SECTIONS 1190-1202 - California Statutes

INSURANCE CODE

SECTION 1190-1202

1190. 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. 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. 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. (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. 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 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 paragraph (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. 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 2 1/2 percent 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.

1192.2. 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 66 2/3 percent 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 66 2/3 percent 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. 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. 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. 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. (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. (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. (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
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 five thousand dollar ($5,000) fee 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. 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 33 1/3 percent 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. (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 2.5 (commencing with Section 17000) 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.

1192.10. (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.

1193. 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. 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. Excess funds investments may be made in bonds issued
pursuant to the Improvement Bond Act of 1915.

1194.5. 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. (a) Excess funds investments may be made by an insurer in
bonds, notes, or other evidences of indebtedness payable in United
States dollars, and issued by a corporation incorporated under the
laws of an alien government provided all of the following conditions
are met:
(1) All the stock of the corporation is owned and ultimately
controlled by a domestic corporation.
(2) Payment in full of any bond, note, or other evidence of
indebtedness is guaranteed by the domestic corporation.
(3) Any bond, note, or other evidence of indebtedness is evaluated
by the National Association of Insurance Commissioners as a bond
which may be carried at amortized cost.
(b) Excess fund investments may be made by a life insurer in
bonds, notes, or other evidence of indebtedness payable in a currency
other than United States dollars and issued by a corporation
incorporated under the laws of an alien government provided all the
following conditions are met:
(1) All of the stock of the corporation is owned and ultimately
controlled by a domestic corporation.
(2) Payment in full of any bond, note, or other evidence of
indebtedness is guaranteed by the domestic corporation.
(3) Any bond, note, or other evidence of indebtedness is evaluated
by the National Association of Insurance Commissioners as a bond
which may be carried at amortized cost.
(4) The life insurer shall, prior to or within five business days
after purchase, enter into a contract with a qualified bank pursuant
to which the bank agrees to exchange the payments made on the
nondollar denominated investment for the full term to maturity of the
investment for United States currency at a rate approximating the
prevailing exchange rate at the time of the purchase. For purposes of
this subdivision, a qualified bank means a bank the accounts of
which are insured by an agency or instrumentality of the federal
government or which is a member of the Federal Reserve System and a
bank that has a net worth equal to or in excess of two hundred fifty
million dollars ($250,000,000) as shown on its most recently
published financial statements.
(c) "Domestic," as used in this section, means organized under the
laws of any state, or of the United States or of the District of
Columbia.

1194.7. Excess funds investments may be made in the stock of a
Federal home loan bank. Any domestic incorporated insurer investing
in the stock of a Federal home loan bank and thereby becoming a
member thereof shall have power (a) to obtain advances from, and (b)
to pledge collateral as security for such advances from such Federal
home loan bank.

