130th Ohio General Assembly
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Sub. H. B. No. 212  As Passed by the House
As Passed by the House

124th General Assembly
Regular Session
2001-2002
Sub. H. B. No. 212


REPRESENTATIVES Wolpert, G. Smith, Seitz, Willamowski, Kearns, Faber, Gilb, Britton, Rhine, Stapleton, Olman, Jolivette, Evans, Krupinski, Salerno, Husted, Flowers, Widowfield, Clancy, Hughes, Lendrum, Goodman, DeWine, Schmidt, Cates, Reidelbach, Fessler, Carmichael, Latta, Hartnett, Carey, Peterson, Coates, Hagan, Raga, Collier, Niehaus, Calvert, Setzer, Webster, Williams, Callender



A BILL
To amend sections 3901.64, 3903.32, 3907.14, and1
3925.08 of the Revised Code to permit assuming2
insurers, in the event of the insolvency of a3
ceding insurer, to make reinsurance payments4
directly to an insured or beneficiary when this is5
provided for in a reinsurance agreement; to permit6
assuming insurers to introduce defenses in an7
insolvency proceeding that it deems to be8
available to the ceding insurer; and to permit9
insurers to invest in limited liability company10
membership interests of insurance, financial,11
investment, and investment management companies.12


BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

       Section 1. That sections 3901.64, 3903.32, 3907.14, and13
3925.08 of the Revised Code be amended to read as follows:14

       Sec. 3901.64.  (A) A domestic ceding insurer may take credit15
for any reinsurance ceded as provided in sections 3901.61 to16
3901.63 of the Revised Code only if the reinsurance agreement17
contained in the reinsurance contract, and any agreement that18
provides security for the payment of the obligations under the19
reinsurance agreement, including any trust agreement, provide, in20
substance, for the following:21

       (1) The In the event of the insolvency of the ceding insurer,22
the reinsurance, whether paid directly or from trust assets23
securing the reinsurance agreement, shall be payable by the24
assuming insurer on the basis of the liability of the domestic25
ceding insurer under the policy or contract reinsured, without any26
diminution because the domestic ceding insurer is insolvent or27
because the liquidator or statutory receiver has failed to pay all28
or any portion of any claims;29

       (2) The reinsurance payments, whether paid directly or from30
trust assets securing the reinsurance agreement, shall be made by31
the assuming insurer directly to the domestic ceding insurer, or32
in the event of its insolvency or liquidation, to its liquidator33
or statutory receiver except where the reinsurance contract or34
other written agreement specifically provides for direct payment35
of the reinsurance to the insured or beneficiary of the insurance36
policy in the event of the insolvency of the ceding insurer.37

       (B)(1) The reinsurance agreement may provide that the38
domiciliary liquidator or statutory receiver shall give written39
notice to the assuming insurer that a claim is pending against40
the domestic ceding insurer on the policy or contract reinsured.41
The notice shall be given within a reasonable amount of time after42
the claim is filed with the liquidator or statutory receiver.43
During the pendency of the claim, any assuming insurer may44
investigate the claim and interpose, at its own expense, in the45
proceeding where the claim is to be adjudicated any defenses which46
it deems to be available to the ceding insurer or its liquidator.47

        (2) The expense may be filed as a claim against the48
insolvent ceding insurer to the extent of a proportionate share of49
the benefit that may accrue to the ceding insurer solely as a50
result of the defense undertaken by the assuming insurer. Where51
two or more assuming insurers are involved in the same claim and a52
majority in interest elect to interpose a defense to the claim,53
the expense shall be apportioned in accordance with the terms of54
the reinsurance agreement as though the expense had been incurred55
by the ceding insurer.56

       Sec. 3903.32.  The amount recoverable by the liquidator from57
reinsurers shall not be reduced as a result of delinquency58
proceedings, regardless of any provision in the reinsurance59
contract or other agreement. Payment made by a reinsurer directly60
to an insured or other creditor does not diminish the reinsurer's61
obligation to the insurer's estate except when the reinsurance62
contract, and any or other written agreement that provides63
security for the payment of the obligations under the contract,64
provides for direct coverage of a named insured and the payment is65
made in discharge of that obligation and the contract or agreement66
has been approved pursuant to division (A)(3) of section 3901.34167
or section 3907.12 or 3925.33 of the Revised Code for direct68
payment of the reinsurance to the insured or beneficiary of the69
insurance policy in the event of the insolvency of the ceding70
insurer.71

       Sec. 3907.14.  The capital, surplus, and all accumulations of72
every domestic life insurance company shall be invested as73
follows:74

       (A) A domestic company may acquire, hold, and convey real75
estate:76

       (1) Which has been acquired or is acquired for its principal77
offices, or which is used in connection therewith, provided that78
it shall not invest more than five per cent of its admitted assets79
on the preceding thirty-first day of December in such real estate;80

       (2) Which has been mortgaged to it in good faith by way of81
security for loans previously contracted or for money due;82

       (3) Which has been conveyed to it in satisfaction of debts83
previously contracted in the course of its dealings, or which it84
may receive in or on account of an exchange for real estate85
acquired in its operations;86

       (4) Which it has purchased at sales under mortgages and on87
any legal process in connection with its investments or under88
decrees obtained or made for such debts;89

       (5) Which is acquired, owned, or held for the purpose of90
developing, improving, or otherwise utilizing such real estate for91
the production of income, without restriction or limitation as to92
time, and may acquire, lease, hold, and manage personal property93
used in connection therewith. No investments in real estate to be94
used primarily for recreational, agricultural, or mining purposes95
shall be made under authority of division (A)(5) of this section96
and except for investments authorized under divisions (A)(1), (2),97
(3), and (4) of this section, no domestic life insurance company98
shall invest in real estate under divisions (A)(5) and (R) of this99
section a sum exceeding in the aggregate ten per cent of its100
admitted assets on the preceding thirty-first day of December.101

