[Rev. 5/24/2016 4:26:45 PM--2015]

CHAPTER 682A - INVESTMENTS

GENERAL PROVISIONS

Definitions

NRS 682A.005        Definitions.

NRS 682A.007        “Acceptable collateral” defined.

NRS 682A.009        “Acceptable private mortgage insurance” defined.

NRS 682A.010        Scope. [Repealed.]

NRS 682A.013        “Accident and health insurance” defined.

NRS 682A.015        “Accident and health insurer” defined.

NRS 682A.017        “Admitted asset” defined.

NRS 682A.019        “Affiliate” defined.

NRS 682A.020        Eligible investments. [Replaced in revision by NRS 682A.300.]

NRS 682A.023        “Asset-backed security” defined.

NRS 682A.025        “Business entity” defined.

NRS 682A.027        “Cap” defined.

NRS 682A.029        “Capital and surplus” defined.

NRS 682A.030        General qualifications. [Repealed.]

NRS 682A.033        “Cash equivalents” defined.

NRS 682A.035        “Class one bond mutual fund” defined.

NRS 682A.037        “Class one money market mutual fund” defined.

NRS 682A.039        “Collar” defined.

NRS 682A.040        Authorization and record of investments. [Repealed.]

NRS 682A.043        “Commercial mortgage loan” defined.

NRS 682A.045        “Construction loan” defined.

NRS 682A.047        “Control” defined.

NRS 682A.049        “Counterparty exposure amount” defined.

NRS 682A.050        Diversification. [Repealed.]

NRS 682A.053        “Covered” defined.

NRS 682A.055        “Credit tenant loan” defined.

NRS 682A.057        “Derivative instrument” defined.

NRS 682A.059        “Derivative transaction” defined.

NRS 682A.060        Public obligations. [Repealed.]

NRS 682A.063        “Direct” and “directly” defined.

NRS 682A.065        “Dollar roll transaction” defined.

NRS 682A.067        “Domestic jurisdiction” defined.

NRS 682A.069        “Equity interest” defined.

NRS 682A.070        Obligations and stock of certain federal and international agencies. [Repealed.]

NRS 682A.073        “Equivalent securities” defined.

NRS 682A.075        “Floor” defined.

NRS 682A.077        “Foreign currency” defined.

NRS 682A.079        “Foreign investment” defined.

NRS 682A.080        Corporate obligations. [Repealed.]

NRS 682A.083        “Foreign jurisdiction” defined.

NRS 682A.085        “Forward” defined.

NRS 682A.087        “Future” defined.

NRS 682A.089        “Government money market mutual fund” defined.

NRS 682A.090        Definitions; net earnings. [Repealed.]

NRS 682A.093        “Government-sponsored enterprise” defined.

NRS 682A.095        “Guaranteed or insured” defined.

NRS 682A.097        “Hedging transaction” defined.

NRS 682A.099        “High grade investment” defined.

NRS 682A.100        Preferred or guaranteed stock. [Repealed.]

NRS 682A.103        “Income” defined.

NRS 682A.105        “Income generation transaction” defined.

NRS 682A.107        “Insurance future” defined.

NRS 682A.109        “Insurance future option” defined.

NRS 682A.110        Common stocks. [Repealed.]

NRS 682A.113        “Investment company” defined.

NRS 682A.115        “Investment company series” defined.

NRS 682A.117        “Investment practices” defined.

NRS 682A.119        “Investment strategy” defined.

NRS 682A.120        Insurance stocks. [Repealed.]

NRS 682A.123        “Investment subsidiary” defined.

NRS 682A.125        “Letter of credit” defined.

NRS 682A.127        “Limited-liability company” defined.

NRS 682A.129        “Lower grade investment” defined.

NRS 682A.130        Stocks of subsidiaries. [Repealed.]

NRS 682A.133        “Market value” defined.

NRS 682A.135        “Medium grade investment” defined.

NRS 682A.137        “Money market mutual fund” defined.

NRS 682A.139        “Mortgage loan” defined.

NRS 682A.140        Common trust funds; mutual funds. [Repealed.]

NRS 682A.143        “Multilateral development bank” defined.

NRS 682A.145        “Mutual fund” defined.

NRS 682A.147        “NAIC” defined.

NRS 682A.149        “Obligation” defined.

NRS 682A.150        Bankers’ acceptances and bills of exchange. [Repealed.]

NRS 682A.153        “Option” defined.

NRS 682A.155        “Over-the-counter derivative instrument” defined.

NRS 682A.157        “Person” defined.

NRS 682A.159        “Potential exposure” defined.

NRS 682A.160        Equipment trust obligations or certificates. [Repealed.]

NRS 682A.163        “Preferred stock” defined.

NRS 682A.165        “Qualified bank” defined.

NRS 682A.167        “Qualified business entity” defined.

NRS 682A.169        “Qualified clearinghouse” defined.

NRS 682A.170        Loans secured by policy. [Repealed.]

NRS 682A.173        “Qualified exchange” defined.

NRS 682A.175        “Qualified foreign exchange” defined.

NRS 682A.177        “Rated credit instrument” defined.

NRS 682A.179        “Real estate” defined.

NRS 682A.180        Collateral loans. [Repealed.]

NRS 682A.183        “Replication transaction” defined.

NRS 682A.185        “Repurchase transaction” defined.

NRS 682A.187        “Required liabilities” defined.

NRS 682A.189        “Residential mortgage loan” defined.

NRS 682A.190        Savings and share accounts. [Repealed.]

NRS 682A.193        “Reverse repurchase transaction” defined.

NRS 682A.195        “Secured location” defined.

NRS 682A.197        “Securities lending transaction” defined.

NRS 682A.199        “Series company” defined.

NRS 682A.200        Miscellaneous investments; records. [Repealed.]

NRS 682A.203        “Sinking fund stock” defined.

NRS 682A.205        “Special rated credit instrument” defined.

NRS 682A.207        “State” defined.

NRS 682A.209        “Substantially similar securities” defined.

NRS 682A.210        Special accounts. [Repealed.]

NRS 682A.213        “SVO” defined.

NRS 682A.215        “Swap” defined.

NRS 682A.217        “Underlying interest” defined.

NRS 682A.219        “Unrestricted surplus” defined.

NRS 682A.220        Special investments of title insurers. [Repealed.]

NRS 682A.223        “Warrant” defined.

NRS 682A.230        Mortgages and deeds of trust. [Repealed.]

NRS 682A.240        Real property. [Repealed.]

 

Provisions Relating to Certain Defined Terms

NRS 682A.245        Qualifications for asset-backed securities.

NRS 682A.250        Time limited for disposal of real property. [Repealed.]

NRS 682A.255        Presumptive control.

NRS 682A.260        Time limited for disposal of other ineligible property and securities. [Repealed.]

NRS 682A.265        Calculation of counterparty exposure.

NRS 682A.270        Failure to dispose of real property, personal property or securities: Effect; penalty. [Repealed.]

NRS 682A.275        Qualifications for equivalent securities.

NRS 682A.280        Prohibited investments and underwriting. [Repealed.]

NRS 682A.285        Exception for foreign investments.

NRS 682A.290        Investments of foreign insurers. [Repealed.]

NRS 682A.295        Qualifications for special rated credit instruments.

 

General Investment Qualification

NRS 682A.300        Investments and investment practices required to conform with this chapter.

NRS 682A.305        Requirements for admitted assets.

NRS 682A.310        Exemption from requirements for admitted assets.

NRS 682A.315        Limitation on time for admitted asset acquired by exemption.

NRS 682A.320        Qualification of investment based on date of acquisition or date of commitment to acquire.

NRS 682A.325        Applicability of law to admitted assets or certain transactions held or entered on or before July 1, 2015.

NRS 682A.330        Computation of limitations based on admitted assets.

NRS 682A.335        Qualification or requalification of admitted asset on or after date of acquisition.

NRS 682A.340        Required documentation of acquisition.

NRS 682A.345        Agreements to purchase securities in advance of issuance prohibited.

NRS 682A.350        Order by Commissioner to alter investment practice.

NRS 682A.355        Insurance futures and insurance future options.

 

Authorization of Investments by Board of Directors

NRS 682A.365        Adoption by board of written plan for investments.

NRS 682A.367        Supervision and direction of board; formal resolution of board regarding investments.

NRS 682A.369        Quarterly review of investments and written plan for investments.

NRS 682A.371        Availability of documentation to board.

NRS 682A.373        Standard of care.

NRS 682A.375        “Board of directors” refers to any equivalent governing body.

 

Miscellaneous Provisions

NRS 682A.380        Prohibited investments.

NRS 682A.382        Loans to officers and directors prohibited.

NRS 682A.384        Permissible loans.

NRS 682A.386        Valuation of investments.

NRS 682A.388        Authority of Commissioner to adopt regulations.

LIFE AND HEALTH INSURERS

NRS 682A.400        Applicability.

NRS 682A.402        Diversification of investments.

NRS 682A.404        Medium and lower grade investments.

NRS 682A.406        Canadian investments.

NRS 682A.408        Rated credit instruments.

NRS 682A.410        Insurer investment pools.

NRS 682A.412        Acquisition of equity interests generally permissible.

NRS 682A.414        Limitation on aggregate amount of investments held in equity interests.

NRS 682A.416        Restriction on mortgage or real estate holdings acquired or held as equity interests.

NRS 682A.418        Short sale of equity investments.

NRS 682A.420        Tangible personal property under lease or other agreement.

NRS 682A.422        Valuation of personal property under lease.

NRS 682A.424        Limitation on aggregate amount of investments held in personal property under lease.

NRS 682A.426        Computation of investments held as personal property under lease for purposes of investment diversification requirements.

NRS 682A.428        Exempted personal property under lease.

NRS 682A.430        Mortgage loans.

NRS 682A.432        Income-producing real estate.

NRS 682A.434        Real estate for accommodation of business operations.

NRS 682A.436        Limitation on aggregate amount of investments held in mortgage loans and real estate.

NRS 682A.438        Securities lending, repurchase, reverse repurchase and dollar roll transactions.

NRS 682A.440        Foreign investments.

NRS 682A.442        Foreign currency exposure.

NRS 682A.444        Additional foreign investment and foreign currency allowance for insurers authorized to do business in foreign jurisdiction and holding foreign contracts.

NRS 682A.446        Additional foreign investment and foreign currency allowance for insurers not authorized to do business in foreign jurisdiction but holding foreign contracts.

NRS 682A.448        Calculation of foreign investments for purposes of determining compliance with limitations.

NRS 682A.450        Derivative transactions.

NRS 682A.452        Derivative transactions: Limitations on hedging transactions.

NRS 682A.454        Derivative transactions: Limitations on income generation transactions.

NRS 682A.456        Derivative transactions: Counterparty exposure.

NRS 682A.458        Commissioner may allow additional derivative transactions by regulation; limitations.

NRS 682A.460        Policy loans.

NRS 682A.462        Limited exemption from quantitative limits on certain investments.

NRS 682A.464        Limited exemption from certain restrictions on investments.

NRS 682A.466        Additional exemption from certain investment limitations with approval of Commissioner.

NRS 682A.468        Prohibitions applied to exempted investments.

PROPERTY AND CASUALTY, FINANCIAL GUARANTY AND MORTGAGE GUARANTY INSURERS

NRS 682A.500        Applicability.

NRS 682A.502        Reserve requirements.

NRS 682A.504        Required reserve amount.

NRS 682A.506        Required reporting of reserves.

NRS 682A.508        Notification to Commissioner of insufficient reserves.

NRS 682A.510        Authority of Commissioner to remedy insufficient reserves.

NRS 682A.512        Diversification of investments.

NRS 682A.514        Medium and lower grade investments.

NRS 682A.516        Canadian investments.

NRS 682A.518        Rated credit instruments.

NRS 682A.520        Insurer investment pools.

NRS 682A.522        Acquisition of equity interests generally permissible.

NRS 682A.524        Limitation on aggregate amount of investments held in equity interests.

NRS 682A.526        Restriction on mortgage or real estate holdings acquired or held as equity interests.

NRS 682A.528        Short sale of equity investments.

NRS 682A.530        Tangible personal property under lease or other agreement.

NRS 682A.532        Valuation of personal property under lease.

NRS 682A.534        Limitation on aggregate amount of investments held in personal property under lease.

NRS 682A.536        Computation of investments held as personal property under lease for purposes of investment diversification requirements.

NRS 682A.538        Exempted personal property under lease.

NRS 682A.540        Mortgage loans.

NRS 682A.542        Income-producing real estate.

NRS 682A.544        Real estate for accommodation of business operations.

NRS 682A.546        Limitation on aggregate amount of investments held in mortgage loans and real estate.

NRS 682A.548        Securities lending, repurchase, reverse repurchase and dollar roll transactions.

NRS 682A.550        Foreign investments.

NRS 682A.552        Foreign currency exposure.

NRS 682A.554        Additional foreign investment and foreign currency allowance for insurers authorized to do business in foreign jurisdiction and holding foreign contracts.

NRS 682A.556        Additional foreign investment and foreign currency allowance for insurers not authorized to do business in foreign jurisdiction but holding foreign contracts.

NRS 682A.558        Calculation of foreign investments for purposes of determining compliance with limitations.

NRS 682A.560        Derivative transactions.

NRS 682A.562        Derivative transactions: Limitations on hedging transactions.

NRS 682A.564        Derivative transactions: Limitations on income generation transactions.

NRS 682A.566        Derivative transactions: Counterparty exposure.

NRS 682A.568        Commissioner may allow additional derivative transactions by regulation; limitations.

NRS 682A.570        Limited exemption from certain restrictions on investments.

NRS 682A.572        Quantitative limitation on exempted investments.

_________

 

GENERAL PROVISIONS

Definitions

      NRS 682A.005  Definitions.  As used in this chapter, unless the context otherwise requires, the words and terms defined in NRS 682A.007 to 682A.223, inclusive, have the meanings ascribed to them in those sections.

      (Added to NRS by 2015, 3416)

      NRS 682A.007  “Acceptable collateral” defined.  “Acceptable collateral” means:

      1.  As to securities lending transactions, and for the purpose of calculating counterparty exposure amount, cash, cash equivalents, letters of credit, direct obligations of, or securities that are fully guaranteed as to principal and interest by, the Federal Government or any agency thereof, or by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and, as to lending foreign securities, sovereign debt rated 1 by the SVO;

      2.  As to repurchase transactions, cash, cash equivalents and direct obligations of, or securities that are fully guaranteed as to principal and interest by, the Federal Government or any agency thereof, or by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation; and

      3.  As to reverse repurchase transactions, cash and cash equivalents.

      (Added to NRS by 2015, 3416)

      NRS 682A.009  “Acceptable private mortgage insurance” defined.  “Acceptable private mortgage insurance” means insurance written by a private insurer protecting a mortgage lender against loss occasioned by a mortgage loan default and issued by a licensed mortgage insurance company with a rating of 1 by the SVO, or a rating issued by a nationally recognized statistical rating organization equivalent to a rating of 1 by the SVO, that covers losses up to an 80 percent loan-to-value ratio.

      (Added to NRS by 2015, 3416)

      NRS 682A.010  Scope.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.013  “Accident and health insurance” defined.  “Accident and health insurance” means protection which provides payment of benefits for covered sickness or accidental injury. The term does not include credit insurance, disability insurance, accidental death and dismemberment insurance and long-term care insurance.

      (Added to NRS by 2015, 3416)

      NRS 682A.015  “Accident and health insurer” defined.  “Accident and health insurer” means a licensed life or health insurer or health services corporation whose insurance premiums and required statutory reserves for accident and health insurance constitute at least 95 percent of the total premium considerations or total statutory required reserves, respectively.

      (Added to NRS by 2015, 3416)

      NRS 682A.017  “Admitted asset” defined.  “Admitted asset” means an asset permitted to be reported as an admitted asset on the statutory financial statement of the insurer most recently required to be filed with the Commissioner. The term does not include assets of separate accounts, the investments of which are not subject to the provisions of this chapter.

      (Added to NRS by 2015, 3416)

      NRS 682A.019  “Affiliate” defined.  “Affiliate” means, as to any person, another person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the person.

      (Added to NRS by 2015, 3416)

      NRS 682A.020  Eligible investments.  [Replaced in revision by NRS 682A.300.]

 

      NRS 682A.023  “Asset-backed security” defined.  “Asset-backed security” means a security or other instrument, excluding a mutual fund, evidencing an interest in, or the right to receive payments from, or payable from distributions on, an asset, a pool of assets or specifically divisible cash flows which are legally transferred to a trust, or another special purpose bankruptcy-remote business entity, which meets the conditions set forth in NRS 682A.245.

      (Added to NRS by 2015, 3417)

      NRS 682A.025  “Business entity” defined.  “Business entity” includes, without limitation, a sole proprietorship, corporation, limited-liability company, association, partnership, joint-stock company, joint venture, mutual fund, trust, joint tenancy or other similar form of business organization, whether organized for-profit or not-for-profit.

      (Added to NRS by 2015, 3417)

      NRS 682A.027  “Cap” defined.  “Cap” means an agreement obligating the seller to make payments to the buyer, with each payment based on the amount by which a reference price or level, or the performance or value of one or more underlying interests, exceeds a predetermined number, sometimes referred to as the strike rate or strike price.

      (Added to NRS by 2015, 3417)

      NRS 682A.029  “Capital and surplus” defined.  “Capital and surplus” means the sum of the capital and surplus of the insurer which is required to be shown on the statutory financial statement of the insurer most recently required to be filed with the Commissioner.

      (Added to NRS by 2015, 3417)

      NRS 682A.030  General qualifications.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.033  “Cash equivalents” defined.  “Cash equivalents” means short-term, highly rated and highly liquid investments or securities that are readily convertible to known amounts of cash without penalty and so near maturity that they present insignificant risk of change in value. The term includes, without limitation, government money market mutual funds and class one money market mutual funds. As used in this section:

      1.  “Highly rated” means an investment rated:

      (a) “P-1” by Moody’s Investor Service, Inc., or its successor organization;

      (b) “A-1” by Standard and Poor’s division of The McGraw Hill Companies, Inc., or its successor organization; or

      (c) An equivalent rating by a nationally recognized statistical rating organization recognized by the SVO.

      2.  “Short-term” means investments with a remaining term to maturity of 90 days or less.

