Article 4 - Property Authorized for Excess Funds Investments

California Insurance Code — §§ 1190-1202

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Sections (40)

Amended by Stats. 1983, Ch. 142, Sec. 83.

Any domestic incorporated insurer, which maintains in cash on hand or on deposit in a national or state bank, or in securities specified in Article 3 (commencing with Section 1170), an amount equal to its required minimum paid-in capital, may invest the remainder of its assets in the purchase of, or loans upon the securities set forth in this article. The investments are known as excess funds investments and are subject to the restrictions set forth in this article.

§ 1191

Amended by Stats. 1951, Ch. 567.

Excess funds investments may be made in the stock of any corporation organized and carrying on business under the laws of this or any other state, or of the United States, or of the District of Columbia, or of the Dominion of Canada or of any province of the Dominion of Canada.

§ 1191.1

Added by Stats. 1980, Ch. 814, Sec. 1.

Excess fund investments may be made in the purchase and sale of exchange traded call options on common stock pursuant to this section.

An insurer may sell exchange traded call options only through an exchange and only with respect to stock which it owns. Common stock that is obligated under an unexpired written call option shall not be sold unless the insurer first enters into a closing purchase transaction. An insurer shall not sell any other options pursuant to this section.

An insurer may purchase exchange traded call options only through an exchange and only for the

purpose of a closing purchase transaction. An insurer shall not purchase any other options pursuant to this section.

§ 1191.5

Added by Stats. 1989, Ch. 1129, Sec. 2.

(a)Excess fund investments may be made by a domestic life insurer having admitted assets aggregating in value not less than one hundred million dollars ($100,000,000) in the purchase and sale of call options on interest-bearing obligations pursuant to subdivision (b) or (c). These investments may be made only in options on interest-bearing obligations issued by the United States of America, or any of its agencies or instrumentalities specified in Section 1180.

(b)An insurer may purchase call options pursuant to this section for the sole purpose of executing a closing

purchase transaction for the interest-bearing obligation subject to the option. An insurer shall not purchase any other options pursuant to this section.

(c)An insurer may sell call options pursuant to this section only on interest-bearing obligations that it owns. An insurer shall not sell an interest-bearing obligation subject to an unexpired written call option sold by it except pursuant to a closing purchase transaction under the call option.

§ 1192

Amended by Stats. 2020, Ch. 370, Sec. 216. (SB 1371) Effective January 1, 2021.

Excess funds investments may be made in:

(a)Interest-bearing obligations issued by a nonaffiliate institution, as defined in paragraph (5) of subdivision (f) of Section 1196.1, organized under the laws of any state, or of the United States, or of the District of Columbia, or of the Dominion of Canada or of any province of the Dominion of Canada, or interest-bearing obligations registered with the Securities and Exchange Commission and publicly traded issued by an affiliate corporation organized under the laws of any state, or of the United States, or of the District of Columbia, or of the Dominion of Canada or of any province of the Dominion of Canada, or interest-bearing obligations issued by an authority established pursuant to the California Industrial Development Financing Act

provided for in Title 10 (commencing with Section 91500) of the Government Code, to which the corporation is obligated with respect to payment, or

(b)Equipment trust obligations or certificates, or other adequately secured instruments, evidencing an interest in or lien upon transportation equipment used or to be used by a common carrier or common carriers and a right to receive determined portions of fixed obligatory payments for the use or purchase of this equipment, when the obligations, certificates, or instruments are issued by a corporation specified in subdivision (a) or are unconditionally guaranteed or assumed by the corporation as to principal and as to interest or dividends and as to the payment of the fixed obligatory payments or the payment of the determined portions thereof.

§ 1192.1

Amended by Stats. 1991, Ch. 1206, Sec. 8.

