2003 Legislation
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HOUSE BILL NO. 59 – Insurers, investments

HOUSE BILL NO. 59

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H0059aaS.....................................................by MR. SPEAKER
                   Requested by: Department of Insurance
INSURERS - Amends existing law to clarify that certain loan interest
amounts shall not be treated as assets; to provide that insurers may invest
funds in foreign corporations whose stock is publicly traded on United
States stock exchanges; to set forth investment limitations for insurers in
trust securities; to provide that the fair market value for property must
be determined by an independent appraiser; and to provide retroactive
application of provisions relating to investment by insurance companies in
time deposits in Idaho branches of certain financial institutions.
                                                                        
01/06    House intro - 1st rdg - to printing
    Rpt prt - to Bus
01/28    Rpt out - rec d/p - to 2nd rdg
01/29    2nd rdg - to 3rd rdg
01/31    3rd rdg - PASSED - 62-2-6
      AYES -- Andersen, Barraclough, Bauer, Bell, Bieter, Black, Block,
      Boe, Bolz, Bradford, Campbell, Cannon, Clark, Collins, Cuddy, Deal,
      Denney, Douglas, Eberle, Edmunson, Ellsworth, Eskridge, Field(18),
      Field(23), Gagner, Garrett, Harwood, Jones, Kellogg, Lake, Langford,
      Martinez, McGeachin, Meyer, Miller, Mitchell, Moyle, Nacarrato,
      Nielsen, Raybould, Ridinger, Ring, Ringo, Roberts, Robison, Rydalch,
      Sali, Sayler, Schaefer, Shepherd, Shirley, Skippen, Smith(30),
      Smith(24), Smylie, Snodgrass, Stevenson, Tilman, Trail, Wills, Wood,
      Mr. Speaker
      NAYS -- Kulczyk, McKague
      Absent and excused -- Barrett, Bedke, Crow, Henbest, Jaquet,
      Langhorst
    Floor Sponsor - Gagner
    Title apvd - to Senate
02/03    Senate intro - 1st rdg - to Com/HuRes
03/05    Rpt out - to 14th Ord
03/10    Rpt out amen - to 1st rdg as amen
03/11    1st rdg - to 2nd rdg as amen
03/12    2nd rdg - to 3rd rdg as amen
03/13    3rd rdg as amen - PASSED - 34-0-1
      AYES -- Andreason(Rouse), Bailey, Brandt, Bunderson, Burkett,
      Burtenshaw, Cameron, Compton, Darrington, Davis, Gannon, Geddes,
      Goedde, Hill, Ingram, Kennedy, Keough, Little, Lodge, Malepeai,
      Marley, McKenzie, McWilliams, Noble, Noh, Pearce, Richardson,
      Schroeder, Sorensen, Stegner, Stennett, Sweet, Werk, Williams
      NAYS -- None
      Absent and excused -- Calabretta
    Floor Sponsor - Cameron
    Title apvd - to House
03/14    Held at Desk
03/19    House concurred in Senate amens - to engros
03/20    Rpt engros - 1st rdg - to 2nd rdg as amen
03/21    2nd rdg - to 3rd rdg as amen
03/27    3rd rdg as amen - PASSED - 68-0-2
      AYES -- Andersen, Barraclough, Barrett, Bauer, Bell, Bieter, Black,
      Block, Boe, Bolz, Bradford, Campbell, Cannon, Clark, Collins, Cuddy,
      Deal, Denney, Douglas, Eberle, Edmunson, Ellsworth, Eskridge,
      Field(18), Field(23), Gagner, Garrett, Harwood, Henbest(Bray),
      Jaquet, Jones, Kellogg, Kulczyk, Lake, Langford, Langhorst, Martinez,
      McGeachin, McKague, Meyer, Miller, Mitchell, Moyle, Nacarrato,
      Nielsen, Raybould, Ridinger, Ring, Ringo, Roberts, Robison, Rydalch,
      Sali, Sayler, Schaefer, Shepherd, Shirley, Skippen, Smith(30),
      Smith(24), Smylie, Snodgrass, Stevenson, Tilman, Trail, Wills, Wood,
      Mr. Speaker
      NAYS -- None
      Absent and excused -- Bedke, Crow
    Floor Sponsor - Gagner
    Title apvd - to enrol
03/28    Rpt enrol - Sp signed
03/31    Pres signed
04/01    To Governor
04/04    Governor signed
         Session Law Chapter 219
         Effective: 01/01/95

