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A BILL
TO BE ENTI'I LED
AN ACT RELATING 'I O INVESTMENT
OF LIFE INSURANCE COMPANY
FUNDS: SPECIF YING SECURITIES
ELIGIBLE FOR INVESTMENTS OF
RESERVES AND CAPITAL; PROVIDING
PENALTY FOR VIOLATION OF THE
PROVISIONS OF THIS ACT; REPEALING
ALL LAWS IN CONFLICT HEREWITH.
AND DECLARING THAT IT SHALL BECOME
EFFECTIVE ON OCTOBER I. 1953.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF FLORIDA:
SECTION 1. Every domestic life insurer must have and continually
lteep to the extent of an amount equal to its entire reserves as hereinafter
defined and entire capital. ii any. invested in:
(l) Coin or currency of the United States of America. on
hand or on deposit in a national or state bank or trust company or invested
in the shares at any building and loan or savings and loan association. or
invested in the shares oi any Iederal savings and loan association.
(2) Bonds. notes. warrants and other securities which are
the direct obligations of the government of the United States of America.
or (or which the faith and credit oi such government are pledged for the
payment of principal and interest.
(3) Bonds. notes. warrants and other securities not in
default which are the direct obligation of any state oi the United States or
of the District of Columbia. or of the Government of Canada or any
province thereof. or {or which the full laith and credit of such state.
District. government or province has been pledged for the payment of
principal and interest.
(4) Bonds. notes. warrants and other securities not in
default oi any county. district. incorporated city. or school district in any
state of the United States. or the District of Columbia. or in any province
of Canada. which are the direct obligations of such county. district. city.
or school district and for payment of the principal and into est of which
the county. district. city. or school distriCt has lawful authority to levy
taxes or make assessments.
(5) Bonds which are payable from revenues or earnings
specifically pledged therefor of any public toll bridge. structure. or
improvement owned by any state. incorporated city. or legally
constituted public corporation or commission. all within the United States
for the payment of the principal and interest of which a lawful sinking
fund has been established and is being maintained, and if no default on the
part of the issuer in payment of principal or interest has occurred on any
of its bonds. notes. warrants or other securities. within five (5) years
prior to the date of investment therein.
(6) Bonds. notes. or other interest bearing obligations of
any solvent corporation organized under the laws of the United States oi
America or of the Dominion of Canada. or under the laws of any state.
District oi Columbia. territory or possession of the United States of
America or the Dominion of Canada. Equipment trust obligations or
certificates or other secured instruments evidencing an interest in the
transportation equipment wholly or in part within the United States of
America and a right to receive determined portions of rental. purchases
or other fixed obligatory payments for the use or purchase of such trans-
portation equipment.
(7) Dividend paying stocks. common or preferred. or
shares of any corporation created or existing under the laws of the United
States of America or oi any state. District of Columbia. territory or
possession of the United States of America; no company may invest more
than ten per cent (10%) of its total admitted assets in stocks; and further
provided. that no company may invest more than three per cent (3%) of
its admitted assets in the stoclt or shares of any one corporation. The
restrictions in this section do not apply to shares of building and loan or
savmgs and loan associations or federal savings and loan associations. In
addition to these percentage limitations. any company may invest
additional amounts in accordance with Section 5 of this act.
(8) Deposits by an insurer authorised to transact insurance
in a foreign country such as may be required for such authority and ior the
transaction of such business.
(9) Bonds. debentures or other securities of:
(a) Federal Land Banks. issued under provisions oi
the Act of Congress entitled the Federal Farm Loan Act" and approved
July 1?. i916. and any acts amendatory or supplemental to that act.
(b) Any Federal Home Loan Bank. issued under
provisions of The Act of Congress entitled the "Federal Home Loan Bank
Act" and approved July 22. 1932.
(c) The Home Owners Loan Corporation. created by
the Act of Congress entitled "Home Owners' Loan Act 0! i933. and
approved June A3. 1933.
(d) Federal Intermediate Credit Banks. created by
the Act of Congress entitled "Agricultural Credits Act of March 4. i923. "
(e) Central Bank for Cooperatives organized under the
Farm Credit Act of 1933.
(i) Public Housing Authorities. issued under the
provisions of the Act of Congress entitled the "Housing Act of A949" and
approved July 1949; the Municipal Housing Commission Act or the "Rural
Housing Commission Act. and any additional amendments. or issued by
any public housing authority or agency in the United States. ii such bonds.
debentures. or other securities are secured by a pledge oi annual
contributions to be paid by the United States or any agency thereof.
