South Carolina § 38-12-260 - Tangible personal property; valuation; limitations.

§ 38-12-260. Tangible personal property; valuation; limitations.

(A)(1) Subject to the limitations of Section 38-12-220, an insurer may acquire tangible personal property or equity interests in tangible personal property, located or used wholly or in part within a domestic jurisdiction, directly or indirectly through:

(a) limited partnership interests or general partnership interests not otherwise prohibited by Section 38-12-60(A)(4);

(b) joint ventures;

(c) stock of an investment affiliate;

(d) membership interests in a limited liability company;

(e) trust certificates; or

(f) other similar instruments.

(2) Investments acquired pursuant to item (1) are eligible only if:

(a) the property is subject to a lease or other agreement with a person whose rated credit instruments in the amount of the purchase price of the personal property the insurer could then acquire pursuant to Section 38-12-230; and

(b) the lease or other agreement provides the 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 benefits to the insurer resulting from ownership of the property, are adequate to return the cost of the insurer's investment in the property plus a return considered adequate by the insurer.

(B) The insurer shall compute the amount of each investment pursuant to this section on the basis of the out-of-pocket purchase price and applicable related expenses paid by the 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 insurer.

(C) An insurer may not acquire, directly or indirectly through an investment affiliate, an investment pursuant to this section if as a result of and after giving effect to the investment the aggregate amount of all investments then held by the insurer pursuant to this section exceeds:

(1) two percent of its admitted assets; or

(2) one-half of one percent of its admitted assets as to a single item of tangible personal property.

(D) For purposes of determining compliance with the limitations of Section 38-12-220, investments acquired by an insurer pursuant to this section must be aggregated with those acquired pursuant to Section 38-12-230, and each lessee of the property pursuant to a lease referred to in this section is considered the issuer of an obligation in the amount of the investment of the insurer in the property determined as provided in subsection (B).

(E) Nothing in this section applies to tangible personal property lease arrangements between an insurer and its subsidiaries and affiliates pursuant to a cost sharing arrangement or agreement permitted pursuant to Chapter 21 of this title.

HISTORY: 2002 Act No. 319, SECTION 2, eff June 3, 2002.