1194.8. (a) Excess fund investments may be made by a domestic
insurer in real estate and leases thereof and in making improvements
thereon for business or residential purposes as an investment for the
production of income. The phrase "business or residential purposes"
shall not include real estate or leases primarily intended for use or
valued as agricultural, horticultural, farm, ranch or mineral
property. Any such investment may be made by admitted insurers having
admitted assets aggregating in value not less than twenty-five
million dollars ($25,000,000).
Domestic insurers, other than life, title, mortgage and mortgage
guaranty insurers, having admitted assets aggregating in value less
than twenty-five million dollars ($25,000,000) but not less than ten
million dollars ($10,000,000) may also qualify to make such
investments for a period of 12 months with the prior approval of the
commissioner. Real estate and leases acquired and improvements made
thereon under this section shall not exceed in the aggregate an
amount equal to 10 percent of the insurer's admitted assets. Real
estate and leases acquired under this section shall be in addition to
that which is authorized to be acquired under the provisions of
paragraphs (a) to (h), inclusive, of Section 1194.86. 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 the investment it would result in the insurer then owning
real estate and leases thereof, other than of the kind and for the
purposes described in paragraphs (a), (b), and (f) of Section
1194.86, in an amount exceeding 10 percent of the insurer's admitted
assets. Any investment in a single parcel of real estate or in a
single leasehold including improvements thereon made under the
authority of this section shall not be made in an amount in excess of
1 percent of the insurer's admitted assets or 10 percent of the
aggregate of the insurer's capital paid-up and unassigned surplus,
whichever amount is larger. A lease eligible for purchase hereunder
shall be for a term which at the date of purchase shall not expire
for at least 24 years. Percentage or dollar value of assets and
capital paid-up and unassigned surplus as provided herein shall be
determined by the insurer's last preceding annual statement of
conditions and affairs made as of the December 31st last preceding
and which has been filed with the commissioner pursuant to law.
(b) In computing the value of real estate held by a domestic
insurer for the purpose of complying with the asset standards or
percentage of asset standards, the insurer shall add the net equity
of the real estate owned by the insured to the amount of encumbrances
and liens against the property for which the insurer could be held
liable for any deficiency in the event of foreclosure or other action
to realize the value of the liens. "Net equity" as used in this
section means book value less the value of liens and encumbrances.
(c) Notwithstanding subdivision (a) or Section 1100, excess fund
investments may be made by a domestic life insurer as an investment
for the production of income in interests in publicly traded limited
partnerships, limited partnerships in which the life insurer is the
general partner, general partnerships, or in shares of beneficial
interests in trusts substantially all the assets of which are real
estate or leases thereof or improvements thereon for business or
residential purposes. "Business or residential purposes" does not
include real estate or leases primarily intended for use or valued as
agricultural, horticultural, farm, ranch, or mineral property. Any
investment authorized by this subdivision may be made by domestic
life insurers having admitted assets aggregating in value not less
than one hundred million dollars ($100,000,000).
Investments acquired pursuant to this subdivision shall be in
addition to investments authorized to be acquired under subdivisions
(a) to (h), inclusive, of Section 1194.86. Except upon the prior
approval in writing of the commissioner, an investment may not be
made under the authority of this subdivision in a general partnership
or a nonpublicly traded trust if at the time of the making of the
investment it would result in the life insurer owning aggregate
interests in those investments in an amount exceeding 3 percent of
the life insurer's admitted assets. Except upon the prior approval in
writing of the commissioner, an investment may not be made if at the
time it would result in the life insurer owning interests in general
or limited partnerships or in shares of beneficial interests in
trusts in an amount exceeding 10 percent of the life insurer's
admitted assets.
An investment in a single partnership or shares of beneficial
interest in a single trust made pursuant to this subdivision shall
not be made in an amount in excess of 1 percent of the life insurer's
admitted assets or 10 percent of the aggregate of the life insurer's
capital paid-up and unassigned surplus, whichever is larger.
Percentage or dollar value of assets and capital paid-up and
unassigned surplus as provided herein shall be determined by the life
insurer's last preceding annual statement of conditions and affairs
made as of the December 31st last preceding and which has been filed
with the commissioner pursuant to applicable provisions of law.
For purposes of this subdivision, "publicly traded" means
securities of a limited partnership or trust listed and traded on a
securities exchange subject to regulation, supervision, or control
under a statute of the United States or listed on the NASDAQ system.
(d) Investments made pursuant to subdivisions (a) and (c) shall
not exceed in the aggregate an amount equal to 10 percent of the
insurer's admitted assets and shall produce sufficient cash-flow to
amortize any mortgage, except with the prior written consent of the
commissioner.

