§ 26.1-05-19 — Authorized investment of funds of insurance companies

A domestic insurance company may invest any of its funds and accumulations in:
1. Securities or obligations made specifically eligible for such investment by law.
2. Bonds or other evidences of indebtedness issued, assumed, or guaranteed by the
United States, the District of Columbia, or by any state, territory, or insular possession
of the United States or by any county, city, township, school district, or other civil
division of a state, including loan-backed securities, those payable from special
revenues or earnings specifically pledged for the payment thereof, and those payable
from special assessments, including rights to purchase or sell these securities or
obligations if these rights are traded upon a contract market designated and regulated
by a federal agency and purchased for legitimate hedging, nonspeculative purposes.
3. Bonds or other evidences of indebtedness issued, assumed, or guaranteed by any
instrumentality or agency of the United States, including rights to purchase or sell
these securities or obligations if these rights are traded upon a contract market
designated and regulated by a federal agency and purchased for legitimate hedging,
nonspeculative purposes.
4. Notes or bonds secured by mortgage or deed of trust insured by the federal housing
administrator, debentures issued by the federal housing administrator, and securities
issued by national mortgage associations.
5. Bonds guaranteed under former chapter 6-09.2.
6. Bonds issued by the public finance authority pursuant to chapter 6-09.4.
7. Bonds issued by the state board of higher education under chapter 15-55.
8. Revenue bonds issued by the state water commission.
9. Interim financing notes issued by the state water commission pursuant to chapter
61-02.
10. Warrants issued by a city under chapter 40-24.
11. Bonds or notes issued pursuant to chapter 40-33.2.
12. Bonds or other obligations issued pursuant to chapter 40-58.
13. Bonds issued under chapter 40-61.
14. Bonds issued under chapter 54-30.
15. Notes or other evidences of indebtedness of the North Dakota life and health
insurance guaranty association not in default.
16. Notes or other interest-bearing obligations of any state development corporation of
which the company is a member, issued in accordance with chapter 10-30.
17. Bonds or other evidences of indebtedness issued, assumed, or guaranteed by Canada
or any province thereof, or by any municipality or district therein, provided that the
obligations are valid and legally authorized and issued.
18. Mortgage bonds and debentures of any solvent railway company duly incorporated
and authorized under the laws of this state or of any other state or insular possession
of the United States or of Canada or of any province thereof.
19. Obligations, including bonds or evidences of indebtedness, or participation in those
bonds or evidences of indebtedness, or loan-backed securities, which are issued,
assumed, guaranteed, or insured by any solvent legal entity duly incorporated and
authorized under the laws of the United States or of any state or insular possession
thereof, or of Canada or of any province thereof, including rights to purchase or sell

these securities or obligations if these rights are traded upon a contract market
designated and regulated by a federal agency and purchased for legitimate hedging,
nonspeculative purposes.
20. Preferred stock, of, or common or preferred stock guaranteed as to dividends by, and
common stock of, any corporation organized under the laws of the United States, any
state or possession of the United States, Canada or any province of Canada, including
rights to purchase or sell these securities or obligations if these rights are traded upon
a contract market designated and regulated by a federal agency and purchased for
legitimate hedging, nonspeculative purposes, subject to the following restrictions and
limitations:
a. Investments in preferred, guaranteed, and common stocks issued or guaranteed
by a single person may not exceed three percent of the insurance company's
admitted assets.
b. Investments in preferred, guaranteed, and common stocks may not exceed in the
aggregate the greater of twenty-five percent of admitted assets or one hundred
percent of the capital and surplus of a nonlife insurance company.
c. Investments in preferred, guaranteed, and common stocks may not exceed in the
aggregate twenty percent of the life insurance company's admitted assets.
For purposes of this section, preferred stock includes mandatory sinking fund
preferred stock. Common stock includes shares of mutual funds, master limited
partnerships trading as common stock, and American deposit receipts that are traded
on a nationally recognized securities exchange or on the national association of
securities dealers automated quotations system.
21. Savings accounts, under certificates of deposit or in any other form, in solvent banks
and trust companies which have qualified for federal deposit insurance corporation
protection, shares and savings accounts, under certificates of deposit, investment
certificates, or in any other form, in solvent savings and loan associations organized
under federal law or state law of any state which have qualified for federal savings and
loan insurance corporation protection, and shares and deposit accounts, under
certificates of deposit or in any other form, in solvent state or federally chartered credit
unions which are insured by the national credit union administration. Investments in
the shares and accounts are not limited to, or by, the amount of any such insurance
protection. Short-term or liquidity investments such as certificates of deposit,
repurchase agreements, bankers' acceptances, commercial paper, money market
mutual funds, or current interest accounts in solvent banks and trust companies,
savings and loan associations, state or federally chartered credit unions, investment
brokerage houses which are regulated by a federal agency, and such other types of
investments as may be deemed appropriate and authorized by rule by the
commissioner.
22. Loans made upon the security of its own policies, if a life insurance company, but no
loan on any policy may exceed the reserve value thereof.
23. Notes secured by mortgages on unencumbered real estate, including construction
loans and leaseholds substantially having and furnishing the rights and protection of a
first real estate mortgage, within the United States or any province of Canada. An
investment in a construction loan covering any single parcel of real estate may not
exceed one quarter of one percent of the admitted assets of the company. Investments
in construction loans in the aggregate may not exceed two percent of the admitted
assets of the company. No loan may be made under this subsection unless at the date
of acquisition the total indebtedness secured by such lien does not exceed eighty
percent of the value of the property upon which it is a lien, provided that the loan
requires immediate scheduled payment in periodic installments of principal and
interest and periodic payments are made no less frequently than annually. A loan that
does not meet these requirements may not exceed seventy-five percent of the value of
the property. A loan may be made in an amount exceeding these percentage
limitations if the value of the property mortgaged in excess of the limitation is
guaranteed or insured by the federal housing administration or guaranteed by the

