Article 2a.--INVESTMENTS BY OTHER THAN LIFE INSURANCE COMPANIES
40-2a05.Corporate obligations; definitions.Any insurance company other than life heretofore or hereafter organizedunder any law of this state may invest by loans or otherwise, with thedirection or approval of amajority of its board of directors or authorized committee thereof, any ofits funds, or any part thereof in bonds or other evidences of indebtednessissued, assumed or guaranteed by a corporation or trust organized under thelaws of the United States of America, or of any state, district, insular orterritorial possession thereof, or of the Dominion of Canada or anyprovince thereof which are designated "1" or "2" by the nationalassociation of insurance commissioners in their most recently publishedValuations of Securities Manual or are rated investment grade in Standard &Poor's (at least BBB-) or Moody's (at least Baa3) corporate bond guides atthe time of acquisition; or which meet the following qualifications:
(a) If fixed-interest bearing obligations, the average fixedcharges shall have been covered at least 1 1/2 times by the average netearnings availablefor fixed charges of the last five years, and thecompany shall have earnings in two of the last three fiscal yearsimmediately preceding the date of acquisition. In the case ofobligations of finance companies, the coverage shall be atleast 1 1/4 times;
(b) if income, or other contingent interest obligations, the netearnings available for fixed charges of the corporation for the fivefiscal years next preceding the date of acquisition of the obligationsshall have averaged per year not less than1 1/2 times the sum of the fixed charges and the maximum contingentinterest to whichthe corporation is subject as of the date of acquisition, and the company shall haveearnings in two of the last three fiscal years immediately preceding thedate of acquisition. In the case of obligations of finance companies,the coverage shall be at least 1 1/4 times;
(c) the corporation or a predecessor thereof must have been in existencefor a period of not less than five years;
(d) investments in any corporate obligations under this act shall not beeligible if the corporation is in default on any fixed obligations as ofthe date of acquisition. Statements adjusted to show the actual conditionat the time of acquisition or at effect of new financing (knowncommercially as pro forma statements) may be used when determininginvestments in this act or in compliance with requirements.
(e) As used in this section:
(1) The term "fixed charges" shall include actual interest incurred ineach year on funded and unfunded debt. In the testing of obligations whereinterest is partially or entirely contingent upon earnings, fixedcharges shall include contingent interest payments; and
(2) the term "net earnings available for fixed charges"shall mean income, before deducting interest on funded and unfunded debt and afterdeducting operating and maintenance expenses, taxes other than incometaxes, depreciation and depletion. Extraordinary, nonrecurring items ofincome or expense shall be excluded.
History: L. 1972, ch. 173, § 5;L. 1987, ch. 160, § 2;L. 1991, ch. 130, § 1; July 1.
Article 2a.--INVESTMENTS BY OTHER THAN LIFE INSURANCE COMPANIES
40-2a05.Corporate obligations; definitions.Any insurance company other than life heretofore or hereafter organizedunder any law of this state may invest by loans or otherwise, with thedirection or approval of amajority of its board of directors or authorized committee thereof, any ofits funds, or any part thereof in bonds or other evidences of indebtednessissued, assumed or guaranteed by a corporation or trust organized under thelaws of the United States of America, or of any state, district, insular orterritorial possession thereof, or of the Dominion of Canada or anyprovince thereof which are designated "1" or "2" by the nationalassociation of insurance commissioners in their most recently publishedValuations of Securities Manual or are rated investment grade in Standard &Poor's (at least BBB-) or Moody's (at least Baa3) corporate bond guides atthe time of acquisition; or which meet the following qualifications:
(a) If fixed-interest bearing obligations, the average fixedcharges shall have been covered at least 1 1/2 times by the average netearnings availablefor fixed charges of the last five years, and thecompany shall have earnings in two of the last three fiscal yearsimmediately preceding the date of acquisition. In the case ofobligations of finance companies, the coverage shall be atleast 1 1/4 times;
(b) if income, or other contingent interest obligations, the netearnings available for fixed charges of the corporation for the fivefiscal years next preceding the date of acquisition of the obligationsshall have averaged per year not less than1 1/2 times the sum of the fixed charges and the maximum contingentinterest to whichthe corporation is subject as of the date of acquisition, and the company shall haveearnings in two of the last three fiscal years immediately preceding thedate of acquisition. In the case of obligations of finance companies,the coverage shall be at least 1 1/4 times;
(c) the corporation or a predecessor thereof must have been in existencefor a period of not less than five years;
(d) investments in any corporate obligations under this act shall not beeligible if the corporation is in default on any fixed obligations as ofthe date of acquisition. Statements adjusted to show the actual conditionat the time of acquisition or at effect of new financing (knowncommercially as pro forma statements) may be used when determininginvestments in this act or in compliance with requirements.
