R590. Insurance, Administration.R590-181. Yankee Bond Rule.
R590-181-1. Authority.
This rule is promulgated by the commissioner pursuant to Sections 31A-2-201 and 31A-18-101.
R590-181-2. Purpose and Scope.
(1) The purpose of this rule is to permit an insurer to invest, within the limits prescribed by this rule, in a bond that is:
(a) denominated in U.S. Dollars; and
(b) issued by:
(i) a foreign government;
(ii) an entity backed by a foreign government; or
(iii) a corporation not domiciled in the United States of America.
(2) This rule applies to an insurer or reinsurer doing business in this state.
R590-181-3. Definitions.
Terms used in this rule are defined in Section 31A-1-301. Additional terms are defined as follows:
(1) "Investment quality" means a quality rating of "1" or "2" assigned by the National Association of Insurance Commissioners' Securities Valuation Office (SVO).
(a) A Yankee bond that is not SVO rated at the time of purchase by an insurer shall be submitted to the SVO for rating within 90 days of purchase.
(b)(i) A Yankee bond that is not SVO rated at the time of purchase by an insurer may be temporarily considered investment quality if the insurer demonstrates to the satisfaction of the commissioner that an SVO rating of "1" or "2" is likely.
(ii) The assumption of quality is in effect only until rating by the SVO is complete.
(2) "Qualified assets" means the same as that term is defined in Subsection 31A-17-201(2).
(3) "Yankee bond" means a fixed income bond issued:
(a) in a U.S. Dollar denomination by a foreign government;
(b) by an entity whose bonds are guaranteed by a foreign government; or
(c) by a corporation not domiciled in the United States of America.
R590-181-4. Investments in Yankee Bonds.
(1) An insurer may invest in Yankee bonds of investment quality limited to 20% of the insurer's qualified assets.
(2) Subject to Subsection (3), an insurer's investment in Yankee bonds of investment quality issued by a single entity, its affiliates, or subsidiaries, is limited to 3% of the insurer's qualified assets.
(3) An investment in Yankee bonds of investment quality issued by an entity within a single sovereign foreign nation, is limited to:
(a) 5% of the insurer's qualified assets if the bonds are rated "1" by the SVO; and
(b) 3% of the insurer's qualified assets if the bonds are rated "2" by the SVO.
R590-181-5. Separability.
If any provision of this rule, Rule R590-181, or its application to any person or situation is held invalid, such invalidity does not affect any other provision or application of this rule that can be given effect without the invalid provision or application. The remainder of this rule shall be given effect without the invalid provision or application.
KEY: insurance
Date of Last Change: March 25, 2022
Notice of Continuation: November 19, 2021
Authorizing, and Implemented or Interpreted Law: 31A-18-105
