Chapter 3906: ALTERNATE INVESTMENT LAW

3906.01 Definitions.

As used in this chapter:

(A) "Annual financial statement" means an insurer's statutorily required financial statement under the insurer's respective authorizing chapter of the Revised Code.

(B) "Authorized control level risked-based capital" means authorized control level RBC as defined in sections 1753.31 and 3903.81 of the Revised Code.

(C) "Cash equivalent" means a short-term, highly liquid investment that is both readily convertible to known amounts of cash and so near its maturity that it presents an insignificant risk of change in value because of changes in interest rates, and that has an original maturity date, to the entity holding the investment, of three months or less.

(D) "Covered" means that an insurer owns, or can immediately acquire through the exercise of options, warrants, or conversion rights already owned, the underlying interest in order to fulfill or secure its obligation under the option, cap, or floor it has written.

(E)

(1) "Derivative instrument" means an agreement, option, instrument, or a series or a combination thereof of either of the following types:

(a) To make or take delivery of, or assume or relinquish, a specified amount of one or more underlying interest, or to make a cash settlement in lieu thereof;

(b) That has a price, performance, value, or cash flow based primarily upon the actual or expected price, level, performance, value, or cash flow of one or more underlying interests.

(2) "Derivative instrument" includes options, warrants, caps, floors, collars, swaps, forwards, futures, and any other agreements, options, or instruments substantially similar thereto or any series or combination thereof.

(F) "Derivative transaction" means a transaction involving the use of one or more derivative instruments.

(G) "Hedging transaction" means a derivative transaction that is entered into and maintained to reduce either of the following:

(1) The risk of economic loss due to a change in the value, yield, price, cash flow, or quantity of assets or liabilities that the insurer has acquired or incurred or anticipates acquiring or incurring;

(2) The currency exchange rate risk or the degree of exposure as to assets or liabilities that an insurer has acquired or incurred or anticipates acquiring or incurring.

(H) "Income generation" means a derivative transaction involving the writing of covered options, caps, or floors that is intended to generate income or enhance return.

(I) "Lower-grade investment" means a rated credit instrument or debt-like preferred stock rated 4, 5, or 6 by the securities valuation office.

(J) "Medium-grade investment" means a rated credit instrument or debt-like preferred stock rated 3 by the securities valuation office.

(K) "Minimum asset requirement" is the requirement that an insurer maintain assets in an amount equal to the sum of the insurer's liabilities and its minimum financial security benchmark, as required by division (A) of section 3906.11 of the Revised Code.

(L) "Minimum financial security benchmark" is the amount an insurer is required to have under section 3906.03 of the Revised Code.

(M) "Replication transaction" means a derivative transaction that is intended to replicate the performance of one or more assets that an insurer is authorized to acquire under this chapter. "Replication transaction" does not include a derivative transaction that is entered into as a hedging transaction.

(N) "Securities valuation office" means the securities valuation office of the national association of insurance commissioners or any successor office.

(O) "Securities valuation office listed mutual fund" means a money market mutual fund or short-term bond fund that is registered with the United States securities and exchange commission under the "Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a-1 to 80a-64, and that has been determined by the securities valuation office to be eligible for special reserve and reporting treatment, rather than as common stock.

(P) "Securities valuation office listed exchange traded fund" means a bond or preferred stock exchange traded fund that is registered with the United States securities and exchange commission under the "Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a-1 to 80a-64, and that has been rated 1 or 2 by the securities valuation office and determined by the office to be eligible for special reserve and reporting treatment, rather than as common stock.

(Q) "Superintendent" means the superintendent of insurance.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3906.02 Applicability.

(A) This chapter, and any rules adopted under it, apply to entities organized under Chapters 1731., 1751., 3907., 3919., 3921., 3925., 3931., 3939., 3941., and 3953. of the Revised Code.

(B) An insurer may apply to the superintendent for permission to make investments under this chapter, in lieu of making investments under any other section of the Revised Code.

