USA Statutes : oregon
Title : TITLE 56 INSURANCE
Chapter : Chapter 733 Accounting and Investments
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 or control of the insurer, including the
true balance of any deposit in a solvent bank or trust company.
(2) Investments held in accordance with the Insurance Code, and due
or accrued income items in connection therewith to the extent considered
by the Director of the Department of Consumer and Business Services to be
collectible.
(3) Premium notes, policy loans, liens and other like policy assets
on life insurance policies and accrued interest thereon, in an amount not
exceeding the loan value of the policy.
(4) Due premiums, deferred premiums, installment premiums, and
written obligations taken for premiums, to the extent allowed by the
director.
(5) The amount recoverable from a reinsurer if credit for
reinsurance may be allowed to the insurer under ORS 731.509 or 731.510
and amounts receivable on assumed reinsurance representing funds withheld
by a solvent ceding insurer under a reinsurance treaty.
(6) Deposits or equities recoverable from underwriting
associations, syndicates and reinsurance funds, or from any suspended
banking institution, to the extent deemed by the director to be available
for the payment of losses and claims.
(7) Other assets considered by the director to be available for the
payment of losses and claims, at values determined by the director. [1967
c.359 §208; 1971 c.321 §18; 1979 c.818 §1; 1993 c.447 §69; 2001 c.318 §7] In addition to assets impliedly
excluded by ORS 733.010, the following expressly shall not be allowed as
assets in any determination of the financial condition of an insurer:
(1) Advances to officers, other than policy loans, whether secured
or not, and advances to employees, agents and other persons on personal
security only.
(2) Stock of such insurer owned by it, or any material 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.
(3) Tangible personal property, except such property as the insurer
is otherwise permitted to acquire and retain as an investment under the
Insurance Code and which is deemed by the Director of the Department of
Consumer and Business Services to be available for the payment of losses
and claims or which is otherwise expressly allowable, in whole or in
part, as an asset.
(4) The amount, if any, by which the book value of any investment
as carried in the ledger assets of the insurer exceeds the value thereof
as determined under the Insurance Code. [1967 c.359 §209; 2001 c.318 §8] In any determination of the
financial condition of an insurer, liabilities to be charged against its
assets shall be calculated in accordance with the Insurance Code and
shall include:
(1) The amount necessary to pay all of its unpaid losses and claims
incurred on or prior to the date of the statement, whether reported or
unreported to the insurer, together with the expenses of adjustment or
settlement thereof.
(2) For insurance other than specified in subsections (3) and (4)
of this section, the amount of reserves equal to the unearned portions of
the gross premiums charged on policies in force, calculated in accordance
with the Insurance Code.
(3) For life insurance policies:
(a) Reserves on life insurance benefits, valued according to the
tables of mortality, rates of interest, and valuation methods applicable
thereto which are adopted pursuant to the Insurance Code.
(b) Reserves for disability benefits, for both active and disabled
lives.
(c) Reserves for accidental death benefits.
(d) Any additional reserves considered to be necessary by the
Director of the Department of Consumer and Business Services.
(4) For health insurance policies, the amount of reserves required
pursuant to ORS 733.080.
(5) Taxes, expenses and other obligations due or accrued at the
date of the statement.
(6) Any additional reserves for asset valuation contingencies or
loss contingencies required by the Insurance Code or considered to be
necessary by the director for the protection of policyholders and
stockholders of the insurer. [1967 c.359 §210] The Director of the Department of
Consumer and Business Services shall disallow reinsurance as credit
against the liabilities of a ceding insurer if credit against the
liabilities of the ceding insurer is not allowed as a credit to the
ceding insurer under ORS 731.509 or 731.510. [1967 c.359 §211; 1993 c.447
§70] If the Director of the
Department of Consumer and Business Services determines that an insurer’s
reserves, however calculated or estimated, are inadequate, the director
shall require the insurer to maintain reserves in such additional amount
as is needed to make them adequate. [1967 c.359 §212] (1) Every insurer shall maintain
an unearned premium reserve on all policies in force.
(2) The Director of the Department of Consumer and Business
Services may require that such reserves shall be equal to the unearned
portions of the gross premiums in force as calculated pro rata on each
respective risk from the policy’s date of issue. In the absence of such
requirement, the unearned premium reserve shall be equal to the pro rata
unearned portions of the gross premiums in force as calculated by an
approximation method approved by the director. After adopting a method of
computing such reserves, an insurer shall not change methods without
approval of the insurance supervisory official of the insurer’s domicile.
(3) This section does not apply to:
(a) Marine and transportation insurance on trip risks not
terminated.
(b) Health insurance.
(c) Title insurance.
(d) Home protection insurance under policies issued by a home
protection insurer.
(e) Life insurance. [1967 c.359 §213; 1981 c.247 §9]As to marine and transportation insurance, the
entire amount of premiums on trip risks not terminated shall be deemed
unearned. The Director of the Department of Consumer and Business
Services may require the insurer to carry a reserve equal to 100 percent
of premiums on trip risks written during the month ended as of the date
of statement. [1967 c.359 §214] For all health insurance
policies the insurer shall maintain reserves which place a sound value on
its liabilities under such policies and which are not less than the
reserves according to appropriate standards set forth in rules issued by
the Director of the Department of Consumer and Business Services. Except
for policies of credit health insurance, such reserves for nondisabled
lives shall not be less in the aggregate than the pro rata gross unearned
premiums for such policies calculated in accordance with ORS 733.060.
[1967 c.359 §215; 1971 c.231 §18] (1)
Each title insurer shall maintain a reserve for unearned premiums on its
policies in force, which shall be charged as a liability in any
determination of its financial condition. Such unearned premium liability
shall be separate from and in addition to the insurer’s liability for
incurred but unpaid losses and loss expenses.
(2) The amount of the unearned premium reserve shall be determined
according to accounting procedures approved or required by the Director
of the Department of Consumer and Business Services.
(3) A separate and distinct fund, known as the Title Insurance
Unearned Premium Reserve Fund, shall be maintained by each title insurer
in its treasury, as additional security to holders of its title insurance
policies. The amount of the fund shall at least equal the amount of the
unearned premium reserve liability determined in accordance with
subsection (2) of this section. This fund shall be in addition to the
insurer’s deposit with the Department of Consumer and Business Services
and deposits required to be maintained with officials of other
jurisdictions. The fund, to the extent of the unearned premium reserve on
business in this state, shall be invested as provided for funds of a
domestic insurer, except that ORS 733.630, 733.670 and 733.690 shall not
be applicable to investment of the fund. The remainder of the fund may be
similarly invested, or may be invested as permitted by the laws of the
insurer’s domicile. The insurer shall keep a separate record of the cash
and investments of the fund, giving complete identification of the assets
belonging to the fund and showing full particulars as to withdrawals and
additions. No title insurance policies shall be issued by an insurer
during a period when its unearned premium reserve fund is below the
required amount. [1967 c.359 §216; 1999 c.196 §10; 2001 c.318 §9] A
home protection insurer shall maintain a reserve for unearned premiums,
unpaid losses and claims incurred whether reported or unreported to the
insurer and the expenses of adjustment or settlement of such losses and
claims, in an aggregate amount of not less than 40 percent of the
aggregate of premiums charged on the insurer’s policies currently in
force. [1981 c.247 §11] A
mortgage insurer shall establish a contingency reserve liability for the
protection of policyholders against the effect of adverse economic cycles
according to accounting procedures approved or required by the Director
of the Department of Consumer and Business Services. [1967 c.359 §217;
1969 c.692 §7; 2001 c.318 §10]Reserves for variable life insurance and annuity
policies shall be established in accordance with actuarial procedures
that recognize the variable nature of the benefits provided, any
mortality guarantees, and the valuation requirements of the Standard
Valuation Law. [1973 c.435 §24; 1981 c.609 §4] (1) The Director of
the Department of Consumer and Business Services shall disallow as an
asset or as a credit against liabilities any reinsurance found by the
director after a hearing thereon to have been arranged for the purpose
principally of deception as to the ceding insurer’s financial condition
as of the date of any financial statement of the insurer. Without
limiting the general purport of the foregoing provision, reinsurance of
any substantial part of the insurer’s outstanding risks contracted for in
fact within four months prior to the date of any such financial statement
and canceled in fact within four months after the date of such statement,
or reinsurance under which the reinsurer bears no substantial insurance
risk or substantial risk of net loss to itself, shall prima facie be
deemed to have been arranged for the purpose principally of deception.
(2) The director shall disallow as an asset any deposit, funds or
other assets of the insurer found by the director after a hearing thereon:
(a) Not to be in good faith the property of the insurer;
(b) 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
(c) To be resulting from arrangements made principally for the
purpose of deception as to the insurer’s financial condition as of the
date of any financial statement of the insurer. [1967 c.359 §221; 2005
c.22 §487] Assets
may be allowed as deductions from corresponding liabilities, liabilities
may be charged as deductions from assets, deductions from assets may be
charged as liabilities, and deductions from liabilities may be allowed as
assets, in accordance with the form of annual statement prescribed by the
Director of the Department of Consumer and Business Services, or
otherwise in the discretion of the director. [1967 c.359 §222] (1) Each bond or
other evidence of debt having a fixed term and rate of interest may be
valued as follows, if amply secured and not in default as to principal or
interest:
(a) If purchased at par, at the par value.
(b) If purchased above or below par, according to an accepted
method of valuation approved by the Director of the Department of
Consumer and Business Services.
(2) For the purpose of subsection (1) of this section, the purchase
price shall not be a higher amount than the actual market value at the
time of purchase, plus actual brokerage, transfer, postage or express
charges paid in the acquisition of such bond or other evidence of debt.
(3) For purposes of subsections (1) and (2) of this section, the
director may determine the method of calculating values. The method or
valuation may not be inconsistent with any applicable method or valuation
used by insurers in general or any such method or valuation then
currently formulated or approved by the National Association of Insurance
Commissioners or its successor organization.
(4) Real property shall be valued as follows:
(a) Real property acquired pursuant to a mortgage loan or contract
of sale shall be valued at an amount not 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 be valued at an
amount not in excess of the cost of the acquired property and the cost of
improvements thereafter made by the insurer, less a reasonable allowance
for depreciation.
