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[Utah Code Table of Contents]
[TITLE 31a. Table of Contents]
31A-18-101 Scope.
Except as otherwise provided in this code, this chapter
and the rules adopted to implement it apply to all insurers
authorized to do business in this state, including reinsurers.
1985
31A-18-102 Separate account investments.
(1) Except as provided under Subsection (2), each separate account established under Section 31A-5-217 shall be evaluated as a separate insurer to determine whether the account complies with Chapters 17 and 18.
(2) Except as provided under Subsection (3), the amounts allocated to each separate account, and accumulations thereon, may be invested and reinvested without regard to any requirements or limitations prescribed by Chapter 18.
(3) To the extent that the corporation's reserve liability, with regard to benefits guaranteed as to dollar amount and duration and funds guaranteed as to principal amount or stated rate of interest, is maintained in any separate account, a portion of the assets of the account at least equal to the reserve liability shall be invested in accordance with this chapter, or in accordance with such requirements as the commissioner prescribes by rule.
(4) Assets allocated to a separate account shall be valued
at market value on the date of valuation, or, if there is
no readily available market, then in accordance with the
applicable contract. However, a portion of the assets of
the account at least equal to the corporation's reserve liability
with regard to the guaranteed benefits and funds referred
to in Subsection (3), if any, shall be reported separately
and valued in accordance with the rules otherwise applicable
to the corporation's assets or in accordance with rules adopted
under Subsection (3). No securities valuation reserve or
other reserve for fluctuation in the value of securities
is required for assets that do not have to comply with this
chapter.
1985
31A-18-103 Protection against currency fluctuations.
Any insurer whose business requires it to make payment
in different currencies may have investments in securities
in each of those currencies in an amount that, independently
of all other investments, meets the requirements of the Insurance
Code as applied separately to the insurer's obligations in
each currency. The commissioner may by order require an insurer,
or by rule require a class of insurers, to maintain these
separate currency investments if the obligations in other
currencies are large enough to present a problem of financial
stability if there are substantial fluctuations in relative
currency values.
1985
31A-18-105 Permitted classes of investments.
The following classes of investment may be counted for the purposes specified under Chapter 17, Part 6, Risk-Based Capital:
(1) bonds or other evidences of indebtedness of:
(a) (i) governmental units in the United States or Canada;
(ii) instrumentalities of the governmental units described in Subsection (1)(a)(i); or
(iii) private corporations domiciled in the United States; and
(b) including demand deposits and certificates of deposits in solvent banks and savings and loan institutions;
(2) equipment trust obligations or certificates that are adequately secured instruments evidencing an interest in transportation equipment that is located wholly or in part within the United States, with a right to receive determined portions of the rental, or to purchase other fixed obligatory payments for the use or purchase of the transportation equipment;
(3) loans secured by:
(a) mortgages;
(b) trust deeds; or
(c) other statutorily authorized types of security interests in real estate located in the United States;
(4) loans secured by pledged securities or evidences of debt eligible for investment under this section;
(5) preferred stocks of United States corporations;
(6) common stocks of United States corporations;
(7) real estate which is used as the home office or branch office of the insurer;
(8) real estate in the United States which produces substantial income;
(9) loans upon the security of the insurer's own policies in amounts that are adequately secured by the policies and that do not exceed the surrender value of the policies;
(10) financial futures contracts used for hedging and not for speculation, as approved under rules adopted by the commissioner;
(11) investments in foreign securities of the classes permitted under this section as required for compliance with Section 31A-18-103 ;
(12) investments permitted under Subsection 31A-18-102 (2); and
(13) other investments as the commissioner authorizes
by rule.
2001
31A-18-106 Investment limitations generally applicable.
(1) The investment limitations listed in Subsections (1)(a) through (l) apply to each insurer.
(a) (i) Except as provided in Subsection (1)(a)(ii), for investments authorized under Subsection 31A-18-105 (1) that are not amortizable under applicable valuation rules, the limitation is 5% of assets.
(ii) The limitation of Subsection (1)(a)(i) and the limitation of Subsection (2) do not apply to demand deposits and certificates of deposit in solvent banks and savings and loan institutions to the extent they are insured by a federal deposit insurance agency.