Bill Text


                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-seventh Legislature                 First Regular Session - 2003
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 59
                                                                        
                                       BY MR. SPEAKER
                           Requested by: Department of Insurance
                                                                        
  1                                        AN ACT
  2    RELATING TO INSURANCE; AMENDING SECTION 41-601, IDAHO CODE,  TO  CLARIFY  THAT
  3        INTEREST  DUE  OR  ACCRUED ON A LOAN IN DEFAULT SHALL NOT BE TREATED AS AN
  4        ASSET AND TO MAKE TECHNICAL CORRECTIONS; AMENDING  SECTION  41-714,  IDAHO
  5        CODE,  TO  PROVIDE  THAT INSURERS MAY INVEST FUNDS IN FOREIGN CORPORATIONS
  6        WHOSE STOCK IS PUBLICLY TRADED ON UNITED STATES  STOCK  EXCHANGES  AND  TO
  7        MAKE  TECHNICAL  CORRECTIONS; AMENDING SECTION 41-716, IDAHO CODE, TO PRO-
  8        VIDE THAT INVESTMENT LIMITATIONS FOR INSURERS IN TRUST SECURITIES  ARE  TO
  9        BE DETERMINED BASED ON THE LOWER OF THE COST OF THE SECURITY OR THE MARKET
 10        VALUE OF THE SECURITY; AND AMENDING SECTION 41-723, IDAHO CODE, TO PROVIDE
 11        THAT  THE FAIR MARKET VALUE FOR PROPERTY MUST BE DETERMINED BY AN INDEPEN-
 12        DENT APPRAISER AND TO MAKE TECHNICAL CORRECTIONS.
                                                                        
 13    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 14        SECTION 1.  That Section 41-601, Idaho Code, be, and the  same  is  hereby
 15    amended to read as follows:
                                                                        
 16        41-601.  "ASSETS" DEFINED. In any determination of the financial condition
 17    of  an insurer, there shall be allowed as assets only such assets as are owned
 18    by the insurer and which consist of:
 19        (1)  Cash in the possession of the insurer, or in transit under  its  con-
 20    trol, and including the true balance of any deposit in a solvent bank or trust
 21    company.
 22        (2)  Investments,  securities,  properties  and  loans acquired or held in
 23    accordance with this code, and in connection therewith the following items:
 24        (a)  Interest due or accrued on any bond or evidence of indebtedness which
 25        is not in default and which is not valued on  a  basis  including  accrued
 26        interest.
 27        (b)  Declared and unpaid dividends on stock and shares, unless such amount
 28        has otherwise been allowed as an asset.
 29        (c)  Interest  due  or  accrued upon a collateral loan in an amount not to
 30        exceed one (1) year's interest thereon.
 31        (d)  Interest due or accrued on deposits in solvent banks and trust compa-
 32        nies, and interest due or accrued on other assets, if such interest is  in
 33        the judgment of the director a collectible asset.
 34        (e)  Interest  due  or accrued on a mortgage loan, not in default pursuant
 35        to the contractual terms of the loan, in an amount not  exceeding  in  any
 36        event  the amount, if any, of the excess of the value of the property less
 37        delinquent taxes thereon over the unpaid principal; but in no event  shall
 38        interest accrued for a period in excess of eighteen (18) months be allowed
 39        as an asset.
 40        (f)  Rent  due  or accrued on real property if such rent is not in arrears
 41        for more than three (3) months, and rent more than  three  (3)  months  in
 42        arrears if the payment of such rent be adequately secured by property held
 43        in the name of the tenant and conveyed to the insurer as collateral.
                                                                        