(C) In determining whether to permit an entity to invest pursuant to this chapter, the superintendent shall consider all of the following:

(1) The character, reputation, and financial standing of the officers of the entity;

(2) The character, reputation, and financial condition of the entity;

(3) The adequacy of the expertise, experience, character, and reputation of the person or persons who will manage the investments on behalf of the entity;

(4) The quality of the enterprise risk management program implemented by the entity to identify, assess, monitor, manage, and report on its key investment and related risks;

(5) Any other factor the superintendent considers relevant.

(D) Separate accounts established in accordance with section 3907.15 of the Revised Code shall continue to be governed by that section.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3906.03 Alternative minimum financial security benchmarks.

(A)

(1) Unless otherwise established in accordance with divisions (A)(2) and (3) of this section, the amount of the minimum financial security benchmark for an insurer shall be the greatest of the following:

(a) The authorized control level risk-based capital applicable to the insurer, as defined and set forth by sections 1753.31 to 1753.43 or 3903.81 to 3903.93 of the Revised Code, less the asset valuation reserve as defined in the risk-based capital instructions defined in division (M) of section 3903.81 of the Revised Code;

(b) The minimum capital or minimum surplus required by statute or rule for maintenance of an insurer's certificate of authority in this state;

(c) All invested assets of an entity organized under Chapter 3919. or 3939. of the Revised Code;

(d) For title insurers, the quotient of annualized net earned premiums divided by eight;

(e) For multiple employer welfare arrangements, the greater of three hundred per cent of the risk-based capital amount reported in the annual statement or the quotient of annualized net earned premiums divided by twelve.

(2) The superintendent may, in accordance with division (B) of this section, establish by order a minimum financial security benchmark to apply to a specific insurer that exceeds the amount arrived at under division (A)(1) of this section.

(3) The superintendent may by rule change the minimum financial security benchmark that is a multiple of authorized control level risk-based capital, or equivalent risk-based capital calculation, to apply to any class of insurers provided the amount established by the rule is not less than the amount arrived at under division (A)(1) of this section.

(B) The superintendent shall determine the amount of minimum capital or minimum surplus as specified in division (A)(1)(b) of this section to determine an insurer's minimum financial security benchmark. The amount shall be sufficient to provide reasonable security against contingencies affecting the insurer's financial position that are not fully covered by reserves or by reinsurance.

(1) In determining this amount, the superintendent shall consider all of the following risks:

(a) Increases in the frequency or severity of losses beyond the levels contemplated by the premium rates charged;

(b) Increases in expenses beyond those contemplated by the premium rates charged;

(c) Decreases in the value of assets, or the return on invested assets below those planned on;

(d) Changes in economic conditions that would make liquidity more important than contemplated and would force untimely sale of assets or prevent timely investments;

(e) Currency devaluation to which the insurer may be subject;

(f) Any other contingencies the superintendent identifies that may affect the insurer's operations.

(2) In determining the minimum financial security benchmark under division (A)(2) of this section, the superintendent shall also take into account the following factors:

(a) The most reliable information available as to the magnitude of the various risks under division (B)(1) of this section;

(b) The extent to which the risks in division (B)(1) of this section are independent of each other or are related, and whether any dependency is direct or inverse;

(c) The insurer's recent history of profits or losses;

(d) The extent to which the insurer has provided protection against adverse contingencies in ways other than the establishment of surplus, including redundancy of premiums, adjustability of contracts under their terms, investment valuation reserves, whether voluntary or mandatory, appropriate reinsurance, the use of conservative actuarial assumptions to provide a margin of security, reserve adjustments in recognition of previous rate inadequacies, contingency or catastrophe reserves, diversification of assets, and underwriting risks;

(e) Independent judgments on the soundness of the insurer's operations, as evidenced by the ratings of reliable professional financial reporting services;

(f) Any other factor the superintendent considers relevant.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3906.04 Rights of insurer.

