Missouri Revised Statutes
Chapter 376
Life, Health and Accident Insurance
←376.291
Section 376.292.1
376.293→
August 28, 2015
Definitions.
376.292. As used in sections 376.291 to 376.307, the following terms
mean:
(1) "Acceptable collateral", as to securities lending repurchase and
reverse repurchase transactions, any financial assets of a type for which,
when taken as collateral by an insurer in such transactions, would permit the
subject securities or repurchase agreements, as the case may be, to constitute
admitted assets of the insurer under the relevant statutory accounting
principles promulgated from time to time by the NAIC as adopted by the
director;
(2) "Acceptable private mortgage insurance", insurance written by a
private insurer protecting a mortgage lender against loss occasioned by a
mortgage loan default and issued by a licensed mortgage insurance company with
an SVO "1" designation or a rating issued by a nationally recognized
statistical rating organization equivalent to an SVO "1" designation that
covers losses to an eighty percent loan-to-value ratio;
(3) "Accident and health insurance", protection that provides payment of
benefits for covered sickness or accidental injury, excluding credit
insurance, disability insurance, accidental death and dismemberment insurance,
and long-term care insurance;
(4) "Accident and health insurer", a licensed life or health insurer or
health service corporation whose insurance premiums and required statutory
reserves for accident and health insurance constitute at least ninety-five
percent of total premium considerations or total statutory required reserves,
respectively;
(5) "Admitted assets", assets permitted to be reported as admitted
assets on the statutory financial statement of the insurer most recently
required to be filed with the director but excluding assets of separate
accounts;
(6) "Affiliate", as to any person, another person that, directly or
indirectly through one or more intermediaries controls, is controlled by, or
is under common control with the person;
(7) "Asset-backed security", a security or other instrument, excluding
shares in a mutual fund, evidencing an interest in or the right to receive
payments from, or payable from distributions on an asset, a pool of assets, or
specifically divisible cash flows which are legally transferred to a trust or
another special purpose bankruptcy-remote business entity on the following
conditions:
(a) The trust or other business entity is established solely for the
purpose of acquiring specific types of assets or rights to cash flows, issuing
securities and other instruments representing an interest in or right to
receive cash flows from those assets or rights, and engaging in activities
required to service the assets or rights and any credit enhancement or support
features held by the trust or other business entity; and
(b) The assets of the trust or other business entity consist solely of
interest-bearing obligations or other contractual obligations representing the
right to receive payment from the cash flow from the assets. However, the
existence of credit enhancements, such as letters of credit or guarantees or
support features, such as swap agreements, shall not cause a security or other
instrument to be ineligible as an asset-backed security;
(8) "Business entity", a sole proprietorship, limited liability company,
association, partnership, joint stock company, joint venture, mutual fund,
trust, joint tendency, or other similar form of business organization, whether
organized for profit or not for profit;
(9) "Capital and surplus", the sum of the capital and surplus of the
insurer required to be shown on the statutory financial statement of the
insurer most recently required to be filed with the director;
(10) "Cash equivalents", short-term, highly rated, and highly liquid
investments or securities readily convertible to known amounts of cash without
penalty and so near maturity that they present insignificant risk of change in
value. Cash equivalents include government money market mutual funds and
class one money market mutual funds. For purposes of this subdivision: (a)
"Short-term" means investments with a remaining term to maturity of ninety
days or less; and (b) "Highly rated" means an investment rated "P-1" by
Moody's Investors Service, Inc., or "A-1" by Standard and Poor's division of
The McGraw Hill Companies, Inc., or its equivalent rating by a nationally
recognized statistical rating organization recognized by the SVO;
(11) "Class one bond mutual fund", a mutual fund that at all times
qualifies for investment using the bond class one reserve factor under the
Purpose and Procedures of the Securities Valuation Office or any successor
publication;
(12) "Class one money market mutual fund", a money market mutual fund
that at all times qualifies for investment using the bond class one reserve
factor under the Purpose and Procedures of the Securities Valuation Office or
any successor publication;
(13) "Code", this chapter and chapters 374, 375, and 382;
(14) "Commercial mortgage loan", a loan secured by a mortgage other than
a residential mortgage loan;
(15) "Construction loan", a loan less than three years in term made for
financing the cost of construction of a building or other improvement to real
estate that is secured by the real estate;
(16) "Control", the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract, other than a
commercial contract for goods or nonmanagement service, or otherwise, unless
the power is the result of an official position with or corporate office held
by the person. Control shall be presumed to exist if a person, directly or
indirectly, owns, controls, holds with power to vote, or holds proxies
representing ten percent or more of the voting securities of another person.
