South Carolina Code 38-12-230. Rated credit instruments; federally backed mortgages
(1) Subject to the limitation of § 38-12-220(B),but not subject to the limitations of § 38-12-220(A)(1), (2), and (3), an insurer may acquire rated credit instruments issued, assumed, guaranteed, or insured by the United States or a government-sponsored enterprise of the United States, if the instruments of the government-sponsored enterprise are assumed, guaranteed, or insured by the United States or are otherwise backed or supported by the full faith and credit of the United States.
Terms Used In South Carolina Code 38-12-230
- Admitted assets: means assets of an insurer considered admitted on the most recent statutory financial statement of the insurer filed with the department pursuant to § 38-13-80. See South Carolina Code 38-1-20
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Class one bond mutual fund: means a mutual fund that is qualified for investment using the bond class one reserve factor of the SVO procedures manual. See South Carolina Code 38-12-30
- Class one money market mutual fund: means a money market mutual fund that is qualified for investment using the bond class one reserve factor of the SVO procedures manual. See South Carolina Code 38-12-30
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Director: means the person who is appointed by the Governor upon the advice and consent of the Senate and who is responsible for the operation and management of the department. See South Carolina Code 38-1-20
- Government money market mutual fund: means a money market mutual fund that at all times:
(a) invests only in obligations issued, guaranteed, or insured by the federal government of the United States or collateralized repurchase agreements composed of these obligations; and
(b) qualifies for investment without a reserve pursuant to the SVO procedures manual. See South Carolina Code 38-12-30 - Insurer: includes a corporation, fraternal organization, burial association, other association, partnership, society, order, individual, or aggregation of individuals engaging or proposing or attempting to engage as principals in any kind of insurance or surety business, including the exchanging of reciprocal or interinsurance contracts between individuals, partnerships, and corporations. See South Carolina Code 38-1-20
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Multilateral development bank: means an international development organization of which the United States is a member. See South Carolina Code 38-12-30
- State: means a state, territory, or possession of the United States of America, the District of Columbia, or the Commonwealth of Puerto Rico. See South Carolina Code 38-12-30
- SVO: means the Securities Valuation Office of the NAIC or any successor office established by the NAIC. See South Carolina Code 38-12-30
(2) Subject to the limitations of § 38-12-220(B), but not subject to the limitations of § 38-12-220(A), an insurer may acquire rated credit instruments issued, assumed, guaranteed, or insured by Canada or a government- sponsored enterprise of Canada, if the instruments of the government- sponsored enterprise are assumed, guaranteed, or insured by Canada or are backed or supported otherwise by the full faith and credit of Canada. An insurer may not acquire an instrument pursuant to this subsection if as a result of and after giving effect to the investment the aggregate amount of investments then held by the insurer pursuant to this subsection exceeds forty percent of its admitted assets.
(3)(a) Subject to the limitations of § 38-12-220(B), but not subject to the limitations of § 38-12-220(A), an insurer may acquire rated credit instruments, excluding asset-backed securities:
(i) issued by a government money market mutual fund, a class one money market mutual fund, a class one bond mutual fund, or a multilateral development bank; or
(ii) issued, assumed, guaranteed, or insured by a government-sponsored enterprise of the United States other than those eligible pursuant to subsection (A)(1) of this section, or a state, if the instruments are general obligations of the state;
(b) An insurer may not acquire an instrument of any one fund, enterprise, entity, or state pursuant to this subsection if as a result of and after giving effect to the investment the aggregate amount of investments then held by the insurer in any one fund, enterprise, entity, or state pursuant to this subsection exceeds ten percent of its admitted assets.
(4) Subject to the limitations of § 38-12-220, an insurer may acquire preferred stocks that are not foreign investments and that meet the requirements of rated credit instruments if as a result of and after giving effect to the investment, the aggregate amount of preferred stocks then held by the insurer pursuant to this subsection:
(a) does not exceed twenty percent of its admitted assets; and
(b) that are not sinking fund stocks or rated P1 or P2 by the SVO or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO does not exceed ten percent of its admitted assets.
(5) Subject to the limitations of § 38-12-220, in addition to those investments eligible pursuant to items (1), (2), (3), and (4) of this subsection, an insurer may acquire rated credit instruments that are not foreign investments.
(B) An insurer may not acquire special rated credit instruments pursuant to this section if as a result of and after giving effect to the investment the aggregate amount of special rated credit instruments then held by the insurer exceeds five percent of its admitted assets. The director may identify, by regulation, certain special rated credit instruments that are exempt from the provisions of this subsection.
(C) Obligations of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and other mortgage-backed or mortgage-related securities as defined in Section 106 of Title I of SMMEA (15 U.S.C. § 77r-1) may be invested in to the same extent as permitted pursuant to subsection (A)(1), whether or not they are rated credit instruments authorized in that subsection.