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included for that part of the test period which precedes such acquisition, provided that (i) if less than substantially all assets of any other institution (or all or less than all assets of any other type of business enterprise) is acquired, such earnings may be included to the extent they are certified by an independent accountant to be attributable to such assets and (ii) if an institution (or substantially all of its assets) is acquired, such earnings may be included if they are included in financial statements of such institution prepared under generally accepted accounting principles. Fixed charges, contingent interest and preferred dividends for the period of such inclusion shall either include any additional fixed charges, tingent interest and preferred dividends properly attributable to such acquisition

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certified by an independent accountant, or be the fixed charges, contingent interest and preferred dividends with respect to debt and stock outstanding immediately after such acquisition.

(H) No such insurer (except an insurer making investments under the authority of subsection (c) of section one thousand four hundred three of this article) or fraternal benefit society shall invest] are rated A or higher (or the equivalent thereto) by securities rating agency recognized by the superintendent, or if not so rated, are similar in structure and in all material respects to other obligations of the institution which are so rated, or

(iii) are insured by one or more authorized insurance companies (other than the investing insurer or any parent, subsidiary affiliate of such insurer) who are licensed to insure obligations in this state and, after considering such insurance,

rated Aaa (or the equivalent thereto) by a securities rating agency recognized by the superintendent,

(iv) have been given the highest quality designation by the Securities Valuation Office of the National Association of Insurance Commissioners.

(B). No investment in or loan upon the obligations of any institution [of the kinds permitted under this paragraph an amount in excess of], other than an institution which issues mortgage related securities, and no investment in any one mortgage related security, made pursuant to the provisions of this paragraph shall exceed five per centum of the admitted assets of such insurer (at last year-end] shown by its last statement on file with the superintendent.

(3) Preferred or guaranteed shares of American institutions. (A) Preferred or guaranteed shares [of any] issued or guaranteed by solvent American institutions, existing under the laws of the United States or of state, district or

territory thereof,] if all of the institution's obligations [and senior preferred shares, if any,) are eligible as investments under [this article, and:

(A) In the case of preferred shares, the institution's net earnings available for fixed charges for its last five fiscal years averaged per year not less than one and one-half times the sum of its average annual fixed charges, its average annual maximum contingent interest, and its average annual preferred dividend requirements (including non-cumulative dividends whether paid or not) for such five years and for either of the last two years of such five years were at least one and one-half times the sum of its fixed charges, contingent interest and such preferred dividend requirements for such year.

(B) In the case of guaranteed shares, the assuming or guaranteeing institution meets the requirements of subparagraph (B) of paragraph two of this subsection, construed so as to include as a fixed charge the amount of guaranteed dividends of such issue or the rental covering the guarantee of such dividends.

No such insurer (except an insurer making investments under the authority of subsection (c) of section one thousand four hundred three of this article) or fraternal benefit society shall invest in or loan upon more than twenty percent of any institution's outstanding preferred shares, nor shall the amount so invested in the preferred shares of any institution exceed two percent of such insurer's or society's admitted assets. Except as provided in article seventeen, subsection (e) of section one thousand four hundred two, paragraphs eight, nine, ten and sixteen of subsection (a) of this section and section four thousand two hundred four of this chapter, no such insurer or society shall invest in or loan upon more than five percent of any institution's outstanding voting shares] item (ii) or (iv) of subparagraph (A) of paragraph two of this subsection.

(B) No investment in the preferred or guaranteed shares of any insti. tution made pursuant to the provisions of this paragraph shall exceed

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two percent of such insurer's admitted assets as shown by its last statement on file with the superintendent.

§ 14. Paragraphs 4 and 5 of subsection (a) of section 1404 of the insurance law are repealed and paragraph 6 is renumbered paragraph 4.

§ 15. The paragraph heading of subparagraph (A) of* paragraph 4 of subsection (a) of section 1404 of the insurance' law, such paragraph renumbered by section fourteen of this act, is amended to read as follows: [Mortgage loans ] Loans secured by real property.

15-a. Subitem (bb) of clause (III) of item (iii) of subparagraph (A) of paragraph 4 of subsection (a) of section 1404 of the insurance law, such paragraph as renumbered by section fourteen of this act, is amended to read as follows:

(bb) if, when the participation is acquired by the insurer, there are more than five holders of participations in the loan, or more than three such holders and such loan is less than five million dollars in original principal amount, the mortgagee shall be (and, in the case of a participation in an obligation, the obligation shall be held by) a bank or trust company duly authorized and licensed to act as a corporate trustee (with or without a co-trustee). "Participation", as used in this paragraph (six] four, means an obligation forming part of an issue of bonds,

or other evidences of indebtedness which are secured by the same mortgage and also an instrument evidencing a participating

interest in any such bond, note or other evidence of indebtedness.