       All real estate specified in divisions (A)(3) and (4) of this102
section, which is not necessary for its accommodation in the103
convenient transaction of its business, shall be sold by the104
company and disposed of within five years after it has acquired105
the title to such real estate or within five years after such real106
estate has ceased to be necessary for the accommodation of its107
business, unless the company procures the certificate of the108
superintendent of insurance that its interests will suffer109
materially by a forced sale of the real estate, in which event the110
time for the sale may be extended to such time as the111
superintendent directs in such certificate.112

       (B) A domestic company may acquire, hold, and convey113
tangible personal property or interests therein for the production114
of income, provided no domestic company shall invest in excess of115
two per cent of its admitted assets as of the preceding116
thirty-first day of December under this division.117

       (C) In loans and liens upon the security of its own118
policies, not exceeding the reserve or present value of the119
policies, computed according to any standard authorized by law or120
according to such higher standard as the company has adopted and121
maintains on the policy, the reserve being the amount of debts of122
the life insurance company by reason of its outstanding policies123
in gross, which may be so treated in the returns for taxation made124
by it;125

       (D) In bankers' acceptances and bills of exchange of the126
kinds and maturities made eligible by law for rediscount with127
federal reserve banks, provided that such acceptances and bills of128
exchange are accepted by a bank or trust company incorporated129
under the laws of the United States or of this state or any other130
bank or trust company which is a member of the federal reserve131
system;132

       (E) In equipment trust obligations or certificates, security133
agreements, or other evidences of indebtedness entered into134
directly or guaranteed by any company operating wholly or partly135
within the United States or Canada, provided that the debt136
obligation is secured by a first lien on tangible personal137
property which is purchased or secured for payment thereof and the138
debt obligation is repayable within twenty years from the date of139
issue in annual, semiannual, or more frequent installments140
beginning not later than the first year after such date;141

       (F) In bonds issued by or for federal land banks and any142
debentures issued by or for federal intermediate credit banks143
under the "Federal Farm Loan Act of 1916," 39 Stat. 360, 12144
U.S.C.A. 641 as amended; any debentures issued by or for banks for145
cooperatives under the "Farm Credit Act of 1933," 48 Stat. 257, 12146
U.S.C.A. 131 as amended;147

       (G) In bonds issued under the "Home Owners' Loan Act of148
1933," 48 Stat. 128, 12 U.S.C.A. 1461;149

       (H) In notes, bonds, debentures, or other such obligations150
issued by the federal housing administrator;151

       (I)(1)(a) In bonds or other evidences of indebtedness, not152
in default as to principal or interest, which are valid153
obligations issued, assumed or guaranteed by the United States, by154
any state thereof, by the Commonwealth of Puerto Rico, by any155
territory or insular possession of the United States, or by the156
District of Columbia, or which are valid obligations issued,157
assumed, or guaranteed by any county, municipal corporation,158
district, or political subdivision, or by any civil division or159
public instrumentality of such governmental units, if by statutory160
or other legal requirements such obligations are payable, as to161
both principal and interest, from taxes levied upon all taxable162
property within the jurisdiction of such governmental unit;163

       (b) In bonds or other obligations issued by or for account164
of any such governmental unit having a population of five thousand165
or more by the latest official federal or state census, which are166
payable as to both principal and interest from revenues or167
earnings from the whole or any part of a publicly owned utility168
supplying water, gas, sewage disposal facility, or electricity, or169
any or all of them, provided that by statute or other applicable170
legal requirements, rates from the service or operation of such171
utility must be fixed, maintained, and collected at all times so172
as to produce sufficient revenues or earnings to pay both173
principal and interest of such bonds or obligations as they become174
due;175

       (c) In any bonds or obligations payable from and secured by176
revenues of the United States, the Commonwealth of Puerto Rico, or177
any state or instrumentality of any of them, or of the District of178
Columbia or of any commission, board, or other instrumentality of179
one or more of them, provided there is a specific pledge of180
revenues, and provided that there is adequate provision for181
payment of interest prior to completion of construction and that182
rates, fees, tolls, or charges fixed are, after completion of183
construction, sufficient to pay all expenses of operation and184
maintenance and the principal and interest when due.185

       (2) In legally authorized and executed bonds, notes,186
warrants, and securities which are the direct obligation of or are187
guaranteed by Canada, or which are the direct obligation of or are188
guaranteed as to both principal and interest by any province of189
Canada, or which are the direct obligation of or are guaranteed as190
to both principal and interest by any municipality of Canada191
having a population of fifty thousand or more by the latest192
official census, and which are not in default as to principal or193
interest;194

       (3) In bonds or other evidence of indebtedness, not in195
default as to principal or interest, which are valid obligations196
issued, assumed, or guaranteed by the United States, by any state197
thereof, the Commonwealth of Puerto Rico, or by the District of198
Columbia, if by statutory or other legal requirements such199
obligations are payable, as to both principal and interest, from200
selective taxes levied by such governmental unit.201

       (J)(1) In mortgage bonds which are the direct obligation of202
a railroad, and which are the first lien on a substantial portion203
of its property, situated wholly in the United States or partly in204
the United States and partly in Canada, the average net yearly205
earnings of which, after deducting proper charges for maintenance206
of way and equipment, for the five fiscal years preceding such207
investments, have been at least one and one-half times the average208
yearly interest for the same period on its mortgages, bonds, and209
funded debts, and in the junior mortgage bond issues of such210
railroad corporations of the same character and under the same211
conditions where the average net yearly earnings for the five212
fiscal years preceding such investment, after deducting proper213
charges for maintenance of way and equipment, have been at least214
three times the average yearly interest charges on such issues and215
all prior liens; or in the mortgage bonds of any incorporated216
railroad company which have been assumed or guaranteed, both as to217
principal and interest, by any incorporated railroad company whose218
bonds constitute a legal investment under division (J)(1) of this219
section. In applying the earnings test to any issuing, assuming,220
or guaranteeing company, whether or not in legal existence during221
the whole of such five years next preceding the date of investment222
by such insurer, which has at any time during such five-year223
period acquired the assets of any other company by purchase,224
merger, consolidation, or otherwise, substantially as an entirety,225
or has been reorganized pursuant to the bankruptcy law, the226
earnings of such other predecessor or constituent companies, or of227
the company so reorganized, available for interest for such228
portion of such period that has preceded such acquisition, or such229
reorganization, may be included in the earnings of such issuing,230
assuming, or guaranteeing company for such portion of such period231
as is determined in accordance with adjusted or pro forma232
consolidated earnings statements covering such portion of such233
period. In such cases the requirements as to earnings shall be234
based upon the mortgages, bonds, and funded debts as they exist235
immediately after such acquisitions or such reorganizations.236