(5) Purchase money mortgages on real property referred to in
subsection (4)(a) of this section shall be valued in an amount not
exceeding the acquisition cost of the real property covered thereby or 90
percent of the fair value of such real property, whichever is less.
(6) Other assets, other than securities, shall be valued at cost of
acquisition less any repaid portion thereof, unless the director
determines that another value is proper. [1967 c.359 §223; 1971 c.231
§19; 1993 c.447 §16; 2001 c.318 §11] (1) Securities held by an insurer,
other than bonds or other evidences of debt to which ORS 733.160 applies,
must be valued in the discretion of the Director of the Department of
Consumer and Business Services at their market value, at their appraised
value or at prices determined by the director as representing their fair
market value.
(2) Preferred or guaranteed stocks or shares while paying full
dividends may be carried at a fixed value instead of market value, at the
discretion of the director and in accordance with any method of valuation
approved by the director.
(3) Stock of a subsidiary corporation of an insurer must not be
valued at an amount in excess of the net value thereof as based upon the
assets only of the subsidiary that would be eligible under ORS 733.510 to
733.780 for investment of the funds of the insurer directly.
(4) The director may determine the method of calculating values as
provided in this section, but the method or valuation may not be
inconsistent with any applicable method or valuation used by insurers in
general or any such method of valuation then currently formulated or
approved by the National Association of Insurance Commissioners or its
successor organization. [1993 c.447 §18; 2001 c.318 §17] An insurer shall keep its books,
records, accounts and transaction source data in such manner that the
Director of the Department of Consumer and Business Services may readily
verify its statements of financial condition and ascertain whether the
insurer is unimpaired, has given proper treatment to policyholders and
has complied with the Insurance Code. [Formerly 738.430] (1) In making any determination
or prescribing rules relating to items such as are reported in the form
of annual statement and any supplement thereto required to be filed by an
insurer, the Director of the Department of Consumer and Business Services
shall give consideration to recommendations made from time to time by the
National Association of Insurance Commissioners, and to customary and
general practice in insurance accounting.
(2) The director may apply and may require insurers to use and
comply with standards, practices and procedures established by the
National Association of Insurance Commissioners in its manuals or other
publications, including actuarial, accounting and other opinion and
reporting requirements. [1967 c.359 §228; 1993 c.447 §20](1) A domestic insurer authorized to
transact life insurance may establish one or more separate accounts and
may allocate thereto amounts, including but not limited to proceeds
applied under optional modes of settlement or under dividend options, to
provide for life insurance or annuities or benefits incidental thereto,
payable in fixed or variable amounts or both.
(2) The income, gains and losses, realized or unrealized, from
assets allocated to a separate account shall be credited to or charged
against the account without regard to other income, gains and losses of
the insurer.
(3) Except with the approval of the Director of the Department of
Consumer and Business Services, and under the conditions the Director may
prescribe as to investments and other matters that shall recognize the
guaranteed nature of the benefits, assets representing reserves for
benefits guaranteed as to dollar amount and duration, and for funds
guaranteed as to principal amount or stated rate of interest, shall not
be maintained in a separate account.
(4) Unless otherwise approved by the director, and notwithstanding
ORS 733.160 or 733.165, assets allocated to a separate account shall be
valued at their market value on the date of valuation. If there is no
readily available market, they shall be valued as provided under the
terms of the policy, the rules or other written agreement applicable to
the separate account. Except as may be otherwise prescribed by the
director under subsection (3) of this section, however, the portion if
any of the assets of a separate account equal to the insurer’s reserves
for guaranteed benefits and funds shall be valued in accordance with the
rules applicable to the insurer’s general assets.
(5) Amounts allocated to a separate account in the exercise of the
power granted by this section are owned by the insurer, and the insurer
is not, nor shall it hold itself out to be, a trustee with respect to
such amounts. If, and to the extent, it is so provided under the
applicable policies, the portion of the assets of a separate account
which equals the reserves and other policy liabilities for such account
shall not be chargeable with liabilities arising out of any other
business the insurer conducts.
(6) No sale, exchange or other transfer of assets may be made by an
insurer between any of its separate accounts or between any other
investment account and one or more of its separate accounts unless:
(a) In the case of a transfer into a separate account, the transfer
is made solely to establish the account or to support the operation of
the policies applicable to the account;
(b) In the case of other transfers, the director has approved the
transfer as being equitable; and
(c) The transfer is made in the form of cash or, with the approval
of the director, securities having a readily determinable market value.
(7) The same separate account may not be used for both variable
annuities and variable life insurance.
(8) The insurer shall maintain in each separate account assets with
a value at least equal to the reserves and other policy liabilities for
such account. [1973 c.435 §6; 1993 c.447 §112](1) Notwithstanding any
other provisions of law a domestic insurer may:
(a) With respect to a separate account registered with the federal
Securities and Exchange Commission as a unit investment trust, exercise
voting rights, in connection with any securities of a regulated
investment company registered under the federal Investment Company Act of
1940, as amended, and held in such account, in accordance with
instructions from persons having interests in such account, ratably as
determined by the insurer; and
(b) With respect to a separate account registered with the federal
Securities and Exchange Commission as a management investment company,
establish for such account a committee, board, or other body, the members
of which need not be otherwise affiliated with the insurer and may be
elected by the vote of persons having interests in such account, ratably
as determined by the insurer. Such committee, board or other body may
have the power, exercisable alone or in conjunction with others, to
manage the separate account and the investment of its assets.
(2) The insurer or such committee, board or other body may make
such other provisions in respect to the separate account as may be
considered necessary to comply with any applicable federal or state laws,
if the Director of the Department of Consumer and Business Services
approves such provisions as not being hazardous to the insurer’s
policyholders or the public in this state.
(3) Any provision of the Insurance Code or rule of the director
applicable to the officers or directors of an insurer and relating to
conflicts of interest will also apply to members of a separate account’s
committee, board or other similar body. No officer or director of an
insurer nor any member of the committee, board or body of a separate
account shall receive directly or indirectly any commission or any other
compensation with respect to the purchase or sale of assets of the
separate account. [1973 c.435 §7; 1997 c.249 §218]STANDARD VALUATION LAWORS 733.300 to 733.322 may be cited as the
Standard Valuation Law. [1991 c.401 §17](1) The Director of the Department
of Consumer and Business Services shall annually value, or cause to be
valued, the reserve liabilities for all outstanding life insurance
policies and annuity and pure endowment contracts of every life insurer
doing business in this state, and may certify the amount of any such
reserves, specifying the mortality table or tables, rate or rates of
interest, and methods, net level premium method or other, used in the
calculations of such reserves. For purposes of ORS 733.300 to 733.322,
reserve liabilities shall be referred to as reserves.
(2) In calculating reserves, the director may use group methods and
approximate averages for fractions of a year or otherwise.
(3) In lieu of the valuation of the reserves required of any
foreign or alien insurer under the Standard Valuation Law, the director
may accept any valuation made, or caused to be made, by the insurance
supervisory official of any state or other jurisdiction when the
valuation complies with the minimum standard provided under the Standard
Valuation Law and if the official of the state or jurisdiction accepts as
sufficient and for all valid legal purposes the certificate of valuation
of the director when the certificate states the valuation to have been
made in a specified manner according to which the aggregate reserves
would be at least as large as if they had been computed in the manner
prescribed by the law of that state or jurisdiction. [1991 c.401 §18] (1) Each insurer transacting
life insurance in this state shall submit annually to the Director of the
Department of Consumer and Business Services the opinion of a qualified
actuary as provided in this section. The following provisions apply with
respect to opinions required under this subsection:
(a) The opinion must state whether, in the opinion of the qualified
actuary, the reserves and related actuarial items held in support of the
policies and contracts specified by the director by rule are computed
appropriately, are based on assumptions that satisfy contractual
provisions, are consistent with prior reported amounts and comply with
applicable laws of this state. The director by rule shall establish the
specific requirements for the opinion and may require any other items
that the director determines to be necessary to its scope.
(b) The opinion shall be submitted with the annual statement
reflecting the valuation of the reserve liabilities for each year.
(c) The opinion shall apply to all business in force, including
individual and group health insurance plans, in form and substance
acceptable to the director as specified by rule.
(d) The director by rule:
(A) Shall adopt standards on which actuarial opinions under this
subsection must be based. In adopting the standards, the director shall
consider standards established from time to time by the Actuarial
Standards Board of the American Academy of Actuaries.
(B) Shall define “qualified actuary” for purposes of this
subsection, by establishing qualifications required of an actuary for the
purpose of giving the opinions. In establishing the definition, the
director shall consider standards established from time to time by the
American Academy of Actuaries.
(C) May also adopt any other rules needed for carrying out this
subsection.
(e) In the case of an opinion required to be submitted by a foreign
or alien insurer, the director may accept the opinion filed by the
insurer with the insurance supervisory official of another state if the
director determines that the opinion reasonably meets the requirements
applicable to a domestic insurer.
(f) Except in cases of fraud or willful misconduct, a qualified
actuary shall not be liable for damages to any person other than the
insurer or the director for any act, error, omission, decision or conduct
with respect to the actuary’s opinion.
(g) For each opinion submitted under this subsection, a memorandum
shall be prepared supporting the opinion. The memorandum must conform in
form and substance to requirements established by the director by rule.
(h) If an insurer fails to provide a supporting memorandum within
the period specified by rule or if the director determines that the
supporting memorandum provided by the insurer fails to meet the standards
prescribed by rule or is otherwise unacceptable to the director, the
director may engage a qualified actuary at the expense of the insurer to
review the opinion and the basis for the opinion and prepare any
supporting memorandum that is required by the director.
(i) Except as provided in this paragraph, a memorandum in the
possession or control of the director that is in support of an actuarial
opinion, and any other material provided by the insurer to the director
in connection with the memorandum, is confidential as provided in ORS
705.137. Notwithstanding ORS 705.137, such a memorandum and other
materials are subject to subpoena only for the purpose of defending an
action seeking damages from the actuary submitting the memorandum by
reason of any action required by this section or by rules adopted under
this section. Once any portion of the confidential memorandum is cited by
the insurer in its marketing or is cited before any governmental agency
other than a state insurance department or is released by the insurer to
the news media, all portions of the confidential memorandum shall be no
longer confidential. In addition to the uses and disclosures allowed
under ORS 705.137, a memorandum or other material may otherwise be
released by the director:
(A) With the written consent of the insurer; or
(B) To the American Academy of Actuaries upon request thereof, when
the request states that the memorandum or other material is required for
the purpose of professional disciplinary proceedings and sets forth
procedures satisfactory to the director for preserving the
confidentiality of the memorandum or other material.
