NMSA 1978, § 59A-9-1 Scope
59A-9-1. Scope
This article [Chapter 59A, Article 9 NMSA 1978], with exception of Section 160 [59A-9-27 NMSA 1978], applies only to domestic insurers.
Laws 1984, ch. 127, § 134.
Investments
NMSA 1978 ch. 59A, art. 9
in effectNMSA 1978, § 59A-9-2 Eligible investments
59A-9-2. Eligible investments
A. Insurers shall invest in or lend their funds on security of, and shall hold as invested assets, only eligible investments as prescribed in this article.
B. Any particular investment held by an insurer on effective date of the Insurance Code, which was a legal investment at time made and which the insurer was legally entitled to possess immediately prior to such effective date, shall be deemed an eligible investment.
C. Eligibility of an investment shall otherwise be determined as of date of making or acquisition.
D. Any investment limitation based upon the amount of the insurer's assets or particular funds shall relate to such assets or funds as shown by the insurer's annual statement as of December 31 next preceding date of acquisition of the investment, or as shown by a more recent financial statement resulting from merger of another insurer, bulk reinsurance or change of capitalization.
E. No insurer shall pay any commission or brokerage for purchase or sale of property in excess of that usual and customary at the time and in the locality where the purchase or sale is made.
Laws 1984, ch. 127, § 135.
NMSA 1978, § 59A-9-3 General qualifications
59A-9-3. General qualifications
A. No security or investment (other than real and personal property acquired under Section 59A-9-21 NMSA 1978) shall be eligible for acquisition by an insurer unless it is interest bearing or interest accruing or by its character entitled to dividends when declared and paid, or has other income-earning entitlement, is not then in default in any respect, and the insurer is entitled to receive for its exclusive account and benefit the interest or income accruing thereon.
B. No security or investment shall be eligible for purchase at a price above its fair market value.
C. No provision of Chapter 59A, Article 9 NMSA 1978 shall prohibit acquisition by an insurer of other or additional securities or property if received as a dividend or lawful distribution of assets, or upon a debt or judgment, or under a lawful and bona fide agreement of bulk reinsurance, merger, or consolidation. Any security or property so acquired which is not otherwise an eligible investment under this article shall be disposed of by the insurer pursuant to Section 59A-9-23 NMSA 1978 if real property, or pursuant to Section 59A-9-24 NMSA 1978 if personal property or securities.
D. Notwithstanding any other provision of law, a domestic insurance company may deposit or arrange for the deposit of securities held in or purchased for its general account and its separate accounts in a clearing corporation or the federal reserve book-entry system. When securities are deposited with a clearing corporation, certificates representing securities of the same class of the same issuer may be merged and held in bulk in the name of the nominee of such clearing corporation with any other securities deposited with such clearing corporation by any person, regardless of the ownership of such securities, and certificates representing securities of small denominations may be merged into one or more certificates of larger denominations. The records of any member bank through which an insurance company holds securities in the federal reserve book-entry system, and the records of any custodian banks through which an insurance company holds securities in a clearing corporation, shall at all times show that such securities are held for such insurance company and for which accounts thereof. Ownership of, and other interests in, such securities may be transferred by bookkeeping entry on the books of such clearing corporation or in the federal reserve book-entry system without, in either case, physical delivery of certificates representing such securities. The superintendent of insurance is authorized to promulgate rules and regulations governing the deposit by insurance companies of securities with clearing corporations and in the federal reserve book-entry system.
(1) "Clearing corporation" means a corporation as defined in Section 55-8-102 NMSA 1978, except that with respect to securities issued by institutions organized or existing under the laws of any foreign country or securities used to meet the deposit requirements pursuant to the laws of a foreign country as a condition of doing business therein, "clearing corporation" may include a corporation which is organized or existing under the laws of any foreign country and is legally qualified under such laws to effect transactions in securities by computerized book-entry.
(2) "Direct participant" means a bank or trust company or other institution which maintains an account in its name in a clearing corporation and through which an insurance company participates in a clearing corporation.
