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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1983 

                        CHAPTER 340--H.F.No. 1106
           An act relating to insurance; correcting certain 
          errors; removing certain deficiencies and ambiguities; 
          correcting certain omissions; expanding certain 
          insurers' investment authority; providing standards 
          for application or reporting requirements; authorizing 
          the commissioner to adopt rules; providing for 
          miscellaneous changes and clarifications; amending 
          Minnesota Statutes 1982, sections 60A.11, subdivisions 
          9, 10, 14, 18, 20, 21, 23, and 24; 60A.111, 
          subdivision 2, and by adding subdivisions; 61A.28, 
          subdivisions 3, 6, and 12; 61A.29, subdivision 2; 
          61A.31, subdivision 3; 62A.32; repealing Minnesota 
          Statutes 1982, section 60A.111, subdivision 4. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1982, section 60A.11, 
subdivision 9, is amended to read: 
    Subd. 9.  [GENERAL CONSIDERATIONS.] The following 
considerations shall apply in the interpretation of this section:
    (a) This section shall apply applies to the investments of 
insurance companies other than life insurance companies; 
     (b) The purpose of this section is to protect and further 
the interests of policyholders, claimants, creditors and the 
public by providing standards for the development and 
administration of programs for the investment of the assets of 
domestic companies.  These standards and the investment programs 
developed by companies shall must take into account the safety 
of company's principal, investment yield and growth, stability 
in the value of the investment, the liquidity necessary to meet 
the company's expected business needs, and investment 
diversification; 
     (c) All financial terms relating to insurance companies 
shall have the meanings assigned to them under statutory 
accounting methods.  All financial terms relating to 
noninsurance companies shall have the meanings assigned to them 
under generally accepted accounting principles; 
    (d) Investments shall must be valued in accordance with the 
valuation procedures established by the National Association of 
Insurance Commissioners, unless the commissioner requires or 
finds another method of valuation reasonable under the 
circumstances; and 
    (e) A company may elect to hold an investment which 
qualifies under more than one subdivision, under the subdivision 
of its choice.  Nothing herein shall prevent prevents a company 
from electing to hold an investment under a subdivision 
different from the one in which it previously held the 
investment; and 
    (f) An investment which qualifies under any provision of 
the law governing investments of insurance companies when 
acquired will continue to be a qualified investment for as long 
as it is held by the insurance company. 
     Sec. 2.  Minnesota Statutes 1982, section 60A.11, 
subdivision 10, is amended to read: 
    Subd. 10.  [DEFINITIONS.] The following terms shall have 
the meaning assigned in this subdivision for purposes of this 
section and section 60A.111: 
    (a) "Admitted assets," for purposes of computing percentage 
limitations on particular types of investments, means the assets 
as shown by the company's annual statement, required by section 
60A.13, as of the December 31 immediately preceding the date the 
company acquires the investment; 
    (b) "Clearing corporation" means The Depository Trust 
Company or any other clearing agency registered with the federal 
securities and exchange commission pursuant to the Federal 
Securities Exchange Act of 1934, section 17A, Euro-clear 
Clearance System Limited and CEDEL S.A., and, with the approval 
of the commissioner, any other clearing corporation as defined 
in section 336.8-102; 
    (c) "Control" has the meaning assigned to that term in, and 
shall must be determined in accordance with, section 60D.01, 
subdivision 4; 
    (d) "Custodian bank" means a bank or trust company or a 
branch of a bank or trust company that is acting as custodian 
and is supervised and examined by state or federal authority 
having supervision over banks and is acting as custodian the 
bank or trust company or with respect to a company's foreign 
investments only by the regulatory authority having supervision 
over banks or trust companies in the jurisdiction in which the 
bank, trust company, or branch is located, and specifically 
includes Euro-clear Clearance System Limited and CEDEL S.A., 
acting as custodians; 
    (e) "Issuer" means the corporation, business trust, 
governmental unit, partnership, association, individual or other 
entity which issues or on behalf of which is issued any form of 
obligation; 
    (f) "Member bank" means a national bank, state bank or 
trust company which is a member of the Federal Reserve System; 
    (g) "National securities exchange" means an exchange 
registered under section 6 of the Securities Exchange Act of 
1934 or an exchange regulated under the laws of the Dominion of 
Canada; 
    (h) "Obligations" shall include bonds, notes, debentures, 
transportation equipment certificates, repurchase agreements, 
bank certificates of deposit, time deposits, bankers' 
acceptances, and other obligations for the payment of money not 
in default as to payments of principal and interest on the date 
of investment, whether constituting general obligations of the 
issuer or payable only out of certain revenues or certain funds 
pledged or otherwise dedicated for payment.  Leases are 
considered obligations if the lease is assigned for the benefit 
of the company and is non-terminable by the lessee or lessees 
thereunder upon foreclosure of any lien upon the leased 
property, and rental payments are sufficient to amortize the 
investment over the primary lease term; 
    (i) "Qualified assets" means the sum of (1) all investments 
qualified in accordance with this section other than investments 
in affiliates and subsidiaries, (2) investments in obligations 
of affiliates as defined in section 60D.01, subdivision 2 
