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Regular Session, 2010
HOUSE BILL NO. 284
BY REPRESENTATIVE KLECKLEY
INSURERS: Provides relative to investment in securities by domestic insurers
AN ACT1
To amend and reenact R.S. 22:584(D)(1), relative to domestic insurers; to provide with2
respect to investment in securities by such insurers; and to provide for related3
matters.4
Be it enacted by the Legislature of Louisiana:5
Section 1. R.S. 22:584(D)(1) is hereby amended and reenacted to read as follows:6
ยง584. Investments in securities7
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D. Any domestic insurer, in addition to the investments permitted by9
Subsection A of this Section, may invest an amount equal to its capital and surplus10
if it is a stock company, and, if it is a company other than stock, it may invest an11
amount equal to its surplus over all liabilities as follows:12
(1)(a)(i) In shares of capital stock, American Depository Receipts listed on13
a national securities exchange, including the National Association of Securities14
Dealers Automated Quotations (NASDAQ), bonds, securities, or other evidences of15
indebtedness of any solvent corporation (other than a corporation engaged solely in16
the business of operating real estate or a corporation having substantially all of its17
assets invested in the shares of such corporation except as specifically provided in18
Item (ii) of this Subparagraph) created under the laws of the United States, or the19
states of the United States, or the District of Columbia, or a foreign corporation20 HLS 10RS-978 ENGROSSED
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whose stock is listed on the New York Stock Exchange or the American Stock1
Exchange, a national securities exchange, including NASDAQ, provided that such2
insurer may not, except in the case of shares permitted by Paragraph (9) of3
Subsection A of this Section, invest in the shares or American Depository Receipts4
of a manufacturing corporation, commonly known as "industrial", unless such5
corporation is listed on a national securities exchange, including NASDAQ, at the6
time of the investment or has earned during any three years of the five-year period7
next preceding the date of the investment, a sum applicable to dividends equal in the8
aggregate to not less than twelve percent of the par value (or, in the case of shares9
having no par value, the issued value) of its outstanding shares, or if such shares10
have been issued less than five years, has earned a sum applicable to dividends11
during the tenure of such issue, equal to not less than four percent per annum of the12
par value, (or, in the case of shares having no par value, the issued value) of its13
outstanding shares.14
(ii) In the stock of a real estate investment trust (REIT) whose stock is listed15
on the New York Stock Exchange, or the American Stock Exchange, or NASDAQ,16
provided such investment shall not exceed five percent of the total number of shares17
of any one such trust and that not more than two percent of its admitted assets are18
invested in shares of any one such trust. Shares in each such trust which has have19
over one-half of its assets invested in ownership of real estate or which has have such20
ownership as its stated investment objective shall be considered real estate21
investment for purposes of conforming with the limitation on real estate ownership22
imposed by Subsection G of this Section.23
(b) Such insurers shall not invest more than five percent of its admitted24
assets in the shares of any one such manufacturing corporation. Such insurers may25
acquire the stock or other share capital of another insurer but shall not invest more26
than fifty percent of said funds, directly or indirectly, in shares of another insurer,27
nor shall such insurer acquire the whole or any part of the stock or other share capital28
of another insurer which transacts the same kind or kinds of insurance where the29 HLS 10RS-978 ENGROSSED
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effect of such acquisition may be to substantially lessen competition generally or1
tend to create a monopoly. Investing in the stocks, bonds, or other evidence of2
indebtedness of any corporation, a substantial portion of whose funds are invested3
directly or indirectly in the shares of insurance companies, shall be regarded as4
investing indirectly in such shares. Whenever the commissioner of insurance has5
reason to believe that there is a violation of this Subsection, he shall conduct an6
investigation, and if he shall find that such investment is in violation of this7
Subsection, he shall cause such insurer to divest itself of such investment within such8
reasonable time, or such extension thereof, as he shall specify. Any such order of the9
commissioner of insurance shall be subject to review as provided in Chapter 12 of10
this Title, R.S. 22:2191 et seq.11
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DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Kleckley HB No. 284
Abstract: Provides relative to investment in securities by domestic insurers.
Present law provides that domestic insurers may invest in certain shares of capital stock,
American Depository Receipts listed on a national securities exchange, bonds, securities, or
other evidences of indebtedness of any solvent corporation created under the laws of the
U.S., the states, or the District of Columbia, or a foreign corporation whose stock is listed
on the New York Stock Exchange or the American Stock Exchange, with certain limitations.
Proposed law specifies that such shares of capital stock or American Depository Receipts
listed on a national securities exchange includes the National Association of Securities
Dealers Automated Quotations (NASDAQ). Also specifies that evidences of indebtedness
of any solvent corporation created under the laws of the U.S., the states, or the District of
Columbia, or a foreign corporation includes those whose stock is listed on any national
securities exchange, including NASDAQ, with certain limitations.
Present law provides that one such limitation is that a domestic insurer may not invest in the
shares or American Depository Receipts of a manufacturing corporation, commonly known
as "industrial", unless such corporation is listed on a national securities exchange at the time
of the investment or meets other criteria. Further prohibits investment in more than 5% of
the insurer's admitted assets in the shares of any one such manufacturing corporation.
Proposed law instead provides that one such limitation is that a domestic insurer may not
invest in the shares or American Depository Receipts of a corporation unless such
corporation is listed on a national securities exchange, including NASDAQ, at the time of HLS 10RS-978 ENGROSSED
HB NO. 284
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the investment or meets other criteria. Further prohibits investment in more than 5% of the
insurer's admitted assets in the shares of any one such corporation.
Present law provides that, with certain limitations, domestic insurers may invest in the stock
of a real estate investment trust (REIT) whose stock is listed on the New York Stock
Exchange or the American Stock Exchange.
Proposed law adds stocks of REITs listed on NASDAQ to those securities in which, with
certain limitations, domestic insurers may invest.
(Amends R.S. 22:584(D)(1))