Except as provided in Section 27-41-39, this chapter shall apply to all domestic insurers and health maintenance organizations.
An insurer may invest in bonds and other evidences of indebtedness which are obligations of any state, county, city, town, village, municipality, district or other political subdivision of any state or of any instrumentality or board thereof or of the United States of America issued to provide funds for public projects, or for refunding of bonds issued for such purposes, which are revenue producing and self-supporting if such obligations are secured by a lien on such revenues to pay principal and interest and the issuing body is required to charge adequate rates for the services so provided to pay all charges against the project, including principal and interest on all indebtedness outstanding against the project.
An insurer may invest in bonds, debentures or other evidences of indebtedness of local public housing authorities existing under the laws of the United States or of any state if such obligations are:
(1) Secured by a pledge of annual contributions unconditionally payable under the annual contributions contract between the Department of Housing and Urban Development and the local agencies issuing the bonds;
(2) Unconditionally guaranteed by the state, municipality or political subdivision creating the authority, if the tax supported obligations of such state, municipality or political subdivision so guaranteeing would be eligible for investment under this chapter; or
(3) Secured by payments to be made sufficient to pay principal and interest on the bonds under an 'assistance contract' between the local authority and the state, municipality or other political subdivision creating the authority; provided, the tax supported obligations of the assisting state, municipality or political subdivision would be eligible for investment under this chapter.
An insurer may invest in obligations issued or guaranteed by the following agencies of the United States of America:
(1) Commodity Credit Corporation;
(2) Federal intermediate credit banks;
(3) Federal land banks;
(4) Central bank for cooperatives;
(5) Federal home loan banks;
(6) Federal National Mortgage Association;
(7) Federal Home Loan Mortgage Corporation;
(8) Tennessee Valley Authority; and
(9) Any other similar agency of the government of the United States of America having similar financial quality.
An insurer may invest in bonds or other evidences of indebtedness issued, assumed or guaranteed by Canada or any province thereof or issued by any municipality in Canada having a population of 25,000 or more.
(a) An insurer may invest in obligations issued, assumed or guaranteed by the International Bank for Reconstruction and Development.
(b) An insurer may invest in the obligations of the Federal National Mortgage Association.
(c) An insurer may invest in obligations issued, assumed or guaranteed by the African Development Bank.
An insurer may invest in secured and unsecured obligations bearing interest at a fixed rate, with mandatory principal and interest being due at specified times, of any solvent institution engaged in any lawful business and existing under the laws of the United States or any state of the United States or Canada or any province thereof if the issuing institution has not defaulted in the payment of principal and interest on any of its fixed interest obligations during the five years preceding the date of investment; provided, that the obligations of an institution which has not been in existence for a period of five years shall be deemed eligible for investment under this section if the institution has not defaulted in the payment of principal and interest on any of its fixed obligations during the period of its existence and if such institution meets the other requisites of this chapter.
An insurer may invest in the preferred or guaranteed stocks or shares of any solvent corporation engaged in any lawful business and existing under the laws of the United States or any state thereof if the prior obligations of the issuing company or the guarantor, if any, would be eligible for investment under the provisions of Section 27-41-15 and if the company has continuously paid the dividends provided for by outstanding preferred stock, if any, during the five years preceding the acquisition of the investment.
(a) An insurer may invest in common stocks or shares of any solvent corporation engaged in any lawful business and existing under the laws of the United States or any state thereof or of Canada or any province thereof if the prior obligations of such corporation, if any, would be eligible for investment under the provisions of Section 27-41-15.
(b) An insurer may invest in and own all or a controlling part of the capital stock of any corporation organized under the laws of the United States or any state thereof if the stock of such corporation is eligible for investment under subsection (a) of this section.
(c) The total amount of the insurer's investments under this section shall not at any time exceed the greater of 10 percent of assets of the insurer or the amount of the insurer's capital and surplus less the minimum capital and surplus required of said insurer to transact insurance by Sections 27-3-7 and 27-3-8 of the Alabama Insurance Code. The limitations contained in this section shall not prevent an insurer from making eligible investments in common stock in excess of said limitations pursuant to the provisions of Section 27-41-35.
