1. Bonds.
2. Equipment Trust Certificates. Equipment trust certificates subject to amortization
under the published findings of the NAIC shall be carried at their amortized values.
Equipment trust certificates which are not listed as qualified for amortization under the
published findings of the NAIC shall be carried at a value not to exceed the certificate's
proportionate part of the aggregate principal amount of the equipment obligations
outstanding times 70% of the net depreciated value of the equipment pledged. 3. Loans
Secured By Real Estate Interest. Loans, other than purchase money mortgages, which are
adequately secured by real estate interests and are not in default as to principal or
interest, shall be valued at the unpaid principal balance if the acquisition was at par.
Further, mortgage loans acquired at a premium or at a discount are to be valued at
amortized cost. Procedures relating to the amortization of premiums and accrual of
discounts on mortgage loans are as follows:
a. Federal Housing Administration (FHA) and Veterans Administration (VA) Mortgages.
Premiums shall be amortized and discounts accrued over a five year period from date of
acquisition. Companies may adjust the asset values of these mortgages to their face
amounts, but any excess of aggregate permissive amortized value, cost of mortgages less
repayments of principal, adjusted for amortization of premiums and accrual of discounts on
a five year basis, shall be treated as a nonadmitted asset.
b. Mortgages other than FHA and VA Mortgages. The book value of real estate mortgages
acquired at a premium shall be reported at values reflecting write-offs of such premiums
over a three year period from date of acquisition. Real estate mortgages purchased at a
discount shall be carried at the amortized value.
c. Premium amortization or discount accretion as required in R590-116-4.A.3.a. or 3.b.
above shall be on the straight-line method of computation.
d. Adequately secured purchase money mortgages shall be valued at the unpaid principal
balance of the lien reduced by a reserve for unrealized gain on the sale of real estate.
The reserve shall maintain the same proportionate relationship between the unpaid
principal balance as the original gain on the sale bore to the original note principal
balance.
e. For loans that are in default or in foreclosure proceedings the carrying values may
be adjusted for additional expenses such as taxes, insurance, and legal fees that have
been incurred to protect the investment or to obtain clear title to the property. To the
extent that such costs are to be recoverable from the ultimate disposition of the
property, these costs may be added to the carrying value of the mortgage loans. However,
such costs that cannot reasonably be expected to be recovered shall be expensed when
incurred.
f. Loans with any of the following provisions may be valued, at the option of the
commissioner, at discounted values which approximate market values of the loans at the
valuation date:
i. Payments other than in equal installments;
ii. Payment periods less often than annually;
iii. Interest below conventional rates of return on the date the loan is granted.
4. Loans Secured By Pledged Securities Or Evidences Of Debt Eligible For Investment Under
Section 31A-18-105 Loans which are adequately secured by pledge of securities or evidences
of debt eligible for investment under Section 31A-18-105 shall be valued at par, if the
acquisition was at par. Further, such loans acquired at a premium or at a discount are to
be valued at the unpaid principal balance or cost, whichever is less.
5. Preferred and Guaranteed Stocks.
a. Preferred or guaranteed stocks in good standing are to be valued at cost by
companies which are maintaining a mandatory securities valuation reserve. Companies not
maintaining a mandatory securities valuation reserve shall value such stocks at market
value.
b. Preferred or guaranteed stocks not in good standing are to be valued at market
value.
c. Market value as used for valuation of preferred or guaranteed stocks means in
accordance with the values listed in "Valuation of Securities". For securities
which are traded on a registered national securities exchange, but are not listed in that
publication, market value may be established at the most recent published trade value.
Securities not listed and not actively traded on a major stock exchange shall have a
market value in an amount that the insurer can justify to the commissioner.
d. Preferred or guaranteed stocks of insurance subsidiaries are to be valued in
accordance with the requirements of Subsection 31A-17-401(3)(a), and Subsection
R590-116-4.B. of this rule.
6. Common Stocks.
a. Common stocks are to be valued at market value. Market value as used for valuation
of common stocks means in accordance with the values listed in "Valuation of
Securities". For securities which are traded on a registered national securities
exchange, but are not listed in that publication, market value may be established at the
most recent published trade value. Securities not listed in and not actively traded on a
registered national securities exchange shall have a market value in an amount that the
insurer can justify to the commissioner.
b. Common stocks of insurance subsidiaries are to be valued in accordance with the
requirements of Subsection 31A-17-401(3)(a).
7. Real Estate.
a. An investment in real estate will be valued at not more than its reasonable cost
plus capitalized permanent improvements less depreciation spread evenly over the life of
the property or, at the option of the company, less depreciation computed on any basis
permitted under the Internal Revenue Code and regulations.
b. Property acquired in satisfaction of a debt shall be valued at its fair market value
or the amount of debt (including interest, taxes, and expenses incurred as cost in
foreclosure), whichever is less.
8. Loans Upon the Security of the Insurer's Own Policies. Loans upon the security of the
insurer's own policies shall be valued at the unpaid loan balance or the policy reserves
securing such loan, whichever is less.
9. Financial Futures Contracts. Financial futures contracts, if approved by Insurance
Department rule, shall be valued in the manner set forth by the commissioner.
10. Investment in Foreign Securities. Foreign securities permitted under Subsection
31A-18-105(11), shall be valued as follows:
a. Where information is available, at the value published by the NAIC. If the security
is payable in a foreign currency the value shall reflect the currency exchange rate.
b. Where information is not available, the security shall have a market value that the
insurer can justify to the commissioner. If the security is payable in a foreign currency
the value shall reflect the currency exchange rate.
11. Separate Account Assets. Separate account assets shall have a value as required under
Subsection 31A-18-102(4).