Iowa SF 320: A bill for an act relating to life insurance company or association cash reinvestments in repurchase agreements collateralized by securities, and including applicability provisions.(Formerly SSB 1086.)

Bill Text

Senate File 320 - Introduced
SENATE FILE 320
BY COMMITTEE ON COMMERCE
(SUCCESSOR TO SSB 1086)
A BILL FOR
An Act relating to life insurance company or association cash1
reinvestments in repurchase agreements collateralized by2
securities, and including applicability provisions.3
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:4
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S.F. 320
Section 1. Section 511.8, subsection 23, paragraph c, Code1
2021, is amended to read as follows:2
c. If the loan is collateralized by cash or cash3
equivalents, the cash or cash equivalent collateral may be4
reinvested by the life insurance company or association in5
rule 2a-7 money market funds as defined in subsection 24,6
individual securities which are eligible for inclusion in the7
legal reserve of the life insurance company or association,8
or in repurchase agreements fully collateralized by such9
securities if the life insurance company or association takes10
delivery of the collateral either directly or through an11
authorized custodian or pooled fund comprised of individual12
securities which are eligible for inclusion in the legal13
reserve of the life insurance company or association. If such14
reinvestment is made in individual securities, or in repurchase15
agreements collateralized by securities other than United16
States government obligations as described in subsection 1, the17
individual securities or the securities which collateralize the18
repurchase agreements shall mature in less than two hundred19
seventy days. If such reinvestment is made in a pooled fund,20
the average maturity of the securities comprising such pooled21
fund must be one hundred eighty days or less and the individual22
maturities of the securities comprising such pooled fund23
must be three hundred ninety-seven days or less. Individual24
securities and securities comprising the pooled fund shall25
be investment grade. As used in this paragraph, “maturity”26
means the earlier of the fixed date on which the holder of27
the security is unconditionally entitled to receive principal28
and interest in full or the date on which the holder of the29
security is unconditionally entitled upon demand to receive30
principal and interest in full.31
Sec. 2. APPLICABILITY. This Act applies to cash or cash32
equivalent reinvestments by a life insurance company or33
association made in repurchase agreements collateralized by34
securities on or after January 1, 2022.35
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S.F. 320
EXPLANATION1
The inclusion of this explanation does not constitute agreement with2
the explanation’s substance by the members of the general assembly.3
This bill allows life insurance companies and associations4
to reinvest cash or cash equivalent collateral for loans5
from securities held in their legal reserves in repurchase6
agreements collateralized by securities in United States7
government obligations maturing in 270 days or more. Under8
current law, all securities that collateralize repurchase9
agreements must mature in less than 270 days. “United States10
government obligations” is described in the bill.11
The bill applies to cash or cash equivalent reinvestments,12
by life insurance companies and associations, made in13
repurchase agreements collateralized by securities, on or after14
January 1, 2022.15
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