Current Status Introducing Body:Senate Bill Number:594 Primary Sponsor:Committee (02) Committee Number:26 Type of Legislation:GB Subject:Investments, legislative intent Residing Body:House Current Committee:Labor, Commerce and Industry Companion Bill Number:404 3239 Computer Document Number:NO5/7194.BD Introduced Date:Feb 05, 1991 Last History Body:House Last History Date:Feb 12, 1991 Last History Type:Introduced, read first time, referred to Committee Scope of Legislation:Statewide Sponsor Committee:Banking and Insurance Sponsor Committee Number:02 Type of Legislation:General Bill
Bill Body Date Action Description CMN
---- ------ ------------ ------------------------------ ---
594 House Feb 12, 1991 Introduced, read first time, 26
referred to Committee
594 Senate Feb 08, 1991 Read third time, sent to House
594 Senate Feb 07, 1991 Read second time, unanimous
consent for third reading on
Friday, February 8
594 Senate Feb 05, 1991 Placed on Calendar without
reference
594 Senate Feb 05, 1991 Introduced, read first time
View additional legislative information at the LPITS web site.
Indicates Matter Stricken
Indicates New Matter
INTRODUCED
February 5, 1991
S. 594
S. Printed 2/5/91--S.
Read the first time February 5, 1991.
TO AMEND SECTION 38-11-10, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO LEGISLATIVE INTENT PERTAINING TO INVESTMENTS BY INSURERS, SO AS TO ESTABLISH STANDARDS FOR THE DEVELOPMENT AND ADMINISTRATION OF INVESTMENTS; AND SECTION 38-11-50, RELATING TO LIMITATIONS ON THE INVESTMENTS, SO AS TO PROVIDE FOR THE VALUATION OF INVESTMENTS AND PROMULGATION OF RELATED REGULATIONS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 38-11-10 of the 1976 Code is amended to read:
"Section 38-11-10. The legislative intent is that policyholder obligations and the minimum capital, or guaranty fund, and surplus required by law, must be covered only by assets of unquestioned integrity and stability and that assets in excess of those required to cover policyholder obligations, minimum capital, or guaranty funds, and surplus, may be invested by insurers at the discretion of such the insurers, except that. However, the assets may must not be invested in assets prohibited under Section 38-11-90. The purpose of this section is to protect and further the interests of policyholders, claimants, creditors, and the public by providing standards for the development and administration of programs for the investment of the assets of companies organized under this chapter. These standards and the investment programs developed by companies must take into account the safety of the company's principal, investment yield and growth, stability in the value of the investment, and liquidity necessary to meet the company's expected business needs, and investment diversification."
SECTION 2. Section 38-11-50 of the 1976 Code is amended to read:
Section 38-11-50. (A) Investments made by insurers for the purpose of covering to cover policyholder obligations, and their minimum capital or guaranty fund and surplus required by law, as provided in Section 38-11-40, are subject to:
(a)(1) None of the securities mentioned in Section 38-11-40 are eligible for the purposes of that section if, within the five years immediately preceding, the obligor has defaulted in the payment of principal or interest on any of its bonds, warrants, or other securities.
(b)(2) With respect to investments under item (g) of Section 38-11-40(g), not more than twenty percent of the insurer's policyholder obligations may be invested in the securities of any one a county, city, town, village, municipality, or district of any a state or territory of the United States or of any its political subdivision thereof, subdivisions or any a civil division or public instrumentality of the United States. However, the foregoing this limitation does not apply with respect to an investment which qualifies for sinking fund purposes under the laws of this State.
(c)(3) Investments described in item (h) of Section 38-11-40(h) may not exceed ten percent of the insurer's policyholder obligations.
(d)(4) Investments described in item (i) of Section 38-11-40(i) may not exceed sixty-six and two-thirds percent of the insurer's policyholder obligations, nor may more than ten percent of the insurer's policyholder obligations be invested in any one investment.
