S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6164
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               April 3, 2023
                                ___________
 
 Introduced by M. of A. WEPRIN -- read once and referred to the Committee
   on Insurance
 
 AN  ACT  to  amend  the insurance law, in relation to financial guaranty
   insurance single risk limits for municipal obligation  bonds,  special
   revenue  bonds and similar obligations of debt issuers in highly rated
   member countries of the  Organisation  of  Economic  Co-operation  and
   Development
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subparagraph (I)  of  paragraph  4  of  subsection  (g)  of
 section 6901 of the insurance law, as amended by chapter 672 of the laws
 of 2005, is amended to read as follows:
   (I)  is  issued  by a bank, trust company, or savings and loan associ-
 ation that:
   (i) is organized and existing under the laws of the United  States  or
 any  state  thereof or, in the case of a non-domestic financial institu-
 tion, has a branch or agency office  licensed  under  the  laws  of  the
 United  States or any state thereof and is domiciled in a member country
 of the Organisation for Economic Co-operation and Development  having  a
 sovereign  rating  in one of the top two generic lettered rating classi-
 fications by a [securities]  NATIONALLY  RECOGNIZED  STATISTICAL  rating
 [agency] ORGANIZATION acceptable to the superintendent;
   (ii)  has  (or  is  the  principal operating subsidiary of a financial
 institution holding company that has) a  long-term  debt  rating  of  at
 least investment grade; and
   (iii)  is  not  a  parent,  subsidiary  or affiliate of the trustee or
 paying agent, if any, with respect to the  insured  obligation  if  such
 trustee  [of]  OR paying agent is the named beneficiary of the letter of
 credit; or
   § 2. Subsections (k), (n) and (s) of section  6901  of  the  insurance
 law,  subsection  (k)  as  amended  by  chapter 605 of the laws of 2004,