(3) "Federal Reserve book-entry system" means the computerized systems sponsored by the United States department of the treasury and certain agencies and instrumentalities of the United States government and such agencies and instrumentalities, respectively, in federal reserve banks through banks which are members of the federal reserve system or which otherwise have access to such computerized systems.
(4) "Member bank" means a national bank, state bank or trust company which is a member of the federal reserve system and through which an insurance company participates in the federal reserve book-entry system.
(5) "Securities" means instruments as defined in Section 55-8-102 NMSA 1978.
Laws 1984, ch. 127, § 136; 1987, ch. 259, § 10.
NMSA 1978, § 59A-9-4 Authorization and record of investments
59A-9-4. Authorization and record of investments
A. An insurer shall not make any particular investment or loan (other than policy loans or annuity contract loans of a life insurer) unless the same is authorized or ratified by the insurer's board of directors, or other appropriate governing body if a reciprocal or Lloyd's insurer, or by a committee thereof charged with supervision of investments and loans. The minutes of any such committee shall be recorded and a report submitted to the board of directors or such other appropriate governing body, at the next meeting thereof.
B. The insurer shall maintain a full record of each investment showing, among other pertinent information, the name of any officer, director or principal stockholder or security holder of the insurer having any direct, indirect or contingent interest in the securities, loan or property constituting the investment, or in the person in whose behalf the investment is made, and the nature of such interest.
Laws 1984, ch. 127, § 137.
NMSA 1978, § 59A-9-5 Diversification
59A-9-5. Diversification
An insurer shall invest in or hold as assets categories of investments only within applicable limits as follows:
A. one person: an insurer shall not at any one time have any combination of investments in or loans upon the security of obligations, property or securities of any one person (other than its lawful subsidiary) aggregating over ten percent of the insurer's assets. This shall not apply as to general obligations of the United States or of any state or of Canada or province thereof, or include policy loans made under Section 148 [59A-9-15 NMSA 1978] of this article, or bank deposits or certificates of deposit issued by banks. For purposes of this provision a corporation or other lawful entity together with its subsidiaries and affiliates shall constitute one person;
B. voting stock: an insurer shall not invest in or hold at any one time more than ten percent of the outstanding voting stock of any corporation, except as to voting rights of preferred stock during default of dividends. This subsection does not apply to stock of the insurer's subsidiary acquired under Section 145 [59A-9-12 NMSA 1978] of this article;
C. minimum capital: an insurer shall invest and maintain invested funds not less in amount than the minimum paid-in capital stock required under the Insurance Code of a domestic stock insurer transacting like kinds of insurance, only in cash and the securities provided for under the following sections of this article: Sections 139 [59A-9-6 NMSA 1978] (public obligations), 140 [59A-9-7 NMSA 1978] (obligations, stock of certain federal and international agencies), 141 [59A-9-8 NMSA 1978] (corporate obligations), and 147 [59A-9-14 NMSA 1978] (equipment trust certificates);
D. revenue bonds: an insurer shall not have invested at any time more than twenty percent of its assets in revenue bonds described in Sections 139 and 141 [59A-9-6 and 59A-9-8 NMSA 1978] of this article;
E. equipment trust certificates: an insurer shall not have invested at any time more than fifteen percent of its assets in equipment trust certificates described in Section 147 [59A-9-14 NMSA 1978] of this article;
F. real property encumbrances: an insurer shall not at any one time have more than thirty-five percent of its assets invested in obligations secured by real property mortgages, trust deeds, contracts of purchase or other similar encumbrances of real property; and
G. other specific limits: limits as to investments in real property shall be as provided in Section 154 [59A-9-21 NMSA 1978] of this article; and other specific limits shall apply as stated in this article dealing with other respective kinds of investments.
Laws 1984, ch. 127, § 138.
