31A-18-105. Prudence evaluation criteria.
(1) An insurer shall consider the following factors to determine whether an investment portfolio or investment policy is prudent: general economic conditions; the possible effect of inflation or deflation; the expected tax consequences of investment decisions or strategies; the fairness or reasonableness of the terms of an investment considering the investment's: probable risk and reward characteristics; and relationship to the investment portfolio as a whole; the extent of the diversification of the insurer's investments among: individual investments; classes of investments; industry concentrations; dates of maturity; and geographic areas; the quality and liquidity of investments in the insurer's affiliates; the investment exposure to: liquidity risk; credit and default risk; systemic risk; interest rate risk; call, prepayment, and extension risk; exchange rate risk; and foreign sovereign risk; the amount of the insurer's: assets; capital and surplus; premium writings; insurance in force; and other appropriate characteristics; the insurer's reported liabilities; the matching of the expected cash flows of the insurer's assets and liabilities; the risk of adverse changes in the insurer's assets and liabilities; and the adequacy of the insurer's capital and surplus to secure the risks and liabilities of the insurer.
(2) The commissioner shall consider the factors described in Subsectionbefore making a determination that an insurer's investment portfolio or investment policy is not prudent. (1)