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furnished through a nationwide automated quotations system approved by the National Association of Securities Dealers, Inc. (and the net income of such institution or such institution and its consolidated subsidiaries was at least three hundred thousand dollars for its last complete fiscal year for which financial information is generally available and, at the end of such year, the total assets of such institution shall have been at least two million dollars and such common shares were held of record by nine hundred or more persons), provided that an insurer may invest under this paragraph an amount not exceeding one percent of the insurer's admitted assets as shown by its last statement on file with the superintendent even though such equity interests are not registered and are not issued by an insurance company.

(B) Investment limitations. (i) [Except as otherwise provided in article seventeen of this chapter, no such insurance company) No insurer subject to the provisions of paragraph two of subsection Tal or subsection (b) of section one thousand four hundred three of this article shall invest in or loan upon [more than five percent of any institution's outstanding voting shares, or more than twenty percent

of

any institution's outstanding common shares excluding voting shares, nor shall the amount invested in) any one institution's outstanding [common shares exceed] equity interest's an amount exceeding one percent of the insurer's admitted assets [at last year-end, provided that no retirement system organized pursuant to article forty-six of this chapter shall invest in or loan upon more than two percent of any institution's outstanding common shares, nor shall the amount invested in any institution's outstanding common shares exceed one percent of the admitted assets of such retirement system at last year-end.

(ii) In this section "voting shares" means shares of any class having voting power for the election

of the
corporation's

directors except shares having such power only by reason of the happening of a contingency.

(C) (i) The] as shown by its last statement on file with the superintendent, and (ii) the cost of any investment in [common shares), equity interests, made pursuant to this paragraph (thirteen], when added to the aggregate cost of all other investments in common shares] equity interests then held pursuant to this paragraph (thirteen and the first sentence of subsection (d) of section one thousand four hundred three of this article], paragraph

six

and clause (ii) of subparagraph (A) of paragraph ten of this subsection shall not exceed: (I) in the

of an insurer authorized to make investments under (this section) item (i) of this subparagraph except a retirement system organized pursuant to article forty-six of this chapter, the lesser of its surplus to policyholders or ten percent of its admitted assets [at last year-end) as shown by its last statement file with the superintendent, and*

(11) in the case of a retirement system organized pursuant to article forty-six of this chapter, thirty percent of its admitted assets [at last year-end, and (III) in the case of any insurer authorized to make investments under this section, the aggregate cost of all such investments in common shares so held by such insurer at last year-end by more than two percent of its admitted assets as of such date or, in the case of any particular Lasurer, by such lesser percentage of admitted assets as the superintendent may order after analysis of all relevant factors pertaining to its operations as being advisable in the interests of its policyholders. (ii) In the case of any insurer authorized to make investments under this section, the cost of any

investment pursuant to this paragraph thirteen in

shares not registered on a national securities exchange, except those of a bank, trust company or insurance company, when added to the aggregate cost of all other investments in such common shares then held by such insurer pursuant to

this
paragraph

thirteen, shall not exceed the lesser of fifteen percent of the surplus to policy: solders or one and one-half percent of the total admitted assets of such insurer at last year-end. (D) Any retirement system organized under article forty-six of this shapter may, in addition to other investments permitted by this paraBraph thirteen, but subject to the limitations of the preceding subparagraphs of this paragraph thirteen, invest in securities of any

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company registered pursuant to the federal

provided that all securities owned by such investment company meet the requirements of subparagraph (A) of this paragraph thirteen] as shown by its last statement on file with the superintendent.

§ 25. Subsection (a) of section 1404 of the insurance law is amended by adding two new paragraphs 9 and 10 to read as follows:

(9) Investments made by subsidiaries. The net investment in real property and loans secured by real property made by subsidiaries engaged

organized to engage exclusively in the acquisition, ownership and management of such investments. Such loans and real

property must qualify

reserve investment under paragraph four or five of this subsection. The subsidiary's net investment in such real property and loans shall be included under such paragraph when computing any limitations applicable to such real property and loans and excluded when computing

the limitations applicable to equity interests under paragraph eight of this subsection. In order to qualify, subsidiary

must

be wholly-owned either by the insurer or by two or more insurance companies domiciled in the United States who are members of the same holding pany system, as such term is defined in article fifteen of this chapter and each individual insurer's share of the net investments made by such subsidiary shall be computed in proportion to its equity interest in such subsidiary.