(j) Grounds for disciplinary action by the director against the
insurer or the qualified actuary shall be defined by rule.
(2) Unless exempted by the director by rule, each insurer
transacting life insurance in this state shall include in each opinion
required by subsection (1) of this section an opinion by the same actuary
who prepared the opinion required by subsection (1) of this section. The
following provisions apply with respect to the opinion:
(a) The actuary shall state the actuary’s opinion as to whether the
reserves and related actuarial items held in support of the policies and
contracts specified by the director by rule, when considered in light of
the assets held by the insurer with respect to the reserves and related
actuarial items, including but not limited to the investment earnings on
the assets and the considerations anticipated to be received and retained
under the policies and contracts, make adequate provision for the
insurer’s obligations under the policies and contracts, including but not
limited to the benefits under and expenses associated with the policies
and contracts.
(b) The director may provide by rule for a transition period for
establishing any higher reserves that the actuary may deem necessary in
order to render the opinion required under this subsection. [1991 c.401
§19; 2001 c.377 §12]Except as otherwise provided in ORS 733.308 and 733.310, the minimum
standard for the valuation of all outstanding life insurance policies and
annuity and pure endowment contracts issued prior to the operative date
stated in ORS 743.204 for the Standard Nonforfeiture Law for Life
Insurance shall be that provided by the laws of this state in effect
immediately prior to that operative date. Except as otherwise provided in
ORS 733.308 and 733.310, the minimum standard for the valuation of all
such policies and contracts issued on or after the operative date stated
in ORS 743.204 for the Standard Nonforfeiture Law for Life Insurance
shall be the commissioners reserve valuation methods defined in ORS
733.312, 733.314 and 733.320, three and one-half percent interest, or in
the case of life insurance policies and contracts, other than annuity and
pure endowment contracts, issued on or after January 1, 1974, four
percent interest for such policies issued prior to January 1, 1978, five
and one-half percent interest for single premium life insurance policies
and four and one-half percent interest for all other such policies issued
on and after January 1, 1978, and the following tables:
(1) For all ordinary policies of life insurance issued on the
standard basis, excluding any disability and accidental death benefits in
such policies:
(a) The Commissioners 1941 Standard Ordinary Mortality Table for
such policies issued prior to the operative date stated in ORS 743.216
(5) for the Standard Nonforfeiture Law for Life Insurance;
(b) The Commissioners 1958 Standard Ordinary Mortality Table for
such policies issued on or after the operative date stated in ORS 743.216
(5) for the Standard Nonforfeiture Law for Life Insurance and prior to
the operative date stated in ORS 743.215 for the Standard Nonforfeiture
Law for Life Insurance, except that for any category of such policies
issued on female risks, all modified net premiums and present values
referred to in ORS 733.300 to 733.322 may be calculated according to an
age not more than six years younger than the actual age of the insured;
and
(c) For such policies issued on or after the operative date stated
in ORS 743.215 for the Standard Nonforfeiture Law for Life Insurance:
(A) The Commissioners 1980 Standard Ordinary Mortality Table;
(B) At the election of the insurer for any one or more specified
plans of life insurance, the Commissioners 1980 Standard Ordinary
Mortality Table with Ten-Year Select Mortality Factors; or
(C) Any ordinary mortality table, adopted after 1980 by the
National Association of Insurance Commissioners, that is approved by rule
adopted by the Director of the Department of Consumer and Business
Services for use in determining the minimum standard of valuation for
such policies.
(2) For all industrial life insurance policies issued on the
standard basis, excluding any disability and accidental death benefits in
such policies:
(a) The 1941 Standard Industrial Mortality Table for such policies
issued prior to the operative date defined in ORS 743.216 (7) of the
Standard Nonforfeiture Law for Life Insurance; and
(b) For such policies issued on or after such operative date, the
Commissioners 1961 Standard Industrial Mortality Table or any industrial
mortality table, adopted after 1980 by the National Association of
Insurance Commissioners, that is approved by rule adopted by the director
for use in determining the minimum standard of valuation for such
policies.
(3) For individual annuity and pure endowment contracts, excluding
any disability and accidental death benefits in such policies:
(a) The 1937 Standard Annuity Mortality Table;
(b) At the option of the insurer, the Annuity Mortality Table for
1949, Ultimate; or
(c) Any modification of either table referred to in paragraph (a)
or (b) of this subsection that is approved by the director.
(4) For group annuity and pure endowment contracts, excluding any
disability and accidental death benefits in such policies:
(a) The Group Annuity Mortality Table for 1951;
(b) Any modification of the table referred to in paragraph (a) of
this subsection that is approved by the director; or
(c) At the option of the insurer, any of the tables or
modifications of tables specified for individual annuity and pure
endowment contracts.
(5)(a) For total and permanent disability benefits in or
supplementary to ordinary policies or contracts:
(A) For policies or contracts issued on or after January 1, 1966,
the tables of Period 2 disablement rates and the 1930 to 1950 termination
rates of the 1952 Disability Study of the Society of Actuaries, with due
regard to the type of benefit or any tables of disablement rates and
termination rates adopted after 1980 by the National Association of
Insurance Commissioners, that are approved by rule adopted by the
director for use in determining the minimum standard of valuation for
such policies;
(B) For policies or contracts issued on or after January 1, 1961
and prior to January 1, 1966, either the tables referred to in
subparagraph (A) of this paragraph or, at the option of the insurer, the
Class (3) Disability Table (1926); and
(C) For policies issued prior to January 1, 1961 the Class (3)
Disability Table (1926).
(b) Any table referred to in paragraph (a) of this subsection
shall, for active lives, be combined with a mortality table permitted for
calculating the reserves for life insurance policies.
(6) For accidental death benefits in or supplementary to policies:
(a) For policies issued on or after January 1, 1966, the 1959
Accidental Death Benefits Table or any accidental death benefits table
adopted after 1980 by the National Association of Insurance
Commissioners, that is approved by rule adopted by the director for use
in determining the minimum standard of valuation for such policies.
(b) For policies issued on or after January 1, 1961, and prior to
January 1, 1966, either the table referred to in paragraph (a) of this
subsection or, at the option of the insurer, the Inter-Company Double
Indemnity Mortality Table.
(c) For policies issued prior to January 1, 1961, the Inter-Company
Double Indemnity Mortality Table.
(7) The table used under subsection (6)(a), (b) or (c) of this
section shall be combined with a mortality table for calculating the
reserves for life insurance policies.
(8) For group life insurance, life insurance issued on the
substandard basis and other special benefits, an insurer may use tables
therefor that are approved by the director. [1991 c.401 §20]Except as provided in ORS 733.310, the
minimum standard for the valuation of all individual annuity and pure
endowment contracts issued on or after January 1, 1979, and for all
annuities and pure endowments purchased on or after January 1, 1979,
under group annuity and pure endowment contracts, shall be the
commissioner’s reserve valuation methods defined in ORS 733.312 and
733.314 and the following tables and interest rates:
(1) For individual annuity and pure endowment contracts issued
prior to January 1, 1979, excluding any disability and accidental death
benefit in such contracts, the 1971 Individual Annuity Mortality Table,
or any modification of that table approved by the Director of the
Department of Consumer and Business Services, and six percent interest
for single premium immediate annuity contracts, and four percent interest
for all other individual annuity and pure endowment contracts.
(2) For individual single premium immediate annuity contracts
issued on or after January 1, 1979, excluding any disability and
accidental death benefits in such contracts, the 1971 Individual Annuity
Mortality Table or any individual annuity mortality table, adopted after
1980 by the National Association of Insurance Commissioners that is
approved by rule adopted by the director for use in determining the
minimum standard of valuation for such contracts, or any modification of
these tables approved by the director, and seven and one-half percent
interest.
(3) For individual annuity and pure endowment contracts issued on
or after January 1, 1979, other than single premium immediate annuity
contracts, excluding any disability and accidental death benefits in such
contracts, the 1971 Individual Annuity Mortality Table or any individual
annuity mortality table adopted after 1980 by the National Association of
Insurance Commissioners that is approved by rule adopted by the director
for use in determining the minimum standard of valuation for such
contracts, or any modification of these tables approved by the director,
and five and one-half percent interest for single premium deferred
annuity and pure endowment contracts and four and one-half percent
interest for all other such individual annuity and pure endowment
contracts.
(4) For all annuities and pure endowments purchased prior to
January 1, 1979, under group annuity and pure endowment contracts,
excluding any disability and accidental death benefits purchased under
such contracts, the 1971 Group Annuity Mortality Table or any
modification of this table approved by the director, and six percent
interest.
(5) For all annuities and pure endowments purchased on or after
January 1, 1979, under group annuity and pure endowment contracts,
excluding any disability and accidental death benefits purchased under
such contracts, the 1971 Group Annuity Mortality Table, or any group
annuity mortality table adopted after 1980 by the National Association of
Insurance Commissioners, that is approved by the director by rule for use
in determining the minimum standard of valuation for such annuities and
pure endowments, or any modification of these tables approved by the
director, and seven and one-half percent interest. [1991 c.401 §21](1) The interest rates used in determining the minimum
standard for the valuation of the following shall be the calendar year
statutory valuation interest rates as defined in this section:
(a) All life insurance policies issued in a particular calendar
year, on or after the operative date stated in ORS 743.215 for the
Standard Nonforfeiture Law for Life Insurance;
(b) All individual annuity and pure endowment contracts issued in a
particular calendar year on or after January 1, 1982;
(c) All annuities and pure endowments purchased in a particular
calendar year on or after January 1, 1982, under group annuity and pure
endowment contracts; and
(d) The net increase, if any, in a particular calendar year after
January 1, 1982, in amounts held under guaranteed interest contracts.
