{"data":{"id":"us-ky/krs-304.7-407","jurisdiction":"us-ky","citation":"KRS 304.7-407","heading":"Investment pools.","body":"(1) An insurer may acquire investments in investment pools that:\n(a) Invest only in:\n1. Obligations that are rated 1 or 2 by SVO or have an equivalent of an\nSVO 1 or 2 rating or, in the absence of a 1 or 2 rating or equivalent\nrating, the issuer has outstandin g obligations with an SVO 1 or 2 or\nequivalent rating by a nationally recognized statistical rating\norganization recognized by the SVO and have:\na. A remaining maturity of three hundred ninety -seven (397) days or\nless or a put that entitles the holder to r eceive the principal amount\nof the obligation which put may be exercised through maturity at\nspecified intervals not exceeding three hundred ninety -seven (397)\ndays; or\nb. A remaining maturity of three (3) years or less and a floating\ninterest rate that re sets no less frequently than quarterly on the\nbasis of a current short -term index (federal funds, prime rate,\ntreasury bills, London InterBank Offered Rate (LIBOR), or\ncommercial paper) and is subject to no maximum limit, if the\nobligations do not have an interest rate that varies inversely to\nmarket interest rate changes;\n2. Government money market mutual funds or class one money market\nmutual funds; or\n3. Securities lending, repurchase, and reverse repurchase transactions that\nmeet all the requirements of  KRS 304.7 -415, except the quantitative\nlimitations of KRS 304.7-415(4); or\n(b) Invest only in investments that an insurer may acquire under this subtitle, if\nthe insurer's proportionate interest in the amount invested in these investments\ndoes not exceed the applicable limits of this subtitle.\n(2) For an investment in an investment pool to be qualified under this subtitle, the\ninvestment pool shall not:\n(a) Acquire securities issued, assumed, guaranteed, or insured by the insurer or an\naffiliate of the insurer;\n(b) Borrow or incur any indebtedness for borrowed money, except for securities\nlending and reverse repurchase transactions that meet the requirements of\nKRS 304.7-415, except the quantitative limitations of KRS 304.7-415(4); or\n(c) Permit the aggrega te value of securities then loaned or sold to, purchased\nfrom, or invested in any one (1) business entity under this section to exceed\nten percent (10%) of the total assets of the investment pool.\n(3) The limitations of KRS 304.7-403(1) shall not apply to an insurer's investment in an\ninvestment pool, however an insurer shall not acquire an investment in an\ninvestment pool under this section if, as a result of and after giving effect to the\ninvestment, the aggregate amount of inv estment then held by the insurer under this\nsection:\n(a) In any one (1) investment pool would exceed ten percent (10%) of its admitted\nassets;\n(b) In all investment pools investing in investments permitted under paragraph (b)\nof subsection (1) of this sect ion would exceed twenty -five (25%) of its\nadmitted assets; or\n(c) In all investment pools would exceed thirty -five percent (35%) of its admitted\nassets.\n(4) For an investment in an investment pool to be qualified under this subtitle, the\nmanager of the investment pool shall:\n(a) Be organized under the laws of the United States or a state and designated as\nthe pool manager in a pooling agreement;\n(b) Be the insurer, an affiliated insurer or a business entity affiliated with the\ninsurer, a qualified bank, a b usiness entity registered under the Investment\nAdvisors Act of 1940 (15 U.S.C. sec. 80a -1 et seq.), as amended or, in the\ncase of a reciprocal insurer or interinsurance exchange, its attorney -in-fact, or\nin the case of a United States branch of an alien in surer, its United States\nmanager or affiliates or subsidiaries of its United States manager;\n(c) Compile and maintain detailed accounting records setting forth:\n1. The cash receipts and disbursements reflecting each participant's\nproportionate investment in the investment pool;\n2. A complete description of all underlying assets of the investment pool,\nincluding amount, interest rate, maturity date if any, and other\nappropriate designations; and\n3. Other records that, on a daily basis, allow third parties to  verify each\nparticipant's investment in the investment pool; and\n(d) Maintain the assets of the investment pool in one (1) or more accounts, in the\nname of or on behalf of the investment pool, under a custody agreement with a\nqualified bank. The custody agreement shall:\n1. State and recognize the claims and rights of each participant;\n2. Acknowledge that the underlying assets of the investment pool are held\nsolely for the benefit of each participant in proportion to the aggregate\namount of its investments in the investment pool; and\n3. Contain an agreement that the underlying assets of the investment pool\nshall not be commingled with the general assets of the custodian\nqualified bank or any other person.\n(5) The pooling agreement for each investment pool sh all be in writing and shall\nprovide that:\n(a) An insurer and its affiliated insurers or, in the case of an investment pool\ninvesting solely in investments permitted under paragraph (a) of subsection\n(1) of this section, the insurer and its subsidiaries, af filiates, or any pension or\nprofit sharing plan of the insurer, its subsidiaries and affiliates or, in the case\nof a United States branch of an alien insurer, affiliates or subsidiaries of its\nUnited States manager, shall at all times, hold one hundred per cent (100%) of\nthe interest in the investment pool;\n(b) The underlying assets of the investment pool shall not be commingled with\nthe general assets of the pool manager or any other person;\n(c) In proportion to the aggregate amount of each pool participant 's interest in the\ninvestment pool:\n1. Each participant owns an undivided interest in the underlying assets of\nthe investment pool; and\n2. The underlying assets of the investment pool are held solely for the\nbenefit of each participant;\n(d) A participant, or in the event of the participant's insolvency, bankruptcy, or\nreceivership, its trustee, receiver, or other successor -in-interest, may withdraw\nall or any portion of its investment from the investment pool under the terms\nof the pooling agreement;\n(e) Withdrawals may be made on demand without penalty or other assessment on\nany business day, but settlement of funds shall occur within a reasonable and\ncustomary period thereafter not to exceed five (5) business days. Distributions\nunder this paragraph shall be calculated in each case net of all then applicable\nfees and expenses of the investment pool. The pooling agreement shall\nprovide that the pool manager shall distribute to a participant, at the discretion\nof the pool manager:\n1. In cash, the then fair ma rket value of the participant's pro rata share of\neach underlying asset of the investment pool;\n2. In kind, a pro rata share of each underlying asset; or\n3. In a combination of cash and in -kind distributions, a pro rata share in\neach underlying asset; and\n(f) The pool manager shall make the records of the investment pool available for\ninspection by the commissioner.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=16843","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:39Z","sha256":"bf18eeb3e3538e0a93e9f354ef4a2b189080252840eef1626c3cad1f73ec3485","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.7-405","next":"us-ky/krs-304.7-409"},"notice":"GroundRules: Original legal text. Not legal advice."}