Utah Administrative Code
Topic - Insurance
Title R590 - Administration
Rule R590-116 - Valuation of Assets
Section R590-116-5 - Valuation of a Security Other Than Common Stock Issued by an Insurance Subsidiary
Current through Bulletin 2024-06, March 15, 2024
The following provisions supplement Subsection 31A-17-401(3)(a) in controlling the way assets of an insurance subsidiary are valued on the books of the parent insurer.
(1) A parent insurer may attribute value to the security of an insurance subsidiary only if a dividend or interest is being paid and payment is anticipated to continue.
(2) The value of a security other than common stock issued by an insurance subsidiary is the lesser of:
(3) The present discounted value of future income under Subsection (2)(a) shall be determined as follows:
NPV = ((CF1)/((1 + i)1)) + ((CF2)/((1 + i)2)) + (CF3)/((1 + 3)3)) + ... ((CFn)/((1 + i)n))
NPV = Net present value
CF = Cash flow
i = Assumed interest rate per period
n = Number of periods
If cash flows remain constant, the following formula may be used:
NPV = CF(1-(1 / (1 + i)n) / i)
(4) The interest rate used shall be Moody's AA Bond rate for a security of substantially equal duration, or another rate that can be justified by the insurer and is accepted by the commissioner.