(A) Investments made by insurers to cover policyholder obligations and their minimum capital or guaranty fund and surplus required by law, provided in Section 38-11-40, are subject to:

1. (1) None of the securities in Section 38-11-40 are eligible for the purposes of that section if, within five years immediately preceding, the obligor has defaulted in the payment of principal or interest on its bonds, warrants, or other securities.
2. (2) With respect to investments under Section 38-11-40(g), not more than twenty percent of the insurer's policyholder obligations may be invested in the securities of a county, city, town, village, municipality, or district of a state or territory of the United States or its political subdivisions or a civil division or public instrumentality of the United States. However, this limitation does not apply to an investment which qualifies for sinking fund purposes under the laws of this State.
3. (3) Investments in Section 38-11-40(h) may not exceed ten percent of the insurer's policyholder obligations.
4. (4) Investments in Section 38-11-40(i)(1), (2), and(3) in the aggregate may not exceed sixty-six and two-thirds percent of the insurer's policyholder obligations. However, investments in Section 38-11-40(i)(4) may exceed sixty-six and two-thirds percent of the insurer's policyholder obligations. Not more than ten percent of the insurer's policyholder obligations may be invested in one investment under Section 38-11-40(i).
5. (5) Investments in Section 38-11-40(j) may not exceed fifteen percent of the insurer's policyholder obligations.
6. (6) Investments in Section 38-11-40(l), (m), and (n) may not exceed in the aggregate sixty-six and two-thirds percent of the insurer's policyholder obligations, nor, with respect to investments under these items, may more than ten percent of the insurer's policyholder obligations be invested in one investment or in one project, subdivision, or transaction or series of related transactions.
7. (7) Investments in Section 38-11-40(o) may not exceed ten percent of the insurer's policyholder obligations.
8. (8) Investments in Section 38-11-40(p) may not exceed ten percent of the insurer's policyholder obligations. Where a life insurer does not, wholly or in part, avail itself of Section 38-11-40(o), as limited by Section 38-11-50(A)(7), the investments under Section 38-11-40(p) may be increased to the extent of the unused portion, but the life insurer's investments under Section 38-11-40(p) may not exceed fifteen percent of the insurer's policyholder obligations. However, this limitation does not apply to real estate acquired by bona fide mortgage foreclosure if the insurer has had title to the real estate for less than five years.
9. (9) Investments in Section 38-11-40(q) may not exceed ten percent of the insurer's policyholder obligations.
10. (10) Investments in Section 38-11-40(r) may not exceed ten percent of the insurer's policyholder obligations.
11. (11) Investments authorized under Section 38-11-40(s) may not exceed ten percent of the insurer's policyholder obligations.
12. (12) Investments authorized pursuant to Section 38-11-40(t) may not exceed twenty percent of the insurer's policyholder obligations, and the aggregate amount of such investments in a single foreign jurisdiction may not exceed ten percent of its policyholder obligations as to a foreign jurisdiction that has a sovereign debt rating of SVO1, or an equivalent rating by a nationally recognized statistical rating organization recognized by the SVO, or three percent of its policyholder obligations as to any other foreign jurisdiction.

(B) For purposes of the limitations contained in this section:

1. (1) Except as otherwise provided in item (2), investments in Section 38-11-40 must be valued in accordance with stated values or standards published by the Securities Valuation Office of the National Association of Insurance Commissioners in its Valuations of Securities Manual. Investments for which the National Association of Insurance Commissioners has not published valuations or standards must be valued as follows:

   1. (a) Obligations having a fixed term and rate, if not in default as to principal or interest, must be valued, if purchased at par, at the par value and, if purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made.
   2. (b) Common, preferred, or guaranteed stocks must be valued at their market value or, at the option of the company, may be valued at the purchase price if it is less than market value.
   3. (c) Other securities investments must be valued in accordance with regulations promulgated pursuant to subsection (D).
2. (2) Investments not provided for in item (1), including real property, must be valued in accordance with regulations promulgated pursuant to subsection (D), but they must not be valued at more than their purchase price. Purchase price for real property includes capitalized permanent improvements less depreciation spread evenly over the life of the property or, at the option of the company, less depreciation computed on a basis permitted under the Internal Revenue Code and its regulations. Investments affected by permanent declines in value must be valued at not more than their market value. However, mortgage loans may be valued at amortized value.