       (2) In mortgage bonds or other interest-bearing obligations237
of terminal companies organized under the laws of the United238
States or any state thereof, provided such bonds or obligations239
have been assumed or guaranteed jointly or severally by two or240
more railroad corporations whose bonds constitute legal241
investments under division (J)(1) of this section;242

       (3) In loans to veterans guaranteed in whole or in part by243
the United States pursuant to Title III of the "Servicemen's244
Readjustment Act of 1944," 58 Stat. 284, 38 U.S.C.A. 693, as245
amended, provided such guaranteed loans are liens upon real246
estate;247

       (4) In mortgage bonds which are the direct obligation of and248
first lien upon the property of a corporation engaged directly and249
primarily in the production and sale of, or in the purchase and250
sale of electricity or gas, or in the operation of telephone or251
telegraph systems or waterworks, or in some combination of them,252
and situated wholly in the United States, or the Commonwealth of253
Puerto Rico, or partly in the United States and partly in Canada,254
the average net yearly earnings of which, after deducting proper255
charges for replacements, depreciation, and obsolescence, for the256
five fiscal years preceding such investment, have been at least257
one and one-half times the average yearly interest for the same258
period on its mortgages, bonds, and funded debts;259

       (5) Any such corporation, or any of its predecessors,260
constituent, or successor corporations, must have been in business261
not less than ten years prior to the date of the purchase of such262
bonds, and must not have defaulted on the interest or principal of263
any of its bonds or funded debts outstanding during the five years264
immediately preceding the date of purchase, provided that division265
(J)(5) of this section does not preclude investments in mortgage266
bonds of railroads reorganized through purchase of assets, merger,267
consolidation, bankruptcy proceedings, or otherwise if such bonds268
are eligible for investment under division (J)(1) of this section;269

       (6) No investment shall be made under division (J)(1), (2),270
(4), or (5) of this section if such railroad or other utility271
corporation and its business, and its issue of bonds, funded272
debts, and stocks are not under the supervision and control of an273
authorized state or federal official or commission, provided that274
division (J)(6) of this section does not apply to the mortgage275
bonds or other interest-bearing obligations of companies engaged276
in the operation of telephone or telegraph systems.277

       (K)(1) In bonds or notes secured by mortgages or deeds of278
trust which are a first lien upon unencumbered fee simple real279
estate in any state, the Commonwealth of Puerto Rico, the District280
of Columbia, or Canada, provided the amount loaned does not exceed281
eighty per cent of the actual market value of such property.282

       The actual market value of any such property shall be shown283
by a valuation and appraisement in writing by a qualified land284
appraiser.285

       In the event the amount loaned under division (K)(1) of this286
section exceeds eighty per cent of the actual market value of the287
land, the structures on the land must be insured by an authorized288
fire insurance company or covered by other comparable289
indemnification, and the policies or indemnifications shall be290
payable or assigned to the mortgagee or to a trustee in its behalf291
and shall be held by the mortgagee or an agent of the mortgagee or292
by such trustee; or in lieu of holding such policies or293
indemnifications, the mortgagee may purchase a policy or policies294
of mortgage protection insurance, payable to the mortgagee or a295
trustee in its behalf, insuring the mortgagee against loss296
resulting from the failure of the mortgagor to acquire and297
maintain, from such an authorized fire insurance company or other298
comparable source, insurance or indemnification.299

       (2) In bonds or notes secured by mortgages insured by the300
federal housing administrator;301

       (3) In bonds or notes secured by mortgages or deeds of trust302
which are a first lien on leasehold estates in wholly or partly303
improved real property, unencumbered, except rentals accruing from304
the property to the owner of the fee, provided that any loan305
secured by a leasehold estate must provide for amortization by306
repayment of principal at least once in each year in amounts307
sufficient to repay the loan within a period of four-fifths of the308
unexpired term of the leasehold but within a period of not more309
than thirty years, and further provided that the amount loaned on310
the leasehold estate does not exceed seventy-five per cent of311
total market value of the leasehold estate determined by312
appraisements in writing made under oath by two real estate313
owners, residents of the county or local district in which the314
real estate is located, or by a qualified land appraiser; if the315
amount loaned exceeds seventy-five per cent of the value of that316
portion of the leasehold estate represented by the value of the317
land, exclusive of improvements on the land, such improvements318
shall be insured against fire for the benefit of the mortgagee in319
an amount not less than the difference between seventy-five per320
cent of the value of such land, exclusive of buildings, and the321
amount loaned; the policies for such amount shall be payable to322
and held by the mortgagee or a trustee named in the lease who323
shall be required by the terms of said lease to use and apply the324
proceeds of such insurance for repairing, restoring, or rebuilding325
such buildings;326

       (4) The following shall not be considered as prior liens or327
encumbrances in the construction and application of this section:328
leasehold estates of any duration, rights-of-way, servitudes,329
joint driveways, easements, party wall agreements, current taxes330
and assessments not delinquent, and restrictions as to building,331
use, and occupancy.332

       (5) This section does not prohibit a domestic life insurance333
company from renewing or extending a loan for the original or a334
lesser amount nor does it prohibit a company from accepting as335
part payment for real estate sold by it a mortgage on the real336
estate for a greater percentage of the purchase price of the real337
estate than is otherwise permitted by this section.338