(A) Subject to this chapter, an insurer making investments under this chapter may loan or invest its funds, and may buy, sell, hold title to, possess, occupy, pledge, convey, manage, protect, insure, and deal with its investments, property, and other assets to the same extent as any other person or corporation under the laws of this state and of the United States.

(B) With respect to all of the insurer's investments, the board of directors of an insurer making investments under this chapter shall exercise the judgment and care, under the circumstances then prevailing, that persons of reasonable prudence, discretion, and intelligence would exercise in the management of a like enterprise, not in regard to speculating but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital. Investments shall be of sufficient value, liquidity, and diversity to assure the insurer's ability to meet its outstanding obligations based on reasonable assumptions as to new business production for current lines of business. As part of its exercise of judgment and care, the board of directors shall take into account the prudence evaluation criteria of division (C) of section 3906.05 of the Revised Code. The exercise of judgment and care by the board of directors under this section shall also be governed by sections 1701.59 and 1702.30 of the Revised Code, as applicable.

(C) An insurer making investments under this chapter shall establish and implement internal controls and procedures to assure compliance with investment policies and procedures to assure that all of the following are met:

(1) The insurer's investment staff and any consultants used are reputable and capable.

(2) A periodic evaluation and monitoring process occurs for assessing the effectiveness of investment policy and strategies.

(3) Management's performance is assessed in meeting the stated objectives within the investment policy through periodic presentations to the board of directors.

(4) Appropriate analyses are undertaken on the degree to which asset cash flows are adequate to meet liability cash flows under different economic environments. These analyses shall be conducted at least annually and make specific reference to the economic conditions considered.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3906.05 Consideration of relevant factors.

(A) An insurer making investments under this chapter shall consider the factors listed in division (C) of this section along with its business in determining whether an investment portfolio or investment policy is prudent.

(B) The superintendent shall consider the factors listed in division (C) of this section prior to making a determination that an insurer's investment portfolio or investment policy is not prudent.

(C) Insurers and the superintendent shall consider the following factors according to divisions (A) and (B) of this section:

(1) General economic conditions;

(2) The possible effect of inflation or deflation;

(3) The expected tax consequences of investment decisions or strategies;

(4) The fairness and reasonableness of the terms of an investment considering its probable risk and reward characteristics and relationship to the investment portfolio as a whole;

(5) The extent of the diversification of the insurer's investments among all of the following:

(a) Individual investments;

(b) Classes of investments;

(c) Industry concentrations;

(d) Dates of maturity;

(e) Geographic areas.

(6) The quality and liquidity of investments in affiliates;

(7) The investment exposure to all of the following risks, quantified in a manner consistent with the insurer's acceptable risk level as described in the insurer's written investment policy, required under division (H) of section 3906.06 of the Revised Code:

(a) Liquidity;

(b) Credit and default;

(c) Systemic or market;

(d) Interest rate;

(e) Call, prepayment, and extension;

(f) Currency;

(g) Foreign sovereign.

(8) The amount of the insurer's assets, capital and surplus, premium writings, insurance in force, and other appropriate characteristics;

(9) The amount and adequacy of the insurer's reported liabilities;

(10) The relationship of the expected cash flows of the insurer's assets and liabilities, and the risk of adverse changes in the insurer's assets and liabilities;

(11) The adequacy of the insurer's capital and surplus to secure the risks and liabilities of the insurer;

(12) Any other factors relevant to whether an investment is prudent.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3906.06 Investment policy.