(b) For investments authorized under Subsection 31A-18-105 (2), the limitation is 10% of assets.
(c) For investments authorized under Subsection 31A-18-105 (3), the limitation is 50% of assets.
(d) For investments authorized under Subsection 31A-18-105 (4), that are considered to be investments in kinds of securities or evidences of debt pledged, those investments are subject to the class limitations applicable to the pledged securities or evidences of debt.
(e) For investments authorized under Subsection 31A-18-105 (5), the limitation is 35% of assets.
(f) For investments authorized under Subsection 31A-18-105 (6), the limitation is:
(i) 20% of assets for life insurers; and
(ii) 50% of assets for nonlife insurers.
(g) For investments authorized under Subsection 31A-18-105 (7), the limitation is 5% of assets, except as to insurers organized and operating under Chapter 7, in which case the limitation is 25% of assets.
(h) For investments authorized under Subsection 31A-18-105 (8), the limitation is 20% of assets inclusive of home office and branch office properties, except as to insurers organized and operating under Chapter 7, in which case the limitation is 35% of assets, inclusive of home office and branch office properties.
(i) For investments authorized under Subsection 31A-18-105 (10), the limitation is 1% of assets.
(j) For investments authorized under Subsection 31A-18-105 (11), the limitation is the greater of that permitted or required for compliance with Section 31A-18-103 .
(k) Except as provided in Subsection (1)(l), an insurer's investments in subsidiaries is limited to 50% of the insurer's total adjusted capital. Investments by an insurer in its subsidiaries includes:
(i) the insurer's loans, advances, and contributions to its subsidiaries; and
(ii) the insurer's holding of bonds, notes, and stocks of its subsidiaries are included.
(l) Under a plan of merger approved by the commissioner, the commissioner may allow an insurer any portion of its assets invested in an insurance subsidiary. The approved plan of merger shall require the acquiring insurer to conform its accounting for investments in subsidiaries to Subsection (1)(k) within a specified period that may not exceed five years.
(2) The limits on investments listed in Subsections (2)(a) through (e) apply to each insurer.
(a) For all investments in a single entity, its affiliates, and subsidiaries, the limitation is 10% of assets, except that the limit imposed by this Subsection (2)(a) does not apply to:
(i) investments in the government of the United States or its agencies;
(ii) investments guaranteed by the government of the United States; or
(iii) investments in the insurer's insurance subsidiaries.
(b) Investments authorized by Subsection 31A-18-105 (3) shall comply with the requirements listed in this Subsection (2)(b).
(i) (A) Except as provided in Subsection (2)(b)(i), the amount of any loan secured by a mortgage or deed of trust may not exceed 80% of the value of the real estate interest mortgaged, unless the excess over 80%:
(I) is insured or guaranteed by the United States, any state of the United States, any instrumentality, agency, or political subdivision of the United States, any of its states, or a combination of any of these; or
(II) insured by an insurer approved by the commissioner and qualified to insure that type of risk in this state.
(B) Mortgage loans representing purchase money mortgages acquired from the sale of real estate are not subject to the limitation of Subsection (2)(b)(i)(A).
(ii) Subject to Subsection (2)(b)(v), loans or evidences of debt secured by real estate may only be secured by unencumbered real property, or an unencumbered interest in real property that is located in the United States.
(iii) Evidence of debt secured by first mortgages or deeds of trust upon leasehold estates shall require that:
(A) the leasehold estate exceed the maturity of the loan by not less than 10% of the lease term;
(B) the real estate not be otherwise encumbered; and
(C) the mortgagee is entitled to be subrogated to all rights under the leasehold.
(iv) Subject to Subsection (2)(b)(v):
(A) participation in any mortgage loan must:
(I) be senior to other participants; and
(II) give the holder substantially the rights of a first mortgagee; or
(B) the interest of the insurer in the evidence of indebtedness must be of equal priority, to the extent of the interest, with other interests in the real property.