§ 16. Item (v) of subparagraph (A) of paragraph 4 of subsection (a) of section 1404 of the insurance law is repealed and

item (v) is added to read as follows:

(v) Investment limitations. (1) Investments held by insurer, except fraternal benefit society, under this subparagraph (A) shall not exceed:

(aa) in the aggregate twenty-five percent of its admitted assets as shown by its last statement on fil with the superintendent excluding any amount guaranteed or insured under the Servicemen's Readjustment Act of 1944, 380.S.C. $$ 1801-1827, or

(bb) 'in the aggregate two percent of its admitted assets as shown by its last statement on file with the superintendent in loans secured by other than first mortgages.

(II) Investments held by a fraternal benefit society under this paragraph shall not exceed;

(aa) in the aggregate fifty percent of its admitted assets as shown by its last statement on file with the superintendent, excluding any amount guaranteed or insured under the Servicemen's Read justment Act of 1944, 38 V.S.C. $$ 1801-1827, or (bb) in the aggregate two percent of its admitted assets as shown by its last statement on file with the superintendent in loans secured by other than first mortgages.

(III) No insurer or society shall invest in or lend upon the security of any one property more than the greater of thirty thousand dollars two percent of its admitted assets as shown by its last statement on file with the superintendent.

(IV). Separate evidences of indebtedness which are separately transferable shall be deemed to constitute separate loans which

may be separately qualified under this paragraph whether or not secured by a single mortgage.

$ 17. Items (vi) and (vii) of subparagraph (A) of paragraph 4 of subsection (a) of section 1404 of the insurance law are repealed.

18. Subparagraph (B) of paragraph 4 of subsection (a) of section 1404 of the insurance law, such paragraph as renumbered by section fourteen of this act, is amended to read as follows: (B) Purchase money mortgages. Purchase money mortgages or like securities received by the insurer on the sale or exchange of real

property held under paragraph [seven) five hereof.

19. Subparagraphs (C), (D) and (E) of paragraph 4 of subsection (a) of section 1404 of the insurance law are repealed. $ 20. Paragraph 7 of subsection (a) of section 1404 of the insurance law is renumbered paragraph 5 and amended to read as follows:

* So in original. (Phrase "subparagraph (A) of" inadvertently added.) EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

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(5) Real property or interests therein. [Real property] (A) The following investments in real property (including incidenta? equipment thereto) located in the United States, if acquired (or used for the following purposes and in the following manner] and held directly through partnership interests engaged exclusively in the business of acquiring, owing and managing such property;

[(A)) (i). The land and the building thereon in which the insurer has its principal office.

[(B)] (ii) Real property requisite for the insurer's convenient accommodation in the transaction of its business.

[(C)] (iii) Real property acquired in total or partial satisfaction of mortgages, l'iens, judgments, claims or indebtedness held by the insurer in the course of its business. [(D) Real

property acquired as partial consideration on the sale of real property owned by the insurer, if such transaction effects a net reduction in its investment in real property.

(E) Additional real property and equipment incident to real property, if necessary or convenient for the purpose of enhancing the sale value of real property held by it pursuant to the provisions of subparagraph (C) or (D) of this paragraph or item (i) or (ii) of subparagraph (H) of this paragraph.

(F) (iv) Real property acquired as an investment for the production of income or to be improved or developed for such investment purpose [pursuant to an existing program].

(B) Investments under this paragraph shall be subject to the following limitations:

(i) The cost of each parcel acquired under [this subparagraph) item (iv) of subparagraph (A) of this paragraph, including the estimated cost

the insurer of the improvement or development thereof, shall not exceed one percent of the insurer's admitted assets (at last year-end] shown by its last statement on file with the superintendent, and when added to the book value of all other real property then held by it pursuant to [this subparagraph] such item (iv), shall not exceed twelve and one-half percent of such admitted assets. Unless otherwise required by the superintendent under subsection (b) of section one thousand four hundred fourteen of this article, each parcel of real property held der [this subparagraph] such item (iv) together with each capital improvement or development thereof existing at acquisition or made subsequently