Excess funds investments may be made in bonds, notes or other obligations issued, assumed or guaranteed by the International Bank for Reconstruction and Development, or the Inter-American Development Bank, or the Government Development Bank for Puerto Rico, or the Asian Development Bank, the International Finance Corporation, or the African Development Bank. Investments held under the authority of this section at any one time shall not be in excess of 21/2percent of the insurer’s admitted assets or an amount equal to 25 percent of the total of the capital

and surplus of such insurer, whichever is the lesser. Percentage or dollar value of assets and surplus as provided herein shall be determined by the insurer’s last preceding annual statement of conditions and affairs filed with the commissioner pursuant to law.

§ 1192.10

Added by Stats. 1993, Ch. 512, Sec. 1. Effective January 1, 1994.

(a)Excess funds investments may be made in securities evidencing an undivided interest in, the right to receive payments from, or payable primarily from distributions on a pool of financial assets held by an unaffiliated business entity, other than those authorized by Section 1192.6, if all of the following conditions are met:

(1)The business entity is not a sole proprietorship and is established solely for the purpose of acquiring specific types of financial assets, issuing

securities representing an undivided interest in, or right to receive cash flows from, those assets, and engaging in related activities.

(2)The pool of assets consists solely of interest-bearing obligations or other contractual obligations representing the right to receive payment from the assets.

(3)The investment is rated in one of the three highest rating categories by at least one nationally recognized statistical rating organization approved by the Securities and Exchange Commission and within one of the two highest categories established by the securities valuation office of the National Association of Insurance Commissioners.

(b)No investment under this section may be made if, as a result of giving effect to that investment, the aggregate amount of investments then held by the insurer under this section

would exceed 10 percent of its admitted assets.

(c)Investments authorized by this section shall not be subject to subdivision (c) of Section 1196.

§ 1192.2

Repealed and added by Stats. 1963, Ch. 321.

An insurer may lend on the security of a first lien on an unencumbered leasehold on real property if:

(a)The real property subject to the leasehold is primarily improved by a single family residence, the term of the loan does not exceed 30 years, and the amount of the loan plus the amount of the liens of any public bond, assessment or tax assessed upon the property loaned upon does not exceed 75 percent of the sound market value of the leasehold for loan purposes as determined by appraisal; or

(b)The real property subject to the leasehold is not

primarily improved by a single family residence, the term of the loan does not exceed 30 years, and the amount of the loan plus the amount of the liens of any public bond, assessment or tax assessed upon the property loaned upon does not exceed 662/3percent of the sound market value of the leasehold for loan purposes as determined by appraisal; or

(c)Where the loan is a building loan, the principal so loaned plus the amount of the liens of any public bond, assessment or tax assessed upon the property subject to said leasehold at no time exceeds 75 percent if made upon the kind of property and improvements referred to in (a) above or if other than referred to in (a) above, at no time exceeds 662/3percent of the sound market value of the leasehold

for loan purposes as determined by appraisal, including the actual cost of the improvements thereon taken as security; or

(d)The loan is fully guaranteed or fully insured or covered by a commitment to fully guarantee or fully insure by the United States, the Federal Housing Administrator, or by any other agency of the United States which the commissioner shall have approved for the purposes of this subdivision as an issuer of insurance or guarantees of loans on real property, whether the proceeds of the guarantee or insurance is payable in cash or in obligations of the United States; or

(e)The loan is fully guaranteed by the United States or any agency thereof pursuant to the “Servicemen’s Readjustment Act of 1944” or any act of Congress supplementary or amendatory thereof, or, if a portion of the loan is so guaranteed, then if the unguaranteed portion of the loan does not

exceed 75 percent of the sound market value of the leasehold for loan purposes as determined by appraisal.

(f)In all cases mentioned in subsections (a), (b), (c) and (e), the loan must be repayable in equal installments not less often than annually in amounts sufficient to completely amortize the loan within three-fourths of the remaining term of the leasehold including options to renew exercisable by the lender.

A leasehold on real property is not encumbered within the meaning of this section if subject only to one or more of the following:

(a)the lien of taxes and assessments not delinquent at the time of investment, (b) the lien for delinquent taxes or assessments delinquent at the time of investment, which are being contested by any legal proceedings, provided that indemnity has been given pursuant to the indenture under which the bonds and notes are issued, or otherwise, for the payment of any

amount which may be found to be due upon the final adjudication of such contest, (c) the lien of taxes and assessment becoming delinquent subsequent to the time of investment, (d) outstanding mineral, oil or timber rights, (e) easements or rights-of-way, (f) sewer rights, (g) rights in walls, (h) building restrictions or other restrictive covenants, or conditions or regulations of use, or subleases under which rents or profits are reserved to the owner.