An insurer may invest in the stocks of other solvent insurers formed under the laws of the United States or any state thereof, provided that the total amount of the insurer's investments in excess of the net asset value of the stock acquired shall not at any time exceed the greater of 10 percent of assets of the insurer or the insurer's capital and surplus less the minimum capital and surplus required of said insurer to transact insurance by Sections 27-3-7 and 27-3-8 of the Alabama Insurance Code.
(a) An insurer may invest in equipment trust obligations or certificates which are adequately secured evidencing an interest in transportation equipment wholly or in part within the United States and a right to receive determined portions of rental, purchase or other fixed obligatory payments for the use or purchase of such transportation equipment.
(b) An insurer may invest in notes, bonds, debentures or other evidences of indebtedness secured by an interest in manufacturing, mining or generating machinery and equipment located wholly within the United States evidencing a right to receive determined portions of rental, purchase or other fixed obligatory payments for the use or purchase of such machinery and equipment.
(c) An insurer may invest in notes, bonds, debentures or evidences of indebtedness secured by a lease of manufacturing, mining, computer equipment or generating machinery and equipment or a lease of other tangible personal property or by a contract or by an agreement requiring aggregate payments sufficient to pay all fixed charges, including maintenance, upkeep and repair, insurance charges and taxes, and to pay the installments of principal and interest and any other payments required by the instrument evidencing the indebtedness.
(d) The lessee or party contracting or agreeing to make such payments under subsections (a), (b), or (c) of this section must be the United States or an agency thereof, a state of the United States or a civil division or governmental unit thereof or a solvent institution whose fixed interest obligations, if any, would be eligible investments under Section 27-41-15.
As used in this chapter, the following terms shall have the respective meanings herein set forth, unless the context shall otherwise require:
(1) ALABAMA INSURANCE CODE. Title 27 of this Code.
(2) INSURER. The term shall have the meaning ascribed in Section 27-1-2 and shall include health maintenance organizations.
(3) PERSON. The term shall have the meaning ascribed in Section 27-1-2.
(4) COMMISSIONER and DEPARTMENT. The terms, respectively, shall have the meanings ascribed in Section 27-1-2.
(5) INVESTMENT. Any asset owned by an insurer.
(6) ELIGIBLE INVESTMENT. Any investment permitted by Sections 27-41-7 to 27-41-35, inclusive, provided the investment meets all the other requirements of this chapter.
(7) DOMESTIC INSURER, FOREIGN INSURER, and ALIEN INSURER. The terms shall have the meanings ascribed in Section 27-1-2 and shall include health maintenance organizations.
(8) ADMITTED ASSET. Any asset of an insurer permitted by the Commissioner of Insurance to be taken into account in any determination of the financial condition of the insurer.
An insurer may invest in:
(1) Leased line obligations of railroads where all of the fixed interest-bearing obligations of the lessee meet the standards prescribed in Section 27-41-15.
(2) Terminal obligations of railroads and other common carriers where all of the fixed interest-bearing obligations of the obligor meet the standards prescribed in Section 27-41-15.
An insurer may invest in secured and unsecured obligations of religious institutions or societies located within the United States if the institution or society has not defaulted in payment of principal or interest on any of its obligations during the five years preceding the investment.
An insurer may invest in adequately secured loans secured by first liens on interests in oil, gas or condensate properties or leaseholds in the United States and Canada on which there are fully completed commercially producing wells.
An insurer may invest in certificates, notes or other obligations issued by trustees or receivers of any institution created or existing under the laws of the United States or of any state thereof which, or the assets of which, are being administered under the direction of any court having jurisdiction if any such obligation is adequately secured as to principal and interest.