       (L) In bonds, notes, or other evidences of indebtedness of339
corporations, trusts, partnerships, or similar business entities340
organized under the laws of the United States, or any state341
thereof, the Commonwealth of Puerto Rico, the District of342
Columbia, or Canada or any province of Canada, secured by343
assignment of lease or leases or the rentals payable under such344
leases, of real or personal property or both to (1) the United345
States or any instrumentality thereof, or any state of the United346
States, the Commonwealth of Puerto Rico, or the District of347
Columbia, or any county, city, town, school, or water district,348
authority, or other political subdivision in any such government,349
or Canada, any province of Canada, or any municipal corporation of350
Canada that has a population of fifty thousand or more by the351
latest official census; or (2) one or more corporations, trusts,352
partnerships, or similar business entities organized under the353
laws of the United States, any state thereof, the Commonwealth of354
Puerto Rico, the District of Columbia, or Canada or any province355
of Canada, provided that (a) the fixed rentals assigned shall be356
sufficient to repay the indebtedness within the unexpired term of357
the lease, exclusive of the term which may be provided by an358
enforceable option of renewal; (b) such lessee has not defaulted359
in payment of interest or principal on any of its bonds, notes,360
debentures, or other evidences of indebtedness during the five361
years immediately preceding the date of the investment, and362
provided the average net earnings available for fixed charges of363
such lessee under division (L)(2) of this section for not less364
than five fiscal years preceding such investment have been at365
least one and one-half times average fixed charges for that period366
and during either of the last two years of such period, the net367
earnings available for fixed charges shall have been not less than368
one and one-half times fixed charges for such year, except that369
railroad companies and utility companies may qualify as lessees370
herein by application of the earnings test provided for railroads371
under division (J)(1) of this section and for utilities under372
division (J)(4) of this section; and (c) a first lien on the373
interest of the lessor in the unencumbered property so leased374
shall be obtained as additional security for the indebtedness;375

       (M) In ground rents, land trust certificates, or fee376
ownership certificates representing or evidencing beneficial377
ownership of or interest in improved real estate under lease for378
not less than twenty-five years from the date of such lease, in379
which it must be provided that the lessee shall pay all taxes and380
assessments levied on or assessed against said real estate, shall381
maintain the improvements on the real estate in good repair, and382
shall provide and maintain fire insurance in an amount equal to383
the insurable value of the building on the real estate; provided:384

       (1) The value of the land and improvements shall be385
evidenced by an appraisement made under oath by a disinterested386
appraiser resident in and the owner of real estate in the city in387
which the property is situated, and such appraisement shall not be388
less than one and sixty-seven hundredths times the amount of such389
land trust certificates, which amount shall be not less than390
twenty times the net annual rental distributable to holders of391
outstanding certificates;392

       (2) Such beneficial interests shall only be in properties on393
which actual earning records for five years immediately preceding394
are available;395

       (3) Such declaration of trust or other trust instrument396
shall provide for a depreciation or other similar fund, in an397
amount which is not less than nine per cent of the net annual398
distributable rental, for the benefit of the holders of399
outstanding certificates.400

       (N)(1) In certificates of deposit or other evidence of401
indebtedness of a savings and loan association provided the402
certificates or other evidence of deposit are insured pursuant to403
the "Financial Institutions Reform, Recovery, and Enforcement Act404
of 1989," 103 Stat. 183, 12 U.S.C.A. 1811, as amended;405

       (2) In interest-bearing obligations, including savings406
accounts and time certificates of deposit of a national bank or407
state bank provided such bank is a member of the federal deposit408
insurance corporation created pursuant to the "Banking Act of409
1933," 92 Stat. 624, 12 U.S.C.A. 624, as amended.410

       (O) In obligations issued, assumed, or guaranteed by the411
international finance corporation or by the international bank for412
reconstruction and development, the Asian development bank, the413
inter-American development bank, the African development bank, or414
other similar development bank in which the president, as415
authorized by congress and on behalf of the United States, has416
accepted membership;417

       (P)(1) In the preferred stocks of any company organized418
under the laws of the United States or of any state thereof419
engaged directly and primarily in the production and sale of, or420
in the purchase and sale of electricity or gas, or in the421
operation of telephone or telegraph systems or water works, or in422
some combination of them, if the average annual net earnings of423
such company, for not less than five fiscal years preceding424
purchase thereof, after deduction of interest on all mortgages,425
bonds, debentures, and funded debts and after deduction of the426
proper charges for replacements, depreciation, and obsolescence,427
have been at least two times the average yearly amount which is428
required to pay the dividends or distributions on all preferred429
stocks; and in which the mortgages, bonds, debentures, funded430
debts, and preferred stocks shall not in the aggregate exceed431
seventy per cent of the total capitalization of such company,432
including mortgages, bonds, debentures, funded debts, and433
preferred and common stocks;434

       (2) In the preferred stocks of any other company organized435
under the laws of the United States, or of any state thereof if436
the average annual net earnings of such company for a period of437
not less than five fiscal years preceding purchase thereof, after438
deduction of interest on all mortgages, bonds, debentures, and439
funded debts and after deduction of the proper charges for440
replacements, depreciation, and obsolescence, have been at least441
four times the amount which is required to pay the dividends or442
distributions on all preferred stocks, and in which the mortgages,443
bonds, debentures, funded debts, and preferred stocks shall not in444
the aggregate exceed sixty per cent of the total capitalization of445
such company, including mortgages, bonds, debentures, funded446
debts, and preferred and common stocks;447

       (3) A domestic life insurance company shall not purchase any448
preferred stocks when the total market values of such stocks then449
owned with those purchased exceed in the aggregate of book values450
and purchase price the capital, surplus, and contingency funds,451
excluding all reserves required by law, of such company on the452
thirty-first day of December preceding the date of such purchase,453
or contemplated purchase, provided that in case of appreciations454
in values of stocks owned the cost rather than the market values455
shall be used in arriving at such aggregate; the purpose being to456
restrict the investments of such company in all preferred stocks457
to capital, surplus, and contingency funds.458

       (4) In the bonds, notes, debentures, or other evidences of459
indebtedness of a solvent corporation, trust, partnership, or460
similar business entity existing under the laws of the United461
States, of any state thereof, the Commonwealth of Puerto Rico, or462
Canada or any province of Canada, provided that either:463

       (a) The bonds, notes, debentures, or other evidences of464
indebtedness of such corporation, trust, partnership, or similar465
business entity are rated 1 or 2 by the securities valuation466
office of the national association of insurance commissioners;467

