Chapter 255 Oregon Laws 2005

AN ACT

SB 462

Relating to insurance financial regulations; creating new provisions; amending ORS 733.630 and 750.055; and repealing ORS 750.047.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 733.630 is amended to read:

733.630. (1) Except as provided in this section, funds of an insurer may be invested in common stock, preferred stock, debt obligations and other securities of one or more corporations without regard to the provisions and limitations of ORS 733.590, 733.620, 733.770 and 733.780 (1)(a) if [such a] the corporation is engaged, or will be engaged, in the kind of business or activity which is related to the insurance business as described in ORS 733.635, provided 80 percent or more of the shares of [such] the corporation having voting powers are owned by the insurer either by itself or with prior approval of the Director of the Department of Consumer and Business Services in cooperation with one or more other persons.

(2) Except as provided in subsection (3) of this section, the amount of funds so invested [shall] may not exceed the lesser of 10 percent of the insurer’s assets or 50 percent of the amount of the insurer’s combined capital and surplus. However, after such investments, the combined capital and surplus of the insurer must be reasonable in relation to the outstanding liabilities of the insurer and adequate to its financial needs. [For the purpose of calculating the amount of investments under this subsection, investments in domestic or foreign insurance subsidiaries must be excluded and the following must be included:] For the purpose of this subsection, the amount of investments by an insurer shall be calculated by:

(a) Excluding the admitted value of investments in subsidiaries of the insurer;

[(a)] (b) Adding the total [net] moneys or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary, including all organizational expenses and contributions to capital and surplus of the insurance subsidiary or the shareholders’ equity of a non-insurance subsidiary, whether or not represented by the purchase of capital stock or issuance of other securities; [and]

[(b)] (c) Adding to the sum determined under paragraph (b) of this subsection all amounts expended in acquiring additional common stock, preferred stock, debt obligations and other securities of a subsidiary, and all contributions to the capital or surplus of [a] an insurance subsidiary or the shareholders’ equity of a non-insurance subsidiary, subsequent to its acquisition or formation[.]; and

(d) Subtracting from the sum determined under paragraph (c) of this subsection the return of any amount included in paragraph (b) or (c) of this subsection, whether the return is in the form of cash, securities or other property.

(3) Funds of an insurer may be invested in common stock, preferred stock, debt obligations and other securities of one or more subsidiaries engaged or organized to engage exclusively in the ownership and management of assets authorized as investments for the insurer. However, each [such] subsidiary must agree to limit its investments in any asset so that [such] the investments will not cause the amount of the total investment of the insurer to exceed any of the investment limitations specified in subsection (2) of this section or in ORS 733.510 to 733.780 that apply to the insurer. For the purpose of this subsection, the total investment of the insurer includes:

(a) Any direct investment by the insurer in an asset; and

(b) The insurer’s proportionate share of any investment in an asset by any subsidiary of the insurer, which shall be calculated by multiplying the amount of the subsidiary’s investment by the percentage of the ownership of the subsidiary.

(4) With the approval of the director, an insurer may invest any greater amount in common stock, preferred stock, debt obligations or other securities of one or more subsidiaries. However, after such an investment, the combined capital and surplus of the insurer must be reasonable in relation to the outstanding liabilities of the insurer and adequate to its financial needs.

(5) An insurer must determine whether any investment pursuant to subsection (2), (3) or (4) of this section meets the applicable requirements [thereof before] on the last day of the month immediately preceding the day on which the investment is made. The determination must be made prior to the investment by calculating the applicable investment limitations as though the investment had already been made, taking into account the then outstanding principal balance on all previous investments in debt obligations and the value of all previous investments in equity securities as of the day they were made, net of any return of capital invested, not including dividends.

SECTION 2. Notwithstanding ORS 733.630, a health care service contractor may make investments subject to ORS 750.047 (repealed by this 2005 Act) as long as the investments are based on the combined capital and surplus of the health care service contractor as of December 31, 2004. The combined capital and surplus of the health care service contractor on the day the investment is made must be reasonable in relation to the outstanding liabilities of the health care service contractor and adequate to its financial needs. An investment made under this section is a permitted investment for the purpose of ORS 733.630.