This presumption may be rebutted by a showing that control does not exist in
fact. The director may determine after furnishing all interested persons
notice and an opportunity to be heard and making specific findings of fact to
support the determination that control exists in fact, notwithstanding the
absence of a presumption to that effect;
(17) "Credit tenant loan", a mortgage loan which is made primarily in
reliance on the credit standing of a major tenant, structured with an
assignment of the rental payments to the lender with real estate pledged as
collateral in the form of a first lien;
(18) "Direct" or "directly", in connection with an obligation, the
designated obligor primarily liable on the instrument representing the
obligation;
(19) "Dollar-roll transaction", two simultaneous transactions with
different settlement dates no more than ninety-six days apart so that in the
transaction with the earlier settlement date an insurer sells to a business
entity, and in the other transaction the insurer is obligated to purchase,
from the same business entity, substantially similar securities of the
following types:
(a) Asset-backed securities issued, assumed or guaranteed by the
Government National Mortgage Association, the Federal National Mortgage
Association, or the Federal Home Loan Mortgage Corporation or their respective
successors; and
(b) Other asset-backed securities referred to in section 106 of Title I
of the Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. 77r-1), as
amended;
(20) "Domestic jurisdiction", the United States, Canada, any state, any
province of Canada, or any political subdivision of the foregoing;
(21) "Equity interest", any of the following that are not rated credit
instruments:
(a) Common stock;
(b) Preferred stock;
(c) Trust certificate;
(d) Equity investment in an investment company other than a money market
mutual fund or a class one bond mutual fund;
(e) Investment in a common trust fund of a bank regulated by a federal
or state agency;
(f) An ownership interest in mineral, oil, or gas to which the rights
have been separated from the underlying fee interest in the real estate where
the mineral, oil, or gas are located;
(g) Instruments which are mandatorily, or at the option of the issuer,
convertible to equity;
(h) Limited partnership interests and those general partnership
interests authorized under subdivision (4) of section 376.294;
(i) Member interests in limited liability companies;
(j) Warrants or other rights to acquire equity interests that are
created by the person that owns or would issue the equity to be acquired; or
(k) Instruments that would be rated credit instruments except for the
provisions under subdivision (47) of this section;
(22) "Foreign currency", currency other than that of a domestic
jurisdiction;
(23) (a) "Foreign investment", an investment in a foreign jurisdiction
or an investment in a person, real estate, or asset domiciled in a foreign
jurisdiction that is substantially of the same type as those eligible for
investment under this chapter other than under section 376.304. An investment
shall not be deemed foreign if the issuing person, qualified primary credit
source, or qualified guarantor is a domestic jurisdiction or a person
domiciled in a domestic jurisdiction unless:
a. The issuing person is a shell business entity; and
b. The investment is not assumed, accepted, guaranteed, or insured or
otherwise backed by a domestic jurisdiction, or a person that is not a shell
business entity domiciled in a domestic jurisdiction;
(b) For purposes of this definition:
a. "Shell business entity" means a business entity having no economic
substance except as a vehicle for owning interests in assets issued, owned, or
previously owned by a person domiciled in a foreign jurisdiction;
b. "Qualified guarantor" means a guarantor against which an insurer has
a direct claim for full and timely payment, evidenced by a contractual right
for which an enforcement action can be brought in a domestic jurisdiction;
c. "Qualified primary credit score" means the credit score to which an
insurer looks for payment as to an investment and against which an insurer has
a direct claim for full and timely payment evidenced by a contractual right
for which an enforcement action can be brought in a domestic jurisdiction;
(24) "Foreign jurisdiction", a jurisdiction other than a domestic
jurisdiction;
