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304.6-010 "Assets" defined.
(1)
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:
(a) Cash in the possession of the insurer, or in transit under its control, and
including the true balance of any deposit in a solvent bank or trust
company;
(b) Investments, securities, properties and loans acquired or held in
accordance with this code and in connection therewith the following items:
1.
Interest due or accrued on any bond or evidence of indebtedness
which is not in default and which is not valued on a basis including
accrued interest;
2.
Declared and unpaid dividends on stocks and shares, unless such
amount has otherwise been allowed as an asset;
3.
Interest due or accrued upon a collateral loan in an amount not to
exceed one (1) year's interest thereon;
4.
Interest due or accrued on deposits in solvent banks and trust
companies, and interest due or accrued on other assets, if such
interest is in the judgment of the commissioner a collectible asset;
5.
Interest due or accrued on a mortgage loan, in an amount not
exceeding in any event the amount, if any, of the excess of the value
of the property less delinquent taxes thereon over the unpaid
principal. Collectible interest one hundred eighty (180) days past
due on a mortgage loan in default is a nonadmitted asset; and
6.
Rent due or accrued on real property if such rent is not in arrears for
more than three (3) months, and rent more than three (3) months in
arrears if the payment of such rent be adequately secured by
property held in the name of the tenant and conveyed to the insurer
as collateral;
(c) Premium notes, policy loans, and other policy assets and liens on policies
of life insurance and annuity contracts and accrued interest thereon, in an
amount not exceeding the policy reserves or cash surrender value;
(d) The net amount of uncollected and deferred premiums and annuity
considerations in the case of a life insurer, corresponding to the basis on
which reserves are held;
(e) Premiums in the course of collection, other than for life insurance, not
more than three (3) months past due, less commissions payable thereon.
To the extent that there is no related unearned premium, any uncollected
premium balances which are over ninety (90) days due shall be
nonadmitted. The uncollected agent's receivable on a policy basis which
is over ninety (90) days due shall be nonadmitted regardless of any
unearned premium;
(f) Installment premiums other than life insurance premiums to the extent of
the policy reserve carried on the policy to which premiums apply. If an
installment premium is past due, the amount over ninety (90) days due
plus all future installments that have been recorded on that policy shall be
nonadmitted;
(g) Bills receivable for premiums other than life insurance premiums, on
policies permitted to be issued on such basis, to the extent of the policy
reserve carried thereon. Bills receivable shall be nonadmitted if either of
the following conditions are present:
1.
If an installment premium is over ninety (90) days due, the entire
bill's receivable balance from that policy shall be nonadmitted; or
2.
If the bill's receivable balance due exceeds the policy's unearned
premium, the amount in excess of the unearned premium is
nonadmitted;
(h) The full amount of reinsurance recoverable on paid losses and loss
adjustment expense by a ceding insurer from a solvent reinsurer and
which reinsurance is authorized under KRS 304.5-140;
(i) Funds held or deposited with reinsured companies, whether premiums
withheld as security for unearned premium and outstanding loss reserves
or advances for loss payments, are admitted assets provided they do not
exceed the liabilities they secure and provided the reinsured is solvent.
Any funds in excess of the liabilities, and any funds held by an insolvent
reinsured, shall be nonadmitted;
(j) Deposits or equities recoverable from underwriting associations,
syndicates and reinsurance funds, or from any suspended banking
institution, to the extent deemed by the commissioner available for the
payment of losses and claims and at values to be determined by the
commissioner;
(k) As to a title insurer, its title plant and equipment reasonably necessary for
conduct of its abstract or title insurance business, at not to exceed the
cost thereof;
(l) Electronic data processing equipment and operating software are
admitted assets to the extent they conform to the requirements of SSAP
No. 4. Electronic data processing equipment and software shall be
depreciated for a period not to exceed three (3) years using methods
detailed in SSAP No. 19. The aggregate value of admitted electronic data
processing equipment and operating system software (net of accumulated
depreciation) shall be limited to three percent (3%) of the reporting entity's
capital and surplus on the statutory balance sheet for its most recently
filed statement with its domicilary state commissioner, adjusted to exclude
electronic data processing equipment and operating system software, net
deferred tax assets, and net positive goodwill;
(m) A collateral loan or unconditional obligation for the payment of money
secured by the pledge of an investment to the extent it conforms to the
requirements of SSAP No. 4. The outstanding principal balance on the
loan and any related accrued interest shall be recorded as an admitted
asset subject to the following limitations:
1.
A collateral loan determined to be impaired shall be an admitted
asset equal to the fair market value of the collateral less estimated
(2)
costs to obtain and sell the collateral. The difference between the
net fair value of the collateral and the amount of the collateral loan
shall be written off in accordance with SSAP No. 5.
2.
A collateral loan secured by an asset that does not qualify as an
investment shall be nonadmitted.
3.
A collateral loan that exceeds the fair market value of the collateral
shall be an admitted asset equal to the fair market value of the
collateral. The excess shall be classified as a nonadmitted asset;
(n) Deferred tax assets as defined in SSAP No. 10;
(o) Receivable for securities as defined in SSAP No. 21;
(p) Guaranteed investment contracts as defined in SSAP No. 21;
(q) Cash value of life insurance where the reporting entity is owner and
beneficiary as defined in SSAP No. 21;
(r) Other amounts receivable under reinsurance contracts as defined in
SSAP No. 21;
(s) State guarantee association promissory notes;
(t) All assets as may be allowed pursuant to the accounting practices and
procedures manual; and
(u) Other assets, not inconsistent with the provisions of this section, deemed
by the commissioner to be available for the payment of losses and claims,
at values to be determined by the commissioner.
Admitted assets may be allowed as deductions from corresponding liabilities,
and liabilities may be charged as deductions from assets, and deductions from
assets may be charged as liabilities, in accordance with the form of annual
statement applicable to such insurer as prescribed by the commissioner, or
otherwise in his or her discretion. The commissioner may make official
regulations prescribing the application of the provisions of this section.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 995, effective July 15, 2010. -Amended 2004 Ky. Acts ch. 24, sec. 11, effective July 13, 2004. -- Created 1970
Ky. Acts ch. 301, subtit. 6, sec. 1, effective June 18, 1970.
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