Sec. 176.4. Provisions

(a) Without the prior approval of the superintendent, no domestic life insurer shall acquire, directly or indirectly, any medium grade or lower grade obligation of any institution, if, after giving effect to any such acquisition, the aggregate amount of all medium grade or lower grade obligations then held by the domestic life insurer would exceed 20 percent of its admitted assets.

(b) Without the prior approval of the superintendent, no domestic life insurer shall acquire, directly or indirectly, any lower grade obligation of any institution if, after giving effect to any such acquisition, the aggregate amount of all lower grade obligations then held by the domestic life insurer would exceed 10 percent of its admitted assets provided that: no more than three percent of its admitted assets consists of obligations rated five or six by the Securities Valuation Office; and no more than one percent of its admitted assets consists of obligations rated six by the Securities Valuation Office.

(c) Attaining or exceeding the limit of any one category referred to in section 176.4(b) of this Part shall not preclude an insurer from acquiring obligations in other categories subject to the specific and multi-category limits. Nothing contained in this Part shall prohibit a domestic life insurer from acquiring any obligation which it has committed to acquire if the insurer would have been permitted to acquire that obligation pursuant to this Part on the date on which such insurer committed to purchase that obligation. Notwithstanding the foregoing, a domestic life insurer may acquire an obligation of an institution in which such insurer already has one or more investments, if such obligation is acquired in order to protect an investment previously made in the obligations of such institution: provided that all such acquired obligations shall not exceed one-half of one percent of the insurer's admitted assets.

(d) In determining approval, the superintendent, in addition to other requirements of law relating to such acquisitions or investments, statutory or otherwise, shall review the standard of care of the directors and officers of the domestic life insurer in making such investments or acquisitions. Directors and officers of domestic life insurers shall perform their duties, in making investments, in good faith and with the degree of care that an ordinarily prudent individual in a like position would use under similar circumstances.

(e) The board of directors of any domestic life insurance company which acquires or invests in, directly or indirectly, medium grade or lower grade obligations of any institution, shall adopt a written plan for the making of such investments. Such plan, in addition to guidelines with respect to the quality of the issues invested in, shall contain diversification standards, including but not limited to standards for issuer, industry, duration, liquidity and geographic location.

(f) Except as provided in section 4240(a)(2)(A) of the Insurance Law, this Part shall not apply to investments made for separate accounts.

(g) This Part shall take effect on February 21, 1991, except that subdivisions (b) and (c) shall take effect on January 1, 1992.