Terms Used In Montana Code > Title 33 > Chapter 12 > Part 2 - Life and Health Insurers

• Acceptable collateral: means :

  (a)(i) as to securities lending transactions and for the purpose of calculating the counterparty exposure amount, cash, cash equivalents, letters of credit, or direct obligations of or securities that are fully guaranteed as to principal and interest by the government of the United States, by any agency of the United States, by the federal national mortgage association, or by the federal home loan mortgage corporation; and

  (ii)as to lending foreign securities, sovereign debt rated 1 by the SVO;

  (b)as to repurchase transactions, cash, cash equivalents, and direct obligations of or securities that are fully guaranteed as to principal and interest by the government of the United States, by an agency of the United States, by the federal national mortgage association, or by the federal home loan mortgage corporation; and

  (c)as to reverse repurchase transactions, cash and cash equivalents. See Montana Code 33-12-102

• Acceptable private mortgage insurance: means insurance written by a private insurer protecting a mortgage lender against loss occasioned by a mortgage loan default and issued by a licensed mortgage insurance company, with an SVO 1 designation or a rating issued by a nationally recognized statistical rating organization equivalent to an SVO 1 designation, that covers losses up to an 80% loan-to-value ratio. See Montana Code 33-12-102
• Accident and health insurer: means a licensed life or health insurer or health service corporation whose insurance premiums and required statutory reserves for accident and health insurance constitute at least 95% of total premium considerations or total statutorily required reserves. See Montana Code 33-12-102
• Admitted assets: means , subject to subsection (5)(b), assets determined in accordance with the requirements of 33-2-501. See Montana Code 33-12-102
• Affiliate: has the meaning provided in 33-2-1101. See Montana Code 33-12-102
• Amortization: Paying off a loan by regular installments.
• Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
• Appraisal: A determination of property value.
• Asset-backed security: means a security or other instrument, excluding a mutual fund, evidencing an interest in or the right to receive payments from or payable from distributions on an asset, a pool of assets, or specifically divisible cash flows that are legally transferred to a trust or another special purpose bankruptcy-remote business entity, on the following conditions:

  (i)the trust or other business entity is established solely for the purpose of acquiring specific types of assets or rights to cash flows, issuing securities and other instruments representing an interest in or right to receive cash flows from those assets or rights, and engaging in activities required to service the assets or rights and any credit enhancement or support features held by the trust or other business entity; and

  (ii)the assets of the trust or other business entity consist solely of interest-bearing obligations or other contractual obligations representing the right to receive payment from the cash flows from the assets or rights. See Montana Code 33-12-102

• Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
• Attorney-in-fact: A person who, acting as an agent, is given written authorization by another person to transact business for him (her) out of court.
• Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
• Business entity: includes a sole proprietorship, corporation, limited liability company, association, partnership, joint-stock company, joint venture, mutual fund, trust, joint tenancy, or other similar form of business organization, whether organized for profit or not for profit. See Montana Code 33-12-102
• Cap: means an agreement obligating the seller to make payments to the buyer, with each payment based on the amount by which a reference price or level or the performance or value of one or more underlying interests exceeds a predetermined number. See Montana Code 33-12-102
• Capital and surplus: means the sum of the capital and surplus of the insurer required to be shown on the most recent statutory financial statement of the insurer required to be filed with the commissioner. See Montana Code 33-12-102
• Cash equivalents: means short-term, highly rated, and highly liquid investments or securities readily convertible to known amounts of cash without penalty and so near maturity that they present insignificant risk of change in value. See Montana Code 33-12-102
• Class one bond mutual fund: means a mutual fund that at all times qualifies for investment using the bond class one reserve factor under the Purposes and Procedures of the Securities Valuation Office or any successor publication. See Montana Code 33-12-102
• Class one money market mutual fund: means a money market mutual fund that at all times qualifies for investment using the bond class one reserve factor under the Purposes and Procedures of the Securities Valuation Office or any successor publication. See Montana Code 33-12-102
• Contract: A legal written agreement that becomes binding when signed.
• Covered: means that an insurer:

  (a)owns or can immediately acquire, through the exercise of options, warrants, or already-owned conversion rights, the underlying interest in order to fulfill or secure its obligations under a call option, cap, or floor it has written; or

  (b)has set aside, under a custodial or escrow agreement, cash or cash equivalents with a market value equal to the amount required to fulfill its obligations under a put option it has written in an income generation transaction. See Montana Code 33-12-102

• Customary: means according to usage. See Montana Code 1-1-206
• Derivative instrument: means an agreement, an option, an instrument, or a series or combination of agreements, options, or instruments:

  (i)to make or take delivery of or assume or relinquish a specified amount of one or more underlying interests or to make a cash settlement in lieu of delivery; or

  (ii)that has a price, level, performance, value, or cash flow based primarily upon the actual or expected price, level, performance, value, or cash flow of one or more underlying interests. See Montana Code 33-12-102

• Derivative transaction: means a transaction involving the use of one or more derivative instruments. See Montana Code 33-12-102
• directly: when used in connection with an obligation, means that the designated obligor is primarily liable on the instrument representing the obligation. See Montana Code 33-12-102
• Dollar roll transaction: means two simultaneous transactions with different settlement dates that are no more than 96 days apart, so that in the transaction with the earlier settlement date, an insurer sells to a business entity, and in the other transaction, the insurer is obligated to purchase from the same business entity, substantially similar securities of the following types:

  (a)asset-backed securities issued, assumed, or guaranteed by the government national mortgage association, the federal national mortgage association, or the federal home loan mortgage corporation or their successors; and

  (b)other asset-backed securities referred to in section 106 of Title I of the Secondary Mortgage Market Enhancement Act of 1984 (15 U. See Montana Code 33-12-102

• Domestic jurisdiction: means the United States, any state, Canada, any province of Canada, or any political subdivision of a state or province. See Montana Code 33-12-102
• Escrow: Money given to a third party to be held for payment until certain conditions are met.
• Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
• Floor: means an agreement obligating the seller to make payments to the buyer in which each payment is based on the amount by which a predetermined number, sometimes called the floor rate or price, exceeds a price, level, performance, or value of one or more underlying interests. See Montana Code 33-12-102
• Foreign currency: means a currency other than that of a domestic jurisdiction. See Montana Code 33-12-102
• Foreign jurisdiction: means a jurisdiction other than a domestic jurisdiction. See Montana Code 33-12-102
• Future: means an agreement, traded on a qualified exchange or qualified foreign exchange, to make or take delivery of or effect a cash settlement based on the actual or expected price, level, performance, or value of one or more underlying interests. See Montana Code 33-12-102
• Government money market mutual fund: means a money market mutual fund that at all times:

  (a)invests only in obligations issued, guaranteed, or insured by the federal government of the United States or collateralized repurchase agreements composed of these obligations; and

  (b)qualifies for investment without a reserve under the Purposes and Procedures of the Securities Valuation Office or any successor publication. See Montana Code 33-12-102

• Government-sponsored enterprise: means a:

  (a)governmental agency; or

  (b)corporation, limited liability company, association, partnership, joint-stock company, joint venture, trust, or other entity or instrumentality organized under the laws of any domestic jurisdiction to accomplish a public policy or other governmental purpose. See Montana Code 33-12-102

• Hedging transaction: means a derivative transaction that is entered into and maintained to reduce:

  (a)the risk of a change in the value, yield, price, cash flow, or quantity of assets or liabilities that the insurer has acquired or incurred or anticipates acquiring or incurring; or

  (b)the currency exchange rate risk or the degree of exposure as to assets or liabilities that an insurer has acquired or incurred or anticipates acquiring or incurring. See Montana Code 33-12-102

• Income: means , as to a security, interest, accrual of discount, dividends, or other distributions, such as rights, tax or assessment credits, warrants, and distributions in kind. See Montana Code 33-12-102
• Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. ^{Source: OCC}
• Investment practices: means transactions of the types described in 33-12-208, 33-12-210, 33-12-308, or 33-12-310. See Montana Code 33-12-102
• Investment subsidiary: means a subsidiary of an insurer engaged or organized to engage exclusively in the ownership and management of assets authorized as investments for the insurer if each subsidiary agrees to limit its investment in any asset so that its investments will not cause the amount of the total investment of the insurer to exceed any of the investment limitations or avoid any other provisions of this chapter applicable to the insurer. See Montana Code 33-12-102
• Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
• Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). ^{Source: OCC}
• Letter of credit: means a clean, irrevocable, and unconditional letter of credit issued or confirmed by and payable and presentable at a financial institution on the list of financial institutions meeting the standards for issuing letters of credit under the Purposes and Procedures of the Securities Valuation Office or any successor publication. See Montana Code 33-12-102
• Lien: A claim against real or personal property in satisfaction of a debt.
• Limited liability company: means a business organization, excluding partnerships and ordinary business corporations, organized or operating under the laws of the United States or any state that limits the personal liability of investors to the equity investment of the investor in the business entity. See Montana Code 33-12-102
• Market value: means :

  (a)as to cash and letters of credit, the amounts of cash or a letter of credit; and

