Session Laws

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

Chapter 175 of the General Laws is hereby amended by striking out section 11, as appearing in the 1988 Official Edition, and inserting in place thereof the following section:-

Section 11. In addition to the reserve provided for in sections nine and ten, the commissioner shall, except as provided in section twelve, charge to each company as a liability all unpaid losses and claims for losses, and all other debts and liabilities including, in the case of a stock company, its capital stock and including, in the case of a mutual company with a guaranty capital or guaranty fund, such guaranty capital or guaranty fund. Said commissioner shall allow to the credit of a company in the account of its financial condition only such assets as are available for the payment of losses including an electronic data processing machine; provided, however, that such machine costs at least one hundred thousand dollars and that such cost is to be amortized in full over a period not to exceed ten years, and including all assets deposited with officers of other states or countries for the security of the policyholders of such company, or assets deposited as collateral for bonds given for the security of the policyholders of a company in lieu of assets deposited with officers of other states or countries; and provided, further, that such deposit is made with a national bank, savings bank or trust company at its principal place of business in the commonwealth which has been approved by the commissioner; and, provided further, that no holding or parcel of real estate shall be given a higher value than would be adequate to yield at three percent annual interest the average amount of its net rental for three years next preceding, except that if a company shows to his satisfaction that the actual value of any of its real estate is greater than the value so ascertained, then the actual value of said real estate as determined by the commissioner shall be allowed. Further, said commissioner may allow any such company to value any of its real estate at the value established by local assessing authorities, less the outstanding amount of any encumbrance thereon. Said commissioner may, in his discretion, require any company to furnish such information as may be required to substantiate the values hereinbefore prescribed.

He shall not allow stockholders' obligations of any description as part of the assets or capital of any stock company, unless secured by sufficient approved collateral.

Said commissioner may value all bonds or other evidences of debt having a fixed term and rate held by a company, if amply secured and not in default as to principal or interest, as follows: if purchased at par, at the par value; if purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield, in the meantime, the effective rate of interest at which the purchase was made; provided, however, that the purchase price shall in no case be taken at a higher figure than the actual market value when purchased; and, provided further, that the commissioner shall have full discretion in determining the method of calculating values according to the preceding rule and the values found by him in accordance with such rule shall be made final and binding; and, provided further, that any such company may return such bonds or other evidences of debt at their market value or their book value, but in no event at an aggregate value exceeding the aggregate of the values calculated according to the foregoing rule.