(25) "Government money market mutual fund", a money market mutual fund
that at all times:
(a) Invests only in obligations issued, guaranteed, or insured by the
federal government of the United States or collateralized repurchase
agreements composed of these obligations; and
(b) Qualifies for investment without a reserve under the Purposes and
Procedures of the Securities Valuation Office or any successor publication;
(26) "Government sponsored enterprise", a:
(a) Government agency; or
(b) Corporation, limited liability company, association, partnership,
joint stock company, joint venture, trust, or other entity or instrumentality
organized under the laws of any domestic jurisdiction to accomplish a public
policy or other governmental purpose;
(27) "Guaranteed" or "insured", in connection with an obligation
acquired under this chapter, the guarantor or insurer has agreed to:
(a) Perform or insure the obligation of the obligor or purchase the
obligation; or
(b) Be unconditionally obligated until the obligation is repaid to
maintain in the obligor a minimum net worth, fixed charge coverage,
stockholders' equity or sufficient liquidity to enable the obligor to pay the
obligation in full;
(28) "High-grade investment", a rated credit instruments rated "1", "2",
"P1", "P2", "PSF1", or "PSF2" by the SVO;
(29) "Investment company", an investment company as defined in Section
3(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-1), as amended, and
a person described in Section 3(c) of that act;
(30) "Investment company series", an investment portfolio of an
investment company that is organized as a series company and to which assets
of the investment company have been specifically allocated;
(31) "Investment subsidiary", a subsidiary of an insurer engaged or
organized to engage exclusively in the ownership and management of assets
authorized as investments for the insurer if such subsidiary limits its
investment in any asset so that its investments will not cause the amount of
the total investment of the insurer to exceed any of the investment limitation
or avoid any other provisions of this chapter applicable to the insurer. As
used in this subdivision, the total investment insurer shall include:
(a) Direct investment by the insurer in an asset; and
(b) The insurer's proportionate share of an investment in an asset by an
investment subsidiary of the insurer which shall be calculated by multiplying
the amount of the subsidiary's investment by the percentage of the insurer's
ownership interest in the subsidiary;
(32) "Investment strategy", the techniques and methods used by an
insurer to meet its investment objectives, such as active bond portfolio
management, passive bond portfolio management, interest rate anticipation,
growth investing, and value investing;
(33) "Letter of credit", a clean, irrevocable, and unconditional letter
of credit issued or confirmed by and payable and presentable at a financial
institution on the list of financial institutions meeting the standards for
issuing letters of credit under the Purposes and Procedures of the Securities
Valuation Office or any successor publication. To constitute applicable
collateral for the purposes of section 376.303, a letter of credit shall have
an expiration date beyond the term of the subject transaction;
(34) "Limited liability company", a business organization, excluding
partnerships and ordinary business corporations, organized or operating under
the laws of the United States or any state thereof that limits the personal
liability of investors to the equity investment of the investor in the
business entity;
(35) "Lower grade investment", a rated credit instrument rated "4", "5",
"6", "P4", "P5", "P6", "PSF4", "PSF5", or "PSF6" by the SVO;
(36) "Market value":
(a) As to cash and credit, the amounts thereof; and
(b) As to a security as of any date, the price for the security in that
date obtained from a generally recognized source or the most recent quotation
from a source, or to the extent no generally recognized source exists, the
price for the security reasonably as determined by the insurer plus accrued
but unpaid income thereon to the extent not included in the price as of that
date;
(37) "Medium grade investment", a rated credit instrument rated "3",
"P3", or "PSF3" by the SVO;
(38) "Money market mutual fund", a mutual fund that meets the conditions
of 17 C.F.R. 270.2a-7 under the Investment Company Act of 1940 (15 U.S.C.