                                           2
                                                                        
  1        (g)  The  unaccrued  portion  of  taxes paid prior to the due date on real
  2        property.
  3        (3)  Premium notes, policy loans, and other policy  assets  and  liens  on
  4    policies  and certificates of life insurance and annuity contracts and accrued
  5    interest thereon, in an amount not exceeding the legal reserve and other  pol-
  6    icy liabilities carried on each individual policy.
  7        (4)  The  net amount of uncollected and deferred premiums and annuity con-
  8    siderations in the case of a life insurer.
  9        (5)  Premiums in the course of collection, other than for life  insurance,
 10    not more than three (3) months past due, less commissions payable thereon. The
 11    foregoing  limitation  shall  not  apply to premiums payable directly or indi-
 12    rectly by the state of Idaho, any department, board,  agency,  or  institution
 13    thereof,  or  any other political subdivision of the state of Idaho, including
 14    municipalities or specially chartered subdivisions, or by  the  United  States
 15    government or by any of its instrumentalities.
 16        (6)  Instalment Installment premiums other than life insurance premiums to
 17    the extent of the unearned premium reserve carried on the policy to which pre-
 18    miums apply.
 19        (7)  Notes  and  like written obligations not past due, taken for premiums
 20    other than life insurance premiums, on policies permitted to be issued on such
 21    basis, to the extent of the unearned premium reserves carried thereon.
 22        (8)  The full amount of reinsurance recoverable by a ceding insurer from a
 23    solvent reinsurer and which reinsurance is authorized  under  section  41-511,
 24    Idaho Code.
 25        (9)  Amounts receivable by an assuming insurer representing funds withheld
 26    by a solvent ceding insurer under a reinsurance treaty.
 27        (10) Deposits  or  equities  recoverable  from  underwriting associations,
 28    syndicates and reinsurance funds, or from any suspended  banking  institution,
 29    to  the  extent deemed by the director available for the payment of losses and
 30    claims and at values to be determined by him.
 31        (11) Electronic and mechanical machines constituting a data processing and
 32    accounting system if the cost of such system is at least twenty-five  thousand
 33    dollars  ($25,000), which cost shall be amortized in full over a period not to
 34    exceed ten (10) calendar years.
 35        (12) All office equipment, office  furniture,  private  passenger  automo-
 36    biles,  deemed  necessary  for  conduct  of  insurance business, the aggregate
 37    amount of which shall not at any one time exceed one per cent percent (1%)  of
 38    the other assets of the insurer.
 39        (13) All  assets,  whether  or  not consistent with the provisions of this
 40    section, as may be allowed pursuant to the annual statement form  approved  by
 41    the director for the kinds of insurance to be reported upon therein.
 42        (14) Other  assets,  not inconsistent with the provisions of this section,
 43    deemed by the director to be available for the payment of losses  and  claims,
 44    at values to be determined by him.
                                                                        
 45        SECTION  2.  That  Section  41-714, Idaho Code, be, and the same is hereby
 46    amended to read as follows:
                                                                        
 47        41-714.  COMMON STOCKS.  After  satisfying  the  requirements  of  section
 48    41-706(3)  and  (4), Idaho Code, (investment of capital and life reserves), an
 49    insurer may invest funds in an aggregate amount not in excess of  fifteen  per
 50    cent  percent  (15%)  of  its  assets in common shares of stock of any solvent
 51    institution existing under the laws of the United States or of any state, dis-
 52    trict or territory thereof, or a foreign corporation publicly traded on United
 53    States stock exchanges, that qualify as a sound investment, in addition to the
                                                                        
                                           3
                                                                        
  1    shares of a substantially owned or wholly owned subsidiary corporation.
  2        For the purpose of determining the investment limitation imposed  by  this
  3    section,  the insurer shall value securities subject to the provisions of this
  4    section at the cost of the security or at the market value  of  the  security,
  5    whichever is lower. However, investments in the shares of subsidiaries or com-
  6    panion  insurance companies shall be governed by sections 41-715 and 41-3801B,
  7    Idaho Code.
  8        The limitations as to investment in common stocks as provided herein shall
  9    not apply to nor limit the right of investments in investment trust securities
 10    as provided for in section 41-716, Idaho Code.
                                                                        
