Title 5. Assets, Liabilities, Reserves, and Investments of Insurers — Subtitle 6. Investments of Insurers Other Than Life Insurers
Statutes in effect as of October 1, 2026.
Md. Code Ann., Ins. § 5-601 (2026)
Title 5. Assets, Liabilities, Reserves, and Investments of Insurers
Subtitle 6. Investments of Insurers Other Than Life Insurers
§ 5–601LinkCopy Citation
Except for § 5-602 of this subtitle, this subtitle applies to domestic insurers other than life insurers.
Md. Code Ann., Ins. § 5-602 (2026)
Title 5. Assets, Liabilities, Reserves, and Investments of Insurers
Subtitle 6. Investments of Insurers Other Than Life Insurers
§ 5–602LinkCopy Citation
(a)
For the purposes of this section, the domicile in the United States of an alien insurer, other than an insurer formed under the laws of Canada, is deemed to be the state where the alien insurer maintains its largest deposit of trusteed assets.
(b)
The investment portfolio of a foreign insurer or alien insurer, other than a life insurer, shall be:
(1)
as allowed by the laws of its domicile; and
(2)
of a quality substantially as high as that required under this subtitle for similar funds of like domestic insurers.
(c)
The Commissioner may deny or refuse to renew a certificate of authority to a foreign insurer or alien insurer if:
(1)
the foreign insurer or alien insurer has investments in one person in excess of the limit provided in § 5-606 of this subtitle; or
(2)
the Commissioner finds that its investments do not comply in substance with the investment requirements and limitations of this subtitle for domestic insurers transacting the same kind of insurance business.
Md. Code Ann., Ins. § 5-603 (2026)
Title 5. Assets, Liabilities, Reserves, and Investments of Insurers
Subtitle 6. Investments of Insurers Other Than Life Insurers
§ 5–603LinkCopy Citation
(a)
The eligibility of an investment shall be determined as of the date of the making or acquisition of the investment.
(b)
An investment limitation that is based on the amount of assets or particular funds of an insurer shall relate to the assets or funds as shown by:
(1)
the annual statement of the insurer as of the December 31 immediately preceding the date of acquisition of the investment by the insurer; or
(2)
a current financial statement of the insurer filed with the Commissioner that reflects the result of merger or consolidation with another insurer, bulk reinsurance, or change in capitalization.
Md. Code Ann., Ins. § 5-604 (2026)
Title 5. Assets, Liabilities, Reserves, and Investments of Insurers
Subtitle 6. Investments of Insurers Other Than Life Insurers
§ 5–604LinkCopy Citation
(a)
An insurer may not make an investment or loan unless the investment or loan is authorized by:
(1)
the board of directors of the insurer; or
(2)
a committee authorized by the board of directors of the insurer to supervise or make investments and loans.
(b)
The committee described in subsection (a)(2) of this section shall:
(1)
record its minutes; and
(2)
submit regular reports of the committee to the board of directors.
Md. Code Ann., Ins. § 5-605 (2026)
Title 5. Assets, Liabilities, Reserves, and Investments of Insurers
Subtitle 6. Investments of Insurers Other Than Life Insurers
§ 5–605LinkCopy Citation
(a)
In addition to investments otherwise excluded under this article, an insurer may not directly or indirectly invest in or lend its funds on security of:
(1)
obligations, stock, or other securities of a corporation, association, or other business unit that is insolvent at the time of the acquisition or loan, except securities eligible for investment under § 5–608 of this subtitle;
(2)
a mortgage or deed of trust, or real property or an interest in real property, that does not come within the class of investments specified in § 5–608(j), (k), (l), (m), and (n) of this subtitle;
(3)
the capital stock of the insurer;
(4)
stocks, bonds, or other securities issued by a corporation, other than an insurer, if a majority of the stock having voting powers of the issuing corporation is owned directly or indirectly by or for the benefit of one or more officers or directors of the insurer; or
(5)
an investment that the Commissioner finds is against public policy or designed to evade a prohibition of this section.
