(a) Except as otherwise limited or prohibited by sections 38a-102 to 38a-102h, inclusive, or by regulation adopted by the Insurance Commissioner pursuant hereto, a domestic insurance company may make or acquire such investments as are prudent in respect of the business of said insurance company and diversification considerations.

(b) Eligibility of an investment shall be determined at the time of its making or acquisition. Any instrument, including any extension or modification thereof, or collateral taken by a domestic insurer as a result of adverse financial circumstances affecting an investment shall not be considered a new investment for purposes of sections 38a-102 to 38a-102h, inclusive.

(c) Any investment limitation based on the amount of an insurance company’s admitted assets or capital and surplus shall relate to such assets or capital and surplus as shown by the insurance company’s annual statement as of December thirty-first next preceding the date of acquisition.

(d) In the case of a domestic life insurance company, the investment limitations set forth in § 38a-102c shall apply to a separate account only to the extent that reserves for guarantees with respect to (1) benefits guaranteed as to dollar amount and duration or (2) funds guaranteed as to principal amount or stated rate of interest are held in a separate account in accordance with subdivision (3) of subsection (a) of § 38a-433.

(e) Any limitation or prohibition appearing in sections 38a-102 to 38a-102h, inclusive, shall apply only with respect to the section in which it appears and shall not constitute a general prohibition applicable to any other section unless specifically stated. The qualification or disqualification of an investment under one section shall not prevent its qualification in whole or in part under another section and an investment authorized by more than one section may be held under whichever authorizing section the company first elects.

(f) (1) A domestic insurance company doing business in this state may enter into derivative financial transactions, including swaps, options, forwards, futures, caps, floors and collars or similar instruments or combinations thereof, in accordance with subsection (a) of this section. Any such company shall include with its audited financial report a statement by the independent certified public accountant conducting such audit that describes such accountant’s assessment of the internal controls of such company relative to such transactions.

(2) If the independent certified public accountant determines the internal controls relative to such derivative financial transactions to be deficient, such company shall include with the statement set forth in subdivision (1) of this subsection such accountant’s report of such deficiencies and a description of remedial actions taken or proposed to be taken to correct such deficiencies, if such actions are not already described in the accountant’s assessment.

(g) The provisions of sections 38a-102 to 38a-102h, inclusive, shall not apply in whole or in part to any activity which the Insurance Commissioner shall exempt therefrom as consistent with the purpose of preserving the financial integrity of insurance companies for their policyholders. The Insurance Commissioner may adopt such regulations, in accordance with chapter 54, as the commissioner deems necessary to carry out the purposes of sections 38a-102 to 38a-102h, inclusive.