Section 3.21.345. Tangible personal property under lease for a property and casualty insurer.

	(a)  Subject to the requirements in (b) of this section, a property and casualty insurer may acquire, hold, or invest in tangible personal property or an equity interest located or used wholly or in part within a domestic jurisdiction either directly or indirectly through a limited partnership interest or general partnership interest not otherwise prohibited by 3 AAC 21.216, a joint venture, stock of an investment subsidiary or membership interest in a limited liability company, a trust certificate, or another similar instrument.  
	(b)  A property and casualty insurer may acquire, hold, or invest in an investment under (a) of this section only if the  
		(1) property is subject to a lease or other agreement with a person whose rated credit instruments would be eligible to be acquired by the property and casualty insurer under 3 AAC 21.330 in the amount of the purchase price of the personal property; and  
		(2) lease or other agreement described in (1) of this subsection provides the property and casualty insurer the right to receive rental, purchase, or other fixed payments for the use or purchase of the property, and the aggregate value of the payments, together with the estimated residual value of the property at the end of its useful life and the estimated tax benefit to the property and casualty insurer resulting from ownership of the property, is adequate to return the cost of the property and casualty insurer's investment in the property, plus a return considered adequate by the property and casualty insurer.  
	(c)  The property and casualty shall compute the amount of each investment under this section on the basis of the out-of-pocket purchase price and applicable related expenses paid by the property and casualty insurer for the investment, net of each borrowing made to finance the purchase price and expenses, to the extent the borrowing is without recourse to the property and casualty insurer.  
	(d)  A property and casualty insurer may not acquire an investment under this section if, as a result of and after giving effect to the investment, the aggregate amount of all investments then held by the property and casualty insurer under this section would exceed  
		(1) two percent of the property and casualty insurer's admitted assets; or  
		(2) one-half of one percent of the property and casualty insurer's admitted assets as to any single item of tangible personal property.  
	(e)  For purposes of determining compliance with the limitations of 3 AAC 21.325, a property and casualty insurer shall aggregate all investments acquired under this section with those acquired under 3 AAC 21.330, and each lessee of the property under a lease referred to in this section will be considered the issuer of an obligation in the amount of the investment of the property and casualty insurer in the property determined as provided in (c) of this section.  
	(f)  This section does not apply to a tangible personal property lease arrangement between a property and casualty insurer and its subsidiaries and affiliates under a cost-sharing arrangement or agreement permitted under AS 21.22.  

Authorities

21.06.090;21.18.010;21.18.030;21.18.040;21.21.010;21.21.020;21.21.255;21.21.420

Notes

Reference

3 AAC 21.325

Authority

AS 21.06.090 AS 21.18.010 AS 21.18.030 AS 21.18.040 AS 21.21.010 AS 21.21.020 AS 21.21.255 AS 21.21.420

History

Eff. 12/28/2001, Register 160