(b)
(1)
An insurer may not directly or indirectly invest in or lend its funds on security of stocks, bonds, or other securities issued by a corporation, if a majority of the outstanding stock of the corporation, or a majority of the stock having voting powers of the corporation, is or will be after the acquisition directly or indirectly owned:
(i)
by the insurer or by or through one or more of the insurer’s officers or directors holding the stock for the benefit of the insurer or its stockholders;
(ii)
by a parent corporation or subsidiary of the insurer, the parent corporation, or subsidiary of the parent corporation; or
(iii)
by any combination of the insurer, its parent corporation, its subsidiaries, or its stockholders.
(2)
Paragraph (1) of this subsection does not prevent an investment in:
(i)
the stock, bonds, or other securities of a corporation organized exclusively to hold and operate real estate acquired by the insurer, in accordance with and subject to § 5-608 of this subtitle;
(ii)
the stock of another insurer; or
(iii)
the stocks, bonds, or other securities of a corporation that is engaged exclusively in a kind of business properly incidental to the insurance business of the insurer, including an investment in the securities of a corporation that is engaged in the financing of insurance premiums or in another incidental business and in the business of holding and operating real estate.
(c)
(1)
An insurer may not directly or indirectly invest in or lend its funds on security of stocks, shares, bonds, or obligations of a person or governmental or business unit of or in a foreign country or subdivision of a foreign country, unless the foreign investments conform substantially with the limitations imposed by this section on like domestic investments.
(2)
The aggregate amount of foreign investments held by an insurer under paragraph (1) of this subsection and under § 5-608(o) and (p) of this subtitle may not exceed the greater of:
(i)
10% of the insurer’s total admitted assets;
(ii)
one and one-half times the amount of the insurer’s reserves and other obligations under the insurance contracts or reinsurance contracts in that country; and
(iii)
the amount necessary to enable the insurer to transact insurance business in the foreign country, directly or through a subsidiary corporation.
Md. Code Ann., Ins. § 5-606 (2026)
Title 5. Assets, Liabilities, Reserves, and Investments of Insurers
Subtitle 6. Investments of Insurers Other Than Life Insurers
§ 5–606LinkCopy Citation
(a)
(1)
Except as otherwise specifically provided in this subtitle, an insurer may not have more than 10% of its total admitted assets invested in or lent on the securities of one person.
(2)
Paragraph (1) of this subsection does not apply to:
(i)
the classes of governmental obligations eligible for minimum capital investments of the insurer, including those obligations eligible under § 5-608(l) of this subtitle; or
(ii)
investments in stock of other insurers.
(b)
An insurer may not acquire the kind of real property specified in § 5-608(n)(1)(i) and (ii) of this subtitle if the value of the real property, plus the value of all of the real property then held by the insurer, exceeds 10% of the insurer’s total admitted assets.
Md. Code Ann., Ins. § 5-607 (2026)
Title 5. Assets, Liabilities, Reserves, and Investments of Insurers
Subtitle 6. Investments of Insurers Other Than Life Insurers
§ 5–607LinkCopy Citation
(a)
Before investing in other classes of securities or types of investments, each insurer shall invest its funds in securities of the classes described in subsection (b) of this section in an amount equal in value to the minimum capital stock and surplus required of a domestic stock insurer authorized to transact the same kind of insurance business.
(b)
(1)
Subject to paragraph (2) of this subsection, the investments required by subsection (a) of this section may be made only in the following classes of securities:
(i)
bonds or other evidences of indebtedness of the United States or an agency of the United States if the obligation is guaranteed as to principal and interest by the United States;
(ii)
bonds or other evidences of indebtedness that are direct obligations of the State or of a county, district, or municipal corporation of the State;
(iii)
bonds or other evidences of indebtedness that are direct obligations of another state;
(iv)
mortgage loans or deeds of trust, as specified in § 5-608(j) and (k) of this subtitle, on property located in the State; or
(v)
ground rents as specified in § 5-608(m) of this subtitle.