NMSA 1978, § 59A-9-6 Public obligations
59A-9-6. Public obligations
A. Subject to Subsection B, below, an insurer may invest in bonds or other evidences of indebtedness, not in default as to principal or interest, which are valid and legally authorized obligations issued, assumed or guaranteed by the United States government or by any state thereof, or by Canada or any of the provinces thereof; or by any county, city, town, village, municipality or district therein or political subdivision thereof, or public instrumentality of one or more of the foregoing, if by statutory or other legal requirements applicable thereto such obligations are payable as to both principal and interest, from:
(1) taxes levied or required to be levied upon all taxable property or all taxable income within the jurisdiction of such governmental unit; or
(2) adequate special revenues pledged or otherwise appropriated or by law required to be provided for the purpose of such payment; but not including any obligation payable solely out of special assessments on properties benefited by local improvements unless adequate security is evidenced by the ratio of assessment to value of the property or the obligation is additionally secured by an adequate guaranty fund or adequate source of revenue required by law.
B. No such investment shall be made in any bond or evidence of indebtedness rated lower than BAA by Moody's Investment Service, Inc. or BBB by Standard & Poors, Inc.
C. Bonds and similar obligations issued by any such governmental unit payable solely from revenues from special projects undertaken for air pollution control, exploitation of energy and other resources, transportation by pipeline or other means, and other similar projects, to be operated under lease or otherwise by one or more nongovernmental business entities, and such bonds or obligations guaranteed as to payment of principal and interest by such entities, are not deemed public obligations for purposes of this section. They shall be treated as obligations of the guarantors, and as to eligibility for investment of insurer funds are governed by Section 141 [59A-9-8 NMSA 1978] of this article.
Laws 1984, ch. 127, § 139.
NMSA 1978, § 59A-9-7 Obligations, stock of certain federal and international agencies
59A-9-7. Obligations, stock of certain federal and international agencies
An insurer may invest in the obligations, and stock where stated, issued, assumed or guaranteed by the following agencies of the United States government, or in which such government is a participant, whether or not the obligations are guaranteed by it:
A. farm loan bank;
B. commodity credit corporation;
C. federal intermediate credit banks;
D. federal land banks;
E. central bank for cooperatives;
F. federal home loan banks, and stock thereof;
G. federal national mortgage association, and stock thereof when acquired in connection with sale of mortgage loans to such association;
H. international bank for reconstruction and development;
I. inter-American development bank;
J. Asian development bank;
K. African development bank; and
L. any other similar agency of, or participated in by, the United States government and of similar financial quality.
Laws 1984, ch. 127, § 140; 1988, ch. 22, § 2.
NMSA 1978, § 59A-9-8 Corporate obligations
59A-9-8. Corporate obligations
A. An insurer may invest in the bonds, debentures or secured obligations of any solvent corporation organized and existing under the laws of any state, or of Canada or province thereof, which has been in existence and active business operation for not less than five (5) years, and which has not defaulted in payment of interest or principal of any of its obligations during the five (5) years prior to investment.
B. No insurer shall invest in any such bonds or evidences of indebtedness in excess of ten percent of any issue and related issues thereof or one hundred thousand dollars ($100,000), whichever is the larger, subject to Paragraph A of Section 138 [59A-9-5 NMSA 1978] (diversification) of this article.
Laws 1984, ch. 127, § 141.
NMSA 1978, § 59A-9-9 Preferred or guaranteed stocks
59A-9-9. Preferred or guaranteed stocks
A. An insurer may invest in preferred or guaranteed stocks or shares of any solvent institution existing under the laws of the United States or Canada, or any state or province thereof.
B. No insurer shall invest in any such preferred or guaranteed stock in an amount in excess of ten percent of any issue and related issues thereof, subject to Paragraph A of Section 138 [59A-9-5 NMSA 1978] (diversification) of this article, and subject to the limit of the insurer's investments in preferred, guaranteed and common stocks as stated in Subsection B of Section 143 [59A-9-10 NMSA 1978] (common stocks) of this article.
Laws 1984, ch. 127, § 142.
NMSA 1978, § 59A-9-10 Common stocks
59A-9-10. Common stocks
A. An insurer may invest in nonassessable (except as to bank or trust company stocks, and except for taxes) common stocks, other than insurance stocks, of any solvent corporation organized and existing under the laws of the United States or Canada, or of any state or province thereof, which has been in existence and active business operation for at least five (5) years prior to the investment; and if such corporation has had net earnings available for dividends on such stock in each of such five (5) years. If the issuing corporation has not been in legal existence for the whole of such five (5) years but was formed as a consolidation or merger of two or more businesses of which at least one was in operation on a date five (5) years prior to the investment, the test of eligibility of the common stock under this section shall be based upon consolidated pro forma statements of the predecessor or constitutuent [constituent] institutions.