For the purposes of this section, delinquent taxes funded on any deferred payment plan shall be deemed delinquent.

§ 1192.3

Added by Stats. 1980, Ch. 1049, Sec. 1.

Excess fund investments may be made by a life insurer having admitted assets aggregating in value not less than two hundred million dollars ($200,000,000) in the following:

(a)Equipment obligations, securities, or certificates of any equipment trust evidencing rights to receive partial payments agreed to be made upon any contract of leasing or conditional sale.

(b)The purchase and ownership of machinery or equipment, which is or will within 30 days after acquisition become subject to contracts for sale or use under which

contractual payments may reasonably be expected to return the principal of and provide earnings on the investment within the anticipated useful life of the property which shall be not less than five years.

Except upon the prior approval, in writing, of the commissioner, an investment may not be made under the authority of this section if at the time of the making of such investment it would result in such insurer then owning such obligations, securities, certificates, machinery and equipment in an amount exceeding five percent of such insurer’s admitted assets as determined by the insurer’s last preceding annual statement filed with the commissioner.

Any investment in a single piece of machinery or equipment shall not be made in excess of one percent of the insurer’s admitted assets or 10 percent of the aggregate of the insurer’s capital paid-up and unassigned surplus, whichever is larger.

§ 1192.4

Amended by Stats. 1955, Ch. 206.

No domestic insurer shall have more than 10 percent of its capital and surplus invested in stock of corporations organized under the laws of the Dominion of Canada or of any province of the Dominion of Canada, but this limitation shall not affect the authority conferred by Sections 1172, 1199 and 1240.

§ 1192.5

Amended by Stats. 1991, Ch. 539, Sec. 10.

Excess funds investments may be made in all deposits and debt obligations of banks or savings and loan associations whose accounts are insured by an agency or instrumentality of the federal government including accounts or certificates of deposit not subject to Section 1182, bankers’ acceptances, and commercial paper.

§ 1192.6

Added by Stats. 1987, Ch. 242, Sec. 2.

(a)An insurer, except an insurer authorized to transact mortgage guaranty insurance as defined in Section 119, may invest in a mortgage, mortgage-backed bond, or a mortgage participation, pass-through, conventional pass-through, trust or participation certificate, which is secured by or represents an undivided interest in any loan secured by real property if the loan is a permitted investment for the insurer or in a pool of those loans if each is a permitted investment for an insurer; and for which there exists, at the time of making the investment, a resale market.

(b)If the loan or pools of loans have been transferred or contributed by an insurer to a corporation, all the voting securities of which are owned by the insurer, then the mortgage, mortgage-backed bond, or mortgage participation, pass-through, conventional pass-through, trust or participation certificate secured by or representing an undivided interest in the loan or pool of loans shall not be revalued solely due to that transfer. Any subsequent transfer to an affiliate from the wholly owned subsidiary shall be valued at the lower of book value or market value.

§ 1192.7

Amended by Stats. 1993, Ch. 616, Sec. 1. Effective January 1, 1994.

(a)A domestic insurer having admitted assets aggregating in value not less than one hundred million dollars ($100,000,000) may make excess funds investments in participation certificates (1) which represent an undivided interest in an interest-bearing obligation issued by a corporation and (2) for which a resale market exists at the time the investment is made.

(b)No investment in a participation certificate may be made pursuant to this section unless the entire obligation is

a form of investment which the insurer would be authorized to acquire pursuant to subdivision (a) of Section 1192.

(c)An investment may not be made under the authority of this section if at the time of making the investment it would result in the insurer then owning participation certificates described in this section in an amount exceeding 4 percent of the insurer’s admitted assets as determined by the insurer’s last preceding annual statement filed with the commissioner.