administrator of veterans' affairs or is insured by private mortgage insurance through
an insurance company authorized to do business in this state. Loans may be
amortized on the basis of a final maturity not exceeding thirty years from the date of
the loan with an actual maturity date of the loan at any time less than thirty years. A
loan on a single-family dwelling, when the loan is amortized on the basis of a final
maturity twenty-five years or less from the date of the loan, may be made in an amount
not exceeding eighty percent of the value of the property mortgaged. The loan on a
single-family dwelling may be made in an amount exceeding eighty percent so long as
any amount over eighty percent of the value of the property mortgaged is insured by
private mortgage insurance through an insurance company authorized to do business
in this state. Buildings may not be included in the valuation of such property unless
they are insured and the policies are made payable to the company as its interest may
appear. A loan may not be made in excess of the amount of insurance carried on the
buildings plus the value of the land. No insurance company may hold less than the
entire loan represented by the bonds or notes described in this subsection except that
a company may own part of an aggregate obligation if all other participants in the
investment are insurance companies authorized to do business in North Dakota or
banks whose depositors are insured by the federal deposit insurance corporation or
savings and loan associations whose members are insured by the federal savings and
loan insurance corporation or unless the security of the bonds or notes, as well as all
collateral papers, including insurance policies, executed in connection therewith, are
made to and held by a trustee which is a solvent bank or trust company having a
paid-in capital of not less than two hundred fifty thousand dollars, except in case of
banks or trust companies incorporated under the laws of the state of North Dakota,
wherein a paid-in capital of not less than one hundred thousand dollars is required. In
case of proper notification of default, the trustee, upon request of at least twenty-five
percent of the holders of the bonds outstanding, and proper indemnification, shall
proceed to protect the rights of the bondholders under the provisions of the trust
indentures. An insurance company may acquire such an interest in real estate directly
or as a joint venture, limited liability company, or through a limited or general
partnership in which the insurance company is a partner. An insurance company
acquiring such an interest in real estate on the basis of a joint venture, limited liability
company, or through a limited or general partnership may acquire such an interest so
long as the company's interest does not exceed seventy-five percent of the value of
the property.
24. First mortgage bonds on improved city real estate in any state, issued by a corporation
duly incorporated under the laws of any state of the United States, if the loans on the
real estate are made in accordance with the requirements as to first mortgage loans in
subsection 23.
25. Real estate for the production of income or for improvement or development for the
production of income subject to the following provisions and limitations:
a. Real estate used primarily for farming or agriculture may not be acquired under
this subsection.
b. Investments made by any company under this subsection may not at any time
exceed ten percent of the admitted assets of the company.
c. An investment in any single parcel of real estate acquired under this subsection
may not exceed two percent of the admitted assets of the company.
d. The real estate, including the cost of improvements, must be valued at cost and
the improvements may be depreciated annually at an average rate of not less
than two percent of the original cost.
e. An insurance company may acquire such real estate or an interest in such real
estate directly or as a joint venture, limited liability company, or through a limited
or general partnership in which the insurance company is a partner.
26. Land and buildings used as home or regional offices, subject to the following
provisions and limitations:

a. Land and buildings thereon owned by the company in which the square footage
of the property is more than fifty percent occupied by the company and its
affiliates.
b. Investments or total commitment in the land and buildings may not aggregate
more than ten percent of the company's admitted assets without the consent of
the commissioner.
c. The real estate, including the cost of improvements, must be valued at cost and
the improvements must be depreciated annually at an average rate of not less
than two percent of the original cost.
27. Investments by loans or otherwise, in the purchase of electric or mechanical
machines, including software, constituting a data processing system. The company
may hold the system as an admitted asset for use in connection with the business of
the company if its aggregate cost does not exceed three percent of the company's
capital and surplus and the cost of the components constituting the system is fully
amortized over a period of not to exceed five years. If a data processing system
consists of separate components acquired at different times, then the cost of each
component must be amortized over a period not to exceed five years commencing
with the date of acquisition of each component.
28. Promissory notes amply secured by the pledge of bonds or other evidences of
indebtedness in which the company is authorized to invest its funds by the provisions
of this section.
29. Ownership of, or loans secured by first liens upon:
a. Production payments or interests therein payable from oil, gas, other
hydrocarbons, or other minerals in producing properties located in areas of
established and continuing production within the United States or the adjacent
continental shelf areas, which production payments are dischargeable from
property interests appraised by independent petroleum engineers at the time of
the acquisition or loan, based on current market prices, to have a current market
value of at least one hundred fifty percent of the purchase price of, or the amount
loaned upon the security of, such production payments. The term "production
payments" means rights to oil, gas, other hydrocarbons, or other minerals in
place or as produced which entitle the owner thereof to a specified fraction or
percentage of production or the proceeds thereof, until a specified or
determinable sum of money has been received, and which have investment
qualities and characteristics in which the speculative elements are not
predominant.
b. Royalty interests, overriding royalty interests, net profit interests, leasehold
interests, working interests, or other interests or rights in oil, gas, other
hydrocarbons, or other minerals in place or as produced, which interests or rights
may be subject to production payments of the nature described in subdivision a.
No domestic insurance company may invest more than five percent of its admitted
assets in the ownership of such interests or rights. In determining the amount invested
in such interests or rights at any given time, each insurance company may evaluate
such interests or rights in such manner as will permit it to amortize the interests or
rights over a period of time during which not more than seventy-five percent of the
dollar value of the recoverable production accruing to such interests or rights will be
produced, as determined by independent petroleum engineers at the time of
investment.
30. Obligations secured by a pledge of personal property, as follows:
a. Tangible personal property, or equipment trust certificates or other instruments
evidencing an interest in or debt secured by tangible personal property, if there is
a right to receive determined portions of rental, purchase, or other fixed obligatory
payments for the use or purchase of such tangible personal property.
b. Bonds, notes, or other evidences of indebtedness secured wholly or partially by
tangible personal property, provided that at the date of acquisition the amount of

such indebtedness does not exceed sixty-six and two-thirds percent of the value
of such tangible personal property.
The aggregate outstanding investment made under subdivisions a and b may not
exceed five percent of the admitted assets of the life insurance company.
31. Loans, securities, or investments issued by a small business investment company
created by the Myron G. Nelson Fund, Incorporated, and licensed by the small
business administration under the Small Business Investment Company Act of 1958
[Pub. L. 85-699; 72 Stat. 689; 15 U.S.C. 661 et seq.] or the Small Business Equity
Enhancement Act of 1992 [Pub. L. 102-366; 106 Stat. 1007-1020; 15 U.S.C. 661
et seq.].
32. Loans, securities, or investments in addition to those permitted in this section, whether
or not the loans, securities, or investments qualify or are permitted as legal
investments under its charter or under other provisions of this section or under other
provisions of the laws of this state. The aggregate admitted value of the company's
investments under this section may not at any one time exceed either seven percent of
the company's admitted assets, or the amount equal to the company's capital and
surplus in excess of the minimum capital and surplus required by law, whichever is
less.
33. Loans, securities, or investments in a North Dakota low-risk incentive fund organized
under chapter 26.1-50. The aggregate admitted value of the company's investment
under this subsection may not at any time exceed the lesser of five percent of the
company's admitted assets or the amount equal to the company's capital and surplus
in excess of the minimum capital and surplus required by law. A company making an
investment under this subsection may value at par any investment purchased at par.
34. Foreign investments of substantially the same types as those permitted under
subsections 19 and 20.
a. Under this subsection, a foreign investment is subject to the following restrictions
and limitations:
(1) Foreign investments issued, assumed, guaranteed, or insured by a single
person may not exceed three percent of the insurance company's admitted
assets.
(2) Foreign investments in a single foreign jurisdiction may not exceed in the
aggregate ten percent of the insurance company's admitted assets as to a
foreign jurisdiction that has a sovereign debt rating of one as determined by
the securities valuation office of the national association of insurance
commissioners or three percent of the insurance company's admitted assets
as to any other foreign jurisdiction.
(3) Foreign investments may not exceed in the aggregate twenty percent of the
insurance company's admitted assets.
b. Investments acquired under this subsection must be aggregated with investments
of the same type made under subsection 20 for purposes of determining
compliance with the limitations contained in that subsection.
c. For purposes of this subsection, a foreign investment means an investment in a
foreign jurisdiction or an investment in a legal entity domiciled in a foreign
jurisdiction. A foreign jurisdiction is any jurisdiction other than the United States,
any state or possession of the United States, Canada, or any province of
Canada.
The commissioner may adopt rules as to investments which are permissible for any
domestic insurance company which may waive or increase any limitation on investments or
authorize companies to invest their funds in investments which are not specifically mentioned in
statutes relating to investments if the commissioner finds, after notice and hearing, that such
funds would be well invested and available for the payment of losses. The commissioner, in
adopting such rules, may not be any more restrictive, or place any greater limitations on, any
type of investment in which companies are authorized by statute to invest their funds.
This section does not prohibit a company from taking any action deemed necessary or
expedient for the protection of investments made by it or from accepting in good faith, to protect

its interests, securities, or property not mentioned in this section in payment or to secure debts
due to it.