 11        SECTION 3.  That Section 41-716, Idaho Code, be, and the  same  is  hereby
 12    amended to read as follows:
                                                                        
 13        41-716.  INVESTMENT  TRUST  SECURITIES.  (1)  An insurer may invest in the
 14    securities of any open-end management type investment  company  or  investment
 15    trust registered with the federal securities and exchange commission under the
 16    Investment  Company  Act of 1940 as from time to time amended, if such invest-
 17    ment company or trust has been organized for not less than three (3) years and
 18    has assets of not less than twenty-five million dollars  ($25,000,000)  as  at
 19    the  date  of  investment by the  insurer. The aggregate amount invested under
 20    this section shall not exceed  twenty-five  percent  (25%)  of  the  insurer's
 21    assets  with  limitations  of five percent (5%) of the insurer's assets in any
 22    one (1) fund and ten percent (10%) of the insurer's assets in any one (1) fund
 23    family.
 24        (2)  For the purpose of determining the investment limitation  imposed  by
 25    this  section, the insurer shall value securities subject to the provisions of
 26    this section at the cost of the security or at the market value of  the  secu-
 27    rity, whichever is lower.
                                                                        
 28        SECTION  4.  That  Section  41-723, Idaho Code, be, and the same is hereby
 29    amended to read as follows:
                                                                        
 30        41-723.  APPRAISAL -- LIMIT OF AMOUNT LOANED. (1) The fair value of  prop-
 31    erty  shall be determined by appraisal by a competent independent appraiser at
 32    the time of the making or acquisition of a mortgage loan  or  investing  in  a
 33    contract  for  the  deed thereon; except, that as to bonds or notes secured by
 34    mortgage or trust deed guaranteed or insured by the federal  housing  adminis-
 35    tration,  or  guaranteed  or insured as to principal in full or in part by the
 36    administrator of veterans' affairs, or guaranteed or insured  by  the  farmers
 37    home  administration, the valuation made by such administration or administra-
 38    tor shall be deemed to have been made by a competent appraiser  for  the  pur-
 39    poses of this subsection.
 40        (2)  An  insurer  shall not make or acquire a loan or loans upon the secu-
 41    rity of any one (1) parcel of real property in aggregate amount in  excess  of
 42    ten  thousand dollars ($10,000) or more than the amount permissible under sec-
 43    tion 41-706(1), Idaho Code, (investment in securities, etc., of any  one  per-
 44    son), whichever is the greater.

Amendment


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-seventh Legislature                 First Regular Session - 2003
                                                                        
                                                                        
                                                     Moved by    Davis               
                                                                        
                                                     Seconded by Cameron             
                                                                        
                                                                        
                                       IN THE SENATE
                              SENATE AMENDMENTS TO H.B. NO. 59
                                                                        
                                                                        
  1                                AMENDMENT TO SECTION 1
  2        On page 1 of the printed bill, in line 34, following "default" insert: "of
  3    the contractual principal payments and the contractual interest payments,".
                                                                        
  4                               AMENDMENTS TO SECTION 3
  5        On page 3, in line 25, following "section" insert: "41-716,  Idaho  Code";
  6    and in line 26, following "section" insert: "41-716, Idaho Code,".
                                                                        
  7                                AMENDMENT TO THE BILL
  8        On page 3, following line 44, insert:
  9        "SECTION  5.  That  Chapter  183, Laws of 2000, be, and the same is hereby
 10    amended by the addition thereto of a NEW SECTION, to read as follows:
                                                                        
 11        SECTION 2.  An emergency existing  therefor,  which  emergency  is  hereby
 12    declared to exist, this act shall be in full force and effect on and after its
 13    passage and approval, and retroactively to January 1, 1995.".
                                                                        
 14                                 CORRECTIONS TO TITLE
 15        On  page  1,  in  line  10,  delete  "AND";  and  in  line  12,  following
 16    "CORRECTIONS"  insert: "; AND AMENDING CHAPTER 183, LAWS OF 2000, BY THE ADDI-
 17    TION OF A NEW SECTION TO DECLARE  AN  EMERGENCY  AND  TO  PROVIDE  RETROACTIVE
 18    APPLICATION".