secured by real or personal property sufficient to qualify the 
investment under subdivision 19 or 23, (3) qualified investments 
in subsidiaries, as defined in section 60D.01, subdivision 9, on 
a consolidated basis with the insurance company without 
allowance for goodwill or other intangible value, and (4) cash 
on hand and on deposit, agent's balances or uncollected premiums 
not due more than 90 days, assets held pursuant to section 
60A.12, subdivision 2, investment income due and accrued, funds 
due or on deposit or recoverable on loss payments under 
contracts of reinsurance entered into pursuant to section 
60A.09, premium bills and notes receivable, federal income taxes 
recoverable, and equities and deposits in pools and associations;
    (j) "Qualified net earnings" means that the net earnings of 
the issuer after elimination of extraordinary nonrecurring items 
of income and expense and before income taxes and fixed charges 
over the five immediately preceding completed fiscal years, or 
its period of existence if less than five years, has averaged 
not less than one and one-quarter times its average annual fixed 
charges applicable to the period; 
     (k) "Required liabilities" means the sum of (1) total 
liabilities as required to be reported in the company's most 
recent annual report to the commissioner of insurance of this 
state, (2) for companies operating under the stock plan, the 
minimum paid-up capital and surplus required to be maintained 
pursuant to section 60A.07, subdivision 5a, (3) for companies 
operating under the mutual or reciprocal plan, the minimum 
amount of surplus required to be maintained pursuant to section 
60A.07, subdivision 5b, and (4) the amount, if any, by which the 
company's loss and loss adjustment expense reserves exceed 350 
percent of its surplus as it pertains to policyholders as of the 
same date.  In addition to the required amounts pursuant to 
clauses (1) to (4), the commissioner may, at his or her 
discretion, require that the amount of any apparent reserve 
deficiency that may be revealed by one to five year loss and 
loss adjustment expense development analysis for the five years 
reported in the company's most recent annual statement to the 
commissioner be added to required liabilities; and 
    (l) "Unrestricted surplus" means the amount by which 
qualified assets exceed 110 percent of required liabilities.  
     Sec. 3.  Minnesota Statutes 1982, section 60A.11, 
subdivision 14, is amended to read: 
    Subd. 14.  [CERTAIN DEVELOPMENT BANK OBLIGATIONS.] (a) 
Certificates of deposits, time deposits, and bankers' 
acceptances issued by and other obligations guaranteed by any 
bank organized under the laws of the United States or any state 
thereof or of the Dominion of Canada or any province thereof.  A 
company may not invest more than five percent of its admitted 
assets in the obligations of any one bank and may not hold at 
any time more than ten percent of the outstanding obligations of 
any one bank.  A letter of credit issued by a member bank which 
qualifies under the guidelines of the National Association of 
Insurance Commissioners as a clean, irrevocable letter of credit 
which contains an "evergreen clause," may be accepted as a 
guaranty of other investments and in lieu of cash to secure 
loans of securities.  
     (b) Obligations issued or guaranteed by the International 
Bank for Reconstruction and Development, the Asian Development 
Bank, the Inter-American Development Bank, the Export-Import 
Bank, the World Bank or any United States government sponsored 
organization of which the United States is a member, provided if 
the principal and interest is payable in United States dollars.  
A company may not invest more than five percent of its total 
admitted assets in the obligations of any one of these banks or 
organizations, and may not invest more than a total of 15 
percent of its total admitted assets in the obligations of all 
such these banks and organizations.  
     Sec. 4.  Minnesota Statutes 1982, section 60A.11, 
subdivision 18, is amended to read: 
    Subd. 18.  [STOCKS.] Stocks issued or guaranteed by any 
corporation incorporated under the laws of the United States or 
any state of the United States, or the laws of Canada or any 
province of Canada, or stocks or stock equivalents listed or 
regularly traded on a national securities exchange on the 
following conditions:  
    (a) A company may invest in preferred stocks traded on a 
national securities exchange and may also invest in other 
preferred stocks if the issuer has qualified net earnings and if 
current or cumulative dividends are not then in arrears;  
    (b) A company may invest in common stocks, common stock 
equivalents or securities convertible into common stock or 
common stock equivalents of any corporation or business trust, 
provided:  
    (1) The common stock, common stock equivalent or 
convertible issue is publicly traded on a national securities 
exchange, or the corporation or business trust has qualified net 
earnings;  
    (2) A company may invest up to two percent of its admitted 
assets in common stock, common stock equivalents or convertible 
issues which do not meet the requirements of clause (1);  
    (3) At no time may a company acquire or hold voting control 
of a corporation or business trust through its ownership of 
common stock, common stock equivalents or other securities, 
except that a company may organize and hold, or acquire and hold 
more than 50 percent of the common stock of (a) a corporation 
providing investment advisory, banking, management or sale 
services to an investment company or to an insurance company, 
(b) a data processing or computer service company, (c) a 
mortgage loan corporation engaged in the business of making, 
originating, purchasing or otherwise acquiring or investing in, 
and servicing or selling or otherwise disposing of loans secured 
by mortgages on real property, (d) a corporation if its business 
is owning and managing or leasing personal property, (e) a 
corporation providing securities underwriting services or acting 
as a securities broker or dealer, (f) a real property holding, 
