Permitted forms of investment

(1) The restricted assets may be invested in: 1. receivables secured by a mortgage lien on land, or a right equivalent to land, located in a state of the EEA or a full member state of the OECD, where the mortgage lien satisfies the requirements of sections 14 and 16(1) to (3) of the Pfandbrief Act — and, in the case of heritable building rights, additionally the requirements of section 13(2) of the Pfandbrief Act — or where the mortgage lien satisfies the corresponding provisions of the other state; 2. receivables a) that are adequately secured by a cash payment or for which credit balances or securities have, in accordance with section 200(1) to (3) of the Investment Code or equivalent provisions of another EEA state or full OECD member state, been pledged or transferred by way of security (securities lending), b) for which debt securities under number 6 or 7 have been pledged or transferred by way of security, or c) that consist of liquid settlement receivables owed by the primary (direct) insurer against a reinsurer, less any settlement liabilities arising from premium claims of the reinsurer against the primary insurer; 3. loans a) to the Federal Republic of Germany, its Länder, municipalities and associations of municipalities, b) to another EEA state or a full OECD member state, c) to regional governments and local authorities of another EEA state or a full OECD member state, d) to an international organisation of which the Federal Republic of Germany is also a full member, e) for which one of the bodies referred to in letters a, b or d, a suitable credit institution within the meaning of number 18 letter b, a public-law credit institution within the meaning of number 18 letter c, or a multilateral development bank within the meaning of number 18 letter d has assumed full guarantee of the interest and repayment, or for which an insurance undertaking within the meaning of Article 14 of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1), as last amended by Directive 2014/51/EU (OJ L 153, 22.5.2014, p. 1), has insured the default risk, or f) to resolution agencies within the meaning of section 8a(1) of the Financial Market Stabilisation Fund Act, insofar as a body referred to in letter a, b or d has assumed the loss-compensation obligation for that resolution agency pursuant to section 8a(4) sentence 1 number 1 sentence 1 and number 1a of the Financial Market Stabilisation Fund Act; 4. loans a) to undertakings having their seat in an EEA state or a full OECD member state, other than credit institutions, provided that, on the basis of the undertaking's past and expected future earnings and asset position, the contractually agreed interest and repayment appear assured and the loans are adequately secured aa) by first-ranking mortgage liens, bb) by pledged or security-transferred receivables, or by securities admitted to trading on, or included in, an organised market within the meaning of section 2(11) of the Securities Trading Act, or cc) in a comparably secure manner; a declaration of commitment by the borrower to the insurance undertaking (negative pledge) can only replace security for the loan if and for as long as the borrower's own status already provides assurance of interest payment and repayment of the loan; b) to undertakings within the meaning of number 14 letter a in which the insurance undertaking holds a shareholding (shareholder loans), where the loans satisfy the requirements of section 240(1) and (2) number 1 of the Investment Code; c) to other undertakings having their seat in an EEA state or a full OECD member state, other than credit institutions, provided that these loans are adequately secured in rem or by way of personal security; 5. advance payments or loans that the insurance undertaking grants against its own policies, up to the amount of the surrender value (policy loans); 6. Pfandbriefe, municipal bonds and other debt securities of credit institutions having their seat in an EEA state or a full OECD member state, where those credit institutions are, by virtue of statutory provisions for the protection of holders of such debt securities, subject to special public supervision, and the funds raised through the issue of the debt securities are, under statutory provisions, invested in assets that, throughout the entire term of the debt securities, adequately cover the liabilities arising from them and that, in the event of the issuer's default, are earmarked with priority for meeting repayments falling due and paying interest (a special statutory cover pool); 7. debt securities a) admitted to trading on an exchange or admitted to, or included in, another organised market (organised market), b) whose inclusion in an organised market is, under the terms of issue, to be applied for, provided that such inclusion of the debt securities takes place within one year of their issue, or c) admitted to trading on an exchange, or admitted to or included in another organised market, in a state outside the EEA; 8. other debt securities; 9. receivables arising from subordinated liabilities against undertakings, or from profit participation rights in undertakings, a) having their seat in an EEA state or a full OECD member state, or b) admitted to trading on an exchange or admitted to or