(2)
At least 60% of the total amount of the required minimum investments must consist of the classes of securities specified in paragraph (1)(i) and (ii) of this subsection.
(c)
An insurer shall maintain the minimum investments required by subsection (a) of this section free and clear from any lien or pledge, other than as impressed on:
(1)
a deposit with any government in the United States; or
(2)
trusteed assets held in trust for the security of the insurer’s policyholders and creditors.
(d)
(1)
After satisfying the minimum investment requirements of subsection (a) of this section, an insurer shall invest, or otherwise acquire or loan on, additional funds to bring its investments up to an amount not less than 50% of the aggregate amount of its unearned premium and loss reserves, in cash or the classes of reserve investments authorized under § 5-608 of this subtitle.
(2)
An insurer shall maintain the investments required by this subsection free from any lien or pledge, other than a deposit of securities, cash, or trusteed assets held by a state for the benefit or protection of all or any class of the policyholders and creditors of the insurer.
(3)
Except for real property acquired under § 5-608(n) of this subtitle, a security or investment is not eligible for acquisition as a reserve investment unless:
(i)
the security or investment is interest-bearing, interest-accruing, or dividend or income-paying;
(ii)
the security or investment is not then in default in any respect; and
(iii)
the insurer is entitled to the interest or income accruing on the security or investment.
(e)
After satisfying the minimum investment requirements of this subtitle, an insurer may invest any part of the remainder of the insurer’s funds in, or otherwise acquire or loan, any of the classes of investments eligible under § 5-608 of this subtitle or in other investments that are not prohibited by this subtitle.
Md. Code Ann., Ins. § 5-608 (2026)
Title 5. Assets, Liabilities, Reserves, and Investments of Insurers
Subtitle 6. Investments of Insurers Other Than Life Insurers
§ 5–608LinkCopy Citation
(a)
(1)
In this section the following words have the meanings indicated.
(2)
“Dollar roll transaction” means two simultaneous transactions with different settlement dates no more than 96 days apart, so that in the transaction with the earlier settlement date, an insurer sells to a business entity, and in the other transaction the insurer is obligated to purchase from the same business entity, substantially similar securities of the following types:
(i)
asset–backed securities issued, assumed, or guaranteed by the Government National Mortgage Association, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation or their respective successors; and
(ii)
other asset–backed securities referred to in Section 106 of Title I of the Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. § 77r–1), as amended.
(3)
“Fixed charges” include:
(i)
interest on funded and unfunded debt amortization of debt discount; and
(ii)
rentals for leased properties.
(4)
“Institution” includes a corporation, joint stock association, business trust, and statutory trust.
(5)
“Net earnings available for fixed charges” means net income after deducting operating and maintenance expenses, taxes other than federal and state income taxes, depreciation, and depletion, and excluding extraordinary nonrecurring items or income or expense appearing in the regular financial statements of the issuing, assuming, or guaranteeing institutions.
(6)
“Obligation” includes bonds, debentures, notes, or other evidences of indebtedness.
(7)
“Repurchase transaction” means a transaction in which an insurer purchases securities from a business entity that is obligated to repurchase the purchased securities or equivalent securities from the business entity at a specified price, either within a specified period of time or on demand.
(8)
“Reverse repurchase transaction” means a transaction in which an insurer sells securities to a business entity and is obligated to repurchase the sold securities or equivalent securities from the business entity at a specified price, either within a specified period of time or on demand.
(9)
“Securities lending transaction” means a transaction in which securities are loaned by an insurer to a business entity that is obligated to return the loaned securities or equivalent securities to the insurer, either within a specified period of time or on demand.
(b)
(1)
(i)
If net earnings are determined by relying on consolidated earnings statements of parent and subsidiary institutions:
(1)
the net earnings shall be determined after providing for the income taxes of subsidiaries and making proper allowance for any minority stock interest; and
(2)
except as otherwise provided in subparagraph (ii) of this paragraph, the required coverage of fixed charges shall be computed on a basis that includes fixed charges and preferred dividends of subsidiaries other than those payable by the subsidiaries to the parent corporation or to other subsidiaries.
