Colorado § 10-3-226 - Equity interests - definition.

§ 10-3-226. Equity interests - definition.

(1) A domestic insurance company may invest in equity interests in business entities created under the laws of the United States, of a state of the United States or the District of Columbia, or of Canada or any province of Canada, but the aggregate value of all equity interests that may be admitted assets under this section must not exceed ten percent of the company's admitted assets. For the purpose of this limitation on aggregate value, a company may determine the value of all its equity interests that may be admitted assets under this section on the basis of the aggregate initial cost of the equity interests in lieu of determining the value of all of the equity interests as provided in section 10-3-214.

(2) Notwithstanding the provisions of subsection (1) of this section, a domestic fire, casualty, or multiple-line insurance company may invest an additional twenty-five percent of its admitted assets in preferred and common stocks of any corporation organized under the laws of the United States, any state, territory, or possession of the United States, the District of Columbia, or the Dominion of Canada or any province thereof.

(3) Investments authorized by subsections (1) and (2) of this section are subject to the following restrictions at the time of investment:

(a) and (b) Repealed.

(c) If there is a rise in the market value of the aggregate stock investments of a domestic insurance company and if the current market value of the aggregate investments of such company in common and preferred stock exceeds fifty percent of the admitted assets of such company as valued on December 31 of any year, then such company shall, on or before March 1 of the following year, liquidate a portion of such investments so that the market value of such stock investments does not exceed fifty percent of the company's admitted assets.

(d) (I) Investments in common stock in any one corporation, at the time of investment, must not exceed two percent of the admitted assets of the investing insurance company, and, at the time of investment, an insurance company shall not purchase more than five percent of the outstanding shares of common stock of any one corporation.

(II) This subsection (3)(d) does not apply to investments in mutual funds, open-end index funds, or exchange-traded index funds.

(e) This section shall not apply to investments made pursuant to the provisions of section 10-3-802.

(f) Investments in equity interests that are not listed on a nationally registered securities exchange or a securities market regulated under the "Securities Exchange Act of 1934", 15 U.S.C. sec. 78a et seq., as amended, must not exceed five percent of the admitted assets of the investing company.

(4) As used in this section, "equity interest" means:

(a) Common stock;

(b) Preferred stock;

(c) A trust certificate;

(d) Equity investments in an investment company other than a qualified money market fund, as defined in section 10-3-242 (1);

(e) Investments in a common trust fund of a bank regulated by a federal or state agency;

(f) An ownership interest in a mineral estate that has been severed from the fee interest;

(g) Instruments that are or must be, at the option of the issuer, convertible to equity;

(h) Partnership interests;

(i) Membership interests in limited liability companies;

(j) Investments in mutual funds, other than qualified money market funds as defined in section 10-3-242 (1); or

(k) Investments in open-end index funds or exchange-traded index funds.

(5) (a) A domestic insurance company may invest in equity interests in business entities created under the laws of a foreign jurisdiction having a sovereign debt rating of "1" from the securities valuation office of the National Association of Insurance Commissioners if the equity interests otherwise meet the requirements of subsections (1) to (3) of this section; except that the aggregate amount of the foreign equity interests that may be admitted assets under this subsection (5)(a) must not exceed three percent of the company's admitted assets.

(b) This subsection (5) does not apply to a jurisdiction described in subsection (1) of this section.

Source: L. 69: p. 495, § 5. C.R.S. 1963: § 72-2-32. L. 71: p. 755, § 2. L. 73: pp. 842, 1408, §§ 1, 52, 53. L. 75: Entire section R&RE, p. 336, § 3, effective July 1. L. 81: (3)(a) and (3)(b) amended, p. 529, § 5, effective July 1. L. 2020: (1), IP(3), and (3)(d) amended, (3)(a) and (3)(b) repealed, and (3)(f), (4), and (5) added, (HB 20-1136), ch. 87, p. 350, § 4, effective September 14.