B. An insurer shall not at any time have invested in preferred or guaranteed stocks or common stocks an aggregate of more than ten percent of its assets if a life insurer, or thirty-five percent of its assets if transacting kinds of insurance other than life insurance.
Laws 1984, ch. 127, § 143.
NMSA 1978, § 59A-9-11 Insurance stocks
59A-9-11. Insurance stocks
A. An insurer may invest in the stocks of other solvent insurers formed under the laws of this or another state, which stocks meet the applicable requirements of Section 142 [59A-9-9 NMSA 1978] (preferred or guaranteed stocks) or 143 [59A-9-10 NMSA 1978] (common stocks) of this article.
B. With the superintendent's advance written consent an insurer may acquire and hold controlling interest in or all outstanding voting stock of another such insurer. The superintendent shall not consent to any such acquisition if he finds it not in the best interests of the insurers involved, or of their respective policyholders or stockholders, or that the acquisition would materially tend to lessen competition or to result in any monopoly in the insurance business in this state.
C. Stock so acquired shall be included with other stock investments for the purpose of the limit of aggregate investments stated in Subsection B of Section 143 of this article.
Laws 1984, ch. 127, § 144.
NMSA 1978, § 59A-9-12 Investments in subsidiaries
59A-9-12. Investments in subsidiaries
A. An insurer either by itself or in cooperation with one or more other business entities, may organize or acquire one or more subsidiaries engaged or to be engaged in any of the following businesses:
(1) an insurance business authorized by the jurisdiction in which the subsidiary is incorporated;
(2) acting as insurance producer for its parent or for any of its parent's insurer subsidiaries;
(3) investing, reinvesting or trading in securities for its own account, that of its parent, any subsidiary of its parent or any affiliate or subsidiary;
(4) management of any investment company registered pursuant to the federal Investment Company Act of 1940, as amended, including related sales and services;
(5) acting as a broker-dealer registered pursuant to the federal Securities Exchange Act of 1934, as amended;
(6) rendering investment advice to governments, government agencies, corporations or other organizations or groups;
(7) rendering other services related to operations of an insurance business;
(8) owning and managing assets that the parent corporation could itself own or manage;
(9) acting as administrative agent for a government instrumentality that is performing an insurance function; or
(10) financing insurance premiums, agents and other forms of consumer financing; and
(11) any other business activity determined by the superintendent to be reasonably ancillary to an insurance business.
B. In addition to investments in common stock, preferred stock, debt obligations and other securities permitted under all other sections of Chapter 59A, Article 9 NMSA 1978 an insurer may also:
(1) invest, in common stock, preferred stock, debt obligations and other securities of one or more subsidiaries, amounts which unless otherwise approved by the superintendent do not exceed the lesser of ten percent of the insurer's assets or fifty percent of the insurer's surplus as regards policyholders, if, after the investments, the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs. In calculating the amount of the investments, there shall be included:
(a) total net money or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary, including all organizational expenses and contributions to capital and surplus of the subsidiary, whether or not represented by the purchase of capital stock or the issuance of other securities; and
(b) all amounts expended in acquiring additional common stock, preferred stock, debt obligations and other securities and all contributions to the capital and surplus of a subsidiary subsequent to its acquisition or formation;
(2) if the insurer's total liabilities, as calculated for annual statement purposes, are less than ten percent of assets, invest any amount in common stock, preferred stock, debt obligations and other securities of one or more subsidiaries, if, after the investment, the insurer's surplus as regards policyholders, considering the investment as if it were a disallowed asset, will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs;
(3) invest any amount in common stock, preferred stock, debt obligations and other securities of one or more subsidiaries, if each subsidiary agrees to limit its investments in any asset so that the investments will not cause the amount of the total investment of the insurer to exceed any of the investment limitations specified in Paragraph (1) of this subsection or in Chapter 59A, Article 9 NMSA 1978, applicable to the insurer. For the purpose of this paragraph "the total investment of the insurer" includes:
(a) any direct investment by the insurer in an asset; and
(b) the insurer's proportionate share of any investment in an asset by any subsidiary of the insurer, which shall be calculated by multiplying the amount of the subsidiary's investment by the percentage of the insurer's ownership of the subsidiary;
(4) with the approval of the superintendent, invest any amount in common stock, preferred stock, debt obligations or other securities of one or more subsidiaries, if, after the investment, the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs; and
(5) invest any amount in the common stock, preferred stock, debt obligations or other securities of any subsidiary exclusively engaged in holding title to, or holding title to and managing or developing, real or personal property, if, after considering as a disallowed asset so much of the investment as is represented by subsidiary assets, which if held directly by the insurer would be considered as a disallowed asset, the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs, and if, following such investment, all voting securities of such subsidiary would be owned by the insurer.
