S.F. 2297 Section 1. Section 508.33A, subsection 8, Code 2024, is 1 amended to read as follows: 2 8. The provisions of sections 508.5 , 508.6 , and 511.8 , 3 section 521.2, subsection 4 , sections 521A.4 and 521A.5 , and 4 chapter 521E shall not be applicable to a limited purpose 5 subsidiary life insurance company organized pursuant to this 6 section . 7 Sec. 2. Section 511.8, subsection 1, paragraphs f, o, and p, 8 Code 2024, are amended to read as follows: 9 f. “Collateral loan” means an unconditional obligation 10 for the payment of money that is secured by the pledge of 11 any assets or investments permitted under this section . A 12 collateral loan cannot be a mortgage loan, rated credit 13 instrument, or other debt security as defined in this 14 subsection . 15 o. “Lower grade investment” means a rated credit instrument 16 that is designated 4, 5, or 6 by the SVO. 17 p. “Medium grade investment” means a rated credit instrument 18 that is designated 3 by the SVO. 19 Sec. 3. Section 511.8, subsection 1, Code 2024, is amended 20 by adding the following new paragraph: 21 NEW PARAGRAPH . 0h. “Credit instrument” means an investment 22 that is qualified as a bond under the accounting practices 23 and procedures manual, such as evidence of indebtedness of a 24 governmental unit or the instrumentality of the governmental 25 unit, or of a private business entity. “Credit instrument” 26 includes asset-backed securities, bank loans, and SVO-listed 27 funds that have an SVO designation, and that qualify as a bond 28 under the manual. 29 Sec. 4. Section 511.8, subsection 1, paragraph v, Code 2024, 30 is amended by striking the paragraph. 31 Sec. 5. Section 511.8, subsection 9, Code 2024, is amended 32 to read as follows: 33 9. Rated credit Credit instruments and short-term 34 investments. An insurer may acquire the following rated credit 35 -1- LSB 5647SV (1) 90 nls/ko 1/ 5

S.F. 2297 instruments and short-term investments subject to all of the 1 following: 2 a. The following credit instruments acquired under this 3 subsection shall be subject to subsection 6 , paragraphs “b” and 4 “c” , and to subsection 7 , but shall not be subject to subsection 5 6, paragraph “a” : 6 (1) Credit instruments issued, assumed, guaranteed, or 7 insured by the United States or Canada. 8 (2) Credit instruments issued, assumed, guaranteed, or 9 insured by a government-sponsored enterprise of the United 10 States or Canada, if the credit instruments are assumed, 11 guaranteed, or insured by the United States or Canada, or are 12 otherwise backed or supported by the full faith and credit of 13 the United States or Canada. 14 (3) Credit instruments, excluding asset-backed securities 15 that are any of the following: 16 (a) Issued, assumed, guaranteed, or insured by a 17 government-sponsored enterprise of a government other than the 18 United States or Canada. 19 (b) Issued, assumed, guaranteed, or insured by a state, if 20 the instruments are general obligations of the state. 21 b. Short-term investments acquired under this subsection 22 shall be subject to subsection 6 . 23 c. All other rated credit instruments acquired under this 24 subsection shall be subject to subsections 6 and 7 . 25 d. Foreign investments acquired under this subsection shall 26 be subject to subsection 15 . 27 Sec. 6. Section 511.8, subsection 10, paragraph a, Code 28 2024, is amended to read as follows: 29 a. (1) An insurer shall not acquire an investment under 30 this subsection , if, as a result of and after giving effect to 31 the investment the aggregate amount of investments then held by 32 the insurer will exceed ten percent of the insurer’s admitted 33 assets. 34 (2) Notwithstanding subparagraph (1), an insurer that 35 -2- LSB 5647SV (1) 90 nls/ko 2/ 5