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD08656-01-3
              

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 subsection (n) as amended by chapter  529  of  the  laws  of  1996,  and
 subsection  (s)  as  amended  by  chapter  672  of the laws of 2005, are
 amended to read as follows:
   (k)  "Governmental unit" means the United States of America, Canada, a
 member country of the Organisation for Economic Co-operation and  Devel-
 opment  having  a sovereign rating in one of the top [two] THREE generic
 lettered rating classifications by a [securities] NATIONALLY  RECOGNIZED
 STATISTICAL  rating  [agency] ORGANIZATION acceptable to the superinten-
 dent, a state, territory or possession of the United States of  America,
 the  District  of  Columbia,  a province of Canada, a municipality, or a
 political subdivision of any of the foregoing, or any public  agency  or
 instrumentality thereof.
   (n) "Investment grade" means that:
   (1)  the  obligation  or parity obligation of the same issuer has been
 determined to be in one of the top four generic lettered rating  classi-
 fications  by  a  [securities]  NATIONALLY RECOGNIZED STATISTICAL rating
 [agency] ORGANIZATION acceptable to the superintendent;
   (2) the obligation or parity obligation of the same  issuer  has  been
 identified  in  writing by such NATIONALLY RECOGNIZED STATISTICAL rating
 [agency] ORGANIZATION to be of investment grade quality; or
   (3) if the obligation or parity obligation of the same issuer has  not
 been  submitted  to  any  such  NATIONALLY RECOGNIZED STATISTICAL rating
 [agency] ORGANIZATION, the obligation is  determined  to  be  investment
 grade  (as  indicated  by a rating in category 1 or 2) by the Securities
 Valuation Office of the National Association of Insurance Commissioners.
   (s) "Utility first mortgage obligation" means  any  obligation  of  an
 issuer secured by a first priority mortgage on utility property owned by
 or  leased to an investor-owned or cooperative-owned utility company and
 located in the United States, Canada or a member country of the  Organi-
 sation  for  Economic  Co-operation  and  Development having a sovereign
 rating in one of the top two generic lettered rating classifications  by
 a  [securities] NATIONALLY RECOGNIZED STATISTICAL rating [agency] ORGAN-
 IZATION acceptable to the superintendent; provided that the  utility  or
 utility  property  or  the  usage fees or other similar utility rates or
 charges are subject to regulation or oversight by a governmental unit.
   § 3. Paragraph 4 of subsection (a) of section 6902  of  the  insurance
 law,  as  amended by chapter 605 of the laws of 2004, is amended to read
 as follows:
   (4) a financial guaranty insurance corporation's  investments  in  any
 one  entity insured by that corporation shall not exceed four percent of
 its admitted assets at last year-end, except that this limit  shall  not
 apply  to  investments  payable or guaranteed by a United States govern-
 mental unit or New York state if such investments payable or  guaranteed
 by  the United States governmental unit or New York state shall be rated
 in one of the top two  generic  lettered  rating  classifications  by  a
 [securities] NATIONALLY RECOGNIZED STATISTICAL rating [agency] ORGANIZA-
 TION acceptable to the superintendent.
   § 4. Subparagraph (B) of paragraph 1 of subsection (d) of section 6904
 of  the insurance law, as amended by chapter 605 of the laws of 2004, is
 amended to read as follows:
   (B) the insured unpaid principal issued by a single entity and  backed
 by a single revenue source shall not exceed [seventy-five] THE FOLLOWING
 percent  of  the aggregate of the insurer's surplus to policyholders and
 contingency  reserve  BASED  ON  THE  HIGHEST  SOVEREIGN  RATING,  BY  A
 NATIONALLY  RECOGNIZED STATISTICAL RATING ORGANIZATION ACCEPTABLE TO THE
 SUPERINTENDENT, OF THE COUNTRY OF THE APPLICABLE GOVERNMENTAL UNIT:
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   (I) SEVENTY-FIVE PERCENT: ANY RATING IN ONE OF  THE  TOP  TWO  GENERIC
 LETTERED RATING CLASSIFICATIONS;
   (II)  FIFTY-NINE PERCENT: AN A+, A1, OR EQUIVALENT RATING AT THE HIGH-
 EST GRADE OF THE THIRD GENERIC LETTERED RATING CLASSIFICATION;
   (III) FORTY-THREE PERCENT: AN A,  A2,  OR  EQUIVALENT  RATING  AT  THE
 MIDDLE GRADE OF THE THIRD GENERIC LETTERED RATING CLASSIFICATION; AND
   (IV) TWENTY-SIX PERCENT: AN A-, A3, OR EQUIVALENT RATING AT THE LOWEST
 GRADE OF THE THIRD GENERIC LETTERED RATING CLASSIFICATION;
   §  5.  Subsection (e) of section 6904 of the insurance law, as amended
 by chapter 89 of the laws of 1989, is amended to read as follows:
   (e) Except as provided in subsection (f) of this section, if an insur-
 er at any time exceeds any limitation prescribed by  subsection  (c)  or
 (d)  of  this  section  or [the last sentence of] paragraph [one] TWO of
 subsection (b) of this section, the insurer  shall  within  thirty  days
 after  the limitations are breached, submit a written plan to the super-
 intendent detailing the steps that it will take or has taken  to  reduce
 its exposure to loss to no more than the permitted amounts, and if after
 notice  and  hearing  the  superintendent determines that an insurer has
 exceeded any limitation prescribed by this section, he  may  order  such
 insurer  to cease transacting any new financial guaranty insurance busi-
 ness until its exposure to loss no longer exceeds  said  limitations  or
 with  respect  to  the  limitations prescribed in [the last sentence of]
 paragraph [one] TWO of subsection (b) of this section,  may  order  such
 insurer  to limit its writing of the types of guaranties permitted under
 subparagraphs (A), (B) and (C) of paragraph one  of  subsection  (b)  of
 this section to investment grade obligations until such time as it shall
 be in compliance with such limitations.
   § 6. This act shall take effect immediately.