included in another organised market, or admitted to trading on an exchange or admitted to or included in another organised market in a state outside the EEA; 10. Asset Backed Securities (structured financial instruments collateralised by receivables) and Credit Linked Notes (financial instruments linked to credit risk), as well as other investments under section 2(1) whose return or repayment is tied to credit risks or by means of which a third party's credit risks are transferred, a) against undertakings having their seat in an EEA state or a full OECD member state, or b) admitted to trading on an exchange or admitted to or included in another organised market, or admitted to trading on an exchange or admitted to or included in another organised market in a state outside the EEA; 11. receivables entered in the debt register of the Federal Republic of Germany, one of its Länder, or a corresponding register of another EEA state or full OECD member state, or whose entry as a debt-register claim takes place within one year of their issue, as well as liquidity instruments within the meaning of section 42(1) of the Act on the Deutsche Bundesbank; 12. fully paid-up shares admitted to trading on an exchange or admitted to or included in another organised market, or admitted to trading on an exchange or admitted to or included in another organised market in a state outside the EEA; 13. participations in the form of a) other fully paid-up shares, participations in a limited liability company, limited partnership interests, and participations as a silent partner within the meaning of the Commercial Code, where the undertaking has a business model, assumes entrepreneurial risk, and aa) has its seat in an EEA state or a full OECD member state, bb) makes available to the insurance undertaking its most recent annual financial statements, prepared and audited by analogous application of the provisions applicable to corporations, and cc) undertakes to continue to provide such annual financial statements as at every future balance-sheet date; b) units and shares in domestic closed-ended alternative investment funds (AIFs) within the meaning of section 1(3) of the Investment Code, aa) that invest, directly or indirectly, in assets under section 261(1) numbers 2 and 4 of the Investment Code, equity-like instruments, and other corporate-financing instruments, and bb) that are managed by a capital management company holding a licence under section 20(1) of the Investment Code or registered under section 44 of the Investment Code, or by a management company having its seat in an EEA state or a full OECD member state that is, for the protection of investors, subject to public supervision and holds a licence or registration comparable to the licence under section 20(1) or the registration under section 44 of the Investment Code, as well as units and shares in closed-ended foreign investment undertakings that are subject to the law of an EEA state or a full OECD member state, satisfy the requirement under double-letter aa in a comparable manner, and are managed by a company within the meaning of double-letter bb; 14. real estate in the form of a) developed land, land under development, or land intended for imminent development, located in an EEA state or a full OECD member state, rights equivalent to land located there, and shares in an undertaking whose sole purpose is the acquisition, development and management of land, or rights equivalent to land, located in such a state; the insurance undertaking must examine the reasonableness of the purchase price on the basis of an appraisal by a sworn expert or in a comparable manner; mortgage liens encumbering such real-estate investments are, without prejudice to section 125(3) sentence 4 of the Insurance Supervision Act, to be deducted; b) shares in a REIT stock corporation, or units in a comparable corporation having its seat in an EEA state or a full OECD member state, that satisfy the requirements of the REIT Act or the comparable provisions of the other state; c) units and shares in domestic special AIFs within the meaning of section 1(6) of the Investment Code, or units and shares in domestic closed-ended retail AIFs within the meaning of section 1(3) in conjunction with (6) sentence 2 of the Investment Code, aa) that invest, directly or indirectly, in assets under section 231(1) sentence 1 numbers 1 to 6 and 8 and (3), and section 235(1), of the Investment Code, and in liquidity investments that broadly correspond to the requirements of section 253(1) sentence 1 of the Investment Code, and bb) that are managed by a capital management company holding a licence under section 20(1) of the Investment Code, or by a management company having its seat in an EEA state that is, for the protection of investors, subject to public supervision and holds a licence comparable to the licence under section 20(1) of the Investment Code, as well as units and shares in EU investment undertakings within the meaning of section 1(8) of the Investment Code in the form of special AIFs and closed-ended retail AIFs that satisfy the requirement under double-letter aa in a comparable manner and are managed by a company within the meaning of double-letter bb; 15. units and investment shares in domestic open-ended retail investment undertakings