KRS 56.140: Investment of insurance fund.

(1) The State Treasurer, with approval of every investment by the cabinet, may invest

the Commonwealth's property and casualty insurance fund in:

(a) Obligations of the United States government, its agencies, and Kentucky cities

of the first and home rule classes;

(b) Warrants issued on the State Treasurer;

(c) State bonds, including bridge revenue bonds issued under KRS 180.010 to

180.250;

(d) Bonds or other evidences of indebtedness of any domestic corporation that is

an agent or instrumentality of the state or of any city, county, or school district

of the state, secured by a mortgage on real estate in Kentucky that has been

conveyed to the corporation by any city, county, school district, or state

educational institution, and which the corporation has leased and given the

option to lease to the city, county, school district, or state educational

institution, with option in the lessee to purchase the property, or an interest

therein, on the payment of the aggregate sum of the bond issue, plus the

expenses inci dent to the issuance of the bonds and the formation and

dissolution of the corporation, subject to credit of the amounts paid as rental

for such property; and

(e) School bonds issued by cities under KRS 162.120 to 162.290.

(2) The cabinet shall not approve investments on which there has ever been a default in

payment of principal or interest preceding the date of acceptance by the State

Treasurer.

(3) All income from investments credited to the Commonwealth's property and

casualty insurance fund shall be credited to that fund.