SENATE BILL 11

47th legislature - STATE OF NEW MEXICO - second session, 2006

INTRODUCED BY

Leonard Lee Rawson

AN ACT

RELATING TO INSURANCE; AMENDING THE NEW MEXICO INSURANCE CODE TO EXPRESSLY PERMIT INVESTMENT IN ASSET-BACKED SECURITIES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     Section 1. A new section of Chapter 59A, Article 9 NMSA 1978 is enacted to read:

     "[NEW MATERIAL] ASSET-BACKED SECURITIES.--

          A. An insurer may invest in asset-backed securities an aggregate amount that does not exceed twenty percent of the insurer's assets.

          B. "Asset-backed security" means a security or other instrument that evidences an undivided interest in, or the right to receive payments from or primarily from, distributions on a pool of financial assets held by an unaffiliated business entity and that meets the following conditions: 

                (1) the business entity is not a sole proprietorship and is established solely for the purpose of acquiring specific types of financial assets, issuing securities representing an undivided interest in, or right to receive cash flows from, those assets and engaging in activities required to service the assets or rights; and

                (2) the pool of financial assets consists of interest-bearing obligations or other contractual obligations representing the right to receive payment from the assets."

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