(2) Calendar year statutory valuation interest rates shall be
established as follows:
(a) Except as provided in paragraph (b) of this subsection, the
calendar year statutory valuation interest rates, “I”, shall be
determined as follows and the results rounded to the nearer one-quarter
of one percent:
(A) For life insurance:
I=0.03+W(R1-0.03)+W/2(R2-0.09)
(B) For single premium immediate annuities and for annuity benefits
involving life contingencies arising from other annuities with cash
settlement options and from guaranteed interest contracts with cash
settlement options,
I=0.03+W(R-0.03)
where R1 is the lesser of R and 0.09, R2 is the greater of R and 0.09, R
is the reference interest rate defined in this section and W is the
weighting factor defined in this section.
(C) For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, valued on an issue year
basis, except as stated in subparagraph (B) of this paragraph, the
formula for life insurance stated in subparagraph (A) of this paragraph
shall apply to annuities and guaranteed interest contracts with guarantee
durations in excess of 10 years and the formula for single premium
immediate annuities stated in subparagraph (B) of this paragraph shall
apply to annuities and guaranteed interest contracts with guarantee
duration of 10 years or less.
(D) For other annuities with no cash settlement options and for
guaranteed interest contracts with no cash settlement options, the
formula for single premium immediate annuities stated in subparagraph (B)
of this paragraph shall apply.
(E) For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, valued on a change in
fund basis, the formula for single premium immediate annuities stated in
subparagraph (B) of this paragraph shall apply.
(b) If the calendar year statutory valuation interest rate for any
life insurance policies issued in any calendar year determined without
reference to this paragraph differs from the corresponding actual rate
for similar policies issued in the immediately preceding calendar year by
less than one-half of one percent, the calendar year statutory valuation
interest rate for such life insurance policies shall be equal to the
corresponding actual rate for the immediately preceding calendar year.
For purposes of applying this paragraph, the calendar year statutory
valuation interest rate for life insurance policies issued in a calendar
year shall be determined for 1980, using the reference interest rate
defined in 1979, and shall be determined for each subsequent calendar
year regardless of the operative date of ORS 743.215 as part of the
Standard Nonforfeiture Law for Life Insurance.
(3) Weighting factors shall be as follows:
(a) The weighting factors referred to in the formulas stated in
subsection (2) of this section are given in the following tables:
(A) Weighting Factors for Life Insurance:
Guarantee
Duration
Weighting
(Years) Factors
10 or less
0.50
More than 10, but less than 20 0.45
More than 20 0.35
For life insurance, the guarantee duration is the maximum number of years
the life insurance can remain in force on a basis guaranteed in the
policy or under options to convert to plans of life insurance with
premium rates or nonforfeiture values or both that are guaranteed in the
original policy.
(B) Weighting factor for single premium immediate annuities and for
annuity benefits involving life contingencies arising from other
annuities with cash settlement options and guaranteed interest contracts
with cash settlement options is 0.80.
(C) Weighting factors for other annuities and for guaranteed
interest contracts, except as stated in subparagraph (B) of this
paragraph, shall be as specified in the following tables (i), (ii) and
(iii), according to the rules and definitions in the following tables
(iv), (v) and (vi):
(i) For annuities and guaranteed interest contracts valued on an
issue year basis:
Guarantee
Weighting Factor
Duration for
Plan Type
(Years)
A B C
5 or less:
0.80 0.60 0.50
More than 5, but not more
than 10:
0.75 0.60 0.50
More than 10, but not more
than 20:
0.65 0.50 0.45
More than 20: 0.45
0.35 0.35
(ii) For annuities and guaranteed interest contracts valued on a
change in fund basis, the factors shown in table (i) above increased by:
Plan Type
A B C
0.15 0.250.05
(iii) For annuities and guaranteed interest contracts valued on an
issue year basis, other than those with no cash settlement options, that
do not guarantee interest on considerations received more than one year
after issue or purchase and for annuities and guaranteed interest
contracts valued on a change in fund basis that do not guarantee interest
rates on considerations received more than 12 months beyond the valuation
date, the factors shown in (i) or derived in (ii) increased by:
Plan Type
A B C
0.05 0.050.05
(iv) For other annuities with cash settlement options and
guaranteed interest contracts with cash settlement options, the
guaranteed duration is the number of years for which the contract
guarantees interest rates in excess of the calendar year statutory
valuation interest rate for life insurance policies with guarantee
duration in excess of 20 years. For other annuities with no cash
settlement options and for guaranteed interest contracts with no cash
settlement options, the guaranteed duration is the number of years from
the date of issue or date of purchase to the date annuity benefits are
scheduled to commence.
(v) Plan type as used in the tables in this subsection is defined
as follows:Plan Type A: At any time the policyholder: (1) may withdraw funds
only with an adjustment to reflect changes in interest rates or asset
values since receipt of the funds by the insurer; or (2) may withdraw
funds without such adjustment but only in installments over five years or
more; or (3) may withdraw funds only as an immediate life annuity; or (4)
is not permitted to make a withdrawal.Plan Type B: Before expiration of the interest rate guarantee, the
policyholder: (1) may withdraw funds only with adjustment to reflect
changes in interest rates or asset values since receipt of the funds by
the insurer; or (2) may withdraw funds without such adjustment but only
in installments over five years or more; or (3) is not permitted to make
a withdrawal. At the end of interest rate guarantee, funds may be
withdrawn without such adjustment in a single sum or installments over a
period of less than five years.Plan Type C: Policyholder may withdraw funds before expiration of
interest rate guarantee in a single sum or installments over less than
five years either: (1) without adjustment to reflect changes in interest
rates or asset values since receipt of the funds by the insurer; or (2)
subject only to a fixed surrender charge stipulated in the contract as a
percentage of the fund.
(b) An insurer may elect to value guaranteed interest contracts
with cash settlement options and annuities with cash settlement options
on either an issue year basis or on a change in fund basis. Guaranteed
interest contracts with no cash settlement options and other annuities
with no cash settlement options must be valued on an issue year basis. As
used in this paragraph, an issue year basis of valuation refers to a
valuation basis under which the interest rate used to determine the
minimum valuation standard for the entire duration of the annuity or
guaranteed interest contract is the calendar year valuation interest rate
for the year of issue or year of purchase of the annuity or guaranteed
interest contract, and the change in fund basis of valuation refers to a
valuation basis under which the interest rate used to determine the
minimum valuation standard applicable to each change in the fund held
under the annuity or guaranteed interest contract is the calendar year
valuation interest rate for the year of the change in the fund.
(4) The reference interest rate referred to in subsection (2) of
this section is defined as follows:
(a) For all life insurance, the lesser of the average over a period
of 36 months and the average over a period of 12 months, ending on June
30 of the calendar year next preceding the year of issue, of the Monthly
Average of the Composite Yield on Seasoned Corporate Bonds, as published
by Moody’s Investors Service, Inc.
(b) For single premium immediate annuities and for annuity benefits
involving life contingencies arising from other annuities with cash
settlement options and guaranteed interest contracts with cash settlement
options, the average over a period of 12 months, ending on June 30 of the
calendar year of issue or year of purchase of the Monthly Average of the
Composite Yield on Seasoned Corporate Bonds, as published by Moody’s
Investors Service, Inc.
(c) For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, valued on a year of
issue basis, except as stated in paragraph (b) of this subsection, with
guarantee duration in excess of 10 years, the lesser of the average over
a period of 36 months and the average over a period of 12 months, ending
on June 30 of the calendar year of issue or purchase, of the Monthly
Average of the Composite Yield on Seasoned Corporate Bonds, as published
by Moody’s Investors Service, Inc.
(d) For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, valued on a year of
issue basis, except as stated in paragraph (b) of this subsection, with
guarantee duration of 10 years or less, the average over a period of 12
months, ending on June 30 of the calendar year of issue or purchase, of
the Monthly Average of the Composite Yield on Seasoned Corporate Bonds,
as published by Moody’s Investors Service, Inc.
(e) For other annuities with no cash settlement options and for
guaranteed interest contracts with no cash settlement options, the
average over a period of 12 months, ending on June 30 of the calendar
year of issue or purchase, of the Monthly Average of the Composite Yield
on Seasoned Corporate Bonds, as published by Moody’s Investors Service,
Inc.
(f) For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, valued on a change in
fund basis, except as stated in paragraph (b) of this subsection, the
average over a period of 12 months, ending on June 30 of the calendar
year of the change in the fund, of the Monthly Average of the Composite
Yield on Seasoned Corporate Bonds, as published by Moody’s Investors
Service, Inc.
(5) In the event that the Monthly Average of the Composite Yield on
Seasoned Corporate Bonds is no longer published by Moody’s Investors
Service, Inc. or in the event that the National Association of Insurance
Commissioners determines that the Monthly Average of the Composite Yield
on Seasoned Corporate Bonds as published by Moody’s Investors Service,
Inc. is no longer appropriate for the determination of the reference
interest rate, the Director of the Department of Consumer and Business
Services by rule may adopt an alternative method for determination of the
reference interest rate. The director shall consider the alternative
method adopted by the National Association of Insurance Commissioners. An
insurer may substitute the alternative method adopted by rule. [1991
c.401 §22]
(1) Except as otherwise provided in ORS 733.314 and 733.320, reserves
according to the commissioners reserve valuation method for the life
insurance and endowment benefits of policies providing for a uniform
amount of insurance and requiring the payment of uniform premiums shall
be the excess, if any, of the present value, at the date of valuation, of
the future guaranteed benefits provided for by the policies, over the
then present value of any future modified net premiums therefor. The
modified net premiums for any such policy shall be the uniform percentage
of the respective contract premiums for such benefits that the present
value, at the date of issue of the policy, of all such modified net
premiums shall be equal to the sum of the then present value of such
benefits provided for by the policy and the excess of A over B, as
follows:
(a) A net level annual premium equal to the present value, at the
date of issue, of such benefits provided for after the first policy year,
divided by the present value, at the date of issue, of an annuity of one
per annum payable on the first and each subsequent anniversary of such
policy on which a premium falls due, except that the net level annual
premium shall not exceed the net level annual premium on the 19 year
premium whole life plan for insurance of the same amount at an age one
year higher than the age at issue of such policy.
(b) A net one year term premium for such benefits provided for in
the first policy year.