In acquiring, investing, exchanging, holding, selling, and managing investments under this chapter, an insurer shall establish and follow a written investment policy that shall be reviewed and approved by the insurer's board of directors on at least an annual basis. The content and format of an insurer's investment policy are at the insurer's discretion, but shall include written guidelines appropriate to the insurer's business with regard to all of the following:

(A) The general investment policy of the insurer, containing policies, procedures, and controls covering all aspects of the investing function;

(B) Quantified goals and objectives regarding the composition of classes of investments, including maximum internal limits;

(C) Periodic evaluations of the investment portfolio as to its risk and reward characteristics;

(D) Professional standards for the individuals making day-to-day investment decisions to assure that investments are managed in an ethical, prudent, and capable manner;

(E) The types of investments that are allowed and that are prohibited, based on their risk and reward characteristics and the insurer's level of experience with the investments;

(F) The relationship of classes of investments to the insurer's insurance products and liabilities;

(G) The manner in which the insurer intends to implement section 3906.05 of the Revised Code;

(H) The level of risk, based on quantitative measures, appropriate for the insurer given the level of capitalization and expertise available to the insurer.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3906.07 Classes of investment for purposes of minimum asset requirement.

All of the following classes of investments may be counted for the purposes specified in section 3906.11 of the Revised Code, whether they are made directly or as a participant in a partnership, joint venture, or limited liability company:

(A) Cash, and cash equivalents, in the direct possession of the insurer or on deposit with a financial institution regulated by any federal or state agency of the United States;

(B) Bonds, debt-like preferred stock, and other evidences of indebtedness of governmental units in the United States or Canada, or the instrumentalities of the governmental units, or private business entities domiciled in the United States or Canada, including asset-backed securities, securities valuation office listed mutual funds, and securities valuation office listed exchange traded funds;

(C) Loans with a loan to value ratio of no greater than eighty per cent that are secured by mortgages, trust deeds, or other security interests in real property located in the United States or Canada, or secured by insurance against default issued by a government insurance corporation of the United States or Canada or by an insurer authorized to do business in this state;

(D) Unaffiliated common stock, or equity-like preferred stock, or equity interests in any business entity organized under the United States, any state thereof, the District of Columbia, the Commonwealth of Puerto Rico, Canada, or any province or territory of Canada, or shares of mutual funds or exchange traded funds registered with the securities and exchange commission of the United States under the "Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a-1 to 80a-64, other than securities valuation office listed mutual funds and securities valuation office listed exchange traded funds;

(E) Real property necessary for the convenient transaction of the insurer's business;

(F) Real property, together with the fixtures, furniture, furnishings, and equipment pertaining thereto in the United States or Canada, which produces, or after suitable improvement can reasonably be expected to produce, substantial income;

(G) Loans, securities, or other investments of the types described in divisions (A) to (F) of this section in countries other than the United States and Canada;

(H) Bonds or other evidences of indebtedness of international development organizations of which the United States is a member;

(I) Loans upon the security of the insurer's own policies in amounts that are adequately secured by the policies and that in no case exceed the surrender values of the policies;

(J) Subsidiary or affiliate equity investments, including common stock, equity-like preferred stock, limited liability partnerships, or limited liability membership interests, of entities that are engaged exclusively in insurance, finance, or investments, and investment management companies that are registered with the securities and exchange commission under the "Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a-1 to 80a-64, as amended;

(K) Investments not otherwise permitted by this section, not specifically prohibited by statute, to which both of the following apply:

(1) The assets do not exceed five per cent of the first five hundred million dollars of the insurer's admitted assets plus ten per cent of the insurer's admitted assets exceeding five hundred million dollars.

(2) The assets qualified to meet the minimum asset requirement at the time they were acquired.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3906.08 Determination of minimum asset requirement.

(A) For the purposes of determining an insurer's minimum asset requirement under section 3906.11 of the Revised Code, the following limitations on classes of investments shall apply:

(1) For investments authorized by division (B) of section 3906.07 of the Revised Code and investments authorized by division (G) of section 3906.07 of the Revised Code that are of the types described in division (B) of section 3906.07 of the Revised Code the following limitations shall apply:

(a) The aggregate amount of medium- and lower-grade investments shall be not more than twenty per cent of an insurer's admitted assets.

(b) The aggregate amount of lower-grade investments shall be not more than ten per cent of an insurer's admitted assets.

