Chapter 3906. ALTERNATE INVESTMENT LAW
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.
| (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.
| (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.
| (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.
| (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; |
|
| (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:
| (e) |
Call, prepayment, and
extension; |
|
| (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.
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.
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.
| (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.
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.
| (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.
| (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.
| (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.
| (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.
| (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.
| (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.