N.Y. Insurance Law § 1414: Valuation of investments

§ 1414. Valuation of investments. (a) (1) All obligations having a

fixed term and rate of interest and held by any life insurance company

or fraternal benefit society authorized to do business in this state, if

amply secured and not in default as to principal or interest, shall be

valued as follows:

(A) if purchased at par, at the par value;

(B) 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 yield in

the meantime the effective rate of interest at which the purchase was

made, or, in the superintendent's discretion, on the basis of the method

of calculation commonly known as the pro rata method.

(2) The purchase price shall in no case be taken at a higher figure

than the actual market value at the time of acquisition.

(3) The superintendent shall have the power to determine the

eligibility of any such investments for valuation on the basis of

amortization, and may by regulation prescribe or limit the types of

securities so eligible for amortization. All obligations which in the

judgment of the superintendent are not amply secured shall not be

eligible for amortization and shall be valued in accordance with

subsection (b) hereof.

(4) The superintendent may, if he finds that the interests of

policyholders so permit or require, by regulation permit or require any

class of insurers, other than life insurance companies or fraternal

benefit societies, authorized to do business in this state, to value

their obligations in accordance with the foregoing rule.

(b) (1) Except securities subject to amortization and except as

otherwise provided in this chapter, the investments (including any

investments in an investment company) of all insurers authorized to do

business in this state shall be valued, in the discretion of the

superintendent, at their market value, or at their appraised value, or

at prices determined by him as representing their fair market value.

(2) If the superintendent finds that in view of the character of

investments of the insurer it would be prudent for such insurer to

establish a special reserve for possible losses or fluctuations in the

values of its investments, he may require that a reserve, reasonable in

amount, be established and maintained and that it be reported in any

statement or report of the financial condition of such insurer.

(3) The superintendent may, in connection with any examination or

required financial statement of the insurer, require it to furnish him a

complete financial statement and audited report of the financial

condition of any corporation whose securities are owned wholly or partly

by such insurer and may cause an examination to be made of any

subsidiary or affiliate of such insurer.

(c) (1) The shares of an insurance company which is not a subsidiary,

or affiliate, including for purposes of this subsection any corporation

having a majority of its assets invested in one or more insurance

companies, shall be valued in accordance with subsection (b) of this

section if such shares are registered on a national securities exchange,

as provided in the federal Securities Exchange Act of 1934, 15 U.S.C. §§

78a-78kk.

(2) Except as otherwise provided in section four thousand two hundred

forty of this chapter, shares of an insurance company which is a

subsidiary, or affiliate, shall be valued according to the methods

approved by the National Association of Insurance Commissioners for the

valuation of subsidiary, controlled and affiliated entities, or such

other method that the superintendent in a regulation determines would be

in the best interests of the policyholders and the people of this state.

(3) The book value of common shares of an insurance company shall be

ascertained by dividing (i) the amount of the insurer's capital and

surplus less the value of all its preferred shares, if any, outstanding,

by (ii) the number of common shares outstanding.

(4) Notwithstanding the foregoing provisions, an insurer may, at its

option, value its shares in a subsidiary insurance company in an amount

not less than acquisition cost if it is less than the value determined

as hereinbefore provided.

(d) Real property acquired by foreclosure or by deed in lieu thereof,

in the absence of a recent appraisal deemed reliable by the

superintendent, shall not be valued at an amount greater than the unpaid

principal of the defaulted loan at the date of such acquisition,

together with any taxes and expenses paid or incurred by such insurer at

such time in connection with such acquisition (but not including any

uncollected interest on such loan), and the cost of additions or

improvements thereafter made by such insurer and any amounts thereafter

paid by such insurer on any assessments levied for improvements in

connection with the property.

(e) Purchase money mortgages received on dispositions of real property

shall be valued in an amount not exceeding ninety percent of the value

of such real property as determined by an appraisal made by an appraiser

at or about the time of the disposition; provided that purchase money

mortgages received on dispositions of real property acquired or held

pursuant to paragraph five of subsection (a) of section one thousand

four hundred four of this article or on dispositions of real property

acquired or held under section one thousand four hundred five of this

article in satisfaction of loans, mortgages, liens, judgments, decrees

or other debts previously owing to such insurer in the course of its

business shall in no event be valued in an amount exceeding its

acquisition costs.

(f) The stock of a subsidiary of an insurer shall be valued on the

basis of the greater of: (i) the value of only such assets of such

subsidiary as would constitute lawful investments if acquired or held

directly by the insurer; or (ii) such other value as may be determined

pursuant to standards and cumulative limitations in regulations

promulgated by the superintendent.

(g) Notwithstanding any provision contained in this section or

elsewhere in this chapter, if the superintendent finds that the

interests of policyholders so permit or require, he may permit or

require any class of insurers authorized to do business in this state to

value their investments or any class thereof as of any date heretofore

or hereafter in accordance with any applicable valuation or method

approved by the National Association of Insurance Commissioners.