§ 31A-4-108 — Power to hold property in other than own name.

(1) An insurer shall hold all investments and deposits of its funds in its own name except:

(1)(a) securities:
(1)(a)(i) kept under a custodial agreement or trust arrangement with one of the following approved by the commissioner:

(1)(a)(i)(A) a bank;
(1)(a)(i)(B) a securities firm's trust company;
(1)(a)(i)(C) a trust company; or
(1)(a)(i)(D) a brokerage firm; and
(1)(a)(ii) that may be issued in the name of a nominee of the:

(1)(a)(ii)(A) bank;
(1)(a)(ii)(B) securities firm's trust company;
(1)(a)(ii)(C) trust company; or
(1)(a)(ii)(D) brokerage firm; and
(1)(b) securities that may be acquired and held in bearer form.
(2) An insurer shall take steps which the commissioner reasonably prescribes by rule or order to:

(2)(a) safeguard the securities described in Subsection (1); and
(2)(b) ensure that the securities are not loaned to other insurers, affiliated or not, to mislead the commissioner about the true financial condition of either the lending or the borrowing insurer.
(3) (3)(a) If the department finds that an insurer is in violation of this section, the insurer is subject to:
(3)(a)(i) a fine;
(3)(a)(ii) suspension of a license;
(3)(a)(iii) revocation of a license;
(3)(a)(iv) another penalty permitted by Section 31A-2-308; or
(3)(a)(v) any combination of Subsections (3)(a)(i) through (iv).
(3)(b) An insurer may not provide for the custody of the insurer's securities except as granted by this section.
(3)(c) Securities of an insurer kept under a custodial agreement or trust arrangement in violation of this section shall be disregarded in:
(3)(c)(i) determining the financial condition of the insurer; or
(3)(c)(ii) reporting the financial condition of the insurer.

Legislative History

Amended by Chapter 176, 2006 General Session