(ii)
If the minority common stock interest in the subsidiary corporation is substantial, the fixed charges and preferred dividends may be apportioned in accordance with regulations adopted by the Commissioner.
(2)
(i)
This paragraph applies to an issuing, assuming, or guaranteeing institution, whether or not in legal existence during the entire 5–year period immediately preceding the date of investment by the insurer, that has at any time during the 5–year period acquired the assets of another institution substantially as an entirety by purchase, merger, consolidation, or otherwise, or has been reorganized pursuant to bankruptcy law.
(ii)
In applying the earnings tests under this section, the earnings of the predecessor, constituent, or reorganized institution available for interest and dividends for the part of the period that preceded the acquisition or reorganization may be included in the earnings of the issuing, assuming, or guaranteeing institution for the part of the period determined in accordance with adjusted or pro forma consolidated earnings statements covering that part of the period and giving effect to all stock outstanding and all fixed charges existing immediately after the acquisition or reorganization.
(c)
The reserve investments of an insurer shall consist of the classes of assets set forth in this section, subject to any limit set for each type or class of asset.
(d)
(1)
The reserve investments of an insurer may include:
(i)
subject to paragraph (2) of this subsection, obligations issued or guaranteed by the African Development Bank, Asian Development Bank, International Bank for Reconstruction and Development, or International Finance Corporation; and
(ii)
bonds or other evidences of indebtedness that:
(1)
are not in default as to principal or interest;
(2)
are valid and legally authorized obligations issued, assumed, or guaranteed by the United States, a state, a county, city, town, village, municipality, district, or political subdivision of a state, or a civil division or public instrumentality of any of these entities;
(3)
by applicable statutory or other legal requirements, are payable, as to both principal and interest, from taxes levied or by law required to be levied on all taxable property or all taxable income within the jurisdiction of the governmental unit or from adequate special revenues pledged or otherwise appropriated or by law required to be provided for the purpose of the payment of obligations; and
(4)
are not payable solely out of special assessments on properties benefited by local improvements.
(2)
An insurer may not invest more than 5% of its total admitted assets in obligations of the African Development Bank, Asian Development Bank, International Bank for Reconstruction and Development, or International Finance Corporation.
(e)
(1)
This subsection does not apply to obligations eligible for investment under subsection (j), (k), or (l) of this section.
(2)
The reserve investments of an insurer may include obligations that are not in default as to principal or interest, that are issued, assumed, or guaranteed by a solvent institution created or existing under the laws of the United States or a state, and that qualify under any of the following items:
(i)
subject to paragraph (3) of this subsection, the obligations are secured by adequate collateral security and bear fixed interest, and, during each of any 3, including either of the last 2, of the 5 fiscal years immediately preceding the date of acquisition by the insurer, the net earnings available for fixed charges of the issuing, assuming, or guaranteeing institution must have been not less than one and one–quarter times the total of the institution’s fixed charges for the year;
(ii)
subject to paragraph (3) of this subsection, the obligations, at the date of acquisition by the insurer, are adequately secured and have investment qualities and characteristics in which speculative elements are not predominant;
(iii)
the obligations bear fixed interest and are other than those described in item (i) of this paragraph, and the net earnings available for fixed charges of the issuing, assuming, or guaranteeing institution:
(1)
for a period of 5 fiscal years immediately preceding the date of acquisition by the insurer, must have averaged each year not less than one and one–half times the institution’s average annual fixed charges applicable to the period; and
(2)
during the last year of the 5–year period, must have been not less than one and one–half times the institution’s fixed charges for the year;
or
(iv)
the obligations are adjustment, income, or other contingent interest obligations, and the net earnings available for fixed charges of the issuing, assuming, or guaranteeing institution for a period of 5 fiscal years immediately preceding the date of acquisition by the insurer:
(1)
must have averaged each year not less than one and one–half times the sum of the institution’s average annual fixed charges plus the institution’s average annual maximum contingent interest applicable to the period; and
(2)
during each of the last 2 years of the 5–year period, must have been not less than one and one–half times the sum of the institution’s fixed charges plus maximum contingent interest for the year.