(2) For any life insurance policy issued on or after January 1,
1986, for which the contract premium in the first policy year exceeds
that of the second year and for which no comparable additional benefit is
provided in the first year for the excess and which provides an endowment
benefit or a cash surrender value or a combination thereof in an amount
greater than the excess premium, the reserve according to the
commissioners reserve valuation method as of any policy anniversary
occurring on or before the assumed ending date, which is defined as the
first policy anniversary on which the sum of any endowment benefit and
any cash surrender value then available is greater than such excess
premium, shall, except as otherwise provided in ORS 733.320, be the
greater of the reserve as of the policy anniversary calculated as
described in subsection (1) of this section and the reserve as of the
policy anniversary calculated as described in subsection (1) of this
section, but with (i) the value defined in subsection (1)(a) of this
section being reduced by 15 percent of the amount of the excess first
year premium, (ii) all present values of benefits and premiums being
determined without reference to premiums or benefits provided for by the
policy after the assumed ending date, (iii) the policy being assumed to
mature on such date as an endowment, and (iv) the cash surrender value
provided on such date being considered as an endowment benefit. The
mortality and interest bases stated in ORS 733.306 and 733.310 shall be
used for the purpose of making the comparison.
(3) Reserves according to the commissioners reserve valuation
method shall be calculated by a method consistent with subsections (1)
and (2) of this section for:
(a) Life insurance policies providing for a varying amount of
insurance or requiring the payment of varying premiums;
(b) Group annuity and pure endowment contracts purchased under a
retirement plan or plan of deferred compensation, established or
maintained by an employer, including a partnership or sole
proprietorship, or by an employee organization, or by both, other than a
plan providing individual retirement accounts or individual retirement
annuities under Section 408 of the Internal Revenue Code, as now or
hereafter amended;
(c) Disability and accidental death benefits in all policies and
contracts; and
(d) All other benefits, except life insurance and endowment
benefits in life insurance policies and benefits provided by all other
annuity and pure endowment contracts. [1991 c.401 §23](1) This section applies to all annuity and pure
endowment contracts other than group annuity and pure endowment contracts
purchased under a retirement plan or plan of deferred compensation,
established or maintained by an employer, including a partnership or sole
proprietorship, or by an employee organization, or by both, other than a
plan providing individual retirement accounts or individual retirement
annuities under Section 408 of the Internal Revenue Code, as now or
hereafter amended.
(2) Reserves according to the commissioners annuity reserve method
for benefits under annuity or pure endowment contracts, excluding any
disability and accidental death benefits in such contracts, shall be the
greatest of the respective excesses of the present values, at the date of
valuation, of the future guaranteed benefits, including guaranteed
nonforfeiture benefits, provided for by such contracts at the end of each
respective contract year, over the present value, at the date of
valuation, of any future valuation considerations derived from future
gross considerations, required by the terms of such contract, that become
payable prior to the end of such respective contract year. The future
guaranteed benefits shall be determined by using the mortality table, if
any, and the interest rate, or rates, specified in such contracts for
determining guaranteed benefits. The valuation considerations are the
portions of the respective gross considerations applied under the terms
of such contracts to determine nonforfeiture values. [1991 c.401 §24] (1) The aggregate reserves of an
insurer for all life insurance policies, excluding disability and
accidental death benefits, issued on or after the operative date stated
in ORS 743.204 for the Standard Nonforfeiture Law for Life Insurance,
shall not be less than the aggregate reserves calculated in accordance
with the methods set forth in ORS 733.312, 733.314, 733.320 and 733.322
and the mortality table or tables and rate or rates of interest used in
calculating nonforfeiture benefits for such policies.
(2) The aggregate reserves of an insurer for all policies,
contracts and benefits shall not be less than the aggregate reserves
determined by the qualified actuary to be necessary to render the opinion
required by ORS 733.304. [1991 c.401 §25] (1) Reserves for all
policies and contracts issued prior to the operative date stated in ORS
743.204 for the Standard Nonforfeiture Law for Life Insurance may be
calculated, at the option of the insurer, according to any standards that
produce greater aggregate reserves for all such policies and contracts
than the minimum reserves required by the laws in effect immediately
prior to the operative date.
(2) Reserves for any category of policies, contracts or benefits as
established by the Director of the Department of Consumer and Business
Services, issued on or after the operative date stated in ORS 743.204 for
the Standard Nonforfeiture Law for Life Insurance, may be calculated, at
the option of the insurer, according to any standards that produce
greater aggregate reserves for the category than those calculated
according to the minimum standard provided in ORS 733.300 to 733.322, but
the rate or rates of interest used for policies and contracts, other than
annuity and pure endowment contracts, shall not be higher than the
corresponding rate or rates of interest used in calculating any
nonforfeiture benefits provided in the policies or contracts.
(3) An insurer that at any time has adopted any standard of
valuation producing greater aggregate reserves than those calculated
according to the minimum standard provided in ORS 733.300 to 733.322 may,
with the approval of the director, adopt any lower standard of valuation.
The standard shall not be lower than the minimum provided in ORS 733.300
to 733.322, except that for the purposes of this subsection, the holding
of additional reserves previously determined by a qualified actuary to be
necessary to render the opinion required by ORS 733.304 shall not be
deemed to be the adoption of such a higher standard of valuation. [1991
c.401 §26] (1) Except
as provided in subsection (2) of this section, if in any contract year
the gross premium charged by an insurer on any life insurance policy or
contract is less than the valuation net premium for the policy or
contract calculated by the method used in calculating the reserve thereon
but using the minimum valuation standards of mortality and rate of
interest, the minimum reserve required for the policy or contract shall
be the greater of either the reserve calculated according to the
mortality table, rate of interest, and method actually used for the
policy or contract, or the reserve calculated by the method actually used
for the policy or contract but using the minimum valuation standards of
mortality and rate of interest and replacing the valuation net premium by
the actual gross premium in each contract year for which the valuation
net premium exceeds the actual gross premium. The minimum valuation
standards of mortality and rate of interest referred to in this
subsection are the standards stated in ORS 733.306 and 733.310.
(2) For any life insurance policy issued on or after January 1,
1986, for which the gross premium in the first policy year exceeds that
of the second year and for which no comparable additional benefit is
provided in the first year for the excess and which provides an endowment
benefit or a cash surrender value or a combination thereof in an amount
greater than the excess premium, subsection (1) of this section shall
apply as if the method actually used in calculating the reserve for the
policy were the method described in ORS 733.312 (1). The minimum reserve
at each policy anniversary of such a policy shall be the greater of the
minimum reserve calculated in accordance with ORS 733.312, and the
minimum reserve calculated in accordance with this section. [1991 c.401
§27](1) For any plan of life insurance that provides for future
premium determination, the amounts of which are to be determined by the
insurer based on then estimates of future experience, or in the case of
any plan of life insurance or annuity that is of such a nature that the
minimum reserves cannot be determined by the methods described in ORS
733.312, 733.314 and 733.320, the reserves held under any such plan must:
(a) Be appropriate in relation to the benefits and the pattern of
premiums for that plan; and
(b) Be computed by a method that is consistent with the principles
of ORS 733.300 to 733.322, as determined by rules adopted by the Director
of the Department of Consumer and Business Services.
(2) Any policy, contract or certificate providing life insurance
under a plan referred to in subsection (1) of this section must be
reviewed and specifically approved by the director before it can be
marketed, issued, delivered or used in this state. [1991 c.401 §28]INVESTMENTS (1) Funds of a domestic
insurer shall be invested, reinvested and used in the manner and subject
to the conditions, restrictions and limitations set forth in ORS 733.510
to 733.780.
(2) Investments of a foreign or alien insurer which would be
authorized for a like domestic insurer shall be allowed as assets in any
determination of its financial condition. Other investments of a foreign
or alien insurer which are authorized by the laws of its domicile may be
so allowed at the discretion of the Director of the Department of
Consumer and Business Services.
(3) The director may adopt rules establishing standards and
limitations for investments by insurers that are not otherwise
specifically permitted or prohibited by ORS 733.510 to 733.780.
(4) The investment program of an insurer must take into account the
safety of the principal of the insurer, investment yield and return,
stability in the value of the investment, liquidity necessary for
expected business needs of the insurer and investment diversification
according to standards established by rule. The director may direct an
insurer to take action to conform to the requirements of this subsection.
[Formerly 738.235; 1989 c.425 §2; 1993 c.447 §21] Funds of an
insurer necessary to satisfy normal current operating requirements are
not subject to ORS 733.510 to 733.780. Normal current operating
requirements include, but are not limited to, the acquisition of personal
property necessary or convenient in the operation of the insurer’s
business. [1967 c.359 §230]As used in ORS 733.510 to 733.780:
(1) “Corporation” means a corporation, joint stock association or
business trust organized and existing under the laws of a sovereign.
(2) “Sovereign” means the United States, or a state, or Canada or a
province thereof.
(3) “Political subdivision” means an incorporated county, city,
town, village, municipality, or subdivision thereof, or a public
corporation, district, agency, commission, authority or instrumentality,
or subdivision thereof. [1967 c.359 §231]As used in ORS 733.510 to 733.780,
“obligation” means a bond, debenture, note, warrant, certificate or other
evidence of indebtedness. [1967 c.359 §232]As used in ORS 733.510
to 733.780, “amply secured obligation” means an obligation which is not
in default and as to which no default is imminent, and which satisfies
the requirements of one or more of the following subsections:
(1) An obligation of a sovereign or political subdivision thereof,
if it is issued, assumed or guaranteed by the governmental unit involved
and is payable either from:
(a) Taxes levied or which may be levied by such governmental unit;
or
(b) Adequate special revenues pledged or otherwise appropriated or
required by law to be used for the purpose of such payment, provided the
law authorizing the issuance of the obligation requires that adequate
rates be fixed, maintained and collected at all times so as to produce
sufficient revenue or earnings to pay all operating expenses, maintenance
charges, and the principal, interest and dividends on the obligation. An
obligation payable solely out of special assessments on real property
benefited by local improvements shall not be considered amply secured
unless the total amount so payable is less than 50 percent of the market
value of the real property (including any improvements thereon) and
constitutes a lien on such property.