shall be valued on the insurer's books as of each last year-end so as to write down the cost of such improvement or development, at rate averaging at least two percent per annum commencing on the date of acquisition or completion, as the case may be, of such improvement development. [Nevertheless, the write-down in any year need not exceed an amount necessary to produce a complete write-down of such cost (or, if

acquisition or completion was prior to January first, nineteen hun dred seventy, of such cost as written down on the insurer's books as of December thirty-first, nineteen hundred sixty-nine) in a period of forty years less the period, if any, by which the date of acquisition or pletion preceded January first, nineteen hundred seventy, by the appli, cation of annual net income before depreciation from such' property and any improvement or development (as estimated from time to time) first to a constant yield (as determined from time to time on the basis of such forty-year period and net income) on the cost, as reduced by write-down, of such property and any improvement or development and then to writedown. In order to enable the superintendent to obtain comparable information from all insurers regarding their operations under this subparagraph (F) and to determine compliance therewith, he may, by regulation, prescribe a uniform classification of all items of investment, income and expense, and a uniform method of reporting such operations.

(G) Real] (ii) The acquisition of real property serving as the residence of an employee, except a director or trustee of such insurer,

if acquired in

connection with the relocation by the insurer of the employee's place of employment, including any relocation in connection with his initial employment, at a purchase price not exceeding [the lesser of one hundred fifty thousand dollars or] the property's value as determined by an independent appraiser for the purpose of such acquisition, provided such employee has made reasonable efforts otherwise to dispose of such property during the month before such acquisition. [If the property's purchase price exceeds one hundred thousand dollars or it is the residence of an officer of the insurer, its acquisition must be approved by the superintendent.

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(H) Real property acquired under: (i) chapter six hundred fifty-eight of the laws of nineteen hundred twenty-two chapter two hundred eighty-four of the laws of nineteen hundred twenty-four, as emergency housing; (ii) section eighty-four (prior to the repeal thereof) of the former insurance law in effect prior to this chapter or chapter twentyfive of the laws of nineteen hundred thirty-eight;, (iii) paragraph nine of subsection (a) of this section or section one' hurdred twenty-four of the private housing finance law; or (iv) section six or eight of the New York state urban development corporation act and constituting a project of the New York state urban development corporation,

subsidiary thereof, provided, the cost of any property acquired under this item (iv), when added to the book value of all other property held under this item (iv) shall not exceed five percent of the insurer's admitted assets at last year-end, and such cost including the estimated cost to the insurer of the improvement or development of the property being acquired shall not exceed one-half of one percent of the insurer's admitted assets at last year-end) Such property must be acquired under item (ii) of subparagraph (A) hereof, and, in the case of a non-director officer, such acquisition subject' to the provisions of subsection (n) of section one thousand four hundred eleven of this article.

[(1)] (11) Real property acquired pursuant to [subparagraphs] items (1) and (ii) of subparagraph (A) [and (B)] hereof shall be disposed of within five years after it shall have ceased to be necessary for the convenient accommodation of such insurer in the transaction of its business, and real property acquired pursuant to [subparagraphs].item (iii) of subparagraph (A) [(c), (D) and "(E)) hereof shall be disposed of within five years after the date of acquisition,, [and real property acquired pursuant to subparagraph (G) hereof shall be disposed of within two years after the date of acquisition, ] unless (in any case] the superintendent certifies that the interests of the insurer will suffer materially by the forced sale thereof and extends the time in such certificate[, or unless in any case, except in respect of property quired pursuant to subparagraph (6) hereof, the insurer elects to hold the property pursuant to subparagraph (F) hereof, in which event thereafter such property shall be deemed to have been acquired at a cost equal to its book value at the time of such election.

(1) No real property shall be acquired by any domestic insurer p pursuant to subparagraph (A), (B), (D), or (E) hereof, except with the superintendent's approval).