C. Investments in common stock, preferred stock, debt obligations or other securities of subsidiaries made pursuant to Subsection B of this section shall not be subject to any of the otherwise applicable restrictions or prohibitions contained in this article applicable to the investments of the insurer.
D. Whether any investment made pursuant to Subsection B of this section meets the applicable requirements thereof is to be determined immediately after the investment is made, taking into account the then outstanding balance on all previous investments in debt obligations and the value of all previous equity securities as of the date they were made.
E. If an insurer ceases to control a subsidiary, it shall dispose of any investment made in it pursuant to this section within three years from time of the cessation of control or within such further time as the superintendent may prescribe, unless at any time after the investment is made, the investments meet the requirements for investment under any other section of the Insurance Code, and the insurer has so notified the superintendent.
Laws 1984, ch. 127, § 145; 2001, ch. 90, § 1; 2016, ch. 89, § 10.
NMSA 1978, § 59A-9-13 Common trust funds, mutual funds
59A-9-13. Common trust funds, mutual funds
A. An insurer may invest in:
(1) a bank's common trust fund as defined in Section 584 of the United States Internal Revenue Code of 1954; and
(2) the securities of any open-end or closed-end management type investment company or investment trust registered under the federal Investment Company Act of 1940, as from time to time amended, if such investment company or trust has assets of not less than ten million dollars ($10,000,000) at date of the investment.
B. All such investments shall be considered as investment in common stocks for the purpose of the limit on aggregate investments imposed by Subsection B of Section 143 [59A-9-10 NMSA 1978] of this article.
Laws 1984, ch. 127, § 146.
NMSA 1978, § 59A-9-14 Equipment trust certificates
59A-9-14. Equipment trust certificates
An insurer may invest in equipment trust obligations or certificates adequately secured and evidencing an interest in transportation equipment, wholly or in part within or principally based within, the United States or Canada, which obligations or certificates carry the right to receive determined portions of rental, purchase or other fixed obligatory payments to be made for use or purchase of such transportation equipment.
Laws 1984, ch. 127, § 147.
NMSA 1978, § 59A-9-15 Policy loans
59A-9-15. Policy loans
A life insurer may lend to its policyholder or annuity contract holder, upon pledge of the policy or contract as collateral security, any sum not exceeding the cash surrender value of the policy or contract, or may lend against pledge or assignment of any of its supplementary contracts or other contracts or obligations, so long as the loan is adequately secured by such pledge or assignment.
Laws 1984, ch. 127, § 148.
NMSA 1978, § 59A-9-16 Collateral loans
59A-9-16. Collateral loans
An insurer may invest in loans secured by deposits of collateral consisting of securities in which the insurer may otherwise invest under this article, if the current market value of such collateral is not less than twenty percent in excess of the amount of the loan. The amount so loaned shall be included pro rata in determining the maximum of funds permitted under this article to be invested in the respective categories of securities so pledged. The superintendent may by rule or regulation place reasonable limit upon such loans to a parent corporation, subsidiary or affiliate of the insurer.
Laws 1984, ch. 127, § 149.
NMSA 1978, § 59A-9-17 Savings and share accounts, time certificates
59A-9-17. Savings and share accounts, time certificates
An insurer may invest in share or savings accounts of state or federal savings and loan or building and loan associations, or in time certificates issued by any such association, and in any one such institution only to the extent that the investment is insured by the Federal Savings and Loan Insurance Corporation or similar federal agency.