(2) An obligation issued, assumed or guaranteed by a corporation,
if the corporation is solvent, has not been in default on any of its
obligations during the preceding three years, and if the obligation is
secured by the pledge of property the market value of which exceeds the
amount of the obligation by 25 percent or more. Obligations which are the
subject of ORS 733.580 and 733.600 are not included within the provisions
of this subsection.
(3) An obligation found to be amply secured under regulations duly
promulgated by the Director of the Department of Consumer and Business
Services. In making such regulations the director shall give
consideration to regulations pertaining to amply secured obligations
issued from time to time by the National Association of Insurance
Commissioners, and shall consider the financial condition of the issuing,
assuming or guaranteeing corporation as well as the existence or absence
of any pledge of property as security. [1967 c.359 §233]As used in ORS 733.510 to 733.780,
“unencumbered” means the nonexistence of any lien, burden or charge
having priority over the lien securing the insurer’s investment. The
following shall not be considered encumbrances on real property or
leasehold interests therein:
(1) Reservations of mineral, oil or timber rights, easements,
rights of way, sewer rights or rights of walls.
(2) Liens for taxes or assessments not delinquent.
(3) Building restrictions or other restrictive covenants common to
the community.
(4) Where the loan is secured by a lien upon real property, a lease
under which rents or profits are reserved to the owner, if in any event
the security for the loan would be a first lien upon the real property
except for such lease.
(5) Where the loan is secured by a lien on a leasehold, a prior
lien on the real property, provided the security for the loan is a first
lien upon the leasehold and there exists no provision preventing the
insurer from continuing the lease in force for the duration of the lease
or no condition or rights of reentry or forfeiture under which such lien
can be cut off, subordinated or otherwise disturbed so long as the
lessee’s obligations under the lease are discharged. [1967 c.359 §234]As used in ORS 733.510 to
733.780, “improved real property” means:
(1) Farmland used for tillage, crop or pasture;
(2) Real estate on which permanent improvements, or improvements
under construction or in process of construction, suitable for residence,
institutional, commercial or industrial use, are situated; and
(3) Real estate to be developed for the use or uses set forth in
subsection (2) of this section on which improvements, or improvements
under construction or in process of construction, such as streets,
sidewalks, sewers and utilities which will become an integral part of
such development, are situated. [1967 c.359 §235; 1989 c.425 §3] Except as
provided in ORS 733.578, funds of an insurer shall not be used as
compensating balances for loans to other persons, or otherwise pledged
for the benefit of other persons. [1975 c.232 §2]Investments of an insurer of the kind described in
ORS 733.650 (4) that are made for the purpose of providing compensating
balances for other persons will not be prohibited by ORS 733.575 or
733.780 while the following conditions are met:
(1) The investment is made in the name of and remains the sole
property of the insurer;
(2) The investment is not subject to appropriation in any manner by
any person, including the person for whom the compensating balance is
being provided, the institution in which the deposit is made and other
creditors of such persons;
(3) The insurer holds an irrevocable written waiver from the
depositary institution, in a form satisfactory to the Director of the
Department of Consumer and Business Services, waiving all right, title
and interest in or to any setoff, banker’s or similar lien or other
security interest in such investment or any funds represented thereby;
(4) The investment is unrestricted as to right of withdrawal except
for such restrictions as may be usual and customary for such investments
under ORS 733.650 (4) when no compensating balance is involved; and
(5) The insurer is receiving a reasonable fee, taking into
consideration its return on other funds, for providing the compensating
balance involved. [1975 c.232 §3] (1) Funds of an
insurer at least equal to its required capitalization shall be invested
and kept invested as follows:
(a) In amply secured obligations of the United States, a state or a
political subdivision of this state.
(b) In loans secured by first liens upon improved, unencumbered
real property (other than leaseholds) in this state where:
(A) The lien does not exceed 50 percent of the appraised value of
the property and the loan is for a term of five years or less;
(B) The lien does not exceed 66-2/3 percent of the appraised value
of the property provided there is an amortization plan mortgage, deed of
trust or other instrument under the terms of which the installment
payments are sufficient to repay the loan within a period of not more
than 25 years; or
(C) The investment is insured or guaranteed by the Federal Housing
Administration, the United States Department of Veterans Affairs, or
under Title I of the Housing Act of 1949 (providing for slum clearance
and redevelopment projects) enacted by Congress on July 15, 1949.
(c) In certificates of deposit or other investments described in
ORS 733.650 (4), to the extent such investments are insured by the
Federal Deposit Insurance Corporation.
(2) Investments made pursuant to this section shall be kept free of
any lien or pledge. The term “lien or pledge” as used in this section
shall not include a deposit of securities with a sovereign, nor assets
held in trust for the benefit or protection of all or any class of
policyholders of an insurer. [Formerly 738.238; 1991 c.67 §195; 1993
c.447 §113]Funds of an insurer may be invested
in amply secured obligations of a sovereign, political subdivision
thereof or corporation. Expressly included, but not by way of limitation,
are obligations of the following federal agencies and authorities:
Federal Home Loan Banks, Federal Land Banks, Home Owners Loan
Corporation, Public Housing Authorities (to the extent that such
obligations are secured by a pledge of annual contributions to be paid by
the United States or an agency thereof), and Federal Intermediate Credit
Banks. [Formerly 738.245] (1) Funds of an insurer may
be invested in:
(a) Loans secured by first liens upon improved, unencumbered real
property (other than leaseholds) in the manner and subject to the same
terms and conditions set forth in ORS 733.580 (1)(b), except that the
property may be located within the boundaries of any sovereign; for loans
described in ORS 733.580 (1)(b)(B), the maximum permitted ratio of the
loan to the appraised value shall be 80 rather than 66-2/3 percent, and
the maximum term of the loan shall be 30 rather than 25 years.
(b) Loans secured by first liens upon a leasehold of improved,
unencumbered real property located within the boundaries of any sovereign
if:
(A) The leasehold has a period of not less than 20 years to run
from the date of the loan, inclusive of the term which may be provided by
an enforceable option of renewal, the loan does not exceed 70 percent of
the fair market value of the leasehold together with any improvements
located thereon which are subject to the lien, the terms of the loan
provide for amortization payments to be made by the borrower on the
principal thereof at least once in each year in amounts sufficient to
completely amortize the loan within a period of four-fifths of the term
of the leasehold, and the insurer is entitled to be subrogated to all
rights of the lessee under the leasehold; or
(B) The investment is insured or guaranteed in the manner provided
in ORS 733.580 (1)(b)(C).
(2) A loan upon the security of real property or a leasehold
interest therein which is a participation in or a part of a series or
issue shall not be made unless the insurer holds a senior participation
or similar security interest in the mortgage or deed of trust giving it
substantially the rights of a first mortgagee.
(3) Nothing in ORS 733.510 to 733.780 shall prohibit an insurer
from renewing or extending a proper loan secured by a first lien upon
real property or a leasehold interest therein made pursuant to this
section or to ORS 733.580 for the original or a lesser amount even though
such amount is a greater percentage of the current fair market value of
the real property or leasehold than would otherwise be permitted under
such sections. [Formerly 738.255; 1995 c.79 §360] (1) Except as otherwise
provided in ORS 733.580 and 733.600, an insurer may invest in real
property only if used for the purposes or acquired in the manner and
within the limits as follows:
(a) The insurer may invest in the land and the buildings thereon in
which it has its principal office, and in such other real property as
required for its convenient accommodation in the transaction of business.
Such investments shall not exceed in the aggregate 10 percent of the
assets of the insurer, except with the consent of the Director of the
Department of Consumer and Business Services.
(b) The insurer may invest in real property that is acquired in
satisfaction of loans, mortgages, liens, judgments or debts previously
owing to the insurer in the course of its business.
(c) The insurer may invest in real property acquired in part
payment of the consideration on the sale of other real property owned by
the insurer if the transaction does not increase the investment of the
insurer in real property.
(d) The insurer may invest in real property acquired by gift or
devise or through merger, consolidation or bulk reinsurance of another
insurer under the Insurance Code.
(e) The insurer may invest in the vendor’s interest in real
property subject to a contract of sale. The amount invested in the
vendor’s interest under such a contract shall not exceed, except with the
consent of the director:
(A) Ninety percent of the market value of the subject real
property, when the real property is one or two family residential
property.
(B) Eighty percent of the market value of the subject real
property, when the real property is other than that described in
subparagraph (A) of this paragraph.
(f) The insurer may invest in real property or any interest therein
that is acquired or held by purchase, lease or otherwise, other than real
property used primarily for agricultural, ranch, mining, development of
oil or mineral resources, recreational, amusement or club purposes, if
the real property or interest therein is acquired as an investment for
the production of income or acquired to be improved or developed for such
investment purposes pursuant to an existing program therefor. The insurer
may hold, improve, develop, maintain, manage, lease, sell and convey real
property acquired by it under this paragraph. Real property and interests
therein so acquired may be leased or sublet. Except with the consent of
the director, an insurer shall not have an amount exceeding five percent
of its assets at any one time invested in real property and interests
therein under this paragraph.
(g) The insurer may invest in additional real property and in
equipment incident to real property if necessary or convenient for the
purpose of enhancing the sale or other value of real property previously
acquired or held by the insurer under paragraph (b), (c), (d) or (f) of
this subsection. The real property and equipment shall be included,
together with the real property for the enhancement of which it was
acquired, for the purpose of applicable investment limits.
(h) The insurer may invest in real property without regard to
whether the property is income-producing when acquired if the insurer
intends to improve the property for resale or if the insurer intends that
the property will be income-producing. The insurer may also invest in
real property that is income-producing and used primarily for
agricultural, ranch, mining, development of oil or mineral resources,
recreational, amusement or club purposes. Funds invested under this
paragraph shall not exceed the lesser of five percent of the insurer’s
assets or 50 percent of the insurer’s capital and surplus, except with
the consent of the director.
(i) Except with the consent of the director, all real property
owned by the insurer under this subsection, except as to properties
described in paragraphs (a) and (e) of this subsection, shall not at any
time exceed 10 percent of the assets of the insurer.
(2) Except as otherwise provided in subsection (3) of this section:
(a) Real property acquired under this section shall be disposed of
within five years after it ceases to be income-producing or to be used by
the insurer for its business operation, whichever is later.