§ 1192.8

Amended by Stats. 2017, Ch. 534, Sec. 26. (AB 1699) Effective January 1, 2018.

(a)A domestic life insurer having admitted assets aggregating in value not less than one hundred million dollars ($100,000,000) may make excess fund investments pursuant to this section in interest-bearing notes, bonds, or obligations issued by (1) any operating business trust or limited partnership organized under the laws of any state of the United States, the District of Columbia, the Dominion of Canada, any province of the Dominion of Canada or (2) an authority established pursuant to the California Industrial Development Financing Act, Title 10 (commencing with Section 91500) of the Government Code. The issuer of the notes, bonds, or obligations through itself or its paying agent shall be obligated thereunder to make payments, with respect to the notes, bonds, or other obligations,

directly to the insurer or the insurer’s nominee.

(b)Except upon the prior written approval of the commissioner, an investment may not be made under the authority of this section unless the note, bond, or obligation is exchange-traded. “Exchange-traded,” as used in this subdivision, means listed and traded on the National Market System of the NASDAQ Stock Market or on a securities exchange subject to regulation, supervision, or control under a statute of the United States and acceptable to the commissioner.

(c)Without the prior written consent of the commissioner, an investment made pursuant to this section shall not exceed in the aggregate 10 percent of the life insurer’s policyholder surplus.

(d)A request to the commissioner for (1) approval pursuant to subdivision (b) to invest in notes, bonds, or obligations

that are not exchange-traded or (2) consent to exceed the 10 percent limitation set forth in subdivision (c), shall be in writing and shall be accompanied by any supporting data and documentation that the commissioner may require. The commissioner shall require the payment of a fee of seven thousand four hundred seventy-two dollars ($7,472), in advance, for the determination of whether to approve or disapprove each request. Each request shall be in writing and shall be deemed approved unless the commissioner disapproves it within 60 days with respect to requests under subdivision (c) or 20 days with respect to requests under subdivision (b), after the request has been filed in the commissioner’s office.

(e)This section shall not be construed to increase or reduce the authority to invest in any operating business trust or limited partnership specifically permitted in other sections of this code.

§ 1192.9

Amended by Stats. 2010, Ch. 400, Sec. 5. (AB 2782) Effective January 1, 2011.

Notwithstanding Section 1100, a domestic insurer may make excess funds investments in shares of an investment company, as defined in the Federal Investment Company Act of 1940, if the requirements of subdivisions (b) and (c) are satisfied. No investment made pursuant to this section that ceases to satisfy the requirements of subdivision (b) or (c) shall be retained as an excess fund investment. No domestic insurer shall invest

under any provision of this code in the shares of any investment company that has more than 33.33 percent of its investments in foreign investments that do not comply with paragraph (4) of subdivision (b).

(a)The definitions in this subdivision apply to the following terms when used in this section:

(1)A mutual fund is an open-end management company as defined in Section 5(a)(1) of the Federal Investment Company Act of 1940 (15 U.S.C. Sec. 80(a)-5(a)(1)).

(2)An exchange traded fund is either an open-end management company as defined in Section 5(a)(1) of the Federal Investment Company Act of 1940, or a unit investment trust as defined in Section 4(2) of the Federal Investment Company Act of 1940 (15 U.S.C. Sec. 80a-4(2)), that is registered under the Federal Investment Company Act of 1940 and that satisfies the

terms of exemptive orders issued by the United States Securities and Exchange Commission that qualify it to be an exchange-traded fund.

(3)A fund is any investment company authorized in this section as an excess fund investment.

(b)The investment company shall:

(1)Be registered with and reporting to the United States Securities and Exchange Commission.

(2)Be domiciled in the United States.

(3)Have assets in excess of one hundred million dollars ($100,000,000), or be affiliated with other investment companies that have, in the aggregate, assets in excess of one billion dollars ($1,000,000,000).

