In any determination of the financial condition of an insurer, there shall be allowed as assets only such assets as are owned by the insurer and which consist of:
(1) Cash in the possession of the insurer or in transit under its control, and including the true balance of any deposit in a solvent bank or trust company;
(2) Investments, securities, properties and loans acquired, or held, in accordance with this title and in connection therewith the following items:
a. Interest due or accrued on any bond or evidence of indebtedness which is not in default and which is not valued on a basis including accrued interest;
b. Declared and unpaid dividends on stock and shares, unless such amount has otherwise been allowed as an asset;
c. Interest due or accrued upon a collateral loan in an amount not to exceed one year's interest thereon;
d. Interest due or accrued on deposits in solvent banks and trust companies, and interest due or accrued on other assets, if such interest is in the judgment of the commissioner a collectible asset;
e. Interest due or accrued on a mortgage loan, in an amount not exceeding in any event the amount, if any, of the excess of the value of the property less delinquent taxes thereon over the unpaid principal; but in no event shall interest accrued for a period in excess of 18 months be allowed as an asset;
f. Rent due or accrued on real property if such rent is not in arrears for more than three months and rent more than three months in arrears if the payment of such rent is adequately secured by property held in the name of the tenant and conveyed to the insurer as collateral; and
g. The unaccrued portion of taxes paid prior to the due date on real property;
(3) Premium notes, policy loans and other policy assets and liens on policies and certificates of life insurance and annuity contracts, and accrued interest thereon, in an amount not exceeding the legal reserve and other policy liabilities carried on each individual policy;
(4) The net amount of uncollected and deferred premiums and annuity considerations in the case of a life insurer;
(5) Premiums in the course of collection, other than for life insurance, not more than three months past due, less commissions payable thereon. The foregoing limitation shall not apply to premiums payable, directly or indirectly, by the United States government or by any of its instrumentalities;
(6) Installment premiums other than life insurance premiums to the extent of the unearned premium reserve carried on the policy to which premiums apply;
(7) Notes and like written obligations not past due taken for premiums, other than life insurance premiums, on policies permitted to be issued on such basis, to the extent of the unearned premium reserves carried thereon;
(8) The full amount of reinsurance recoverable by a ceding insurer from a solvent reinsurer and which reinsurance is authorized under Section 27-5-12;
(9) Amounts receivable by an assuming insurer representing funds withheld by a solvent ceding insurer under a reinsurance treaty;
(10) Deposits or equities recoverable from underwriting associations, syndicates and reinsurance funds or from any suspended banking institution, to the extent deemed by the commissioner available for the payment of losses and claims and at values to be determined by him;
(11) Electronic and mechanical machines constituting a data processing and accounting system if the cost of such system is at least $10,000.00, which costs shall be amortized in full over a period not to exceed 10 calendar years;
(12) All assets, whether or not consistent with the provisions of this section, as may be allowed pursuant to the annual statement form approved by the commissioner for the kinds of insurance to be reported upon therein; and
(13) Other assets, not inconsistent with the provisions of this section, deemed by the commissioner to be available for the payment of losses and claims, at values to be determined by him.
In addition to assets impliedly excluded by the provisions of Section 27-37-1, the following expressly shall not be allowed as assets in any determination of the financial condition of an insurer:
(1) Good will, trade names and other like intangible assets;
(2) Advances to officers, directors and controlling stockholders, other than policy loans, unless the same are secured by collateral satisfactory to the commissioner, and advances to employees, agents and other persons on personal security only;
(3) Stock of such insurer owned by it, or any equity therein, or loans secured thereby or any material proportionate interest in such stock acquired, or held, through the ownership by such insurer of an interest in another firm, corporation or business unit;
(4) Furniture, fixtures, furnishings, safes, vehicles, libraries, stationery, literature and supplies, except:
a. Such personal property as is required through foreclosure of chattel mortgages under loans insured or guaranteed under provisions of the National Housing Act or any act of Congress relating to veterans benefits;
b. Such as is reasonably necessary for the maintenance and operation of real estate held by it other than real estate for home office, branch office and similar purposes; and
c. In the case of title insurers, abstract plant and equipment not to exceed 50 percent of the paid-in capital stock of such title insurer; and
(5) The amount, if any, by which the aggregate book value of investments as carried in the ledger assets of the insurer exceeds the aggregate value thereof, as determined under this title.