(g) Obligations issued. assumed. or guaranteed by
the international Bank for Reconstruction and Development.
(10) loans and liens to policyholders upon the pledge of the
policy as collateral security. any sum not exceeding the loan value
specified in the policy.
(ll) Loans upon the pledge of securities or evidences of
debt eligible for investment under these sections. As of date made. no
such loan shall exceed in amount eighty per cent (807.) of the market value
of such collateral pledged.
(12) 80nds. notes or other evidences of debt which are
secured by first mortgages. liens. or deeds of trust on fee simple. unen-
cumbered. improved or income producing real property located in the
United States or in Canada. No loan shall exceed sixty-mix and modhirds
per cent (66 2/37.) of the fair market value at the real estate on which the
loan is made. unless such loan is guaranteed by instrumentality oi the
Federal Government. Nothing in this act shall be deemed to prohibit a
domestic life company from renewing or extending a loan {or the original
or a lesser amount where a shrinkage in value of such real estate would
cause its value to be less than fifty per cent (50%) in excess of the amount
loaned thereon. nor to prohibit a company from accepting as part payment
(or real estate sold by it a mortgage thereon {or more than sixty-six and
two-thirds per cent (66 2/379) of the purchase price of such real estate.
SECTION 2. NO DOMESTIC LIFE INSURANCE COMPANY MAY
DIRECTLY OR INDIRECTLY ACQUIRE OR HOLD REAL ESTATE EXCEPT
AS FOLLOWS:
(1) Such land and buildings thereon or acquired for, in
which it has its principal home office and branch offices (or the transaction
of its own business; the amount invested in such real property shall not
exceed ten per centum oi the investing company's admitted assets. but the
commissioner may grant permission to the company to invest in real
property (or such purpose in such increased amount as he may deem proper
upon a hearing held before him.
(2) Property mortgaged to it in good faith as security for
loans previously contracted for money due.
(3) Property conveyed to it in satisfaction of debts
previously contracted in the course of its dealings. or purchased at sales
upon judgments, decrees. or mortgages obtained or made {or such debts.
(4) Additional real property and equipment incident to real
property. if necessary or convenient for the purpose of enhancing the sale
value of real property previously acquired or held by it under subsections
(2) and (3) of this section and subject to the prior written approval of the
commissioner.
(S) (a) Real estate acquired {or the purpose of leasing the
same to any person. firm. or corporation. or real estate already leased
under the {allowing conditions:
1. Where there has already been erected on said
property a building or other impr0vements satisfactory to the purchaser,
or
2. Where the lessee shall at its own cost erect
thereon. free of liens, a building or other improvements satisfactory to
the lessor. or
3. Where the lessor under the terms and
conditions of a lease for a period of not less than twenty-five years from
date of lease executed and entered into simultaneously with the purchase of
the property agrees to erect a building or other improvements on said
property;
4. That the said improvements shall remain on
the said property during the period of the lease. and in cases where the
said improvements are put upon said property at the cost of the lessee the
said improvements at the termination of the lease shall vest. free of liens.
in the owner of the real estate;
5. That during the term of the lease the tenant
shall keep and maintain the said improvements in good repair. Real estate
acquired pursuant to the provisions of this subsection (5) (a) shall not be
treated as an admitted asset unless and until the improvements herein
required shall have been constructed and the lease agreement entered into
in accordance with the terms of this subsection. nor shall real estate
acquired pursuant to this subsection (5) (a) be treated as an admitted asset
in an amount exceeding the amount actually invested reduced each year by
equal decrements suilicient to write off at least seventy-five per cent (7570)
of the investment at the normal termination oi the lease or at the end of
thirty years should the term oi the lease be (or a longer period. The total
investments of any company undet this subsection (5) (a) shall not exceed
four per cent (4%) of its assets. nor more than fifty per cent (50%) of its
capital and surplus whichever is less.
(b) Subject to approval of the commissioner. real estate
(or recreation. hospitalisation. convalescent and retirement purposes oi
its employees. Such investment under this subsection (5) (b) shall not
exceed five per cent (5%) of the company's surplus.
(c) No investment shall be made by any company
pursuant to this subsection (5) which will cause such company's investment
in all real property owned or held by it directly or indirech to exceed ten
per cent (10%) of its assets.
(6) It is unlawful for any such incorporated company to
purchase or hold real estate in any other case or for any other purpose.