       (b) The corporation, trust, partnership, or similar business468
entity has not defaulted in payment of interest or principal on469
any of its bonds, notes, debentures, or other evidences of470
indebtedness during the five years immediately preceding the date471
of purchase, and the average annual net earnings of such472
corporation, trust, partnership, or similar business entity that473
are available for fixed charges for not less than five fiscal474
years preceding such purchase have been at least one and one-half475
times the average fixed charges of such corporation, trust,476
partnership, or similar business entity for that period and during477
either of the last two years of such period, the net earnings478
available for fixed charges shall have been not less than one and479
one-half times the fixed charges of such corporation, trust,480
partnership, or similar business entity for such year.481

       (5) In common stocks or shares of any solvent incorporated482
company organized under the laws of the United States, or of any483
state, district, or territory thereof, or the Commonwealth of484
Puerto Rico, provided that a dividend or distribution has been485
paid by the corporation in the preceding twelve months upon such486
stock to be purchased, or that such corporation, together with its487
predecessor corporation or corporations, has been in existence for488
a period of at least five years. No domestic company shall invest489
in common stock or shares under divisions (P)(5) and (R) of this490
section a sum exceeding in the aggregate ten per cent of its491
admitted assets on the preceding thirty-first day of December.492

       (6) In the stocks or limited liability company membership493
interests of insurance corporations, financial corporations,494
investment corporations, and investment management companies,495
which investment management companies are registered with the496
securities and exchange commission under the "Investment Company497
Act of 1940," 54 Stat. 789, 15 80a-1, as amended, except its own498
stock, but no domestic life insurance company shall invest in such499
stocks or limited liability company membership interests under500
division (P)(6) of this section, exclusive of its investments in501
stocks or limited liability company membership interests of502
insurance company subsidiaries or subsidiaries engaged exclusively503
in the ownership of insurance company subsidiaries, a sum504
exceeding the lesser of fifty per cent of its policyholder surplus505
or ten per cent of its admitted assets as of the preceding506
thirty-first day of December unless the approval of the507
superintendent of insurance is first obtained. Whenever the508
superintendent has reason to believe that the retention,509
investment, or acquisition of the stock or limited liability510
company membership interest of any such corporation company511
substantially lessens competition generally in the business of512
insurance or creates a monopoly therein the superintendent shall513
proceed under section 3901.13 of the Revised Code to cause such514
domestic insurance company to divest itself of such stock or515
limited liability company membership interest.516

       (7)(a) In bonds, notes, debentures, or other evidences of517
indebtedness issued, assumed, or guaranteed by a solvent518
corporation, trust, or partnership formed or existing under the519
laws of a foreign jurisdiction, provided each such foreign520
investment is of the same kind and quality as United States521
investments authorized under this section; or in common or522
preferred stock or shares of any solvent corporation formed or523
existing under the laws of a foreign jurisdiction provided each524
such foreign investment is of the same kind and quality as United525
States investments authorized under this section; or in bonds or526
other evidences of indebtedness issued, assumed, or guaranteed by527
a foreign jurisdiction.528

       An insurer shall not invest in foreign investments under529
division (P)(7) of this section, including investments denominated530
in foreign currency, a sum exceeding in the aggregate fifteen per531
cent of its admitted assets as of the preceding thirty-first day532
of December. The aggregate amount of investments held by an533
insurer in a single foreign jurisdiction shall not exceed three534
per cent of its admitted assets as of the preceding thirty-first535
day of December.536

       As used in division (P)(7)(a) of this section, "foreign537
jurisdiction" means a jurisdiction outside the United States,538
Puerto Rico, or canada, whose bonds are rated 1 by the securities539
valuation office of the national association of insurance540
commissioners.541

       (b) An insurer may acquire investments denominated in542
foreign currency whether or not they are foreign investments.543

       An insurer shall not invest in investments denominated in544
foreign currency a sum exceeding in the aggregate ten per cent of545
its admitted assets as of the preceding thirty-first day of546
December. The aggregate amount of investments denominated in a547
single foreign currency held by an insurer shall not exceed three548
per cent of an insurer's admitted assets as of the preceding549
thirty-first day of December.550

       (c) As used in division (P)(7) of this section, "foreign551
currency" means a currency other than that of the United States.552

       (8) An insurer may invest without limitation in investments553
of government money market funds. As used in division (P)(8) of554
this section, "government money market fund" means a mutual fund555
that at all times invests in obligations issued, guaranteed, or556
insured by the federal government of the United States, or557
collateralized repurchase agreements comprised of these558
obligations, and that qualifies for investment without a reserve559
pursuant to the purposes and procedures of the securities560
valuation office of the national association of insurance561
commissioners.562

       (Q) In loans upon the pledge of any securities in which such563
companies are authorized by this section to invest, provided that564
any loan upon such a pledge shall not exceed eighty per cent of565
the cash market value of the collateral at the time of the making566
of such loan and at the end of each twelve-month period567
thereafter, and such company, through the collateral pledged to568
it, shall not exceed the amounts which it may, under this section,569
invest in one corporation so that, in the stocks and securities570
which may be owned and those which are pledged to it, the571
limitations in this section might be indirectly evaded;572

       (R)(1) Any domestic legal reserve life insurance company may573
loan or invest its funds, to an extent not exceeding in the574
aggregate five per cent of its total admitted assets, in loans or575
investments not permitted under this section. Any such company576
may also invest up to an additional five per cent of its total577
admitted assets, in loans or investments in small businesses578
having more than half of their assets or employees in this state579
and in venture capital firms having an office within this state,580
provided that, as a condition of a company making an investment in581
a venture capital firm, the firm must agree to use its best582
efforts to make investments, in an aggregate amount at least equal583
to the investment to be made by the company in that venture584
capital firm, in small businesses having their principal offices585
within this state and having either more than one-half of their586
assets within this state or more than one-half of their employees587
employed within this state.588

