KRS 304.7-405: Rated credit instruments.

Subject to the limitations of subsection (6) of this section, an insurer may acquire rated

credit instruments:

(1) Subject to the limitations of KRS 304.7 -403(2), but not the limitations of KRS

304.7-403(1), an insurer may acquire rated credit instruments issued, assumed,

guaranteed, or insured by:

(a) The United States; or

(b) A government sponsored enterprise of the United States, if the instruments of

the government sponsored enterprise are assumed, guaranteed, or insured by

the United States, or are oth erwise backed or supported by the full faith and

credit of the United States.

(2) (a) Subject to the limitations of KRS 304.7 -403(2), but not to the limitations of

KRS 304.7 -403(1), an insurer may acquire rated credit instruments issued,

assumed, guaranteed, or insured by:

1. Canada; or

2. A government sponsored enterprise of Canada, if the instruments of the

government sponsored enterprise are assumed, guaranteed, or insured by

Canada or are otherwise backed or supported by the full faith and credit

of Canada;

(b) However, an insurer shall not acquire an instrument under this subsection if,

as a result of and after giving effect to the investment, the aggregate amount of

investments then held by the insurer under this subsection would exceed forty

percent (40%) of its admitted assets.

(3) (a) Subject to the limitations of KRS 304.7 -403(2), but not to the limitations of

KRS 304.7-403(1), an insurer may acquire rated credit instruments, excluding

asset-backed securities:

1. Issued by a government money market mutual fund, a class one money

market mutual fund, or a class one bond mutual fund;

2. Issued, assumed, guaranteed, or insured by a government sponsored

enterprise of the United States other than those eligible under subsection

(1) of this section;

3. Issued, assumed, guaranteed, or insured by a state, if the instruments are

general obligations of the state; or

4. Issued by a multilateral development bank;

(b) However, an insurer shall not acquire an instrument of any one (1) fund, any

one (1) enterpris e or entity, or any one (1) state under this subsection if, as a

result of and after giving effect to the investment, the aggregate amount of

investments then held in any one (1) fund, enterprise, entity, or state under this

subsection would exceed ten percent (10%) of its admitted assets.

(4) Subject to the limitations of KRS 304.7 -403, an insurer may acquire preferred

stocks that are not foreign investments and that meet the requirements of rated

credit instruments if, as a result of and after giving effect to the investment;

(a) The aggregate amount of preferred stocks then held by the insurer under this

subsection does not exceed twenty percent (20%) of its admitted assets; and

(b) The aggregate amount of preferred stocks then held by the insurer under t his

subsection which are not sinking fund stocks or rated P1 or P2 by the SVO

does not exceed ten percent (10%) of its admitted assets.

(5) Subject to the limitations of KRS 304.7 -403, in addition to those investments

eligible under subsections (1) to (4) of this section, an insurer may acquire rated

credit instruments that are not foreign investments.

(6) An insurer shall not acquire special rated credit instruments under this section if, as

a result of and after giving effect to the investment, the aggreg ate amount of special

rated credit instruments then held by the insurer would exceed five percent (5%) of

its admitted assets.