(4)Have at least 66.67

percent of its investments be investments that are authorized under Article 3 (commencing with Section 1170) and Article 4 (commencing with Section 1190), except that any amount of a fund’s assets may consist of foreign investments, provided that if more than 50 percent of its total investments consist of foreign investments, then the insurer’s investment in that fund shall comply with the provisions of subparagraph (C) of paragraph (1) of subdivision (c), notwithstanding any other provision of this section or this code.

(5)Have at least 36 months of active investment history.

(6)Issue its shares as fully paid and nonassessable, with no preemptive, conversion, or exchange rights.

(7)Issue its shares to the insurer or to the insurer’s custodian, subcustodian, or depository designated pursuant to Section 1104.9, or

have its shares be retained by a bank, trust company, or other entity other than the investment company that is authorized by the United States to act as a transfer and dividend paying agent for the investment company, provided that, notwithstanding any other provision of this code, Section 1104.9 shall not apply to the assets or investments held by the investment company.

(8)Provide equal rights and privileges to each share within the same class or series, and entitle each share within its class or series to vote and to participate equally in dividends and distributions declared by the investment company and in the net distributable assets of the investment company on liquidation.

(9)If it is a mutual fund, entitle shareholders to require the investment company to redeem all shares.

(10)If it is an

exchange-traded fund, all of its shares are both of the following:

(A)Registered under the Federal Securities Act of 1933.

(B)Either listed and traded on a national securities exchange registered under the Securities Exchange Act of 1934 or have prices ascertained by quotations furnished through a nationwide automated quotations system approved by the Financial Industry Regulatory Authority.

(11)Have no investment policies that authorize any of the following:

(A)Borrowings to exceed 331/3percent of its total assets.

(B)The aggregate notional value of its derivative instruments

outstanding to exceed 10 percent of its total assets.

(C)Investment in commodities or direct ownership of real estate.

(12)Have an expense ratio that does not exceed the following amounts of its average daily net asset values:

(A)For a money market fund, 100 basis points.

(B)For a bond fund, 200 basis points.

(C)For a stock or mixed stock/bond fund, 300 basis points.

(c)An insurer shall do the following:

(1)At no time make or retain an excess fund investment under the authority of this section that exceeds the following limits:

(A)An amount of its admitted assets, as reported in its most recent annual statement, that is more than any of the following:

(i)Three percent in a single investment company or 7 percent in an affiliated group of investment companies.

(ii) Twenty-five percent in all investments authorized by this section.

(B) One hundred percent of its surplus as regards policyholders, as reported in its most recent annual statement, in all investments authorized by this section.

(C) For an investment in a fund that has more than 50 percent of its assets in foreign investments, those foreign investments shall be foreign investments as defined by Section 1240 and shall be considered foreign investments,

investments denominated in foreign currencies, or both, as applicable, for purposes of the limitations set forth in subdivisions (a) and (b) of Section 1241. No insurer shall invest in any such fund pursuant to any other provision of this code.

(D) An investment in any single investment company that exceeds 10 percent of the total net asset value of that investment company.

(2)Make a specific determination, pursuant to Sections 1200 and 1201, that an investment company has stated investment policies that are suitable for the insurer’s investment objectives.

(d)In addition to any other remedies available under this code for any violation of this section, the commissioner may, after giving an insurer notice and an opportunity to be heard, deny credit in any financial statement filed with the commissioner for all or

any part of an investment in an investment company, even if it otherwise complies with this section, if he or she finds the investment to be unsound or hazardous.

The grounds for finding an investment unsound or hazardous may include, but are not limited to, the following determinations:

(1)The investment company’s investment adviser or subadviser lacks sufficient investment experience to render reliable investment advice; or lacks good professional character or good standing with any securities licensing authorities having jurisdiction over them.

(2)The portfolio turnover rate of the investment company is excessive in relation to its investment goals.

(3)The investment company’s annual investment management fee, or other fees or charges incurred by the investment company

or the insurer, are not reasonable when compared to charges or fees associated with similar investment companies.

(4)An investment company fails to mirror substantially any security index upon which its stated investment policy is based.

§ 1192.95

Amended by Stats. 2012, Ch. 419, Sec. 25. (SB 323) Effective January 1, 2013. Operative January 1, 2014, by Sec. 32 of Ch. 419.

