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The Business Council supports this legislation which would amend the insurance law Section 1405 to increase the overall limit on foreign investments by life insurance companies from 20% of admitted assets to 26% of admitted assets.
The new 26% limit would be implemented by allowing 20% (16% under current law) of admitted assets to be invested in foreign jurisdictions having investment grade ratings and another 6% (4% under current law) of admitted assets to be invested in foreign jurisdictions of any category. Up to 7% (6% current law) of admitted assets could be invested in any one jurisdiction having investment grade ratings, and up to 3% (2% current law) of admitted assets could be invested in any one jurisdiction having any rating category.
This bill will enable life insurers in New York 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. The ability of this state's life insurers to provide their customers with superior, risk-adjusted returns depends on their ability to make timely investment decisions. Foreign investments provide safety enhancing diversification to domestic portfolios and expand investment alternatives.
Several states in recent years have increased their foreign investment limits including Connecticut (33%), Illinois (30%) and Texas (25%). This modest expansion of existing foreign investment limits will help New York life insurers to remain competitive.
For these reasons the Business Council urges the legislature to pass S.2890-A/A.2130-A.