      (Added to NRS by 2015, 3417)

      NRS 682A.035  “Class one bond mutual fund” defined.  “Class one bond mutual fund” means a mutual fund that at all times qualifies for investment using the bond class one reserve factor contained in the Purposes and Procedures Manual of the SVO.

      (Added to NRS by 2015, 3417)

      NRS 682A.037  “Class one money market mutual fund” defined.  “Class one money market mutual fund” means a money market mutual fund that at all times qualifies for investment using the bond class one reserve factor under the Purposes and Procedures Manual of the SVO.

      (Added to NRS by 2015, 3417)

      NRS 682A.039  “Collar” defined.  “Collar” means an agreement to receive payments as the buyer of an option, cap or floor and to make payments as the seller of a different option, cap or floor.

      (Added to NRS by 2015, 3417)

      NRS 682A.040  Authorization and record of investments.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.043  “Commercial mortgage loan” defined.  “Commercial mortgage loan” means any mortgage loan other than a residential mortgage loan.

      (Added to NRS by 2015, 3417)

      NRS 682A.045  “Construction loan” defined.  “Construction loan” means a loan of less than 3 years in term, made for financing the costs of construction of a building or other improvement to real estate and that is secured by the real estate.

      (Added to NRS by 2015, 3417)

      NRS 682A.047  “Control” defined.  “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract, other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person.

      (Added to NRS by 2015, 3417)

      NRS 682A.049  “Counterparty exposure amount” defined.  “Counterparty exposure amount” means the amount calculated pursuant to NRS 682A.265.

      (Added to NRS by 2015, 3418)

      NRS 682A.050  Diversification.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.053  “Covered” defined.  “Covered” means that an insurer owns or can immediately acquire, through the exercise of options, warrants or conversion rights already owned, the underlying interest to fulfill or secure its obligations under a call option, cap or floor it has written, or has set aside in accordance with a custodial or escrow agreement, cash or cash equivalents with a market value equal to the amount required to fulfill its obligations in accordance with a put option it has written, in an income generation transaction.

      (Added to NRS by 2015, 3418)

      NRS 682A.055  “Credit tenant loan” defined.  “Credit tenant loan” means a mortgage loan which is made primarily in reliance on the credit standing of a major tenant, structured with an assignment of the rental payments to the lender with real estate pledged as collateral in the form of a first position lien.

      (Added to NRS by 2015, 3418)

      NRS 682A.057  “Derivative instrument” defined.

      1.  “Derivative instrument” means an agreement, option or instrument, or a series or combination thereof:

      (a) To make or take delivery of, or assume or relinquish, a specified amount of one or more underlying interests, or to make a cash settlement in lieu thereof; or

      (b) That has a price, performance, value or cash flow based primarily upon the actual or expected price, level, performance, value or cash flow of one or more underlying interests.

      2.  The term includes, without limitation, options, warrants used in a hedging transaction and not attached to another financial instrument, caps, floors, collars, swaps, forwards, futures and any other agreements, options or instruments substantially similar thereto, or any series or combination thereof, and any agreements, options or instruments allowed pursuant to the regulations adopted under NRS 682A.388.

      3.  The term does not include an investment authorized by NRS 682A.408 to 682A.448, inclusive, 682A.460 and 682A.518 to 682A.558, inclusive.

      (Added to NRS by 2015, 3418)

      NRS 682A.059  “Derivative transaction” defined.  “Derivative transaction” means a transaction involving the use of one or more derivative instruments.

      (Added to NRS by 2015, 3418)

      NRS 682A.060  Public obligations.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.063  “Direct” and “directly” defined.  “Direct” or “directly,” when used in connection with an obligation, means that the designated obligor is primarily liable on the instrument representing the obligation.

      (Added to NRS by 2015, 3418)

      NRS 682A.065  “Dollar roll transaction” defined.  “Dollar roll transaction” means two simultaneous transactions with different settlement dates, not more than 96 days apart, such that in the transaction with the earlier settlement date, an insurer sells to a business entity, and in the other transaction the insurer is obligated to purchase from the same business entity substantially similar securities of the following types:

      1.  Asset-backed securities issued, assumed or guaranteed by the Government National Mortgage Association, the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, or their respective successors; and

      2.  Other asset-backed securities referred to in section 106 of title 1 of the Secondary Mortgage Market Enhancement Act of 1984, 15 U.S.C. § 77r-1, as amended.

      (Added to NRS by 2015, 3418)

      NRS 682A.067  “Domestic jurisdiction” defined.  “Domestic jurisdiction” means the United States, Canada, any state of the United States, any province of Canada or any political subdivision of any of the foregoing.

      (Added to NRS by 2015, 3419)

      NRS 682A.069  “Equity interest” defined.  “Equity interest” means any of the following that are not rated credit instruments:

      1.  Common stock;

      2.  Preferred stock;

      3.  A trust certificate;

      4.  An equity investment in an investment company, other than a money market mutual fund or a class one bond mutual fund;

      5.  An investment in a common trust fund of a bank regulated by a federal or state agency;

      6.  An ownership interest in minerals, oil or gas, the rights to which have been separated from the underlying fee interest in the real estate where the minerals, oil or gas are located;

      7.  Instruments which are mandatorily, or at the option of the issuer, convertible to equity;

      8.  Limited partnership interests and those general partnership interests authorized pursuant to paragraph (d) of subsection 1 of NRS 682A.380;

      9.  Member interests in a limited-liability company;

      10.  Warrants or other rights to acquire equity interests that are created by the person that owns or would issue the equity to be acquired; and

      11.  Instruments that would be rated credit instruments.

      (Added to NRS by 2015, 3419)

      NRS 682A.070  Obligations and stock of certain federal and international agencies.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.073  “Equivalent securities” defined.  “Equivalent securities” means any securities which meet the qualifications of NRS 682A.275.

      (Added to NRS by 2015, 3419)

      NRS 682A.075  “Floor” defined.  “Floor” means an agreement obligating the seller to make payments to the buyer in which each payment is based on the amount by which a predetermined number, sometimes called the floor rate or price, exceeds a reference price, level, performance or value of one or more underlying interests.

      (Added to NRS by 2015, 3419)

      NRS 682A.077  “Foreign currency” defined.  “Foreign currency” means a currency other than that of a domestic jurisdiction.

      (Added to NRS by 2015, 3419)

      NRS 682A.079  “Foreign investment” defined.  “Foreign investment” means an investment in a foreign jurisdiction, or an investment in a person, real estate or asset domiciled in a foreign jurisdiction, that is substantially of the same type as those eligible for investment in accordance with this chapter, other than an investment made in accordance with NRS 682A.440 to 682A.448, inclusive, and 682A.550 to 682A.558, inclusive.

      (Added to NRS by 2015, 3419)

      NRS 682A.080  Corporate obligations.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.083  “Foreign jurisdiction” defined.  “Foreign jurisdiction” means a jurisdiction other than a domestic jurisdiction.

      (Added to NRS by 2015, 3419)

      NRS 682A.085  “Forward” defined.  “Forward” means an agreement, other than a future, to make or take delivery of or effect a cash settlement based on the actual or expected price, level, performance or value of one or more underlying interests.

      (Added to NRS by 2015, 3419)

      NRS 682A.087  “Future” defined.  “Future” means an agreement, traded on a qualified exchange or qualified foreign exchange, to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance or value of one or more underlying interests.

      (Added to NRS by 2015, 3419)

      NRS 682A.089  “Government money market mutual fund” defined.  “Government money market mutual fund” means a money market mutual fund that at all times:

      1.  Invests only in obligations issued, guaranteed or insured by the Federal Government or collateralized repurchase agreements composed of these obligations; and

      2.  Qualifies for investment without a reserve in accordance with the Purposes and Procedures Manual of the SVO.

      (Added to NRS by 2015, 3419)

      NRS 682A.090  Definitions; net earnings.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.093  “Government-sponsored enterprise” defined.  “Government-sponsored enterprise” means a:

      1.  Governmental agency; or

      2.  Corporation, limited-liability company, association, partnership, joint stock company, joint venture, trust or other entity or instrumentality organized in accordance with the laws of any domestic jurisdiction to accomplish a public policy or other governmental purpose.

      (Added to NRS by 2015, 3420)

      NRS 682A.095  “Guaranteed or insured” defined.  “Guaranteed or insured,” when used in connection with an obligation acquired in accordance with the provisions of this chapter, means that the guarantor or insurer has agreed to:

      1.  Perform or insure the obligation of the obligor or purchase the obligation; or

      2.  Be unconditionally obligated until the obligation is repaid to maintain in the obligor a minimum net worth, fixed charge coverage, stockholder’s equity or sufficient liquidity to enable the obligor to pay the obligation in full.

      (Added to NRS by 2015, 3420)

      NRS 682A.097  “Hedging transaction” defined.  “Hedging transaction” means a derivative transaction which is entered into and maintained to reduce:

      1.  The risk of a change in the value, yield, price, cash flow or quantity of assets or liabilities which the insurer has acquired or incurred or anticipates acquiring or incurring; or

      2.  The currency exchange rate risk or the degree of exposure as to assets or liabilities which an insurer has acquired or incurred or anticipates acquiring or incurring.

      (Added to NRS by 2015, 3420)

      NRS 682A.099  “High grade investment” defined.  “High grade investment” means a rated credit instrument rated 1 or 2 by the SVO.

      (Added to NRS by 2015, 3420)

      NRS 682A.100  Preferred or guaranteed stock.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.103  “Income” defined.  “Income” means, as to a security, interest, accrual of discount, dividends or other distributions, including, without limitation, rights, tax or assessment credits, warrants and distributions in kind.

      (Added to NRS by 2015, 3420)

      NRS 682A.105  “Income generation transaction” defined.  “Income generation transaction” means a derivative transaction involving the writing of covered call options, covered put options, covered caps or covered floors that is intended to generate income or enhance returns.

      (Added to NRS by 2015, 3420)

      NRS 682A.107  “Insurance future” defined.  “Insurance future” means a future relating to an index or pool that is based on insurance-related claims.

      (Added to NRS by 2015, 3420)

      NRS 682A.109  “Insurance future option” defined.  “Insurance future option” means an option on an insurance future.

      (Added to NRS by 2015, 3420)

      NRS 682A.110  Common stocks.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.113  “Investment company” defined.  “Investment company” has the meaning ascribed to it in 15 U.S.C. § 80a-3, as amended, and a person described in 15 U.S.C. § 80a-3(c).

      (Added to NRS by 2015, 3420)

      NRS 682A.115  “Investment company series” defined.  “Investment company series” means an investment portfolio of an investment company that is organized as a series company and to which assets of the investment company have been specifically allocated.

      (Added to NRS by 2015, 3420)

      NRS 682A.117  “Investment practices” defined.  “Investment practices” means transactions of the types described in NRS 682A.438, 682A.450 to 682A.458, inclusive, 682A.548 and 682A.560 to 682A.568, inclusive.

      (Added to NRS by 2015, 3420)

      NRS 682A.119  “Investment strategy” defined.  “Investment strategy” means the techniques and methods used by an insurer to meet its investment objectives, including, without limitation, active bond portfolio management, passive bond portfolio management, interest rate anticipation, growth investing and value investing.

      (Added to NRS by 2015, 3420)

      NRS 682A.120  Insurance stocks.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.123  “Investment subsidiary” defined.  “Investment subsidiary” means a subsidiary of an insurer engaged or organized to engage exclusively in the ownership and management of assets authorized as investments for the insurer where the subsidiary limits its investment in any asset so that its investments will not cause the amount of the total investment of the insurer to exceed any of the investment limitations or avoid any other provisions of this chapter applicable to the insurer. As used in this section, “total investment of the insurer” includes:

      1.  Direct investment by the insurer in an asset; and

      2.  The insurer’s proportionate share of an investment in an asset by an investment subsidiary of the insurer, calculated by multiplying the amount of the subsidiary’s investment by the percentage of the insurer’s ownership interest in the subsidiary.

      (Added to NRS by 2015, 3421)

      NRS 682A.125  “Letter of credit” defined.  “Letter of credit” means a clean, irrevocable and unconditional document that serves as a guaranty for payments made to a specified person under specified conditions, issued or confirmed by, and payable and presentable at, a financial institution on the list of financial institutions meeting the standards for issuing letters of credit in accordance with the Purposes and Procedures Manual of the SVO.

      (Added to NRS by 2015, 3421)

      NRS 682A.127  “Limited-liability company” defined.  “Limited-liability company” means a business organization, excluding partnerships and ordinary business corporations, that is organized or operating in accordance with the laws of the United States, or any state thereof, and that limits the personal liability of investors to the equity investment of the investor in the business organization.

      (Added to NRS by 2015, 3421)

      NRS 682A.129  “Lower grade investment” defined.  “Lower grade investment” means a rated credit instrument that is rated 4, 5 or 6 by the SVO.

      (Added to NRS by 2015, 3421)

      NRS 682A.130  Stocks of subsidiaries.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.133  “Market value” defined.  “Market value” means:

      1.  As to cash and letters of credit, the face amounts thereof; and

      2.  As to a security as of any date, the price for the security on that date obtained from a generally recognized source or the most recent quotation from such a source or, to the extent no generally recognized source exists, the price for the security as determined in good faith by the parties to a transaction, plus accrued but unpaid income thereon to the extent not included in the price on that date.

      (Added to NRS by 2015, 3421)

      NRS 682A.135  “Medium grade investment” defined.  “Medium grade investment” means a rated credit instrument that is rated 3 by the SVO.

      (Added to NRS by 2015, 3421)

      NRS 682A.137  “Money market mutual fund” defined.  “Money market mutual fund” means a mutual fund that meets the conditions of 17 C.F.R. § 270.2a-7, adopted in accordance with the provisions of the Investment Company Act of 1940, 15 U.S.C. §§ 80a-1 et seq., as amended.

      (Added to NRS by 2015, 3421)

      NRS 682A.139  “Mortgage loan” defined.  “Mortgage loan” means an obligation secured by a mortgage, deed of trust, trust deed or other consensual lien on real estate.

      (Added to NRS by 2015, 3421)

      NRS 682A.140  Common trust funds; mutual funds.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.143  “Multilateral development bank” defined.  “Multilateral development bank” means an international development organization of which the United States is a member.

      (Added to NRS by 2015, 3421)

      NRS 682A.145  “Mutual fund” defined.  “Mutual fund” means an investment company or, in the case of an investment company that is organized as a series company, an investment company series, that, in either case, is registered with the United States Securities and Exchange Commission in accordance with the provisions of the Investment Company Act of 1940, 15 U.S.C. §§ 80a-1 et seq., as amended.

      (Added to NRS by 2015, 3421)

      NRS 682A.147  “NAIC” defined.  “NAIC” means the National Association of Insurance Commissioners, or its successor organization.

      (Added to NRS by 2015, 3422)

      NRS 682A.149  “Obligation” defined.  “Obligation” means evidence of indebtedness for the payment of money or other consideration, whether constituting a general obligation of the issuer or payable only out of certain revenues or certain funds pledged or otherwise dedicated for payment. The term includes, without limitation, a bond, note, debenture, trust certificate, including an equipment certificate, production payment, negotiable bank certificate of deposit, banker’s acceptance, credit tenant loan or loan secured by financing net leases.

      (Added to NRS by 2015, 3422)

      NRS 682A.150  Bankers’ acceptances and bills of exchange.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.153  “Option” defined.  “Option” means an agreement giving the buyer the right to buy or receive, sell or deliver, enter into, extend or terminate, or effect a cash settlement based on the actual or expected price, level, performance or value of one or more underlying interests.

      (Added to NRS by 2015, 3422)

      NRS 682A.155  “Over-the-counter derivative instrument” defined.  “Over-the-counter derivative instrument” means a derivative instrument entered into with a business entity other than through a qualified exchange or qualified foreign exchange, or cleared through a qualified clearinghouse.

      (Added to NRS by 2015, 3422)

      NRS 682A.157  “Person” defined.  “Person” means an individual, a business entity, a multilateral development bank or a government or quasi-governmental body, including, without limitation, a political subdivision or a government sponsored enterprise.

      (Added to NRS by 2015, 3422)

      NRS 682A.159  “Potential exposure” defined.  “Potential exposure” means the amount determined in accordance with the Annual Statement Instructions for the type of insurer to be reported on as adopted by the NAIC.

      (Added to NRS by 2015, 3422)

      NRS 682A.160  Equipment trust obligations or certificates.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.163  “Preferred stock” defined.  “Preferred stock” means the stock of a business entity authorized to issue the stock and that has a preference in liquidation over the common stock of the business entity.

      (Added to NRS by 2015, 3422)

      NRS 682A.165  “Qualified bank” defined.  “Qualified bank” means:

      1.  A national bank, state bank or trust company that at all times is not less than adequately capitalized as determined by the standards adopted by United States banking regulators and that is either regulated by state banking laws or is a member of the Federal Reserve System; or

      2.  A bank or trust company incorporated or organized in accordance with the laws of a country other than the United States that is regulated as a bank or trust company by that country’s government, or an agency thereof, and that at all times is not less than adequately capitalized as determined by the standards adopted by international banking authorities.

      (Added to NRS by 2015, 3422)

      NRS 682A.167  “Qualified business entity” defined.  “Qualified business entity” means a business entity that is:

      1.  An issuer of obligations or preferred stock that is rated 1 or 2 by the SVO or an issuer of obligations, preferred stock or derivative instruments that are rated the equivalent of 1 or 2 by the SVO or by a nationally recognized statistical rating organization recognized by the SVO; or

      2.  A primary dealer in United States government securities, recognized by the Federal Reserve Bank of New York.

      (Added to NRS by 2015, 3422)

      NRS 682A.169  “Qualified clearinghouse” defined.  “Qualified clearinghouse” means a clearinghouse for, and subject to the rules of, a qualified exchange or qualified foreign exchange, which provides clearing services, including acting as a counterparty to each of the parties to a transaction such that the parties no longer have credit risk as to each other.