Laws 1984, ch. 127, § 150.
NMSA 1978, § 59A-9-18 Miscellaneous investments
59A-9-18. Miscellaneous investments
A. An insurer may make loans or investments not otherwise expressly permitted under this article, in an aggregate amount not exceeding five percent of the insurer's assets and not exceeding one percent of such assets as to any one such loan or investment, if the loan or investment meets the requirements of Section 136 [59A-9-3 NMSA 1978] (general qualifications) of this article and by reason of safety of principal and yield otherwise qualifies as a sound investment. No such loan or investment shall be represented by:
(1) any item described in Section 119 [59A-8-2 NMSA 1978] (assets not allowed) of the Insurance Code or any loan or investment otherwise expressly prohibited;
(2) agents' balances, or amounts advanced to or owing by agents;
(3) any category of loans or investments expressly eligible under any other provision of this article; or
(4) any investment theretofore acquired or held by the insurer under any other category of loans or investments eligible under this article.
B. The insurer shall keep a separate record of all loans and investments made under this section.
Laws 1984, ch. 127, § 151.
NMSA 1978, § 59A-9-19 Special investments of separate account funds
59A-9-19. Special investments of separate account funds
The amounts allocated to each separate account established with respect to variable life insurance and variable annuity contracts shall be invested and, together with the accumulations thereon reinvested, as provided for by the respective such contracts and in accordance with the provisions of Section 395 [59A-20-30 NMSA 1978] of the Insurance Code.
Laws 1984, ch. 127, § 152.
NMSA 1978, § 59A-9-20 Special investments of title insurers
59A-9-20. Special investments of title insurers
A. A title insurer having paid-in capital stock paid in cash of not less than one hundred thousand dollars ($100,000), may invest an amount not exceeding fifty percent of its subscribed capital stock, or paid-in basic capital surplus if a mutual insurer, in preparation and purchase of materials or plant necessary to enable it to engage in the title insurance business.
B. In all statements and proceedings for determination of the insurer's financial condition, such investments shall be valued at actual cost thereof or at such lesser value as the insurer may estimate, or be omitted entirely at the insurer's option.
Laws 1984, ch. 127, § 153.
NMSA 1978, § 59A-9-21 Real property
59A-9-21. Real property
A. An insurer may invest in real estate only if used for the purposes or acquired in the manner and within limits as follows:
(1) the building in which the insurer has its principal office and the land on which it stands, if the land is owned by the insurer or occupied under lease the terms of which are satisfactory to the superintendent, and if the superintendent has approved the title to the lands;
(2) such other real estate as is requisite for branch office or other business facilities necessary for the insurer's convenient accommodation in transaction of its business;
(3) real estate acquired in satisfaction or part payment of loans, mortgages, liens, judgments, decrees or debts previously owing to the insurer in due course of its business;
(4) real estate acquired in part payment of the consideration on sale of other real estate owned by the insurer, if such transaction has effected a net reduction in the insurer's real estate investments;
(5) real estate acquired by gift or devise, or through merger, consolidation or bulk reinsurance of another insurer or corporation under the Insurance Code;
(6) additional real estate and equipment incidental thereto, if necessary or convenient for enhancing the sale or other value of real estate previously acquired or held under this section; and
(7) real estate, or any interest therein, acquired or held by purchase, lease or otherwise, other than real estate to be used primarily for agricultural, ranch, mining, development of oil or mineral resources, recreational, amusement, hotel, motel or club purposes, acquired as an investment for production of income, or acquired to be improved or developed for such investment purposes pursuant to an existing program therefor. The insurer may hold, mortgage, improve, develop, maintain, manage, lease and sell or trade real estate acquired by it under this paragraph. The insurer may elect to hold under the provisions of this paragraph real estate duly acquired or held by it under other provisions of this section.
B. Real estate of the insurer under this section shall not in its respective categories exceed the applicable percentage of the insurer's assets as follows:
(1) under Paragraph A(1), principal office, fifteen percent unless a larger percentage, but not to exceed twenty-five percent, is approved by the superintendent;
(2) under Paragraph A(2), branch office and facilities, five percent;
(3) under Paragraph A(7), investment purposes, ten percent; and
(4) the aggregate of all real estate holdings under all categories, twenty-five percent.