(10) Investment companies. (A) Securities of any investment company registered pursuant to the federal Investment Company Act of 1940, 15 U.$.C, § 802, if such company : (i) invests

at

least ninety percent of its assets in the types of securities which qualify as a reserve investment pursuant to the

provisions of paragraph one, two or three of this subsection or which invest in securities which are determined by the superintendent to be substantively similar to the types of securities set forth in such paragraphs; or (ii) invests

at

least, ninety percent of its assets in the types of equity interests which qualify as a reserve investment pursuant to the provisions of paragraph eight of this subsection.

(B) Investment limitations. Investments made by an insurer subject to the provisions of paragraph two of subsection (a) or subsection (b) of section one thousand four hundred three of this article shall not exceed the following limitations:

(i) in any investment company qualifying under item (i) of subparagraph (A) hereof, ten percent of such insurer's admitted assets as shown by it's last statement on file with the superintendent and the aggregate amount of investment in such qualifying investment companies shall not exceed twenty-five percent of such insurer's admitted assets as shown by its last statement on file with the superintendent; and

(ii) in any investment company qualifying under item (ii) of subparagraph (A) hereof, five percent of such insurer's admitted assets shown by its last statement on file with the superintendent and the aggregate amount of investment in such qualifying investment companies shall be included when calculating the permissible aggregate value of equity interests pursuant to the provisions of subparagraph (B) of paragraph eight of this subsection.

§ 26. Subsection (b) of section 1404 of the insurance law, the closing paragraph as separately amended by chapters 496 and 687 of the laws of 1989, is amended to read as follows:

(b) Leeway provision. Investments which do not qualify or are not permitted under subsection (a) hereof[; ], but excluding any investment prohibited by the provisions of paragraph six of subsection (a) of this section or by the provisions of paragraph one, two, three, four, six, eight, nine or ten of subsection (a) of section one thousand four hundred seven of this article, provided that:

(1) the aggregate cost of such investments shall not exceed [four] five percent of the admitted assets of the insurer [at last year-end] as shown by its last statement on file with the superintendent, and

(2) [no insurer authorized to make investments under paragraph thirteen of subsection (a) of this section shall invest in or loan upon any voting shares of any institution under this subsection (b) if the aggregate of all voting shares of such institution invested in or loaned upon by such insurer shall thereupon exceed the percentage of the outstanding voting shares of such institution specified in item (i) of subparagraph (B) of paragraph thirteen of subsection (a) of this section, and

(3) retirement system organized under article forty-six of this chapter shall invest in or loan upon any common shares of any institu

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tion if the aggregate of all common shares of such institution invested in or loaned upon by such retirement system shall thereupon exceed the percentage of the total outstanding common shares of such institution specified in item (ii) of subparagraph (B) of paragraph thirteen of subsection (a) of this section.

None of the investment limitations in subparagraph (B) of paragraph thirteen of subsection (a) of this section or in other provisions of subsection (a) of this section shall apply to investments under this subsection. Investments investments that are neither interest-bearing nor income-paying, made under this subsection as provided in paragraph one of subsection (d) of section one thousand four hundred three of this articles, shall be subject to all the provisions of this subsection and] shall not in the aggregate exceed three percent of (such] the admitted assets of the insurer as shown by its last statement on file with the superintendent.

§ 27. The section heading of section 1405 of the insurance law is amended to read as follows: Investments of life insurers. § 28. Section 1407 of the insurance law, paragraph 8 of subsection (a) as added and paragraph 9 of subsection (a) as renumbered by chapter

109 of the laws of 1988, is amended to read as follows:

§ 1407. [Investments of] Non-reserve and prohibited investments for property/casualty and certain other insurers. (a) Any insurer that makes investments under the authority of subsection (c), of section one thousand four hundred three of this article and meets the requirements of such subsection (c) and section one thousand four hundred two of this article may invest in, or otherwise acquire or loan upon, directly indirectly, any of the (classes] types of investments [eligible under) described in section one thousand four hundred four of this article (and any shares or obligations, including voting trust certificates, certificates of deposit, interim receipts, and other similar instruments representing shares or obligations eligible hereunder, or loans made by banks or trust companies secured by the assignment of cash surrender values, of at least equal amount, in life insurance policies issued by life insurance companies licensed to do business in this state], but without having to meet the applicable qualitative standards or quantitative limitations which are set forth in subsection (a) of section

thousand four hundred four of this article, except the following prohibited investments:

(1) Obligations, shares or other securities of any [corporation, association or other business unit] institution which is insolvent at the time of the investment[, except securities eligible for investment under section one thousand four hundred four of this article).

