RCW 48.13.273
Acquisition of medium and lower grade obligations -- Definitions -- Limitations -- Rules. (Effective until July 1, 2012.)

(1) As used in this section:

     (a) "Lower grade obligations" means obligations that are rated four, five, or six by the securities valuation office.

     (b) "Medium grade obligations" means obligations that are rated three by the securities valuation office.

     (c) "Securities valuation office" means the entity created by the national association of insurance commissioners in part, to assign rating categories for bond obligations acquired by insurers.

     (2) No insurer may acquire directly or indirectly, any medium grade or lower grade obligation if, after giving effect to the acquisition, the aggregate amount of all medium grade and lower grade obligations then held by the insurer would exceed twenty percent of its admitted assets provided that:

     (a) No more than ten percent of an insurer's admitted assets may be invested in lower grade obligations;

     (b) No more than three percent of an insurer's admitted assets may be invested in lower grade obligations rated five or six by the securities valuation office;

     (c) No more than one percent of an insurer's admitted assets may be invested in lower grade obligations rated six by the securities valuation office;

     (d) No more than one percent of an insurer's admitted assets may be invested in medium and lower grade obligations issued, guaranteed, or insured by any one institution; and

     (e) No more than one-half of one percent of an insurer's admitted assets may be invested in lower grade obligations issued, guaranteed, or insured by any one institution.

     (3) This section does not require an insurer to sell or otherwise dispose of any obligation lawfully acquired before July 25, 1993, or in accordance with this chapter. The commissioner shall adopt rules identifying the circumstances under which the commissioner may approve an investment in obligations exceeding the limitations of this section as necessary to mitigate financial loss by an insurer.

     (4) The board of directors of any domestic insurance company which acquires or invests, directly or indirectly, more than two percent of its admitted assets in medium grade and lower grade obligations of any institution, shall adopt a written plan for making those investments. 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 issuer, industry, duration, liquidity, and geographic location.

[1993 c 92 § 5.]