      (Added to NRS by 2015, 3422)

      NRS 682A.170  Loans secured by policy.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.173  “Qualified exchange” defined.  “Qualified exchange” means:

      1.  A securities exchange registered as a national securities exchange or a securities market regulated in accordance with the Securities Exchange Act of 1934, 15 U.S.C. §§ 78a et seq., as amended;

      2.  A board of trade or commodities exchange designated as a contract market by the United States Commodity Futures Trading Commission or any successor thereof;

      3.  Private Offerings, Resales and Trading through Automated Linkages, otherwise known as PORTAL;

      4.  A designated offshore securities market as defined in Securities Exchange Commission Regulation S, 17 C.F.R. Part 230, as amended; or

      5.  A qualified foreign exchange.

      (Added to NRS by 2015, 3423)

      NRS 682A.175  “Qualified foreign exchange” defined.  “Qualified foreign exchange” means a foreign exchange, board of trade or contract market located outside the United States, its territories or possessions:

      1.  That has received regulatory comparability relief in accordance with Commodity Futures Trading Commission Rule 30.10, as set forth in 17 C.F.R. Part 30, Appendix C, as amended;

      2.  That is, or its members are, subject to the jurisdiction of a foreign futures authority that has received regulatory comparability relief in accordance with Commodity Futures Trading Commission Rule 30.10, as set forth in 17 C.F.R. Part 30, Appendix C, as amended, as to futures transactions in the jurisdiction where the exchange, board of trade or contract market is located; or

      3.  Upon which foreign stock index futures contracts are listed that are the subject of no-action relief issued by the Commodity Futures Trading Commission’s Office of General Counsel, provided that an exchange, board of trade or contract market that qualifies as a qualified foreign exchange only in accordance with this section is a qualified foreign exchange as to foreign stock index futures contracts that are the subject of no-action relief.

      (Added to NRS by 2015, 3423)

      NRS 682A.177  “Rated credit instrument” defined.

      1.  “Rated credit instrument” means a contractual right to receive cash or another rated credit instrument from another entity which instrument:

      (a) Is rated or required to be rated by the SVO;

      (b) In the case of an instrument with a maturity of 397 days or less, is issued, guaranteed or insured by an entity that is rated by, or another obligation of such entity is rated by, the SVO or by a nationally recognized statistical rating organization recognized by the SVO;

      (c) In the case of an instrument with a maturity of 90 days or less, is issued by a qualified bank;

      (d) Is a share of a class one bond mutual fund; or

      (e) Is a share of a money market mutual fund.

      2.  The term does not include:

      (a) An instrument that is mandatorily, or at the option of the issuer, convertible to an equity interest; or

      (b) A security that has a par value and whose terms provide that the issuer’s net obligation to repay all or part of the security’s par value is determined by reference to the performance of an equity, a commodity, a foreign currency or an index of equities, commodities, foreign currencies, or any combination thereof.

      (Added to NRS by 2015, 3423)

      NRS 682A.179  “Real estate” defined.

      1.  “Real estate” means:

      (a) Real property;

      (b) Interests in real property, including, without limitation, leaseholds, minerals and oil and gas that have not been separated from the underlying fee interest;

      (c) Improvements and fixtures located on or in real property; and

      (d) The seller’s equity in a contract providing for a deed of real estate.

      2.  As to a mortgage on real estate, the term includes the leasehold estate only if it has an unexpired term, including, without limitation, renewal options exercisable at the option of the lessee, extending beyond the scheduled maturity date of the obligation that is secured by a mortgage on the leasehold estate for the greater of:

      (a) A period equal to at least 20 percent of the original term of the obligation; or

      (b) Ten years.

      (Added to NRS by 2015, 3424)

      NRS 682A.180  Collateral loans.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.183  “Replication transaction” defined.  “Replication transaction” means a derivative transaction that is intended to replicate the performance of one or more assets which an insurer is authorized to acquire in accordance with the provisions of this chapter. The term does not include a derivative transaction that is entered into as a hedging transaction.

      (Added to NRS by 2015, 3424)

      NRS 682A.185  “Repurchase transaction” defined.  “Repurchase transaction” means a transaction in which an insurer purchases securities from a business entity that is obligated to repurchase the purchased securities, or equivalent securities, from the insurer at a specified price, either within a specified period of time or upon demand.

      (Added to NRS by 2015, 3424)

      NRS 682A.187  “Required liabilities” defined.  “Required liabilities” means the total liabilities required to be reported on the statutory financial statement of the insurer most recently required to be filed with the Commissioner.

      (Added to NRS by 2015, 3424)

      NRS 682A.189  “Residential mortgage loan” defined.  “Residential mortgage loan” means a mortgage loan primarily secured by real estate which is improved with at least one but not more than four residential dwelling units.

      (Added to NRS by 2015, 3424)

      NRS 682A.190  Savings and share accounts.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.193  “Reverse repurchase transaction” defined.  “Reverse repurchase transaction” means a transaction in which an insurer sells securities to a business entity and is obligated to repurchase the sold securities, or equivalent securities, from the business entity at a specified price, either within a specified period of time or on demand.

      (Added to NRS by 2015, 3424)

      NRS 682A.195  “Secured location” defined.  “Secured location” means the contiguous real estate owned by one person.

      (Added to NRS by 2015, 3424)

      NRS 682A.197  “Securities lending transaction” defined.  “Securities lending transaction” means a transaction in which securities are loaned by an insurer to a business entity that is obligated to return the loaned securities, or equivalent securities, to the insurer, either within a specified period of time or upon demand.

      (Added to NRS by 2015, 3424)

      NRS 682A.199  “Series company” defined.  “Series company” means an investment company that is organized as a series company, as defined in 17 C.F.R. § 270.18f-2.

      (Added to NRS by 2015, 3424)

      NRS 682A.200  Miscellaneous investments; records.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.203  “Sinking fund stock” defined.  “Sinking fund stock” means preferred stock that:

      1.  Is subject to a mandatory sinking fund or similar arrangement that will provide for the redemption or open market purchase of the entire issue over a period not greater than 40 years after the date of acquisition; and

      2.  Provides for mandatory sinking fund installments or open market purchases commencing not more than 10.5 years after the date of issue, with the sinking fund installments providing for the purchase or redemption, on a cumulative basis commencing 10 years after the date of issue, of at least 2.5 percent per year of the original number of shares of that issue of preferred stock.

      (Added to NRS by 2015, 3424)

      NRS 682A.205  “Special rated credit instrument” defined.  “Special rated credit instrument” means a rated credit instrument that meets the requirements of NRS 682A.295.

      (Added to NRS by 2015, 3425)

      NRS 682A.207  “State” defined.  “State” means a state, territory or possession of the United States, the District of Columbia or the Commonwealth of Puerto Rico.

      (Added to NRS by 2015, 3425)

      NRS 682A.209  “Substantially similar securities” defined.  “Substantially similar securities” means securities that meet all criteria for “substantially similar” specified in the Accounting Practices and Procedures Manual adopted by the NAIC, as amended, and in an amount that constitutes good delivery form as determined from time to time by the Public Securities Administration, or its successor organization.

      (Added to NRS by 2015, 3425)

      NRS 682A.210  Special accounts.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.213  “SVO” defined.  “SVO” means the Securities Valuation Office of the NAIC, or any successor office established by the NAIC.

      (Added to NRS by 2015, 3425)

      NRS 682A.215  “Swap” defined.  “Swap” means an agreement to exchange or to net payments at one or more times based on the actual or expected price, level, performance or value of one or more underlying interests.

      (Added to NRS by 2015, 3425)

      NRS 682A.217  “Underlying interest” defined.  “Underlying interest” means the assets, liabilities, other interests or a combination thereof underlying a derivative instrument, including, without limitation, any one or more securities, currencies, rates, indices, commodities or derivative instruments.

      (Added to NRS by 2015, 3425)

      NRS 682A.219  “Unrestricted surplus” defined.  “Unrestricted surplus” means the amount by which total admitted assets exceed 125 percent of the insurer’s required liabilities.

      (Added to NRS by 2015, 3425)

      NRS 682A.220  Special investments of title insurers.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.223  “Warrant” defined.  “Warrant” means an instrument that:

      1.  Gives the holder the right to purchase an underlying financial instrument at a given price and time or at a series of prices and times outlined in the warrant agreement; and

      2.  Is issued alone or in connection with the sale of other securities, including, without limitation, as part of a merger or recapitalization agreement, or to facilitate the divestiture of the securities of another business entity.

      (Added to NRS by 2015, 3425)

      NRS 682A.230  Mortgages and deeds of trust.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.240  Real property.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

Provisions Relating to Certain Defined Terms

      NRS 682A.245  Qualifications for asset-backed securities.  To qualify as an asset-backed security, a trust or other special purpose bankruptcy-remote business entity must meet the following conditions:

      1.  The trust or other business entity is established solely for the purpose of acquiring specific types of assets or rights to cash flows, issuing securities and other instruments representing an interest in or right to receive cash flows from those assets or rights, and engaging in activities required to service the assets or rights and any credit enhancement or support features held by the trust or other business entity; and

      2.  The assets of the trust or other business entity consist solely of interest-bearing obligations or other contractual obligations representing the right to receive payment from the cash flows from the assets or rights. The existence of credit enhancements, including, without limitation, letters of credit or guarantees, or support features, including, without limitation, swap agreements, do not cause a security or other instrument to be ineligible as an asset-backed security.

      (Added to NRS by 2015, 3425)

      NRS 682A.250  Time limited for disposal of real property.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.255  Presumptive control.

      1.  Control, as defined in NRS 682A.047, shall be deemed to exist if a person, directly or indirectly, owns, controls, holds with the power to vote or holds proxies representing 10 percent or more of the voting securities of another person.

      2.  A presumption of control may be rebutted by a showing that control does not exist in fact.

      3.  The Commissioner may determine, after furnishing all interested persons notice and an opportunity to be heard and making specific findings of fact to support the determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.

      (Added to NRS by 2015, 3426)

      NRS 682A.260  Time limited for disposal of other ineligible property and securities.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.265  Calculation of counterparty exposure.

      1.  Except as otherwise provided in this section, the counterparty exposure amount is the net amount of credit risk attributable to an over-the-counter derivative instrument. The amount of credit risk equals:

      (a) The market value of the over-the-counter derivative instrument if the liquidation of the derivative instrument would result in a final cash payment to the insurer; or

      (b) Zero, if the liquidation of the derivative instrument would not result in a final cash payment to the insurer.

      2.  If over-the-counter derivative instruments are entered into in accordance with a written master agreement which provides for netting of payments owed by the respective parties, and the domiciliary jurisdiction of the counterparty is either within the United States or, if not within the United States, within a foreign jurisdiction listed in the Purposes and Procedures Manual of the SVO as eligible for netting, the net amount of credit risk is the greater of zero or the net sum of:

      (a) The market value of the over-the-counter derivative instruments entered into in accordance with the agreement, the liquidation of which would result in a final cash payment to the insurer; and

      (b) The market value of the over-the-counter derivative instruments entered into in accordance with the agreement, the liquidation of which would result in a cash payment by the insurer to the business entity.

      3.  For open transactions, market value must be determined at the end of the most recent quarter of the insurer’s fiscal year and must be reduced by the market value of acceptable collateral held by the insurer or placed in escrow by one or both parties.

      (Added to NRS by 2015, 3426)

      NRS 682A.270  Failure to dispose of real property, personal property or securities: Effect; penalty.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.275  Qualifications for equivalent securities.  To qualify as equivalent securities, the securities must be:

      1.  In a securities lending transaction, securities that are identical to the loaned securities in all features including the amount of the loaned securities, except as to certificate number if held in physical form, but if any different security is exchanged for a loaned security by recapitalization, merger, consolidation or other corporate action, the different security shall be deemed to be the loaned security;

      2.  In a repurchase transaction, securities that are identical to the purchased securities in all features including the amount of the purchased securities, except as to the certificate number if held in physical form; or

      3.  In a reverse repurchase transaction, securities that are identical to the sold securities in all features including the amount of the sold securities, except as to the certificate number if held in physical form.

      (Added to NRS by 2015, 3426)

      NRS 682A.280  Prohibited investments and underwriting.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.285  Exception for foreign investments.

      1.  An investment shall not be deemed a foreign investment if the issuing person, qualified primary credit source or qualified guarantor is a domestic jurisdiction or a person domiciled in a domestic jurisdiction unless:

      (a) The issuing person is a shell business entity; and

      (b) The investment is not assumed, accepted, guaranteed or insured or otherwise backed by a domestic jurisdiction or a person, that is not a shell business entity, domiciled in a domestic jurisdiction.

      2.  For the purposes of this section:

      (a) “Qualified guarantor” means a guarantor against which an insurer has a direct claim for full and timely payment, evidenced by a contractual right for which an enforcement action can be brought in a domestic jurisdiction.

      (b) “Qualified primary credit source” means the credit source to which an insurer looks for payment as to an investment and against which an insurer has a direct claim for full and timely payment, evidenced by a contractual right for which an enforcement action can be brought in a domestic jurisdiction.

      (c) “Shell business entity” means a business entity having no economic substance, except as a vehicle for owning interests in assets issued, owned or previously owned by a person domiciled in a foreign jurisdiction.

      (Added to NRS by 2015, 3427)

      NRS 682A.290  Investments of foreign insurers.  Repealed. (See chapter 522, Statutes of Nevada 2015, at page 3516.)

 

      NRS 682A.295  Qualifications for special rated credit instruments.

      1.  To qualify as a special rated credit instrument the instrument must be:

      (a) An instrument that is structured so that, if it is held until retired by or on behalf of the issuer, its rate of return, based on its purchase cost and any cash flow stream possible in accordance with the structure of the transaction, may become negative because of reasons other than the credit risk associated with the issuer of the instrument. A rated credit instrument is not a special rated credit instrument for the purposes of this section if it is:

             (1) A share in a class one bond mutual fund;

             (2) An instrument, other than an asset-backed security, with payments of par value fixed as to amount and timing, or callable but in any event payable only at par or greater, and interest or dividend cash flows that are based on either a fixed or variable rate determined by reference to a specified rate or index;

             (3) An instrument, other than an asset-backed security, that has a par value and is purchased at a price not more than 110 percent of par;

             (4) An instrument, including an asset-backed security, whose rate of return would become negative only as a result of a prepayment due to casualty, condemnation, economic obsolescence of collateral or change of law;

             (5) An asset-backed security that relies on collateral that meets the requirements of subparagraph (2), the par value of which collateral:

                   (I) Is not allowed to be paid sooner than one-half of the remaining term to maturity from the date of acquisition;

                   (II) Is allowed to be paid before maturity only at a premium sufficient to provide a yield to maturity for the investment, considering the amount prepaid and reinvestment rates at the time of early repayment, at least equal to the yield to maturity of the initial investment; or

                   (III) Is allowed to be paid before maturity at a premium at least equal to the yield of a treasury issue of comparable remaining life; or

             (6) An asset-backed security that relies on cash flows from assets that are not prepayable at any time at par, but is not otherwise governed by subparagraph (5), if the asset-backed security has a par value reflecting principal payments to be received if held until retired by or on behalf of the issuer and is purchased at a price not more than 105 percent of such par amount.

      (b) An asset-backed security that:

             (1) Relies on cash flows from assets that are prepayable at par at any time;

             (2) Does not make payments of par that are fixed as to amount and timing; and

             (3) Has a negative rate of return at the time of acquisition if a prepayment threshold assumption is used. As used in this subsection, “prepayment threshold assumption” includes:

                   (I) Two times the prepayment expectation reported by a recognized, publicly available source as being the median of expectations contributed by broker dealers or other entities, except insurers, engaged in the business of selling or evaluating such securities or assets. The prepayment expectation used in this calculation is, at the insurer’s election, the prepayment expectation for pass-through securities of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation or the Government National Mortgage Association, or, for other assets of the same type as the assets that underlie the asset-backed security, in either case with a gross weighted average coupon of the assets that underlie the asset-backed security.

                   (II) Another prepayment threshold assumption specified by the Commissioner by regulation adopted pursuant to NRS 682A.388.

      2.  For the purposes of paragraph (b) of subsection 1, if the asset-backed security is purchased in combination with one or more other asset-backed securities that are supported by identical underlying collateral, the insurer may calculate the rate of return for these specific combined asset-backed securities in combination. The insurer shall maintain documentation demonstrating that such securities were acquired and are continuing to be held in combination.

      (Added to NRS by 2015, 3427)

General Investment Qualification

      NRS 682A.300  Investments and investment practices required to conform with this chapter.  Insurers may acquire, hold or invest in investments or engage in investment practices as set forth in this chapter. Investments not conforming to the provisions of this chapter are not admitted assets.

      (Added to NRS by 1971, 1617; A 1999, 1832; 2015, 3463) — (Substituted in revision for NRS 682A.020)

      NRS 682A.305  Requirements for admitted assets.  Subject to the provisions of NRS 682A.310, an insurer shall not acquire or hold an investment as an admitted asset unless at the time of acquisition the investment is:

      1.  Eligible for the payment or accrual of interest or a discount, whether in cash or securities, eligible to receive dividends or other distributions or is otherwise income producing; or

      2.  Acquired in accordance with NRS 682A.418, 682A.422, 682A.434 to 682A.442, inclusive, 682A.446 to 682A.452, inclusive, 682A.528, 682A.532, 682A.544 to 682A.552, inclusive, or 682A.554 and 682A.556 or pursuant to the authority of this title, other than this chapter.

      (Added to NRS by 2015, 3428)

      NRS 682A.310  Exemption from requirements for admitted assets.  An insurer may acquire or hold as admitted assets investments that do not otherwise qualify as provided in this chapter if:

      1.  The insurer has not acquired them for the purpose of circumventing any limitations contained in this chapter;

      2.  The insurer complies with the provisions of NRS 682A.380 and 682A.386 as to the investments; and

      3.  The insurer acquires the investments in the following circumstances:

      (a) As payment on account of existing indebtedness or in connection with the refinancing, restructuring or workout of existing indebtedness, if taken to protect the insurer’s interest in that investment;

      (b) As realization on collateral for an obligation;

      (c) In connection with an otherwise qualified investment or investment practice, as interest on, or a dividend or other distribution related to, the investment or investment practice, or in connection with the refinancing of the investment, in each case for no additional or only nominal consideration;

      (d) Under a lawful and bona fide agreement of recapitalization or voluntary or involuntary reorganization in connection with an investment held by the insurer; or

      (e) Under a bulk reinsurance, merger or consolidation transaction approved by the Commissioner if the assets constitute admissible investments for the ceding, merged or consolidated companies.

      (Added to NRS by 2015, 3428)

      NRS 682A.315  Limitation on time for admitted asset acquired by exemption.

