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House Study Bill 515 - IntroducedA Bill ForAn Act 1relating to the legal reserve requirements of life
2insurance companies.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 511.8, subsection 22, paragraph i,
2subparagraph (2), Code 2020, is amended to read as follows:
3(2) Securities pledged as collateral for financial
4instruments used in highly effective hedging transactions as
5defined in the national association of insurance commissioners’
6statement of statutory accounting principles no.86 or the
7national association of insurance commissioners’ statement
8of statutory accounting principles no.108, together with
9securities pledged to a counterparty, clearing organization,
10or clearinghouse on an upfront basis in the form of initial
11margin, independent amount, or other securities pledged as
12a precondition of entering into highly effective hedging
13transactions pursuant to subparagraph (1), are not eligible
14in excess of ten percent of the legal reserve of the life
15insurance company or association, less any financial
16instruments used in hedging transactions held in the legal
17reserve under this subsection and less any securities included
18under subparagraph (3).
19EXPLANATION
20The inclusion of this explanation does not constitute agreement with
21the explanation’s substance by the members of the general assembly.
22Life insurance companies may invest in, among other things,
23certain financial instruments used in hedging transactions
24to satisfy their legal reserve requirements. A maximum of
2510 percent of a life insurance company’s legal reserve may
26be held in the form of securities pledged as collateral in
27highly effective hedging transactions. Currently, the term
28“highly effective hedging transaction” is defined in Code
29section 511.8 by reference to the definition contained in the
30national association of insurance commissioners’ statement of
31statutory accounting principles no.86. This bill modifies
32the definition of “highly effective hedging transaction”
33to also include the definition of highly effective hedging
34transaction contained in the national association of insurance
35commissioners’ statement of statutory account principles no.
-1-1108.
-2-ja/rn
2insurance companies.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 511.8, subsection 22, paragraph i,
2subparagraph (2), Code 2020, is amended to read as follows:
3(2) Securities pledged as collateral for financial
4instruments used in highly effective hedging transactions as
5defined in the national association of insurance commissioners’
6statement of statutory accounting principles no.86 or the
7national association of insurance commissioners’ statement
8of statutory accounting principles no.108, together with
9securities pledged to a counterparty, clearing organization,
10or clearinghouse on an upfront basis in the form of initial
11margin, independent amount, or other securities pledged as
12a precondition of entering into highly effective hedging
13transactions pursuant to subparagraph (1), are not eligible
14in excess of ten percent of the legal reserve of the life
15insurance company or association, less any financial
16instruments used in hedging transactions held in the legal
17reserve under this subsection and less any securities included
18under subparagraph (3).
19EXPLANATION
20The inclusion of this explanation does not constitute agreement with
21the explanation’s substance by the members of the general assembly.
22Life insurance companies may invest in, among other things,
23certain financial instruments used in hedging transactions
24to satisfy their legal reserve requirements. A maximum of
2510 percent of a life insurance company’s legal reserve may
26be held in the form of securities pledged as collateral in
27highly effective hedging transactions. Currently, the term
28“highly effective hedging transaction” is defined in Code
29section 511.8 by reference to the definition contained in the
30national association of insurance commissioners’ statement of
31statutory accounting principles no.86. This bill modifies
32the definition of “highly effective hedging transaction”
33to also include the definition of highly effective hedging
34transaction contained in the national association of insurance
35commissioners’ statement of statutory account principles no.
-1-1108.
-2-ja/rn