Engrossed Bill (Original Bill with Amendment(s) Incorporated)


                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-seventh Legislature                 First Regular Session - 2003
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                        HOUSE BILL NO. 59, As Amended in the Senate
                                                                        
                                       BY MR. SPEAKER
                           Requested by: Department of Insurance
                                                                        
  1                                        AN ACT
  2    RELATING TO INSURANCE; AMENDING SECTION 41-601, IDAHO CODE,  TO  CLARIFY  THAT
  3        INTEREST  DUE  OR  ACCRUED ON A LOAN IN DEFAULT SHALL NOT BE TREATED AS AN
  4        ASSET AND TO MAKE TECHNICAL CORRECTIONS; AMENDING  SECTION  41-714,  IDAHO
  5        CODE,  TO  PROVIDE  THAT INSURERS MAY INVEST FUNDS IN FOREIGN CORPORATIONS
  6        WHOSE STOCK IS PUBLICLY TRADED ON UNITED STATES  STOCK  EXCHANGES  AND  TO
  7        MAKE  TECHNICAL  CORRECTIONS; AMENDING SECTION 41-716, IDAHO CODE, TO PRO-
  8        VIDE THAT INVESTMENT LIMITATIONS FOR INSURERS IN TRUST SECURITIES  ARE  TO
  9        BE DETERMINED BASED ON THE LOWER OF THE COST OF THE SECURITY OR THE MARKET
 10        VALUE  OF  THE  SECURITY;  AMENDING SECTION 41-723, IDAHO CODE, TO PROVIDE
 11        THAT THE FAIR MARKET VALUE FOR PROPERTY MUST BE DETERMINED BY AN  INDEPEN-
 12        DENT  APPRAISER  AND  TO  MAKE TECHNICAL CORRECTIONS; AND AMENDING CHAPTER
 13        183, LAWS OF 2000, BY THE ADDITION OF A NEW SECTION TO  DECLARE  AN  EMER-
 14        GENCY AND TO PROVIDE RETROACTIVE APPLICATION.
                                                                        
 15    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 16        SECTION  1.  That  Section  41-601, Idaho Code, be, and the same is hereby
 17    amended to read as follows:
                                                                        
 18        41-601.  "ASSETS" DEFINED. In any determination of the financial condition
 19    of an insurer, there shall be allowed as assets only such assets as are  owned
 20    by the insurer and which consist of:
 21        (1)  Cash  in  the possession of the insurer, or in transit under its con-
 22    trol, and including the true balance of any deposit in a solvent bank or trust
 23    company.
 24        (2)  Investments, securities, properties and loans  acquired  or  held  in
 25    accordance with this code, and in connection therewith the following items:
 26        (a)  Interest due or accrued on any bond or evidence of indebtedness which
 27        is  not  in  default  and which is not valued on a basis including accrued
 28        interest.
 29        (b)  Declared and unpaid dividends on stock and shares, unless such amount
 30        has otherwise been allowed as an asset.
 31        (c)  Interest due or accrued upon a collateral loan in an  amount  not  to
 32        exceed one (1) year's interest thereon.
 33        (d)  Interest due or accrued on deposits in solvent banks and trust compa-
 34        nies,  and interest due or accrued on other assets, if such interest is in
 35        the judgment of the director a collectible asset.
 36        (e)  Interest due or accrued on a mortgage loan, not  in  default  of  the
 37        contractual principal payments and the contractual interest payments, pur-
 38        suant  to the contractual terms of the loan, in an amount not exceeding in
 39        any event the amount, if any, of the excess of the value of  the  property
 40        less  delinquent  taxes thereon over the unpaid principal; but in no event
 41        shall interest accrued for a period in excess of eighteen (18)  months  be
 42        allowed as an asset.
 43        (f)  Rent  due  or accrued on real property if such rent is not in arrears
                                                                        