      1.  An investment, or portion of an investment, acquired by an insurer in accordance with NRS 682A.310 becomes a nonadmitted asset 3 years, or 5 years in the case of mortgage loans and real estate, after the date of its acquisition, unless within that period the investment has become a qualified investment in accordance with a provision of this chapter, other than NRS 682A.310, but an investment acquired in accordance with an agreement of bulk reinsurance, merger or consolidation may be qualified for a longer period if so provided in the plan for reinsurance, merger or consolidation as approved by the Commissioner.

      2.  Upon application by the insurer, and a showing that the nonadmission of an asset held in accordance with NRS 682A.310 would materially injure the interests of the insurer, the Commissioner may extend the period of admissibility for an additional reasonable period of time.

      (Added to NRS by 2015, 3429)

      NRS 682A.320  Qualification of investment based on date of acquisition or date of commitment to acquire.  Except as otherwise provided in NRS 682A.325 and 682A.335, an investment shall be deemed to qualify pursuant to this chapter if, on the date the insurer committed to acquire the investment or on the date of its acquisition, it would have qualified pursuant to this chapter. For the purposes of determining limitations contained in this chapter, an insurer shall give appropriate recognition to any commitments to acquire investments.

      (Added to NRS by 2015, 3429)

      NRS 682A.325  Applicability of law to admitted assets or certain transactions held or entered on or before July 1, 2015.

      1.  An investment, held as an admitted asset by an insurer on July 1, 2015, which qualified pursuant to this chapter before July 1, 2015, shall be deemed to remain qualified as an admitted asset pursuant to this chapter.

      2.  Each specific transaction constituting an investment practice of the type described in this chapter that was lawfully entered into by an insurer, and was in effect on July 1, 2015, must continue to be allowed in accordance with the provisions of this chapter until its expiration or termination in accordance with its terms.

      (Added to NRS by 2015, 3429)

      NRS 682A.330  Computation of limitations based on admitted assets.  Unless otherwise specified, an investment limitation computed on the basis of an insurer’s admitted assets or capital and surplus shall relate to the amount required to be shown on the statutory balance sheet of the insurer most recently required to be filed with the Commissioner. For purposes of computing any limitation based on admitted assets, the insurer shall deduct from the amount of its admitted assets the amount of the liability recorded on its statutory balance sheet for:

      1.  The return of acceptable collateral received in a reverse repurchase transaction or a securities lending transaction;

      2.  Cash received in a dollar roll transaction; and

      3.  The amount reported as borrowed money in the most recently filed financial statement to the extent not included in subsections 1 and 2.

      (Added to NRS by 2015, 3429)

      NRS 682A.335  Qualification or requalification of admitted asset on or after date of acquisition.  An investment qualified, in whole or in part, for acquisition or holding as an admitted asset may be qualified or requalified at the time of acquisition or a later date, in whole or in part, in accordance with any section of this chapter if the relevant conditions contained in that section are satisfied at the time of qualification or requalification.

      (Added to NRS by 2015, 3430)

      NRS 682A.340  Required documentation of acquisition.  An insurer shall maintain documentation demonstrating that investments were acquired in accordance with the provisions of this chapter, and specifying the section of this chapter pursuant to which they were acquired.

      (Added to NRS by 2015, 3430)

      NRS 682A.345  Agreements to purchase securities in advance of issuance prohibited.  An insurer shall not enter into an agreement to purchase securities in advance of their issuance for resale to the public as part of a distribution of the securities by the issuer, or otherwise guarantee the distribution, except that an insurer may acquire privately placed securities with registration rights.

      (Added to NRS by 2015, 3430)

      NRS 682A.350  Order by Commissioner to alter investment practice.  Notwithstanding the provisions of this chapter, the Commissioner, for good cause, may, in accordance with the provisions of chapter 233B of NRS, order an insurer to nonadmit, limit, dispose of, withdraw from or discontinue an investment or investment practice. The authority of the Commissioner pursuant to this section is in addition to any other authority of the Commissioner.

      (Added to NRS by 2015, 3430)

      NRS 682A.355  Insurance futures and insurance future options.  Insurance futures and insurance future options are not considered investments or investment practices for the purposes of this chapter.

      (Added to NRS by 2015, 3430)

Authorization of Investments by Board of Directors

      NRS 682A.365  Adoption by board of written plan for investments.  An insurer’s board of directors shall adopt a written plan for acquiring and holding investments and for engaging in investment practices that specifies guidelines as to the quality, maturity and diversification of investments and other specifications, including, without limitation, investment strategies intended to ensure that the investments and investment practices are appropriate for the business conducted by the insurer, its liquidity needs and its capital and surplus. The board of directors shall review and assess the insurer’s technical investment and administrative capabilities and expertise before adopting a written plan concerning an investment strategy or practice.

      (Added to NRS by 2015, 3430)

      NRS 682A.367  Supervision and direction of board; formal resolution of board regarding investments.  Investments acquired and held pursuant to this chapter must be acquired and held under the supervision and direction of the board of directors of the insurer. The board of directors shall evidence by formal resolution, at least annually, that it has determined whether all investments have been made in accordance with delegations, standards, limitations and investment objectives prescribed by the board or a committee of the board charged with the responsibility to direct the insurer’s investments.

      (Added to NRS by 2015, 3430)

      NRS 682A.369  Quarterly review of investments and written plan for investments.  On no less than a quarterly basis, and more often if deemed appropriate, an insurer’s board of directors or a committee of the board shall:

      1.  Receive and review a summary report on the insurer’s investment portfolio, its investment activities and practices engaged in pursuant to delegated authority, in order to determine whether the investment activity or practice of the insurer is consistent with its written plan; and

      2.  Review and revise, as appropriate, the written plan.

      (Added to NRS by 2015, 3430)

      NRS 682A.371  Availability of documentation to board.  In discharging its duties pursuant to NRS 682A.365 to 682A.375, inclusive, the board of directors shall require that the records of any authorizations or approvals, other documentation as the board may require and reports of any action taken pursuant to authority delegated in accordance with the written plan referred to in NRS 682A.365 be made available on a regular basis to the board of directors.

      (Added to NRS by 2015, 3431)

      NRS 682A.373  Standard of care.  In discharging its duties pursuant to NRS 682A.365 to 682A.375, inclusive, the board of directors of an insurer shall perform its duties in good faith and with that degree of care that ordinarily prudent individuals in like positions would use under similar circumstances.

      (Added to NRS by 2015, 3431)

      NRS 682A.375  “Board of directors” refers to any equivalent governing body.  If an insurer does not have a board of directors, all references to the board of directors in this chapter shall be deemed to be references to the governing body of the insurer having authority equivalent to that of a board of directors.

      (Added to NRS by 2015, 3431)

Miscellaneous Provisions

      NRS 682A.380  Prohibited investments.

      1.  An insurer shall not, directly or indirectly:

      (a) Invest in an obligation or security, or make a guarantee for the benefit of or in favor of an officer or director of the insurer, except as provided in NRS 682A.382 and 682A.384;

      (b) Invest in an obligation or security, make a guarantee for the benefits of or in favor of, or make other investments in a business entity of which 10 percent or more of the voting securities or equity interests are owned directly or indirectly by, or for the benefit of, one or more officers or directors of the insurer, except as authorized in chapter 692C of NRS or provided in NRS 682A.382 and 682A.384;

      (c) Engage on its own behalf, or through one or more affiliates, in a transaction or series of transactions designed to evade the prohibitions of this chapter;

      (d) Invest in a partnership as a general partner, except that an insurer may make an investment as a general partner:

             (1) If all other partners are subsidiaries of the insurer;

             (2) For the purpose of:

                   (I) Meeting cash calls committed to before July 1, 2015;

                   (II) Completing those specific projects or activities of the partnership in which the insurer was a general partner on July 1, 2015, that had been undertaken as of that date; or

                   (III) Making capital improvements to property owned by the partnership on July 1, 2015, if the insurer was a general partner as of that date; or

             (3) Pursuant to NRS 682A.310; or

      (e) Invest in or lend its funds upon the security of shares of its own stock, except that an insurer may acquire shares of its own stock for the following purposes:

             (1) Conversion of a stock insurer into a mutual or reciprocal insurer or a mutual or reciprocal insurer into a stock insurer;

             (2) Issuance to the insurer’s officers, employees or agents in connection with a plan approved by the Commissioner for converting a publicly held insurer into a privately held insurer pursuant to NRS 693A.400 to 693A.540, inclusive, or in connection with other stock option and employee benefit plans; or

             (3) In accordance with any other plan approved by the Commissioner.

      2.  Nothing contained in paragraph (d) of subsection 1 shall be construed to prohibit a subsidiary or other affiliate of the insurer from becoming a general partner.

      3.  Any investment or loan made by an insurer in accordance with the provisions of paragraph (e) of subsection 1 must not be an admitted asset of the insurer.

      (Added to NRS by 2015, 3431)

      NRS 682A.382  Loans to officers and directors prohibited.

      1.  Except as otherwise provided in NRS 682A.384, an insurer shall not, without the prior written approval of the Commissioner, directly or indirectly:

      (a) Make a loan to, or another investment in, an officer or director of the insurer, or a person in which the officer or director has any direct or indirect financial interest;

      (b) Make a guarantee for the benefit of, or in favor of, an officer or director of the insurer, or a person in which the officer or director has any direct or indirect financial interest; or

      (c) Enter into an agreement for the purchase or sale of property from or to an officer or director of the insurer, or a person in which the officer or director has any direct or indirect financial interest.

      2.  For the purposes of this section, an officer or director shall not be deemed to have a financial interest by reason of an interest that is held directly or indirectly through the ownership of equity interests representing less than 2 percent of all outstanding equity interests issued by a person that is a party to the transaction, or solely by reason of that individual’s position as a director or officer of a person that is a party to the transaction.

      3.  This section does not allow an investment that is prohibited by NRS 682A.380.

      4.  This section does not apply to a transaction between an insurer and any of its subsidiaries or affiliates that is entered into in compliance with the provisions of chapter 692C of NRS, other than a transaction between an insurer and its officer or director.

      (Added to NRS by 2015, 3432)

      NRS 682A.384  Permissible loans.  An insurer may, without the prior written approval of the Commissioner, make:

      1.  Policy loans in accordance with the terms of the policy or contract and NRS 682A.460;

      2.  Advances to officers or directors for expenses reasonably expected to be incurred in the ordinary course of the insurer’s business or guarantees associated with credit or charge cards issued, or credit extended, for the purpose of financing these expenses;

      3.  Loans secured by the principal residence of an existing or new officer of the insurer made in connection with the officer’s relocation at the insurer’s request, if the loans comply with the requirements of NRS 682A.430 to 682A.436, inclusive, or 682A.540 to 682A.546, inclusive, and the terms and conditions otherwise are the same as those generally available from unaffiliated third parties;

      4.  Secured loans to an existing or new officer of the insurer made in connection with the officer’s relocation at the insurer’s request, if the loans:

      (a) Do not have a term exceeding 2 years;

      (b) Are required to finance mortgage loans outstanding at the same time on the prior and new residences of the officer;

      (c) Do not exceed an amount equal to the equity of the officer in the prior residence; and

      (d) Are required to be fully repaid upon the earlier of the end of the 2-year period or the sale of the prior residence; or

      5.  Loans and advances to officers or directors made in compliance with state or federal law specifically related to the loans and advances by a regulated noninsurance subsidiary or affiliate of the insurer in the ordinary course of business and on terms not more favorable than available to other customers of the entity.

      (Added to NRS by 2015, 3432)

      NRS 682A.386  Valuation of investments.  For the purposes of this chapter, the value or amount of an investment acquired or held, or an investment practice engaged in, pursuant to this chapter, unless otherwise specified in this title, is the value at which assets of an insurer are required to be reported for statutory accounting purposes as determined in accordance with procedures prescribed in published accounting and valuation standards of the NAIC, including, without limitation, the Purposes and Procedures Manual of the SVO and the Valuation of Securities Manual, the Accounting Practices and Procedures Manual, the Annual Statement Instructions or any successor valuation procedures officially adopted by the NAIC.

      (Added to NRS by 2015, 3433)

      NRS 682A.388  Authority of Commissioner to adopt regulations.  The Commissioner may, pursuant to chapter 233B of NRS, adopt regulations to carry out the provisions of this chapter.

      (Added to NRS by 2015, 3433)

LIFE AND HEALTH INSURERS

      NRS 682A.400  Applicability.  NRS 682A.400 to 682A.468, inclusive, apply to the investments and investment practices of life and health insurers.

      (Added to NRS by 2015, 3433)

      NRS 682A.402  Diversification of investments.

      1.  Except as otherwise specified in this chapter, an insurer shall not acquire, directly or indirectly through an investment subsidiary, an investment in accordance with the provisions of this chapter if, as a result of and after giving effect to the investment, the insurer would hold more than 3 percent of its admitted assets in investments of all kinds issued, assumed, accepted, insured or guaranteed by a single person, or 5 percent of its admitted assets in investments in the voting securities of a depository institution or any company that controls the institution.

      2.  The limitations in subsection 1 do not apply to the aggregate amounts insured by a single financial guaranty insurer with the highest generic rating issued by a nationally recognized statistical rating organization.

      3.  Asset-backed securities are not subject to the limitations in subsection 1. However, an insurer shall not acquire an asset-backed security if, as a result of and after giving effect to the investment, the aggregate amount of asset-backed securities secured by, or evidencing an interest in, a single asset or single pool of assets held by a trust or other business entity held by the insurer would exceed 3 percent of its admitted assets.

      (Added to NRS by 2015, 3433)

      NRS 682A.404  Medium and lower grade investments.

      1.  An insurer shall not acquire, directly or indirectly through an investment subsidiary, an investment in accordance with the provisions of NRS 682A.408, 682A.420 to 682A.428, inclusive, or 682A.440 to 682A.448, inclusive, or counterparty exposure in accordance with the provisions of NRS 682A.456 if, as a result of and after giving effect to the investment:

      (a) The aggregate amount of medium and lower grade investments held by the insurer would exceed 20 percent of its admitted assets;

      (b) The aggregate amount of lower grade investments held by the insurer would exceed 10 percent of its admitted assets;

      (c) The aggregate amount of investments rated 5 or 6 by the SVO held by the insurer would exceed 3 percent of its admitted assets;

      (d) The aggregate amount of investments rated 6 by the SVO held by the insurer would exceed 1 percent of its admitted assets;

      (e) The aggregate amount of medium and lower grade investments held by the insurer that receive as cash income less than the equivalent yield for United States Treasury issues with a comparative average life, would exceed 1 percent of its admitted assets;

      (f) The aggregate amount of medium and lower grade investments issued, assumed, guaranteed, accepted or insured by any one person or, as to asset-backed securities secured by or evidencing an interest in a single asset or pool of assets, held by the insurer would exceed 1 percent of its admitted assets; or

      (g) The aggregate amount of lower grade investments issued, assumed, guaranteed, accepted or insured by any one person or, as to asset-backed securities secured by or evidencing an interest in a single asset or pool of assets, held by the insurer would exceed 0.5 percent of its admitted assets.

      2.  If an insurer attains or exceeds the limit of any one rating category referred to in this section, the insurer is not precluded from acquiring investments in other rating categories subject to the specific and multicategory limits applicable to those investments.

      (Added to NRS by 2015, 3433)

      NRS 682A.406  Canadian investments.

      1.  An insurer shall not acquire, directly or indirectly through an investment subsidiary, a Canadian investment authorized by the provisions of this chapter if, as a result of and after giving effect to the investment, the aggregate amount of these investments held by the insurer would exceed 40 percent of its admitted assets, or if the aggregate amount of Canadian investments not acquired in accordance with the provisions of paragraph (c) or (d) of subsection 1 of NRS 682A.408 held by the insurer would exceed 25 percent of its admitted assets.

      2.  As to an insurer that is authorized to do business in Canada or that has outstanding insurance, annuity or reinsurance contracts on lives or risks resident or located in Canada and denominated in Canadian currency, the limitations in subsection 1 must be increased by the greater of:

      (a) The amount the insurer is required by Canadian law to invest in Canada or to be denominated in Canadian currency; or

      (b) An amount not to exceed 115 percent of the amount of its reserves and other obligations under contracts on lives or risks resident or located in Canada.

      (Added to NRS by 2015, 3434)

      NRS 682A.408  Rated credit instruments.

      1.  Subject to the limitations of NRS 682A.404, but not to the limitations of NRS 682A.402, an insurer may acquire rated credit instruments issued, assumed, guaranteed or insured by:

      (a) The United States;

      (b) A government-sponsored enterprise of the United States, if the instruments of the government-sponsored enterprise are assumed, guaranteed or insured by the United States or are otherwise backed or supported by the full faith and credit of the United States;

      (c) Canada; or

      (d) A government-sponsored enterprise of Canada, if the instruments of the government-sponsored enterprise are assumed, guaranteed or insured by Canada or are otherwise backed or supported by the full faith and credit of Canada.

      2.  An insurer shall not acquire an instrument in accordance with paragraph (c) or (d) of subsection 1 if, as a result of and after giving effect to the investment, the aggregate amount of investments held by the insurer in accordance with paragraph (c) or (d) of subsection 1 would exceed 40 percent of its admitted assets.

      3.  Subject to the limitations of NRS 682A.404, but not to the limitations of NRS 682A.402, an insurer may acquire credit rated instruments, excluding asset-backed securities:

      (a) Issued by a government money market mutual fund, a class one money market mutual fund or a class one bond mutual fund;

      (b) Issued, assumed, guaranteed or insured by a government-sponsored enterprise of the United States other than those eligible under subsection 1;

      (c) Issued, assumed, guaranteed or insured by a state, if the instruments are general obligations of the state; or

      (d) Issued by a multilateral development bank.

      4.  An insurer shall not acquire an instrument of any one fund, any one enterprise or entity or any one state as described in subsection 3 if, as a result of and after giving effect to the investment, the aggregate amount of investments held in any one fund, enterprise or entity, or state would exceed 10 percent of the insurer’s admitted assets.

      5.  Subject to the limitations of NRS 682A.402, 682A.404 and 682A.406, an insurer may acquire preferred stocks that are not foreign investments and which meet the requirements of rated credit instruments if, as a result of and after giving effect to the investment:

      (a) The aggregate amount of preferred stocks held by the insurer in accordance with this section does not exceed 20 percent of the insurer’s admitted assets; and

      (b) The aggregate amount of preferred stocks held by the insurer in accordance with this section which are not sinking fund stocks or rated P1 or P2 by the SVO does not exceed 10 percent of the insurer’s admitted assets.