developing, managing, brokerage or leasing corporation, (g) any 
domestic or foreign insurance company, (h) any alien insurance 
company; provided, that if the organization or acquisition and 
the holding of the company shall be is subject to the prior 
approval of the insurance commissioner, which approval shall 
must be given upon good cause shown and which approval shall be 
is deemed to have been given if the commissioner does not 
disapprove of the organization or acquisition within 30 days 
after notification by the company, (i) an investment subsidiary 
to acquire and hold investments which the company could acquire 
and hold directly, provided that if the investments of the 
subsidiary shall be are considered direct investments for 
purposes of this chapter and shall be are subject to the same 
percentage limitations, requirements and restrictions as are 
contained herein, or (j) any corporation whose business has been 
approved by the commissioner as complimentary complementary or 
supplementary to the business of the company.  The percentage of 
common stock may be less than 50 percent if the prior approval 
of the commissioner is obtained.  A company may invest up to an 
aggregate of ten percent of its admitted assets under subclauses 
(a) to (e) of this clause (3); and 
    (4) A company may invest in the common stock of any 
corporation owning investments in foreign companies used for 
purposes of legal deposit, when the insurance company transacts 
business therein direct or as reinsurance; and 
    (c) A company may invest in warrants and rights granted by 
an issuer to purchase stock of the issuer if the stock of the 
issuer at the time of the acquisition of the warrant or right to 
purchase, would qualify as an investment under paragraph (a) or 
(b) whichever is applicable.  A company shall not invest more 
than two percent of its assets under this paragraph.  Any stock 
actually acquired through the exercise of a warrant or right to 
purchase may be included in paragraph (a) or (b), whichever is 
applicable, only if the stock meets the standards prescribed in 
the clause at the time of acquisition of the stock; and 
     (d) A company may invest in the securities of any face 
amount certificate company, unit investment trust, or management 
type investment company, registered or in the process of 
registration under the Federal Investment Company Act of 1940 as 
from time to time amended, provided that the aggregate of all 
these investments other than in securities of money market 
mutual funds or mutual funds investing primarily in United 
States government securities, determined at cost, shall not 
exceed five percent of its admitted assets; investments may be 
made under this clause without regard to the percentage 
limitations applicable to investments in voting securities. 
     (e) A company may invest in any proportion of the shares or 
investment units of an investment company or investment trust, 
whether or not registered under the Federal Investment Company 
Act of 1940, which is managed by an insurance company, member 
bank, trust company regulated by state or federal authority or 
an investment manager or adviser registered under the Federal 
Investment Advisers Act of 1940 or qualified to manage the 
investments of an investment company registered under the 
Federal Investment Company Act of 1940, provided that the 
investments of the investment company or investment trust are 
qualified investments made under this section and that the 
articles of incorporation, bylaws, trust agreement, investment 
management agreement, or some other governing instrument limits 
its investments to investments qualified under this section.  
     Sec. 5.  Minnesota Statutes 1982, section 60A.11, 
subdivision 20, is amended to read: 
    Subd. 20.  [REAL ESTATE.] (a) Except as provided in 
paragraphs (b) to (d), a company may only acquire, hold, and 
convey real estate only for the following purposes and in the 
following manner which:  
    (1) Such as shall have has been mortgaged to it in good 
faith by way of security for loans previously contracted, or for 
moneys due;  
    (2) Such as shall have has been conveyed to it in 
satisfaction of debts previously contracted in the course of its 
dealings;  
    (3) Such as shall have has been purchased at sales on 
judgments, decrees or mortgages obtained or made for the debts;  
and 
    (4) Such as shall be is subject to a contract for deed 
under which the company holds the vendor's interest to secure 
the payments the vendee is required to make thereunder.  
    All the real estate specified in clauses (1) to (3) shall 
must be sold and disposed of within five years after the company 
shall have has acquired title to the same it, or within five 
years after the same shall have it has ceased to be necessary 
for the accommodation of its the company's business, and it 
shall the company must not hold this property for a longer 
period unless the company elects to hold such the real estate 
under another section, or unless it shall procure procures a 
certificate from the commissioner of insurance that its interest 
will suffer materially by the forced sale thereof, in which 
event the time for the sale may be extended to the time the 
commissioner directs in the certificate.  
    (b) A company may acquire and hold real estate for the 
convenient accommodation of its business.  
    (c) A company may acquire real estate or any interest in 
real estate, including oil and gas and other mineral interests, 
as an investment for the production of income, and may hold, 
improve or otherwise develop, subdivide, lease, sell and convey 
real estate so acquired directly or as a joint venture or 
through a limited or general partnership in which the company is 
a partner.  
    (d) A company may also hold real estate (1) if the purpose 
of the acquisition is to enhance the sale value of real estate 
previously acquired and held by the company under this section, 
and (2) if the company expects the real estate so acquired to 
qualify under paragraph (b) or (c) above within five years after 
acquisition.  