SECTION 3. Section 2 of this 2005 Act is repealed on January 2, 2009.

SECTION 4. ORS 750.055 is amended to read:

750.055. (1) The following provisions of the Insurance Code [shall] apply to health care service contractors to the extent [so applicable and] not inconsistent with the express provisions of ORS 750.005 to 750.095:

(a) ORS 705.137, 705.139, 731.004 to 731.150, 731.162, 731.216 to 731.362, 731.382, 731.385, 731.386, 731.390, 731.398 to 731.430, 731.428, 731.450, 731.454, 731.488, 731.504, 731.508, 731.509, 731.510, 731.511, 731.512, 731.574 to 731.620, 731.592, 731.594, 731.640 to 731.652, 731.730, 731.731, 731.735, 731.737, 731.750, 731.752, 731.804 and 731.844 to 731.992.

(b) ORS 732.215, 732.220, 732.230, 732.245, 732.250, 732.320, 732.325 and 732.517 to 732.592, not including ORS 732.582.

(c)[(A)] ORS 733.010 to 733.050, 733.080, 733.140 to 733.170, 733.210, 733.510 [to 733.620, 733.635] to 733.680 and 733.695 to 733.780 [apply to not-for-profit health care service contractors].

[(B) ORS chapter 733, not including ORS 733.630, applies to for-profit health care service contractors.]

(d) ORS chapter 734.

(e) ORS 742.001 to 742.009, 742.013, 742.061, 742.065, 742.150 to 742.162, 742.400, 742.520 to 742.540, 743.010, 743.013, 743.018 to 743.030, 743.050, 743.100 to 743.109, 743.402, 743.412, 743.472, 743.492, 743.495, 743.498, 743.522, 743.523, 743.524, 743.526, 743.527, 743.528, 743.529, 743.549 to 743.555, 743.556, 743.560, 743.600 to 743.610, 743.650 to 743.656, 743.691, 743.693, 743.694, 743.697, 743.699, 743.701, 743.706 to 743.712, 743.721, 743.722, 743.726, 743.727, 743.728, 743.729, 743.793, 743.804, 743.807, 743.808, 743.814 to 743.839, 743.842, 743.845, 743.847, 743.854, 743.856, 743.857, 743.858, 743.859, 743.861, 743.862, 743.863, 743.864, 743.866 and 743.868.

(f) The provisions of ORS chapter 744 relating to the regulation of insurance producers.

(g) ORS 746.005 to 746.140, 746.160, 746.220 to 746.370, 746.600, 746.605, 746.607, 746.608, 746.610, 746.615, 746.625, 746.635, 746.650, 746.655, 746.660, 746.668, 746.670, 746.675, 746.680 and 746.690.

(h) ORS 743.714, except in the case of group practice health maintenance organizations that are federally qualified pursuant to Title XIII of the Public Health Service Act unless the patient is referred by a physician associated with a group practice health maintenance organization.

(i) ORS 735.600 to 735.650.

(j) ORS 743.680 to 743.689.

(k) ORS 744.700 to 744.740.

(L) ORS 743.730 to 743.773.

(m) ORS 731.485, except in the case of a group practice health maintenance organization that is federally qualified pursuant to Title XIII of the Public Health Service Act and that wholly owns and operates an in-house drug outlet.

(2) For the purposes of this section [only], health care service contractors shall be deemed insurers.

(3) Any for-profit health care service contractor organized under the laws of any other state which is not governed by the insurance laws of such state, will be subject to all requirements of ORS chapter 732.

(4) The Director of the Department of Consumer and Business Services may, after notice and hearing, adopt reasonable rules not inconsistent with this section and ORS 750.003, 750.005, 750.025 and 750.045 that are deemed necessary for the proper administration of these provisions.