1194.81. Domestic incorporated insurers may invest in notes or
bonds secured by a mortgage or other first lien upon unencumbered
real property meeting the criteria of subdivision (e), if the secured
obligation meets the conditions of subdivisions (a) and (b), as
follows:
(a) There exists no condition or right of reentry or of forfeiture
under which the lien can be cut off, subordinated, or otherwise
disturbed.
(b) The secured obligation satisfies the conditions of paragraph
(1), (2), (3), or (4), as follows:
(1) The principal so loaned or the entire note or bond issue so
secured, plus the amount of the liens of any public bond, assessment,
or tax assessed upon the property loaned upon, does not exceed 80
percent of the market value of that real property, together with
improvements which are taken as security at the date of investment.
(2) Where the loan is insured by an admitted mortgage guaranty
insurer conforming to the provisions of Chapter 2A (commencing with
Section 12640.01) of Part 6 of Division 2, the unguaranteed portion
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 80 percent of the market value of that real property, together
with improvements which are taken as security at the date of
investment.
(3) Where the loan is made or the notes or bonds are issued for a
building loan on real property, the principal so loaned, or the
entire outstanding notes or bonds so issued, plus the amount of the
lien of any public bond, assessment, or tax assessed upon the
property loaned upon, at no time exceeds 80 percent of the market
value of the real property together with the actual cost of the
improvements thereon taken as security.
(4) Where the loan is secured by a first mortgage or other first
lien upon real property primarily improved with a residential
building, or buildings, which for the purposes of this paragraph
includes a condominium unit, designed for occupancy by not more than
four families, the terms of the loan provide for monthly payments of
principal and interest sufficient to effect full repayment of the
loan within the remaining useful life of the building as estimated in
the appraisal for the loan, or 40 years, whichever is less, and the
principal so loaned or the entire note or bond issue so secured, plus
the amount of the liens of any public bond, assessment, or tax
assessed upon the property loaned, does not exceed 90 percent of the
market value of that real property, or of that real property together
with improvements which are taken as security on the date of
investment.
(c) Real property is not encumbered within the meaning of this
section if subject only to one or more of the following:
(1) The lien of taxes and assessments not delinquent at the time
of investment.
(2) The lien for delinquent taxes or assessments delinquent at the
time of investment, which are being contested by any legal
proceedings, if 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 that contest.
(3) The lien of taxes and assessments becoming delinquent
subsequent to the time of investment.
(4) Outstanding mineral, oil or timber rights.
(5) Easements or rights-of-way.
(6) Sewer rights.
(7) Rights in walls.
(8) Building restrictions or other restrictive covenants, or
conditions or regulations of use, or leases under which rents or
profits are reserved to the owner.
(d) For the purposes of this section, delinquent taxes funded on
any deferred payment plan shall be deemed delinquent.
(e) Only real property meeting the following criteria of paragraph
(1), (2), or (3) may secure notes or bonds eligible for investment
under this section:
(1) There is an improvement on the real property with a value that
is substantial in relation to the total value of the property.
(2) There is no improvement on the real property, but the funds
loaned on account of the secured obligation, which meets the criteria
of paragraph (3) of subdivision (b), are used to construct an
improvement on real property and the value of the improvement
constructed on the real property is at all times substantial in
relation to the amount of the construction loan funds advanced by the
insurer and drawn down by or on account of the borrower.
(3) There is no improvement on the real property, but the property
is revenue producing and is used primarily as agricultural,
horticultural, farm, or ranch property.
(4) There is no improvement on the real property, but the note or
bond secured by that real property is held in conjunction with
another note or bond held by the insurer that is secured by other
real property on which there exists a substantial improvement.
However, the value of the unimproved real property may not exceed 20
percent of the total value of all real property taken as security for
all those notes or bonds.