(a)Notwithstanding Section 1100, an insurer may make excess funds investments in investment pools and cash management pools established pursuant to this section. The pools shall meet all of the following standards:

(1)All participants in a pool shall each be affiliated with one another within the meaning of subdivision (a) of Section 1215 and shall all be insurers, or a pension plan or profit-sharing plan of a participant or affiliate.

(2)The pools shall be a corporation, partnership, trust, limited liability company, or business trust domiciled in the United States with all assets held in accordance with Section 1104.9 and shall be maintained in one or more accounts in the name of or on behalf of the investment pool. Pool assets shall be held under a bank custody agreement that states and recognizes the claims and

rights of each participant, acknowledges that the pool assets are held solely for the benefit of each participant in proportion to the aggregate amount of its pool investments, and states that the investments shall not be commingled with the general assets of the custodian or any other person. The pool manager shall be an insurer as defined by Section 826 or a business entity registered as an investment adviser under the federal Investment Act of 1940. The fiduciary duties a manager owes to the limited liability company and its members are those of a partner to a partnership. This duty may not be restricted by agreement.

(3)Any management fee shall be subject to disapproval by the commissioner. Costs directly incurred in acquiring or selling assets, such as commissions, transaction fees, or custodial fees, are not management fees and may be charged by the pool to the participants as long as these fees are on a direct cost reimbursement basis.

All costs shall be apportioned to each participant in proportion to its interest in the pool.

(4)All shares of the pool shall be of the same class with equal rights, preferences, and privileges. Each share shall participate equally in dividends and distributions declared by the pool on liquidation in proportion to each participant’s interest. When issued, the shares shall be fully paid and nonassessable and shall have no preemptive, conversion, or exchange rights.

(5)Each participant shall be entitled to require the pool to redeem all or any portion of the shares held by the participant on demand without penalty or assessment on any business day.

(6)All assets of a cash management pool shall be assets that participant insurers may lawfully acquire individually and shall be:

(A)debt obligations issued by or on

behalf of the United States, its territories and possessions, the District of Columbia, and states or their political subdivisions, agencies, and instrumentalities, including industrial development obligations, having a maturity not exceeding one year; (B) corporate debt obligations, other than debt obligations issued, assumed, guaranteed, or insured by a participant or by any affiliate of a participant, having a maturity not exceeding one year and that are rated One or Two by the Securities Valuation Office of the National Association of Insurance Commissioners; or (C) accounts, deposits, or obligations of banks or savings and loan associations insured by an agency or instrumentality of the federal government.

(7)All assets of an investment pool shall be:

(A)investments that are authorized under Section 1191, other than stock issued, assumed, guaranteed, or insured by a participant or any affiliate of a participant; (B) accounts, deposits,

or obligations of banks or savings and loan associations insured by an agency or instrumentality of the federal government; or (C) investments that are authorized under Section 1192, other than securities or notes issued, assumed, guaranteed, or insured by a participant or any affiliate of a participant, or under Section 1194.5 or 1241.

(8)The assets of pools shall be required to meet the requirements of and be authorized for investment by a domestic incorporated insurer under Article 3 (commencing with Section 1170) or this article.

(9)No pool shall make investments in purchases of, or loans upon, more than 30 percent of the total in par value or more than 30 percent of the total number of outstanding shares of the capital stock of any one corporation.

(10)Transactions between the pool and its participants shall

not be deemed to be material for purposes of subdivision (d) of Section 1215.4 or subdivision (b) of Section 1215.5. Investment activity of pools and transactions between pools and participants shall be reported in the annual registration statement required by Section 1215.4 and pursuant to Section 1215.5.