    (e) A company may, after securing the approval of the 
commissioner, acquire and hold real estate for the purpose of 
providing necessary living quarters for its employees; provided, 
that.  The company shall must dispose of the real estate within 
five years after it has ceased to be necessary for that purpose 
unless the commissioner agrees to extend the holding period upon 
application by the company.  
    (f) A company may not invest more than 25 percent of its 
total admitted assets in real estate.  The cost of any parcel of 
real estate held for both the accommodation of business and for 
the production of income shall must be allocated between the two 
uses annually.  No more than three percent of its total admitted 
assets may be invested in real estate held under paragraph (e).  
     Sec. 6.  Minnesota Statutes 1982, section 60A.11, 
subdivision 21, is amended to read: 
    Subd. 21.  [FOREIGN INVESTMENTS.] Obligations of and 
investments in foreign countries, on the following conditions:  
    (a) A company may acquire and hold other any foreign 
investments in foreign countries which are required as a 
condition of doing business in the foreign country or necessary 
for the convenient accommodation of its foreign business.  An 
investment is considered necessary for the convenient 
accommodation of the insurance company's foreign business only 
if it is demonstrably and directly related in size and purpose 
to the company's foreign insurance operations; and 
    (b) A company may also invest not more than a total of two 
percent of its admitted assets in any combination of:  
    (1) the obligations of foreign governments, corporations, 
or business trusts,;  
     (2) obligations of federal, provincial, or other political 
subdivisions backed by the full faith and credit of the foreign 
governmental unit;  
     (3) or in the stocks or stock equivalents or obligations of 
foreign corporations or business trusts not qualifying for 
investment under subdivision 10, if the obligations, stocks or 
stock equivalents are listed or regularly traded on the London, 
Paris, Zurich, or Tokyo stock exchange or any similar regular 
securities exchange approved not disapproved by the commissioner 
within 30 days following notice from the company of its 
intention to invest in these securities.  
     Sec. 7.  Minnesota Statutes 1982, section 60A.11, 
subdivision 23, is amended to read: 
    Subd. 23.  [COLLATERAL LOANS.] Obligations adequately 
secured by a qualifying letter of credit issued by a member bank 
or by cash or by the pledge of any investment authorized by any 
of the preceding subdivisions, on the following conditions if:  
    (a) The pledged investment shall be collateral is legally 
assigned or delivered to the company;  
    (b) The company shall reserve has the right to declare the 
obligation immediately due and payable if the security 
thereafter depreciates to the point where the investment would 
not qualify under paragraph (c); provided, that additional 
qualifying security may be pledged to allow the investment to 
remain qualified;  
    (c) The pledged investment shall collateral must at the 
time of purchase delivery or assignment have a market value of 
at least, in the case of cash, equal to and, in all other cases, 
1-1/4 times the amount of the unpaid balance of the obligations; 
and.  
    (d) A company may not invest more than five percent of its 
total admitted assets under this subdivision.  
     Sec. 8.  Minnesota Statutes 1982, section 60A.11, 
subdivision 24, is amended to read: 
    Subd. 24.  [OPTIONS.] (a) A company may sell 
exchange-traded call options against stocks or other securities 
owned by the company and may purchase exchange-traded call 
options in a closing transaction against a call option 
previously written by the company.  
    (b) A company may purchase or sell other exchange-traded 
call options, and may sell or purchase exchange-traded put 
options only if, to the extent and on terms and conditions the 
commissioner determines to be consistent with the purposes of 
this section.  
    Sec. 9.  Minnesota Statutes 1982, section 60A.111, 
subdivision 2, is amended to read: 
    Subd. 2.  [PLAN.] If the commissioner determines that the 
required liabilities of any company are greater than its 
qualified assets and that the combined financial resources of 
the insurance company members of any insurance holding company 
system of which the company is a member are not adequate to 
counterbalance that fact, the commissioner may require the 
company to submit to the commissioner for his approval a plan by 
which the company undertakes to bring the ratio of its required 
liabilities to its qualified assets, expressed as a percentage, 
up to at least 100 percent within a reasonable period, usually 
not exceeding five years.  
     Sec. 10.  Minnesota Statutes 1982, section 60A.111, is 
amended by adding a subdivision to read:  
    Subd. 4a.  [PROHIBITION.] If the commissioner determines 
that the company does not have unrestricted surplus, the 
commissioner may prohibit that company from purchasing any asset 
which is not a qualified asset as defined in section 60A.11, 
unless a request is made of the commissioner and the request is 
not denied within 15 days.  The commissioner may, in his 
discretion, exempt any insurer from the requirements of this 
subdivision.  
     Sec. 11.  Minnesota Statutes 1982, section 60A.111, is 
amended by adding a subdivision to read:  
    Subd. 6.  [FACTORS CONSIDERED.] The commissioner, in 
exercising his discretion under this section, may take into 
consideration the size, the lines of business, and the 
dispersion of risks of the company, and the consolidated assets 
and surplus as regards policyholders of the other insurers of 
the insurance holding company system of which the company is a 
member and any other factors deemed relevant by the commissioner.