An insurer may invest in loans with a maturity not in excess of five years from the date thereof which are secured by pledge of securities eligible for investment under this chapter or by the pledge or assignment of life insurance policies issued by insurers authorized to transact insurance in this state. On the date made, no such loan shall exceed in amount 75 percent of the market value of the collateral pledged; except, that loans upon the pledge of United States government bonds and loans upon the pledge or assignment of life insurance policies shall not exceed 95 percent of the market value of the bonds or the cash surrender value of the policies pledged. The amount so loaned shall be included in the maximum amount of funds permitted under this chapter to be invested in a single person.
A life insurer may lend to its policyholder upon the security of the policy any sum not exceeding the cash surrender value of the policy or may lend against pledge or assignment of any of its supplementary contracts or other contracts or obligations so long as the loan is adequately secured by such policy contracts.
An insurer may invest in shares or savings accounts of savings and loan associations insured by the Federal Savings and Loan Insurance Corporation.
An insurer authorized to transact insurance in a foreign country may make investments, in an aggregate amount not exceeding its obligations incurred in such country, in securities of or in such country possessing characteristics similar to like investments required pursuant to this chapter for investments in the United States of America. Canadian securities eligible for investment under other provisions of this chapter are not subject to this section.
An insurer may invest in bonds, debentures, notes or other evidences of indebtedness which are:
(1) Guaranteed by the United States of America, represented by the Secretary of Commerce acting pursuant to Title 11 of the Merchant Marine Act, 1936, as amended, and the Federal Ship Financing Act of 1972;
(2) Insured by the United States of America, represented by the Secretary of Commerce acting pursuant to Title 11 of the Merchant Marine Act, 1936, as amended, and the Federal Ship Mortgage Insurance Act, as amended; provided, that such indebtedness is secured by mortgages on ships, barges, tugboats or other shipping vessels; or
(3) Secured by mortgages on ships, barges, tugboats or other shipping vessels which are under lease or charter to the United States government or an agency or department of the United States government or to a solvent institution whose fixed interest obligations, if any, would be eligible investments under Section 27-41-15, if such lease or charter is assigned as additional security for such bonds, debentures, notes or other evidences of indebtedness and requires aggregate payments sufficient to pay all fixed charges, including maintenance, upkeep and repair, insurance charges and taxes, and to pay the installments of principal and interest and any other payments required by the instrument evidencing the indebtedness.
An insurer may invest in:
(1) Bonds, notes or other evidences of indebtedness which are secured by a first mortgage lien or deed of trust upon unencumbered improved real property located in the United States or Canada, including leasehold estates in such real estate having an unexpired term (inclusive of the term or terms which may be provided by options of renewal) of not less than 10 years beyond the final maturity of the loan. Unless guaranteed or insured by the Administrator of Veterans Affairs, the Secretary of Housing and Urban Development or by a mortgage guaranty insurance policy issued by an insurance company licensed and authorized to do business by and in the State of Alabama, no such mortgage loan or loans when made shall exceed 75 percent of the fair value of the real estate or leasehold, except that loans made on single family dwellings shall not exceed 80 percent of the fair value of the property. 'Fair value' shall be determined by a competent appraiser or appraisers. For the purposes of this section and Section 27-41-30, real estate shall not be deemed to be encumbered by reason of the existence of taxes or assessments that are not delinquent, instruments creating or reserving mineral, oil or timber rights, rights-of-way, joint driveways, sewer rights, public utility easements, rights in walls, nor by reason of building restrictions or other restrictive covenants, nor when such real estate is subject to lease in whole or in part whereby rents or profits are reserved to the owner; provided, that the security created by the mortgage or trust deed on the real estate is a first lien upon such real estate and that there is no condition or right of re-entry or forfeiture under which such lien can be cut off, subordinated or otherwise disturbed.
(2) Bonds, notes or other evidences of indebtedness which are secured by mortgage or deed of trust on real estate or an interest in real estate in the United States, if payment of such indebtedness or part thereof is guaranteed or insured by the Administrator of Veterans Affairs in accordance with the Servicemen's Readjustment Act of 1944, as amended. Any portion of a mortgage loan referred to in this subdivision which is not guaranteed as herein provided must not exceed 75 percent of the fair value of the property as defined in subdivision (1) above.