80a-1, et seq.), as amended or renumbered;
(39) "Mortgage loan", an obligation secured by a mortgage, deed of
trust, trust deed, or other consensual lien on real estate;
(40) "Multilateral development bank", an international development
organization of which the United States is a member;
(41) "Mutual fund", an investment company or in the case of an
investment company that is organized as a series company, an investment
company series, that in either case is registered with the United States
Securities and Exchange Commission under the Investment Company Act of 1940
(15 U.S.C. 80a-1, et seq.), as amended;
(42) "NAIC", the National Association of Insurance Commissioners;
(43) "Obligation", a bond, note, debenture, trust certificate, including
an equipment trust certificate, production payment, negotiable bank
certificate of deposit, bankers' acceptance, credit tenant loan, loan secured
by financing net leases, and other evidence of indebtedness for the payment of
money, or participations, certificates, or other evidence of an interest in
any of the foregoing, whether constituting a general obligation of the issuer
or payable only out of certain revenues or certain funds pledged or otherwise
dedicated for payment;
(44) "Person", an individual, a business entity, a multilateral
development bank, or a government or quasigovernment body, such as a political
subdivision or a government sponsored enterprise;
(45) "Preferred stock", preferred, preference, or guaranteed stock of a
business entity authorized to issue the stock that has a preference in
liquidation over the common stock of the business entity;
(46) "Qualified business entity", a business entity that is:
(a) An issuer of obligations or preferred stock that are rated "1" or
"2" by the SVO or an issuer of obligations, preferred stock, or derivative
instruments that are rated the equivalent of "1" or "2" by the SVO or the
equivalent by a nationally recognized statistical rating organization
recognized by the SVO;
(b) A primary dealer in the United States government securities
recognized by the Federal Reserve Bank of New York; or
(c) With respect to section 376.303, an affiliate of an entity that is a
qualified business entity under paragraph (a) or (b) of this subdivision whose
arrangement with the insurer is guaranteed by the affiliated entity that is a
qualified business entity under paragraph (a) or (b) of this subdivision;
(47) "Rated credit instrument":
(a) An obligation or other instrument which gives its holder a
contractual right to receive cash or another rated credit instrument from
another entity if the instrument:
a. Is rated or required to be rated by the SVO;
b. In the case of an instrument with a maturity of three hundred
ninety-seven days or less, is issued, guaranteed, or insured by an entity that
is rated by or another instrument of such entity is rated by the SVO or by a
nationally recognized statistical rating organization recognized by the SVO;
c. In the case of an instrument with a maturity of ninety days or less,
is issued, assumed, accepted, guaranteed, or insured by a qualified bank;
d. Is a share of a class one bond mutual fund; or
e. Is a share of a money market mutual fund;
(b) "Rated credit instrument" shall not mean:
a. An instrument that is mandatorily, or at the option of the issuer,
convertible to an equity interest; or
b. A security that has a par value and whose terms provide that the
issuer's net obligation to repay all or part of the security's par value is
determined by reference to the performance of an equity, a commodity, a
foreign currency, or an index of equities, commodities, foreign currencies, or
combination thereof;
(48) "Real estate":
(a) Real property;
(b) Interests in real property, such as leaseholds, mineral, oil, and
gas that have not been separated from the underlying fee interest;
(c) Improvements and fixtures located on or in real property; and
(d) The seller's equity in a contract providing for a deed of real
estate; As to a mortgage on a leasehold estate, real estate shall include the
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 a leasehold
estate by a period equal to at least twenty percent of the original term of
the obligation or ten years, whichever is greater;
(49) "Repurchase transaction", a transaction in which an insurer
purchases securities from a business entity that is obligated to repurchase
the purchased securities or substantially the same securities from the insurer
at a specified price within a specified period of time or on demand;
(50) "Required liabilities", total liabilities required to be reported
on the statutory financial statement of the insurer most recently required to
be filed with the director;
(51) "Residential mortgage loan", a loan primarily secured by a mortgage
on real estate improved with a one-to-four family residence;
(52) "Reverse repurchase transaction", a transaction in which an insurer
sells substantially the same securities to a business entity and is obligated
to repurchase the sold securities or substantially the same securities from
the business entity at a specified price within a specified period of time or
upon demand;
(53) "Secured location", the contiguous real estate owned by one person;
(54) "Securities lending transaction", a transaction in which securities
are loaned by an insurer to a business entity that is obligated to return the
loaned securities or substantially the same securities to the insurer within a
specified period of time or upon demand;
(55) "Series company", an investment company that is organized as series
