Minnesota Session Laws - 1998, Regular Session

                            CHAPTER 297-H.F.No. 2895 
                  An act relating to insurance; including secondary 
                  property covered by a township mutual fire insurance 
                  company; modifying permitted investments for township 
                  mutual companies; amending Minnesota Statutes 1996, 
                  section 67A.191, subdivision 1; Minnesota Statutes 
                  1997 Supplement, section 67A.231. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1996, section 67A.191, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [FARM RISKS.] A township mutual fire 
        insurance company may issue an insurance policy for qualified 
        and secondary property as defined in section 67A.14, subdivision 
        1, in combination with a policy issued by an insurer authorized 
        to sell property and casualty insurance in this state.  Except 
        as provided in subdivision 2, The portions of the combination 
        policy issued by a township mutual insurance company are 
        excluded from all provisions of the insurance laws of this state 
        as provided in section 67A.25, subdivision 2. 
           Sec. 2.  Minnesota Statutes 1997 Supplement, section 
        67A.231, is amended to read: 
           67A.231 [DEPOSIT OF FUNDS; INVESTMENT; LIMITATIONS.] 
           The directors of any township mutual insurance company may 
        authorize the treasurer to invest any of its funds and 
        accumulations in:  
           (a) Bonds, notes, mortgages, or other obligations 
        guaranteed by the full faith and credit of the United States of 
        America and those for which the credit of the United States is 
        pledged to pay principal, interest or dividends, including 
        United States agency and instrumentality bonds, debentures, or 
        obligations; 
           (b) Bonds, notes, evidence of indebtedness, or other public 
        authority obligations guaranteed by this state; 
           (c) Bonds, notes, evidence of the indebtedness or other 
        obligations guaranteed by the full faith and credit of any 
        county, municipality, school district, or other duly authorized 
        political subdivision of this state; 
           (d) Bonds or other interest bearing obligations, payable 
        from revenues, provided that the bonds or other interest bearing 
        obligations are at the time of purchase rated among the highest 
        four quality categories used by a nationally recognized rating 
        agency for rating the quality of similar bonds or other interest 
        bearing obligations, and are not rated lower by any other such 
        agency; or obligations of a United States agency or 
        instrumentality that have been rated in one of the two highest 
        categories established by the Securities Valuation Office of the 
        National Association of Insurance Commissioners.  A company may 
        not invest more than 20 percent of its admitted assets in the 
        obligations of any one corporation.  This is not applicable to 
        bonds or other interest bearing obligations in default as to 
        principal; 
           (e) Investments in the obligations stated in paragraphs 
        (a), (b), (c), and (d), may be made either directly or in the 
        form of securities of, or other interests in, an investment 
        company registered under the Federal Investment Company Act of 
        1940.  Investment company shares authorized pursuant to this 
        subdivision shall not exceed 20 percent of the company's 
        surplus.  These obligations must be carried at the lower of cost 
        or market on the annual statement filed with the commissioner 
        and adjusted to market on an annual basis; 
           (f) Loans upon improved and unencumbered real property in 
        this state worth at least twice the amount loaned thereon, not 
        including buildings, unless insured by property insurance 
        policies payable to and held by the security holder; 
           (g) Real estate, including land, buildings and fixtures, 
        located in this state and used primarily as home office space 
        for the insurance company; 
           (h) Demand or time deposits or savings accounts in 
        federally insured depositories located in this any state to the 
        extent that the deposit or investment is insured by the Federal 
        Deposit Insurance Corporation, Federal Savings and Loan 
        Corporation, or the National Credit Union Administration.  An 
        additional deposit not to exceed 50 percent of the township 
        mutual insurance company's policyholder surplus may be located 
        in these depositories if covered by private deposit insurance 
        written by an insurer licensed by the department of commerce; 
           (i) Guarantee fund certificates of a mutual insurer which 
        reinsures the business of the township mutual insurance 
        company.  The commissioner may by rule limit the amount of 
        guarantee fund certificates which the township mutual insurance 
        company may purchase and this limit may be a function of the 
        size of the township mutual insurance company; and 
           (j) Up to $1,500 in stock of an insurer which issues 
        directors and officers liability insurance to township mutual 
        insurance company directors and officers; and 
           (k) Up to $10,000 in shares of stock of the National 
        Association of Mutual Insurance Companies bank, subject to the 
        commissioner's approval. 
           Sec. 3.  [EFFECTIVE DATE.] 
           Sections 1 and 2 are effective the day following final 
        enactment. 
           Presented to the governor March 17, 1998 
           Signed by the governor March 18, 1998, 4:40 p.m.