(c) The aggregate amount of investments rated 5 or 6 by the securities valuation office shall be not more than five per cent of the insurer's admitted assets.

(d) The aggregate amount of investments rated 6 by the securities valuation office shall be not more than one per cent of an insurer's admitted assets.

(e) The aggregate amount of medium- and lower-grade investments that receive as cash income less than the yield for treasury issues with a comparative average life shall be not more than one per cent of an insurer's admitted assets.

(2) Investments authorized by division (C) of section 3906.07 of the Revised Code shall be not more than forty-five per cent of an insurer's admitted assets in the case of life insurers and not more than twenty-five per cent of an insurer's admitted assets in the case of insurers that are not life insurers.

(3) Investments authorized by division (D) of section 3906.07 of the Revised Code shall be not more than twenty per cent of an insurer's admitted assets in the case of life insurers and not more than twenty-five per cent of an insurer's admitted assets in the case of insurers that are not life insurers.

(4) Investments authorized by division (E) of section 3906.07 of the Revised Code shall be not more than ten per cent of an insurer's admitted assets.

(5) Investments authorized by division (F) of section 3906.07 of the Revised Code shall be not more than ten per cent of an insurer's admitted assets.

(6) Investments authorized by division (G) of section 3906.07 of the Revised Code shall be not more than twenty per cent of an insurer's admitted assets.

(7) Investments authorized by division (H) of section 3906.07 of the Revised Code shall be not more than two per cent of an insurer's admitted assets.

(8) Investments authorized by division (J) of section 3906.07 of the Revised Code shall be not more than ten per cent of an insurer's admitted assets in the case of life insurers and not more than three per cent of an insurer's admitted assets in the case of insurers that are not life insurers. An insurer may exceed the limits described in division (A)(8) of this section with investments in a wholly owned domestic insurer, or in a corporation, or similar business entity organized under the laws of the United States, any state thereof, or any other jurisdiction approved by the superintendent, that is formed and maintained to acquire or hold shares of an insurer, with the prior written consent of the superintendent.

(B)

(1) For purposes of determining compliance with section 3906.11 of the Revised Code, securities issued by a single entity and its affiliates, other than the government of the United States, or agencies whose securities are backed by the full faith and credit of the United States, and subsidiaries authorized under division (J) of section 3906.07 of the Revised Code, shall be not more than five per cent of an insurer's admitted assets in the case of life insurers and shall be not more than five per cent of an insurer's admitted assets in the case of insurers that are non-life insurers.

(2) Notwithstanding division (B)(1) of this section, investments in the voting securities of a depository institution, or any company that controls a depository institution, shall not exceed five per cent of an insurer's admitted assets.

(C) For purposes of determining compliance with this section, the admitted portion of assets of subsidiaries of an insurer invested in under division (J) of section 3906.07 of the Revised Code shall be deemed to be owned directly by the insurer and any other investors in proportion to the market value of their interest in the subsidiaries. If interest in the subsidiary has no market value, then the asset allocation proportion shall be determined by the reasonable value of interest in the subsidiary as determined under the national association of insurance commissioners' accounting practices and procedures manual.

(D) If the superintendent considers it necessary to get a proper evaluation of the investment portfolio of an insurer, the superintendent may require that investments in mutual funds, exchange traded funds, pooled investment vehicles, or other investment companies be treated for purposes of this chapter as if the investor owned directly its proportional share of the assets owned by the mutual fund, exchange traded fund, pooled investment vehicle, or investment company.

(E) Unless otherwise specified in this chapter, an insurer's investment limitations shall be computed using the insurer's general account admitted assets, capital, or surplus as reported in the insurer's most recent annual financial statement required to be filed with the superintendent.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3906.09 Payment in different currencies.

An insurer investing under this chapter that is doing business that requires the insurer to make payment in different currencies shall have investments in securities in each of these currencies in an amount that, independent of all other investments, meets the requirements of this chapter, as applied separately to the insurer's obligations in each currency. The superintendent may, by order, exempt an insurer, or, by rule, a class of insurers, from this requirement if the obligations in other currencies are small enough that no significant problem for financial solidity would be created by substantial fluctuations in relative currency values.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3906.10 Prohibited investments.

