1999 Minnesota Statutes

     60A.123 Valuation procedure. 

    Subdivision 1.    Requirement.  An insurer shall value 
 its commercial mortgage loans and real estate acquired through 
 foreclosure of commercial mortgage loans as provided in this 
 section for the purpose of establishing reserves or carrying 
 values of the investments and for statutory accounting purposes. 

    Subd. 2.    Performing mortgage loan.  A performing 
 mortgage loan must be carried at its amortized acquisition cost. 

    Subd. 3.    Distressed mortgage loan.  (a) The insurer 
 shall make an evaluation of the appropriate carrying value of 
 its commercial mortgage loans which it classifies as distressed 
 mortgage loans.  The carrying value must be based upon one or 
 more of the following procedures: 

    (1) an internal appraisal; 

    (2) an appraisal made by an independent appraiser; 

    (3) the value of guarantees or other credit enhancements 
 related to the loan. 

    (b) The insurer may determine the carrying value of its 
 distressed mortgage loans through either an evaluation of each 
 specific distressed mortgage loan or by a sampling methodology.  
 Insurers using a sampling methodology shall identify a sampling 
 of its distressed mortgage loans that represents a cross section 
 of all of its distressed mortgage loans.  The insurer shall make 
 an evaluation of the appropriate carrying value for each sample 
 loan.  The carrying value of all of the insurer's distressed 
 mortgage loans must be the same percentage of their amortized 
 acquisition cost as the sample loans.  The carrying value must 
 be based upon an internal appraisal or an appraisal conducted by 
 an independent appraiser. 

    (c) The insurer shall either take a charge against its 
 surplus or establish a reserve for the difference between the 
 carrying value and the amortized acquisition cost of its 
 distressed mortgage loans. 

    Subd. 4.    Delinquent mortgage loan.  (a) The insurer 
 shall make an evaluation of the appropriate carrying value of 
 each delinquent mortgage loan.  The carrying value must be based 
 upon one or more of the following procedures: 

    (1) an internal appraisal; 

    (2) an appraisal by an independent appraiser; 

    (3) the value of guarantees or other credit enhancements 
 related to the loan. 

    (b) The insurer shall either take a charge against its 
 surplus or establish a reserve for the difference between the 
 carrying value and the amortized acquisition cost of its 
 delinquent mortgage loans. 

    Subd. 5.    Restructured mortgage loan.  (a) The insurer 
 shall make an evaluation of the appropriate carrying value of 
 each restructured mortgage loan.  The carrying value must be 
 based upon one or more of the following procedures: 

    (1) an internal appraisal; 

    (2) an appraisal by an independent appraiser; 

    (3) the value of guarantees or other credit enhancements 
 related to the loan. 

    (b) The insurer shall either take a charge against its 
 surplus or establish a reserve for the difference between the 
 carrying value and the amortized acquisition cost of its 
 restructured mortgage loans. 

    Subd. 6.    Mortgage loan in foreclosure.  (a) The 
 insurer shall make an evaluation of the appropriate carrying 
 value of each mortgage loan in foreclosure.  The carrying value 
 must be based upon an appraisal made by an independent appraiser.

    (b) The insurer shall take a charge against its surplus for 
 the difference between the carrying value and the amortized 
 acquisition cost of its mortgage loans in the process of 
 foreclosure. 

    Subd. 7.    Real estate owned.  (a) The insurer shall 
 make an evaluation of the appropriate carrying value of real 
 estate owned.  The carrying value must be based upon an 
 appraisal made by an independent appraiser. 

    (b) The insurer shall take a charge against its surplus for 
 the difference between the carrying value and the amortized 
 acquisition cost of real estate owned. 

    HIST: 1991 c 325 art 19 s 3