Real estate acquired under subsections (1) and (5) 0 0
this section which has ceased to be used or to be necessary for the purposes
stated therein shall be sold within five years thereafter. unless the company
procures a certificate from the commissioner that the interest of the
company will materially suffer by a forced sale of such real estate in which
event the time for the sale may be extended to such a time as the
commissioner may direct in the certificate. Any real estate acquired under
subsections (2). (3) and (4) of this subsection (1) shall be sold within five
years after the company has acquired title thereto; provided. that the
commissioner may in his discretion extend the five year period as provided
hereinabove. Any real estate acquired under subsection (5) (a) of this
section shall. within five years after the termination or expiration of such
lease. be sold or released [or an additional term pursuant to the
provisions of subsection (5) (a): provided. that the commissioner may in his
discretion extend the five year period as provided hereinabove. Nothing
contained herein prevents any insurance company from improving or
conveying its real estate, notwithstanding the lapse of five years without
having procured such certificate from the commissioner.
SECTION 3. lNVESTMENTS OR LOANS ON OWN STOCK PRO-
HlBiTED. No domestic life insurance company shall be permitted to
invest in or loan upon its own stoclt either directly or indirectly.
SECTION 4. ENTIRE RESERVES DEFINED. The entire
reserves of a domestic life insurance company as used in this act shall be
the sum of:
Net present value of all outstanding policies in force
(less reinsurance); reserves for accidental death benefits and total and
permanent disability benefits (less reinsurance); present value of
supplementary contracts and including dividends left with the company to
accumulate at interest. liability on policies cancelled and not included in
net reserve" upon which a surrender value may be demanded, and policy
claims and losses outstanding; premiums in advance. and unearned
premiums. if any. and pension fund liability. less amount of net uncollected
and deferred premiums.
SECTION 5. INVESTMENTS OF OTHER FUNDS. After
satisfying the requirements of this act any funds of any domestic life insurer
in excess of its life insurance reserves and capital. if any. may be invested
without limitation in other securities or in any manner as may be approved
by the commissioner .
SECTION 6. PRIOR INVESTMENTS NOT AFFECTED. Nothing
herein shall be construed as affecting the propriety or legality of
investments made by a domestic life insurance company which was in
accordance with the laws in force at the time the investment was made.
SECTION 7. PENALTY. Whenever it appears by exam-
ination. as authorized by law. that a domestic life insurance company has
acquired any investments in violation of the law in force at the time of such
acquisition. it shall be the duty of the insurance commissioner to disallow
the amount of such investments. if wholly ineligible. or the amount of the
value thereof in excess of any limitation prescribed in the law. and to
deduct such amount as a non-admitted asset of such company. in any
determination of the financial condition of any such company such amount
shall be deducted as a non-admitted asset of such company.
SECTION 8. All laws or parts of laws in conflict with this act
are hereby repealed.
SECTION 9. This act shall take effect October l. 1953.