(b) Real property acquired under subsection (1)(h) of this section
that is not income-producing when acquired shall be disposed of within
five years after acquisition if the real property is not improved for
resale or if the real property is not income-producing during the five
years.
(c) When an investment or any combination of investments by an
insurer in real property exceeds any applicable limitation under this
section other than a limitation of time, the insurer, not later than the
fifth year after the limitation is exceeded, shall dispose of sufficient
real property that is subject to the limitation to comply with the
limitation.
(3) Any real property acquired under this section that otherwise
qualifies as an investment under ORS 733.510 to 733.780 may be retained
and held if approved as an investment in the manner prescribed by ORS
733.730 and 733.740. The director may extend the time limit prescribed in
subsection (2) of this section if the interests of the insurer will
suffer by a “forced sale” of the property. [Formerly 738.265; 1979 c.846
§1; 1989 c.425 §4; 2003 c.576 §555] (1) Funds of an
insurer may be invested in stocks (including trust certificates) of
solvent corporations organized and carrying on a business under the laws
of a sovereign as follows:
(a) Preferred or guaranteed stocks if the corporation is not in
default or arrears as to any preferred or guaranteed dividend and has
continuously and regularly paid such dividends during the preceding three
years or has paid cash dividends for five years on common stock.
(b) Common stocks as provided in paragraph (c) of this subsection
if:
(A) The obligations and preferred stock, if any, of such
corporation are eligible for investment under ORS 733.510 to 733.780; and
(B) The stock is registered on a national securities exchange
regulated under the Securities Exchange Act, or if of a type not commonly
so registered is regularly traded on a broad national or regional basis.
(c) Notwithstanding ORS 733.780 (1), not more than 25 percent of
admitted assets may be in common stocks that have not paid a cash
dividend during each of the five years preceding the date of acquisition.
(2) An insurer shall not invest so as to own or control more than
five percent of the voting power outstanding of a corporation, nor shall
it invest in the obligations or stocks of a corporation if the insurer,
directors, trustees and officers own or control, or as a result thereof
shall own and control, in the aggregate more than 50 percent of the
voting power. This subsection does not apply to limit the amount of an
insurer’s assets that may be invested in the voting securities of a
depository institution or any company that controls the depository
institution. [Formerly 738.275; 1995 c.565 §1; 2001 c.377 §39](1) Except as provided in this section, funds of an insurer
may be invested in common stock, preferred stock, debt obligations and
other securities of one or more corporations without regard to the
provisions and limitations of ORS 733.590, 733.620, 733.770 and 733.780
(1)(a) if the corporation is engaged, or will be engaged, in the kind of
business or activity which is related to the insurance business as
described in ORS 733.635, provided 80 percent or more of the shares of
the corporation having voting powers are owned by the insurer either by
itself or with prior approval of the Director of the Department of
Consumer and Business Services in cooperation with one or more other
persons.
(2) Except as provided in subsection (3) of this section, the
amount of funds so invested may not exceed the lesser of 10 percent of
the insurer’s assets or 50 percent of the amount of the insurer’s
combined capital and surplus. However, after such investments, the
combined capital and surplus of the insurer must be reasonable in
relation to the outstanding liabilities of the insurer and adequate to
its financial needs. For the purpose of this subsection, the amount of
investments by an insurer shall be calculated by:
(a) Excluding the admitted value of investments in subsidiaries of
the insurer;
(b) Adding the total moneys or other consideration expended and
obligations assumed in the acquisition or formation of a subsidiary,
including all organizational expenses and contributions to capital and
surplus of the insurance subsidiary or the shareholders’ equity of a
noninsurance subsidiary, whether or not represented by the purchase of
capital stock or issuance of other securities;
(c) Adding to the sum determined under paragraph (b) of this
subsection all amounts expended in acquiring additional common stock,
preferred stock, debt obligations and other securities of a subsidiary,
and all contributions to the capital or surplus of an insurance
subsidiary or the shareholders’ equity of a noninsurance subsidiary,
subsequent to its acquisition or formation; and
(d) Subtracting from the sum determined under paragraph (c) of this
subsection the return of any amount included in paragraph (b) or (c) of
this subsection, whether the return is in the form of cash, securities or
other property.
(3) Funds of an insurer may be invested in common stock, preferred
stock, debt obligations and other securities of one or more subsidiaries
engaged or organized to engage exclusively in the ownership and
management of assets authorized as investments for the insurer. However,
each subsidiary must agree to limit its investments in any asset so that
the investments will not cause the amount of the total investment of the
insurer to exceed any of the investment limitations specified in
subsection (2) of this section or in ORS 733.510 to 733.780 that apply to
the insurer. For the purpose of this subsection, the total investment of
the insurer includes:
(a) Any direct investment by the insurer in an asset; and
(b) The insurer’s proportionate share of any investment in an asset
by any subsidiary of the insurer, which shall be calculated by
multiplying the amount of the subsidiary’s investment by the percentage
of the ownership of the subsidiary.
(4) With the approval of the director, an insurer may invest any
greater amount in common stock, preferred stock, debt obligations or
other securities of one or more subsidiaries. However, after such an
investment, the combined capital and surplus of the insurer must be
reasonable in relation to the outstanding liabilities of the insurer and
adequate to its financial needs.
(5) An insurer must determine whether any investment pursuant to
subsection (2), (3) or (4) of this section meets the applicable
requirements on the last day of the month immediately preceding the day
on which the investment is made. The determination must be made prior to
the investment by calculating the applicable investment limitations as
though the investment had already been made, taking into account the then
outstanding principal balance on all previous investments in debt
obligations and the value of all previous investments in equity
securities as of the day they were made, net of any return of capital
invested, not including dividends. [1967 c.359 §241; 1969 c.285 §1; 1993
c.447 §113a; 1995 c.638 §7; 2005 c.255 §1]Note: Sections 2 and 3, chapter 255, Oregon Laws 2005, provide:
Sec. 2. Investments by health care service contractors.
Notwithstanding ORS 733.630, a health care service contractor may make
investments subject to ORS 750.047 (repealed by this 2005 Act) as long as
the investments are based on the combined capital and surplus of the
health care service contractor as of December 31, 2004. The combined
capital and surplus of the health care service contractor on the day the
investment is made must be reasonable in relation to the outstanding
liabilities of the health care service contractor and adequate to its
financial needs. An investment made under this section is a permitted
Sec. 3. Section 2 of this 2005 Act is repealed on January 2, 2009.
Investments authorized by ORS 733.630 may be made in
corporations engaged, or which will be engaged, in one or more of the
following insurance or ancillary businesses:
(1) Any kind of insurance business authorized by the jurisdiction
in which it is incorporated.
(2) Any kind of business primarily related to the insurance
business carried on by the parent.
(3) Acting as an insurance producer for its parent or for any of
its parent’s insurer subsidiaries or intermediate insurer subsidiaries.
(4) Investing, reinvesting or trading in securities for its own
account, that of its parent, any subsidiary of its parent, or any
affiliate or subsidiary.
(5) Management of any investment company subject to or registered
pursuant to the Federal Investment Company Act of 1940, as amended,
including related sales and services.
(6) Acting as a broker-dealer subject to or registered pursuant to
the Securities Exchange Act of 1934, as amended.
(7) Rendering investment advice to governments, government
agencies, corporations or other organizations or groups.
(8) Rendering other services related to the operations of an
insurance business including, but not limited to, actuarial, loss
prevention, safety engineering, data processing, accounting, claims,
appraisal and collection services.
(9) Ownership and management of assets or property which the parent
could itself own and manage.
(10) Acting as administrative agent for a government
instrumentality which is performing an insurance function.
(11) Financing of insurance premiums.
(12) Owning a corporation or corporations engaged or organized to
engage exclusively in one or more of the businesses specified in
subsections (1) to (11) of this section. [1969 c.285 §3; 2003 c.364 §84] (1) Funds of an
insurer may be invested in loans secured by pledges of obligations and
stocks eligible for investment under ORS 733.510 to 733.780. As of the
date the loan is made, it shall not exceed in amount 80 percent of the
market value of the collateral pledged. No such loan shall be made for
the purpose of providing funds to purchase or carry stocks registered on
a national securities exchange.
(2) Funds of an insurer may be invested in loans secured by
personal property or fixtures if such loan is:
(a) In connection with a loan on the security of real property or a
leasehold as provided in ORS 733.580 or 733.600;
(b) In an amount not exceeding 20 percent of the amount loaned on
the real property or leasehold;
(c) For a term of not more than five years;
(d) Secured by a security interest which constitutes a first lien,
except for taxes not then delinquent, on tangible, permanent personal
property of the borrower kept and used on the premises, other than stocks
of goods held for sale or transfer in the ordinary course of business or
items which by normal use will be consumed or depleted during the period
of the loan; and
(e) In an amount, the ratio of which to the value of the security
does not exceed the ratio of the companion loan to the value of the real
property or leasehold.
(3) Funds of an insurer may be loaned to its own life insurance
policyholder upon the security of such life insurance policy. The loan
shall not exceed the cash value of the policy. [Formerly 738.285]Funds of an insurer may be invested in the following:
(1) Obligations secured by a mortgage or deed of trust payment of
which is guaranteed by a policy of mortgage insurance.
(2) Obligations issued, assumed or guaranteed by the International
Bank for Reconstruction and Development.
(3) Bank and bankers’ acceptances and other bills of exchange of
the kind and nature made eligible by law for purchase in the open market
by federal reserve banks.
(4) Deposits, certificates of deposits, accounts or savings or
certificate shares or accounts of or in banks, trust companies, savings
and loan associations or building and loan associations insured with the
Federal Deposit Insurance Corporation or qualified to do business under
the laws of this state.
(5) Obligations issued by trustees or receivers of a corporation
created or existing under the laws of a sovereign which, or the assets of
which, are being administered under the direction of a court having
jurisdiction if the obligation is adequately secured as to principal and
interest.
(6) Transportation equipment used wholly or in part within a
sovereign, or adequately secured trust certificates of participation or
similar obligations or contracts evidencing an interest in such
transportation equipment, where the investor is entitled to receive a
determined or determinable portion of rental, purchase or other
obligatory payments for use or purchase of the equipment.
(7) Purchase contracts or lease-purchase agreements executed under
the Federal Public Buildings Purchase Contract Act of 1954, or the Post
Office Department Property Act of 1954.