     Sec. 12.  Minnesota Statutes 1982, section 61A.28, 
subdivision 3, is amended to read: 
    Subd. 3.  [LOANS OR OBLIGATIONS SECURED BY MORTGAGE.] Loans 
or obligations (hereinafter loans) secured by a first mortgage, 
or deed of trust (hereinafter mortgage), on improved real estate 
in the United States, provided if the amount of the loan secured 
thereby is not in excess of 66-2/3 percent of the market value 
of the real estate at the time of the loan, or, when the loan is 
to be fully amortized by installment payments of principal, 
which may begin up to five years from the date of the loan if 
the real estate is to be used for commercial purposes, and 
interest at least annually over a period of not to exceed 40 
years, the amount of the loan shall does not exceed (a) 80 
percent of the market value of the real estate at the time of 
the loan; (b) 90 percent of the market value of the real estate 
at the time of the loan if the loan is secured by a purchase 
money mortgage made in connection with the disposition of real 
estate acquired pursuant to section 61A.31, subdivision 1, or, 
if (1) the real estate is used for commercial purposes, and (2) 
the loan is additionally secured by an assignment of lease or 
leases, and (3) the lessee or lessees under the lease or leases, 
or a guarantor or guarantors of the lessee's obligations, is a 
corporation whose obligations would qualify as an investment 
under subdivision 6(f), and (4) the rents payable during the 
primary term of the lease or leases are sufficient to amortize 
at least 60 percent of the loan.  In calculating the ratio of 
the amount of the loan to the value of the property, no part of 
the amount of any loan is to be included which the United States 
or any agency or instrumentality thereof or other mortgage 
insurer as may be approved by the commissioner has insured or 
guaranteed or made a commitment to insure or guarantee; 
provided, in no event shall may the loan exceed the market value 
of the property.  No improvement shall may be included in 
estimating the market value of the real estate unless the same 
shall be it is insured against fire by policies payable to the 
security holder or a trustee for its benefit.  This requirement 
may be met by a program of self-insurance established and 
maintained by a corporation whose debt obligations would qualify 
for purchase under subdivision 6, paragraph (g), clause (4).  
Also loans secured by mortgage, upon leasehold estates in 
improved real property where at the date of investment the lease 
shall have has an unexpired term of at least five years longer 
than the term of the loan secured thereby, and where the 
leasehold estate is unencumbered except by the lien reserved in 
the lease for the payment of rentals and the observance of the 
other covenants, terms and conditions of the lease and where the 
mortgagee, upon default, is entitled to be subrogated to, or to 
exercise, all the rights and to perform all the covenants of the 
lessee, provided that no loan on the leasehold estate shall may 
exceed, (a) 66-2/3 percent of the market value thereof at the 
time of the loan, or (b) 80 percent of the market value thereof 
at the time of the loan if the real property is to be used for 
commercial purposes, and the loan must is to be fully amortized 
by installment payments of principal, which may begin up to 
within five years from the date of the loan if the leasehold 
estate is to be used for commercial purposes, and interest is 
payable at least annually over a the period of the loan which 
may not to exceed 40 years and the market value thereof shall be 
of the leasehold estate is shown by the sworn certificate of a 
competent appraiser, or (c) 90 percent of the market value of 
the leasehold estate at the time of the loan if the loan is 
secured by a purchase money mortgage made in connection with the 
disposition of real estate acquired pursuant to section 61A.31, 
subdivision 1.  In calculating the ratio of the amount of the 
loan to the value of the leasehold estate, no part of the amount 
of any loan is to be included which the United States or any 
agency or instrumentality thereof or other mortgage insurer 
approved by the commissioner has insured or guaranteed or made a 
commitment to insure or guarantee; provided, in no event shall 
may the loan exceed the market value of the leasehold estate.  
Also loans secured by mortgage, which the United States or any 
agency or instrumentality thereof or other mortgage insurer 
approved by the commissioner has insured or guaranteed or made a 
commitment to insure or guarantee.  Also loans secured by 
mortgage, on improved real estate in the Dominion of Canada 
provided if the amount of the loan is not in excess of 66-2/3 
percent of the market value of the real estate at the time of 
the loan, or, when the loan is to be fully amortized by 
installment payments of principal, which may begin up to five 
years from the date of the loan if the real estate is used for 
commercial purposes, and interest at least annually over a 
period of not to exceed 40 years, the amount of the loan shall 
does not exceed, (a) 80 percent of the market value of the real 
estate at the time of the loan, or (b) 90 percent of the market 
value of the real estate at the time of the loan if the loan is 
secured by a purchase money mortgage made in connection with the 
disposition of real estate acquired pursuant to section 61A.31, 
subdivision 1.  In calculating the ratio of the amount of the 
loan to the value of the property, no part of the amount of any 
loan is to be included which the Dominion of Canada or any 
agency or instrumentality thereof has insured or guaranteed or 
made a commitment to insure or guarantee; provided in no event 
shall may the loan exceed the market value of the property.  