(2) [Any mortgage,] Obligations secured by real property or real property or interest therein, which are either not eligible under which exceed the investment limitations under paragraph [șix] four or (seven) five of subsection (a) of section one thousand four hundred four of this article.

(3) [Any shares] Shares of stock of the investing insurer, except to the extent perunitted by the provisions of subsection (d) of section thousand four hundred eleven of this article. (4) Obligations, shares or other securities (including certificates of deposit) issued by Cany] a parent corporations, if majority of its total outstanding, shares or of its yoting shares is, or will be after such acquisition, directly or indirectly owned by: such insurer; one or Bore of its officers or directors holding the same for the benefit of such insurer or of its stockholders; a parent corporation or subsidiary of such insurer; a parent corporation or subsidiary of any such parent corporation or subsidiary; or any combination of the insurer, its parent corporation, subsidiaries or shareholders] or a corporation which is an affiliate or will be an affiliate after direct or indirect acquisition by the insurer. Nothing in this paragraph shall be deemed to prevent any investment in obligations, shares or other securities of: (A) [a corporation organized exclusively to hold and operate real esate acquired by such insurer in accordance with section

thousand fcur hundred four of this article, (8)] another insurance corporation within the limitations prescribed in section one thousand four hundred eight of this article, EXPLANATION-Matter in italics is new; matter in brackets [] is old law

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[(C) any corporation engaged

engaged exclusively in kind of business properly incidental to the insurance business of such insurer, including the financing of insurance premiums, or in such incidental business and the business of holding and operating real estate] (B) a subsidiary or ganized to engage exclusively in the acquisition, ownership or management of investments of the type described in paragraphs one, two, three, six, seven, eight or ten of subsection (a) of section one thousand four hundred four of this article, provided such subsidiary is wholly-owned by two more insurance companies domiciled in the United States who are members of the same holding company system, as such term is defined in article fifteen of this chapter. Furthermore, each individual insurer's share of the net investment made by such subsidiary shall be:

(i) computed in proportion to its equity interests in such subsidiary, and (ii) included when computing any applicable investinent limitations, or

(D)] (C) subsidiaries subject to and within the limitations prescribed in article sixteen of this chapter.

(5) (Except as provided in article sixteen of this chapter, obligations, shares or other securities issued by a corporation having, than twenty percent of its assets invested in insurance company shares, directly or indirectly, including proportionate equities or interest in insurance company shares held through any intermediate subsidiary of such issuing corporation, but excluding any shares held by such issuing corporation or its subsidiaries in any alien insurer not doing business in any state of the United States, provided such alien insurer is neither owned nor financially controlled, in whole or in part, by a foreign government or by any political subdivision thereof,, nor

is agency of any such foreign government] Investments made under the leeway provision, as set forth in subsection (b) of section one thousand four hundred four of this article,, if the aggregate amount of such investments exceed twelve percent of the insurer's invested assets as shown by its last statement on file with the superintendent; or if the aggregate amount of investments that neither interest-bearing

incomepaying including the anount of initial margin deposits made with respect to contracts and payments made to purchase options as provided in paragraph seven of subsection (d) of section one thousand four hundred three of this article, exceed three percent of the insurer's invested assets as shown by its last statement on file with the superintendent.

(6) Obligations, shares or other securities issued by a corporation, [other than an insurance corporation,] if a majority of the shares have ing voting powers of such issuing corporation is owned directly or indirectly by or for the benefit of one or more officers or directors of the insurer.