(8) Stock of the Federal Home Loan Bank to the extent of the
minimum required by the Federal Home Loan Bank Act. An insurer acquiring
such stock may exercise all rights and powers given to members under such
Act, including but not by way of limitation the right to obtain advances
or borrow money from such bank and to pledge collateral as security
therefor.
(9) Obligations issued, assumed or guaranteed by the Inter-American
Development Bank.
(10) Loans guaranteed by the Oregon Student Assistance Commission
pursuant to ORS 348.393 to 348.399 and 348.505 to 348.695.
(11) Obligations issued, assumed or guaranteed by the Asian
Development Bank.
(12) Obligations issued, assumed or guaranteed by the African
Development Bank. [Formerly 738.295; 1969 c.336 §9; 1969 c.692 §8; 1973
c.514 §1; 1985 c.456 §2; 1993 c.447 §114] Except as may be
prescribed by the Director of the Department of Consumer and Business
Services under ORS 733.220 (3) for reserves for guaranteed benefits and
funds:
(1) Amounts allocated to a separate account and accumulations
thereon may be invested and reinvested without regard to the requirements
and limitations prescribed by ORS 733.510 to 733.780, except as expressly
provided for separate accounts under such sections; and
(2) The investments in separate accounts shall not be considered in
applying the investment limitations applicable to the general investments
of the insurer. [1973 c.435 §9]An insurer shall not invest the funds of a separate account
so as to have more than 10 percent of the market value of the assets of
the account invested in or secured by the stocks, obligations or property
of any one person or political subdivision, or invested in a single
parcel of real property or any other single investment. This section does
not apply to:
(1) Funds equaling 25 percent of the market value of the total
assets in the separate account;
(2) Investments in, or loans upon, the security of the general
obligations of a sovereign; or
(3) Investments in certificates of deposits insured by the Federal
Deposit Insurance Corporation. [1973 c.435 §10; 1981 c.472 §27; 1999
c.107 §17]An insurer shall not invest the funds of a separate
account so as to own or control, under the insurer’s general and separate
accounts in the aggregate, more than 10 percent of the voting power
outstanding of any issuer of securities. Securities held in separate
accounts, the voting rights in which are exercisable only in accordance
with instructions from persons having interests in such accounts, shall
not be considered in applying this section. [1973 c.435 §11]
The limitations provided in ORS 733.654 and 733.656 do not apply to the
investment of separate account funds in the securities of an investment
company registered under the federal Investment Company Act of 1940, as
amended, if the investments of the investment company comply in substance
with ORS 733.654 and 733.656. [1973 c.435 §12; 1997 c.249 §219] (1)
Funds of an insurer may be invested in a manner not expressly prohibited
under ORS 732.325 and 733.780, provided such investments are made in the
exercise of the judgment and care under the circumstances then prevailing
which investors of prudence, discretion and intelligence exercise in the
management of their own affairs not in regard to speculation but in
regard to the permanent disposition of their funds, considering the
probable income as well as the probable safety of their capital.
(2) Funds invested under this section shall not exceed the lesser
of seven and one-half percent of the insurer’s assets or the excess of
the insurer’s assets over all liabilities and required capitalization.
(3) If the Director of the Department of Consumer and Business
Services has reason to believe that loans or investments made pursuant to
this section are not adequately secured or are not yielding an income the
director may direct the insurer to report under oath the amount of such
loans or investments, the security therefor and its market value.
[Formerly 738.305; 1979 c.846 §2; 1989 c.425 §4a](1) An insurer
may acquire and retain personal property received as a dividend, gift or
devise, or pursuant to a lawful plan of merger, consolidation or
reorganization or bona fide agreement of bulk reinsurance, or in
satisfaction or liquidation of an obligation, or in exchange or part
payment for real or personal property previously owned or to protect or
enhance such property.
(2) An insurer may make purchases or loan sums necessary to
protect, preserve or enhance investment property, real or personal, which
it is otherwise authorized to acquire or hold.
(3) The Director of the Department of Consumer and Business
Services shall allow as assets in any determination of the financial
condition of the insurer only such property or investments acquired or
retained under this section as are consistent with the customary
operations of an insurer. [Formerly 738.315]
Funds of a home protection insurer may be invested in tangible personal
property held by the insurer for the purpose of performing or providing
repairs or replacements under its home protection policies. Funds so
invested shall not exceed 25 percent of the assets of the insurer that
are allowable in determining its financial condition under the Insurance
Code, unless otherwise allowed under rules issued by the Director of the
Department of Consumer and Business Services. [1981 c.247 §13] Funds of a title
insurer may be invested in its title plant. [1967 c.359 §247]Funds of an insurer may be invested in obligations that
are not investment grade as established by the Director of the Department
of Consumer and Business Services by rule, but the funds that an insurer
may invest under this section shall not exceed 20 percent of the
insurer’s assets. [1989 c.425 §2b; 1993 c.447 §22]
Funds of a health care service contractor may be invested in all real and
personal property used exclusively by the contractor to provide
authorized health care services. [1967 c.359 §248](1) An investment which was legal and proper immediately
before June 8, 1967, shall be considered a proper investment and shall be
subject to extension or renewal.
(2) Eligibility of an investment shall be determined as of the date
of its acquisition. [Formerly 738.325]Except as may be expressly provided to the contrary in ORS
733.510 to 733.780, all investments shall be subject to the
qualifications, restrictions and limitations set forth in ORS 733.510 to
733.780. [Formerly 738.333]
(1) Investments and sales or exchanges thereof, except for policy loans
of an insurer issuing life insurance policies, shall be approved by the
board of directors or a committee thereof charged with the duty of
investing the funds of the insurer.
(2) Deposits shall be made in banks or banking institutions
approved by the board of directors. [Formerly 738.335] As to each investment, an
insurer shall make a written record in permanent form, signed by a person
authorized by the board of directors or by a committee thereof charged
with the duty of investing the funds. The record shall show the
authorization and approval of the investment and in addition shall
contain:
(1) In the case of mortgage loans:
(a) The name of the borrower;
(b) The location and legal description of the property;
(c) A physical description and the appraised value of the security
as determined by a competent and qualified appraiser; and
(d) The amount of the loan, rate of interest and terms of repayment.
(2) In the case of obligations:
(a) The name of the obligor;
(b) A description of the security and record of earnings;
(c) The amount invested and the rate of interest or dividend; and
(d) The maturity and yield based upon the purchase price.
(3) In the case of corporate stocks:
(a) The name of the issuing corporation;
(b) The record of earnings and of dividends paid for the preceding
three years for preferred stock and for the preceding five years for
common stock;
(c) A summary of the financial statement of the corporation as of
the end of the preceding fiscal year;
(d) The exchange, if any, on which the stock is listed; and
(e) The amount invested and the number of shares acquired and held.
(4) In the case of real estate, leaseholds or vendors’ interests
under contracts of sale therein:
(a) The location and legal description of the property;
(b) A physical description and the appraised value of the property
and interest therein;
(c) The purchase price and terms;
(d) The amount of any lien known to be against the property;
(e) If of a leasehold, the terms of the outstanding lease; and
(f) If a vendor’s interest under a contract of sale, the terms and
status of payments under the contract.
(5) In the case of all investments:
(a) The amount of any expenses and commissions incurred on account
of the investment or loan and by whom and to whom payable if not covered
by contracts with mortgage loan representatives or correspondents that
are part of the insurer’s records; and
(b) The name of any director, trustee or officer of the insurer,
having a direct, indirect or contingent interest in the loan, security or
property, or who would derive, directly or indirectly, any benefit
therefrom, and the nature of such interest or benefit. [Formerly 738.345;
2005 c.22 §488] After a
hearing, the Director of the Department of Consumer and Business Services
may by written order require the disposal of an investment which the
director finds to be made or retained in violation of the Insurance Code,
or of an investment which the director, for good cause, determines to be
prejudicial to, and to impair the security of, the stockholders or
policyholders of the insurer. [Formerly 738.355]On loans secured by liens upon real property or
leasehold interests therein, the buildings and other improvements located
on the premises shall be kept insured against loss or damage from fire in
an amount not less than the unpaid balance of the obligation or the
insurable value of the property, whichever is the lesser. The fire
insurance policy or policies shall be payable to the insurer, or a
trustee for its benefit, and continued in force until the loan is repaid
or satisfied. Such policy or policies shall be held by the insurer or the
trustee, unless the Director of the Department of Consumer and Business
Services has determined that a different method of protecting the
insurers against loss is satisfactory and has given prior approval of
such method to the insurer. [1967 c.359 §254; 1969 c.336 §10](1) An insurer shall not have any
combination of investments in or secured by the stocks, obligations, and
property of one person, corporation or political subdivision in excess of
10 percent of the insurer’s assets, nor shall it invest more than 10
percent of its assets in a single parcel of real property or in any other
single investment. This subsection does not apply to:
(a) Investments in, or loans upon, the security of the general
obligations of a sovereign;
(b) Policy loans by insurers issuing life insurance policies;
(c) Investments by a title insurer in its title plant, or in real
property not in excess of 50 percent of the insurer’s combined capital
and surplus; or
(d) Investments by a health care service contractor in all real or
personal property used exclusively by such contractor to provide
authorized health care services or in real property used primarily for
its home office.
(2) Notwithstanding subsection (1) of this section and subject to
approval by the Director of the Department of Consumer and Business
Services in writing, a domestic insurer organized before 1950 may invest
an amount not exceeding 15 percent of its assets in real property used
primarily for its home office. [Formerly 738.375; 1983 c.732 §1] (1) An insurer shall not make
investments:
(a) Which at the time of purchase or acquisition are not
interest-bearing or dividend or income-paying, or are in default in any
respect; or
(b) From which the insurer is not entitled to receive for its
exclusive account and benefit the interest, dividends or income.
(2) Subsection (1)(a) of this section shall not apply to property
acquired under ORS 733.610, 733.670 or 733.680 if the property is
acquired with the intent and expectation that it will be income-producing.
(3) An insurer shall not invest its funds in any investment or
security found by the Director of the Department of Consumer and Business
Services to be designed to evade any prohibition of the Insurance Code.
[Formerly 738.385]
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