      6.  Subject to the limitations of NRS 682A.402, 682A.404 and 682A.406, in addition to those investments eligible pursuant to subsections 1 to 5, inclusive, an insurer may acquire rated credit instruments that are not foreign investments.

      7.  An insurer shall not acquire special rated credit instruments as described in this section if, as a result of and after giving effect to the investment, the aggregate amount of special rated credit instruments held by the insurer would exceed 5 percent of the insurer’s admitted assets.

      (Added to NRS by 2015, 3434)

      NRS 682A.410  Insurer investment pools.

      1.  An insurer may acquire investments in investment pools that invest only in:

      (a) Obligations with an SVO rating of 1 or 2, or the equivalent of an SVO rating of 1 or 2 by a nationally recognized statistical rating organization recognized by the SVO, or, in the absence of an equivalent rating, the issuer has outstanding obligations with the equivalent of an SVO rating of 1 or 2, or an equivalent rating, and have:

             (1) 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

             (2) A remaining maturity 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 purposes 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.

      (b) Government money market mutual funds or class one money market mutual funds.

      (c) Securities lending, repurchase and reverse repurchase transactions that meet all the requirements of NRS 682A.438, except the quantitative limitations of subsection 4 of NRS 682A.438.

      (d) Investments which an insurer may acquire pursuant to this chapter if the insurer’s proportionate interest in the amount invested in these investments does not exceed the applicable limits of this chapter.

      2.  For an investment in an investment pool to be qualified pursuant to this chapter, the investment pool must not:

      (a) Acquire securities issued, assumed, guaranteed or insured by the insurer or an affiliate of the insurer;

      (b) Borrow or incur any indebtedness for borrowed money, except for securities lending and reverse repurchase transactions that meet the requirements of NRS 682A.438, except the quantitative limitations of subsection 4 of NRS 682A.438; or

      (c) 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.

      3.  The limitations of NRS 682A.402 do not apply to an insurer’s 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:

      (a) In any one investment pool would exceed 10 percent of its admitted assets;

      (b) 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

      (c) In all investment pools would exceed 35 percent of its admitted assets.

      4.  For an investment in an investment pool to be qualified pursuant to this chapter, the manager of the investment pool must:

      (a) Be organized in accordance with the laws of the United States or a state and designated as the pool manager in a pooling agreement;

      (b) 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 reciprocal insurer or interinsurance exchange, its attorney-in-fact, 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;

      (c) Compile and maintain detailed accounting records setting forth:

             (1) The cash receipts and disbursements reflecting each participant’s proportionate investments in the investment pool;

             (2) 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

             (3) Other records which, on a daily basis, allow third parties to verify each participant’s investment in the investment pool; and

      (d) 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:

             (1) State and recognize the claims and rights of each participant;

             (2) 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

             (3) 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.

      5.  The pooling agreement for each investment pool must be in writing and must provide that:

      (a) 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.

      (b) The underlying assets of the investment pool must not be commingled with the general assets of the pool manager or any other person.

      (c) In proportion to the aggregate amount of each pool participant’s interest in the investment pool:

             (1) Each participant owns an undivided interest in the underlying assets of the investment pool; and

             (2) The underlying assets of the investment pool are held solely for the benefit of each participant.

      (d) A participant, or in the event of the participant’s 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.

      (e) Withdrawals may be made on demand without penalty or other assessment on any business day, but settlements of funds must 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:

             (1) In cash, the then fair market value of the participant’s pro rata share of each underlying asset of the investment pool;

             (2) In kind, a pro rata share of each underlying asset; or

             (3) In a combination of cash and in-kind distributions, a pro rata share in each underlying asset.

      (f) The pool manager shall make the records of the investment pool available for inspection by the Commissioner.

      (Added to NRS by 2015, 3435)

      NRS 682A.412  Acquisition of equity interests generally permissible.  Subject to the limitations of NRS 682A.402, 682A.404 and 682A.406, an insurer may acquire equity interests in business entities organized in accordance with the laws of any domestic jurisdiction.

      (Added to NRS by 2015, 3438)

      NRS 682A.414  Limitation on aggregate amount of investments held in equity interests.  An insurer shall not acquire an investment in accordance with the provisions of NRS 682A.412 to 682A.418, inclusive, if, as a result of and after giving effect to the investment, the aggregate amount of investments held by the insurer in accordance with those sections would exceed 20 percent of the insurer’s admitted assets, or the amount of equity interests held by the insurer that are not listed on a qualified exchange would exceed 5 percent of the insurer’s admitted assets. An accident and health insurer is not subject to the provisions of NRS 682A.412 to 682A.418, inclusive, but is subject to the same aggregate limitation on equity interests as a property and casualty insurer in accordance with the provisions of NRS 682A.502 to 682A.510, inclusive, and 682A.522 to 682A.528, inclusive.

      (Added to NRS by 2015, 3438)

      NRS 682A.416  Restriction on mortgage or real estate holdings acquired or held as equity interests.  An insurer shall not acquire in accordance with the provisions of NRS 682A.412 to 682A.418, inclusive, any investments that the insurer may acquire in accordance with the provisions of NRS 682A.430 to 682A.436, inclusive.

      (Added to NRS by 2015, 3438)

      NRS 682A.418  Short sale of equity investments.  An insurer shall not short sell equity investments unless the insurer covers the short sale by owning the equity investment or an unrestricted right to the equity investment exercisable within 6 months after the short sale.

      (Added to NRS by 2015, 3438)

      NRS 682A.420  Tangible personal property under lease or other agreement.

      1.  Subject to the limitations of NRS 682A.402, 682A.404 and 682A.406, an insurer may acquire tangible personal property or equity interests therein located or used wholly or in part within a domestic jurisdiction either directly or indirectly through limited partnership interests and general partnership interests not otherwise prohibited by paragraph (d) of subsection 1 of NRS 682A.380, joint ventures, stock of an investment subsidiary or membership interests in a limited-liability company, trust certificates or other similar instruments.

      2.  Investments acquired as described in subsection 1 are eligible only if:

      (a) The property is subject to a lease or other agreement with a person whose rated credit instruments in the amount of the purchase price of the personal property the insurer could acquire in accordance with the provisions of NRS 682A.408; and

      (b) The lease or other agreement provides the insurer the right to receive rental, purchase or other fixed payments for the use or purchase of the property, and the aggregate value of the payments, together with the estimated residual value of the property at the end of its useful life and the estimated tax benefits to the insurer resulting from ownership of the property, must be adequate to return the cost of the insurer’s investment in the property, plus a return deemed adequate by the insurer.

      (Added to NRS by 2015, 3438)

      NRS 682A.422  Valuation of personal property under lease.  The insurer shall compute the amount of each investment acquired in accordance with the provisions of NRS 682A.420 to 682A.428, inclusive, on the basis of the out-of-pocket purchase price and applicable related expenses paid by the insurer for the investment, net of each borrowing made to finance the purchase price and expenses, to the extent the borrowing is without recourse to the insurer.

      (Added to NRS by 2015, 3439)

      NRS 682A.424  Limitation on aggregate amount of investments held in personal property under lease.  An insurer shall not acquire an investment in accordance with the provisions of NRS 682A.420 to 682A.428, inclusive, if, as a result of and after giving effect to the investment, the aggregate amount of all investments held by the insurer in accordance with the provisions of NRS 682A.420 to 682A.428, inclusive, would exceed:

      1.  Two percent of its admitted assets; or

      2.  One half of one percent of its admitted assets as to any single item of tangible personal property.

      (Added to NRS by 2015, 3439)

      NRS 682A.426  Computation of investments held as personal property under lease for purposes of investment diversification requirements.  For the purposes of determining compliance with the limitations of NRS 682A.402, 682A.404 and 682A.406, investments acquired by an insurer in accordance with the provisions of NRS 682A.420 to 682A.428, inclusive, must be aggregated with those acquired in accordance with the provisions of NRS 682A.408, and each lessee of the property under a lease referred to in NRS 682A.420 to 682A.428, inclusive, shall be deemed the issuer of an obligation in the amount of the investment of the insurer in the property determined as provided in NRS 682A.422.

      (Added to NRS by 2015, 3439)

      NRS 682A.428  Exempted personal property under lease.  Nothing in NRS 682A.420 to 682A.428, inclusive, applies to tangible personal property lease arrangements between an insurer and its subsidiaries and affiliates in accordance with a cost-sharing arrangement or agreement permitted in accordance with the provisions of chapter 692C of NRS.

      (Added to NRS by 2015, 3439)

      NRS 682A.430  Mortgage loans.

      1.  Subject to the limitations of NRS 682A.402, 682A.404 and 682A.406, an insurer may acquire, either directly or indirectly through limited partnership interests and general partnership interests not otherwise prohibited by paragraph (d) of subsection 1 of NRS 682A.380, joint ventures, stock of an investment subsidiary or membership interests in a limited-liability company, trust certificates or other similar instruments, obligations secured by mortgages on real estate situated within a domestic jurisdiction.

      2.  A mortgage loan which is secured by other than a first lien must not be acquired unless the insurer is the holder of the first lien.

      3.  The obligations held by the insurer and any obligations with an equal lien priority shall not, at the time of acquisition of the obligation, exceed:

      (a) Ninety percent of the fair market value of the real estate, if the mortgage loan is secured by a purchase money mortgage or like security received by the insurer upon disposition of the real estate.

      (b) Eighty percent of the fair market value of the real estate, if the mortgage loan requires immediate scheduled payment in periodic installments of principal and interest, has an amortization period of not more than 30 years and periodic payments made not less frequently than annually. Each periodic payment must be sufficient to ensure that at all times the outstanding principal balance of the mortgage loan is not greater than the outstanding principal balance that would be outstanding under a mortgage loan with the same original principal balance, with the same interest rate and requiring equal payments of principal and interest with the same frequency over the same amortization period. Mortgage loans allowed in accordance with this section are allowed notwithstanding the fact that they provide for a payment of the principal balance before the end of the period of amortization of the loan. For residential mortgage loans, the 80-percent limitation may be increased to 97 percent if acceptable private mortgage insurance has been obtained.

      (c) Seventy-five percent of the fair market values of the real estate for mortgage loans that do not meet the requirements of paragraph (a) or (b).

      4.  For the purposes of subsections 1, 2 and 3, the amount of an obligation required to be included in the calculation of the loan-to-value ratio may be reduced to the extent the obligation is insured by the Federal Housing Administration or guaranteed by the Administrator of Veterans Affairs, or their successors.

      5.  A mortgage loan that is held by an insurer pursuant to NRS 682A.325 or acquired in accordance with the provisions of NRS 682A.430 to 682A.436, inclusive, and is restructured in a manner that meets the requirements of a restructured mortgage loan in conformance with the Accounting Practices and Procedures Manual adopted by the NAIC will continue to qualify as a mortgage loan in accordance with the provisions of this chapter.

      6.  Subject to the limitations of NRS 682A.402, 682A.404 and 682A.406, credit lease transactions that do not qualify for investment pursuant to NRS 682A.408 are exempt from the provisions of subsections 1, 2 and 3 if they meet the following criteria:

      (a) The loan amortizes over the initial fixed lease term at least in an amount sufficient so that the loan balance at the end of the lease term does not exceed the original appraised value of the real estate;

      (b) The lease payments cover or exceed the total debt service over the life of the loan;

      (c) A tenant or its affiliated entity whose rated credit instruments have an SVO rating of 1 or 2, or a comparable rating from a nationally recognized statistical rating organization recognized by the SVO, has a full faith and credit obligation to make the lease payments;

      (d) The insurer holds or is the beneficial holder of a first lien mortgage on the real estate;

      (e) The expenses of the real estate are passed through to the tenant, excluding exterior, structural, parking and heating, ventilation and air conditioning replacement expenses, unless annual escrow contributions, from cash flows derived from the lease payments, cover the expense shortfall; and

      (f) There is a perfected assignment of the rents due pursuant to the lease to, or for the benefit of, the insurer.

      (Added to NRS by 2015, 3439)

      NRS 682A.432  Income-producing real estate.

      1.  An insurer may acquire, manage and dispose of real estate situated in a domestic jurisdiction either directly or indirectly through limited partnership interests and general partnership interests not otherwise prohibited by paragraph (d) of subsection 1 of NRS 682A.380, joint ventures, stock of an investment subsidiary or membership interests in a limited-liability company, trust certificates or other similar instruments. The real estate must be income producing or intended for improvement or development for investment purposes under an existing program, in which case the real estate shall be deemed to be income producing.

      2.  The real estate may be subject to mortgages, liens or other encumbrances, the amount of which must, to the extent that the obligations secured by the mortgages, liens or encumbrances are without recourse to the insurer, be deducted from the amount of the investment of the insurer in the real estate for purposes of determining compliance with subsections 2 and 3 of NRS 682A.436.

      (Added to NRS by 2015, 3440)

      NRS 682A.434  Real estate for accommodation of business operations.

      1.  An insurer may acquire, manage and dispose of real estate for the convenient accommodation of the insurer’s, and its affiliates’, business operations, including home office, branch office and field office operations.

      2.  Real estate acquired as described in this section may include excess space for rent to others, if the excess space, valued at its fair market value, would otherwise be an allowed investment in accordance with the provisions of NRS 682A.432 and is so qualified by the insurer.

      3.  The real estate acquired as described in this section may be subject to one or more mortgages, liens or other encumbrances, the amount of which must, to the extent that the obligations secured by the mortgages, liens or encumbrances are without recourse to the insurer, be deducted from the amount of the investment of the insurer in the real estate for purposes of determining compliance with subsection 4 of NRS 682A.436.

      4.  For the purposes of this section, business operations must not include that portion of real estate used for the direct provision of health care services by an accident and health insurer for its insureds. An insurer may acquire real estate used for these purposes under NRS 682A.432.

      (Added to NRS by 2015, 3441)

      NRS 682A.436  Limitation on aggregate amount of investments held in mortgage loans and real estate.

      1.  An insurer shall not acquire an investment in accordance with the provisions of NRS 682A.430 if, as a result of and after giving effect to the investment, the aggregate amount of all investments held by the insurer pursuant to that section would exceed:

      (a) One percent of its admitted assets in mortgage loans covering any one secured location;

      (b) One-quarter of one percent of its admitted assets in construction loans covering any one secured location; or

      (c) Two percent of its admitted assets in construction loans in the aggregate.

      2.  An insurer shall not acquire an investment under NRS 682A.432 if, as a result of and after giving effect to the investment and any outstanding guarantees made by the insurer in connection with the investment, the aggregate amount of investments held by the insurer under NRS 682A.432 plus the guarantees outstanding would exceed:

      (a) One percent of its admitted assets in one parcel or group of contiguous parcels of real estate, except that this limitation does not apply to that portion of real estate used for the direct provision of health care services by an accident and health insurer for its insureds, such as hospitals, medical clinics, medical professional buildings or other health facilities used for the purpose of providing health services; or

      (b) Fifteen percent of its admitted assets in the aggregate, but not more than 5 percent of its admitted assets as to properties that are to be improved or developed.

      3.  An insurer shall not acquire an investment pursuant to NRS 682A.430 or 682A.434 if, as a result of and after giving effect to the investment and any guarantees made by the insurer in connection with the investment, the aggregate amount of all investments held by the insurer in accordance with those sections plus the guarantees outstanding would exceed 45 percent of the insurer’s admitted assets. An insurer may exceed this limitation by not more than 30 percent of the insurer’s admitted assets if:

      (a) This increased amount is invested only in residential mortgage loans;

      (b) The insurer has not more than 10 percent of the insurer’s admitted assets invested in mortgage loans other than residential mortgage loans;

      (c) The loan-to-value ratio of each residential mortgage loan does not exceed 60 percent at the time the mortgage loan is qualified pursuant to this increased authority, and the fair market value is supported by an appraisal that is not more than 2 years old and prepared by an independent appraiser;

      (d) A single mortgage loan qualified pursuant to this increased authority does not exceed 0.5 percent of the insurer’s admitted assets;

      (e) The insurer files with the Commissioner, and receives approval from the Commissioner for, a plan that is designed to result in a portfolio of residential mortgage loans that is sufficiently geographically diversified; and

      (f) The insurer agrees to file annually with the Commissioner records which demonstrate that the insurer’s portfolio of residential mortgage loans is geographically diversified in accordance with the plan.

      4.  The limitations of NRS 682A.402, 682A.404 and 682A.406 do not apply to an insurer’s acquisition of real estate under NRS 682A.432. An insurer shall not acquire real estate under NRS 682A.432 if, as a result of and after giving effect to the acquisition, the aggregate amount of real estate held by the insurer in accordance with that section would exceed 10 percent of its admitted assets. With the approval of the Commissioner, additional amounts of real estate may be acquired under NRS 682A.432.

      (Added to NRS by 2015, 3441)

      NRS 682A.438  Securities lending, repurchase, reverse repurchase and dollar roll transactions.  An insurer may enter into securities lending, repurchase, reverse repurchase and dollar roll transactions with business entities, subject to the following requirements:

      1.  The insurer’s board of directors shall adopt a written plan that is consistent with the requirements of the written plan in NRS 682A.365 which specifies the guidelines and objectives to be followed, including, without limitation:

      (a) A description of how cash received will be invested or used for general corporate purposes of the insurer;

      (b) Operational procedures to manage interest rate risk, counterparty default risk, the conditions under which proceeds from reverse repurchase transactions may be used in the ordinary course of business and the use of acceptable collateral in a manner that reflects the liquidity needs of the transactions; and

      (c) The extent to which the insurer may engage in these transactions.

      2.  The insurer shall enter into a written agreement for all transactions authorized by this section other than dollar roll transactions. The written agreement must require that each transaction terminate not more than 1 year after its inception or upon the earlier demand of the insurer. The agreement must be with the business entity counterparty, but for securities lending transactions, the agreement may be with an agent acting on behalf of the insurer, if the agent is a qualified business entity and if the agreement:

      (a) Requires the agent to enter into separate agreements with each counterparty that are consistent with the requirements of this section; and

      (b) Prohibits securities lending transactions under the agreement with the agent or its affiliates.

