Current through February 24, 2025
(a) A property
and casualty insurer may acquire, hold, or invest in an obligation secured by a
mortgage on real estate situated within a domestic jurisdiction either directly
or indirectly through a limited partnership interest or general partnership
interest not otherwise prohibited by
3
AAC 21.216, a joint venture, stock of an investment
subsidiary or a membership interest in a limited liability company, a trust
certificate, or another similar instrument. A property and casualty insurer may
not acquire, hold, or invest in a mortgage loan that is secured by other than a
first lien unless the property and casualty insurer is the holder of the first
lien. An obligation held by a property and casualty insurer and any obligation
with an equal lien priority may not, at the time of acquisition of the
obligation, exceed
(1) 90 percent of the fair
market value of the real estate if the mortgage loan is secured by a purchase
money mortgage or like security received by the property and casualty insurer
upon disposition of the real estate;
(2) 80 percent of the fair market value of
the real estate if the mortgage loan requires immediate scheduled payment in
periodic installments of principal and interest, has an amortization period of
30 years or less, and has periodic payments made no less frequently than
annually, subject to the following:
(A) each
periodic payment must be sufficient to ensure that, at all times, the
outstanding principal balance of the mortgage loan will not be greater than the
outstanding principal balance would be under a mortgage loan with the same
original principal balance, with the same interest rate and requiring equal
payments of principal and interest with the same frequency over the same
amortization period;
(B) a mortgage
loan permitted under this paragraph is permitted notwithstanding that the loan
provides for a payment of the principal balance before the end of the period of
amortization of the loan;
(C) for a
residential mortgage loan, the 80 percent limitation may be increased to 97
percent if acceptable private mortgage insurance has been obtained;
or
(3) 75 percent of the
fair market value of the real estate for a mortgage loan that does not meet the
requirements of (1) or (2) of this subsection.
(b) For purposes of (a) of this section, the
amount of an obligation required to be included in the calculation of the
loan-to-value ratio may be reduced to the extent the obligation is insured by
the United States Department of Housing and Urban Development, Federal Housing
Administration or guaranteed by the United States Secretary of Veterans Affairs
for the United States, or its successor.
(c) A mortgage loan that is held by a
property and casualty insurer under
3
AAC 21.206(f) or acquired under this
section and that is restructured in a manner that meets the requirements of a
restructured mortgage loan in accordance with the National Association of
Insurance Commissioners accounting practices and procedures manual continues to
qualify as a mortgage loan under
3
AAC 21.201 -
3
AAC 21.399.
(d) A credit lease transaction that does not
qualify for investment under
3
AAC 21.330 need not comply with a requirement of(a) of
this section if
(1) it includes a loan
amortized over the initial fixed lease term at least in an amount sufficient so
that the loan balance at the end of the lease term does not exceed the original
appraised value of the real estate;
(2) the lease payments cover or exceed the
total debt service over the life of the loan;
(3) a tenant or its affiliated entity, whose
rated credit instruments are rated one or two by the securities valuation
office or have an equivalent rating from a nationally recognized statistical
rating organization, has a full faith and credit obligation to make the lease
payments;
(4) the property and
casualty insurer holds or is the beneficial holder of a first lien mortgage on
the real estate;
(5) the expenses
of the real estate, other than exterior, structural, parking, heating,
ventilation, and air conditioning replacement expenses, are passed through to
the tenant, unless annual escrow contributions from cash flows derived from the
lease payments cover the expense shortfall; and
(6) a perfected assignment exists of the rent
due under the lease to or for the benefit of the property and casualty
insurer.
(e) A property
and casualty insurer may acquire, manage, and dispose of real estate situated
in a domestic jurisdiction either directly or indirectly through a limited
partnership interest or general partnership interest not otherwise prohibited
in 3 AAC 21.216, a joint venture, the
stock of an investment subsidiary, a membership interest in a limited liability
company, a trust certificate, or another similar instrument, subject to the
following:
(1) the real estate must be
income-producing or intended for improvement or development for an investment
purpose under an existing plan of improvement or development, in which case the
real estate is considered to be income-producing;
(2) the real estate may be subject to a
mortgage, lien, or other encumbrance, the amount of which must be deducted, to
the extent that the obligations secured by the mortgage, lien, or encumbrance
is without recourse to the property and casualty insurer, from the amount of
the investment of the property and casualty insurer in the real estate for
purposes of determining compliance with (g)(2) and (3) of this
section.