(A) An insurer investing under this chapter shall not invest in investments that are prohibited for an insurer by statute or rules of this state.

(B) An insurer investing under this chapter shall not invest in a partnership as a general partner.

(C) The superintendent shall set a reasonable amount of time, not to exceed five years, for disposal of a prohibited investment in hardship cases if the insurer demonstrates that the investment was legal when made or the result of a mistake made in good faith, or if the superintendent determines that the sale of the asset would be contrary to the interests of insureds, creditors, or the general public.

(D) Violation of division (A) of this section may be grounds for regulatory action pursuant to divisions (A) and (I) of section 3903.12 of the Revised Code.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3906.11 Minimum asset requirement.

(A) An insurer investing under this chapter shall maintain assets in an amount equivalent to the sum of its liabilities and its minimum financial security benchmark at all times.

(B) Assets invested under this chapter may be counted toward satisfaction of the minimum asset requirement only so far as they are invested in compliance with this chapter and any applicable rules adopted, or orders issued, by the superintendent pursuant to this chapter.

(C) The amount of admitted assets used to calculate the minimum asset requirement shall be reduced by the amount of the liability recorded on an insurer's statutory balance sheet for all of the following:

(1) The return of acceptable collateral received in a reverse repurchase transaction or a securities lending transaction;

(2) Cash received in a dollar roll transaction;

(3) Other amounts reported as borrowed money.

(D) Assets other than invested assets may be counted toward satisfaction of the minimum asset requirement at admitted annual financial statement value. However, loans to officers or directors or their immediate families shall not be counted toward the satisfaction of the minimum asset requirement.

(E) An investment held as an admitted asset by an insurer on the effective date of this section that qualified under the applicable insurance investment law of this state shall remain qualified as an admitted asset under this chapter.

(F) Notwithstanding any provision of this chapter to the contrary, an asset acquired in the bona fide enforcement of creditors' rights or in bona fide workouts or settlements of disputed claims may be counted toward the minimum asset requirement for five years if the asset is real property and three years if the asset is not real property.

(G) The superintendent may determine an insurer to be financially hazardous under section 3903.09 of the Revised Code if either of the following apply:

(1) The insurer does not own the amount of assets needed to meet its minimum asset requirement.

(2) The insurer is unable to apply the amount of assets needed to meet its minimum asset requirement toward compliance with this chapter.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3906.12 Derivative use plan.

(A) Prior to an insurer entering into derivative transactions, the board of directors of the insurer investing under this chapter shall approve a derivative use plan.

(B) An insurer shall notify the superintendent of insurance in writing within three days after identifying either of the following:

(1) Any event or occurrence related to an insurer's derivatives use that may lead to a material change to the insurer's policyholder surplus;

(2) Any event or occurrence related to an insurer's derivatives use that, with the passage of time, may lead to a material change to the insurer's policyholder surplus.

(C) Prior to entering into derivative transactions, an insurer shall file with the superintendent a copy of its derivative use plan and internal controls, for informational purposes. The insurer shall keep current the copy of its derivative use plan and internal controls filed with the superintendent. The insurer shall not enter into derivative transactions until thirty calendar days after the date on which the derivative use plan and internal controls is filed with the superintendent. This thirty-calendar-day period is to begin on the date that the superintendent receives the derivative use plan and internal controls.

(D) The superintendent may adopt rules prescribing the form and content of derivative use plans, as well as any internal controls the superintendent considers necessary.

(E) An insurer that engages in hedging transactions or replication transactions shall do both of the following:

(1) Maintain its position in any outstanding derivative instrument used as part of a hedging transaction or replication transaction for as long as the hedging transaction or replication transaction continues to be effective;

(2) Demonstrate to the superintendent, upon request, that any derivative transaction entered into and involving hedging transaction or replication transaction is an effective hedging transaction or replication transaction. The insurer must be able to demonstrate this at the time the derivative transaction is entered into, and for as long as the transaction continues to be in place.

