{"data":{"id":"us-ky/krs-304.7-415","jurisdiction":"us-ky","citation":"KRS 304.7-415","heading":"Securities lending, repurchase, reverse repurchase, and dollar roll","body":"transactions.\nAn insurer may enter into securities lending, repurchase, reverse repurchase, and dollar\nroll transactions with business entities, subject to the following requirements:\n(1) The insurer's board of directors shall adopt a written plan that is consistent with the\nrequirements of the written plan in KRS 304.7 -361 that specifies guidelines and\nobjectives to be followed, such as:\n(a) A description of how cash received will b e invested or used for general\ncorporate purposes of the insurer;\n(b) Operational procedures to manage interest rate risk, counterparty default risk,\nthe conditions under which proceeds from reverse repurchase transactions\nmay be used in the ordinary cours e of business, and the use of acceptable\ncollateral in a manner that reflects the liquidity needs of the transactions; and\n(c) The extent to which the insurer may engage in these transactions;\n(2) The insurer shall enter into a written agreement for all tr ansactions authorized in\nthis section other than dollar roll transactions. The written agreement shall require\nthat each transaction terminate not more than one (1) year from its inception or\nupon the earlier demand of the insurer. The agreement shall be w ith the business\nentity counterparty, but for securities lending transactions, the agreement may be\nwith an agent acting on behalf of the insurer, if the agent is a qualified business\nentity, and if the agreement:\n(a) Requires the agent to enter into separ ate agreements with each counterparty\nthat are consistent with the requirements of this section; and\n(b) Prohibits securities lending transactions under the agreement with the agent or\nits affiliates;\n(3) Cash received in a transaction under this section s hall be invested in accordance\nwith this subtitle and in a manner that recognizes the liquidity needs of the\ntransaction or used by the insurer for its general corporate purposes. For so long as\nthe transaction remains outstanding, the insurer, its agent, or its custodian shall\nmaintain, as to acceptable collateral received in a transaction under this section,\neither physically or through the book entry systems of the Federal Reserve,\nDepository Trust Company, Participants Trust Company, or other securities\ndepositories approved by the commissioner:\n(a) Possession of the acceptable collateral;\n(b) A perfected security interest in the acceptable collateral; or\n(c) In the case of a jurisdiction outside of the United States, title to, or rights of a\nsecured creditor to, the acceptable collateral;\n(4) The limitations of KRS 304.7 -403 and 304.7 -417 shall not apply to the business\nentity counterparty exposure created by transactions under this section. For purposes\nof calculations made to determine compliance with this subsection, no effect will be\ngiven to the insurer's future obligation to resell securities, in the case of a repurchase\ntransaction, or to repurchase securities, in the case of a reverse repurchase\ntransaction. An insurer shall not enter into a trans action under this section if, as a\nresult of and after giving effect to the transaction:\n(a) The aggregate amount of securities th en loaned, sold to, or purchased from\nany one (1) business entity counterparty under this section would exceed five\npercent (5%) of its admitted assets. In calculating the amount sold to or\npurchased from a business entity counterparty under repurchase or reverse\nrepurchase transactions, effect may be given to netting provisions under a\nmaster written agreement; or\n(b) The aggregate amount of all securities then loaned, sold to, or purchased from\nall business entities under this section would exceed forty p ercent (40%) of its\nadmitted assets;\n(5) In a securities lending transaction, the insurer shall receive acceptable collateral\nhaving a market value as of the transaction date at least equal to one hundred two\npercent (102%) of the market value of the secur ities loaned by the insurer in the\ntransaction as of that date. If at any time the market value of the acceptable\ncollateral is less than the market value of the loaned securities, the business entity\ncounterparty shall be obligated to deliver additional a cceptable collateral, the\nmarket value of which, together with the market value of all acceptable collateral\nthen held in connection with the transaction, at least equals one hundred two percent\n(102%) of the market value of the loaned securities;\n(6) In a reverse repurchase transaction, other than a dollar roll transaction, the insurer\nshall receive acceptable collateral having a market value as of the transaction date at\nleast equal to ninety -five percent (95%) of the market value of the securities\ntransferred by the insurer in the transaction as of that date. If at any time the market\nvalue of the acceptable collateral is less than ninety -five percent (95%) of the\nmarket value of the securities so transferred, the business entity counterparty shall\nbe obligated to deliver additional acceptable collateral, the market value of which,\ntogether with the market value of all acceptable collateral then held in connection\nwith the transaction, at least equals ninety-five percent (95%) of the market value of\nthe transferred securities;\n(7) In a dollar roll transaction, the insurer shall receive cash in an amount at least equal\nto the market value of the securities transferred by the insurer in the transaction as\nof the transaction date; and\n(8) In a repurchase trans action, the insurer shall receive as acceptable collateral\ntransferred securities having a market value at least equal to one hundred two\npercent (102%) of the purchase price paid by the insurer for the securities. If at any\ntime the market value of the ac ceptable collateral is less than one hundred percent\n(100%) of the purchase price paid by the insurer, the business entity counterparty\nshall be obligated to provide additional acceptable collateral, the market value of\nwhich, together with the market valu e of all acceptable collateral then held in\nconnection with the transaction, at least equals one hundred two percent (102%) of\nthe purchase price. Securities acquired by an insurer in a repurchase transaction\nshall not be sold in a reverse repurchase trans action, loaned in a securities lending\ntransaction, or otherwise pledged.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=16847","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:39Z","sha256":"47c920323dd26e1071c483aa2c0ba15643c5bfb2928eab9a6c3400b75fe226c1","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.7-413","next":"us-ky/krs-304.7-417"},"notice":"GroundRules: Original legal text. Not legal advice."}