Minnesota Session Laws - 1987, Regular Session

  

                         Laws of Minnesota 1987 

                        CHAPTER 189-H.F.No. 1267 
           An act relating to insurance; regulating investments 
          of domestic companies; defining terms; providing 
          additional investment authority; amending Minnesota 
          Statutes 1986, section 60A.11, subdivisions 10 and 26. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1986, section 60A.11, 
subdivision 10, is amended to read:  
    Subd. 10.  [DEFINITIONS.] The following terms 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 
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 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" 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 nonterminable 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 1-1/4 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 commerce 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.  The commissioner may waive the requirement in clause 
(4) unless the company's written premiums exceed 300 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 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. 2.  Minnesota Statutes 1986, section 60A.11, 
subdivision 26, is amended to read:  
    Subd. 26.  [RULES.] (a) The commissioner may promulgate 
adopt appropriate rules to carry out the purpose and provisions 
of this section.  
    (b) A company may make qualified investments in any 
additional securities or property of any kind with the written 
order of the commissioner.  This approval is at the discretion 
of the commissioner.  
    (c) Nothing authorized in this subdivision negates or 
reduces the investment authority granted in subdivisions 1 to 25.
    Sec. 3.  [EFFECTIVE DATE.] 
    Sections 1 and 2 are effective the day following final 
enactment. 
    Approved May 20, 1987