1194.82. (a) An insurer may invest in notes or bonds secured by
second mortgages or other second liens, including all inclusive or
wraparound mortgages or liens, upon real property encumbered only by
a first mortgage or lien which meets the requirements set forth in
Section 1194.81, subject to either of the following conditions:
(1) The insurer also owns the note or bond secured by the prior
first mortgage or lien and the aggregate value of both loans does not
exceed the loan to market value ratio requirements of Section
1194.81.
(2) The note or bond is secured by an "all-inclusive" or
"wraparound" lien or mortgage which conforms to the requirements
specified in subdivision (b), provided that the aggregate value of
the resulting loan does not exceed the loan to market value ratio
requirements of Section 1194.81.
(b) "Wraparound" and "all-inclusive" lien or mortgage refer to a
loan made by an insurer to a borrower on the security of a mortgage
or lien on real property other than property containing a residence
of one to four units or upon which a residence of one to four units
is to be constructed, where the real property is encumbered by a
first mortgage or lien and which loan is subject to all of the
following:
(1) There is no more than one preexisting mortgage or lien on the
real property.
(2) The total amount of the obligation of the borrower to the
insurer under the loan is not less than the sum of the amount
disbursed by the insurer on account of the loan and the outstanding
balance of the obligation secured by the preexisting lien or
mortgage.
(3) The instrument evidencing the lien or mortgage by which the
obligation of the borrower to the insurer under the loan is secured,
is recorded, and the lien is insured under a policy of title
insurance in an amount not less than the total amount of the
obligation of the borrower to the insurer under the loan.
(4) The insurer either (A) pursuant to Section 2924b of the Civil
Code, files for record in the office of the recorder of the county in
which the real property is located a duly acknowledged request for a
copy of any notice of default or of sale under the preexisting lien,
(B) otherwise arranges with the recorder of any county in which the
real property is located to be advised in case of the filing for
record of any notice of default or of sale with respect to any
obligation secured by the preexisting lien, or (C) is entitled under
applicable law to receive notice of default, sale, and foreclosure of
the preexisting lien.
(5) The amount disbursed by an insurer under any single wraparound
or all-inclusive loan made pursuant to this section shall not exceed
the greater of 1 percent of the insurer's admitted assets or 10
percent of the aggregate of the insurer's capital paid-up and
unassigned surplus.

1194.85. In any case in which a domestic insurer has requested the
approval of the commissioner to make the investments specified in
subdivision (a) or (c) of Section 1194.8, that insurer shall
reimburse the department for all actual expenses, not to exceed five
hundred dollars ($500), incurred by it in making a determination of
whether to approve or disapprove that request.

1194.86. Every admitted incorporated insurer may purchase, hold, or
convey real estate only for the following purposes and in the
following manner:
(a) The building in which it has its principal office and the land
upon which that building stands.
(b) Real estate requisite for its accommodation in the convenient
transaction of its business.
(c) Real estate acquired by it, or by any person for it, to secure
the payment of loans previously contracted or for moneys due.
(d) Real estate purchased at sales upon deeds of trust or upon
judgments or decrees obtained for those loans or debts.
(e) Real estate conveyed to it in satisfaction of debts previously
contracted in the course of its dealings.
(f) Real estate acquired by gift or devise.
(g) Real estate acquired in part payment of the consideration of
the sale of real property owned by it, if each such transaction shall
not effect an increase in its investment in such real property.
(h) Upon the written approval of the Insurance Commissioner, real
estate requisite or desirable for the protection or enhancement of
the value of other real or personal property owned by the insurers.
(i) Real estate and improvements thereon which domestic insurers
are permitted to invest pursuant to the provisions and subject to the
conditions and limitations of Section 1194.8 or Section 1210.

1194.87. If, after a hearing, the commissioner is satisfied that an
insurer is carrying upon its books any parcel or parcels of real
estate at values exceeding the sound market value thereof, he or she
may order the insurer to:
(a) Create an adequate contingency reserve against the book value
of the parcel or parcels, or
(b) Reduce the book value of the parcel or parcels by a
corresponding amount.
In the case of real estate, not of a character described in
subdivision (a), (b), (h), or (i) of Section 1194.86, which has been
held by the insurer for more than five years, the commissioner may
order the insurer to dispose of the real estate within six months if,
after a hearing, the commissioner is satisfied that:
(1) The insurer has refused reasonable offers for the sale of the
real estate, or
(2) The real estate may be disposed of without undue hardship to
the insurer.
For the purpose of enabling him or her to determine whether to
issue an order pursuant to this section, the commissioner, if he or
she is not satisfied with the appraisal furnished at his or her
request by the insurer, may appraise the real estate at the expense
of the insurer.
The commissioner may suspend or revoke the certificate of
authority of an insurer failing to comply with any order issued under
this section.

1194.88. Every admitted incorporated insurer may, for the
protection or enhancement of the value of real property acquired
under the provisions of Section 1194.86, use its funds in the manner
as it shall deem proper to repair, alter, remodel, rehabilitate,
demolish, purchase furnishings or other personal property for use in
or otherwise to improve the real estate.