       As used in division (R) of this section:589

       (a) "Small businesses" means any corporation, partnership,590
proprietorship, or other entity that either does not have more591
than four hundred employees, or would qualify as a small business592
for the purpose of receiving financial assistance from small593
business investment companies licensed under the "Small Business594
Investment Act of 1958," 72 Stat. 689, 15 U.S.C.A. 661, as595
amended, and rules of the small business administration.596

       (b) "Venture capital firms" means any corporation,597
partnership, proprietorship, or other entity, the principal598
business of which is or will be the making of investments in small599
businesses.600

       (c) "Investments" means any equity investment, including601
limited partnership interests and other equity interests in which602
liability is limited to the amount of the investment, but does not603
include general partnership interests or other interests involving604
general liability.605

       (2) In the event that, subsequent to being made under606
provisions of division (R) of this section, an investment is607
determined to have become qualified as an investment for a608
domestic life insurance company as provided for in this section,609
the company may consider such investment as held under the610
applicable provisions of the foregoing divisions (A) to (Q) of611
this section and such investment shall no longer be considered as612
having been made under the provisions of this division.613

       (S)(1) No domestic life insurance company shall subscribe to614
or participate in any underwriting for the purchase or sale of615
securities or property, nor shall it enter into any such616
transaction for purchase or sale on account of said company617
jointly with any other person, nor shall any such company enter618
into any agreement to withhold from sale any of its property, but619
the disposition of its property shall be at all times within the620
control of its board of directors. Nothing contained in division621
(S)(1) of this section shall be construed to invalidate or622
prohibit an agreement by an insurance company for the purchase for623
its own account of an entire issue of the securities of a624
corporation or to invalidate or prohibit an agreement by an625
insurance company and one or more other investors to join and626
share in the purchase of investments for their individual accounts627
and for bona fide investment purposes.628

       (2) In the determination of capitalization in this section629
the value of all bonds, debentures, and funded debts, and630
nonconvertible or nonparticipating preferred stocks shall be631
figured at par. Participating or convertible preferred shares632
shall be figured at par or market on the preceding thirty-first633
day of December, whichever is higher, and the value of all common634
shares shall be figured at the market on the preceding635
thirty-first day of December.636

       (3) As used in this section:637

       (a) "Funded debt" means all interest-bearing obligations638
maturing in more than one year from their issuance and all639
guaranteed or assumed interest-bearing obligations or stock.640
Securities or stock of a corporation pledged to secure other641
funded debt of the corporation are not included in the funded642
debt.643

       (b) "Fixed charges" include actual interest incurred in each644
year on funded and unfunded debt and annual apportionment of debt645
discount or premium. Where interest is partially or entirely646
contingent upon earnings, "fixed charges" include contingent647
interest payments.648

       (c) "Net earnings available for fixed charges" means income649
after deducting operating and maintenance expenses, taxes other650
than income taxes, depreciation, and depletion. Extraordinary,651
nonrecurring items of income or expense shall be excluded.652

       (4) Except as provided in a plan of mutualization adopted653
pursuant to the provisions of sections 3913.01 to 3913.10 of the654
Revised Code, no domestic life insurance company may invest in or655
loan upon its own stock, either directly or indirectly.656

       (5) If the investments of any domestic life insurance657
company are at the time of the making thereof or on October 13,658
1953, otherwise than as authorized in this section, such659
investments shall not be admitted or accepted as authorized660
investments for such company.661

       (6) Any earnings test provided for in this section shall be662
deemed to have been met if the requirements of such earnings test663
are met by any company which assumes or guarantees the investment664
or which assumes or guarantees the performance of any lease which665
is the security for the investment. In applying any such earnings666
test, the operations of a company's predecessor companies, if any,667
for the stipulated period shall be included.668

       (7) No domestic life insurance company shall at any time669
have invested in or loaned upon the security of the obligations,670
property, or securities of a particular corporation, trust,671
partnership, or similar business entity a sum exceeding the672
greater of two per cent of its admitted assets as of the preceding673
thirty-first day of December or twenty-five per cent of that674
portion of its capital and surplus, or its surplus in the case of675
a mutual company, that exceeds the minimum required capital and676
surplus under section 3907.05 of the Revised Code unless the677
approval of the superintendent of insurance is first obtained. The678
restrictions of division (S)(7) of this section do not apply to679
divisions (C), (F), (G), (H), (P)(6), and (R) of this section or680
to any valid obligation issued, assumed, or guaranteed by the681
United States, or any state thereof, the Commonwealth of Puerto682
Rico, the District of Columbia, or Canada or any province of683
Canada. For purposes of division (S)(7) of this section, such684
company may, at its option, consider either the lessor or the685
lessee under division (L) of this section to be the person to whom686
any such investment or loan is made.687

       (8) This section does not affect the propriety or legality688
of an investment made by a domestic life insurance company which689
was in accordance with the laws in force at the time of the making690
of the investment.691

       Sec. 3925.08.  Funds accumulated in the course of business,692
or surplus money above the capital stock, of any company organized693
under any law of this state, for the purpose provided in section694
3925.01 of the Revised Code, shall only be loaned or invested in695
the securities listed in sections 3925.05 and 3925.06 of the696
Revised Code, or in the following:697

       (A)(1) Bonds and mortgages on unencumbered real estate698
within this or any other state worth twenty-five per cent more699
than the sum loaned thereon, exclusive of buildings, unless such700
buildings are insured in some company authorized to do business in701
this state, and the policy is transferred to the company making702
the investment; or, in lieu of transferring such policies, the703
mortgagee may purchase a policy or policies of mortgage protection704
insurance, payable to the mortgagee or a trustee in its behalf,705
insuring the mortgagee against loss resulting from the failure of706
the mortgagor to acquire and maintain, from such an authorized707
insurance company, insurance in the amount required by this708
section;709

       (2) Bonds or notes secured by mortgages insured by the710
federal housing administrator;711

       (3) Loans to veterans guaranteed in whole or in part by the712
United States pursuant to Title III of the "Servicemen's713
Readjustment Act of 1944," 58 Stat. 284, 38 U.S.C. 693, as714
amended, provided such guaranteed loans are liens upon real715
estate.716

