Section 63A. (1) As used in this section the following words shall, unless the context clearly requires otherwise, have the following meaning:?
''Medium grade obligation'', obligations which are rated three by the Securities Valuation Office of the National Association of Insurance Commissioners.
''Lower grade obligations'', obligations which are rated four, five or six by the Securities Valuation Office of the National Association of Insurance Commissioners.
''Admitted assets'', the amount thereof as of the last day of the most recently concluded annual statement year, computed in the manner permitted or prescribed by this chapter.
''Aggregate amount of medium grade and lower grade obligations'', the aggregate statutory statement value thereof.
''Institution'', a corporation, a joint-stock company, an association, a trust, a business partnership, a business joint venture or similar entity.
''Directly or indirectly'', any method by which an insurer acquires or holds an investment in medium or lower grade obligations in an insurer's name or in other than the insurer's name, such as in a nominee name, for which the insurer has taken credit as an asset in its annual statement filed under section twenty-five.
(2) No domestic insurer shall directly or indirectly acquire any medium grade or lower grade obligations 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 twenty percent of its admitted assets provided that: no more than ten percent of its admitted assets consists of obligations rated four, five or six by the securities valuation office; and no more than three percent of its admitted assets consists of obligations rated five or six by the securities valuation office, and no more than one 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 multi-category limits.
(3) No domestic insurer may invest more than an aggregate of one 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 one 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 one percent of its admitted assets in any medium or lower grade obligations issued, guaranteed or insured by any one institution.
(4) Nothing contained in this section shall prohibit a domestic insurer from acquiring any obligations which it has committed to acquire if the insurer would have been permitted to acquire that obligation pursuant to this section on the date on which such insurer committed to purchase that obligation.
(5) Notwithstanding the foregoing, a domestic insurer may acquire a medium or lower grade obligation of an institution in which the insurer already has one or more medium or lower grade obligations, if the medium or lower grade obligation is acquired in order to protect an investment previously made in the obligations of the institution, provided that all such acquired medium or lower grade obligations of the institution made under the provisions of this paragraph shall not exceed one-half of one percent of the insurer's admitted assets.
(6) Nothing contained in this section shall prohibit a domestic insurer from acquiring an obligation as a result of a restructuring of a medium or lower grade obligation already held.
(7) Nothing contained in this section shall require a domestic insurer to sell or otherwise dispose of any obligation legally acquired prior to the effective date of this section.
(8) 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 the making of such 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.
(9) Notwithstanding any other provision of this section the commissioner may approve a protective investment that causes the insurer to exceed any limitation contained in this section if the insurer shows to the satisfaction of the commissioner that such investment is not prejudicial to the interests of policyholders.