{"data":{"id":"us-ky/krs-304.7-014","jurisdiction":"us-ky","citation":"KRS 304.7-014","heading":"Application -- Investments that may be acquired and held as admitted","body":"assets -- Computation of limitations based on admitted assets -- Documentation\n-- Agreements to purchase securities in advance of their issuance -- Order to\nlimit investment practice.\n(1) (a) Insurers may acquire, hold, or invest investments or engage in investment\npractices as set forth in this subtitle. Investments not conforming to this\nsubtitle or otherwise expressly allowed in this chapter shall not be admitted\nassets.\n(b) This subtitle shall apply to investments and investment practices of domestic\ninsurers and United States branches of alien insurers entered through this\nstate. This subtitle shall not apply to separate accounts of an insurer except to\nthe extent that the provisions of KRS 304.7-240 so provide.\n(2) Subject to subsection (3) of this section, an insurer shall not acquire or hold an\ninvestment as an admitted asset unless at the time of acquisition it is:\n(a) Eligible for the payment or accrual of interest or discou nt, whether in cash or\nother securities, eligible to receive dividends or other distributions, or is\notherwise income producing; or\n(b) Acquired under KRS 304.7 -413(3), 304.7-415, 304.7-419, 304.7-423, 304.7-\n465(3), 304.7-467, 304.7-471, or 304.7-473, or under the authority of sections\nof the code other than in this subtitle.\n(3) An insurer may acquire or hold as admitted assets investments that do not otherwise\nqualify under this subtitle if the insurer has not acquired them for the purpose of\ncircumventing any limitations contained in this subtitle, if the insurer acquires the\ninvestments in the following circumstances and the insurer complies with the\nprovisions of KRS 304.7-363 as to the investments:\n(a) As payment on account of existing indebtedness or in connection with the\nrefinancing, restructuring, or workout of existing indebtedness, if taken to\nprotect the insurer's interest in that investment;\n(b) As realization on collateral for an obligation;\n(c) In connection with an otherwise qualified investm ent or investment practice,\nas interest on a dividend, other distribution related to the investment,\ninvestment practice, or in connection with the refinancing of the investment,\nin each case for no additional or only nominal consideration;\n(d) Under a law ful and bona fide agreement of recapitalization, voluntary, or\ninvoluntary reorganization in connection with an investment held by the\ninsurer; or\n(e) Under a bulk reinsurance, merger, or consolidation transaction approved by\nthe commissioner if the assets  constitute admissible investments for the\nceding, merged, or consolidated companies.\n(4) A foreign insurer that becomes a domestic insurer in accordance with KRS 304.24 -\n500 may hold as admitted assets investments that do not otherwise qualify under\nthis s ubtitle if the investments were qualified as admitted assets in the insurer's\nformer state of domicile immediately prior to the insurer's becoming a Kentucky\ndomestic insurer, if the insurer has not acquired the investments for the purpose of\ncircumventing any limitations contained in this subtitle and if the insurer complies\nwith the provisions of KRS 304.7-363 as to the investments.\n(5) An investment or portion of an investment acquired by an insurer under subsections\n(3) or (4) of this section shall become a nonadmitted asset three (3) years, or five (5)\nyears in the case of mortgage loans and real estate, from the date of its acquisition,\nunless within that period the investment has become a qualified investment under\nthis subtitle other than s ubsections (3) or (4) of this section, but an investment\nacquired under an agreement of bulk reinsurance, merger, or consolidation may be\nqualified for a longer period if so provided in the plan for reinsurance, merger, or\nconsolidation as approved by the commissioner. Upon application by the insurer\nand a showing that the nonadmission of an asset held under subsections (3) or (4) of\nthis section would materially injure the interests of the insurer, the commissioner\nmay extend the period for admissibility for an additional reasonable period of time.\n(6) Except as provided in subsections (7) and (9) of this section, an investment shall\nqualify under this subtitle if, on the date the insurer committed to acquire the\ninvestment or on the date of its acquisition , it would have qualified under this\nsubtitle. For the purposes of determining limitations contained in this subtitle, an\ninsurer shall give appropriate recognition to any commitments to acquire\ninvestments.\n(7) (a) An investment held as an admitted asset by an insurer on July 14, 2000 that\nqualified under this subtitle shall remain qualified as an admitted asset under\nthis subtitle.\n(b) Each specific transaction constituting an investment practice of the type\ndescribed in this subtitle that was lawfully en tered into by an insurer and was\nin effect on July 14, 2000 shall continue to be permitted under this subtitle\nuntil its expiration or termination under its terms.\n(8) Unless otherwise specified, an investment limitation computed on the basis of an\ninsurer's admitted assets or capital and surplus shall relate to the amount required to\nbe shown on the statutory balance sheet of the insurer most recently required to be\nfiled with the commissioner. For purposes of computing any limitation based upon\nadmitted assets, the insurer shall deduct from the amount of its admitted assets the\namount of the liability recorded on its statutory balance sheet for:\n(a) The return of acceptable collateral received in a reverse repurchase transaction\nor a securities lending transaction;\n(b) Cash received in a dollar roll transaction; and\n(c) The amount reported as borrowed money in the most recently filed financial\nstatement to the extent not included in paragraphs (a) and (b) of this\nsubsection.\n(9) An investment qualified, in whole or in part, for acquisition or holding as an\nadmitted asset may be qualified or requalified at the time of acquisition or a later\ndate, in whole or in part, under any other section of this subtitle, if the relevant\nconditions contained in the other s ection of this subtitle are satisfied at the time of\nqualification or requalification.\n(10) An insurer shall maintain documentation demonstrating that investments were\nacquired in accordance with this subtitle, and specifying the section of this subtitle\nunder which they were acquired.\n(11) An insurer shall not enter into an agreement to purchase securities in advance of\ntheir issuance for resale to the public as part of a distribution of the securities by the\nissuer, or otherwise guarantee the distribution , except that an insurer may acquire\nprivately placed securities with registration rights.\n(12) Notwithstanding the provisions of this subtitle, the commissioner, for good cause,\nmay order under the state's administrative regulations, an insurer to nonadmi t, limit,\ndispose of, withdraw from or discontinue an investment or investment practice. The\nauthority of the commissioner under this subsection is in addition to any other\nauthority of the commissioner.\n(13) Insurance futures and insurance futures options  are not considered investments or\ninvestment practices for the purposes of this subtitle.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=16795","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:38Z","sha256":"5d4a03bf6b515e6c86680624d1b533ccd21e8a04c3abe1b7496992ff349f6ae6","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.7-012","next":"us-ky/krs-304.7-020"},"notice":"GroundRules: Original legal text. Not legal advice."}