       (B)(1) Legally authorized and executed bonds, notes,717
warrants, and securities which are the direct obligation of or are718
guaranteed as to both principal and interest by Canada, or which719
are the direct obligation of or are guaranteed as to both720
principal and interest by any province of Canada, or which are the721
direct obligation of or are guaranteed as to both principal and722
interest by any municipal corporation of Canada having a723
population of one hundred thousand or more by the latest official724
census, and which are not in default as to principal or interest;725

       (2) Obligations issued, assumed, or guaranteed by the726
international finance corporation or by the international bank for727
reconstruction and development, the Asian development bank, the728
inter-American development bank, the African development bank, or729
similar development bank in which the president, as authorized by730
congress and on behalf of the United States, has accepted731
membership.732

       (C) Bonds or other evidences of indebtedness, not in default733
as to principal or interest, which are valid obligations issued,734
assumed, or guaranteed by the United States, by any state thereof,735
the Commonwealth of Puerto Rico, by any territory or insular736
possession of the United States, or by the District of Columbia,737
or which are valid obligations issued, assumed, or guaranteed by738
any county, municipal corporation, district, or political739
subdivision, or by any civil division or public instrumentality of740
such governmental units, if by statutory or other legal741
requirements such obligations are payable, as to both principal742
and interest, from taxes levied upon all taxable property within743
the jurisdiction of such governmental unit, or in bonds or other744
obligations issued by or for account of any such governmental unit745
having a population of five thousand or more by the latest746
official federal or state census, which are payable as to both747
principal and interest from revenues or earnings from the whole or748
any part of a publicly owned utility, provided that by statute or749
other applicable legal requirements, rates from the service or750
operation of such utility must be fixed, maintained, and collected751
at all times so as to produce sufficient revenues or earnings to752
pay both principal and interest of such bonds or obligations as753
they become due, and in any bonds or obligations issued or754
guaranteed by the United States, any state, the District of755
Columbia, the Commonwealth of Puerto Rico, any county, municipal756
corporation, district, political subdivision, civil division,757
commission, board, authority, agency, or other instrumentality of758
one or more of them, provided there is a specific pledge of759
revenues, earnings, or other adequate security and provided that760
no prior or parity obligation of the same issuer, payable from761
revenues or earnings from the same source, has been in default as762
to principal or interest during the five years next preceding the763
date of such investment, but such issuer need not have been in764
existence for that period, and obligations acquired under this765
section may be newly issued, and further provided that there is766
adequate provision for payment of expenses of operation and767
maintenance and the principal and interest on all obligations when768
due;769

       (D)(1) Bonds or other evidences of indebtedness, bearing or770
accruing interest, issued, assumed, or guaranteed by any solvent771
corporation, trust, partnership, or similar business entity772
organized and existing under the laws of this or any other state,773
or of the United States, the Commonwealth of Puerto Rico, or of774
the District of Columbia, or of Canada or any province of Canada,775
upon which there is no existing interest or principal default,776
provided that either:777

       (a) The bonds or other evidences of indebtedness are rated 1778
or 2 by the securities valuation office of the national779
association of insurance commissioners;780

       (b) The corporation, together with its predecessor781
corporation or corporations, or the trust, partnership, or similar782
business entity, has been in existence for a period of at least783
five years.784

       (2) Stocks or limited liability company membership interests785
of any insurance corporation, financial corporation, investment786
corporation, and investment management company companies, which787
investment management company is companies are registered with the788
securities and exchange commission under the "Investment Company789
Act of 1940," 54 Stat. 789, 15 U.S.C. 80a-1, as amended, except790
its own stock, and stocks or limited liability company membership791
interests, bonds, notes, and debentures of any corporation company792
which is organized for, and limited in its operations to, the793
financing of insurance premiums, upon approval of such investments794
by the superintendent of insurance; except that approval shall not795
be required for the purchase of the outstanding stocks or limited796
liability company membership interests of any such corporation797
company, if investment in each such corporation company does not798
exceed in the aggregate two and one-half per cent of the total799
admitted assets of the company making the investment as of the800
preceding thirty-first day of December. Whenever the801
superintendent has reason to believe that the retention,802
investment, or acquisition of the stock or limited liability803
company membership interest of any such corporation company804
substantially lessens competition generally in the business of805
insurance or creates a monopoly therein he the superintendent806
shall proceed under section 3901.13 of the Revised Code to cause807
such domestic insurance company to divest itself of such stock or808
limited liability company membership interest.809

       (3) Other stocks of any solvent corporation organized under810
the laws of this or any other state, or of the United States, or811
of the District of Columbia, or of Canada or any province of812
Canada, provided that a dividend or distribution has been paid by813
the corporation in the preceding twelve months upon the stock to814
be purchased or such corporation, together with its predecessor815
corporation or corporations, has been in existence for a period of816
at least five years.817

       (4) A domestic company may acquire, hold, and convey818
tangible personal property or interests therein for the production819
of income, provided no domestic company shall invest in excess of820
two per cent of its admitted assets as of the preceding821
thirty-first day of December under this division.822

       (5) In equipment trust obligations or certificates, security823
agreements, or other evidences of indebtedness entered into824
directly or guaranteed by any company operating wholly or partly825
within the United States or Canada, provided that such debt826
obligation is secured by a first lien on tangible personal827
property which is purchased or secured for payment thereof and828
such debt obligation is repayable within twenty years from the829
date of issue in annual, semiannual, or more frequent installments830
beginning not later than the first year after such date.831

       (6) An insurer may invest without limitation in investments832
of government money market funds. As used in division (D)(6) of833
this section, "government money market fund" means a fund that at834
all times invests in obligations issued, guaranteed, or insured by835
the federal government of the United States or collateralized836
repurchase agreements comprised of such obligations, and that837
qualifies for investment without a reserve pursuant to the838
purposes and procedures of the securities valuation office of the839
national association of insurance commissioners.840

       (E) Negotiable promissory notes maturing in not more than841
six months from the date thereof, secured by collateral security842
through the transfer of any of the classes of securities described843
in this section or in sections 3925.05 and 3925.06 of the Revised844
Code, with absolute power of sale within twenty days after default845
in payment at maturity;846