(3)
To determine the adequacy of collateral security for purposes of paragraph (2)(i) or (ii) of this subsection not more than one–third of the total value of the required collateral may include stock other than stock meeting the requirements of subsection (f) of this section.
(f)
(1)
In this subsection, “preferred dividends requirement” means cumulative or noncumulative dividends whether paid or unpaid.
(2)
The reserve investments of an insurer may include preferred or guaranteed stock of a solvent institution, created or existing under the laws of the United States or a state, if:
(i)
all prior obligations, and prior preferred stock, if any, of the institution at the date of acquisition by the insurer are eligible as investments under this article;
(ii)
for preferred stock:
(1)
the net earnings of the institution available for fixed charges for a period of 5 fiscal years immediately preceding the date of acquisition by the insurer must have averaged each year not less than one and one–half times the sum of any average annual fixed charges, any average annual maximum contingent interest, and the average annual preferred dividend requirement applicable to the period; and
(2)
during either of the last 2 years of the 5–year period, the net earnings must have been not less than one and one–half times the sum of the institution’s fixed charges, contingent interest, and preferred dividend requirement for the year; and
(iii)
for guaranteed stock, the assuming or guaranteeing institution meets the requirements of subsection (e)(2)(iii) of this section construed to include as a fixed charge the amounts of guaranteed dividends of the issue or the rental covering the guarantee of the dividends.
(g)
The reserve investments of an insurer may include certificates, notes, or other obligations, adequately secured as to principal and interest, issued by trustees or receivers of an institution created or existing under the laws of the United States or a state, that, or the assets of which, are being administered under the direction of a court having jurisdiction.
(h)
The reserve investments of an insurer may include equipment trust obligations or certificates that are adequately secured or other adequately secured instruments that evidence:
(1)
an interest in transportation equipment located wholly or partly in the United States; and
(2)
a right to receive determined parts of rental, purchase, or other fixed obligatory payments for the use or purchase of the transportation equipment.
(i)
The reserve investments of an insurer may include bank and bankers’ acceptance and other bills of exchange of the kind and maturities made eligible by law for purchase in the open market by federal reserve banks.
(j)
(1)
This subsection does not apply to obligations eligible for investment under subsection (e) of this section.
(2)
(i)
The reserve investments of an insurer may include bonds or evidences of indebtedness that are secured by first mortgages or deeds of trust on unencumbered fee–simple or improved leasehold real property located in the United States.
(ii)
For purposes of subparagraph (i) of this paragraph, real property is not considered encumbered because of:
(1)
the existence of instruments reserving mineral, oil, or timber rights, rights–of–way, sewer rights, or rights in walls;
(2)
liens for taxes or assessments not yet due;
(3)
building restrictions or other restrictive covenants; or
(4)
leases on the real property under which rents or profits are reserved to the owner if the security for the loan is a first lien on the real property and if there is no condition or right of reentry or forfeiture under which the lien may be cut off, subordinated, or otherwise disturbed.
(3)
At the time of investment by the insurer, a mortgage loan made or acquired by an insurer on any one property may not exceed 80% of the value of the real property securing the loan.
(4)
A mortgage loan may not be made or acquired by an insurer unless an appraisal is made by an appraiser for the purpose of the investment.
(5)
A mortgage loan made or acquired by an insurer that is a participation or a part of a series of issue secured by the same mortgage or deed of trust is not a lawful investment under this subsection unless:
(i)
the entire series or issue that is secured by the same mortgage or deed of trust is held by the insurer; or
(ii)
the insurer holds a pari passu participation interest in the mortgage or deed of trust and has the rights of a first mortgagee.