      3.  Cash received in a transaction as described in this section must be invested in accordance with the provisions of this chapter and in a manner that recognizes the liquidity needs of the transaction or used by the insurer for its general corporate purposes. For so long as the transaction remains outstanding, the insurer, its agent or custodian shall maintain, as to acceptable collateral received in a transaction in accordance with this section, either physically or through book entry systems of the Federal Reserve, the Depository Trust Company, the Participants Trust Company or any other securities depositories approved by the Commissioner:

      (a) Possession of the acceptable collateral;

      (b) A perfected security interest in the acceptable collateral; or

      (c) In the case of a jurisdiction outside of the United States, title to, or rights of a secured creditor to, the acceptable collateral.

      4.  The limitations of NRS 682A.402, 682A.404, 682A.406 and 682A.440 to 682A.448, inclusive, do not apply to the business entity counterparty exposure created by transactions entered into under this section. For purposes of calculations made to determine compliance with this subsection, no effect will be given to the insurer’s future obligation to resell securities, in the case of a repurchase transaction, or to repurchase securities, in the case of a reverse repurchase transaction. An insurer shall not enter into a transaction under this section if, as a result of and after giving effect to the transaction:

      (a) The aggregate amount of securities loaned, sold or purchased from any one business entity counterparty under this section would exceed 5 percent of its admitted assets. In calculating the amount sold to or purchased from a business entity counterparty in accordance with repurchase or reverse purchase transactions, effect may be given to netting provisions under a master written agreement.

      (b) The aggregate amount of all securities loaned, sold to or purchased from all business entities under this section would exceed 40 percent of its admitted assets.

      5.  In a securities lending transaction, the insurer shall receive acceptable collateral having a market value on the transaction date equal to 102 percent or more of the market value of the securities loaned by the insurer in the transaction on that date. If at any time the market value of the acceptable collateral is less than the market value of the loaned securities, the business entity counterparty is obligated to deliver additional acceptable collateral, the market value of which, together with the market value of all acceptable collateral held in connection with the transaction, equals 102 percent or more of the market value of the loaned securities.

      6.  In a reverse repurchase transaction, other than a dollar roll transaction, the insurer shall receive acceptable collateral having a market value on the transaction date equal to 95 percent or more of the market value of the securities transferred by the insurer in the transaction on that date. If at any time the market value of the acceptable collateral is less than 95 percent of the market value of the securities so transferred, the business entity counterparty is obligated to deliver additional acceptable collateral, the market value of which, together with the market value of all acceptable collateral held in connection with the transaction, equals 95 percent or more of the market value of the transferred securities.

      7.  In a dollar roll transaction, the insurer shall receive cash in an amount equal to at least the market value of the securities transferred by the insurer in the transaction on the transaction date.

      8.  In a repurchase transaction, the insurer shall receive as acceptable collateral transferred securities having a market value equal to 102 percent or more of the purchase price paid by the insurer for the securities. If at any time the market value of the acceptable collateral is less than 100 percent of the purchase price paid by the insurer, the business entity counterparty is obligated to provide additional acceptable collateral, the market value of which, together with the market value of all acceptable collateral held in connection with the transaction, equals 102 percent or more of the purchase price. Securities acquired by an insurer in a repurchase transaction may not be sold in a reverse repurchase transaction, loaned in a securities lending transaction or otherwise pledged.

      9.  To constitute acceptable collateral for the purposes of this section, a letter of credit must have an expiration date beyond the term of the subject transaction.

      (Added to NRS by 2015, 3442)

      NRS 682A.440  Foreign investments.  Subject to the limitations of NRS 682A.402, 682A.404 and 682A.406, an insurer may acquire foreign investments, or engage in investment practices with persons of or in foreign jurisdictions, of substantially the same type as those that an insurer is allowed to acquire pursuant to this chapter, other than of the type allowed under NRS 682A.410 if, as a result of and after giving effect to the investments:

      1.  The aggregate amount of foreign investments held by the insurer in accordance with this section does not exceed 20 percent of its admitted assets; and

      2.  The aggregate amount of foreign investments held by the insurer in accordance with this section in a single foreign jurisdiction does not exceed 10 percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO 1 or 3 percent of its admitted assets as to any other foreign jurisdiction.

      (Added to NRS by 2015, 3444)

      NRS 682A.442  Foreign currency exposure.

      1.  Subject to the limitations of NRS 682A.402, 682A.404 and 682A.406, an insurer may acquire investments, or engage in investment practices denominated in foreign currencies, whether or not they are foreign investments acquired as described in NRS 682A.440, or additional foreign currency exposure as a result of the termination or expiration of a hedging transaction with respect to investments denominated in a foreign currency if:

      (a) The aggregate amount of investments held by the insurer in accordance with this section denominated in foreign currencies does not exceed 10 percent of its admitted assets; and

      (b) The aggregate amount of investments held by the insurer in accordance with this section denominated in the foreign currency of a single foreign jurisdiction does not exceed 10 percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO 1 or 3 percent of its admitted assets as to any other foreign jurisdiction.

      2.  An investment must not be considered denominated in a foreign currency if the acquiring insurer enters into one or more contracts in transactions allowed under NRS 682A.450 to 682A.458, inclusive, and the business entity counterparty agrees in the contract or contracts to exchange all payments made on the foreign currency denominated investment for United States currency at a rate which effectively insulates the investment cash flows against future changes in currency exchange rates during the period the contract or contracts are in effect.

      (Added to NRS by 2015, 3444)

      NRS 682A.444  Additional foreign investment and foreign currency allowance for insurers authorized to do business in foreign jurisdiction and holding foreign contracts.  In addition to investments allowed under NRS 682A.440 and 682A.442, an insurer that is authorized to do business in a foreign jurisdiction, and that has outstanding insurance, annuity or reinsurance contracts on lives or risks resident or located in that foreign jurisdiction and denominated in a foreign currency of that jurisdiction, may acquire foreign investments respecting that foreign jurisdiction, and may acquire investments denominated in the currency of that jurisdiction, subject to the limitations of NRS 682A.402, 682A.404 and 682A.406. Investments made in accordance with this section in obligations of foreign governments, their political subdivisions and government-sponsored enterprises are not subject to the limitations of NRS 682A.402, 682A.404 and 682A.406 if those investments carry an SVO rating of 1 or 2. The aggregate amount of investments acquired by the insurer in accordance with this section must not exceed the greater of:

      1.  The amount the insurer is required by the law of the foreign jurisdiction to invest in the foreign jurisdiction; or

      2.  One hundred fifteen percent of the amount of the insurer’s reserves, net of reinsurance, and other obligations under the contracts on lives or risks resident or located in the foreign jurisdiction.

      (Added to NRS by 2015, 3445)

      NRS 682A.446  Additional foreign investment and foreign currency allowance for insurers not authorized to do business in foreign jurisdiction but holding foreign contracts.  In addition to investments allowed under NRS 682A.440 and 682A.442, an insurer that is not authorized to do business in a foreign jurisdiction, but which has outstanding insurance, annuity or reinsurance contracts on lives or risks resident or located in that foreign jurisdiction and denominated in foreign currency of that jurisdiction, may acquire foreign investments respecting that foreign jurisdiction, and may acquire investments denominated in the currency of that jurisdiction subject to the limitations of NRS 682A.402, 682A.404 and 682A.406. Investments made in accordance with this section in obligations of foreign governments, their political subdivisions and government-sponsored enterprises are not subject to the limitations of NRS 682A.402, 682A.404 and 682A.406 if those investments carry an SVO rating of 1 or 2. The aggregate amount of investments acquired by the insurer in accordance with this section must not exceed 105 percent of the amount of the insurer’s reserves, net of reinsurance, and other obligations under the contracts on lives or risks resident or located in the foreign jurisdiction.

      (Added to NRS by 2015, 3445)

      NRS 682A.448  Calculation of foreign investments for purposes of determining compliance with limitations.  Investments acquired in conformance with NRS 682A.440 to 682A.448, inclusive, must be aggregated with investments of the same types made under this chapter, and in a similar manner, for purposes of determining compliance with the limitations, if any, contained in this chapter. Investments in obligations of foreign governments, their political subdivisions and government-sponsored enterprises of these persons, except for those exempted by NRS 682A.444 and 682A.446, are subject to the limitations of NRS 682A.402, 682A.404 and 682A.406.

      (Added to NRS by 2015, 3445)

      NRS 682A.450  Derivative transactions.  An insurer may, directly or indirectly through an investment subsidiary, engage in derivative transactions as described in NRS 682A.450 to 682A.458, inclusive, pursuant to the following conditions:

      1.  An insurer may use derivative instruments under NRS 682A.450 to 682A.458, inclusive, to engage in hedging transactions and certain income generation transactions, as these terms may be further defined in regulations adopted by the Commissioner pursuant to NRS 682A.388; and

      2.  An insurer must be able to demonstrate to the Commissioner the intended hedging characteristics and the ongoing effectiveness of the derivative transaction or combination of the transactions through cash flow testing or other appropriate analyses.

      (Added to NRS by 2015, 3446)

      NRS 682A.452  Derivative transactions: Limitations on hedging transactions.  An insurer may enter into hedging transactions under NRS 682A.450 to 682A.458, inclusive, if, as a result of and after giving effect to the transaction:

      1.  The aggregate statement value of options, caps, floors and warrants not attached to another financial instrument purchased and used in hedging transactions does not exceed 7.5 percent of its admitted assets;

      2.  The aggregate statement value of options, caps and floors written in hedging transactions does not exceed 3 percent of its admitted assets; and

      3.  The aggregate potential exposure of collars, swaps, forwards and futures used in hedging transactions does not exceed 6.5 percent of its admitted assets.

      (Added to NRS by 2015, 3446)

      NRS 682A.454  Derivative transactions: Limitations on income generation transactions.  An insurer may only enter into the following types of income generation transactions if, as a result of and after giving effect to the transactions, the aggregate statement value of the fixed income assets that are subject to call or which generate the cash flows for payments under the caps or floors, plus the face value of fixed income securities underlying a derivative instrument subject to call, plus the amount of the purchase obligations under the puts, does not exceed 10 percent of its admitted assets:

      1.  Sales of covered call options on noncallable fixed income securities, callable fixed income securities if the option expires by its terms before the end of the noncallable period or derivative instruments based on fixed income securities;

      2.  Sales of covered call options on equity securities, if the insurer holds in its portfolio, or can immediately acquire through the exercise of options, warrants or conversion rights already owned, the equity securities subject to call during the complete term of the call option sold;

      3.  Sales of covered puts on investments that the insurer is allowed to acquire pursuant to this chapter, if the insurer has escrowed, or entered into a custodian agreement segregating, cash or cash equivalents with a market value equal to the amount of its purchase obligations under the put during the complete term of the put option sold; or

      4.  Sales of covered caps or floors, if the insurer holds in its portfolio the investments generating the cash flow to make the required payments under the caps or floors during the complete term that the cap or floor is outstanding.

      (Added to NRS by 2015, 3446)

      NRS 682A.456  Derivative transactions: Counterparty exposure.  An insurer shall include all counterparty exposure amounts in determining compliance with the limitations of NRS 682A.402, 682A.404 and 682A.406.

      (Added to NRS by 2015, 3447)

      NRS 682A.458  Commissioner may allow additional derivative transactions by regulation; limitations.  In accordance with the regulations adopted pursuant to NRS 682A.388, the Commissioner may approve additional transactions involving the use of derivative instruments in excess of the limits of NRS 682A.452 for other risk-management purposes, but replication transactions must not be allowed for other than risk-management purposes.

      (Added to NRS by 2015, 3447)

      NRS 682A.460  Policy loans.  A life insurer may lend to a policyholder on the security of the cash surrender value of the policyholder’s policy a sum not exceeding the legal reserve that the insurer is required to maintain on the policy.

      (Added to NRS by 2015, 3447)

      NRS 682A.462  Limited exemption from quantitative limits on certain investments.  Solely for the purpose of acquiring investments that exceed the quantitative limitations of NRS 682A.402 to 682A.448, inclusive, an insurer may acquire in accordance with this section an investment, or engage in investment practices described in NRS 682A.438, but an insurer shall not acquire an investment or engage in investment practices described in NRS 682A.438 in accordance with this section if, as a result of and after giving effect to the transaction:

      1.  The aggregate amount of investments held by the insurer would exceed 3 percent of its admitted assets; or

      2.  The aggregate amount of investments as to one limitation in NRS 682A.402 to 682A.448, inclusive, held by the insurer would exceed 1 percent of its admitted assets.

      (Added to NRS by 2015, 3447)

      NRS 682A.464  Limited exemption from certain restrictions on investments.

      1.  In addition to the authority provided in NRS 682A.462, an insurer may acquire in accordance with this section an investment of any kind, or engage in investment practices described in NRS 682A.438 that are not specifically prohibited by the provisions of this chapter, without regard to the categories, conditions, standards or other limitations of NRS 682A.402 to 682A.448, inclusive, if, as a result of and after giving effect to the transaction, the aggregate amount of investments held would not exceed the lesser of:

      (a) Ten percent of its admitted assets; or

      (b) Seventy-five percent of its capital and surplus.

      2.  An insurer shall not acquire any investment or engage in any investment practice in accordance with this section if, as a result of and after giving effect to the transaction, the aggregate amount of all investments in any one person held by the insurer would exceed 3 percent of its admitted assets.

      (Added to NRS by 2015, 3447)

      NRS 682A.466  Additional exemption from certain investment limitations with approval of Commissioner.  In addition to the investments acquired as described in NRS 682A.462 and 682A.464, an insurer may acquire in accordance with this section an investment of any kind, or engage in investment practices described in NRS 682A.438, that are not specifically prohibited by the provisions of this chapter, without regard to any limitations of NRS 682A.402 to 682A.448, inclusive, if:

      1.  The Commissioner grants prior approval;

      2.  The insurer demonstrates that its investments are being made in a prudent manner and that the additional amounts will be invested in a prudent manner; and

      3.  As a result of and after giving effect to the transaction the aggregate amount of investments held by the insurer is not greater than:

      (a) Twenty-five percent of its capital and surplus; or

      (b) One hundred percent of capital and surplus less 10 percent of its admitted assets.

      (Added to NRS by 2015, 3447)

      NRS 682A.468  Prohibitions applied to exempted investments.  An investment prohibited by NRS 682A.380, not allowed by NRS 682A.450 to 682A.458, inclusive, or additional derivative instruments acquired under NRS 682A.450 to 682A.458, inclusive, must not be acquired pursuant to NRS 682A.462 to 682A.468, inclusive.

      (Added to NRS by 2015, 3448)

PROPERTY AND CASUALTY, FINANCIAL GUARANTY AND MORTGAGE GUARANTY INSURERS

      NRS 682A.500  Applicability.  NRS 682A.500 to 682A.572, inclusive, apply to the investments and investment practices of property and casualty, financial guaranty and mortgage guaranty insurers.

      (Added to NRS by 2015, 3448)

      NRS 682A.502  Reserve requirements.  Subject to all other limitations and requirements of this chapter, a property and casualty, financial guaranty, mortgage guaranty or accident and health insurer shall maintain an amount not less than 100 percent of adjusted loss reserves and loss adjustment expense reserves, 100 percent of adjusted unearned premium reserves and 100 percent of statutorily required policy and contract reserves in:

      1.  Cash and cash equivalents;

      2.  High and medium grade investments that qualify pursuant to NRS 682A.518 and 682A.520;

      3.  Equity interests that qualify pursuant to NRS 682A.522 to 682A.528, inclusive, and which are traded on a qualified exchange;

      4.  Investments of the type set forth in NRS 682A.550 to 682A.558, inclusive, if the investments are rated in the highest generic rating category by a nationally recognized statistical rating organization recognized by the SVO for rating foreign jurisdictions and if any foreign currency exposure is effectively hedged through the maturity date of the investments;

      5.  Qualifying investments of the type set forth in subsections 2, 3 and 4 that are acquired pursuant to NRS 682A.570 and 682A.572;

      6.  Interest and dividends receivable on qualifying investments of the type set forth in subsections 1 to 5, inclusive; or

      7.  Reinsurance recoverable on paid losses.

      (Added to NRS by 2015, 3448)

      NRS 682A.504  Required reserve amount.

      1.  For the purposes of determining the amount of assets to be maintained in accordance with this section, the calculation of adjusted loss reserves and loss adjustment expense reserves, adjusted unearned premium reserves and statutorily required policy and contract reserves must be based on the amounts reported as of the most recent annual or quarterly statement date.

      2.  Adjusted loss reserves and loss adjustment expense reserves must be, for each individual line of business, equal to the sum derived by multiplying the amount obtained pursuant to paragraph (a) by the amount obtained pursuant to paragraph (b), and subtracting from the product obtained by way of that multiplication the amount obtained pursuant to paragraph (c), as follows:

      (a) The result of each amount reported by the insurer as losses and loss adjustment expenses unpaid for each accident year for each individual line of business.

      (b) The discount factor that is applicable to the line of business and accident year published by the Internal Revenue Service in accordance with the provisions of section 846 of the Internal Revenue Code, 26 U.S.C. § 846, as amended, for the calendar year that corresponds to the most recent annual statement of the insurer.

      (c) Accrued retrospective premiums discounted by an average discount factor. The discount factor used in this paragraph must be calculated by dividing the losses and loss adjustment expenses unpaid after discounting by loss and loss adjustment expense reserves before discounting the amount obtained pursuant to paragraph (a).

      3.  For purposes of the calculations required pursuant to subsection 2, the losses and loss adjustment expenses unpaid must be determined net of anticipated salvage and subrogation, and gross of any discount for the time value of money or tabular discount.

      4.  Adjusted unearned premium reserves must be equal to the sum derived by subtracting the amount obtained pursuant to paragraph (b) from the amount obtained pursuant to paragraph (a), as follows:

      (a) The amount reported by the insurer as unearned premium reserves.

      (b) The admitted asset amounts reported by the insurer as:

             (1) Premiums in and agent’s balances in the course of collection, accident and health premiums due and unpaid and uncollected premiums for accident and health premiums;

             (2) Premiums, agent’s balances and installments booked but deferred and not yet due; and

             (3) Bills receivable, taken for premium.

      5.  Statutorily required policy and contract reserves also must include, without limitation, any required contingency reserves, including, without limitation, in the case of a mortgage guaranty insurer, the amounts required by NRS 681B.100.

      (Added to NRS by 2015, 3448)

      NRS 682A.506  Required reporting of reserves.  A property and casualty, financial guaranty, mortgage guaranty or accident and health insurer shall supplement its annual statement with a reconciliation and summary of its assets and reserve requirements as required in NRS 682A.502 and 682A.504. A reconciliation and summary showing that an insurer’s assets as required in NRS 682A.502 and 682A.504 are greater than or equal to its undiscounted reserves referred to in NRS 682A.502 and 682A.504 is sufficient to satisfy this requirement. Upon prior notification, the Commissioner may require an insurer to submit such a reconciliation and summary with any quarterly statement filed during the calendar year.

