Legislative Memo

Ken Pokalsky
Director of Government Affairs
T 518.465.7517 x205


S.2999 (Seward)



Foreign Investments by Life Insurers


S.2999 (Seward)


May 2, 2005


This bill would increase the aggregate amount of foreign investments that New York life insurers
are permitted to make under Section 1405 of the Insurance Law from 14% to 27% of admitted
assets. In addition, the bill would adjust the counterparty requirements applicable to foreign
currency hedges pursuant to Section 1405(a)(C) of the Insurance Law.

The world's securities marketplace has undergone dramatic changes in the last several years,
resulting in an expansion of foreign investment opportunities. Non-insurers, which in some cases
directly compete with domestic life insurers, have already taken advantage of this marketplace by
dramatically increasing their non-U.S. holdings.

This legislation is important in order for New York life insurers to compete effectively in today's
global marketplace. The globalization of the world's economies, and the expansion of financing
alternatives continue to develop at an ever-increasing pace. It is vital that this state's life
insurers have adequate discretion to determine the appropriate diversification of their investment

Many pension funds and other asset managers have determined that as a result of continued
globalization of financial markets, an appropriate asset mix may include 20% or more of assets in
foreign markets. To require New York like insurers to limit their holdings to only 14% not only
places them at a competitive disadvantage, but it reduces their ability to optimize overall returns
and reduce risks.

The adjustment of the foreign investment limits allowed in this bill will allow New York life
insurers to compete more effectively and enhance their financial position in order to provide their
customers with superior, risk-adjusted returns on more diversified portfolios.

For the abovementioned and other reasons, The Business Council strongly supports this legislation
and urges its adoption.