Also loans secured by mortgage, on real estate in the United 
States which may be unimproved provided there exists a definite 
plan for commencement of development for commercial purposes 
within not more than five years where the amount of the loan 
does not exceed 80 percent of the market value of the unimproved 
real estate at the time of the loan and the loan is to be fully 
amortized by installment payments of principal, which may begin 
up to five years from the date of the loan, and interest at 
least annually over a period of not to exceed 40 years.  Also 
loans secured by second mortgage on improved or unimproved real 
estate used, or to be used, for commercial purposes; provided, 
that if unimproved real estate there exists a definite plan for 
commencement of development within not more than five years, in 
the United States or the Dominion of Canada under the following 
conditions:  (a) the amount of the loan secured by the second 
mortgage is equal to the sum of the amount disbursed by the 
company and the then outstanding indebtedness under the first 
mortgage loan; and (b) the company has control over the payments 
under the first mortgage indebtedness; and (c) the total amount 
of the loan shall does not exceed 66-2/3 percent of the market 
value of the real estate at the date of the loan or, when the 
note or bond is to be fully amortized by installment payments of 
principal, beginning not more than five years from the date of 
the loan, and interest at least annually over a period of not to 
exceed 40 years, the amount of the loan shall does not exceed 80 
percent of the market value of the real estate at the date of 
the loan. 
     For purposes of this subdivision, improved real estate 
includes real estate improved with permanent buildings, used for 
agriculture or pasture, or income producing real estate, 
including but not limited to, parking lots and leases, royalty 
or other mineral interests in properties producing oil, gas, or 
other minerals and interests in properties for the harvesting of 
forest products.  
     A loan or obligation otherwise permitted under this 
subdivision shall must be permitted notwithstanding the fact 
that it provides for a payment of the principal balance prior to 
the end of the period of amortization of the loan.  
    The vendor's equity in a contract for deed shall qualify 
qualifies as a loan secured by mortgage for the purposes of this 
subdivision. 
     A mortgage participation certificate evidencing an interest 
in a loan secured by mortgage or pools of the same shall qualify 
qualifies under this subdivision, provided if the loan secured 
by mortgage, and in the case of pools of the same that each 
loan, would otherwise qualify under this subdivision.  
     Sec. 13.  Minnesota Statutes 1982, section 61A.28, 
subdivision 6, is amended to read: 
    Subd. 6.  [STOCKS, OBLIGATIONS, AND OTHER INVESTMENTS.] 
Stocks, warrants or options to purchase stocks, bonds, notes, 
evidences of indebtedness, or other investments as set forth in 
this subdivision, provided that no investment may be made which 
will increase the aggregate investment in all common stocks 
under paragraphs (a) and (b) beyond 20 percent of admitted 
assets as of the end of the preceding calendar year.  In 
applying the standards prescribed in paragraphs (b), (c), and 
(d), (f) and (g) of this subdivision to the stocks, bonds, 
notes, evidences of indebtedness, or other obligations of a 
corporation which in the qualifying period preceding purchase of 
the stocks, bonds, notes, evidences of indebtedness, or other 
obligations acquired its property or a substantial part thereof 
through consolidation, merger, or purchase, the earnings of the 
several predecessors or constituent corporations shall must be 
consolidated.  In applying any percentage limitations of this 
subdivision the value of the stock, or warrant or option to 
purchase stock, shall must be based on cost.  For purposes of 
this subdivision, National Securities Exchange means an exchange 
registered under section 6 of the Securities Exchange Act of 
1934 or an exchange regulated under the laws of the Dominion of 
Canada.  
     (a) Stocks of banks, insurance companies, and municipal 
corporations organized under the laws of the United States or 
any state thereof; but not more than 15 percent of the admitted 
assets of any domestic life insurance company may be invested in 
stocks of other insurance corporations and banks. 
     (b) Common stocks, common stock equivalents, or securities 
convertible into common stock or common stock equivalents of any 
corporation or business trust not designated in paragraph (a) of 
this subdivision, organized under the laws of the United States 
or any state thereof, or of the Dominion of Canada or any 
province thereof, or those traded on a National Securities 
Exchange, if the net earnings of the corporation after the 
elimination of extraordinary nonrecurring items of income and 
expense and before income taxes and fixed charges over the five 
immediately preceding completed fiscal years, or its period of 
existence if less than five years, shall have has averaged not 
less than one and one-fourth times its average annual fixed 
charges applicable to the period.  
     (c) Preferred stock of, or common or preferred stock 
guaranteed as to dividends by, any corporation not designated in 
paragraph (a) of this subdivision, organized under the laws of 
the United States or any state thereof, or of the Dominion of 
Canada or any province thereof, or those traded on a National 
Securities Exchange, under the following conditions:  (1) No 
investment shall may be made under this paragraph in a stock 
upon which any dividend, current or cumulative, is in arrears; 
and (2) the aggregate investment in stocks under this paragraph 
and in common stocks under paragraphs (a) and (b) shall may not 
exceed 25 percent of the life insurance company's admitted 
assets, provided that no more than 20 percent of the company's 
admitted assets shall may be invested in common stocks under 
paragraphs (a) and (b); and (3) if the net earnings of the 
corporation after the elimination of extraordinary nonrecurring 
items of income and expenses and before income taxes and fixed 
charges over the five immediately preceding completed fiscal 
years, or its period of existence if less than five years, shall 
have has averaged not less than one and one-fourth times its 
average annual fixed charges applicable to the period.  
