Investments in equities by a life insurance company may not exceed the total of
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A. B. C. D.D
According to the investment guidelines established by the National Association of Insurance Commissioners (NAIC), life insurance companies are required to follow certain rules when investing in equities. These rules are designed to ensure that insurers do not take on too much risk with policyholders' funds. One such rule is that investments in equities by a life insurance company may not exceed the total of:
Option A: 70 percent of the insurance company's regulatory capital Regulatory capital is the amount of money that an insurer is required to hold to meet solvency requirements set by regulators. The 70 percent limit on equity investments means that the insurer must keep at least 30 percent of its regulatory capital in other types of investments, such as bonds or cash.
Option B: 15 percent of the liabilities in respect of non-participating policies Non-participating policies are life insurance policies that do not pay dividends to policyholders. The 15 percent limit on equity investments means that the insurer must keep at least 85 percent of the money it owes to non-participating policyholders in other types of investments, such as bonds or cash.
Option C: 25 percent of the liabilities in respect of participating policies Participating policies are life insurance policies that pay dividends to policyholders. The 25 percent limit on equity investments means that the insurer must keep at least 75 percent of the money it owes to participating policyholders in other types of investments, such as bonds or cash.
Therefore, the correct answer is option D: All of the above. Life insurance companies are subject to all three limits on equity investments, and they must ensure that their investments do not exceed any of these limits to maintain solvency and manage risk effectively.