Investment in securities or obligations of certain corporations
(1) Except as provided in this section, funds of an insurer may be invested in common stock, preferred stock, debt obligations and other securities of one or more corporations without regard to the provisions and limitations of ORS 733.590 (Investment in obligations of sovereign, political subdivision thereof or corporation), 733.620 (Investment in stocks of corporation), 733.770 (Limitations on investments in property of any one person or single parcel of real estate) and 733.780 (Prohibited investments) (1)(a) if the corporation is engaged, or will be engaged, in the kind of business or activity that is related to the insurance business as described in ORS 733.635 (Approved activities of corporations in which investments authorized), provided that the insurer owns 80 percent or more of the shares of the corporation that have voting powers either alone or, with prior approval of the Director of the Department of Consumer and Business Services, in cooperation with one or more other persons.
(2) Except as provided in subsection (3) of this section, the amount of funds invested as described in subsection (1) of this section may not exceed the lesser of 10 percent of the insurer’s assets or 50 percent of the amount of the insurer’s combined capital and surplus. However, after such investments, the insurer’s combined capital and surplus must be reasonable in relation to the insurer’s outstanding liabilities and adequate to the insurer’s financial needs. For the purpose of this subsection, the amount of an insurer’s investments must be calculated by:
(a) Excluding the admitted value of investments in subsidiaries of the insurer;
(b) Adding the total moneys or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary, including all organizational expenses and contributions to capital and surplus of the insurance subsidiary or the shareholders’ equity of a noninsurance subsidiary, whether or not represented by the purchase of capital stock or issuance of other securities;
(c) Adding to the sum determined under paragraph (b) of this subsection all amounts expended in acquiring additional common stock, preferred stock, debt obligations and other securities of a subsidiary, and all contributions to the capital or surplus of an insurance subsidiary or the shareholders’ equity of a noninsurance subsidiary, subsequent to its acquisition or formation; and
(d) Subtracting from the sum determined under paragraph (c) of this subsection the return of any amount included in paragraph (b) or (c) of this subsection, whether the return is in the form of cash, securities or other property.
(3)(a) Funds of an insurer may be invested in common stock, preferred stock, debt obligations and other securities of one or more subsidiaries engaged or organized to engage exclusively in owning and managing assets authorized as investments for the insurer. However, each subsidiary must agree to limit the subsidiary’s investments in any asset so that the investments will not cause the amount of the insurer’s total investment to exceed any of the investment limitations specified in subsection (2) of this section, or specified in ORS 733.510 (Investments of insurers) to 733.780 (Prohibited investments), that apply to the insurer.
(b) For the purpose of this subsection, the total investment of the insurer includes:
(A) Any direct investment by the insurer in an asset; and
(B) The insurer’s proportionate share of any investment in an asset by any subsidiary of the insurer, which must be calculated by multiplying the amount of the subsidiary’s investment by the percentage of the subsidiary’s ownership.
(4) With the approval of the director, an insurer may invest any greater amount in common stock, preferred stock, debt obligations or other securities of one or more subsidiaries. However, after such an investment, the insurer’s combined capital and surplus must be reasonable in relation to the insurer’s outstanding liabilities and adequate to the insurer’s financial needs.
(5) Investments in common stock, preferred stock, debt obligations or other securities of one or more subsidiaries that an insurer makes in accordance with subsection (2), (3) or (4) of this section are not subject to restrictions or prohibitions set forth in the Insurance Code that would otherwise apply to an insurer’s investments.
(6) An insurer must determine whether any investment pursuant to subsection (2), (3) or (4) of this section meets the applicable requirements on the last day of the month that immediately precedes the day on which the investment is made. The determination must be made prior to the investment by calculating the applicable investment limitations as though the investment had already been made, taking into account the then outstanding principal balance on all previous investments in debt obligations and the value of all previous investments in equity securities as of the day the investments were made, net of any return of capital invested, not including dividends. [1967 c.359 §241; 1969 c.285 §1; 1993 c.447 §113a; 1995 c.638 §7; 2005 c.255 §1; 2013 c.370 §35]
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