Bill Text: NJ S3409 | 2022-2023 | Regular Session | Amended
Bill Title: Updates certain insurance company investment provisions in accordance with Investments of Insurers Model Act.
Spectrum: Bipartisan Bill
Status: (Passed) 2024-01-08 - Approved P.L.2023, c.219. [S3409 Detail]
Download: New_Jersey-2022-S3409-Amended.html
Sponsored by:
Senator NELLIE POU
District 35 (Bergen and Passaic)
Senator STEVEN V. OROHO
District 24 (Morris, Sussex and Warren)
SYNOPSIS
Updates certain insurance company investment provisions in accordance with Investments of Insurers Model Act.
CURRENT VERSION OF TEXT
As reported by the Senate Commerce Committee on January 26, 2023, with amendments.
An Act concerning foreign investments by certain insurance companies and amending R.S.17:24-10,
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1[1. R.S.17:24-10 is amended to read as follows:
17:24-10. a. Any insurance company of this State lawfully doing business in any foreign country may also invest its funds, to an amount not exceeding the value of its outstanding policies of insurance issued or delivered in the foreign country, in securities issued by any governing body or agency or any corporation of the foreign country or in obligations secured upon property therein, otherwise of the same character as that prescribed for authorized investments for the funds of the company under the laws of this State; provided, that any loan secured by first mortgage on unencumbered real estate in the Dominion of Canada, authorized and placed under any act of that Dominion by virtue of which it assumes liability for all or a substantial portion of any loss resulting from the liquidation of such investment after the foreclosure of the mortgage securing the same, or by virtue of which it guarantees the payment of such loan, shall be construed as being of such character. Any investment hereby authorized shall be subject to all other limitations imposed by the laws of this State.
b. Any insurance company of this State may invest in foreign obligations and investments:
(1) up to 10 percent of admitted assets in any foreign country or jurisdiction rated in one of the two highest rating categories by an independent, nationally recognized United States rating agency; and
(2) up to two percent of admitted assets in any other foreign country and up to 15 percent of admitted assets in the aggregate in all such other foreign countries. The aggregate foreign obligations and investments shall not exceed 30 percent of admitted assets. All such foreign obligations and investments made within the limitations of this subsection shall also be subject to the percentage limitations in R.S.17:24-1 set seq., as applicable to the investment class, but this subsection shall not apply to investments that otherwise constitute an ownership interest in a subsidiary or affiliate of the insurance company.
(cf: P.L.1945, c.23, p.80, s.1)]1
11. R.S.17:24-1 is amended to read as follows:
17:24-1. Any insurance company
of this State for the purpose of
investing its capital, surplus and other funds, or any part thereof, may:
a. Purchase or hold as collateral security or otherwise and sell and transfer any bonds or public stock issued, created or guaranteed by the United States, or any territory or insular possession thereof, or the Commonwealth of Puerto Rico, or by this State, or by any of the other states of the United States or the District of Columbia, or by Canada or any of the provinces thereof, or by any of the incorporated cities, counties, parishes, townships or other municipal corporations situated in any of the places hereinabove mentioned; or bonds authorized to be issued by any commission appointed by the Supreme Court of this State as the said court was constituted prior to September 15, 1948.
b. Purchase or hold real estate for business or residential purposes, other than as provided for in R.S.17:19-8 to 17:19-12, inclusive, as an investment for the production of income, and improve or otherwise develop such real estate; provided, that if the commissioner shall determine, after due hearing upon notice to any such insurance company, that the interests of such insurance company's policyholders require that any specified real estate so purchased or held be disposed of, then such insurance company shall dispose of such real estate within such reasonable time as the commissioner shall direct; and provided further, the aggregate amount of such investments for the production of income, but excluding real estate held as provided for in R.S.17:19-8 to 17:19-12, inclusive, shall not exceed 5% of the total admitted assets of such insurance company as of December 31 next preceding. The term "real estate for business or residential purposes" as used in this subsection b. shall include any real property used or operated as a part of or in connection with a business or a residential development, and shall also include a leasehold of such real estate having an unexpired term of not less than 20 years, inclusive of the term or terms which may be provided by any enforceable option or options of extension or of renewal. Income produced by investment in any such leasehold shall be applied by such insurance company in a manner calculated to amortize the amount invested for acquisition and improvement thereof within a period not exceeding 8/10 of such unexpired term of the leasehold following such acquisition or improvement, or within a period of 40 years thereafter, whichever is less.