(v) A fee simple or leasehold real estate or any interest in either of them is not considered to be encumbered within the meaning of this chapter by reason of any prior mortgage or trust deed held or assumed by the insurer as a lien on the property, if:
(A) the total of the mortgages or trust deeds held does not exceed 70% of the value of the property; and
(B) the security created by the prior mortgage or trust deed is a first lien.
(c) Loans permitted under Subsection 31A-18-105 (4) may not exceed 75% of the market value of the collateral pledged, except that loans upon the pledge of United States government bonds may be equal to the market values of the pledge.
(d) For an equity interest in a single real estate property authorized under Subsection 31A-18-105 (8), the limitation is 5% of assets.
(e) Investments authorized under Subsection 31A-18-105 (10) shall be in connection with potential changes in the value of specifically identified:
(i) assets which the insurer owns; or
(ii) liabilities which the insurer has incurred.
(3) The restrictions on investments listed in Subsections (3)(a) and (b) apply to each insurer.
(a) Except for financial futures contracts and real property acquired and occupied by the insurer for home and branch office purposes, a security or other investment is not eligible for purchase or acquisition under this chapter unless it is:
(i) interest bearing or income paying; and
(ii) not then in default.
(b) A security is not eligible for purchase at a price above its market value.
(4) Computation of percentage limitations under this section:
(a) is based only upon the insurer's total qualified invested assets described in Section 31A-18-105 and this section, as these assets are valued under Section 31A-17-401 ; and
(b) excludes investments permitted under Section 31A-18-108 and Subsections 31A-17-203 (2) and (3).
(5) An insurer may not make an investment that, because the investment does not conform to Section 31A-18-105 and this section, has the result of rendering the insurer, under Chapter 17, Part VI, Risk-Based Capital, subject to proceedings under Chapter 27.
(6) A pattern of persistent deviation from the investment diversification standards set forth in Section 31A-18-105 and this section may be grounds for a finding that the person or persons with authority to make the insurer's investment decisions are "incompetent" as used in Subsection 31A-5-410 (3).
(7) Section 77r-1 of the Secondary Mortgage Market Enhancement
Act of 1984 does not apply to the purchase, holding, investment,
or valuation limitations of assets of insurance companies
subject to this chapter.
2000
31A-18-107 Disposal of nonqualified assets.
(1) The commissioner may allow a reasonable time, not longer than ten years, for disposal of any investment which was a qualified asset when made, but which, because of changes in valuation or changes in the insurer's asset mix, is no longer a qualified asset under Section 31A-17-201 .
(2) The commissioner may allow a reasonable time during
which an investment which is not a qualified asset may be
characterized as one, but only if the investment was made
by mistake or if the forced sale of the asset would be contrary
to the interests of insureds, creditors, or the Utah public.
1985
31A-18-108 Investment of excess surplus.
(1) If an insurer has excess surplus, as defined under Section 31A-1-301 , then to the extent of its excess surplus, the insurer may invest in a manner inconsistent with the limitations of Section 31A-18-106 or in other assets approved by the commissioner.
(2) This section does not empower any insurer to make investments that are:
(a) illegal; or
(b) prohibited under Section 31A-4-107 .
(3) Each insurer has the burden of establishing the extent
of its excess surplus.
1999
31A-18-110 Investment valuation reserves.
(1) The commissioner may by rule, applicable to all or any specified classes of insurers, provide for the establishment, in reasonable amounts, of investment valuation reserves that are necessary to lessen the impact on surplus of the fluctuation of the values of specific classes of assets. In formulating these rules, the commissioner shall consider:
(a) similar rules used in other states or recommended for use by the National Association of Insurance Commissioners;
(b) the propensities of the various types and classes of investments to fluctuate in value; and
(c) the present and anticipated investment climate, as measured by economic indicators such as interest rates, price-level changes, market volatility, and economic growth or decline.
(2) The commissioner may by order require an individual insurer to establish investment valuation reserves in addition to those required for other insurers of the class to which the insurer belongs, to the extent that the financial condition of the insurer and the nature of its assets and liabilities or business require that those reserves be established to adequately protect its insureds.
(3) Where reasonably possible, reserves required under
Subsection (1) shall correspond with those generally required
in other states.
1985