(7) Foreign investments, meaning obligations, shares or other securities of any person or governmental or business unit of or in a foreign country [any subdivision thereof] of any person or business unit of or in a possession of the United States, except such as conform substantially with the limitations imposed by this section upon like domestic investments; but the aggregate amount of foreign investments including, obligations of

of American institutions payable outside of the United States and cash deposited in a bank, trust company or thrift institution located outside of the United States held at any time by such insurer under this paragraph and under paragraph [eight] six of subsection (a) of section thousand four hundred four of this article [in foreign countries and subdivisions thereof] shall not exceed the greatest of (i) (ten] twelve percent of the insurer's admitted assets as shown by its last statement on file with the superintendent, (ii) fifteen percent of the insurer's invested assets as shown by its last statement on file with the superintendent, or (iii) one and one-half times the amount of its reserves and other obligations under its insurance and reinsurance contracts on risks resident or located in such foreign countries and subdivisions thereofs, or (iii) the amount necessary to enable the insurer to establish and carry on an insurance business in such foreign countries, directly or through a subsidiary corporation, ]. An investment in the shares of an alien insurer, which results in the control of such insurer by the investing insurer, shall not be included when calculating the limitations under this paragraph, but such an investment shall only be subject to the limitations of section one thousand four hundred eight of this article.

(8) A direct or indirect ownership interest in a risk retention group, as defined in article fifty-nine of this chapter, other than in risk retention group all of whose members are insurance companies, in which

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case any investment in such a risk retention group shall be subject to the limitations prescribed in section one thousand four hundred eight of this article.

(9) Acquiring any interest in an investment through a partnership, other than an interest acquired

limited partner

limited partnership.

(10) Any investment found by the superintendent to be against public policy or designed to evade any prohibition of this chapter.

(b) This section shall not prohibit any such insurer from accepting securities, otherwise ineligible, which may be distributed pursuant to any judicial or lawful non-judicial plan of reorganization or dissolution.

(c) Any investment pursuant to the provisions of this section shall be subject to other requirements of law (statutory or otherwise) that af fect the standard of care of directors and officers of corporations, and in making investments under this section the insurer's directors and officers shall perform their duties in good faith and with that degree of care that an ordinarily prudent individual in a like position would under similar circumstances.

§ 29. The section heading and subsection (a) of section 1408 of the insurance law, subsection (a) as amended by chapter 114 of the laws of 1988, are amended to read as follows:

Acquisition of insurance company shares; linitations thereon. (a) Any insurer which makes investments under the authority of subsection (c) of section one thousand four hundred three of this article and which meets the requirements of such subsection and section one thousand four hundred two of this article, may invest in, or otherwise acquire, the shares, including voting trust certificates, certificates of, deposit, interim receipts and other similar instruments representing such shares, of any other insurance [corporations] companies, including for purposes of this section any corporation having a majority of its assets invested in one or more insurance companies, in an amount which, together with its present holdings and with any indirect or proportionate interest in insurance company shares held by it through any intermediate subsidiary, shall not exceed in value thirty-five percent of the surplus to policyholders of such acquiring insurer, or fifty percent of its surplus over and above its liabilities and capital, whichever is greater No United States branch of an alien insurer shall be permitted to acquire or hold any shares of any alien insurance corporation. § 30. Section 1409 of the insurance law, subsection (b) as amended by chapter 534 of the laws of 1985, subsections (c) and (d) added by chapter 500 of the laws of 1991, is amended to read as follows:

$ 1409. Limitation of investments. (a) Excepț as more specifically provided in this chapter, no domestic insurer shall have more than ten percent of its admitted assets as shown by its last statement on file with the superintendent invested in, loaned

upon,

the securities (including for this purpose certificates of deposit, partnership interests and other equity interests) of any one institution.

,(b) The restriction of subsection (a) hereof shall not apply to the classes of governmental obligations (including [those described in item (i) of subparagraph (C) of paragraph six of subsection (a) of section one thousand four hundred four of this article), ) obligations, secured by tortgages upon real property guaranteed or insured under the National Housing Act, 12 U.S.C. $$ 1701-1750) eligible for minimum capital surplus to policyholder investments pursuant to the provisions of section one thousand four hundred two of this article nor to investments in shares of other insurance companies pursuant to the provisions of section one thousand four hundred eight of this article.

(C) The limitations of investments set forth in this section shall not apply to mortgage-related securities[, as that term is defined in paragraph two of subsection (a) of section fourteen hundred one of this Chapter, ) or securities issued' or guaranteed by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association; provided, however, that for an insurer maintaining an aggregate investBent in excess of seventy percent of its admitted assets as shown by its last statement on file with the superintendent in such securities, the balance of such investments greater than seventy percent thereon'shali be limited by and apportioned according to a ratio of one to two respectively, between investment in such securities and investment in governEXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

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