Insurance Companies, Agents, Brokers, Policies

Plain English Breakdown

Checked against official source text during the last sync.

Insurance Companies' Foreign Investments and Money Market Fund Investments

This bill changes how much Tennessee insurance companies can invest in foreign assets and money market funds.

What This Bill Does

• Increases the limit for domestic insurance companies to invest up to 20% of their admitted assets in foreign securities, from the previous limit of 1%.
• Raises the maximum percentage of a company's admitted assets that can be used for loans and investments from 5% to 10%.
• Allows Tennessee insurance companies to invest in specific types of money market funds, including government-backed funds and Class 1 funds.
• Requires these money market funds to follow rules set by the National Association of Insurance Commissioners (NAIC).

Who It Names or Affects

• Tennessee domestic insurance companies
• Investment firms that deal with foreign securities and money market funds

Terms To Know

Admitted assets

The total value of an insurance company's assets as recognized by state regulators.

Money market fund

A type of investment vehicle that pools money from many investors to buy a diversified portfolio of short-term debt securities.

Limits and Unknowns

• The bill does not specify how the changes will be enforced or monitored.
• It is unclear what specific impact these changes might have on insurance companies' financial stability and risk management practices.

Official Summary Text

DOMESTIC INSURANCE COMPANY
INVESTMENT

In
addition to the foreign investments permitted
by

certain state laws regarding the acquisition of stock
,
present law authorizes
any domestic insurance company
to
invest in, or otherwise acquire or loan upon, securities and investments in for
eign countries that are substantially of the same kinds, classes and investment grades as those eligible for investment
of assets by certain domestic insurance companies as long as
the aggregate amount of
such
investments
do
not exceed
1%
of its admitted a
ssets.
This bill increases the percentage limit from 1% to 20% of its admitted assets.

Additionally, present law prohibits the
aggregate of the insurance company's loans and investments
from
exceed
ing

5%

of
the company's admitted asset
s. This bill incr
eases the percentage limit from 5% to 10% of its admitted assets.

MONEY MARKET FUND INVESTMENTS PERMITTED

This bill authorizes domestic insurance companies to invest their assets in
a money market fund

that may be either
of the following:



A government money market fund that is a money market fund that 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 qualifies for investment without a reserve under the Purposes and Procedures Manual of the of the National Association of Insurance Commissioners (NAIC) Investment Analysis Office; or, if it is no longer being published, the successor publication to the Purposes and Procedures Manual of the NAIC Investment Analysis Office
.



A Class 1 money market fund that is a money market fund that qualifies for investment using the bond Class 1 reserve factor under the Purposes and Procedures Manual of the NAIC Investment Analysis Office or, if it is no longer being published, the successor publication to the Purposes and Procedures Manual of the NAIC Investment Analysis Office.

This bill clarifies that
money market funds qualifying for listing within these categories
must
conform to the Purposes and Procedures Manual of the NAIC Investment Analysis Office
,
or, if it is no longer being published, the successor publication to the Purposes and Procedures Manual of the NAIC Investment Analysis Office.

Current Bill Text

HOUSE BILL 161
By McCalmon

SENATE BILL 696
By Johnson

SB0696
000904
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 56,
Chapter 3, Part 4, relative to investments by
insurance companies.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 56-3-403(c), is amended by deleting
the language "one percent (1%)" and substituting "twenty percent (20%)".
SECTION 2. Tennessee Code Annotated, Section 56-3-402(15), is amended by
deleting the language "five percent (5%)" and substituting "ten percent (10%)".
SECTION 3. Tennessee Code Annotated, Section 56-3-402, is amended by adding the
following new subdivision:
(17)
(A) In a money market fund, as defined by 17 CFR 270.2a-7 under the
Investment Company Act of 1940 (15 U.S.C. §§ 80a-1 et seq.), that may be
either of the following:
(i) A government money market fund that is a money market fund
that:
(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 under the
Purposes and Procedures Manual of the of the National
Association of Insurance Commissioners (NAIC) Investment

- 2 - 000904

Analysis Office or, if it is no longer being published, the successor
publication to the Purposes and Procedures Manual of the NAIC
Investment Analysis Office; or
(ii) A Class 1 money market fund that is a money market fund that
qualifies for investment using the bond Class 1 reserve factor under the
Purposes and Procedures Manual of the NAIC Investment Analysis Office
or, if it is no longer being published, the successor publication to the
Purposes and Procedures Manual of the NAIC Investment Analysis
Office.
(B) For the purposes of complying with this subdivision (17), money
market funds qualifying for listing within these categories must conform to the
Purposes and Procedures Manual of the NAIC Investment Analysis Office or, if it
is no longer being published, the successor publication to the Purposes and
Procedures Manual of the NAIC Investment Analysis Office.
SECTION 4. This act takes effect upon becoming a law, the public welfare requiring it.