     (d) Warrants, options, and rights to purchase stock if the 
stock, at the time of the acquisition of the warrant, option, or 
right to purchase, would qualify as an investment under 
paragraph (a), (b), or (c), whichever is applicable.  A domestic 
life insurance company shall not invest more than two percent of 
its assets under this paragraph.  Any stock actually acquired 
through the exercise of a warrant or option, or rights to 
purchase may be included in paragraph (a), (b), or (c), 
whichever is applicable, only if the stock then meets the 
standards prescribed in the paragraph at the time of acquisition 
of the stock. 
     (e) The securities of any face amount certificate company, 
unit investment trust, or management type investment company, 
registered or in the process of registration under the federal 
Investment Company Act of 1940 as from time to time amended, 
provided that the aggregate of the investments, determined at 
cost, by the life insurance company shall may not exceed five 
percent of its admitted assets, and the investments may be made 
without regard to the percentage limitations applicable to 
stocks, and warrants or options or rights to purchase stock.  In 
addition, the company may transfer assets into one or more of 
its separate accounts for the purpose of establishing, or 
supporting its contractual obligations under, the accounts in 
accordance with the provisions of sections 61A.13 to 61A.21. 
     (f) Bonds, notes, debentures, repurchase agreements, or 
other evidences of indebtedness (1) secured by letters of credit 
issued by a national bank, state bank or trust company which is 
a member of the federal reserve system or by a bank organized 
under the laws of the Dominion of Canada or (2) traded on a 
national securities exchange or (3) issued, assumed, or 
guaranteed by a corporation or business trust, other than a 
corporation designated in subdivision 4, organized under the 
laws of the United States or any state thereof, or the Dominion 
of Canada or any province thereof, if the net earnings of the 
corporation after the elimination of extraordinary nonrecurring 
items of income and expense and before income taxes and fixed 
charges over the five immediately preceding completed fiscal 
years, or its period of existence if less than five years, shall 
have has averaged not less than one and one-fourth times its 
average annual fixed charges applicable to the period.  No 
investment shall may be made under this paragraph upon which any 
interest obligation is in default.  
    (g) Obligations for the payment of money under the 
following conditions:  (1) The obligation shall must be secured, 
either solely or in conjunction with other security, by an 
assignment of a lease or leases on property, real or personal; 
and (2) the lease or leases shall must be nonterminable by the 
lessee or lessees upon foreclosure of any lien upon the leased 
property; and (3) the rents payable under the lease or leases 
shall must be sufficient to amortize at least 90 percent of the 
obligation during the primary term of the lease; and (4) the 
lessee or lessees under the lease or leases, or a governmental 
entity or corporation which has assumed or guaranteed any 
lessee's performance thereunder, shall must be a governmental 
entity or corporation whose obligations would qualify as an 
investment under subdivision 2 or paragraph (f).  
    (h) A company may sell exchange-traded call options against 
stocks of or other securities owned by the company and may 
purchase exchange-traded call options in a closing transaction 
against a call option previously written by the company.  In 
addition to the authority granted by paragraph (d) of this 
subdivision, to the extent and on the terms and conditions the 
commissioner determines to be consistent with the purposes of 
this chapter, a company may purchase or sell other 
exchange-traded call options, and may sell or purchase 
exchange-traded put options.  
    Sec. 14.  Minnesota Statutes 1982, section 61A.28, 
subdivision 12, is amended to read: 
    Subd. 12.  [ADDITIONAL INVESTMENTS.] Investments of any 
kind, without regard to the categories, conditions, standards, 
or other limitations set forth in the foregoing subdivisions and 
section 61A.31, subdivision 3, except that the prohibitions in 
clause (c) (d) of said subdivision 3 shall remain remains 
applicable, may be made by a domestic life insurance company in 
an amount not to exceed the lesser of the following: 
    (1) Five percent of the company's total admitted assets as 
of the end of the preceding calendar year, or 
    (2) Fifty percent of the amount by which its capital and 
surplus as of the end of the preceding calendar year exceeds 
$675,000.  Provided, however, that a company's total investment 
under this section in the common stock of any corporation, other 
than the stock of the types of corporations specified in 
subdivision 6(a), shall may not exceed ten percent of the common 
stock of the corporation.  Provided, further, that no investment 
may be made under the authority of this clause (2) or clause (1) 
by a company that has not completed five years of actual 
operation since the date of its first certificate of authority.  
    If, subsequent to being made under the provisions of this 
subdivision, an investment is determined to have become 
qualified or eligible under any of the other provisions of this 
chapter, the company may consider such the investment as being 
held under such the other provision and such the investment need 
no longer be considered as having been made under the provisions 
of this subdivision.  