(3) Bonds, notes or other evidences of indebtedness which are secured by mortgage or deed of trust insured by the Secretary of Housing and Urban Development under the terms of the National Housing Act, as amended.
(4) Purchase money mortgages shall be valued as provided in Section 27-37-9.
(5) Bonds, notes or other evidences of indebtedness which are secured by a first mortgage lien or deed of trust upon unencumbered improved or income-bearing real property located in the United States or Canada, including leasehold estates in such real estate having an unexpired term of not less than 10 years beyond the final maturity of the loan where the borrower is a solvent corporation engaged in any lawful business and existing under the laws of the United States or any real estate of the United States or Canada, or any province thereof, if such corporation has not defaulted in the payment of principal and interest on any of its fixed interest obligations during five years preceding the date of investment and the amount of indebtedness does not exceed 100 percent of the value of the property.
(a) Only eligible investments may be counted as admitted assets.
(b) Every investment lawfully held by a life, disability, or burial insurer on January 1, 1978, and every investment which the life, disability, or burial insurer became obligated to make prior to January 1, 1978, which was a lawful investment for the insurer at the time made or at the time the insurer became obligated to make it shall be an eligible investment. Any particular investment held by an insurer on May 17, 1993, or any amendment thereto, which was a legal investment at the time it was made, and which the insurer was legally entitled to possess immediately prior to the effective date, shall be deemed to be an eligible investment; however, any investment made after May 17, 1993, shall be in compliance with the limitations and qualifications of this section.
(c) All life, disability, or burial insurers shall within 90 days after January 1, 1978 file with the commissioner a written statement certified by its treasurer or chief investment officer, listing in the manner as to readily identify the same, all the investments or obligations for investments not otherwise eligible under this chapter, identifying each nonconforming investment and stating the terms and conditions of acquisition or proposed acquisition thereof.
(d) All insurers, other than life, disability, or burial insurers, shall within 90 days after May 17, 1993, file with the commissioner a written statement certified by its treasurer or chief investment officer, listing in the manner as to readily identify the same, all the investments or obligations for investments not otherwise eligible under this chapter, identifying each nonconforming investment and stating the terms and conditions of acquisition or proposed acquisition thereof.
(e) Eligibility of an investment shall be determined as of the date of its making or acquisition, except as stated in subsection (b) of this section.
(f) Any investment limitation based upon the amount of the insurer's assets or particular funds shall relate to the value of the assets or funds as shown by the insurer's annual statement as of December 31 next preceding the date of the investment by the insurer or as shown by a current financial statement filed with and accepted as to content in writing by the commissioner.