S.F. 2297 files an annual statement pursuant to section 508.11 and 1 completes the NAIC’s health statement test shall not acquire 2 an investment under this subsection, if, as a result of and 3 after giving effect to the investment, the aggregate amount of 4 investments then held by the insurer will exceed twenty-five 5 percent of the insurer’s admitted assets. 6 Sec. 7. Section 511.8, subsection 12, paragraph a, 7 unnumbered paragraph 1, Code 2024, is amended to read as 8 follows: 9 An insurer may acquire obligations secured by a mortgage or 10 deed of trust that is a first or second lien upon otherwise 11 unencumbered real estate, or upon leasehold estates in real 12 property if fifty years or more of the term including renewals 13 is unexpired, or other similar instruments, including mezzanine 14 loans , either directly or through a business entity where 15 the business entity’s sole purpose is to hold mortgages that 16 qualify for investment under this subsection, provided all of 17 the following apply: 18 Sec. 8. Section 511.8, subsection 13, Code 2024, is amended 19 to read as follows: 20 13. Real estate. 21 a. An insurer may acquire real estate either directly 22 or through certificates evidencing participation with other 23 investors. 24 a. b. An insurer may acquire real estate required for the 25 insurer’s home offices, or to be otherwise occupied by the 26 insurer or the insurer’s employees in transacting the insurer’s 27 business, and the insurer may lease any unused space to 28 other occupants. The value of an insurer’s investments under 29 this paragraph shall not exceed ten percent of the insurer’s 30 admitted assets. 31 b. c. Excluding investments under paragraph “a” “b” , an 32 insurer’s investments under this subsection shall not exceed 33 fifteen percent of the insurer’s admitted assets. 34 c. d. An insurer’s aggregate investments under this 35 -3- LSB 5647SV (1) 90 nls/ko 3/ 5

S.F. 2297 subsection and subsection 12 shall not exceed forty-five 1 percent of the insurer’s admitted assets. 2 Sec. 9. Section 511.8, subsection 19, Code 2024, is amended 3 to read as follows: 4 19. Collateral loans and other debt securities secured by 5 collateral. An insurer may acquire collateral loans or other 6 debt securities secured by collateral consisting of any assets 7 or investments permitted under this section , provided that 8 the amount of the loan is not in excess of ninety percent of 9 the value of the collateral at the time of acquisition . For 10 the purpose of determining compliance with the quantitative 11 limits in this subsection section , the collateral pledged to 12 the insurer shall be aggregated with the insurer’s direct 13 investments. 14 Sec. 10. REPEAL. Section 508.6, Code 2024, is repealed. 15 EXPLANATION 16 The inclusion of this explanation does not constitute agreement with 17 the explanation’s substance by the members of the general assembly. 18 This bill relates to the investment of funds by life 19 insurance companies and associations. 20 “Credit instrument” is defined in the bill as an investment 21 that is qualified as a bond under the accounting practices and 22 procedures manual, and includes asset-backed securities, bank 23 loans, and SVO-listed funds that have an SVO designation, and 24 that qualify as a bond under the manual. The bill amends Code 25 section 511.8(1) and (9) to conform with that definition. 26 The bill prohibits an insurer that files an annual statement 27 and completes the NAIC health statement test from acquiring an 28 investment if, as a result of the investment, the aggregate 29 amount of investments held by the insurer will exceed 25 30 percent of the insurer’s assets. 31 Under current law, an insurer may acquire obligations 32 secured by a mortgage or deed of trust that is a first or second 33 lien upon otherwise unencumbered real estate, or upon leasehold 34 estates in real property if 50 years or more of the term 35 -4- LSB 5647SV (1) 90 nls/ko 4/ 5

S.F. 2297 including renewals is unexpired, or other similar instruments, 1 including mezzanine loans, subject to the requirements of 2 Code section 511.8(12)(a). Under the bill, an insurer may 3 acquire such obligations either directly or through a business 4 entity where the sole purpose of the business entity is to hold 5 mortgages that qualify for investment. 6 The bill permits an insurer to acquire collateral loans 7 or other debt securities secured by collateral consisting of 8 any permitted assets or investments provided that the amount 9 of the loan is not in excess of 90 percent of the value of the 10 collateral at the time of acquisition. 11 The bill repeals Code section 508.6 and makes conforming 12 changes to Code section 508.33A. 13 -5- LSB 5647SV (1) 90 nls/ko 5/ 5