(e)(5) Investments described in item (j) of Section 38-11-40(j) may not exceed fifteen percent of the insurer's policyholder obligations.
(f)(6) Investments described in items (l), (m), and (n) of Section 38-11-40(l), (m), and (n) may not exceed in the aggregate sixty-six and two-thirds percent of the insurer's policyholder obligations, nor, with respect to investments under any of these items, may more than ten percent of the insurer's policyholder obligations be invested in any one investment or in any one project, subdivision, or transaction or series of related transactions.
(g)(7) Investments described in item (o) of Section 38-11-40(o) may not exceed ten percent of the insurer's policyholder obligations.
(h)(8) Investments described in item (p) of Section 38-11-40(p) may not exceed ten percent of the insurer's policyholder obligations. Where a life insurer does not, wholly or in part, avail itself of item (o) of Section 38-11-40(o), as limited by item (f) of Section 38-11-40(f), the investments under item (p) of Section 38-11-40(p) may be increased to the extent of the unused portion, but in no event may the life insurer's investments under item (p) of Section 38-11-40(p) may not exceed fifteen percent of the insurer's policyholder obligations. However, this limitation does not apply to real estate acquired by bona fide mortgage foreclosure if the insurer has had title to such the real estate for less than a five-year period years.
(i)(9) Investments described in item (q) of Section 38-11-40(q) may not exceed ten percent of the insurer's policyholder obligations.
(j)(10) Investments described in item (r) of Section 38-11-40(r) may not exceed ten percent of the insurer's policyholder obligations.
(k)(11) Investments authorized under item (s) of Section 38-11-40(s) may not exceed ten percent of the insurer's policyholder obligations.
(l) For the purposes of the limitations contained in this section, the property and securities enumerated in Section 38-11-40 may be valued at cost, less depreciation, or market, whichever is less. However, the Commissioner may, by regulation, authorize valuation of securities in accordance with stated values established for the securities in writing or as published by the Committee on Valuation of Securities of the National Association of Insurance Commissioners. However, mortgage loans may, in any event, be valued at amortized value.
(B) For purposes of the limitations contained in this section:
(1) Except as otherwise provided in item (2), investments in Section 38-11-40 must be valued in accordance with stated values or standards published by the Securities Valuation Office of the National Association of Insurance Commissioners in its Valuations of Securities Manual. Investments for which the National Association of Insurance Commissioners has not published valuations or standards must be valued as follows:
(a) Obligations having a fixed term and rate, if not in default as to principal or interest, must be valued, if purchased at par, at the par value and, 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.
(b) Common, preferred, or guaranteed stocks must be valued at their market value or, at the option of the company, may be valued at the purchase price if it is less than market value.
(c) Other securities investments must be valued in accordance with regulations promulgated pursuant to subsection (D).
(2) Investments not provided for in item (1), including real property, must be valued in accordance with regulations promulgated pursuant to subsection (D), but they must not be valued at more than their purchase price. Purchase price for real property includes capitalized permanent improvements less depreciation spread evenly over the life of the property or, at the option of the company, less depreciation computed on a basis permitted under the Internal Revenue Code and its regulations. Investments affected by permanent declines in value must be valued at not more than their market value. However, mortgage loans may be valued at amortized value.
(C) An investment, including real property, not purchased by a company but acquired in satisfaction of a debt or otherwise must be valued in accordance with the applicable procedures for that type of investment contained in this section. For purposes of applying the valuation procedures, the purchase price is the market value at the time the investment is acquired or, for an investment acquired in satisfaction of debt, the amount of the debt including interest, taxes, and expenses, whichever is less.
(D) The commissioner shall promulgate regulations for determining and calculating values to be used in financial statements submitted to the Department of Insurance for investments not subject to published National Association of Insurance Commissioner's valuation standards."
SECTION 3. This act takes effect upon approval by the Governor.