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A d]LL TO BE ENillLED AN ACT REL~NG '!0 INVES'eb.ENOF LlFE INSLRANCE COMPANY FUn5; SPEclFYlNG SECURIl[En ELICIJLu r'OR INVEd'[MEN'le Ot' REstGRVES AND CAPI'iAL. PacvIDENG PE16L3 Y FOR VIGLaTION OF -t HE i--RC'lISIONS CE THIS AC1, REPintlNG ALL LAs',~5 IN CCNFLIC'I HEREWi-iH, ,,NL) DEGLARING 3 HKi IT sHALL BECChiE EFF.:-C 1VE ON OCTCiSEK 2. -%3. Y 'INil LEGISLATURE OF THE 53ATE OF FLORIDA Ev. ry domestic li[e insurer must have and continue f an amount equal to its entire reserves as hereinafte apital, 1; any. invested in: oin or currency of the United Stues of Arnerica, on .r. a ::ational or staLe bank or Lrust company or EnVest( -builellop and loan ur savings and loan association, or -e, o: any federal savings and loan assos:iation. liond'1, riote5, W37rants a-10 Other securities which ar as of thr government of the L"nited States of Amer>ca, th and credit of such government are pledged for the el and ititerest. Bonds, notes, warrants and other securities not in he dii ect obligation of any state of thei United States or alunnia, or of the Government of Canada or ary r for which the (141 faith and credit of such stale, ni r>r pre.vince has been ple ed for the payrrient of -sr, dands no;e:; .warrants and other securitieS yat in y, dimict, incorporated city, or school district in al 51stes, or the Dastrict of Colun-.hia, or ir. any province. re ih.eli:cc'. obligMions of such county, district, city ad 6:.r payment of tja principal ased ilit. at of whie.h city, or schom m:-:rte'. ha In.fsil wuthority es tevy
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.-. ..d ....... .r.aa l f o e e u s re ig
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(4) Bonds, debentures 01othe-r securities of: (a) Feller:tl Land .-.:Inks .1:;.;ued tr.der pro-;isions of .e a.:t of Qi a-ess er.:ith:d :he --~ederal Farr:: 1.oaa Act aorl approved ..y ,7. t9ta. ar.d any art= :=meridamry or supplemen'al 10 that ac-, {b) Any Federal Home Lean dank, issued t:ader ..r -.--taans o;-Js ei ..:s c.>ngress eniitled the -1-ederal Hon.e Lean Lius:k .-: ar.d appr:w.. : Ju]) 22, .932. (c.] fht Hors.c aners' Loan Corporation, crealed by 1s :-.:s of C-.r:.-r. as ro.lattei 'Horne Gwr.ers' Loan Ac; of itiU, -and .py.raved Jure .i. 193-.. (d) 1-edera] Intermediate Credit lianks created by -. -a i of Cnr.g -41 en= ttleri "Agri::ultural Credi, s act of March 4, .921 10) Centrul Sarik for Coopeatis:es orpoir.ed ur.der the I :-:". 'redil :. -.31 jg3 L M .>ublie Housing author tiles, issued ani.le r the .-.-. i i.ions of -:.x 3.-t of Coi.pres s e-tutled Lhe 'Heusing Act ei a 94C' and a:-p'-:--ed July 90: the Muilicipal Hau-lini; Comn--nison Aci or :he storal -..si:itt Coi:.-i .n..ion at t, and any additior.al arriendments, or isered uy 3...: i .:>lic he: 3.1.,. aatherity or gency w the United States, if such bands, d -.e-uures, ..r olher se.-.aritie; are secured by a pleclge of annual c ..0 a.:-ions -.. paid ay the United States or any apacy Lherof, ig} t:bligior.s issued, as:surged, or guaranteed by (E. J:.'ernadm....1 :enk N:r ]("cur:struc'.ran and Develognant, (1'': 1.aar.s ard ]teris to policyholders upan the pledge ot"1ae pt:.e. y as col)...1-.--3] sect.rity, any sum noi exceeding ihe loan value ....-..ified in tis ,,.-.1xy. (111 to;u.s u-on the pled ;e af locurgir:s or ender.ca of di -natpa'Je si :: ."Sta en! Inder these ss!ctinns. 55 Of date Jr.ade, :10 so. n .t::en shaL -xceed it. arr omit eighty per cent (80%) of the m;arket salat of .. L :011& :11 pledget 1.1.:) 501.6-., r.-.tes or other evidences of debt which al e 70..:4.-j hy ji: : M: ogges, bens, or deeds of trust on fee sin.pae, unen, ei,: ered, irr :,:r.r-d or :nconte prod-temg 1-eal property locate
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.1'. ''. Yliade .~ ~ ~ ~ ~ ~ ~ ~ ~ ..~r .ss .-:: ..re .s ..a. e by it u'.c~ii:yo h