An insurer may invest in loans, notes, bonds or other evidences of indebtedness of any person up to the fair value of real property securing said indebtedness, upon compliance with the following conditions and provisions:
(1) The indebtedness must be secured by a first mortgage lien on real property having a fair value of not less than the principal amount of the loan, except as provided in subdivision (8) of this section;
(2) The indebtedness must be additionally secured by a lease on said real property, which lease must be assigned and transferred by the lessor to the lender or to a trustee of the lender under a trust instrument;
(3) The lease so assigned as additional security must be noncancellable and may be terminated only upon such conditions as are generally provided in commercial leases, such as, for example, destruction by fire, tornado or similar hazard or condemnation or taking by power of eminent domain;
(4) Rental payments under such lease must be payable monthly, quarterly or semi-annually and the aggregate rental payments required to be paid during the initial term of any such lease must be sufficient to pay the fixed charges against the leased property, including expenses of maintenance, upkeep and repair, insurance charges and taxes, and to pay the installments of principal and interest and any other payments required by the instrument evidencing the indebtedness;
(5) The lease additionally securing such indebtedness shall be a so-called 'net lease,' except as otherwise provided in subdivision (8) of this section. 'Net lease' shall mean a lease under the terms of which the lessee is required to pay, in addition to the rental payments, all other charges for the maintenance, upkeep and repair of the leased property and all taxes, insurance and other charges provided under the terms of the lease;
(6) The indebtedness must be payable in full, both as to principal and interest, during the initial term of the lease assigned or transferred as additional security. The required payments of principal and interest on such indebtedness must be made in substantially equal periodic installments in an aggregate amount sufficient to retire or pay the loan in full upon or prior to the expiration of the initial term of such lease; except, that if the substantially equal periodic installments are at a rate sufficient to retire or pay the loan in full as amortized over the initial term of the lease, balloon payments may be permitted to pay the remaining balance due on the indebtedness if, by the terms of the instruments evidencing the same, the entire indebtedness matures prior to the expiration of the initial term of the lease. In addition to the required payments of principal and interest, the evidences of indebtedness may also provide for payment of additional moneys to the holder thereof based upon excess rentals, volume of sales or other events or factors which the parties may agree upon;
(7) The lessee, or any obligor under any such lease, must be a person, corporation or other legal entity or government agency, unit or subdivision whose obligations, at the time the lender commits in writing to make a loan, are or would be an eligible investment under this chapter and are or would be amortizable under the rules and regulations promulgated by the commissioner (ordinarily the same as promulgated by the National Association of Insurance Commissioners); and
(8) If the lease additionally securing such indebtedness is not a 'net lease,' then, and in such event, the indebtedness shall not exceed 90 percent of the fair value of the real property mortgaged to secure the payment of such indebtedness.
Where the words 'lease,' 'lessor' or 'lessee' appear in this section, the singular shall include the plural.
An insurer may invest in electronic and mechanical machines constituting a data processing and accounting system if the cost of such system is not less than $10,000.00 and cost for such machines is amortized in full over a period not to exceed ten calendar years.
(a) If real property securing any evidence of indebtedness held by an insurer is used for agricultural purposes and a proceeding to foreclose the mortgage or an insolvency proceeding relating to the mortgagor has been commenced or if the mortgagor has made an assignment for the benefit of creditors, the insurer may, for the purpose of preserving or enhancing the earnings of such property:
(1) Purchase agricultural livestock or equipment and utilize the same or cause the same to be utilized in the operation of the property by the mortgagor or by a receiver or trustee or by the insurer; or
(2) Lend up to the value of any agricultural equipment or livestock which may be utilized in the operation of the property on the security of such equipment and livestock as a first lien.
(b) Nothing in this section shall be deemed to limit any right which the insurer may otherwise have under or with respect to any such loan, mortgage or investment.
In connection with mortgage loans made under subdivisions (2) and (3) of Section 27-41-29, an insurer may loan on the value of personal property items listed in the Department of Housing and Urban Development Commitment for Insurance or the Veterans Administration Certificates of Reasonable Value. Nothing in this section shall be deemed to prevent an insurer from taking liens on personal property items as additional security for any investment eligible for investment under this chapter.
Domestic life insurance companies are authorized to invest, within the limitations set forth in this section, in chattel mortgages resulting from the financing of tangible personal property, which mortgages must constitute valid first liens on the chattels mortgaged. The maximum amount of such mortgages to be admitted as assets shall not exceed one half of the amount of surplus remaining after deducting from capital and surplus an amount equal to the statutory minimum capital and surplus required of a newly organized life insurance company. In addition, an adequate reserve for losses, based on past and prospective experience of the company, shall be maintained at all times.
(a) An insurer may invest in properties and facilities, and any interest and rights in such properties and facilities, for the development and production of fossil or synthetic fuel or other minerals, whether or not the extraction would deplete the surface of such properties, including, but not limited to, investments relating to:
(1) The exploration for and development and production of such fuel and minerals, and
(2) Ownership and control of such property, facilities, interest, and rights.