c. Invest in bonds or notes secured by mortgages or trust deeds on unencumbered fee simple or leasehold real estate, which shall include areas above the surface of the ground but not contiguous thereto, or any interest therein, located within the United States, any territory or insular possession thereof, the Commonwealth of Puerto Rico, or Canada, worth at least 1/3 more than the sum so invested. No loan may be made on leasehold real estate unless the terms of such loan provide for amortization payments to be made by the borrower on the principal thereof in amounts sufficient to completely amortize the loan within a period not exceeding 9/10 of the term of the leasehold, inclusive of the term or terms which may be provided by any enforceable option or options of extension or of renewal, which is unexpired at the time the loan is made. For the purpose of this subsection c., fee simple or leasehold real estate or any interest therein shall not be deemed to be encumbered within the meaning of this subsection c. by reason of the existence of taxes or assessments that are not delinquent, easements, profits or licenses, nor by reason of building restrictions or other restrictive covenants, nor when such real estate or interest therein is subject to lease in whole or in part whereby rents or profits are reserved to the owner; provided, that the security created by the mortgage or trust deed on such real estate or interest therein securing such bond or note is a first lien upon such real estate or interest therein. No insurance company shall, pursuant to this subsection c., invest in or loan upon the security of any one property more than $30,000 or more than 2% of its total admitted assets, whichever is the greater. The total investments of any insurance company made pursuant to this subsection c. shall not exceed 40% of its total admitted assets.
d. Invest in bonds or notes evidencing loans to veterans if the full amount of any such loan is guaranteed by the government of the United States or by the Administrator of Veterans' Affairs pursuant to the "Servicemen's Readjustment Act of 1944," Pub.L.78-346 (38 U.S.C. s.3701 et seq.), as heretofore or hereafter amended; and in the case of loans so guaranteed for less than the full amount thereof, the maximum amount which may be loaned or invested by any such insurance company pursuant to the provisions of any law of this State shall be increased by the amount so guaranteed.
e. Lend on or purchase mortgage or collateral trust bonds of railroad companies organized under the laws of said states, or the District of Columbia, or the Commonwealth of Puerto Rico, or Canada or any province thereof, or operated wholly or partly therein; or equipment trust certificates or obligations which are adequately secured or other adequately secured instruments evidencing an interest in transportation or municipal sanitation equipment wholly or in part within the United States or any territory or insular possession thereof, the Commonwealth of Puerto Rico or Canada and a right to receive determined portions of rental, purchase or other fixed obligatory payments for the use or purchase of such equipment; or certificates of receivers of any corporation where such purchase is necessary to protect an investment in the securities of such corporation theretofore made under authority of chapters 17 to 33, inclusive, of this Title; or the bonds or other evidences of indebtedness of public utility companies organized under the laws of Canada or any province thereof; or the capital stock, bonds, securities or evidences of indebtedness created by any corporation of the United States or of any state, or of the District of Columbia, or of the Commonwealth of Puerto Rico or of Canada or of any province thereof; provided, that no purchase of any bond or evidence of indebtedness which is in default as to interest shall be made by such company unless such purchase is necessary to protect an investment theretofore made under authority of chapters 17 to 33, inclusive, of this Title, in the securities of the corporation which issued, assumed or guaranteed such bond or evidence of indebtedness in default; provided further, that no purchase of the stock of any corporation of a class on which dividends have not been paid during each of the past five years preceding the time of purchase shall be made unless the stock so purchased shall represent a majority in control of all the stock then outstanding, or the corporation shall have earned during the period of such five years an aggregate sum available for dividends upon such stock which would have been sufficient, after all fixed charges and obligations, to pay dividends upon all shares of such class of stock outstanding during such period averaging 4% per annum computed upon the par value of such stock, or in the case of stock having no par value, upon the stated capital in respect thereof; and provided further, that in the case of the stock of a corporation resulting from or formed by merger, consolidation, acquisition or otherwise, less than five years preceding the time of purchase, each consecutive year next preceding the effective date of such merger, consolidation, acquisition or other action during which dividends or other distributions of profits shall have been paid by any one or more of its constituent or predecessor institutions shall be deemed a year during which dividends have been paid on such class of stock and the earnings of such constituent or predecessor institutions available for dividends during each of such years may be included as earnings of the existing corporation whose stock is to be purchased for each such years, and in the case of the stock of a corporation resulting from or formed by merger or consolidation less than five years preceding such purchase, each consecutive year next preceding the effective date of such merger or consolidation during which dividends shall have been paid by any one or more of its constituent corporations on any or all classes of its or their stock in an aggregate amount sufficient to have paid dividends on that class of stock of the existing corporation whose stock is to be purchased, had such corporation then been in existence, shall be deemed a year during which dividends have been paid on such class of stock; provided, however, that nothing herein contained shall prohibit the purchase of stock of any class which is preferred, as to dividends, over any class the purchase of which is not prohibited by this section; and provided further, that no purchase of its own stock shall be made by any insurance company except for the purpose of the retirement of such stock or except as specifically permitted by any law of this State applicable by its terms only to insurance companies. Unless the stock so purchased shall represent a majority in control of all the stock then outstanding, the cost of stock investment pursuant to this section may not exceed more than 25% of the total admitted assets of such insurance company as of December 31 next preceding with no more than 5% in any one stock. Notwithstanding any other provision of R.S.17:24-1 et seq., the cost basis of all stock investment shall be used for the purpose of determining the asset value against which such percentage limitations are to be applied.