(F) An insurer may not invest, or use, a derivative instrument for any purpose other than a hedging transaction, income generation, or replication.

(G) All documents provided to the superintendent under this section shall be deemed trade secrets and shall be provided with trade secret protection. Such documents shall also be considered work papers of the superintendent that are subject to section 3901.48 of the Revised Code and are confidential and privileged and shall not be considered a public record, as defined in section 149.43 of the Revised Code. The original documents and any copies of them shall not be subject to subpoena and shall not be made public by the superintendent or any other person, except as otherwise provided in section 3901.48 of the Revised Code.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3906.13 Powers of superintendent.

(A) If the superintendent determines that an insurer's investment practices do not meet the requirements of this chapter, the superintendent may, after notification to the insurer of the superintendent's findings, order the insurer to make changes necessary to comply with this chapter.

(B) If the superintendent determines that the financial condition, current investment practice, or current investment plan of an insurer are or may endanger the interests of insureds, creditors, or the general public, the superintendent may impose reasonable additional restrictions upon the admissibility or valuation of investments and may impose restrictions on the investment practices of the insurer, including prohibiting an investment or requiring the divestment of an investment.

(C) The superintendent may count toward satisfaction of the minimum asset requirement any assets that an insurer is required to invest under the laws of a country other than the United States as a condition for doing business in that country if the superintendent finds that counting them does not endanger the interests of the insurer's insureds or creditors, or the general public.

(D) If the superintendent is satisfied by evidence of the solidity of an insurer and the competence of management and its investment advisors, the superintendent, after a hearing, may, by order, adjust the class limitations prescribed in section 3906.08 of the Revised Code for that insurer, to the extent that the superintendent is satisfied that the interests of the insurer's insureds and creditors and the general public are sufficiently protected. Such adjustments, in aggregate, shall be limited to an amount equal to ten per cent of the insurer's liabilities.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3906.14 Hearings.

(A) An insurer subject to an order of the superintendent under section 3906.03 or 3906.13 of the Revised Code may request a hearing within thirty days of the date of the order. The hearing shall be held in compliance with Chapter 119. of the Revised Code.

(B) The superintendent shall hold hearings required under this section privately unless the insurer requests a public hearing, in which case the hearing shall be public.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3906.15 Adoption of rules.

(A) The superintendent may, in accordance with section 119.03 of the Revised Code, adopt rules interpreting and implementing the provisions of this chapter.

(B) The superintendent may, in accordance with section 119.03 of the Revised Code, adopt one or more of the following restrictions on investments in rules:

(1) The superintendent may prescribe for defined classes of insurers special procedural requirements, including special reports and prior approval on investments, as well as disapproval of investments subsequent to either.

(2) The superintendent may prescribe substantive restrictions on investments of defined classes of insurers, including all of the following:

(a) Specification of classes of assets that may not be counted toward satisfaction of the minimum asset requirement even though the assets may be counted for unrestricted insurers;

(b) Specification of maximum amounts of assets that an insurer may invest in a single investment, issue, or class or group of classes of investments that shall be expressed as percentages of total assets, capital, surplus, legal reserves, or other variables;

(c) Prescription of qualitative tests for investments and conditions under which investments may be made, including requirements of specified ratings from investment advisory services, listing on specified stock exchanges, collateral, marketability, currency matching, and the financial and legal status of the issuer and its earnings capacity.

(C) If the superintendent is satisfied by evidence of the solidity of an insurer and the competence of management and its investment advisors, the superintendent, after a hearing, may by order grant an exemption to that insurer from any restriction made under division (B) of this section to the extent that the superintendent is satisfied that the interests of the insurer's insureds and creditors, as well as the general public, are protected.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.