                                           2
                                                                        
  1        for more than three (3) months, and rent more than  three  (3)  months  in
  2        arrears if the payment of such rent be adequately secured by property held
  3        in the name of the tenant and conveyed to the insurer as collateral.
  4        (g)  The  unaccrued  portion  of  taxes paid prior to the due date on real
  5        property.
  6        (3)  Premium notes, policy loans, and other policy  assets  and  liens  on
  7    policies  and certificates of life insurance and annuity contracts and accrued
  8    interest thereon, in an amount not exceeding the legal reserve and other  pol-
  9    icy liabilities carried on each individual policy.
 10        (4)  The  net amount of uncollected and deferred premiums and annuity con-
 11    siderations in the case of a life insurer.
 12        (5)  Premiums in the course of collection, other than for life  insurance,
 13    not more than three (3) months past due, less commissions payable thereon. The
 14    foregoing  limitation  shall  not  apply to premiums payable directly or indi-
 15    rectly by the state of Idaho, any department, board,  agency,  or  institution
 16    thereof,  or  any other political subdivision of the state of Idaho, including
 17    municipalities or specially chartered subdivisions, or by  the  United  States
 18    government or by any of its instrumentalities.
 19        (6)  Instalment Installment premiums other than life insurance premiums to
 20    the extent of the unearned premium reserve carried on the policy to which pre-
 21    miums apply.
 22        (7)  Notes  and  like written obligations not past due, taken for premiums
 23    other than life insurance premiums, on policies permitted to be issued on such
 24    basis, to the extent of the unearned premium reserves carried thereon.
 25        (8)  The full amount of reinsurance recoverable by a ceding insurer from a
 26    solvent reinsurer and which reinsurance is authorized  under  section  41-511,
 27    Idaho Code.
 28        (9)  Amounts receivable by an assuming insurer representing funds withheld
 29    by a solvent ceding insurer under a reinsurance treaty.
 30        (10) Deposits  or  equities  recoverable  from  underwriting associations,
 31    syndicates and reinsurance funds, or from any suspended  banking  institution,
 32    to  the  extent deemed by the director available for the payment of losses and
 33    claims and at values to be determined by him.
 34        (11) Electronic and mechanical machines constituting a data processing and
 35    accounting system if the cost of such system is at least twenty-five  thousand
 36    dollars  ($25,000), which cost shall be amortized in full over a period not to
 37    exceed ten (10) calendar years.
 38        (12) All office equipment, office  furniture,  private  passenger  automo-
 39    biles,  deemed  necessary  for  conduct  of  insurance business, the aggregate
 40    amount of which shall not at any one time exceed one per cent percent (1%)  of
 41    the other assets of the insurer.
 42        (13) All  assets,  whether  or  not consistent with the provisions of this
 43    section, as may be allowed pursuant to the annual statement form  approved  by
 44    the director for the kinds of insurance to be reported upon therein.
 45        (14) Other  assets,  not inconsistent with the provisions of this section,
 46    deemed by the director to be available for the payment of losses  and  claims,
 47    at values to be determined by him.
                                                                        
 48        SECTION  2.  That  Section  41-714, Idaho Code, be, and the same is hereby
 49    amended to read as follows:
                                                                        
 50        41-714.  COMMON STOCKS.  After  satisfying  the  requirements  of  section
 51    41-706(3)  and  (4), Idaho Code, (investment of capital and life reserves), an
 52    insurer may invest funds in an aggregate amount not in excess of  fifteen  per
 53    cent  percent  (15%)  of  its  assets in common shares of stock of any solvent
                                                                        
                                           3
                                                                        
  1    institution existing under the laws of the United States or of any state, dis-
  2    trict or territory thereof, or a foreign corporation publicly traded on United
  3    States stock exchanges, that qualify as a sound investment, in addition to the
  4    shares of a substantially owned or wholly owned subsidiary corporation.
  5        For the purpose of determining the investment limitation imposed  by  this
  6    section,  the insurer shall value securities subject to the provisions of this
  7    section at the cost of the security or at the market value  of  the  security,
  8    whichever is lower. However, investments in the shares of subsidiaries or com-
  9    panion  insurance companies shall be governed by sections 41-715 and 41-3801B,
 10    Idaho Code.
 11        The limitations as to investment in common stocks as provided herein shall
 12    not apply to nor limit the right of investments in investment trust securities
 13    as provided for in section 41-716, Idaho Code.
                                                                        