The aggregate amount invested at cost, including but not limited to common stock, preferred stock and debt obligations, in one or more subsidiaries shall not exceed the lesser of 10% of such insurance company's assets or 50% of such insurance company's surplus as regards policyholders as of December 31 next preceding. In calculating the amount of such investments, investments in domestic or foreign insurance subsidiaries shall be excluded.
f. Invest in bonds or notes evidencing loans if the full amount of any such loan is insured by the government of the United States, or by the Administrator of the Farmers' Home Administration pursuant to the " Bankhead-Jones Farm Tenant Act," Pub.L.75-210 (7 U.S.C. s.1000 et seq.), as heretofore or hereafter amended.
g. Invest in securities, properties and other investments in foreign countries, in addition to those specified in R.S.17:24-10, which are substantially of the same character as prescribed for authorized investments for funds of the insurance company under the preceding subsections of this section, to an amount valued at cost, not exceeding in the aggregate at any one time 20% of the total admitted assets of the insurance company as of December 31 next preceding; provided, however, that the amount invested pursuant to this subsection in authorized investments, other than qualified foreign investments, shall not exceed in the aggregate, at any one time, 5% of such admitted assets; and provided further that the amount invested in authorized investments in any one foreign country pursuant to this subsection shall not exceed in the aggregate, at any one time, 10% of such admitted assets. For the purposes of this subsection, Canada shall not be deemed to be a foreign country.
The term "qualified foreign investment" as used in this subsection shall include any investment in a foreign country where:
(1) the issuer or obligor is:
(a) a jurisdiction which is rated in one of the two highest rating categories by an independent, nationally recognized United States rating agency;
(b) any political subdivision or other governmental unit of any such jurisdiction, or any agency or instrumentality of any such jurisdiction, political subdivision or other governmental unit; or
(c) an institution that is organized under the laws of any such jurisdiction, or, in the case of investments which are substantially of the same character as prescribed for investments under subsections b. and c. of this section, the real property is located in any such jurisdiction; and
(2) if the investment is denominated in any currency other than United States dollars, the investment is effectively hedged, substantially in its entirety, against the United States dollar pursuant to contracts or agreements which are:
(a) issued by or traded on a securities exchange or board of trade regulated under the laws of the United States or Canada or a province thereof;
(b) entered into with a United States banking institution which has assets in excess of $5 billion and which has obligations outstanding, or has a parent corporation which has obligations outstanding, which are rated in one of the two highest rating categories by an independent, nationally recognized United States rating agency, or with a broker-dealer registered with the Securities and Exchange Commission which has net capital in excess of $250 million; or
(c) entered into with any other banking institution which has assets in excess of $5 billion and which has obligations outstanding, or has a parent corporation which has obligations outstanding, which are rated in one of the two highest rating categories by an independent, nationally recognized United States rating agency and which is organized under the laws of a jurisdiction which is rated in one of the two highest rating categories by an independent, nationally recognized United States rating agency.
Any investment qualified pursuant to paragraph (2) of the preceding definition of "qualified foreign investment" shall remain so qualified only at such time or times that the hedging requirements of paragraph (2) are met.
[g.] h. Except as provided in section 3 of P.L.2007, c.252 (C.17:24-1.2), make loans or investments not qualifying or permitted under any subsection of this section to an amount, not including the amount of investments otherwise expressly authorized by law, not exceeding in the aggregate at any one time the greater of 5% of the total admitted assets or 50% of the excess of total admitted assets over the sum of liabilities plus capital and surplus required to transact business, but in any event not to exceed 10% of the total admitted assets of such insurance company as of December 31 next preceding.1
(cf: P.L.2007, c.252, s.1)
2. This act shall take effect immediately.