1194.9. If the commissioner shall decide, after due notice and
hearing that the interest of any company having real estate acquired
pursuant to the provisions of Section 1194.8 requires that any
specific parcel or parcels of such real estate be disposed of, then
such insurance company shall dispose of such real estate within such
reasonable time as the commissioner shall direct.

1194.95. Excess funds investments may be made in an electronic
computer or data processing machine or system to be used in
connection with the business of the insurer; provided, however, that
this machine or system shall have an original cost of at least two
hundred fifty thousand dollars ($250,000) and shall be amortized in
full over a period not to exceed four full calendar years.

1195. This article does not authorize investments in any obligation
unless the obligation is interest or income-bearing or
dividend-paying.
An obligation is interest or income-bearing within the meaning of
this section if it is not in default in payment of interest or income
on the date of acquisition by the insurer and if no such default was
imminent on such date.
Nothing in this section contained, however, shall limit or affect
the authority conferred by section 1191 of this code.

1196. Excess funds investments shall not be made in any stock or
obligation unless:
(a) The stock or obligation qualifies as a sound investment.
(b) In case of a purchase, the price paid for the security is not
in excess of the current market value at the date of purchase.
(c) In case of a loan, the amount loaned does not exceed
eighty-five per cent of the market value, at the date of the loan, of
the collateral taken as security.

1196.1. (a) No domestic insurer shall acquire, directly or
indirectly, any medium grade or lower grade obligation of any
institution if, after giving effect to any such acquisition, the
aggregate amount of all medium grade and lower grade obligations then
held by the domestic insurer would exceed 20 percent of its admitted
assets, provided that, (1) no more than 10 percent of its admitted
assets consists of obligations rated four, five, or six by the
Securities Valuation Office; (2) no more than 3 percent of its
admitted assets consist of obligations rated five or six by the
Securities Valuation Office; and (3) no more than 1 percent of its
admitted assets consists of obligations rated six by the Securities
Valuation Office. Attaining or exceeding the limit of any one
category shall not preclude an insurer from acquiring obligations in
other categories subject to the specific and multicategory limits.
(b) No domestic insurer may invest more than an aggregate of 1
percent of its admitted assets in medium grade obligations issued,
guaranteed, or insured by any one institution nor may it invest more
than one-half of 1 percent of its admitted assets in lower grade
obligations issued, guaranteed, or insured by any one institution. In
no event, however, may a domestic insurer invest more than 1 percent
of its admitted assets in any medium or lower grade obligations
issued, guaranteed, or insured by any one institution.
(c) Notwithstanding subdivision (a) or (b), a domestic insurer may
acquire an obligation of an institution in which the insurer already
has one or more obligations if the obligation is acquired in order
to protect an investment previously made in the obligations of the
institution; provided that all of those acquired obligations shall
not exceed one-half of 1 percent of the insurer's admitted assets.
(d) Nothing contained in this section; (1) shall prohibit a
domestic insurer from acquiring an obligation as a result of a
restructuring of a medium or lower grade obligation already held; or
(2) shall require a domestic insurer to sell or otherwise dispose of
any obligation legally acquired prior to the effective date of this
section.
(e) The board of directors of any domestic insurer that acquires
or invests, directly or indirectly, more than 2 percent of its
admitted assets in medium grade and lower grade obligations, shall
adopt a written plan for the making of that investment. The plan, in
addition to guidelines with respect to the quality of the issues
invested in, shall contain diversification standards including, but
not limited to, standards for issuers, industry duration, liquidity,
and geographic location.
(f) As used in this section:
(1) "Medium grade obligations" means obligations which are rated
three by the Securities Valuation Office of the National Association
of Insurance Commissioners.
(2) "Lower grade obligations" means obligations which are rated
four, five, or six by the Securities Valuation Office of the National
Association of Insurance Commissioners.
(3) "Admitted assets" means the amount shown as of the last day of
the most recently concluded annual statement year, computed in the
manner prescribed by the commissioner.
(4) "Aggregate amount of medium grade and lower grade obligations"
means the aggregate statutory statement value of the obligation.
(5) "Institution" means (A) any corporation, business trust, or
limited partnership organized under the laws of any state of the
United States, District of Columbia, the Dominion of Canada, any
province of the Dominion of Canada or (B) an authority established
pursuant to the California Industrial Development Financing Act,
Title 10 (commencing with Section 91500) of the Government Code.