Assets may be allowed as deductions from corresponding liabilities, and liabilities may be charged as deductions from assets and deductions from assets may be charged as liabilities in accordance with the form of an annual statement applicable to the insurer as prescribed by the commissioner or otherwise in his discretion.
(a) The commissioner shall disallow as an asset or as a credit against liabilities any reinsurance found by him after a hearing thereon to have been arranged for on a temporary basis for the purpose principally of deception as to the ceding insurer's financial condition as at the date of any financial statement of the insurer. Reinsurance of any substantial part of the insurer's outstanding risks contracted for in fact within 90 days prior to the date of any such financial statement and cancelled in fact within 90 days after the date of such statement shall prima facie be deemed to have been arranged for the purpose of deception within the intent of this section.
(b) The commissioner shall disallow as an asset any deposit, funds or other assets of the insurer found by him after a hearing thereon:
(1) Not to be in good faith the property of the insurer;
(2) Not freely subject to withdrawal or liquidation by the insurer at any time for the payment or discharge of claims or other obligations arising under its policies; and
(3) To be resulting from arrangements made principally for the purpose of deception as to the insurer's financial condition as at the date of any financial statement of the insurer.
(c) No such disallowance of assets or credits shall be valid unless made by the commissioner after a hearing of which notice was given the insurer within six months after the date the financial statement of the insurer as to which such deception is claimed was filed with the commissioner.
(d) The commissioner may suspend or revoke the certificate of authority of any insurer which has knowingly been a party to any such deception or attempt thereat.
(a) All bonds or other evidences of debt having a fixed term and rate of interest held by an insurer shall, if amply secured and not in default as to principal or interest, be valued as follows:
(1) If purchased at par, at the par value;
(2) 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 or, in lieu of such method, according to such accepted method of valuation as is approved by the commissioner;
(3) Purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, plus actual brokerage, transfer, postage or express charges paid in the acquisition of such securities; and
(4) Unless otherwise provided by valuation established or approved by the commissioner, no such security shall be carried at above the call price for the entire issue during any period within which the security may be so called.
(b) The commissioner shall have full discretion in determining the method of calculating values according to the rules set forth in this section, but no such method or valuation shall be inconsistent with any applicable valuation or method currently accepted and in use among insurers in general.
(a) Securities, other than those referred to in Section 27-37-5, held by an insurer shall be valued, in the discretion of the commissioner, at their market value, or at their appraised value or at prices determined by him as representing their fair market value.
(b) Preferred or guaranteed stocks or shares, while paying full dividends, may be carried at a fixed value in lieu of market value, at the discretion of the commissioner and in accordance with such method of valuation as he may approve.
(c) No valuation under this section shall be inconsistent with any applicable valuation or method currently accepted and in use among insurers in general.
(a) Real property acquired pursuant to a mortgage loan or contract for sale, in the absence of a recent appraisal deemed by the commissioner to be reliable, shall not be valued at an amount greater than the unpaid principal of the defaulted loan or contract at the date of such acquisition, together with any taxes and expenses paid or incurred in connection with such acquisition, and the cost of improvements thereafter made by the insurer and any amounts thereafter paid by the insurer on assessments levied for improvements in connection with the property.
(b) Other real property held by an insurer shall not be valued at an amount in excess of fair value as determined by recent appraisal. If valuation is based on an appraisal more than three years old, the commissioner may at his discretion call for and require a new appraisal in order to determine fair value.
(c) Personal property acquired pursuant to chattel mortgages shall not be valued at an amount greater than the unpaid balance of principal on the defaulted loan at the date of acquisition, together with taxes and expenses incurred in connection with such acquisition or the fair value of such property, whichever amount is the lesser.
Funeral supply inventories owned by the insurer shall be valued at an amount not exceeding cost to the insurer or market value, whichever is lower. Funeral equipment owned by the insurer shall be valued at an amount not in excess of cost to the insurer reduced by depreciation at the rate of not less than 18 percent per annum from date of acquisition of such equipment.
Purchase money mortgages on real property shall be valued in an amount not exceeding the acquisition cost of the real property covered thereby or the unpaid balance of the debt secured by such mortgage, whichever is less.