Insurer investment pools.
An insurer may acquire investments in investment pools that invest only in:
Obligations that are rated 1 or 2 by the SVO or have an equivalent of an SVO 1 or 2 rating, or, in the absence of a 1 or 2 rating or equivalent rating, the issuer has outstanding obligations with an SVO 1 or 2 equivalent rating, by a nationally recognized statistical rating organization recognized by the SVO, and have:
A remaining maturity of 397 days or less or a put option that entitles the holder to receive the principal amount of the obligation with the ability to exercise the put option through maturity at specified intervals not exceeding 397 days; or
A remaining maturity of less than or equal to 3 years and a floating interest rate that resets not less frequently than quarterly on the basis of a current short-term index and is not subject to a maximum limit, if the obligations do not have an interest rate that varies inversely to market interest rate changes. For the purpose of this subparagraph, qualifying short-term indexes include, without limitation, the federal funds rate, prime rate, treasury bills rates, the London Interbank Offered Rate or commercial paper rates.
Government money market mutual funds or class one money market mutual funds.
Securities lending, repurchase and reverse repurchase transactions that meet all the requirements of NRS 682A.548, except the quantitative limitations of subsection 4 of that section.
Investments which an insurer may acquire pursuant to this chapter if the insurers proportionate interest in the amount invested in these investments does not exceed the applicable limits of this chapter.
For an investment in an investment pool to be qualified pursuant to this chapter, the investment pool must not:
Acquire securities issued, assumed, guaranteed or insured by the insurer or an affiliate of the insurer;
Borrow or incur any indebtedness for borrowed money, except for securities lending and reverse repurchase transactions that meet the requirements of NRS 682A.548 except the quantitative limitations of subsection 4 of that section; or
Permit the aggregate value of securities loaned or sold to, purchased from or invested in any one business entity in accordance with this section to exceed 10 percent of the total assets of the investment pool.
The limitations of NRS 682A.512 do not apply to an insurers investment in an investment pool, however an insurer shall not acquire an investment in an investment pool in accordance with this section if, as a result of and after giving effect to the investment, the aggregate amount of investments held by the insurer in accordance with this section:
In any one investment pool would exceed 10 percent of its admitted assets;
In all investment pools investing in investments permitted in accordance with paragraph (d) of subsection 1 would exceed 25 percent of its admitted assets; or
In all investment pools would exceed 40 percent of its admitted assets.
For an investment in an investment pool to be qualified pursuant to this chapter, the manager of the investment pool must:
Be organized in accordance with the laws of the United States or a state and designated as the pool manager in a pooling agreement;
Be the insurer, an affiliated insurer or a business entity affiliated with the insurer, a qualified bank, a business entity registered in accordance with the provisions of the Investment Advisers Act of 1940, 15 U.S.C. §§ 80a-1 et seq., as amended, or, in the case of a United States branch of an alien insurer, its United States manager or affiliates or subsidiaries of its United States manager;
Compile and maintain detailed accounting records setting forth:
The cash receipts and disbursements reflecting each participants proportionate investments in the investment pool;
A complete description of all underlying assets of the investment pool, including, without limitation, amount, interest rate, maturity date, if any, and other appropriate designations; and
Other records which, on a daily basis, allow third parties to verify each participants investment in the investment pool; and
Maintain the assets of the investment pool in one or more accounts, in the name of or on behalf of the investment pool, in accordance with a custody agreement with a qualified bank. The custody agreement must:
State and recognize the claims and rights of each participant;
Acknowledge that the underlying assets of the investment pool are held solely for the benefit of each participant in proportion to the aggregate amount of its investments in the investment pool; and
Contain an agreement that the underlying assets of the investment pool must not be commingled with the general assets of the custodian qualified bank or any other person.
The pooling agreement for each investment pool must be in writing and must provide that:
An insurer and its affiliated insurers or, in the case of an investment pool investing solely in investments allowed in accordance with paragraph (a) of subsection 1, the insurer and its subsidiaries, affiliates or any pension or profit-sharing plan of the insurer, its subsidiaries and affiliates or, in the case of a United States branch of an alien insurer, affiliates or subsidiaries of its United States manager, shall at all times hold 100 percent of the interests in the investment pool.
The underlying assets of the investment pool must not be commingled with the general assets of the pool manager or any other person.
In proportion to the aggregate amount of each pool participants interest in the investment pool:
Each participant owns an undivided interest in the underlying assets of the investment pool; and
The underlying assets of the investment pool are held solely for the benefit of each participant.
A participant, or in the event of the participants insolvency, bankruptcy or receivership, its trustee, receiver or other successor-in-interest, may withdraw all or any portion of its investment from the investment pool in accordance with the terms of the pooling agreement.
Withdrawals may be made on demand without penalty or other assessment on any business day, but settlements of funds shall occur within a reasonable and customary period thereafter not to exceed 5 business days. Distributions in accordance with this paragraph must be calculated in each case net of all applicable fees and expenses of the investment pool. The pooling agreement must provide that the pool manager shall distribute to a participant at the discretion of the pool manager:
In cash, the then fair market value of the participants pro rata share of each underlying asset of the investment pool;
In kind, a pro rata share of each underlying asset; or
In a combination of cash and in-kind distributions, a pro rata share in each underlying asset.
The pool manager shall make the records of the investment pool available for inspection by the Commissioner.