Senate
Study
Bill
1086
-
Introduced
SENATE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
COMMERCE
BILL
BY
CHAIRPERSON
SCHULTZ)
A
BILL
FOR
An
Act
relating
to
life
insurance
company
or
association
cash
1
reinvestments
in
repurchase
agreements
collateralized
by
2
securities,
and
including
applicability
provisions.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
TLSB
1781XC
(1)
89
ko/rn
S.F.
_____
Section
1.
Section
511.8,
subsection
23,
paragraph
c,
Code
1
2021,
is
amended
to
read
as
follows:
2
c.
If
the
loan
is
collateralized
by
cash
or
cash
3
equivalents,
the
cash
or
cash
equivalent
collateral
may
be
4
reinvested
by
the
life
insurance
company
or
association
in
5
rule
2a-7
money
market
funds
as
defined
in
subsection
24
,
6
individual
securities
which
are
eligible
for
inclusion
in
the
7
legal
reserve
of
the
life
insurance
company
or
association,
8
or
in
repurchase
agreements
fully
collateralized
by
such
9
securities
if
the
life
insurance
company
or
association
takes
10
delivery
of
the
collateral
either
directly
or
through
an
11
authorized
custodian
or
pooled
fund
comprised
of
individual
12
securities
which
are
eligible
for
inclusion
in
the
legal
13
reserve
of
the
life
insurance
company
or
association.
If
such
14
reinvestment
is
made
in
individual
securities
,
or
in
repurchase
15
agreements
collateralized
by
securities
other
than
United
16
States
government
obligations
as
described
in
subsection
1
,
the
17
individual
securities
or
the
securities
which
collateralize
the
18
repurchase
agreements
shall
mature
in
less
than
two
hundred
19
seventy
days.
If
such
reinvestment
is
made
in
a
pooled
fund,
20
the
average
maturity
of
the
securities
comprising
such
pooled
21
fund
must
be
one
hundred
eighty
days
or
less
and
the
individual
22
maturities
of
the
securities
comprising
such
pooled
fund
23
must
be
three
hundred
ninety-seven
days
or
less.
Individual
24
securities
and
securities
comprising
the
pooled
fund
shall
25
be
investment
grade.
As
used
in
this
paragraph,
“maturity”
26
means
the
earlier
of
the
fixed
date
on
which
the
holder
of
27
the
security
is
unconditionally
entitled
to
receive
principal
28
and
interest
in
full
or
the
date
on
which
the
holder
of
the
29
security
is
unconditionally
entitled
upon
demand
to
receive
30
principal
and
interest
in
full.
31
Sec.
2.
APPLICABILITY.
This
Act
applies
to
cash
or
cash
32
equivalent
reinvestments
by
a
life
insurance
company
or
33
association
made
in
repurchase
agreements
collateralized
by
34
securities
on
or
after
January
1,
2022.
35
-1-
LSB
1781XC
(1)
89
ko/rn
1/
2
S.F.
_____
EXPLANATION
1
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
2
the
explanation’s
substance
by
the
members
of
the
general
assembly.
3
This
bill
allows
life
insurance
companies
and
associations
4
to
reinvest
cash
or
cash
equivalent
collateral
for
loans
5
from
securities
held
in
their
legal
reserves
in
repurchase
6
agreements
collateralized
by
securities
in
United
States
7
government
obligations
maturing
in
270
days
or
more.
Under
8
current
law,
all
securities
that
collateralize
repurchase
9
agreements
must
mature
in
less
than
270
days.
“United
States
10
government
obligations”
is
described
in
the
bill.
11
The
bill
applies
to
cash
or
cash
equivalent
reinvestments,
12
by
life
insurance
companies
and
associations,
made
in
13
repurchase
agreements
collateralized
by
securities,
on
or
after
14
January
1,
2022.
15
-2-
LSB
1781XC
(1)
89
ko/rn
2/
2