within the meaning of section 1(2) of the Investment Code (UCITS), as well as units and shares in comparable EU investment undertakings within the meaning of section 1(8) of the Investment Code, provided that these undertakings are managed by a UCITS management company having its seat in an EEA state; 16. units and investment shares in domestic open-ended special AIFs within the meaning of section 1(6) sentence 1 of the Investment Code, a) that satisfy the requirements of section 284 of the Investment Code and are not covered by number 14 letter c, and b) that are managed by a capital management company holding a licence under section 20(1) of the Investment Code, or by a management company having its seat in an EEA state that is, for the protection of investors, subject to public supervision and holds a licence comparable to the licence under section 20(1) of the Investment Code, as well as units and shares in EU investment undertakings within the meaning of section 1(8) of the Investment Code in the form of open-ended special AIFs that satisfy the requirement under letter a in a comparable manner and are managed by a company within the meaning of letter b; 17. units and shares in domestic investment undertakings within the meaning of section 1(1) of the Investment Code, a) that are not retail investment undertakings in the form of real-estate special funds under sections 230 to 260 of the Investment Code, b) that are not covered by number 13 letter b, number 14 letter c, or numbers 15 and 16, and c) that are managed by a capital management company holding a licence under section 20(1) of the Investment Code, or by a management company having its seat in an EEA state that is, for the protection of investors, subject to public supervision and holds a licence comparable to the licence under section 20(1) of the Investment Code, as well as units and shares in EU investment undertakings within the meaning of section 1(8) of the Investment Code that satisfy the requirement under letter a in a comparable manner, are not covered by the forms of investment listed under letter b, and are managed by a company within the meaning of letter c; and 18. deposits and investments with a) the European Central Bank or the central bank of an EEA state or a full OECD member state, b) a credit institution having its seat in an EEA state that is subject to the requirements of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338), as last amended by Directive 2014/59/EU (OJ L 173, 12.6.2014, p. 190), where the credit institution confirms in writing to the insurance undertaking that it complies with the own-funds and liquidity requirements applicable to credit institutions at its seat (a suitable credit institution), c) public-law credit institutions that are excluded from the scope of Directive 2013/36/EU under Article 2(5) thereof, d) multilateral development banks that are assigned a risk weight of 0 per cent under Article 117(2) of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 646/2012 (OJ L 176, 27.6.2013, p. 1), as last amended by Commission Delegated Regulation (EU) 2015/62 (OJ L 11, 17.1.2015, p. 37). Current-account credit balances are also treated as investments.
(2) The restricted assets may, in addition, be invested in investments that are not listed in subsection (1), that do not satisfy the requirements of subsection (1), or that exceed the limits under section 3(2) numbers 1 to 3 and (3) to (5) and section 4(1) to (4) (opening clause). Investments made under the opening clause of sentence 1 are, in total, limited to 5 per cent of the restricted assets; having regard to the interests of policyholders, the supervisory authority may, upon application, raise this investment limit to up to 10 per cent of the restricted assets.
(3) The supervisory authority may also permit the insurance undertaking to make investments in assets not listed in the preceding subsections, or that do not satisfy the requirements of the preceding subsections, and to exceed the limits set out in section 3(2) numbers 1 to 3 and (3) to (5) and section 4(1) to (4), provided that the interests of policyholders are not thereby impaired.
(4) Direct and indirect investments are not permitted 1. in consumer loans, working-capital loans, movable property or claims to movable property, or in intangible assets, 2. in participations in group undertakings of the insurance undertaking within the meaning of section 18 of the Stock Corporation Act, except for undertakings in which the insurance undertaking holds only a passive participation without operational influence over the business or ongoing project development, and 3. in undertakings to which the insurance undertaking or its group undertakings within the meaning of section 18 of the Stock Corporation Act have transferred the whole or part of their business operations by way of outsourcing (section 7 number 2 of the Insurance Supervision Act) of functions, or which perform, for the insurance undertaking or its group undertakings within the meaning of section 18 of the Stock Corporation Act, activities directly connected with the conduct of insurance business, where the scope of such undertaking's business operations is substantially determined by the subject matter of the outsourced functions or the service activity.