company, as defined in Rule 18f-2 under the Investment Company Act of 1940 (15
U.S.C. 80a-1, et seq.), as amended;
(56) "Sinking fund stock", preferred stock that:
(a) Is subject to a mandatory sinking fund or similar arrangement that
will provide for the redemption or open market purchase of the entire issue
over a period not longer than forty years from the date of acquisition; and
(b) Provides for mandatory sinking fund installments or open market
purchases commencing not more than ten and one-half years from the date of
issue with the sinking fund installments providing for the purchase or
redemption on a cumulative basis commencing ten years from the date of issue
of at least two and one-half percent per year of the original number of shares
of that issue of preferred stock;
(57) "Special rated credit instrument", a rated credit instrument that
is:
(a) Structured so that if it is held until retired by or on behalf of
the issuer, its rate of return based on its purchase cost and any cash flow
stream possible under the structure of the transaction may become negative due
to reasons other than the credit risk associated with the issuer of the
instrument; however, a rated credit instrument shall not be a special rated
credit instrument under this paragraph if it is:
a. A share in a class one bond mutual fund;
b. An instrument other than an asset-backed security with payments of
par value fixed as to an amount and timing or callable but in any event
payable only at par value or greater and interest or dividend cash flows that
are based on a fixed or variable rate determined by reference to a specified
rate or index;
c. An instrument other than an asset-backed security that has a par
value and is purchased at a price no greater than one hundred ten percent of
par;
d. An instrument, including an asset-backed security, whose rate of
return would become negative only as a result of prepayment due to casualty,
condemnation, or economic obsolescence of collateral or change of law;
e. An asset-backed security that relies on collateral that meets the
requirements of subparagraph b. of this paragraph and the par value of which
collateral:
(i) Is not permitted to be paid sooner than one-half of the remaining
term to maturity from the date of acquisition;
(ii) Is permitted to be paid prior to maturity only at a premium
sufficient to provide a yield to maturity for the investment, considering the
amount of prepaid and reinvestment rates at the time of early repayment, at
least equal to the yield to maturity of the initial investment; or
(iii) Is permitted to be paid prior to maturity at a premium at least
equal to the yield of a treasury issue of comparable remaining life; or
f. An asset-backed security that relies on cash flow from assets that
are not prepayable at any time at par but is not otherwise governed by
subparagraph e. of this paragraph if the asset-backed security has a par
value reflecting principal payments to be received if held until retired by or
on behalf of the issuer and is purchased at a price no greater than one
hundred five percent of such par amount;
(b) An asset-backed security that:
a. Relies on cash flow from assets that are prepayable at par at any
time;
b. Does not make payments of par that are fixed as to amount and timing;
and
c. Has a negative rate of return at the time of acquisition if a
prepayment threshold assumption is used with such prepayment threshold
assumption defined as either:
(i) Two times the prepayment expectation reported by a recognized
publicly available source as being the median of expectations contributed by
broker dealers or other entities except insurers engaged in the business of
selling or evaluating such securities or assets. At the insurer's election,
the prepayment expectation used in this calculation shall be the prepayment
expectation for pass-through securities of the Federal National Mortgage
Association, the Federal Home Loan Mortgage Corporation, the Government
National Mortgage Association, or for other assets of the same type of assets
that underlie the asset-backed security in a gross weighted average coupon
comparable to the gross weighted average coupon of the assets that underlie
the asset-backed security; or
(ii) Another prepayment threshold assumption specified by the director
by regulation;
(c) For purposes of paragraph (b) of this subdivision, if the
asset-backed security is purchased in combination with one or more other
asset-backed securities that are supported by identical underlying collateral,
the insurer may calculate the rate of return for these specific combined
asset-backed securities in combination. The insurer shall maintain
documentation demonstrating that such securities were acquired and are
continuing to be held in combination;
(58) "State", a state, territory, or possession of the United States,
District of Columbia, or the Commonwealth of Puerto Rico;
(59) "Substantially the same securities", securities that meet all
criteria for substantially the same securities specified in the NAIC
Accounting Practices and Procedures Manual, as amended, as adopted by the
director;
(60) "Subsidiary", as to any person, an affiliate controlled by such
person, directly or indirectly, through one or more intermediaries;
(61) "SVO", the Securities Valuation Office of the NAIC or any successor
office established by the NAIC;
(62) "Unrestricted surplus", the amount by which total admitted assets
exceed one hundred and twenty-five percent of the insurer's required
liabilities.
(L. 2007 S.B. 66)
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