(1) As used in this section, unless the context otherwise requires: (a) "Aggregate amount of medium-grade and lower-grade obligations" means the aggregate statutory statement value of medium-grade and lower-grade obligations. (a.3) "Domestic obligation" means an obligation described in section 10-3-215 (1)(a) to (1)(f). (a.7) "Foreign obligation" means an obligation described in section 10-3-215 (1)(h) and (1)(i). (b) "Lower-grade obligation" means an obligation rated four, five, or six by the securities valuation office of the national association of insurance commissioners or by any successor entity. (c) "Medium-grade obligation" means an obligation rated three by the securities valuation office of the national association of insurance commissioners or by any successor entity. (d) "Obligation" means a bond or other type of evidence of indebtedness referred to in section 10-3-215. (2) Without the written approval of the commissioner, no domestic insurance company shall acquire, directly or indirectly, any medium-grade or lower-grade obligation of any institution if, at the time of acquisition, after giving effect to any such acquisition: (a) The aggregate amount of all medium-grade and lower-grade domestic and foreign obligations then held by the domestic insurance company would exceed twenty percent of its admitted assets with the aggregate amount of such foreign obligations being no more than ten percent of its admitted assets; or (b) The aggregate amount of all lower-grade domestic and foreign obligations then held by the domestic insurance company would exceed ten percent of its admitted assets with the aggregate amount of such foreign obligations being no more than five percent of its admitted assets; or (c) The aggregate amount of all domestic and foreign obligations held by the domestic insurance company which were rated five or six by the securities valuation office of the national association of insurance commissioners or by any successor entity would exceed three percent of its admitted assets with the aggregate amount of such foreign obligations being no more than one and one-half percent of its admitted assets; or (d) The aggregate amount of all domestic and foreign obligations held by the domestic insurance company which were rated six by the securities valuation office of the national association of insurance commissioners or by any successor entity would exceed one percent of its admitted assets with the aggregate amount of such foreign obligations being no more than one-half percent of its admitted assets. (3) Attaining or exceeding the limit of any one of the categories listed in paragraphs (a) to (d) of subsection (2) of this section shall not preclude an insurer from acquiring obligations in other categories subject to the specific and multi-category limits. (4) Without the written approval of the commissioner, no domestic insurance company shall acquire, directly or indirectly, any medium-grade or lower-grade obligation of any institution if, at the time of acquisition, after giving effect to any such acquisition: (a) The aggregate amount of all medium-grade and lower-grade obligations issued, guaranteed, or insured by such institution and held by the domestic insurance company exceeds one percent of the domestic insurance company's admitted assets; or (b) The aggregate amount of all lower-grade obligations issued, guaranteed, or insured by such institution and held by the domestic insurance company exceeds one-half of one percent of the domestic insurance company's admitted assets. (5) Nothing contained in this section shall prohibit a domestic insurance company from acquiring any obligation which it has committed to acquire if such insurance company would have been permitted to acquire that obligation pursuant to this section on the date on which such insurance company committed to purchase that obligation; and nothing in this section shall require a domestic insurance company to sell or otherwise dispose of any investment. (6) Notwithstanding any other provision of this section, a domestic insurance company may acquire, whether or not through a restructuring, an obligation of an institution in which such insurance company already has one or more obligations, if such obligation is acquired in order to protect an investment previously made in the obligations of such institution so long as all such acquired obligations of an institution do not exceed one-half of one percent of the insurer's admitted assets. (7) Nothing contained in this section shall prohibit a domestic insurance company from acquiring an obligation as a result of a restructuring of a medium- or lower-grade obligation already held. (8) The board of directors of any domestic insurance company which acquires or invests, directly or indirectly, more than two percent of its admitted assets in medium-grade and lower- grade obligations shall adopt a written plan for the acquisition of such investments. The plan, in addition to guidelines with respect to the quality of the issues invested in, shall contain appropriate diversification standards applied to all of its investments, which may include, for example, standards for issuer, industry, duration, liquidity, and geographic location. (9) All obligations acquired by a domestic insurance company shall be rated in accordance with the standards of the securities valuation office or any successor entity. (10) The provisions of this section shall take effect July 1, 1992, and shall apply to all investments in obligations acquired on or after that date.
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