(6)
Except as otherwise provided in this section, an insurer may not invest in or loan on the security of any one property more than the greater of $25,000 or 2% of its total admitted assets.
(7)
The total investments of an insurer in the kinds of investments allowed under this paragraph may not exceed 40% of its total admitted assets.
(k)
The reserve investments of an insurer may include purchase–money mortgages or like securities received by the insurer on the sale or exchange of real property acquired under subsection (n) of this section.
(l)
(1)
The reserve investments of an insurer may include bonds, notes, or other evidences of indebtedness secured by mortgages or deeds of trust that are guaranteed or insured by an instrumentality of the United States under the National Housing Act, Servicemen’s Readjustment Act of 1944, or Bankhead–Jones Farm Tenant Act.
(2)
The limitations of this section or any other law of the State that require security on a loan, prescribe the nature, amount, or form of security on a loan, or limit the interest rate on a loan do not apply to these insured or guaranteed mortgage loans.
(m)
(1)
Subject to paragraphs (2) and (3) of this subsection, the reserve investments of an insurer may include ground rents in any state.
(2)
For unexpired redeemable ground rents, any premium paid must be amortized over the period between the date of acquisition and redemption date.
(3)
For expired redeemable ground rents, any premium paid must be charged off when acquired.
(4)
An insurer shall carry redeemable ground rents purchased at a discount at an amount not greater than the cost of acquisition.
(n)
(1)
Subject to paragraph (2) of this subsection, reserve investments of an insurer may include real estate for the accommodation of business only if the real estate:
(i)
consists of the land and the building on the land in which the insurer has its principal office;
(ii)
is necessary for the insurer’s convenient accommodation in transacting business;
(iii)
is acquired to satisfy loans, mortgages, liens, judgments, decrees, or other debts previously owed to the insurer in the course of business;
(iv)
is acquired as partial payment of the consideration for the sale of real property owned by the insurer if the transaction causes a net reduction in the investment of the insurer in real property; or
(v)
is additional real property and equipment incident to real property that is necessary or convenient to enhance the market value of real property previously acquired or held by the insurer under item (iii) or (iv) of this paragraph.
(2)
(i)
Subject to subparagraph (ii) of this paragraph, the reserve investments of an insurer may include fee–simple or improved leasehold real estate, or interests in limited partnerships formed for the development or ownership of fee–simple or improved leasehold real estate, only if the investment:
(1)
is acquired as an investment for the production of income;
(2)
is acquired to be improved or developed as an investment for the production of income; and
(3)
does not include property to be used primarily for mining, recreational, amusement, hotel, or club purposes.
(ii)
(1)
The cost of each parcel of fee–simple or improved leasehold real estate or limited partnership interest acquired under this paragraph, including the cost to the insurer of improving or developing the real estate, may not exceed:
(A)
1% of the admitted assets of the insurer; and
(B)
in combination with the value of all of the real estate acquired or held by the insurer, 10% of the admitted assets of the insurer.
(2)
Except as otherwise required by the Commissioner, each parcel of fee–simple or improved leasehold real estate held by an insurer directly or through a limited partnership under this paragraph shall be valued on the books of the insurer as of December 31 each year at an amount that includes the write–down cost of the property, exclusive of land cost, but inclusive of all improvements or development costs, at a rate that averages at least 2% per year of the cost of the property for each year or part of a year that the property is held.
(3)
The admitted value of each parcel of fee–simple or improved leasehold real estate held under this paragraph may not exceed the depreciated value of the property.
(3)
Unless the Commissioner certifies that the interests of the insurer will suffer materially by a forced sale of the real property and the Commissioner extends the time for disposal of the real property in the certificate:
(i)
real property acquired under paragraph (1)(i) and (ii) of this subsection must be disposed of within 5 years after the real property ceases to be necessary for the convenient accommodation of the insurer in transacting business; and
(ii)
real property acquired under paragraph (1)(iii) and (iv) of this subsection must be disposed of within 5 years after the date of acquisition.