C. Real estate holdings of the insurer shall be subject to disposal as provided in Section 156 [59A-9-23 NMSA 1978] of this article.
Laws 1984, ch. 127, § 154.
NMSA 1978, § 59A-9-22 Real estate mortgages, deeds of trust
59A-9-22. Real estate mortgages, deeds of trust
A. An insurer may invest in bonds or notes secured by mortgages or deeds of trust representing first liens upon unencumbered and improved real estate located in this or another state, or in Canada, subject to the following conditions:
(1) the amount loaned, or aggregate amount of bonds issued upon the security of a mortgage or deed of trust, shall not at time of the investment exceed sixty-five percent of the fair market value of the real estate. The value of the real estate shall be substantiated by the appraisal of a recognized real estate appraiser acceptable to the superintendent. Before making the investment, a certificate of the value of the property, based on such appraisal, shall be executed by the insurer's board of directors or by an investment committee of the board of directors making or authorizing the investment on the insurer's behalf;
(2) there shall not have been any default as to payment of any part of the principal or interest of any such bond or note;
(3) the total investment in any one such note, or bond or bonds secured by the same real estate, shall not exceed seventy-five thousand dollars ($75,000) or ten percent of the insurer's assets, whichever is the greater; and
(4) in applying the limitation under this subsection there may be excluded from the amount invested that portion which is guaranteed by the superintendent for veteran affairs pursuant to the Servicemen's Readjustment Act of 1944 [repealed], as amended, or insured by the federal housing administrator or other agency of the United States government, or by an agency of the Canadian government.
B. "Improved real estate" means all real estate within limits of an incorporated village, town or city on which permanent buildings suitable for residence or commercial use are situated, and such other real estate as may be deemed to be "improved" for the purposes of this section under rules and regulations of the superintendent.
C. For purposes of this section real estate shall not be deemed to be encumbered:
(1) by existence of taxes or assessments which are not delinquent, instruments creating or reserving mineral, oil or timber rights, rights-of-way, joint driveways, sewer rights, rights in walls, or by building restrictions or other restrictive covenants; or
(2) when such real estate is subject to lease in whole or in part whereby rents or profits are reserved to the owner, if the security for such investment is a full and unrestricted first lien upon such real estate and there is no condition or rights of reentry or forfeiture under which the investment can be cut off, subordinated or otherwise disturbed.
D. A mortgage or deed of trust shall be deemed to represent a first lien upon the real estate for purposes of this section despite existence of a prior first mortgage or first deed of trust on the same real estate if the lending or investing insurer assumes and agrees to pay such prior first mortgage or deed of trust; and the balance owing on such prior first mortgage or deed of trust at time of the insurer's investment or loan, together with the additional amount loaned by the insurer on the security of the same real estate, shall be deemed to be the aggregate amount so invested by the insurer in the mortgage or deed of trust loan for purpose of limitations imposed thereon by this section and article.
E. Any such mortgage or deed of trust shall require the borrower to maintain insurance of improvements against the hazards of fire and those represented by extended coverage, for not less than seventy-five percent of the appraised value of the improvements.
Laws 1984, ch. 127, § 155.
NMSA 1978, § 59A-9-23 Time limit for disposal of real property
59A-9-23. Time limit for disposal of real property
A. Except as stated in Subsection B, or unless the insurer elects to hold the real estate as an investment under Paragraph A(7) of Section 154 [59A-9-21 NMSA 1978] of this article:
(1) an insurer shall dispose of real estate acquired under Paragraph A(1) of Section 154 of this article within five (5) years after it has ceased to be necessary for the convenient accommodation of the insurer in conduct of its business; and
(2) an insurer shall dispose of real estate acquired under Paragraphs A(2) through A(6) of Section 154 of this article within five (5) years after date of acquisition, unless used or to be used for the insurer's convenient accommodation in conduct of its business under Paragraph A(1) of that section.