      (Added to NRS by 2015, 3449)

      NRS 682A.508  Notification to Commissioner of insufficient reserves.  If a property and casualty, financial guaranty, mortgage guaranty or accident and health insurer’s assets and reserves do not comply with NRS 682A.502 and 682A.504, the insurer shall notify the Commissioner immediately of the amount by which the reserve requirements exceed the annual statement value of the qualifying assets, explain why the deficiency exists and, within 30 days after the date of the notice, propose a plan of action to remedy the deficiency.

      (Added to NRS by 2015, 3449)

      NRS 682A.510  Authority of Commissioner to remedy insufficient reserves.

      1.  If the Commissioner determines that an insurer is not in compliance with NRS 682A.502 and 682A.504, the Commissioner shall require the insurer to eliminate the condition causing the noncompliance within a specified time after the date on which the notice of the Commissioner’s requirements is mailed or delivered to the insurer.

      2.  If an insurer fails to comply with the Commissioner’s requirements that are imposed pursuant to subsection 1, the insurer is deemed to be in hazardous financial condition and the Commissioner shall take one or more of the actions authorized by law as to insurers in hazardous financial condition.

      (Added to NRS by 2015, 3449)

      NRS 682A.512  Diversification of investments.

      1.  Except as otherwise specified in this chapter, an insurer shall not acquire, directly or indirectly through an investment subsidiary, an investment in accordance with the provisions of this chapter if, as a result of and after giving effect to the investment, the insurer would hold more than 5 percent of its admitted assets in investments of all kinds issued, assumed, accepted, insured or guaranteed by a single person.

      2.  The limitation in subsection 1 does not apply to the aggregate amounts insured by a single financial guaranty insurer with the highest generic rating issued by a nationally recognized statistical rating organization.

      3.  Asset-backed securities are not subject to the limitation in subsection 1. However, an insurer shall not acquire an asset-backed security if, as a result of and after giving effect to the investment, the aggregate amount of asset-backed securities secured by, or evidencing an interest in, a single asset or single pool of assets held by a trust or other business entity held by the insurer would exceed 5 percent of its admitted assets.

      (Added to NRS by 2015, 3450)

      NRS 682A.514  Medium and lower grade investments.

      1.  An insurer shall not acquire, directly or indirectly through an investment subsidiary, an investment in accordance with the provisions of NRS 682A.518, 682A.530 to 682A.538, inclusive, or 682A.550 to 682A.558, inclusive, or counterparty exposure in accordance with the provisions of NRS 682A.566 if, as a result of and after giving effect to the investment:

      (a) The aggregate amount of all medium and lower grade investments held by the insurer would exceed 20 percent of its admitted assets;

      (b) The aggregate amount of lower grade investments held by the insurer would exceed 10 percent of its admitted assets;

      (c) The aggregate amount of investments rated 5 or 6 by the SVO held by the insurer would exceed 5 percent of its admitted assets;

      (d) The aggregate amount of investments rated 6 by the SVO held by the insurer would exceed 1 percent of its admitted assets; or

      (e) The aggregate amount of medium and lower grade investments held by the insurer that receive as cash income less than the equivalent yield for United States Treasury issues with a comparative average life, would exceed 1 percent of its admitted assets.

      2.  An insurer shall not acquire, directly or indirectly through an investment subsidiary, an investment in accordance with the provisions of NRS 682A.518, 682A.530 to 682A.538, inclusive, or 682A.550 to 682A.558, inclusive, or counterparty exposure in accordance with the provisions of NRS 682A.566 if, as a result of and after giving effect to the investment:

      (a) The aggregate amount of medium and lower grade investments issued, assumed, guaranteed, accepted or insured by any one person or, as to asset-backed securities by or evidencing an interest in a single asset or pool of assets, held by the insurer, would exceed 1 percent of its admitted assets; or

      (b) The aggregate amount of lower grade investments issued, assumed, guaranteed, accepted or insured by any one person or, as to asset-backed securities by or evidencing an interest in a single asset or pool of assets, held by the insurer, would exceed 0.5 percent of its admitted assets.

      3.  If an insurer attains or exceeds the limit of any one rating category referred to in this section, the insurer must not be precluded from acquiring investments in other rating categories subject to the specific and multicategory limits applicable to those investments.

      (Added to NRS by 2015, 3450)

      NRS 682A.516  Canadian investments.

      1.  An insurer shall not acquire, directly or indirectly through an investment subsidiary, any Canadian investments authorized by the provisions of this chapter if, as a result of and after giving effect to the investment, the aggregate amount of these investments held by the insurer would exceed 40 percent of its admitted assets, or if the aggregate amount of Canadian investments not acquired in accordance with paragraph (c) or (d) of subsection 1 of NRS 682A.518 held by the insurer would exceed 25 percent of its admitted assets.

      2.  As to an insurer that is authorized to do business in Canada or that has outstanding insurance, annuity or reinsurance contracts on lives or risks resident or located in Canada and denominated in Canadian currency, the limitations in subsection 1 must be increased by the greater of:

      (a) The amount the insurer is required by Canadian law to invest in Canada or to be denominated in Canadian currency; or

      (b) One hundred twenty-five percent of the amount of its reserves and other obligations under contracts on risks resident or located in Canada.

      (Added to NRS by 2015, 3451)

      NRS 682A.518  Rated credit instruments.

      1.  Subject to the limitations of NRS 682A.514, but not to the limitations of NRS 682A.512, an insurer may acquire rated credit instruments issued, assumed, guaranteed or insured by:

      (a) The United States;

      (b) A government-sponsored enterprise of the United States, if the instruments of the government-sponsored enterprise are assumed, guaranteed or insured by the United States or are otherwise backed or supported by the full faith and credit of the United States;

      (c) Canada; or

      (d) A government-sponsored enterprise of Canada, if the instruments of the government-sponsored enterprise are assumed, guaranteed or insured by Canada or are otherwise backed or supported by the full faith and credit of Canada.

      2.  An insurer shall not acquire an instrument in accordance with paragraph (c) or (d) of subsection 1 if, as a result of and after giving effect to the investment, the aggregate amount of investments held by the insurer in accordance with paragraph (c) or (d) of subsection 1 would exceed 40 percent of its admitted assets.

      3.  Subject to the limitations of NRS 682A.514, but not to the limitations of NRS 682A.512, an insurer may acquire rated credit instruments, excluding asset-backed securities:

      (a) Issued by a government money market mutual fund, a class one money market mutual fund or a class one bond mutual fund;

      (b) Issued, assumed, guaranteed or insured by a government-sponsored enterprise of the United States other than those eligible in accordance with subsection 1;

      (c) Issued, assumed, guaranteed or insured by a state, if the instruments are general obligations of the state; or

      (d) Issued by a multilateral development bank.

      4.  An insurer shall not acquire an instrument of any one fund, any one enterprise or entity, or any one state as described in subsection 3 if, as a result of and after giving effect to the investment, the aggregate amount of investments held in any one fund, enterprise or entity or state would exceed 10 percent of the insurer’s admitted assets.

      5.  Subject to the limitations of NRS 682A.512, 682A.514 and 682A.516, an insurer may acquire preferred stocks that are not foreign investments and which meet the requirements of rated credit instruments if, as a result of and after giving effect to the investments:

      (a) The aggregate amount of preferred stocks held by the insurer in accordance with this section does not exceed 20 percent of the insurer’s admitted assets; and

      (b) The aggregate amount of preferred stocks held by the insurer in accordance with this section which are not sinking fund stocks or rated P1 or P2 by the SVO does not exceed 10 percent of the insurer’s admitted assets.

      6.  Subject to the limitations of NRS 682A.512, 682A.514 and 682A.516, in addition to those investments eligible pursuant to subsections 1 to 5, inclusive, an insurer may acquire rated credit instruments that are not foreign investments.

      7.  An insurer shall not acquire special rated credit instruments as described in this section if, as a result of and after giving effect to the investment, the aggregate amount of special rated credit instruments held by the insurer would exceed 5 percent of the insurer’s admitted assets.

      (Added to NRS by 2015, 3451)

      NRS 682A.520  Insurer investment pools.

      1.  An insurer may acquire investments in investment pools that invest only in:

      (a) 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:

             (1) 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

             (2) 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.

      (b) Government money market mutual funds or class one money market mutual funds.

      (c) 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.

      (d) Investments which an insurer may acquire pursuant to this chapter if the insurer’s proportionate interest in the amount invested in these investments does not exceed the applicable limits of this chapter.

      2.  For an investment in an investment pool to be qualified pursuant to this chapter, the investment pool must not:

      (a) Acquire securities issued, assumed, guaranteed or insured by the insurer or an affiliate of the insurer;

      (b) 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

      (c) 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.

      3.  The limitations of NRS 682A.512 do not apply to an insurer’s 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:

      (a) In any one investment pool would exceed 10 percent of its admitted assets;

      (b) 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

      (c) In all investment pools would exceed 40 percent of its admitted assets.

      4.  For an investment in an investment pool to be qualified pursuant to this chapter, the manager of the investment pool must:

      (a) Be organized in accordance with the laws of the United States or a state and designated as the pool manager in a pooling agreement;

      (b) 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;

      (c) Compile and maintain detailed accounting records setting forth:

             (1) The cash receipts and disbursements reflecting each participant’s proportionate investments in the investment pool;

             (2) 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

             (3) Other records which, on a daily basis, allow third parties to verify each participant’s investment in the investment pool; and

      (d) 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:

             (1) State and recognize the claims and rights of each participant;

             (2) 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

             (3) 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.

      5.  The pooling agreement for each investment pool must be in writing and must provide that:

      (a) 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.

      (b) The underlying assets of the investment pool must not be commingled with the general assets of the pool manager or any other person.

      (c) In proportion to the aggregate amount of each pool participant’s interest in the investment pool:

             (1) Each participant owns an undivided interest in the underlying assets of the investment pool; and

             (2) The underlying assets of the investment pool are held solely for the benefit of each participant.

      (d) A participant, or in the event of the participant’s 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.

      (e) 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:

             (1) In cash, the then fair market value of the participant’s pro rata share of each underlying asset of the investment pool;

             (2) In kind, a pro rata share of each underlying asset; or

             (3) In a combination of cash and in-kind distributions, a pro rata share in each underlying asset.

      (f) The pool manager shall make the records of the investment pool available for inspection by the Commissioner.

      (Added to NRS by 2015, 3452)

      NRS 682A.522  Acquisition of equity interests generally permissible.  Subject to the limitations of NRS 682A.512, 682A.514 and 682A.516, an insurer may acquire equity interests in business entities organized in accordance with the laws of any domestic jurisdiction.

      (Added to NRS by 2015, 3454)

      NRS 682A.524  Limitation on aggregate amount of investments held in equity interests.  An insurer shall not acquire an investment in accordance with the provisions of NRS 682A.522 to 682A.528, inclusive, if, as a result of and after giving effect to the investment, the aggregate amount of investments held by the insurer in accordance with the provisions of those sections would exceed the greater of 25 percent of the insurer’s admitted assets or 100 percent of the insurer’s surplus as regards policyholders.

      (Added to NRS by 2015, 3454)

      NRS 682A.526  Restriction on mortgage or real estate holdings acquired or held as equity interests.  An insurer shall not acquire in accordance with the provisions of NRS 682A.522 to 682A.528, inclusive, any investments that the insurer may acquire in accordance with the provisions of NRS 682A.540 to 682A.546, inclusive.

      (Added to NRS by 2015, 3454)

      NRS 682A.528  Short sale of equity investments.  An insurer shall not short sell equity investments unless the insurer covers the short sale by owning the equity investment or an unrestricted right to the equity instrument exercisable within 6 months after the short sale.

      (Added to NRS by 2015, 3455)

      NRS 682A.530  Tangible personal property under lease or other agreement.

      1.  Subject to the limitations of NRS 682A.512, 682A.514 and 682A.516, an insurer may acquire tangible personal property or equity interests therein located or used wholly or in part within a domestic jurisdiction either directly or indirectly through limited partnership interests and general partnership interests not otherwise prohibited by paragraph (d) of subsection 1 of NRS 682A.380, joint ventures, stock of an investment subsidiary or membership interests in a limited-liability company, trust certificates or other similar instruments.

      2.  Investments acquired as described in subsection 1 are eligible only if:

      (a) The property is subject to a lease or other agreement with a person whose rated credit instruments in the amount of the purchase price of the personal property the insurer could acquire in accordance with the provisions of NRS 682A.518; and

      (b) The lease or other agreement provides the insurer the right to receive rental, purchase or other fixed payments for the use or purchase of the property, and the aggregate value of the payments, together with the estimated residual value of the property at the end of its useful life and the estimated tax benefits to the insurer resulting from ownership of the property, must be adequate to return the cost of the insurer’s investment in the property, plus a return deemed adequate by the insurer.

      (Added to NRS by 2015, 3455)

      NRS 682A.532  Valuation of personal property under lease.  The insurer shall compute the amount of each investment entered into in accordance with the provisions of NRS 682A.530 to 682A.538, inclusive, on the basis of the out-of-pocket purchase price and applicable related expenses paid by the insurer for the investment, net of each borrowing made to finance the purchase price and expenses, to the extent the borrowing is without recourse to the insurer.

      (Added to NRS by 2015, 3455)

      NRS 682A.534  Limitation on aggregate amount of investments held in personal property under lease.  An insurer shall not acquire an investment in accordance with the provisions of NRS 682A.530 to 682A.538, inclusive, if, as a result of and after giving effect to the investment, the aggregate amount of all investments held by the insurer in accordance with the provisions of NRS 682A.530 to 682A.538, inclusive, would exceed:

      1.  Two percent of its admitted assets; or

      2.  One half of one percent of its admitted assets as to any single item of tangible personal property.

      (Added to NRS by 2015, 3455)

      NRS 682A.536  Computation of investments held as personal property under lease for purposes of investment diversification requirements.  For the purposes of determining compliance with the limitations of NRS 682A.512, 682A.514 and 682A.516, investments acquired by an insurer in accordance with the provisions of NRS 682A.530 to 682A.538, inclusive, must be aggregated with those acquired in accordance with the provisions of NRS 682A.518, and each lessee of the property in accordance with a lease referred to in NRS 682A.530 to 682A.538, inclusive, shall be deemed the issuer of an obligation in the amount of the investment of the insurer in the property determined as provided in NRS 682A.532.

      (Added to NRS by 2015, 3455)

      NRS 682A.538  Exempted personal property under lease.  Nothing in NRS 682A.530 to 682A.538, inclusive, applies to tangible personal property lease arrangements between an insurer and its subsidiaries and affiliates in accordance with a cost-sharing arrangement or agreement permitted in accordance with the provisions of chapter 692C of NRS.

      (Added to NRS by 2015, 3455)

      NRS 682A.540  Mortgage loans.

      1.  Subject to the limitations of NRS 682A.512, 682A.514 and 682A.516, an insurer may acquire, either directly, or indirectly through limited partnership interests and general partnership interests not otherwise prohibited by paragraph (d) of subsection 1 of NRS 682A.380, joint ventures, stock of an investment subsidiary or membership interests in a limited-liability company, trust certificates, or other similar instruments, obligations secured by mortgages on real estate situated within a domestic jurisdiction. A mortgage loan which is secured by other than a first lien must not be acquired unless the insurer is the holder of the first lien.

      2.  The obligations held by the insurer and any obligations with an equal lien priority must not, at the time of acquisition of the obligation, exceed:

      (a) Ninety percent of the fair market value of the real estate, if the mortgage loan is secured by a purchase money mortgage or like security received by the insurer upon disposition of the real estate.

      (b) Eighty percent of the fair market value of the real estate, if the mortgage loan requires immediate scheduled payment in periodic installments of principal and interest, has an amortization period of 30 years or less and periodic payments made not less frequently than annually. Each periodic payment must be sufficient to ensure that at all times the outstanding principal balance of the mortgage loan is not greater than the outstanding principal balance that would be outstanding under a mortgage loan with the same original principal balance, the same interest rate and requiring equal payments of principal and interest with the same frequency over the same amortization period. Mortgage loans allowed in accordance with this section are allowed notwithstanding the fact that they provide for a payment of the principal balance before the end of the period of amortization of the loan. For residential mortgage loans, the 80-percent limitation may be increased to 97 percent if acceptable private mortgage insurance has been obtained.

      (c) Seventy-five percent of the fair market value of the real estate for mortgage loans that do not meet the requirements of paragraph (a) or (b).

      3.  For the purposes of subsection 2, the amount of an obligation required to be included in the calculation of the loan-to-value ratio may be reduced to the extent the obligation is insured by the Federal Housing Administration or guaranteed by the Administrator of Veterans Affairs, or their successors.

      4.  A mortgage loan that is held by an insurer pursuant to NRS 682A.325 or acquired in accordance with the provisions of NRS 682A.540 to 682A.546, inclusive, and is restructured in a manner that meets the requirements of a restructured mortgage loan in conformance with the Accounting Practices and Procedures Manual adopted by the NAIC, will continue to qualify as a mortgage loan in accordance with the provisions of this chapter.

      5.  Subject to the limitations of NRS 682A.512, 682A.514 and 682A.516, credit lease transactions that do not qualify for investment pursuant to NRS 682A.518 are exempt from the provisions of subsections 1, 2 and 3 if they meet the following criteria:

      (a) The loan amortizes over the initial fixed lease term at least in an amount sufficient so that the loan balance at the end of the lease term does not exceed the original appraised value of the real estate;

      (b) The lease payments cover or exceed the total debt service over the life of the loan;

      (c) A tenant or its affiliated entity whose rated credit instruments have an SVO 1 or 2 rating or a comparable rating from a nationally recognized statistical rating organization recognized by the SVO, has a full faith and credit obligation to make the lease payments;

      (d) The insurer holds or is the beneficial holder of a first lien mortgage on the real estate;

      (e) The expenses of the real estate are passed through to the tenant excluding exterior, structural, parking and heating, ventilation and air conditioning replacement expenses, unless annual escrow contributions, from cash flows derived from the lease payments, cover the expense shortfall; and

      (f) There is a perfected assignment of the rents due pursuant to the lease to, or for the benefit of, the insurer.