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-,1:er the R.lla i:1g codinons: 1. Where threrr has aire!ady bec!n erected on said .er y a h.f.::.!:s or oth( r in:pt-ovements satast-i.clory LO the perchaser : 2. ;/here 1he lessrc shu: at its ova: r.os-. crecs .-mor:, fre -:i liens, a building or othetin.proveitera sa-idac1nry te 3 Who l'a the les sot und:ir "h(! rcern-.S a.d ..runors of a le:se in r a pe rind of r.o les s than twer.Ly -five yea:3 iron. -c. of le.ase e :acu1ed .md -rttered ir-La simullaneously wirh the purchase of -7--oper:y s::;---es to -ret i a ba:iir.g or other improvements uri said -isperty; -t. ThM the said in.proven.ems shall :'eltal:1 on .-:..ed pro,.e--:y during, the period of the leat:e, ar.d in cases where the .: en i n-prove n -: !s ;tre pu, .pon said pr ope vty at 1he e ot.L of the irs:see :he ..6 ir:.prov -:r::m:a ul 1::r .<:rri.iratso:1 af the lease shall vest ~rce :>f lierti, :9 omr.et:' '::e rol est tie. 5. I hal ea11:1p, the terrr. of the tr.ase rhetena;ii a) Eteep an i ;. eti::tuin the said imprmen.ents ir good re:pair. ikal t:smic a : .i:-ed pur -.;.m. o th, pr risior.s of this ensection (5) (a) shall not be t ved as an -arat:r-et ;tsset u:iless and unal ihe in-provemer..s hereir. r. g .,:-r-ci shail ~.re... am. co:inratka arad the jease ap-eenorir alitered i::Co i .:. 1. ordam.with the -err::s of this subsection, nor chall real estate a .ared par..ee.t to iha.; sehsectior. i 3) (a) ise trealen as an a..il:.stted asse-1 i..: :arnoun: .:-.3:dar.g -he tre aunt ac-..ially invested re.duced each year :>y e : .I :kt:-er; --: -., s-.dfit::ent Lo write CEf at leas: seveny -five per ce:it (~; 5%) o; 'h..investn.org a: -.he nor.sal iern-anauer. :n the lea-.r. or at the 3:::c. ei 1.j i --; ye;..rs si. ...1.! the -..:rr of the lease be :ur a lor.setperiou. ~.jo a....;d il e -.:.nien15 in :..r.y coniany unde: [bis subseclian (i) (a} shall nGL exceed ft .r --,r Eer.1 1 : 7:1 of 3" a.isel s raor n-.ore [han fifty pr.T c.e it ('30"'0) Of 3-5 t.t;;,i at;d a..7 1.j.:4 Wilk:tet-:r -.6 leGS. (b) S .bje:L la upgraval o: the corr.rt.inioner, c.:e.1 estate ft : r.:rrearior, zi.-s),1-al.z:ttinn, e..3;,valesci.-.: artl t'elit-err~em ptrposes of
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-. -err.ployea a S.ch 1:1vemnera under this siubilectiert (,} {b) shall not -x:..red five >0: rem 1~ 2) or" -1,e company's s-.ird.is. (e) Iso imesimait shal] & n.ade by ary congar1y irscant to di::: sa'-tie; tio2 (5} whirb wilt cause such corr.pany's i:1xeso.ent i: all real p-: accry nuorI r>r heid by it directly or indirectly to es.eec ter. c:c.ent in "ai of 1:s it:ssers. 'u) It is u-ilawtul for any such incorporated con.par.y to achase or hob1 ren] mate in any c,1her case or foany other 3,urtion:. Real erlate acquirea uticie-sitbsectior.s (2) ad l':)? of !n ; sectior which ha:a reard to bri used cr ro be r.ecessary far the purpows .:t ad the rei-i:Ball be sald withi:1 Ii.. e years thereafte r, urhus ihe cornpai.y ;r:.cures a .craiticate Iroira the conirsissioner that the inLereS1 Of [he .-..u.par.y w;tl ;: ;,te:-My s affr t ny a forced =.:1]e ai sa:b real est;i le an whsh i a r: the time fer the =.ab. may be mer.ded to such a ittse as the .--r.r::issiol-e :Ir.ay .li--:ct ii. -he certilicae. fey reai ras-ate :tcquire:i under y ..!.ystimis 1.0. 1.3) ar,) (-3) cylrhis =; ::m:cti.:r.1 (j} shull be sold wi'.hi:: five -.ra after 6.: -.ornpa::y has acqv.iret1 title thereto; provided, thM !hr. ....:r.r-.o;sao: e -may ir. his discretior, ex*ctsJ ',he bee you period as provideed .-etiaabour. si:iy c'al esi-tic acquire:i ur.der st.bsectio:t (5) {a) at 1his -le-r. sha11. u..[11tr. rive ;e;=rs an-r -he myn.iration or expit-a:ior. .:1 och .-isc. be 3.,1:1 :sr role-tsed far nr. additione tern. pursuant to the ; r .--istony. .,i n..:sectar. (-,) 131, p--maisi. -list the con.a.itirlo:ter al.ny i:1 his 'i-.. ration extenrJ the -joe yo.r pe:'ior.1 -i:: provided herei:tabove. Nuihirig .:.. tined 1-.. : si-. gra..r.ts ar.y m..rai.. -r:.r:.par.y trarn in;prarir a:....veyitig r E : is:el ma te i otwil]/.1:me:1 ti: 11:0 tr.siirancrc rils.pariy ;ts ur.ec1 ari 1his ;,r -. r.h .Le [110 A sim of; -b.
PAGE 7
.. ..an .au .f ..ua ndn .oi e .n ..c : ... r .ir ..r:.n ., ..ese o ccie~a e t en ft n oa n
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