(b) An insurer shall not have at any one time any single investment or combination of investments permitted under subsection (a) of this section aggregating in cost to the insurer in excess of five percent of the amount by which the admitted assets of such insurer exceed $50,000,000.00 (excluding in the computation of assets investments permitted under subsection (a) above).
(a)(1) An insurer may acquire, invest in, own, maintain, alter, furnish and improve the following real estate:
a. Land and buildings used for home office and branch office purposes, together with such other real estate as is required for the convenient transaction of its business; and
b. Funeral home buildings used in the servicing of burial insurance policies.
(2) An insurer may lease to others part of the real property otherwise occupied by it for home office and other purposes under paragraphs a. and b. of subdivision (1) of this subsection, except that the value of the parts so leased must be included in subdivision (2) of subsection (b) of this section.
(3) Except as provided in subsection (e) of this section, an insurer may not carry, as an admitted asset, real estate acquired under this subsection following 10 years from the date when such real estate ceases to be necessary for the convenient accommodation of the insurer in the transaction of its business.
(4) The cost of the aggregate amount of real estate owned under this subsection, less encumbrances and less depreciation where applicable, shall not exceed five percent of the insurer's admitted assets.
(b)(1) An insurer may acquire, invest in, own, maintain, alter, furnish and improve the following real estate:
a. Real estate acquired as payment or part payment in the sale of other real estate owned by the insurer;
b. Real estate acquired by a gift or devise;
c. Real estate necessary for the protection or enhancement of the value of other real estate owned by the insurer;
d. Real estate acquired through a lawful merger or consolidation with another insurance company and not required for its accommodation as provided in subsection (a) of this section; and
e. Real estate under lease or being constructed under a definite agreement providing for lease to a solvent person for industrial or commercial purposes. The fixed interest obligations, if any, of any such lessee under this paragraph must be eligible for investment under Section 27-41-15.
(2) The cost of the aggregate amount of real estate owned under this subsection, less depreciation, where applicable, shall not exceed 10 percent of the insurer's admitted assets.
(c) An insurer may acquire, own, maintain, alter, furnish and improve real estate acquired in satisfaction of loans, mortgages, liens or other evidences of indebtedness previously owing to the insurer in the regular course of its business. Except as stated in subsection (e) of this section, an insurer may not carry as an admitted asset real estate acquired under this subsection following 10 years from the date of acquisition.
(d) An insurer may acquire, invest in, own, maintain, alter, furnish and improve real estate acquired to be improved or developed as an investment for the production of income. The cost of the aggregate amount of real estate owned under this subsection, including the cost of improvement and development, less depreciation, where applicable, shall not exceed 10 percent of the insurer's admitted assets.
(e) Upon evidence satisfactory to him that the interest of an insurer will suffer materially if it is not permitted to carry a particular parcel of real estate as an admitted asset after expiration of the period set out in subsections (a) and (c) of this section, the commissioner may, by order in writing, grant a reasonable extension of the period, as specified in said order, during which time the insurer may continue to carry such real estate as an admitted asset.
(f) Real estate permitted to be carried as an admitted asset of the insurer under this section shall be so carried at an amount equal to its cost at the time of acquisition together with the actual cost of improvements made thereon, less encumbrances and less depreciation where applicable.
(g) The limitations provided in this section with respect to real estate investments under this section shall not apply where the total amount invested by an insurer in such investments does not exceed the total capital and surplus of such insurer, less the minimum capital and surplus required to be maintained by such insurer under the provisions of Sections 27-3-7 and 27-3-8 of the Alabama Insurance Code.
(a) An insurer may make investments not otherwise expressly permitted by this chapter which may be counted as admitted assets, except as expressly prohibited under Section 27-41-36, provided that:
(1) The aggregate of all such investments shall not exceed 10 percent of the insurer's admitted assets;
(2) The insurer's capital and surplus shall not be less than twice the total capital and surplus required of the insurer to transact insurance under Sections 27-3-7 and 27-3-8 of the Alabama Insurance Code; and
(3) Such investments are sound investments.