      (Added to NRS by 2015, 3456)

      NRS 682A.542  Income-producing real estate.

      1.  An insurer may acquire, manage and dispose of real estate situated in a domestic jurisdiction either directly or indirectly through limited partnership interests and general partnership interests not otherwise prohibited by paragraph (d) of subsection 1 of NRS 682A.380, joint ventures, stock of an investment subsidiary or membership interests in a limited-liability company, trust certificates or other similar interests. The real estate must be income producing or intended for improvement or development for investment purposes under an existing program, in which case the real estate shall be deemed to be income producing.

      2.  The real estate may be subject to mortgages, liens or other encumbrances, the amount of which must, to the extent that the obligations secured by the mortgages, liens or encumbrances are without recourse to the insurer, be deducted from the amount of the investment of the insurer in the real estate for purposes of determining compliance with subsections 2 and 3 of NRS 682A.546.

      (Added to NRS by 2015, 3457)

      NRS 682A.544  Real estate for accommodation of business operations.

      1.  An insurer may acquire, manage and dispose of real estate for the convenient accommodation of the insurer’s, and its affiliates, business operations, including home office, branch office and filed office operations.

      2.  Real estate acquired as described in this section may include excess space for rent to others, if the excess space, valued at its fair market value, would otherwise be an allowed investment in accordance with the provisions of NRS 682A.542 and is so qualified by the insurer.

      3.  The real estate acquired as described in this section may be subject to one or more mortgages, liens or other encumbrances, the amount of which must, to the extent that the obligations secured by the mortgages, liens or encumbrances are without recourse to the insurer, be deducted from the amount of the investment of the insurer in the real estate for purposes of determining compliance with subsection 4 of NRS 682A.546.

      4.  For purposes of this section, business operations must not include that portion of real estate used for the direct provision of health care services by an insurer whose insurance premiums and required statutory reserves for accident and health insurance constitute at least 95 percent of total premium considerations or total statutory required reserves, respectively. An insurer may acquire real estate used for these purposes under NRS 682A.542.

      (Added to NRS by 2015, 3457)

      NRS 682A.546  Limitation on aggregate amount of investments held in mortgage loans and real estate.

      1.  An insurer shall not acquire an investment in accordance with the provisions of NRS 682A.540 if, as a result of and after giving effect to the investment, the aggregate amount of all investments held by the insurer pursuant to that section would exceed:

      (a) One percent of its admitted assets in mortgage loans covering any one secured location;

      (b) One-quarter of one percent of its admitted assets in construction loans covering any one secured location; or

      (c) One percent of its admitted assets in construction loans in the aggregate.

      2.  An insurer shall not acquire an investment under NRS 682A.542 if, as a result of and after giving effect to the investment and any outstanding guarantees made by the insurer in connection with the investment, the aggregate amount of investments held by the insurer under NRS 682A.542 plus the guarantees outstanding would exceed:

      (a) One percent of its admitted assets in any one parcel or group of contiguous parcels of real estate, except that this limitation does not apply to that portion of real estate used for the direct provision of health care services by an insurer whose insurance premiums and required statutory reserves for accident and health insurance constitute at least 95 percent of total premium considerations or total statutory required reserves, respectively, including, without limitation, hospitals, medical clinics, medical professional buildings or other health facilities used for the purpose of providing health services; or

      (b) The lesser of 10 percent of its admitted assets or 40 percent of its surplus as regards policyholders in the aggregate, except for an insurer whose insurance premiums and required statutory reserves for accident and health insurance constitute at least 95 percent of total premium considerations or total statutory required reserves, respectively, this limitation must be increased to 15 percent of its admitted assets in the aggregate.

      3.  An insurer shall not acquire an investment pursuant to NRS 682A.540 or 682A.542 if, as a result of and after giving effect to the investment and any guarantees it has made in connection with the investment, the aggregate amount of all investments held by the insurer in accordance with the provisions of those sections plus the guarantees outstanding would exceed 25 percent of the insurer’s admitted assets.

      4.  The limitations of NRS 682A.512, 682A.514 and 682A.516 do not apply to an insurer’s acquisition of real estate under NRS 682A.544. An insurer shall not acquire real estate under NRS 682A.544 if, as a result of and after giving effect to the acquisition, the aggregate amount of real estate held by the insurer in accordance with that section would exceed 10 percent of its admitted assets. With the permission of the Commissioner, additional amounts of real estate may be acquired under NRS 682A.544.

      (Added to NRS by 2015, 3458)

      NRS 682A.548  Securities lending, repurchase, reverse repurchase and dollar roll transactions.  An insurer may enter into securities lending, repurchase, reverse repurchase and dollar roll transactions with business entities, subject to the following requirements:

      1.  The insurer’s board of directors shall adopt a written plan that is consistent with the requirements of the written plan in NRS 682A.365 which specifies the guidelines and objectives to be followed, including, without limitation:

      (a) A description of how cash received will be invested or used for general corporate purposes of the insurer;

      (b) Operational procedures to manage interest rate risk, counterparty default risk, the conditions under which proceeds from reverse repurchase transactions may be used in the ordinary course of business and the use of acceptable collateral in a manner that reflects the liquidity needs of the transaction; and

      (c) The extent to which the insurer may engage in these transactions.

      2.  The insurer shall enter into a written agreement for all transactions authorized in this section other than dollar roll transactions. The written agreement must require that each transaction terminate not more than 1 year after its inception or upon the earlier demand of the insurer. The agreement must be with the business entity counterparty, but for securities lending transactions, the agreement may be with an agent acting on behalf of the insurer, if the agent is a qualified business entity and if the agreement:

      (a) Requires the agent to enter into separate agreements with each counterparty that are consistent with the requirements of this section; and

      (b) Prohibits securities lending transactions under the agreement with the agent or its affiliates.

      3.  Cash received in a transaction entered into as described in this section must be invested in accordance with the provisions of this chapter and in a manner that recognizes the liquidity needs of the transaction or used by the insurer for its general corporate purposes. For so long as the transaction remains outstanding, the insurer, its agent or custodian shall maintain, as to acceptable collateral received in a transaction entered into in accordance with this section, either physically or through the book entry systems of the Federal Reserve, the Depository Trust Company, the Participants Trust Company or any other securities depositories approved by the Commissioner:

      (a) Possession of the acceptable collateral;

      (b) A perfected security interest in the acceptable collateral; or

      (c) In the case of a jurisdiction outside of the United States, title to, or rights of a secured creditor to, the acceptable collateral.

      4.  The limitations of NRS 682A.512, 682A.514, 682A.516 and 682A.550 to 682A.558, inclusive, do not apply to the business entity counterparty exposure created by transactions entered into under this section. For purposes of calculations made to determine compliance with this subsection, no effect will be given to the insurer’s future obligation to resell securities, in the case of a repurchase transaction, or to repurchase securities, in the case of a reverse repurchase transaction. An insurer shall not enter into a transaction under this section if, as a result of and after giving effect to the transaction:

      (a) The aggregate amount of securities loaned, sold to or purchased from any one business entity counterparty under this section would exceed 5 percent of its admitted assets. In calculating the amount sold to or purchased from a business entity counterparty under repurchase or reverse repurchase transactions, effect may be given to netting provisions contained within a master written agreement.

      (b) The aggregate amount of all securities loaned, sold to or purchased from all business entities under this section would exceed 40 percent of its admitted assets.

Ê The limitation in this subsection does not apply to reverse repurchase transactions for so long as the borrowing is used to meet operational liquidity requirements resulting from an officially declared catastrophe and subject to a plan approved by the Commissioner.

      5.  In a securities lending transaction, the insurer shall receive acceptable collateral having a market value on the transaction date, equal to 102 percent or more of the market value of the securities loaned by the insurer in the transaction on that date. If at any time the market value of the acceptable collateral is less than the market value of the loaned securities, the business entity counterparty is obligated to deliver additional acceptable collateral, the market value of which, together with the market value of all acceptable collateral held in connection with the transaction, equals 102 percent or more of the market value of the loaned securities.

      6.  In a reverse repurchase transaction, other than a dollar roll transaction, the insurer shall receive acceptable collateral having a market value on the transaction date equal to 95 percent or more of the market value of the securities transferred by the insurer in the transaction on that date. If at any time the market value of the acceptable collateral is less than 95 percent of the market value of the securities so transferred, the business entity counterparty is obligated to deliver additional acceptable collateral, the market value of which, together with the market value of all acceptable collateral held in connection with the transaction, equals 95 percent or more of the market value of the transferred securities.

      7.  In a dollar roll transaction, the insurer shall receive cash in an amount equal to at least the market value of the securities transferred by the insurer in the transaction on the transaction date.

      8.  In a repurchase transaction, the insurer shall receive as acceptable collateral transferred securities having a market value equal to 102 percent or more of the purchase price paid by the insurer for the securities. If at any time the market value of the acceptable collateral is less than 100 percent of the purchase price paid by the insurer, the business entity counterparty is obligated to provide additional acceptable collateral, the market value of which, together with the market value of all acceptable collateral held in connection with the transaction, equals 102 percent or more of the purchase price. Securities acquired by an insurer in a repurchase transaction must not be sold in a reverse repurchase transaction, loaned in a securities lending transaction or otherwise pledged.

      9.  To constitute acceptable collateral for the purposes of this section, a letter of credit must have an expiration date beyond the term of the subject transaction.

      (Added to NRS by 2015, 3458)

      NRS 682A.550  Foreign investments.  Subject to the limitations of NRS 682A.512, 682A.514 and 682A.516, an insurer may acquire foreign investments, or engage in investment practices with persons of, or in, foreign jurisdictions, of substantially the same types as those that an insurer is allowed to acquire pursuant to this chapter, other than of the type allowed under NRS 682A.520 if, as a result of and after giving effect to the investment:

      1.  The aggregate amount of foreign investments held by the insurer in accordance with this section does not exceed 20 percent of its admitted assets; and

      2.  The aggregate amount of foreign investments held by the insurer in accordance with this section in a single foreign jurisdiction does not exceed 10 percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO 1 or 5 percent of its admitted assets as to any other foreign jurisdiction.

      (Added to NRS by 2015, 3460)

      NRS 682A.552  Foreign currency exposure.

      1.  Subject to the limitations of NRS 682A.512, 682A.514 and 682A.516, an insurer may acquire investments, or engage in investment practices denominated in foreign currencies, whether or not they are foreign investments acquired as described in NRS 682A.550, or additional foreign currency exposure as a result of the termination or expiration of a hedging transaction with respect to investments denominated in a foreign currency if:

      (a) The aggregate amount of investments held by the insurer in accordance with this section denominated in foreign currencies does not exceed 15 percent of its admitted assets; and

      (b) The aggregate amount of investments held by the insurer in accordance with this section denominated in the foreign currency of a single foreign jurisdiction does not exceed 10 percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO 1 or 5 percent of its admitted assets as to any other foreign jurisdiction.

      2.  An investment must not be considered denominated in a foreign currency if the acquiring insurer enters into one or more contracts in transactions allowed under NRS 682A.560 to 682A.568, inclusive, and the business entity counterparty agrees, in accordance with the contract or contracts, to exchange all payments made on the foreign currency denominated investment for United States currency at a rate which effectively insulates the investment cash flows against future changes in currency exchange rates during the period the contract or contracts are in effect.

      (Added to NRS by 2015, 3461)

      NRS 682A.554  Additional foreign investment and foreign currency allowance for insurers authorized to do business in foreign jurisdiction and holding foreign contracts.  In addition to investments allowed under NRS 682A.550 and 682A.552, an insurer that is authorized to do business in a foreign jurisdiction, and that has outstanding insurance, annuity or reinsurance contracts on lives or risks resident or located in that foreign jurisdiction and denominated in foreign currency of that jurisdiction, may acquire foreign investments respecting that foreign jurisdiction, and may acquire investments denominated in the currency of that jurisdiction, subject to the limitations of NRS 682A.512, 682A.514 and 682A.516. Investments made in accordance with this section in obligations of foreign governments, their political subdivisions and government-sponsored enterprises are not subject to the limitations of NRS 682A.512, 682A.514 and 682A.516 if those investments carry an SVO rating of 1 or 2. The aggregate amount of investments acquired by the insurer in accordance with this section must not exceed the greater of:

      1.  The amount the insurer is required by law to invest in the foreign jurisdiction; or

      2.  One hundred twenty-five percent of the amount of the insurer’s reserves, net of reinsurance and other obligations under the contracts.

      (Added to NRS by 2015, 3461)

      NRS 682A.556  Additional foreign investment and foreign currency allowance for insurers not authorized to do business in foreign jurisdiction but holding foreign contracts.  In addition to investments allowed under NRS 682A.550 and 682A.552, an insurer that is not authorized to do business in a foreign jurisdiction but which has outstanding insurance, annuity or reinsurance contracts on lives or risks resident or located in a foreign jurisdiction and denominated in foreign currency of that jurisdiction, may acquire foreign investments respecting that foreign jurisdiction, and may acquire investments denominated in the currency of that jurisdiction subject to the limitations set forth in NRS 682A.512, 682A.514 and 682A.516. Investments made in accordance with this section in obligations of foreign governments, their political subdivisions and government-sponsored enterprises are not subject to the limitations of NRS 682A.512, 682A.514 and 682A.516 if those investments carry an SVO rating of 1 or 2. The aggregate amount of investments acquired by the insurer in accordance with this section must not exceed 105 percent of the amount of the insurer’s reserves, net of reinsurance, and other obligations under the contracts on risks resident or located in the foreign jurisdiction.

      (Added to NRS by 2015, 3461)

      NRS 682A.558  Calculation of foreign investments for purposes of determining compliance with limitations.  Investments acquired in conformance with NRS 682A.550 to 682A.558, inclusive, must be aggregated with investments of the same types made under this chapter, and in a similar manner, for purposes of determining compliance with the limitations, if any, contained in this chapter. Investments in obligations of foreign governments, their political subdivisions and government-sponsored enterprises of these persons, except for those exempted in accordance with the provisions of NRS 682A.554 and 682A.556, are subject to the limitations of NRS 682A.512, 682A.514 and 682A.516.

      (Added to NRS by 2015, 3462)

      NRS 682A.560  Derivative transactions.  An insurer may, directly or indirectly through an investment subsidiary, engage in derivative transactions as described in NRS 682A.560 to 682A.568, inclusive, pursuant to the following conditions:

      1.  An insurer may use derivative instruments under NRS 682A.560 to 682A.568, inclusive, to engage in hedging transactions and certain income generation transactions, as these terms may be further defined in regulations adopted by the Commissioner pursuant to NRS 682A.388; and

      2.  An insurer must be able to demonstrate to the Commissioner the intended hedging characteristics and the ongoing effectiveness of the derivative transaction or combination of transactions through cash flow testing or other appropriate analyses.

      (Added to NRS by 2015, 3462)

      NRS 682A.562  Derivative transactions: Limitations on hedging transactions.  An insurer may enter into hedging transactions under NRS 682A.560 to 682A.568, inclusive, if, as a result of and after giving effect to the transaction:

      1.  The aggregate statement value of options, caps, floors and warrants not attached to another financial instrument purchased and used in hedging transactions does not exceed 7.5 percent of its admitted assets;

      2.  The aggregate statement value of options, caps and floors written in hedging transactions does not exceed 3 percent of its admitted assets; and

      3.  The aggregate potential exposure of collars, swaps, forwards and futures used in hedging transactions does not exceed 6.5 percent of its admitted assets.

      (Added to NRS by 2015, 3462)

      NRS 682A.564  Derivative transactions: Limitations on income generation transactions.  An insurer may only enter into the following types of income generation transactions if, as a result of and after giving effect to the transactions, the aggregate statement value of the fixed income assets that are subject to call plus the face value of fixed income securities underlying a derivative instrument subject to call, plus the amount of the purchase obligations under the puts, does not exceed 10 percent of its admitted assets:

      1.  Sales of covered call options on noncallable fixed income securities, callable fixed income securities if the option expires by its terms before the end of the noncallable period or derivative instruments based on fixed income securities;

      2.  Sales of covered call options on equity securities, if the insurer holds in its portfolio, or can immediately acquire through the exercise of options, warrants or conversion rights already owned, the equity securities subject to call during the complete term of the call option sold; or

      3.  Sales of covered puts on investments that the insurer is allowed to acquire pursuant to this chapter if the insurer has escrowed, or entered into a custodian agreement segregating, cash or cash equivalents with a market value equal to the amount of its purchase obligations under the put during the complete term of the put option sold.

      (Added to NRS by 2015, 3462)

      NRS 682A.566  Derivative transactions: Counterparty exposure.  An insurer shall include all counterparty exposure amounts in determining compliance with the limitations of NRS 682A.512, 682A.514 and 682A.516.

      (Added to NRS by 2015, 3463)

      NRS 682A.568  Commissioner may allow additional derivative transactions by regulation; limitations.  In accordance with the regulations adopted pursuant to NRS 682A.388, the Commissioner may approve additional transactions involving the use of derivative instruments in excess of the limits of NRS 682A.562 or for other risk-management purposes, but replication transactions must not be allowed for other than risk-management purposes.

      (Added to NRS by 2015, 3463)

      NRS 682A.570  Limited exemption from certain restrictions on investments.  An insurer may acquire investments, or engage in investment practices, in accordance with the provisions of this section and NRS 682A.572, of any kind that are not specifically prohibited by this chapter, or engage in investment practices, without regard to any limitation in NRS 682A.512 to 682A.558, inclusive, but an insurer shall not acquire an investment or engage in an investment practice in accordance with the provisions of this section and NRS 682A.572 if, as a result of and after giving effect to the transaction, the aggregate amount of the investments held by the insurer in accordance with the provisions of this section and NRS 682A.572 would exceed the greater of:

      1.  Its unrestricted surplus; or

      2.  The lesser of:

      (a) Ten percent of its admitted assets; or

      (b) Fifty percent of its surplus as regards policy holders.

      (Added to NRS by 2015, 3463)

      NRS 682A.572  Quantitative limitation on exempted investments.  An insurer shall not acquire any investment or engage in any investment practice in accordance with subsection 2 of NRS 682A.570 if, as a result of and after giving effect to the transaction, the aggregate amount of all investments in any one person held by the insurer in accordance with subsection 1 of NRS 682A.570 would exceed 5 percent of its admitted assets.

      (Added to NRS by 2015, 3463)