Current through Register Vol. 49, No. 6, March 15, 2024
PURPOSE: This amendment updates statutory references,
relaxes a regulatory restriction, and gives meaning to an exemption that has
not been useable since 1993.
PURPOSE: This rule upgrades the quality of real
estate appraisals used by insurers by requiring appraisals that meet the same
standards as those applicable to federally-regulated financial institutions.
This rule effectuates or aids in the interpretation of sections
375.330,
376.302,
and
379.080,
RSMo.
(1) Any real estate
held as an investment for the production of income pursuant to section
375.330.1(7), RSMo, or any mortgage loan made pursuant to section
376.302
or
379.080.1(2)(f),
RSMo, excluding purchase money mortgages as identified in section
376.302.1(1)(a), RSMo, may be held as an admissible asset only if the
appraisal-
(A) Is made of real estate no more
than one hundred eighty (180) days before the date the deed or mortgage is
recorded in the appropriate public records;
(B) Is a written statement that is
independently and impartially prepared by a licensed or certified appraiser
setting forth an opinion of defined value of an adequately described property
as of a specific date, supported by presentation and analysis of relevant
market information;
(C) Provides
the current market value of the real estate, that is the value of the real
estate in an arms-length sale as of the date of the appraisal; and
(D) Is made by an individual who is-
1. On the national registry of
state-certified and licensed appraisers who are eligible to perform appraisals
in federally related transactions, which national registry is maintained
pursuant to
12 USC Section
3332; and
2. Certified or licensed to make the
appraisal by the state in which the real estate is located.
(2) Notwithstanding any
provision of section (1) of this rule to the contrary, no appraisal is
necessary in order to admit as an asset the holding of any debt or security
issued, assumed or guaranteed by the United States, any state, territory or
possession of the United States, the District of Columbia or any
administration, agency, authority or instrumentality of them, but only to the
extent that the debit or security is issued, assumed insured or guaranteed by
any such entity.
(3)
Notwithstanding any provision of section (1) of this rule to the contrary, an
insurer may establish written procedures, approved by the company's board of
directors, for the valuation of its real estate and mortgage loans, which will
exempt the insurer from all of the provisions of section (1). The written
procedures must be approved by the director. The director may review the
insurer's compliance with these procedures. The director must be notified of
any material changes to the written procedures. To be exempt under this
section, an insurer's mortgage loan and real estate operations shall meet the
following minimum standards:
(A) The insurer
holds a combined mortgage loan and real estate portfolio valued at three
hundred (300) million dollars or more;
(B) The insurer has established written
procedures and obtained board approval and approval by the director;
(C) The insurer, as part of the written
procedures, has established a reasonable system of valuation of its mortgage
loans and real estate which includes the following elements:
1. A system to value its real estate acquired
through foreclosure for the purpose of establishing reserves or carrying values
of the investments and for statutory accounting purposes;
2. A program for the training, education and
certification of employees, at least one (1) of whom must be certified as
described in paragraph (1)(D)1. of this rule, who conducts internal appraisals
of investments, or a system involving the use of independent certified
appraisers as described in paragraph (1)(D)1. of this rule. Any internal
appraiser shall not be compensated, directly or indirectly, on the basis of the
outcome of appraisals performed and shall have direct reporting access to the
chief investment officer of the insurer; and
3. Carrying values for the foreclosed real
estate shall be based upon the internal appraisal or an independent appraisal
and the value of the guarantees or other credit enhancements related to the
investment; and
(D) The
audit report of the independent certified public accountant which prepares the
audit of the insurer's annual statement shall contain findings by the auditor
that-
1. The insurer has adopted valuation
procedures meeting the requirements of section (3) of this rule;
2. The procedures adopted by the board of
directors have been uniformly applied by the insurer in conformance with
section (3) of this rule; and
3.
The management of the insurer has an adequate system of internal
controls.
*Original authority: 375.045, RSMo
1967.