(4)
An insurer may not acquire real property under paragraph (1)(i), (ii), or (iv) or (3) of this subsection except with the approval of the Commissioner.
(o)
An insurer may invest in or otherwise acquire or loan on Canadian securities and investments that are substantially of the same kinds, classes, and investment grades as those eligible for investment under this subtitle.
(p)
(1)
Subject to paragraph (2) of this subsection, an insurer that is authorized to do business in a foreign country or possession of the United States or that has outstanding insurance contracts or reinsurance contracts on risks located in a foreign country or possession of the United States may invest in or otherwise acquire or loan on securities and investments in the foreign country or possession that are substantially of the same kinds, classes, and investment grades as those eligible for investment under this subtitle.
(2)
The aggregate amount of the investments made under paragraph (1) of this subsection and of the currency of the foreign country or possession held by the insurer may not exceed one and one–half times the greater of:
(i)
the amount of the reserves of the insurer and other obligations under any outstanding insurance contracts or reinsurance contracts in that country or possession; and
(ii)
the amount that the insurer is required by law to invest in that country or possession.
(q)
The reserve investments of an insurer may include stocks or debentures or both of a housing authority organized under the public housing law of the State, to the extent and on the conditions that the Commissioner authorizes, if all of the stock of the housing authority has been or will be originally issued to one or more insurers.
(r)
The reserve investments of an insurer may include shares or deposits in a savings and loan association or building and loan association to the extent that the investment or account is insured by the Federal Deposit Insurance Corporation.
(s)
(1)
Subject to paragraph (2) of this subsection, the reserve investments of an insurer may include dividend–paying common stock of a corporation created or existing under the laws of the United States, Canada, a state, or a province of Canada.
(2)
To the extent necessary to satisfy the reserve requirements of this subtitle, an insurer may not have more than:
(i)
10% of its total admitted assets in preferred stock under subsection (f) of this section;
(ii)
10% of its total admitted assets in common stock under this subsection; or
(iii)
5% of its total admitted assets in the stock of any one corporation.
(t)
(1)
The reserve investments of an insurer may include securities lending, repurchase, reverse repurchase, and dollar roll transactions with business entities, subject to the requirements of paragraphs (2) through (9) of this subsection.
(2)
(i)
The insurer’s board of directors shall adopt a written plan that specifies guidelines and objectives to be followed, such as:
(1)
a description of how cash received will be invested or used for general corporate purposes of the insurer;
(2)
operational procedures to manage interest rate risk, counterparty default risk, the conditions under which proceeds from reverse repurchase transactions may be used in the ordinary course of business, and the use of acceptable collateral in a manner that reflects the liquidity needs of the transaction; and
(3)
the extent to which the insurer may engage in these transactions.
(ii)
The insurer shall file with the Commissioner the written plan including all changes and amendments to the written plan for use in the State on or before the date the plan becomes effective.
(3)
(i)
The insurer shall enter into a written agreement for all transactions authorized under this subsection other than dollar roll transactions.
(ii)
The written agreement shall require that each transaction terminate no more than 1 year from its inception or on the earlier demand of the insurer.
(iii)
The agreement shall be with the business entity counterparty, but for securities lending transactions, the agreement may be with an agent acting on behalf of the insurer, if the agent is a qualified business entity, and if the agreement:
(1)
requires the agent to enter into separate agreements with each counterparty that are consistent with the requirements of this section; and
(2)
prohibits securities lending transactions under the agreement with the agent or its affiliates.
(4)
(i)
Cash received in a transaction under this subsection shall be invested in accordance with this subtitle and in a manner that recognizes the liquidity needs of the transaction or used by the insurer for its general corporate purposes.
(ii)
For so long as the transaction remains outstanding, the insurer, its agent, or its custodian shall maintain, as to acceptable collateral received in a transaction under this subsection, either physically or through the book entry systems of the Federal Reserve, Depository Trust Company, Participants Trust Company, or other securities depositories approved by the Commissioner:
(1)
possession of the acceptable collateral;
(2)
a perfected security interest in the acceptable collateral; or
(3)
in the case of a jurisdiction outside the United States, title to, or rights of a secured creditor to, the acceptable collateral.
