KRS 304.7-350: Valuation of assets.

(1) All obligations having a fixed term, rate, and face value held by an insurer

authorized to do business in this state may, if amply secured and not in default

either as to principal or interest, be valued as follows: if acquired at face value, at

the face v alue; if acquired above or below face value, on the basis of the purchase

price adjusted annually to bring the value to face value at maturity and so as to yield

in each year the effective rate of interest at which the purchase was made. The

amortization p rovided for in this subsection may be calculated with reasonable

approximations. The commissioner shall have the power to determine by rule the

eligibility of investments for valuation under this subsection.

(2) (a) Securities, other than those referred to in subsection (1) of this section, held

by an insurer shall be valued, in the discretion of the commissioner, at their

fair market value, at their appraised value, or at prices determined by the

commissioner as representing their fair market value.

(b) Preferred or guaranteed stock or shares while paying full dividends may be

carried at a fixed value in lieu of market value, at the discretion of the

commissioner and in accordance with the method of computation he or she

approves.

(c) Securities qualifying under KRS 304.7-120, 304.7-423, or 304.7-473 shall be

valued at their fair value or net equity value, except that securities of a

subsidiary insurance corporation as provided for in KRS 304.7 -120 shall be

valued either at cost or on a net equity basis, whichever is greater.

(3) (a) Real property acquired pursuant to a mortgage loan or contract for sale, in the

absence of a recent appraisal deemed by the commissioner to be reliable, shall

not be valued at an amount greater than the unpaid principal of the de faulted

loan or contract at the date of acquisition, together with any taxes and

expenses paid or incurred in connection with acquisition, and the cost of

improvements thereafter made by the insurer and any amounts thereafter paid

by the insurer on assessments levied for improvements in connection with the

property.

(b) Other real property held by an insurer shall not be valued at an amount in

excess of fair value as determined by recent appraisal deemed by the

commissioner to be reliable. If valuation is b ased on an appraisal more than

three (3) years old, the commissioner may, at his or her discretion, call for and

require a new appraisal in order to determine fair value.

(c) Personal property acquired pursuant to chattel mortgages or security

agreements shall not be valued at an amount greater than the unpaid principal

of the defaulted loan at the date of acquisition, together with any taxes and

expenses paid or incurred in connection with acquisition, or the fair value of

the property, whichever amount is the lesser.

(4) However, in all cases securities shall be valued in accordance with the standards

promulgated by the National Association of Insurance Commissioners including the

Purposes and Procedures of the Securities Valuation Office, the Valuation of

Securities Manual, the Accounting Practices and Procedures Manual, the Annual

Statement Instructions, or any successor valuation procedures officially adopted by

the NAIC.