SECTION 5. ORS 750.055, as amended by section 3, chapter 263, Oregon Laws 2003, is amended to read:

(b) ORS 732.215, 732.220, 732.230, 732.245, 732.250, 732.320, 732.325 and 732.517 to 732.592, not including ORS 732.582.

(c)[(A)] ORS 733.010 to 733.050, 733.080, 733.140 to 733.170, 733.210, 733.510 [to 733.620, 733.635] to 733.680 and 733.695 to 733.780 [apply to not-for-profit health care service contractors].

[(B) ORS chapter 733, not including ORS 733.630, applies to for-profit health care service contractors.]

(d) ORS chapter 734.

(e) ORS 742.001 to 742.009, 742.013, 742.061, 742.065, 742.150 to 742.162, 742.400, 742.520 to 742.540, 743.010, 743.013, 743.018 to 743.030, 743.050, 743.100 to 743.109, 743.402, 743.412, 743.472, 743.492, 743.495, 743.498, 743.522, 743.523, 743.524, 743.526, 743.527, 743.528, 743.529, 743.549 to 743.555, 743.556, 743.560, 743.600 to 743.610, 743.650 to 743.656, 743.691, 743.693, 743.694, 743.697, 743.699, 743.701, 743.706 to 743.712, 743.721, 743.722, 743.727, 743.728, 743.729, 743.793, 743.804, 743.807, 743.808, 743.814 to 743.839, 743.842, 743.845, 743.847, 743.854, 743.856, 743.857, 743.858, 743.859, 743.861, 743.862, 743.863, 743.864, 743.866 and 743.868.

(f) The provisions of ORS chapter 744 relating to the regulation of insurance producers.

(i) ORS 735.600 to 735.650.

(j) ORS 743.680 to 743.689.

(k) ORS 744.700 to 744.740.

(L) ORS 743.730 to 743.773.

(2) For the purposes of this section [only], health care service contractors shall be deemed insurers.

SECTION 6. ORS 750.055, as amended by section 7, chapter 137, Oregon Laws 2003, and section 3, chapter 263, Oregon Laws 2003, is amended to read:

(b) ORS 732.215, 732.220, 732.230, 732.245, 732.250, 732.320, 732.325 and 732.517 to 732.592, not including ORS 732.582.

(c)[(A)] ORS 733.010 to 733.050, 733.080, 733.140 to 733.170, 733.210, 733.510 [to 733.620, 733.635] to 733.680 and 733.695 to 733.780 [apply to not-for-profit health care service contractors].

[(B) ORS chapter 733, not including ORS 733.630, applies to for-profit health care service contractors.]

(d) ORS chapter 734.

(e) ORS 742.001 to 742.009, 742.013, 742.061, 742.065, 742.150 to 742.162, 742.400, 742.520 to 742.540, 743.010, 743.013, 743.018 to 743.030, 743.050, 743.100 to 743.109, 743.402, 743.412, 743.472, 743.492, 743.495, 743.498, 743.522, 743.523, 743.524, 743.526, 743.527, 743.528, 743.529, 743.549 to 743.555, 743.556, 743.560, 743.600 to 743.610, 743.650 to 743.656, 743.691, 743.693, 743.694, 743.697, 743.701, 743.706 to 743.712, 743.721, 743.722, 743.727, 743.728, 743.729, 743.793, 743.804, 743.807, 743.808, 743.814 to 743.839, 743.842, 743.845, 743.847, 743.854, 743.856, 743.857, 743.858, 743.859, 743.861, 743.862, 743.863, 743.864, 743.866 and 743.868.

(f) The provisions of ORS chapter 744 relating to the regulation of insurance producers.

(i) ORS 735.600 to 735.650.

(j) ORS 743.680 to 743.689.

(k) ORS 744.700 to 744.740.

(L) ORS 743.730 to 743.773.

(2) For the purposes of this section [only], health care service contractors shall be deemed insurers.

SECTION 7. ORS 750.047 is repealed.

Approved by the Governor June 20, 2005

Filed in the office of Secretary of State June 21, 2005

Effective date January 1, 2006

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