KRS 304.7-417: Foreign investments and foreign currency transactions.

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

investments, or engage in investment practices with persons of or in foreign

jurisdictions, of substantially the same types as those that an insurer is permitted to

acquire under t his subtitle, other than of the type permitted under KRS 304.7 -407,

if, as a result of and after giving effect to the investment:

(a) The aggregate amount of foreign investments then held by the insurer under

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

and

(b) The aggregate amount of foreign investments then held by the insurer under

this subsection in a single foreign jurisdiction does not exceed ten percent

(10%) of its admitted assets as to a foreign jurisdiction that has a sovereign

debt rating of SVO 1 or three percent (3%) of its admitted assets as to any

other foreign jurisdiction.

(2) Subject to the limitations of KRS 304.7-403, an insurer may acquire investments, or

engage in investment practices denominated in forei gn currencies, whether or not

they are foreign investments acquired under subsection (1) of this section, or

additional foreign currency exposure as a result of the termination or expiration of a

hedging transaction with respect to investments denominated in a foreign currency,

if:

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

subsection denominated in foreign currencies does not exceed ten percent

(10%) of its admitted assets; and

(b) The aggregate amount of investments then h eld by the insurer under this

subsection denominated in the foreign currency of a single foreign jurisdiction

does not exceed ten percent (10%) of its admitted assets as to a foreign

jurisdiction that has a sovereign debt rating of SVO 1 or three percent ( 3%) of

its admitted assets as to any other foreign jurisdiction;

(c) However, an investment shall not be considered denominated in a foreign

currency if the acquiring insurer enters into one (1) or more contracts in

transactions permitted under KRS 304.7 -419 and the business entity

counterparty agrees under the contract or contracts to exchange all payments

made on the foreign currency denominated investment for United States

currency at a rate that effectively insulates the investment cash flows against

future changes in currency exchange rates during the period the contract or

contracts are in effect.

(3) In addition to investments permitted under subsections (1) and (2) of this section, an

insurer that is authorized to do business in a foreign jurisdictio n, and that has

outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or

located in that foreign jurisdiction and denominated in foreign currency of that

jurisdiction, may acquire foreign investment respecting that foreign jurisdiction, and

may acquire investments denominated in the currency of that jurisdiction, subject to

the limitations of KRS 304.7 -403. However, investments made under this

subsection in obligations of foreign governments, their political subdivisions, and

government sponsored enterprises shall not be subject to the limitations of KRS

304.7-407 if those investments carry an SVO rating of 1 or 2. The aggregate amount

of investments acquired by the insurer under this subsection shall not exceed the

greater of:

(a) The amount the insurer is required by the law of the foreign jurisdiction to

invest in the foreign jurisdiction; or

(b) One hundred fifteen percent (115%) of the amount of its reserves, net of

reinsurance, and other obligations under the contracts on lives or risks resident

or located in the foreign jurisdiction.

(4) In addition to investments permitted under subsections (1) and (2) of this section, an

insurer that is not authorized to do business in a foreign jurisdiction, but that has

outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or

located in that foreign jurisdiction and denominated in foreign currency of that

jurisdiction, may acquire foreign investments respecting that foreign jurisdiction,

and may acquire inve stments denominated in the currency of that jurisdiction

subject to the limitations of KRS 304.7 -403. However, investments made under this

subsection in obligations of foreign governments, their political subdivisions, and

government sponsored enterprises shall not be subject to the limitations of KRS

304.7-403 if those investments carry an SVO rating of 1 or 2. The aggregate amount

of investments acquired by the insurer under this subsection shall not exceed one

hundred five percent (105%) of the amount of its reserves, net of reinsurance, and

other obligations under the contracts on lives or risks resident or located in the

foreign jurisdiction.

(5) Investments acquired under this section shall be aggregated with investments of the

same types made in accor dance with this subtitle, and in a similar manner, for

purposes of determining compliance with the limitations, if any, contained in this

subtitle. Investments in obligations of foreign governments, their political

subdivisions, and government sponsored en terprises of these persons, except for

those exempted under subsections (3) and (4) of this section, shall be subject to the

limitations of KRS 304.7-403.