     Sec. 15.  Minnesota Statutes 1982, section 61A.29, 
subdivision 2, is amended to read: 
    Subd. 2.  [FOREIGN INVESTMENTS.] Any domestic life 
insurance company may invest in obligations of and investments 
in foreign countries, other than the Dominion of Canada, on the 
following conditions:  
    (a) A company may acquire and hold other any foreign 
investments in foreign countries which are required as a 
condition of doing business in the foreign country or necessary 
for the convenient accommodation of its foreign business.  An 
investment shall be considered necessary for the convenient 
accommodation of foreign business only if it is demonstrably and 
directly related in size and purpose to such company's foreign 
insurance operations; and 
    (b) A company may also invest not more than a total of two 
percent of its admitted assets in any combination of:  
     (1) the obligations of foreign governments, corporations, 
or business trusts,;  
     (2) obligations of federal, provincial, or other political 
subdivisions backed by the full faith and credit of the foreign 
governmental unit;  
     (3) or in the stocks or stock equivalents or obligations of 
foreign corporations or business trusts not qualifying for 
investment under section 61A.28, subdivision 6, if the 
obligations, stocks, or stock equivalents are regularly traded 
on the London, Paris, Zurich, or Tokyo stock exchange or any 
similar regular securities exchange approved not disapproved by 
the commissioner within 30 days following notice from the 
company of its intention to invest in these securities.  
     Sec. 16.  Minnesota Statutes 1982, section 61A.31, 
subdivision 3, is amended to read: 
    Subd. 3.  [ACQUISITION OF PROPERTY.] Any domestic life 
insurance company may: 
    (a) acquire real property or any interest in real property, 
including oil and gas and other mineral interests, in the United 
States or any state thereof, or in the Dominion of Canada or any 
province thereof, as an investment for the production of income, 
and hold, improve or otherwise develop, and lease, sell, and 
convey the same either directly or as a joint venturer or 
through a limited or general partnership in which the company is 
a partner, subject to the following conditions and limitations:  
(1) The cost to the company of each parcel of real property 
acquired pursuant to this paragraph, including the estimated 
cost to the company of the improvement or development thereof, 
when added to the book value of all other real property then 
held by it pursuant to this clause, shall may not exceed 15 
percent of its admitted assets as of the end of the preceding 
calendar year, and (2) the cost to the company of each parcel of 
real property acquired pursuant to this paragraph, including the 
estimated costs to the company of the improvement or development 
thereof, shall may not exceed two percent of its admitted assets 
as of the end of the preceding calendar year; 
    (b) acquire personal property in the United States or any 
state thereof, or in the Dominion of Canada or any province 
thereof, under lease or leases or commitment for lease or leases 
provided that if:  (1) either the fair value of the property 
exceeds the company's investment in it or the lessee, or at 
least one of the lessees, or a guarantor, or at least one of the 
guarantors, of the lease is a corporation with a net worth of 
$1,000,000 or more; and (2) the lease provides for rent 
sufficient to amortize the investment with interest over the 
primary term of the lease or 40 years the useful life of the 
property, whichever is less; and (3) in no event shall does the 
total investment in personal property under this paragraph 
exceed three percent of the domestic life insurance company's 
admitted assets. 
    (c) acquire and hold real estate (1) if the purpose of the 
acquisition is to enhance the sale value of real estate 
previously acquired and held by the company under this section 
and (2) if the company expects the real estate so acquired to 
qualify and be held by the company under paragraph (a) within 
five years after acquisition; and 
    (d) not acquire real property under paragraphs (a) to (c) 
if the property is to be used primarily for agricultural, 
horticultural, ranch, mining, or church purposes. 
     All real property acquired or held under this subdivision 
shall must be carried at a value equal to the lesser of (1) cost 
plus the cost of capitalized improvements, less normal 
depreciation, or (2) market value. 
    Sec. 17.  Minnesota Statutes 1982, section 62A.32, is 
amended to read: 
    62A.32 [MEDICARE SUPPLEMENT 1+; COVERAGE.] 
    Medicare supplement 1+ must have a level of coverage so 
that it will be certified as a qualified plan pursuant to 
chapter 62E, and will provide:  
    (a) Coverage of part A medicare eligible expenses for 
hospitalization to the extent not covered by medicare to at 
least 50 percent of the deductible and co-payment required under 
medicare for the first 60 days of any medicare benefit period;  
    (b) Coverage of part A medicare eligible expenses for 
hospitalization to the extent not covered by medicare from the 
61st day through the 90th day in any medicare benefit period;  
    (c) Coverage of part A medicare eligible expenses incurred 
as daily hospital charges during use of medicare's lifetime 
hospital inpatient reserve days to the extent not covered by 
medicare;  
    (d) Upon exhaustion of all medicare hospital inpatient 
coverage including the lifetime reserve days, coverage of 90 
percent of all medicare part A eligible expenses for 
hospitalization not covered by medicare subject to a lifetime 
maximum benefit of an additional 365 days;  
    (e) Coverage of 20 percent of the amount of medicare 
eligible expenses under part B regardless of hospital 
confinement and coverage of at least 50 100 percent of the 
medicare calendar year part B deductible;  
    (f) 80 percent of charges for covered services described in 
section 62E.06, subdivision 1, which charges are not paid by 
medicare or pursuant to paragraphs (a) to (e); and 
    (g) Shall include A limitation of $1,000 per person on 
total annual out-of-pocket expenses for the covered services.  
The coverage must be subject to a maximum lifetime benefit of 
not less than $100,000. 
    Sec. 18.  [REPEALER.] 
    Minnesota Statutes 1982, section 60A.111, subdivision 4, is 
repealed. 
    Approved June 14, 1983