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27. Investment of assets.- (1) Every insurer shall invest and at all times keep invested assets equivalent to not less than the sum of-
(a) the amount of his liabilities to holders of life insurance policies in India on account of matured claims, and
(b) the amount required to meet the liability on policies of life insurance maturing for payment in India, less-
(i) the amount of premiums which have fallen due to the insurer on such policies but have not been paid and the days of grace for payment of which have not expired, and
(ii) any amount due to the insurer for loans granted on and within the surrender values of policies of life insurance maturing for payment in India issued by him or by an insurer whose business he has acquired and in respect of which he has assumed liability,
in the manner following, namely, twenty five per cent of the said sum in Government securities, a further sum equal to not less than twenty five per cent of the said sum in Government securities or other approved securities and the balance in any of the approved investments specified in sub-section (1) of section 27A or, subject to the limitations, conditions and restrictions specified in sub-section (2) of that section, in any over investment.
(2) For the purposes of subsection (1),—
(a) the amount of any deposit made under section 7 or section 98 by the insurer in respect of his life insurance business shall be deemed to be assets invested or kept invested Government securities;
(b) the securities of, or guaranteed as to principal and interest by, the Government of the United Kingdom shall be regarded as approved securities other than Government securities for a period of four years from the commencement of the Insurance (Amendment) Act, 1950 (47 of 1950), in the manner and to the extent hereinafter specified, namely:—
(i) during the first year, to the extent of twenty-five per cent in value of the sum referred to in sub-section (1);
(ii) during the second year, to the extent of eighteen and three fourths per cent in value of the said sum;
(iii) during the third year, to the extent of twelve and a half per cent in value of the said sum; and
(iv) during the fourth year, to the extent of six and a quarter per cent in value of the said sum:
Provided that, if the Authority so directs in any case, the securities specified in clause (b) shall be regarded as approved securities other than Government securities for a longer period than four years, but not exceeding six years in all and the manner in which and the extent to which the securities shall be so regarded shall be as specified in the direction;
(c) any prescribed assets shall, subject to such conditions, if any, as may be prescribed, be deemed to be assets invested or kept invested in approved investments specified in sub section (1) of section 27A.
(3) In computing the assets referred to in subsection (1),—
(a) any investment made with reference to any currency other than the Indian rupee which is in excess of the amount required to meet the liabilities of the insurer in India with reference to that currency, to the extent of such excess; and
(b) any investment made in the purchase of any immoveable property outside India or on the security of any such property, shall not be taken into account:
Provided that nothing contained in this sub section shall affect the operation of sub-section (2):
Provided further that the Authority may, either generally or in any particular case, direct that any investment, whether made before or after the commencement of the Insurance (Amendment) Act, 1950 (47 of 1950), and whether made in or outside India, shall, subject to such conditions as may be imposed, be taken into account, in such manner as may be specified in computing the assets referred to in sub-section (1) and where any direction has been issued under this proviso copies thereof shall be laid before Parliament as soon as may be after it is issued.
(4) Where an insurer has accepted reassurance in respect of any policies of life insurance issued by another insurer and maturing for payment in India or has ceded reassurance to another insurer in respect of any such policies issued by himself, the sum referred to in subsection (1) shall be increased by the amount of the liability involved in such acceptance and decreased by the amount of the liability involved in such cession.
(5) The Government securities and other approved securities in which assets are under sub-section (1) to be invested and kept invested shall be held by the insurer free of any encumbrance, charge, hypothecation or lien.
(6) The assets required by this section to be held invested by an insurer incorporated or domiciled outside India shall, except to the extent of any part thereof which consists of foreign assets held outside India, be held in India and all such assets shall be held in trust for the discharge of the liabilities of the nature referred to in sub section (1) and shall be vested in trustees resident in India and approved by the Authority, and the instrument of trust under this sub section shall be executed by the insurer with the approval of the Authority and shall define the manner in which alone the subject matter of the trust shall be dealt with.
Explanation.—This sub section shall apply to an insurer incorporated India whose share capital to the extent of one third is owned by, or the members of whose governing body to the extent of one third consists of, members domiciled elsewhere than in India.
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