1998 Minnesota Statutes

     60A.12 Assets and liabilities. 

    Subdivision 1.    Valuation and admissibility of life 
 company assets.  In valuing the assets which compose the legal 
 reserve of a life company, its real estate, stocks, and bonds 
 shall be so rated that the average annual income thereof shall 
 not be less than three percent, and if any asset produces less 
 it shall be rated at its value upon a three percent basis.  
 Loans and credits shall not be allowed for more than their face 
 value, nor shall any asset be appraised for more than its market 
 value.  Only such assets shall be allowed as are available for 
 payment of losses in this state, including an electronic 
 computer or data processing machine or system heretofore or 
 hereafter purchased for use in connection with the business of a 
 life company, provided such machine or system shall have an 
 original cost of not less than one hundred thousand dollars nor 
 more than three percent of the admitted assets of the company 
 and such cost shall be amortized in full over a period not to 
 exceed ten full calendar years.  Any deposit or fund set apart 
 as security for a particular liability may be set off to an 
 amount not exceeding such liability.  The amount of any interest 
 bearing lien against any policy or loan thereon, not exceeding 
 the net value or premium reserve of such policy, computed under 
 the provisions of this chapter, may likewise be allowed against 
 liability thereunder.  Stockholders' obligations of any 
 description shall not be rated as part of the assets of any 
 company, unless secured by sufficient approved collateral. 

    Subd. 2. Repealed, 1991 c 325 art 8 s 18 

    Subd. 3.    Valuation of evidences of indebtedness.  All 
 bonds or other evidences of debt, having a fixed term and rate, 
 held by an insurance company or fraternal benefit society 
 authorized to do business in this state may, if amply secured 
 and not in default as to principal and interest, be valued as 
 follows:  If purchased at par, at the par value; 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; provided, that the purchase price shall in no 
 case be taken at a higher figure than the actual market value at 
 the time of purchase.  If the notes or bonds secured by mortgage 
 or trust deed in the nature thereof which the federal housing 
 administrator has insured, or made a commitment to insure, are 
 purchased above par, they may, if not in default as to principal 
 and interest, be valued during the first five years after 
 purchase on the basis of the purchase price adjusted in equal 
 annual installments to bring the value to par at the end of five 
 years. 

    Subd. 4.    Unearned premiums reserve.  (1)    For 
 companies other than life or title.  To determine the policy 
 liability of any company other than life or title insurance, and 
 the amount the company shall hold as reserve, the commissioner 
 shall take 50 percent of the aggregate premiums, on policies 
 running one year or less from date of policy, and a pro rata 
 rate amount on policies running more than one year from date of 
 policy, except upon inland and marine risks, which the 
 commissioner shall compute by charging 50 percent of the amount 
 of premium written in its policies upon yearly risks and upon 
 risks covering more than one passage not terminated, and the 
 full amount of premiums written in policies upon all other 
 inland and marine risks not terminated.  In case of any fire and 
 marine company with less than $200,000 capital admitted to 
 transact in this state fire business only, the full amount of 
 premiums written in its marine and inland navigation and 
 transportation policies shall be charged as liability. 

    (2)    Special provisions for mutual fire companies with a 
 contingent liability.  In case of a mutual fire insurance 
 company with a policyholders' contingent liability fixed by its 
 bylaws and in its policies as provided by law, to determine the 
 amount of this reinsurance reserve, the commissioner shall take 
 25 percent of the aggregate premiums running one year or less 
 from date of policy, and 50 percent of the pro rata amount on 
 policies running more than one year from date of policy. 

    (3)    Casualty companies writing liability or workers' 
 compensation.  In case of a casualty insurance company writing 
 insurance against loss or damage resulting from accident to or 
 injuries suffered by an employee or other person and for which 
 the insured is liable, and under insurance against loss from 
 liability on account of the death of or injury to an employee 
 not caused by the negligence of an employer, the commissioner 
 shall charge as a liability, in addition to the capital stock 
 and all other outstanding indebtedness of the corporation: 

    Notwithstanding any other provision of this subdivision, an 
 unearned premium reserve shall be required based only on the 
 timing and the amount of the recorded written premium.  

    (4)    Provision for annual payment term policies.  A 
 policy for a term of years on which the premium is payable 
 annually shall be considered a policy for one year. 

    Subd. 5.    Loss reserves.  (1)   For other than 
 liability and workers' compensation.  The reserve for 
 outstanding losses under policies other than workers' 
 compensation and liability policies shall be at least equal to 
 the aggregate estimated amounts due or to become due on account 
 of all the losses and claims of which the corporation has 
 received notice.  The loss reserve shall also include the 
 estimated liability on any notices received by the corporation 
 of the occurrence of any event which may result in a loss, and 
 the estimated liability for all losses which have occurred but 
 on which no notice has been received.  For the purpose of these 
 reserves, the corporation shall keep a complete and itemized 
 record showing all losses and claims on which it has received 
 notice, including all notices received by it of the occurrence 
 of any event which may result in a loss. 

    When, in the judgment of the commissioner, the loss 
 reserves, calculated in accordance with the foregoing 
 provisions, are inadequate, the commissioner may require the 
 corporation to maintain additional reserves. 

    (2)   For liability losses.  The reserve for outstanding 
 losses and loss expenses incurred under liability policies 
 during each of the three years immediately preceding the date of 
 the statement shall be not less than 60 percent of the earned 
 liability premium for each of the three corresponding years 
 immediately preceding the date of the statement, less all loss 
 and loss expense payments made under claims incurred during each 
 of those years. 

    (3)   For compensation claims.  The reserve for 
 outstanding losses and loss expenses incurred under workers' 
 compensation policies shall be at least equal to the following 
 amounts: 

    (a) For all compensation claims under policies written more 
 than three years prior to the date of the statement, the present 
 values, at four percent interest, of the determined and the 
 estimated future payments; 

    (b) For all compensation claims under policies written in 
 the three years immediately preceding the date of the statement, 
 the reserve shall be not less than 65 percent of the earned 
 compensation premiums for each of the three years, less all loss 
 and loss expense payments made in connection with the claims 
 under policies written in each of the corresponding years.  For 
 the first year of the three-year period, the reserve shall be 
 not less than the present value, at four percent interest, of 
 the determined and the estimated unpaid compensation claims 
 under policies written during that year. 

    Subd. 6.  Repealed, 1978 c 465 s 15 

    Subd. 7.    Liability and workers' compensation reserves 
 subject to increase.  When, in the judgment of the 
 commissioner, the liability or compensation loss reserves of any 
 supervised insurer, calculated in accordance with the foregoing 
 provisions, are inadequate, the commissioner may require such 
 insurer to maintain additional reserves based upon estimated 
 individual claims or otherwise. 

    Subd. 8.    Liability and workers' compensation experience 
 to be included in annual statement.  Each insurer that writes 
 liability or compensation policies shall include in the annual 
 statement required by law a schedule of its experience 
 thereunder in such form as the commissioner may prescribe. 

    Subd. 9.    Exemption.  This section shall not apply to 
 farmers' mutual insurance companies. 

    Subd. 10. Repealed, 1993 c 299 s 33 

    HIST: 1967 c 395 art 1 s 12; 1975 c 359 s 23; 1978 c 465 s 6; 
 1986 c 444; 1991 c 325 art 16 s 1; 1992 c 540 art 2 s 8; 1992 c 
 564 art 1 s 17,54; 1993 c 299 s 2