KRS 304.7-455: Limitations on investments that are guaranteed by a single person --

Investments in certain rating categories -- Canadian investments.

(1) Except as otherwise specified in this subtitle, an insurer shall not acquire directly or

indirectly through an investment subsidiary an investment under this subtitle if, as a

result of and after giving effect to the investment, the insurer would hold more than

five percent (5%) of its admitted assets in investments of all kinds issued, assumed,

accepted, insured, or guaranteed by a single person.

(2) This five percent (5%) limitation shall not apply to the aggregate amounts insured

by a single financial guaranty insurer with the highest generic rating issued by a

nationally recognized statistical rating organization.

(3) Asset-backed securities shall not be subject to the limitations of subsection (1) of

this section. However, an insurer shall not acquire an asset -backed security if, as a

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

backed securities secured by or evidencing an interest in a single asset or single pool

of assets held by a trust or other business entity, then held by the insurer would

exceed five percent (5%) of its admitted assets.

(4) An insurer shall not acquire, directly or indirectly through an investment subsidiary,

an investment under KRS 304.7 -457, 304.7 -463, or 304.7 -469, or counterparty

exposure under KRS 304.7 -471(4) if, as a result of and after giving effect to the

investment:

(a) The aggregate amount of all medium and lower grade investments then held

by the insurer would exceed twenty percent (20%) of its admitted assets;

(b) The aggregate amount of lower grade investments then held by the insurer

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

(c) The aggregate amount of investments rated 5 or 6 by the SVO then held by the

insurer would exceed five percent (5%) of its admitted assets;

(d) The aggregate amount of investments rated 6 by the SVO then held by the

insurer would exceed one percent (1%) of its admitted assets; or

(e) The aggregate amount of medium and lower grade investments then held by

the insurer that receive as cash income less than the equivalent yield for

Treasury issues with a comparative average life, would exceed one percent

(1%) of its admitted assets.

(5) An insurer shall not acquire, directly or indirectly through an investment subsidiary,

an investment under KRS 304.7 -457, 304.7 -463, or 304.7 -469, or counterparty

exposure under KRS 304.7 -471(4) if, as a result of and after giving effect to the

investment:

(a) The aggregate amount of medium and lower grade investments issued,

assumed, guaranteed, accepted, or insured by any one (1) person or, as to

asset-backed securities secured by or evidencing an interest in a single asset or

pool of assets, then held by the insurer would exceed one percent (1%) of its

admitted assets; or

(b) The aggregate amount of lower grade investments issued, assumed,

guaranteed, accepted, or insured by any one (1) person or, as to asset -backed

securities secured by or evidencing an interest in a single asset or pool of

assets, then held by the insurer would exceed one -half of one percent (0.5%)

of its admitted assets.

(6) If an insurer attains or exceeds the limit of any one (1) rating category referre d to in

subsections (4) to (6) of this section, the insurer shall not thereby be precluded from

acquiring investments in other rating categories subject to the specific and

multicategory limits applicable to those investments.

(7) An insurer shall not acquire, directly or indirectly through an investment subsidiary,

any Canadian investments authorized by this subtitle, if as a result of and after

giving effect to the investment, the aggregate amount of these investments then held

by the insurer would exceed forty percent (40%) of its admitted assets, or if the

aggregate amount of Canadian investments not acquired under KRS 304.7 -457(2)

then held by the insurer would exceed twenty -five percent (25%) of its admitted

assets.

(8) However, as to an insurer that is authorized to do business in Canada or that has

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

located in Canada and denominated in Canadian currency, the limitations of

subsection (7) of this section shall be increased by the greater of:

(a) The amount the insurer is required by Canadian law to invest in Canada or to

be denominated in Canadian currency; or

(b) One hundred twenty -five percent (125%) of the amount of its reserves and

other obligations under contracts on risks resident or located in Canada.