(5)
(i)
The limitations of § 5–606(a) of this subtitle do not apply to the business entity counterparty exposure created by transactions under this subsection.
(ii)
For purposes of calculations made to determine compliance with this subsection, no effect will be given to the insurer’s future obligation to resell securities, in the case of a repurchase transaction, or to repurchase securities, in the case of a reverse repurchase transaction.
(iii)
An insurer may not enter into a transaction under this subsection if, as a result of and after giving effect to the transaction:
(1)
(A)
the aggregate amount of securities then loaned, sold to, or purchased from any one business entity counterparty under this subsection would exceed 5% of its admitted assets; and
(B)
in calculating the amount sold to or purchased from a business entity counterparty under repurchase or reverse repurchase transactions, effect may be given to netting provisions under a master written agreement; or
(2)
the aggregate amount of all securities then loaned, sold to, or purchased from all business entities under this subsection would exceed 40% of its admitted assets.
(6)
(i)
In a securities lending transaction, the insurer shall receive acceptable collateral having a market value as of the transaction date at least equal to 102% of the market value of the securities loaned by the insurer in the transaction as of that date.
(ii)
If at any time the market value of the acceptable collateral is less than the market value of the loaned securities, the business entity counterparty shall be obligated to deliver additional acceptable collateral, the market value of which, together with the market value of all acceptable collateral then held in connection with the transaction, at least equals 102% of the market value of the loaned securities.
(7)
(i)
In a reverse repurchase transaction, other than a dollar roll transaction, the insurer shall receive acceptable collateral having a market value as of the transaction date at least equal to 95% of the market value of the securities transferred by the insurer in the transaction as of that date.
(ii)
If at any time the market value of the acceptable collateral is less than 95% of the market value of the securities so transferred, the business entity counterparty shall be obligated to deliver additional acceptable collateral, the market value of which, together with the market value of all acceptable collateral then held in connection with the transaction, at least equals 95% of the market value of the transferred securities.
(8)
In a dollar roll transaction, the insurer shall receive cash in an amount at least equal to the market value of the securities transferred by the insurer in the transaction as of the transaction date.
(9)
(i)
In a repurchase transaction, the insurer shall receive as acceptable collateral transferred securities having a market value at least equal to 102% of the purchase price paid by the insurer for the securities.
(ii)
If at any time the market value of the acceptable collateral is less than 100% of the purchase price paid by the insurer, the business entity counterparty shall be obligated to provide additional acceptable collateral, the market value of which, together with the market value of all acceptable collateral then held in connection with the transaction, at least equals 102% of the purchase price.
(iii)
Securities acquired by an insurer in a repurchase transaction may not be sold in a reverse repurchase transaction, loaned in a securities lending transaction, or otherwise pledged.
(10)
The provisions of this subsection that apply to insurers also apply to health maintenance organizations.
(u)
The reserve investments of an insurer may include any other investments not otherwise prohibited by this subtitle if:
(1)
the aggregate amount of the investments made under this subsection does not exceed 4% of the amount of the admitted assets of the insurer at the end of the previous year; and
(2)
the investment does not violate any limitations on allowed investments under this section.
Md. Code Ann., Ins. § 5-609 (2026)
Title 5. Assets, Liabilities, Reserves, and Investments of Insurers
Subtitle 6. Investments of Insurers Other Than Life Insurers
§ 5–609LinkCopy Citation
(a)
Each insurer shall dispose of any investments acquired in violation of the law in force on the date of acquisition of the investment.
(b)
In any determination of the financial condition of an insurer with investments acquired in violation of the law, the amount of the value of investments, if wholly ineligible, or the amount of the value of the investments in excess of any limitation prescribed by this subtitle, shall be deducted as a nonadmitted asset of the insurer.