(11)Participation in an investment pool shall be subject to a written pooling agreement that shall be approved by the participant’s board of directors and shall provide that (A) the underlying assets of the pool shall not be commingled with the general assets of the pool manager or any other person; (B) each participant must own an undivided interest in the underlying assets of the pool; (C) the underlying assets of the investment pool are held solely for the benefit of each participant; and (D) the pool manager shall make the records of the investment pool available for inspection by the commissioner. Pool agreements shall also specify what

type of share participants hold to evidence their beneficial interest in the pool’s assets. Prior to the execution of a pool agreement, a participating insurer’s board of directors must approve the agreement only after having received a written opinion from an independent outside counsel explaining the ramifications and possible effects that a declaration of insolvency by a participant will have on the insurer’s share of the investment pool.

(12)No participant insurer may invest more than 10 percent of admitted assets in a single pool or more than 25 percent of admitted assets in all pools combined.

(13)Each participant’s proportionate share of the assets of a pool shall be deemed to be the direct holdings of that participant for purposes of determining compliance with the investment requirements of this code and shall be reported as such on required quarterly and annual

reports. Pools operated as limited liability companies pursuant to Title 2.6 (commencing with Section 17701.01) of the Corporations Code shall conform their investments to this paragraph and the requirements of Sections 1200 and 1201.

(14)The pool manager shall compile and maintain detailed accounting records setting forth (A) the cash received and disbursements reflecting each participant’s proportional investment in the investment pool; (B) a complete description of all underlying assets of the investment pool including amount, interest rate, and maturity date, if any, and other appropriate designations; and (C) other records that, on a daily basis, will allow the commissioner and the participants to verify each participant’s investments in the pool.

(15)Pools shall not borrow or loan assets, except for securities-lending arrangements that are otherwise lawful for insurer

participants of the pool.

(b)As used in this section, “share” means stock, participation unit, certificate of interest, or other evidence of beneficial ownership in the pool, whether evidenced by an instrument or by a book entry maintained by the pool.

(c)The commissioner shall have the authority to review any pool agreement and to disapprove any agreement that does not comply with this section. The commissioner shall have the authority to review the operation of any pool and to order compliance with this section. The commissioner shall have the authority to disallow, as an admitted asset, any pool investment not in compliance with this section. The commissioner may impose a fee upon any pool to recoup the actual cost of review under this section.

§ 1193

Amended by Stats. 1953, Ch. 1653.

Excess funds investments may be made in bonds of any permanent road division, or any district of any state when such bonds are legal investments for savings banks of this State, or have been certified as legal investments for savings banks pursuant to Division 10 of the Water Code, or when the statutes or laws providing for the issuance of such bonds, provide that such bonds shall be entitled to the same force or value or use as bonds issued by any municipality, or such law specifically states that such bonds shall be legal investments for either savings banks, insurance companies, all trust funds, state school funds or any funds which may be invested in bonds of cities,

counties, cities and counties, school districts, or municipalities in the State, or when such bonds have been investigated and approved by a commission or board now or hereafter authorized by law to conduct such investigation and give such approval when such law specifies that upon such approval said bonds are legal investments for insurers, or which the commissioner approves in writing as legal for investment of the funds of insurers. The commissioner in determining whether to approve any bonds as legal investments which do not otherwise qualify as such, shall make, upon the request of any insurer, at such insurer’s expense, an investigation and finding as provided for in Section 1175.

§ 1194

Enacted by Stats. 1935, Ch. 145.

Excess funds investments may be made in bonds issued by any county, municipality, or school district in this State to represent assessments for local improvements authorized by law. At the date of such investment the purchase price or principal loaned shall not exceed fifty per cent of the market value of the real property or of the real property together with the improvements thereon, upon which the bond is the first lien.

§ 1194.1

Added by Stats. 1957, Ch. 659.

Excess funds investments may be made in bonds issued pursuant to the Improvement Bond Act of 1915.

§ 1194.5

Amended by Stats. 1983, Ch. 115, Sec. 2.

Excess funds investments may be made in any debt obligation issued by the United States, a federal agency or entity authorized to issue debt obligations by federal statute; the Commonwealth of Puerto Rico, its agencies and political subdivisions; any state, its agencies or political subdivisions, or by any city, county, or city and county, or by any department or board of such city, county, or city and county, whether issued in bearer, registered or book entry form.

§ 1194.6