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Senate Study Bill 1086 - IntroducedA Bill ForAn Act 1relating to life insurance company or association cash
2reinvestments in repurchase agreements collateralized by
3securities, and including applicability provisions.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 511.8, subsection 23, paragraph c, Code
22021, is amended to read as follows:
3c. If the loan is collateralized by cash or cash
4equivalents, the cash or cash equivalent collateral may be
5reinvested by the life insurance company or association in
6rule 2a-7 money market funds as defined in subsection 24,
7individual securities which are eligible for inclusion in the
8legal reserve of the life insurance company or association,
9or in repurchase agreements fully collateralized by such
10securities if the life insurance company or association takes
11delivery of the collateral either directly or through an
12authorized custodian or pooled fund comprised of individual
13securities which are eligible for inclusion in the legal
14reserve of the life insurance company or association. If such
15reinvestment is made in individual securities, or in repurchase
16agreements collateralized by securities other than United
17States government obligations as described in subsection 1, the
18individual securities or the securities which collateralize the
19repurchase agreements shall mature in less than two hundred
20seventy days. If such reinvestment is made in a pooled fund,
21the average maturity of the securities comprising such pooled
22fund must be one hundred eighty days or less and the individual
23maturities of the securities comprising such pooled fund
24must be three hundred ninety-seven days or less. Individual
25securities and securities comprising the pooled fund shall
26be investment grade. As used in this paragraph, “maturity”
27means the earlier of the fixed date on which the holder of
28the security is unconditionally entitled to receive principal
29and interest in full or the date on which the holder of the
30security is unconditionally entitled upon demand to receive
31principal and interest in full.
32 Sec. 2. APPLICABILITY. This Act applies to cash or cash
33equivalent reinvestments by a life insurance company or
34association made in repurchase agreements collateralized by
35securities on or after January 1, 2022.
-1-1EXPLANATION
2The inclusion of this explanation does not constitute agreement with
3the explanation’s substance by the members of the general assembly.
4This bill allows life insurance companies and associations
5to reinvest cash or cash equivalent collateral for loans
6from securities held in their legal reserves in repurchase
7agreements collateralized by securities in United States
8government obligations maturing in 270 days or more. Under
9current law, all securities that collateralize repurchase
10agreements must mature in less than 270 days. “United States
11government obligations” is described in the bill.
12The bill applies to cash or cash equivalent reinvestments,
13by life insurance companies and associations, made in
14repurchase agreements collateralized by securities, on or after
15January 1, 2022.
-2-ko/rn
2reinvestments in repurchase agreements collateralized by
3securities, and including applicability provisions.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 511.8, subsection 23, paragraph c, Code
22021, is amended to read as follows:
3c. If the loan is collateralized by cash or cash
4equivalents, the cash or cash equivalent collateral may be
5reinvested by the life insurance company or association in
6rule 2a-7 money market funds as defined in subsection 24,
7individual securities which are eligible for inclusion in the
8legal reserve of the life insurance company or association,
9or in repurchase agreements fully collateralized by such
10securities if the life insurance company or association takes
11delivery of the collateral either directly or through an
12authorized custodian or pooled fund comprised of individual
13securities which are eligible for inclusion in the legal
14reserve of the life insurance company or association. If such
15reinvestment is made in individual securities, or in repurchase
16agreements collateralized by securities other than United
17States government obligations as described in subsection 1, the
18individual securities or the securities which collateralize the
19repurchase agreements shall mature in less than two hundred
20seventy days. If such reinvestment is made in a pooled fund,
21the average maturity of the securities comprising such pooled
22fund must be one hundred eighty days or less and the individual
23maturities of the securities comprising such pooled fund
24must be three hundred ninety-seven days or less. Individual
25securities and securities comprising the pooled fund shall
26be investment grade. As used in this paragraph, “maturity”
27means the earlier of the fixed date on which the holder of
28the security is unconditionally entitled to receive principal
29and interest in full or the date on which the holder of the
30security is unconditionally entitled upon demand to receive
31principal and interest in full.
32 Sec. 2. APPLICABILITY. This Act applies to cash or cash
33equivalent reinvestments by a life insurance company or
34association made in repurchase agreements collateralized by
35securities on or after January 1, 2022.
-1-1EXPLANATION
2The inclusion of this explanation does not constitute agreement with
3the explanation’s substance by the members of the general assembly.
4This bill allows life insurance companies and associations
5to reinvest cash or cash equivalent collateral for loans
6from securities held in their legal reserves in repurchase
7agreements collateralized by securities in United States
8government obligations maturing in 270 days or more. Under
9current law, all securities that collateralize repurchase
10agreements must mature in less than 270 days. “United States
11government obligations” is described in the bill.
12The bill applies to cash or cash equivalent reinvestments,
13by life insurance companies and associations, made in
14repurchase agreements collateralized by securities, on or after
15January 1, 2022.
-2-ko/rn