KRS 304.6-010: "Assets" defined.

(1) In any determination of the financial condition of an insurer, there shall be allowed

as assets only such assets as are owned by the insurer and which consist of:

(a) Cash in the possession of the insurer, or in transit under its control, and

including the true balance of any deposit in a solvent bank or trust company;

(b) Investments, securities, properties and loans acquired or held in accordance

with this code and in connection therewith the following items:

1. Interest due or accrued on any bond or evid ence of indebtedness which

is not in default and which is not valued on a basis including accrued

interest;

2. Declared and unpaid dividends on stocks and shares, unless such amount

has otherwise been allowed as an asset;

3. Interest due or accrued upon a collateral loan in an amount not to exceed

one (1) year's interest thereon;

4. Interest due or accrued on deposits in solvent banks and trust companies,

and interest due or accrued on other assets, if such interest is in the

judgment of the commissioner a collectible asset;

5. Interest due or accrued on a mortgage loan, in an amount not exceeding

in any event the amount, if any, of the excess of the value of the property

less delinquent taxes thereon over the unpaid principal. Collectible

interest one hundr ed eighty (180) days past due on a mortgage loan in

default is a nonadmitted asset; and

6. Rent due or accrued on real property if such rent is not in arrears for

more than three (3) months, and rent more than three (3) months in

arrears if the payment of such rent be adequately secured by property

held in the name of the tenant and conveyed to the insurer as collateral;

(c) Premium notes, policy loans, and other policy assets and liens on policies of

life insurance and annuity contracts and accrued interest thereon, in an amount

not exceeding the policy reserves or cash surrender value;

(d) The net amount of uncollected and deferred premiums and annuity

considerations in the case of a life insurer, corresponding to the basis on

which reserves are held;

(e) Premiums in the course of collection, other than for life insurance, not more

than three (3) months past due, less commissions payable thereon. To the

extent that there is no related unearned premium, any uncollected premium

balances which are over ninety (90) days due shall be nonadmitted. The

uncollected agent's receivable on a policy basis which is over ninety (90) days

due shall be nonadmitted regardless of any unearned premium;

(f) Installment premiums other than life insurance premiums to the extent of the

policy reserve carried on the policy to which premiums apply. If an

installment premium is past due, the amount over ninety (90) days due plus all

future installments that have be en recorded on that policy shall be

nonadmitted;

(g) Bills receivable for premiums other than life insurance premiums, on policies

permitted to be issued on such basis, to the extent of the policy reserve carried

thereon. Bills receivable shall be nonadmit ted if either of the following

conditions are present:

1. If an installment premium is over ninety (90) days due, the entire bill's

receivable balance from that policy shall be nonadmitted; or

2. If the bill's receivable balance due exceeds the policy's un earned

premium, the amount in excess of the unearned premium is

nonadmitted;

(h) The full amount of reinsurance recoverable on paid losses and loss adjustment

expense by a ceding insurer from a solvent reinsurer and which reinsurance is

authorized under KRS 304.5-140;

(i) Funds held or deposited with reinsured companies, whether premiums

withheld as security for unearned premium and outstanding loss reserves or

advances for loss payments, are admitted assets provided they do not exceed

the liabilities they secure and provided the reinsured is solvent. Any funds in

excess of the liabilities, and any funds held by an insolvent reinsured, shall be

nonadmitted;

(j) Deposits or equities recoverable from underwriting associations, syndicates

and reinsurance funds, or from any suspended banking institution, to the

extent deemed by the commissioner available for the payment of losses and

claims and at values to be determined by the commissioner;

(k) As to a title insurer, its title plant and equipment reasonably nece ssary for

conduct of its abstract or title insurance business, at not to exceed the cost

thereof;

(l) Electronic data processing equipment and operating software are admitted

assets to the extent they conform to the requirements of SSAP No. 4.

Electronic data processing equipment and software shall be depreciated for a

period not to exceed three (3) years using methods detailed in SSAP No. 19.

The aggregate value of admitted electronic data processing equipment and

operating system software (net of accumula ted depreciation) shall be limited

to three percent (3%) of the reporting entity's capital and surplus on the

statutory balance sheet for its most recently filed statement with its domicilary

state commissioner, adjusted to exclude electronic data processi ng equipment

and operating system software, net deferred tax assets, and net positive

goodwill;

(m) A collateral loan or unconditional obligation for the payment of money

secured by the pledge of an investment to the extent it conforms to the

requirements of SSAP No. 4. The outstanding principal balance on the loan

and any related accrued interest shall be recorded as an admitted asset subject

to the following limitations:

1. A collateral loan determined to be impaired shall be an admitted asset

equal to th e fair market value of the collateral less estimated costs to

obtain and sell the collateral. The difference between the net fair value

of the collateral and the amount of the collateral loan shall be written off

in accordance with SSAP No. 5.

2. A collate ral loan secured by an asset that does not qualify as an

investment shall be nonadmitted.

3. A collateral loan that exceeds the fair market value of the collateral shall

be an admitted asset equal to the fair market value of the collateral. The

excess shall be classified as a nonadmitted asset;

(n) Deferred tax assets as defined in SSAP No. 10;

(o) Receivable for securities as defined in SSAP No. 21;

(p) Guaranteed investment contracts as defined in SSAP No. 21;

(q) Cash value of life insurance where the re porting entity is owner and

beneficiary as defined in SSAP No. 21;

(r) Other amounts receivable under reinsurance contracts as defined in SSAP No.

21;

(s) State guarantee association promissory notes;

(t) All assets as may be allowed pursuant to the accoun ting practices and

procedures manual; and

(u) Other assets, not inconsistent with the provisions of this section, deemed by

the commissioner to be available for the payment of losses and claims, at

values to be determined by the commissioner.

(2) Admitted assets may be allowed as deductions from corresponding liabilities, and

liabilities may be charged as deductions from assets, and deductions from assets

may be charged as liabilities, in accordance with the form of annual statement

applicable to such insurer as prescribed by the commissioner, or otherwise in his or

her discretion. The commissioner may make official regulations prescribing the

application of the provisions of this section.