(f) A property
and casualty insurer may acquire, manage, and dispose of real estate for the
convenient accommodation of the business operations of the property and
casualty insurer or its affiliates. For purposes of this subsection,
(1) real estate acquired may
(A) include excess space for rent to others
if the excess space, valued at its fair market value, would otherwise be a
permitted investment under (e) of this section and is so qualified by the
property and casualty insurer; and
(B) be subject to a mortgage, lien, or other
encumbrance, the amount of which must be deducted, to the extent that the
obligation secured by the mortgage, lien, or encumbrance is without recourse to
the insurer, from the amount of the investment of the property and casualty in
the real estate for purposes of determining compliance with (h) of this
section; and
(2)
business operations
(A) include home office,
branch office, and field office operations; and
(B) do not include operations on that portion
of real estate used for the direct provision of health care services by a
property and casualty insurer whose insurance premiums and reserves required by
AS 21.18 for accident and health insurance constitute at least 95 percent of
total premium considerations or total reserves required by AS 21.18,
respectively; a property and casualty insurer may acquire real estate used for
the direct provision of health care services under (e) of this
section.
(g)
A property and casualty insurer may not acquire an investment
(1) under (a) - (d) of this section if, as a
result of and after giving effect to the investment, the aggregate amount of
all investments then held by the property and casualty insurer under (a) - (d)
of this section would exceed
(A) one percent
of the property and casualty insurer's admitted assets in mortgage loans
covering any one secured location;
(B) one-quarter of one percent of the
property and casualty insurer's admitted assets in construction loans covering
any one secured location; or
(C)
one percent of the property and casualty insurer's admitted assets in
construction loans in the aggregate;
(2) under (e) of this section if, as a result
of and after giving effect to the investment and any outstanding guarantees
made by the property and casualty insurer in connection with the investment,
the aggregate amount of investments then held by the property and casualty
insurer under (e) of this section plus the guarantees then outstanding would
exceed
(A) one percent of the property and
casualty insurer's admitted assets in one parcel or group of contiguous parcels
of real estate; however, the limitation in this subparagraph does not apply to
that portion of real estate used for the direct provision of health care
services by a property and casualty insurer whose insurance premiums and
reserves required by AS 21.18 for accident and health insurance constitute at
least 95 percent of total premium considerations or total reserves required by
AS 21.18, respectively; for purposes of this subparagraph, real estate used for
the direct provision of health care services includes hospitals, medical
clinics, medical professional buildings, or other health facilities used for
the purpose of providing health services;
(B) the lesser of 10 percent of the property
and casualty insurer's admitted assets or 40 percent of the property and
casualty insurer's policyholder surplus; or
(C) for a property and casualty insurer whose
insurance premiums and reserves required by AS 21.18 for accident and health
insurance constitute at least 95 percent of total premium considerations or
total reserves required by AS 21.18, respectively, the lesser of 15 percent of
the property and casualty insurer's admitted assets or 40 percent of the
property and casualty insurer's policyholder surplus; or
(3) under (a) - (e) of this section if, as a
result of and after giving effect to the investment and any guarantees the
property and casualty insurer has made in connection with the investment, the
aggregate amount of all investments then held by the property and casualty
insurer under (a) - (e) of this section plus the guarantees then outstanding
would exceed 25 percent of the property and casualty insurer's admitted
assets.
(h) The
limitations of
3
AAC 21.325 do not apply to a property and casualty
insurer's acquisition of real estate under (f) of this section. A property and
casualty insurer may not acquire real estate under (f) of this section if, as a
result of and after giving effect to the acquisition, the aggregate amount of
real estate then held by the property and casualty insurer under (f) of this
section would exceed 10 percent of the property and casualty insurer's admitted
assets, unless the director gives prior written permission, upon finding the
acquisition consistent with the purposes of
3
AAC 21.201 -
3
AAC 21.399 as stated in
3
AAC 21.201 for the insurer to acquire additional
amounts of real estate under (f) of this section.
(i) For purposes of
3
AAC 21.201 -
3
AAC 21.399, real estate includes a leasehold estate
only if it has an unexpired term, including renewal options exercisable at the
option of the lessee, extending beyond the scheduled maturity date of the
obligation that is secured by a mortgage on the leasehold estate by a period
equal to at least 20 percent of the original term of the obligation or 10
years, whichever is greater.
Authority:AS
21.06.090
AS 21.18.010
AS 21.18.030
AS 21.18.040
AS 21.21.010
AS 21.21.020
AS 21.21.255
AS
21.21.420