       (F)(1) Repurchase agreements with, and interest-bearing847
obligations, including savings accounts and time certificates of848
deposit of, a national bank of the United States, a commonwealth849
bank of Puerto Rico, a chartered bank of Canada, or a state bank,850
provided such bank is either a member of the federal deposit851
insurance corporation created pursuant to the "Banking Act of852
1933," as amended, or the Canada deposit insurance corporation853
created pursuant to the act of parliament known as the "Canada854
Deposit Insurance Corporation Act," as amended.855

       (2) Certificates of deposit, savings share accounts,856
investment share accounts, stock deposits, stock certificates, or857
other evidences of indebtedness of a savings and loan association,858
provided all such evidences of indebtedness are insured pursuant859
to the "Financial Institutions Reform, Recovery, and Enforcement860
Act of 1989," 103 Stat. 183, 12 U.S.C.A. 1811, as amended;861

       (3) Bankers' acceptances and bills of exchange of the kinds862
and maturities made eligible by law for rediscount with the863
federal reserve banks, provided that the same are accepted by a864
bank or trust company incorporated under the laws of the United865
States or of this state or any other bank or trust company which866
is a member of the federal reserve system.867

       (G) Any securities issued as a result of any reorganization,868
or capital or debt adjustment, in whole or in part, in exchange869
for securities acquired by it prior to such reorganization, or870
capital or debt adjustment;871

       (H)(1) In bonds, notes, debentures, or other evidences of872
indebtedness issued, assumed, or guaranteed by a solvent873
corporation, trust, or partnership formed or existing under the874
laws of a foreign jurisdiction, provided each such foreign875
investment is of the same kind and quality as United States876
investments authorized under this section; or in common or877
preferred stock or shares of any solvent corporation formed or878
existing under the laws of a foreign jurisdiction, provided each879
such foreign investment is of the same kind and quality as United880
States investments authorized under this section; or in bonds or881
other evidences of indebtedness issued, assumed, or guaranteed by882
a foreign jurisdiction.883

       An insurer shall not invest in foreign investments under884
division (H) of this section, including investments denominated in885
foreign currency, a sum exceeding in the aggregate fifteen per886
cent of its admitted assets as of the preceding thirty-first day887
of December. The aggregate amount of investments held by an888
insurer in a single foreign jurisdiction shall not exceed three889
per cent of its admitted assets as of the preceding thirty-first890
day of December.891

       As used in division (H)(1) of this section, "foreign892
jurisdiction" means a jurisdiction outside the United States,893
Puerto Rico, or Canada whose bonds are rated 1 by the securities894
valuation office of the national association of insurance895
commissioners.896

       (2) An insurer may acquire investments denominated in897
foreign currency whether or not they are foreign investments.898

       An insurer shall not invest in investments denominated in899
foreign currency a sum exceeding in the aggregate ten per cent of900
its admitted assets as of the preceding thirty-first day of901
December. The aggregate amount of investments denominated in a902
single foreign currency held by an insurer shall not exceed three903
per cent of an insurer's admitted assets as of the preceding904
thirty-first day of December.905

       (3) As used in division (H) of this section, "foreign906
currency" means a currency other than that of the United States.907

       (I)(1) Any securities or other property not permitted under908
section 3925.05, 3925.06, 3925.08, or 3925.20 of the Revised Code909
to an extent not exceeding in the aggregate six per cent of the910
total admitted assets of such company on the preceding911
thirty-first day of December, within the limitations prescribed in912
division (J) of this section. Any such company may also invest up913
to an additional five per cent of the total admitted assets of914
such company on the preceding thirty-first day of December, within915
the limitations prescribed in division (J) of this section, in916
loans or investments in small businesses having more than half of917
their assets or employees in this state and in venture capital918
firms having an office within this state, provided that, as a919
condition of a company making an investment in a venture capital920
firm, the firm must agree to use its best efforts to make921
investments, in an aggregate amount at least equal to the922
investment to be made by the company in that venture capital firm,923
in small businesses having their principal offices within this924
state and having either more than one-half of their assets within925
this state or more than one-half of their employees employed926
within this state.927

       As used in division (I) of this section:928

       (a) "Small businesses" means any corporation, partnership,929
proprietorship, or other entity that either does not have more930
than four hundred employees, or would qualify as a small business931
for the purpose of receiving financial assistance from small932
business investment companies licensed under the "Small Business933
Investment Act of 1958," 72 Stat. 689, 15 U.S.C.A. 661, as934
amended, and rules of the small business administration.935

       (b) "Venture capital firms" means any corporation,936
partnership, proprietorship, or other entity, the principal937
business of which is or will be the making of investments in small938
businesses.939

       (c) "Investments" means any equity investment, including940
limited partnership interests and other equity interests in which941
liability is limited to the amount of the investment, but does not942
include general partnership interests or other interests involving943
general liability.944

       (2) In the event that, subsequent to being made under this945
division, a loan or investment is determined to have become946
qualified as a loan or investment under any of the divisions (A)947
to (F) of this section or under section 3925.05, 3925.06, or948
3925.20 of the Revised Code, the company may consider such loan or949
investment as held under such other statutory provision and such950
loan or investment shall no longer be considered as having been951
made under this division.952

       (J) No domestic insurance company shall at any time have953
invested a sum exceeding five per cent of its admitted assets as954
of the preceding thirty-first day of December in the bonds, notes,955
debentures, other evidences of indebtedness, and stocks of a956
particular corporation, trust, partnership, or similar business957
entity, except for investments authorized under divisions (A) and958
(D)(2) of this section, and no domestic insurance company together959
with its subsidiary, if any, shall at any time own directly or960
indirectly more than twenty-five per cent of the outstanding961
bonds, notes, debentures, other evidences of indebtedness, and962
stocks of any corporation, except for investments authorized under963
divisions (A) and (D)(2) of this section.964

       This section does not affect the propriety or legality of an965
investment made by such domestic insurance company which was in966
accordance with the laws in force at the time of the making of the967
investment.968

       Section 2. That existing sections 3901.64, 3903.32, 3907.14,969
and 3925.08 of the Revised Code are hereby repealed.970

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