COMMITTEE SUBSTITUTE
FOR
H. B. 3080
(By Delegate
Beane
)
(Originating in the Committee on the Judiciary)
[April 5, 2001]
A BILL to amend and reenact sections five, seven, fourteen and
fifteen, article eight, chapter thirty-three of the code of
West Virginia, one thousand nine hundred thirty-one, as
amended, all relating to permissible investments by insurers;
allowing insurers to invest in certain securities; and
modifying the types and amount of stocks in which insurers may
invest.
Be it enacted by the Legislature of West Virginia:
That sections five, seven, fourteen and fifteen, article
eight, chapter thirty-three of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended and
reenacted, all to read as follows:
ARTICLE 8. INVESTMENTS.
§33-8-5. Limitation of investments in one person.
An insurer shall not, except with the consent of the
commissioner, have at one time any combination of investments in
or loans upon the security of the obligations, property, or
securities of any one person, institution or corporation,
aggregating an amount exceeding five percent of the insurer's
assets. This restriction shall not apply to investments in or
loans upon the security of general obligations of the United States
or fully guaranteed by the United States or the District of
Columbia or any state of the United States or of political
subdivisions of the state of West Virginia or other states of the
United States,
or such other funds or obligations of the United
States made pursuant to section seven of this article, or include
policy loans made under section nineteen of this article or
investments in foreign securities pursuant to section eight of this
article. Pursuant to section 106(b) of the "Secondary Mortgage
Market Enhancement Act of 1984," an act of the Congress of the
United States, this section prohibits domestic insurers from
exercising the investment authority granted any person, trust,
corporation, partnership, association, business trust or business
entity pursuant to section 106(a) (1) or (2) of that act.
§33-8-7. Government obligations.
An insurer may invest any of its funds in:
(a) Bonds or securities which are the direct obligation of or
which are secured or guaranteed in whole or in part as to principal
and interest by the United States, any state or territory of the
United States or the District of Columbia, where there exists the
power to levy taxes for the prompt payment of the principal and
interest of such bonds or evidences of indebtedness, and in bonds
issued by the federal land banks or securities issued by the
federal home loan bank system. Pursuant to section 106(b) of the
"Secondary Mortgage Market Enhancement Act of 1984," an act of the
Congress of the United States, this section prohibits domestic
insurers from exercising the investment authority granted any
person, trust, corporation, partnership, association, business
trust or business entity pursuant to section 106(a) (1) or (2) of
that act,
except as provided in subsection (c).
(b) Bonds or evidences of indebtedness which are direct
general obligations of any county, district, city, town, village,
school district, park district or other political subdivision of
this state or any other state or territory of the United States or
the District of Columbia, which shall not be in default in the
payment of any of its general obligation bonds, either principal or
interest, at the date of such investment; where they are payable from ad valorem taxes levied on all the taxable property located
therein and the total indebtedness after deducting sinking funds
and all debts incurred for self-sustaining public works does not
exceed ten per centum of the actual value of all taxable property
therein on the basis of which the last assessment was made before
the date of such investment.
(c) Securities issued or guaranteed by the Federal Home Loan
Mortgage Corporation or the Federal National Mortgage Association
aggregating an amount not to exceed twenty percent of the insurer's
assets.
§33-8-14. Common stocks.
Subject to the limits set forth in sections five and six of
this article, an insurer may invest in the nonassessable shares of
capital stock of any solvent corporation created under the laws of
the United States or of any state:
if such corporation has paid
cash dividends of not less than four percent per annum on the
average market price of such common stock for a period of five
fiscal years next preceding the date of acquisition by such insurer
or shall have earned, during such period, an aggregate sum
applicable to dividends on its common stock equal at least to an
aggregate sum which would have been sufficient to pay dividends of
four percent per annum on the average market price of all its common stocks outstanding during such period. Provided, That:
(a) The capital stock is one which is included in a nationally
recognized index of companies, including, but not limited to,
Standard & Poors 500 and Wilshire 2000;
(b) The insurer's investment in any one entity under this
section would not exceed three percent of its admitted assets; and
(c) As a result of and after giving effect to the investment,
the aggregate amount of investments then held by the insurer under
this section would not exceed twenty percent of its admitted
assets.
§33-8-15. Real property mortgages.
(a) An insurer may invest in entire first mortgages on
improved unencumbered real estate or the entire issue of bonds
secured thereby located within any state worth at least
thirty-three and one-third per centum more than the amount loaned
thereon, based on sound appraisal by a competent appraiser and duly
certified by him
or her, provided that the investment in any one
mortgage or any one issue of bonds or any one contract for deed
does not exceed twenty-five thousand dollars or two per centum of
the insurer's assets, whichever is the greater.
(b) "Improved real estate," as used in this section, means all
farmland which has been reclaimed and is used for the purpose of husbandry, whether for tillage or pasture, and all real property on
which permanent buildings suitable for residence or commercial use
are situated.
(c) Real property shall not be
deemed considered to be
encumbered within the meaning of this section by reason of the
existence of instruments reserving or excepting mineral rights and
interests, rights-of-way, sewer rights and rights in walls or
easements, nor by reason of building restrictions or other
restrictive covenants, nor by reason of the fact that it is subject
to lease under which rents or profits are reserved to the owners:
Provided, That the security for such investment is a full and
unrestricted first lien upon such real property and that there is
no condition nor right of reentry or forfeiture under which such
investments can be cut off, subordinated or otherwise disturbed.
(d) Notwithstanding the restrictions set forth in this section
any insurer may invest: (1) In bonds or notes secured by mortgage
or trust deed insured by the federal housing administration or in
debentures issued by it under the terms of an act of Congress of
the United States entitled the "National Housing Act," as
heretofore or hereafter amended; (2) in securities issued by
national mortgage associations established by or under the
authority of the National Housing Act; and (3) in bonds or notes secured by mortgage or trust deed guaranteed as to principal by the
administrator of veterans' affairs pursuant to the provisions of
Title III of an act of Congress of the United States as of June
twenty-two, one thousand nine hundred forty-four, entitled the
"Servicemen's Re-Adjustment Act of one thousand nine hundred
forty-four," as heretofore or hereafter amended. Pursuant to
section 106(b) of the "Secondary Mortgage Market Enhancement Act of
1984," an act of the Congress of the United States, this section
prohibits domestic insurers from exercising the investment
authority granted any person, trust, corporation, partnership,
association, business trust or business entity pursuant to section
106(a) (1) or (2) of that act,
except that the investments as
provided in subsection (c) of section seven of this article are
considered to be permissible
.
(e) Notwithstanding the restrictions herein set forth, the
amount of any first mortgage investment as limited by subsection
(a) of this section may be exceeded if and to the extent that such
excess shall be guaranteed by the administrator of veterans'
affairs pursuant to the provisions of Title III of an act of
Congress of the United States of June twenty-two, one thousand nine
hundred forty-four, entitled the "Servicemen's Re-Adjustment Act of
one thousand nine hundred forty-four," as heretofore or hereafter amended. Pursuant to section 106(b) of the "Secondary Mortgage
Market Enhancement Act of 1984," an act of the Congress of the
United States, this section prohibits domestic insurers from
exercising the investment authority granted any person, trust,
corporation, partnership, association, business trust or business
entity pursuant to section 106(a) (1) or (2) of that act,
except
that the investments as provided in subsection (c) of section seven
of this article are considered to be permissible
.
(f) No such insurer shall in any manner, either directly or
indirectly, by means of corporations, holding companies, trustees
or otherwise, invest in real estate securities junior to first
mortgages unless the first mortgage in its entirety is owned by the
insurer.
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