(b) No investment shall be an eligible investment under this section if the investment is in an asset not allowed under the provisions of Section 27-37-2 of the Alabama Insurance Code or is otherwise expressly prohibited or is eligible under any other provision of this chapter; except, that an insurer may invest in common stocks up to the limits imposed by this section in excess of the limits imposed by Section 27-41-17.
(c) The insurer shall keep a separate record of all investments made under this section.
(d) If an investment made under this section subsequently qualifies as an eligible investment under any other provision of this chapter, the investment shall thereafter not be eligible under this section.
(a) After January 1, 1978, an insurer shall not invest in nor lend its funds upon the security of any note or other evidence of indebtedness of any director, officer or controlling stockholder of the insurer, except as to policy loans authorized under Section 27-41-25 and except as provided in Sections 27-1-2, 27-27-26 and 27-37-2 of the Alabama Insurance Code.
(b) No insurer shall underwrite or participate in the underwriting of an offering of securities or property by any other person; provided, that nothing in this subsection shall prevent an insurer from purchasing securities or property directly from any person so long as the purchase is made for investment purposes and not for the purpose of resale through public distribution.
(a) The funds of a mutual aid association shall be in cash or shall be invested as provided in Sections 27-41-3 through 27-41-36 and Section 27-41-38 as applicable to life insurers, except that:
(1) Funds of the association to the extent of its reserve liabilities resulting from valuation of its contracts providing for benefits, aid or services payable or to be rendered other than in cash may, at the option of the association, be invested in securities or assets eligible for investment of the funds of life insurers in general, but with category limits as follows in lieu of limits otherwise applicable thereto under Sections 27-41-3 through 27-41-36:
a. Not to exceed 25 percent of the reserves of the association in the aggregate may be invested in preferred and guaranteed stocks authorized in Section 27-41-16 and common stocks authorized under Section 27-41-17;
b. Not to exceed 10 percent of such reserves may be invested in insurance stock authorized under Section 27-41-18; and
c. Not to exceed 40 percent of such reserves may be invested in real estate for production of income authorized under Section 27-41-34.
(2) In addition to the investment of particular reserves in designated categories of investments as provided in subdivision (1) of this subsection, the association may invest additional funds in the same categories, but within the percentage limitations otherwise applicable under Sections 27-41-3 through 27-41-36 as computed upon all of the assets of the association after deduction of the reserves mentioned in subdivision (1) of this subsection.
(b) This section shall not apply to mutual aid corporations that received a certificate of authority prior to July 31, 1967. The moneys derived by such corporations from the payment of subscriptions to its capital stock, and the payment of sales of stock (contributed surplus for mutual) may be invested in bonds of the United States or of this state or of the cities or counties of this state, estimated at their market value, or in notes or mortgages secured by real estate collateral worth twice the amount of said mortgages or notes.
(c) Mutual aid corporations, both stock and mutual, organized prior to July 31, 1967, shall be solvent so long as their assets exceed their liabilities.
In addition to other investments permitted under this chapter, mutual aid associations may invest in funeral supply inventories, consisting of caskets, suits, robes, dresses and embalming supplies, and funeral equipment, consisting of automobiles, hearses, ambulances, funeral cars and other motor vehicle equipment, to the extent reasonably necessary to the full performance by the association of its outstanding contracts and policies. Such funeral supply inventories shall not exceed 25 percent of the association's assets.
The investments of a foreign or alien insurer shall be as permitted by the laws of its domicile but shall be of a quality and diversity substantially equivalent to that required of like domestic insurers under this chapter.
No investment (other than in common stocks allowed under Section 27-41-17, in insurance stocks allowed under Section 27-41-18, in loans or investments allowed under Section 27-41-35, in real property allowed under Section 27-41-34, or in funeral supply inventories and equipment allowed under Section 27-41-38) shall be an eligible investment unless it is interest-bearing or interest-accruing or dividend or income-paying, is not then in default and the insurer is entitled to receive for its account and benefit the interest or income accruing thereon.