1197. Excess funds investments shall not be made in a loan or any
other obligation to any one borrower or obligor, including all
affiliates which shall be treated as one borrower or obligor, in an
amount exceeding 10 percent of the capital stock and surplus or 1
percent of the admitted assets of the lending insurer, whichever
amount is greater.

1198. Excess funds investments shall not be made in purchases of or
loans upon shares of the capital stock of any one corporation in an
amount exceeding 10 percent of the excess of the admitted assets of
the investing insurer over the liabilities and required reserves of
such insurer.
Nor shall the excess amount of any such investment over and above
25 percent of the excess of the admitted assets of the owner thereof
over the liabilities and required reserves of such owner be retained.
The commissioner may determine the retention of such excess amount
over said 25 percent to be a violation of the provisions of this
article within the meaning of and subject to all the provisions of
Section 1202.
No investment which is permitted under Section 1199 shall be
prohibited or its retention limited by this section.

1199. No domestic incorporated fire, life or marine insurer shall
make excess funds investments in purchases of, or loans upon, more
than 30 percent of the total in par value or number of outstanding
shares of the capital stock of any one corporation, except:
(a) In the purchase of the stock of another admitted domestic
insurer; or
(b) With the prior authorization of the commissioner, in the
purchase of stock of any other insurance corporation organized under
the laws of any other state, or of the Dominion of Canada or of any
province of the Dominion of Canada, which is supervised by the state
or dominions or provincial insurance commissioner or similar
official, and the investments of which comply in substance with the
investment requirements and limitations imposed by this code upon
like domestic insurers; provided, that no such domestic insurer shall
have in the aggregate more than 50 percent of its capital and
surplus invested in the stocks of insurance corporations organized
under the laws of this state or other states or of the Dominion of
Canada or of any province of the Dominion of Canada.
(c) In the purchase of stock of any corporation organized under
the laws of this state for the exclusive purpose of engaging in the
business of financing insurance premiums and any and all matters
incidental thereto and engaging exclusively in such business and such
matters.
(d) Such insurer may purchase or otherwise acquire all or any
percent of the issued and outstanding stock of any corporation which
is any of the following:
(1) A corporation providing investment advisory, management, or
sales services to an investment company or separate account.
(2) A real property holding, developing, managing, or leasing
corporation.
(3) A data processing or computer service corporation.
(4) An investment company or companies as defined by the
Investment Company Act of 1940, (Title 15, U.S.C., Sec. 80 a-1, et
seq.).
(5) A corporation acting as administrative agent for a
governmental instrumentality performing insurance-related functions,
or for private health and welfare plans.

1200. An excess funds investment shall not be made unless
authorized or approved by the directors of the investor or by a
committee thereof charged with the duty of supervising or making such
investment. Such authorization or approval shall be entered upon the
records or minutes of the investor and, if made upon authority of
such a committee a report shall be submitted to the directors at
their next meeting.

1201. The entry of approval shall show:
(a) The fact of making such investment.
(b) The amount thereof.
(c) The name of each director voting to approve the investment.
(d) The amount, character and value of the security purchased or
taken as collateral.
(e) If the investment is a loan, the name of the borrower, the
rate of interest thereon and the due date thereof.

1202. The commissioner may, in his discretion and after hearing, by
written order require the disposal of any investments made in
violation of the provisions of this article, pending which disposal
pursuant to such order no value shall be allowed for such investment
in any statement, required by any provision of this code, purporting
to show the financial condition of the owner thereof, or in measuring
the financial condition of the owner thereof for the purpose of
determining whether such owner is solvent or insolvent. The
commissioner may also, for good cause, require the disposal of any
excess funds investments.