 14        SECTION 3.  That Section 41-716, Idaho Code, be, and the  same  is  hereby
 15    amended to read as follows:
                                                                        
 16        41-716.  INVESTMENT  TRUST  SECURITIES.  (1)  An insurer may invest in the
 17    securities of any open-end management type investment  company  or  investment
 18    trust registered with the federal securities and exchange commission under the
 19    Investment  Company  Act of 1940 as from time to time amended, if such invest-
 20    ment company or trust has been organized for not less than three (3) years and
 21    has assets of not less than twenty-five million dollars  ($25,000,000)  as  at
 22    the  date  of  investment by the  insurer. The aggregate amount invested under
 23    this section shall not exceed  twenty-five  percent  (25%)  of  the  insurer's
 24    assets  with  limitations  of five percent (5%) of the insurer's assets in any
 25    one (1) fund and ten percent (10%) of the insurer's assets in any one (1) fund
 26    family.
 27        (2)  For the purpose of determining the investment limitation  imposed  by
 28    this section 41-716, Idaho Code, the insurer shall value securities subject to
 29    the provisions of this section 41-716, Idaho Code, at the cost of the security
 30    or at the market value of the security, whichever is lower.
                                                                        
 31        SECTION  4.  That  Section  41-723, Idaho Code, be, and the same is hereby
 32    amended to read as follows:
                                                                        
 33        41-723.  APPRAISAL -- LIMIT OF AMOUNT LOANED. (1) The fair value of  prop-
 34    erty  shall be determined by appraisal by a competent independent appraiser at
 35    the time of the making or acquisition of a mortgage loan  or  investing  in  a
 36    contract  for  the  deed thereon; except, that as to bonds or notes secured by
 37    mortgage or trust deed guaranteed or insured by the federal  housing  adminis-
 38    tration,  or  guaranteed  or insured as to principal in full or in part by the
 39    administrator of veterans' affairs, or guaranteed or insured  by  the  farmers
 40    home  administration, the valuation made by such administration or administra-
 41    tor shall be deemed to have been made by a competent appraiser  for  the  pur-
 42    poses of this subsection.
 43        (2)  An  insurer  shall not make or acquire a loan or loans upon the secu-
 44    rity of any one (1) parcel of real property in aggregate amount in  excess  of
 45    ten  thousand dollars ($10,000) or more than the amount permissible under sec-
 46    tion 41-706(1), Idaho Code, (investment in securities, etc., of any  one  per-
 47    son), whichever is the greater.
                                                                        
 48        SECTION  5.  That  Chapter  183,  Laws of 2000, be, and the same is hereby
 49    amended by the addition thereto of a NEW SECTION, to read as follows:
                                                                        
                                           4
                                                                        
  1        SECTION 2.  An emergency existing  therefor,  which  emergency  is  hereby
  2    declared to exist, this act shall be in full force and effect on and after its
  3    passage and approval, and retroactively to January 1, 1995.

Statement of Purpose / Fiscal Impact


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                      STATEMENT OF PURPOSE
                                
                            RS 12344
                                

This bill amends portions of Chapters 6 and 7 of Title 41 regarding
limitations on how insurers may account for certain types of
investments and assets for regulatory filings.  The amendments
clarify that interest due or accrued on a mortgage loan for a
period of up to 18 months may be treated as an admitted asset only
if the loan is not in default, allow insurers to report as an asset
investments in stock of a foreign corporation that is publicly
traded on U.S. stock exchanges, provide that insurers' investments
in trust securities be valued at the lower of cost or market for
purposes of calculating the percentage limitation on these types of
investments, and require that the fair value of property which is
the basis of a mortgage loan be determined by an independent
appraiser.

                         FISCAL IMPACT
There is no fiscal impact to the state's General Fund.  



Contact:  Shad D. Priest
          Insurance, Dept. of 
          334-4250
                    

STATEMENT OF PURPOSE/FISCAL NOTE                       H 5