B. Upon proof satisfactory to the superintendent that the interests of the insurer would suffer materially by forced sale thereof, the superintendent may by order grant a reasonable extension of the period, as specified in such order, within which the insurer shall dispose of any particular parcel of such real estate.
Laws 1984, ch. 127, § 156.
NMSA 1978, § 59A-9-24 Time limit for disposal of other ineligible property and securities
59A-9-24. Time limit for disposal of other ineligible property and securities
Any personal property or securities lawfully acquired by an insurer which it could not otherwise have invested in or loaned its funds upon at time of acquisition shall be disposed of by the insurer within three (3) years from date of acquisition unless within such period the property or security has attained to the status of eligibility; but any personal property or security acquired under any agreement of bulk reinsurance, merger or consolidation may be retained for a longer period if so provided in the plan for such reinsurance, merger or consolidation as approved by the superintendent under Article 34 [Chapter 59A, Article 34 NMSA 1978] of the Insurance Code. Upon application by the insurer and proof that forced sale of any such property or security would materially injure the interests of the insurer, the superintendent may extend the disposal period for an additional reasonable time.
Laws 1984, ch. 127, § 157.
NMSA 1978, § 59A-9-25 Failure to dispose of property or securities; effect; penalty
59A-9-25. Failure to dispose of property or securities; effect; penalty
A. Any property or securities lawfully acquired, and held by an insurer after expiration of the period for disposal thereof and any extension of such period granted by the superintendent as provided in Sections 156 and 157 [59A-9-23 and 59A-9-24 NMSA 1978] of this article, shall not be allowed as an asset of the insurer.
B. The insurer shall forthwith dispose of any ineligible investments unlawfully acquired by it, and the superintendent shall suspend or revoke the insurer's certificate of authority if the insurer fails to dispose of the investment within such reasonable time as the superintendent, by order, may specify. No such investment shall be allowed as an asset in determining the insurer's financial condition.
Laws 1984, ch. 127, § 158.
NMSA 1978, § 59A-9-26 Prohibited investments and investment underwriting
59A-9-26. Prohibited investments and investment underwriting
A. In addition to investments excluded pursuant to other provisions of the Insurance Code, an insurer shall not acquire, invest in or lend upon the security of:
(1) issued shares of its own capital stock, except as provided in Section 568 [59A-34-22 NMSA 1978] of the Insurance Code (purchase of own shares by stock insurer). No such shares shall be deemed an asset of the insurer in any determination of its financial condition;
(2) securities issued by a corporation or enterprise the controlling interest of which is, or will after such acquisition by the insurer be, held directly or indirectly by the insurer or any combination of the insurer and the insurer's directors, officers, subsidiaries or controlling stockholders (other than the parent corporation), and the spouses and children of any of the foregoing individuals. Investments in controlled insurance corporations or subsidiaries under Sections 144 and 145 [59A-9-11 and 59A-9-12 NMSA 1978] of this article are not subject to this section;
(3) any note or other evidence of indebtedness of any director, officer, employee or controlling stockholder of the insurer, or of the spouse or child of any of the foregoing individuals, except as to policy loans authorized under Section 148 [59A-9-15 NMSA 1978] of this article; or
(4) any real estate in which any officer or director or controlling stockholder (other than parent corporation) of the insurer has a financial interest.
B. No insurer shall underwrite or participate in underwriting of an offering of securities or property of any other person. This provision shall not prohibit the insurer from having a subsidiary which is a principal underwriter of a registered investment company (mutual fund).
C. No insurer shall enter into an agreement to withhold from sale any of its securities or property, and disposition of its assets shall at all times be within control of the insurer.
Laws 1984, ch. 127, § 159.
NMSA 1978, § 59A-9-27 Investments of foreign insurers
59A-9-27. Investments of foreign insurers
The investment portfolio of a foreign or alien insurer shall be as permitted by the laws of its domicile if of a quality substantially equal to that required under this article for similar funds of like domestic insurers.
Laws 1984, ch. 127, § 160.
Source: New Mexico Compilation Commission (nmonesource.com)URL: https://nmonesource.com/nmos/nmsa-unanno/en/item/18562/index.doFetched: 10/20/2026