SB314 Alabama 2011 Session

Summary

Primary Sponsor

Mark Slade Blackwell

Republican

Session

Regular Session 2011

Title

Insurance, domestic insurers, investments of, prohibited activities with certain exceptions, financial institutions authorized in the state in lieu of assets, except deposits for outside of state, removing or concealing assets or records, prohibited, using custodial arrangements for holding securities, prohibited, investment activities further regulated, Secs. 27-27-26, 27-27-29, 27-41-5, 27-41-27 am'd.; Act 2010-685, 2010 Reg. Sess. am'd.

Summary

SB314 updates Alabama's insurance laws to give domestic insurers more flexibility in asset custody and investments, with new exemptions for certain officers and expanded foreign investment options under regulator oversight.

What This Bill Does

It creates exemptions from strict pecuniary-interest rules for certain officers, directors, committee members, or employees who invest or handle insurer funds. It requires insurers to keep assets in Alabama-based financial institutions, but allows outside deposits for safekeeping or convenient operation and permits custodial arrangements for holding securities subject to regulator-approved safeguards. It expands the range and limits of investments outside the United States and Canada, with jurisdiction- and currency-based caps and an overall aggregate limit. It also requires board or committee approval for investments or loans over 10% of admitted assets and allows asset segregation or commingling with other insurers under the Commissioner's approval, with the act becoming effective immediately after the governor signs it.

Who It Affects

• Domestic insurers and the officers, directors, committee members, and employees who handle or invest insurer funds, who gain exemptions and new investment flexibility subject to limits and regulatory approvals.
• The Alabama Department of Insurance (the Commissioner) and state regulators, who will oversee approvals for custodial arrangements, asset segregation, foreign investments, and in-state asset requirements.

Key Provisions

• Exemption from pecuniary-interest prohibitions for certain officers, directors, committee members, or employees who invest or handle insurer funds, with specific allowed holdings (e.g., common stock, certain mutual funds, government bonds in the US/Canada, and certain international development organization securities).
• Insurers must generally keep assets in Alabama-based financial institutions, with exceptions for real property outside Alabama, necessary branch operations outside the state, and legally required outside deposits or safekeeping outside the state.
• Insurers may deposit assets outside Alabama for safekeeping or convenient operation, and may maintain executive offices outside Alabama with records accessible to the Alabama Commissioner.
• Custodial arrangements for holding securities (segregated or commingled) are permitted if they meet rules adopted by the Commissioner for safeguarding assets and facilitating examinations.
• Insurers may invest in securities or other investments located outside the United States or Canada, subject to jurisdiction- and currency-based limits and an overall aggregate limit (up to 20% of admitted assets).
• Foreign investment limits include specific caps by sovereign debt designation, currency denomination limits, and aggregate foreign-currency exposure, plus rules to treat investments denominated in foreign currency and related hedging arrangements.
• Investments or loans exceeding 10% of admitted assets generally require approval by the insurer’s board or designated committee, with required recording and reporting.
• Section 27-41-27 allows cross-border investments in foreign jurisdictions up to the level of obligations incurred in that country, with Canadian securities treated separately; various sections impose additional investment limits and conditions.
• Effective date: the act becomes effective immediately following passage and the Governor’s approval.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Insurance