An investment may be eligible notwithstanding that part of the interest or income accruing thereon is paid by the insurer to a third party in consideration of services rendered by the third party with respect to the investment or that part of the interest or income accruing thereon is shared by the insurer with one or more joint venturers or others participating in the same investment.
Any investment authorized may be deposited in a clearing corporation as defined in Section 7-8-102(3), or in a federal reserve bank under book-entry system. When such securities are so deposited, certificates representing securities of the same class of the same issuer may be merged and held in bulk in the name of the nominee of such clearing corporation with any other securities deposited in such clearing corporation by any person, regardless of the ownership of such securities, and securities of small denominations may be merged into one or more certificates of larger denominations. Title to such securities may be transferred by bookkeeping entry on the books of such clearing corporation or federal reserve bank without physical delivery or certificates representing such securities.
Any real estate, personal property, securities or other investment lawfully acquired and held by an insurer shall not be allowed as an admitted asset of the insurer after expiration of the period for disposal thereof or any extension of such period granted by the commissioner pursuant to the provisions of Section 27-41-34.
Except as expressly prohibited in Section 27-41-36, an insurer may make any investment without limit as to kind, time or amount, but only eligible investments shall be included or counted as admitted assets of the insurer in the determination of its financial condition.
If part of an investment qualifies as an eligible investment under any provision of this act and part does not, then only the part of the investment so qualifying shall be counted as an admitted asset.
An insurer shall not make any investment or loan, other than loans on policies or annuity contracts, unless the same be authorized, approved or ratified by the board of directors of the insurer or by such committee or person as the board of directors shall expressly authorize. The action of the board of directors, the committee or other persons so authorized shall be recorded and regular reports thereof shall be submitted to the board of directors. This requisite shall not apply to funeral supplies authorized for mutual aid associations under Section 27-41-38 which are purchased in the regular course of business under the general supervision of the association's board of directors.
(a) An insurer shall not have at any one time any single investment or combination of investments in or loans upon the security of the obligations, property or securities of any one person aggregating in cost to the insurer in excess of the greater of 10 percent of such insurer's assets or the total of its capital and surplus, as shown in the latest annual report of the insurer filed pursuant to subsection (a) of Section 27-3-26 of the Alabama Insurance Code, less the minimum capital and surplus required of said insurer for authority to transact insurance by Sections 27-3-7 and 27-3-8 of the Alabama Insurance Code.
The restriction of this subsection shall not apply to evidences of indebtedness issued, assumed or guaranteed by the United States of America or any department, agency or instrumentality thereof or by any state of the United States.
(b) An insurer shall at all times invest and maintain invested funds in cash and assets allowed in the following sections of this chapter in an amount not less than the capital required of it to transact insurance by Section 27-3-7 of the Alabama Insurance Code:
(1) Section 27-41-7 (United States government obligations).
(2) Section 27-41-9 (state, county, municipal and school obligations).
(3) Section 27-41-29 (mortgage loans).
(c) An insurer shall at all times invest and maintain invested funds in cash and the investments prescribed in this chapter in an amount not less than the amount of the reserves under its policies and annuity contracts in force.
(d) Limits as to investments shall apply as stated in specific sections relating to particular kinds of investments.
An insurer may invest in bonds, notes, warrants, debentures and other evidences of indebtedness which are direct obligations of the United States of America for which the full faith and credit of the United States of America is pledged for the payment of principal and interest.
An insurer may invest in loans guaranteed as to principal and interest by the United States of America or by any agency or instrumentality of the United States of America to the extent of such guaranty.
An insurer may invest in bonds or other evidences of indebtedness which are general obligations of or are adequately secured as to both principal and interest by irrevocable pledge of specific revenues by this state or any other state of the United States or any county, incorporated city or town or duly organized school district or other civil division, governmental unit or public instrumentality of any such state. Obligations payable solely out of special assessments on properties benefited by local improvements shall not be eligible under this section.
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