California Insurance Code

§ 12106

INS § 12106 Effective Jan 1, 2006Div. 2 · Part 4 · Ch. 1 · Art. 5

Statute text

(a)An admitted financial guaranty insurance corporation’s investments in any one entity insured by that corporation shall not exceed 4 percent of its admitted assets as of the end of the prior calendar year, except that this limit shall not apply to investments payable or guarantied by a United States governmental unit or agency or the State of California if the investments payable or guarantied by the United States governmental unit or agency or the State of California shall be rated in one of the top two generic lettered rating classifications by a securities rating agency acceptable to the commissioner.

(b)In addition to any transaction that an insurer meeting the requirements of Section 1211 may effect and maintain under any other provision of this code, a financial guaranty insurance corporation may effect and maintain a transaction in contracts for the future delivery or receipt of the currency of a foreign country, interest rate options, credit default swaps under which the insurer is acquiring credit protection, and any other products included in the plan referred to in paragraph (7), if the following conditions are satisfied:

(1)The transaction is used for the purpose of limiting risk of loss under financial guaranty insurance policies or reinsurance contracts covering those policies due to fluctuations in interest rates or currency exchange rates or, in the case of credit default swaps, financial default, insolvency, or other credit events.

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Legislative history

Amended by Stats. 2005, Ch. 412, Sec. 2. Effective January 1, 2006.