(e) As used in this section:
(1) The term "fixed charges" shall include actual interest incurred ineach year on funded and unfunded debt. In the testing of obligations whereinterest is partially or entirely contingent upon earnings, fixedcharges shall include contingent interest payments; and
(2) the term "net earnings available for fixed charges"shall mean income, before deducting interest on funded and unfunded debt and afterdeducting operating and maintenance expenses, taxes other than incometaxes, depreciation and depletion. Extraordinary, nonrecurring items ofincome or expense shall be excluded.
History: L. 1972, ch. 173, § 5;L. 1987, ch. 160, § 2;L. 1991, ch. 130, § 1; July 1.
Article 2a.--INVESTMENTS BY OTHER THAN LIFE INSURANCE COMPANIES
40-2a05.Corporate obligations; definitions.Any insurance company other than life heretofore or hereafter organizedunder any law of this state may invest by loans or otherwise, with thedirection or approval of amajority of its board of directors or authorized committee thereof, any ofits funds, or any part thereof in bonds or other evidences of indebtednessissued, assumed or guaranteed by a corporation or trust organized under thelaws of the United States of America, or of any state, district, insular orterritorial possession thereof, or of the Dominion of Canada or anyprovince thereof which are designated "1" or "2" by the nationalassociation of insurance commissioners in their most recently publishedValuations of Securities Manual or are rated investment grade in Standard &Poor's (at least BBB-) or Moody's (at least Baa3) corporate bond guides atthe time of acquisition; or which meet the following qualifications:
(a) If fixed-interest bearing obligations, the average fixedcharges shall have been covered at least 1 1/2 times by the average netearnings availablefor fixed charges of the last five years, and thecompany shall have earnings in two of the last three fiscal yearsimmediately preceding the date of acquisition. In the case ofobligations of finance companies, the coverage shall be atleast 1 1/4 times;
(b) if income, or other contingent interest obligations, the netearnings available for fixed charges of the corporation for the fivefiscal years next preceding the date of acquisition of the obligationsshall have averaged per year not less than1 1/2 times the sum of the fixed charges and the maximum contingentinterest to whichthe corporation is subject as of the date of acquisition, and the company shall haveearnings in two of the last three fiscal years immediately preceding thedate of acquisition. In the case of obligations of finance companies,the coverage shall be at least 1 1/4 times;
(c) the corporation or a predecessor thereof must have been in existencefor a period of not less than five years;
(d) investments in any corporate obligations under this act shall not beeligible if the corporation is in default on any fixed obligations as ofthe date of acquisition. Statements adjusted to show the actual conditionat the time of acquisition or at effect of new financing (knowncommercially as pro forma statements) may be used when determininginvestments in this act or in compliance with requirements.
(e) As used in this section:
(1) The term "fixed charges" shall include actual interest incurred ineach year on funded and unfunded debt. In the testing of obligations whereinterest is partially or entirely contingent upon earnings, fixedcharges shall include contingent interest payments; and
(2) the term "net earnings available for fixed charges"shall mean income, before deducting interest on funded and unfunded debt and afterdeducting operating and maintenance expenses, taxes other than incometaxes, depreciation and depletion. Extraordinary, nonrecurring items ofincome or expense shall be excluded.
History: L. 1972, ch. 173, § 5;L. 1987, ch. 160, § 2;L. 1991, ch. 130, § 1; July 1.