  (b)as to a security, as of any date, the price for the security on that date obtained from a generally recognized source or the most recent quotation from a generally recognized source or, to the extent that a generally recognized source does not exist, the price for the security as determined in good faith by the parties to a transaction, plus accrued but unpaid income on a security to the extent not included in the price as of that date. See Montana Code 33-12-102

• Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
• Mortgage loan: means an obligation secured by a mortgage, deed of trust, trust deed, or other consensual lien on real estate. See Montana Code 33-12-102
• Mortgage loan: A loan made by a lender to a borrower for the financing of real property. ^{Source: OCC}
• Multilateral development bank: means an international development organization of which the United States is a member. See Montana Code 33-12-102
• NAIC: means the national association of insurance commissioners. See Montana Code 33-12-102
• Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
• Obligation: means a bond, note, debenture, trust certificate including an equipment certificate, production payment, negotiable bank certificate of deposit, bankers' acceptance, credit tenant loan, loan secured by financing net leases, and other evidence of indebtedness for the payment of money (or participations, certificates, or other evidences of an interest in any of the foregoing), whether constituting a general obligation of the issuer or payable only out of certain revenue or certain funds pledged or otherwise dedicated for payment. See Montana Code 33-12-102
• Option: means an agreement giving the buyer the right to buy or receive (a "call option"), sell or deliver (a "put option"), enter into, extend or terminate, or effect a cash settlement based on the actual or expected price, level, performance, or value of one or more underlying interests. See Montana Code 33-12-102
• Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
• Person: has the meaning provided in 33-1-202. See Montana Code 33-12-102
• Personal property: All property that is not real property.
• Personal property: means money, goods, chattels, things in action, and evidences of debt. See Montana Code 1-1-205
• Potential exposure: means the amount determined in accordance with the NAIC Annual Statement Instructions. See Montana Code 33-12-102
• Property: means real and personal property. See Montana Code 1-1-205
• Qualified bank: means :

  (a)a national bank, state bank, or trust company that at all times is adequately capitalized as determined by standards adopted by United States banking regulators and that is either regulated by state banking laws or is a member of the federal reserve system; or

  (b)a bank or trust company incorporated or organized under the laws of a country other than the United States that is regulated as a bank or trust company by that country's government or an agency of that government and that at all times is adequately capitalized as determined by the standards adopted by international banking authorities. See Montana Code 33-12-102

• Qualified business entity: means a business entity that is:

  (a)an issuer of obligations or preferred stock that is rated 1 or 2 by the SVO or an issuer of obligations, preferred stock, or derivative instruments that are rated the equivalent of 1 or 2 by the SVO or by a nationally recognized statistical rating organization recognized by the SVO; or

  (b)a primary dealer in United States government securities recognized by the federal reserve bank of New York. See Montana Code 33-12-102

• Qualified exchange: means :

  (a)a securities exchange registered as a national securities exchange or a securities market regulated under the Securities Exchange Act of 1934 (15 U. See Montana Code 33-12-102

• Real estate: means :

  (i)real property;

  (ii)interests in real property, such as leaseholds, minerals, oil, and gas, that have not been separated from the underlying fee interest;

  (iii)improvements and fixtures located on or in real property; and

  (iv)the seller's equity in a contract providing for a deed of real estate. See Montana Code 33-12-102

• Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. ^{Source: FDIC}
• Repurchase transaction: means a transaction in which an insurer purchases securities from a business entity that is obligated to repurchase the purchased securities or equivalent securities from the insurer at a specified price, either within a specified period of time or upon demand. See Montana Code 33-12-102
• Residential mortgage loan: means a loan primarily secured by a mortgage on real estate improved with a residence for no more than four families. See Montana Code 33-12-102
• Reverse repurchase transaction: means a transaction in which an insurer sells securities to a business entity and is obligated to repurchase the sold securities or equivalent securities from the business entity at a specified price, either within a specified period of time or upon demand. See Montana Code 33-12-102
• Secured location: means the contiguous real estate owned by one person. See Montana Code 33-12-102
• Securities lending transaction: means a transaction in which securities are loaned by an insurer to a business entity that is obligated to return the loaned securities or equivalent securities to the insurer, either within a specified period of time or upon demand. See Montana Code 33-12-102
• Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
• Short-term: means investments with a remaining term to maturity of 90 days or less. See Montana Code 33-12-102
• State: when applied to the different parts of the United States, includes the District of Columbia and the territories. See Montana Code 1-1-201
• SVO: means the securities valuation office of the NAIC or any successor office established by the NAIC. See Montana Code 33-12-102
• Trustee: A person or institution holding and administering property in trust.
• United States: includes the District of Columbia and the territories. See Montana Code 1-1-201
• Writing: includes printing. See Montana Code 1-1-203