;

(c) Loans secured by the principal residence of an existing or new officer of the

insurer made in connection with the officer's relocation at the insurer's request,

if the loans comply with the requirements of KRS 304.7 -413 or 304.7 -465,

and the terms and condit ions otherwise are the same as those generally

available from unaffiliated third parties;

(d) Secured loans to an existing or new officer of the insurer made in connection

with the officer's relocation at the insurer's request, if the loans:

1. Do not have a term exceeding two (2) years;

2. Are required to finance mortgage loans outstanding at the same time on

the prior and new residences of the officer;

3. Do not exceed an amount equal to the equity of the officer in the prior

residence; and

4. Are required to be fully repaid upon the earlier of the end of the two (2)

year period or the sale of the prior residence; and

(e) Loans and advances to officers or directors made in compliance with state or

federal law specifically related to the loans an d advances by a regulated

noninsurance subsidiary or affiliate of the insurer in the ordinary course of

business and on terms no more favorable than available to other customers of

the entity.