[(x)] (iv) No real property shall be acquired by any domestic insurer pursuant to items (i) and (ii) of subparagraph (A)[, (B) or (G] hereof if its [value] cost, together with the book value of all real property then held pursuant to [subparagraphs (A), (B) (G) hereof,] such items (i) and (ii), exceeds ten percent of the insurer's admitted assets as shown by its last statement on file with the superintendent. (v) Except with the

the superintendent's approval, no domestic insurer shall:

(1) acquire, any real property pursuant to items (i) and (ii) of subparagraph (A) hereof,

(17) with respect to any building which was acquired under items (i) and (ii) of subparagraph (A) hereof, make any improvement which should be capitalized according to generally accepted accounting principles if the annual expenditure for such improvements for any such building will exceed the greater of ten percent of its book value or one-half of one percent of the insurer's admitted assets as shown by its last statement on file with the superintendent. § 21. Paragraph 8 of subsection (a) of section 1404 of the insurance law is renumbered paragraph 6 and amended to read as follows:

(6) Foreign investments. (A) Investments in [Canada) a foreign country or in a possession of the United States which are substantially of the same kinds, classes and investment grades as those eligible for investmerit under other provisions of this section] subsection. The aggregate drount of (such] foreign investments including, cash in the currency of such country or possession, obligations of American institutions payable outside of the United States and cash deposited in a bank, trust company of thrift institution located outside of the United States held any time pursuant to the provisions of this section shall not exceed [the greater of] ten percent of the insurer's admitted assets [or the amount, EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

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any, permitted pursuant to subparagraph (B) hereof] as shown by its last statement on file with the superintendent.

(B) [Investments in a foreign country or in a possession of the United States if the insurer is authorized to do business therein, if the insurer has outstanding insurance, annuity or reinsurance contracts on lives or risks resident or located therein; provided such investments

substantially of the same kinds, classes and investment grades as those eligible for investment under other provisions of this section. The aggregate amount of such investments and of cash in the currency of such country or possession at any time held shall not, except as permitted by subparagraph (A) hereof, exceed the amount which such insurer is required by law to invest in such country or possession or one and half times the amount of its reserves and other obligations under such contracts, whichever is greater.

(C)] Investments in any one possession of the United States or in any one foreign country, [in addition to investments permitted under subparagraphs (A) and (B) hereof, which are substantially of the same kinds, classes and investment grades as those eligible for investment under other provisions of this section. The aggregate amount of such investments) other than Canada, made pursuant to this [subparagraph] paragraph shall not exceed (i) in the case of any possession or country having the highest sovereign debt rating, as established by a securities rating agency recognized by the superintendent, three percent of the insurer's adın itted assets as shown by its last statement file with the superintendent, or

(ii) in the case of any other possession or country one percent of the insurer's admitted assets (at last year-end] as shown by its last statement on file with the superintendent.

5 22. Paragraphs 9, 10, 12, 14, 15, 16, 17, 18 and 19 of subsection (a) of section 1404 of the insurance law are repealed.

$ 23. Paragraph 11 of subsection (a) of section 1404 of the insurance law as amended by chapter 337 of the laws of 1991, is amended to read as follows:

[(11)) (7) Development bank obligations. Obligations issued or guaranteed by the international bank for reconstruction and development, the inter-American development bank, the Asian development bank, the African development bank or the international finance corporation; provided that

(i) obligations of such banks and the international finance corporation are rated AA or higher (or the equivalent thereto) by a securities rating agency recognized by the superintendent, or if not so rated are similar in structure and in all material respects to other obligations of the same institution which are so rated, and

(ii) the aggregate investment made pursuant to the provisions of this paragraph in each such bank and the international finance corporation at any time, shall not exceed five percent of the insurer's admitted assets [at last year-end] as shown by its last statement

file with the superintendent, and

(iii) the aggregate investment made pursuant to the provisions of this paragraph in all such banks and the international finance corporation shall not exceed fifteen percent of the insurer's admitted assets [at last year-end) as shown by

its last statement file with the superintendent.

§ 24. Paragraph 13 of subsection (a) of section 1404 of the insurance law, the opening paragraph of item (i) of subparagraph (C) as amended by chapter 805 of the laws of 1984, is amended to read as follows:

(13) Common shares] (8) Equity interests. (A) (Common shares] Investments in common shares or partnership interests of any solvent American institution, [existing under the laws of the United States or any state, district, or territory thereof,] if:

(i) all its obligations and preferred shares, if any, are eligible as investments under this [article, except as provided in subsection (b) of this section, ] subsection and

(ii) [the institution shall have earned, during a period of seven fiscal years next preceding the investment, an aggregate sum applicable to dividends upon its common shares outstanding during such period sufficient to pay dividends of at least four percent per annum upon their par value, or upon their stated capital if without par value, and

(iii)] such [common shares] equity interests of any such institution except [a bank, trust company or] an insurance company are registered on

national securities exchange, as provided in the Securities Exchange Act of 1934, 15 U. S. C. $$78a-78kk or otherwise registered pursuant to said act and, if so otherwise registered, price quotations therefor are

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