A. No security or investment (other than real and personal property acquired under Section 59A-9-21 NMSA 1978) shall be eligible for acquisition by an insurer unless it is interest bearing or interest accruing or by its character entitled to dividends when declared and paid, or has other income-earning entitlement, is not then in default in any respect, and the insurer is entitled to receive for its exclusive account and benefit the interest or income accruing thereon.

B. No security or investment shall be eligible for purchase at a price above its fair market value.

C. No provision of Chapter 59A, Article 9 NMSA 1978 shall prohibit acquisition by an insurer of other or additional securities or property if received as a dividend or lawful distribution of assets, or upon a debt or judgment, or under a lawful and bona fide agreement of bulk reinsurance, merger, or consolidation. Any security or property so acquired which is not otherwise an eligible investment under this article shall be disposed of by the insurer pursuant to Section 59A-9-23 NMSA 1978 if real property, or pursuant to Section 59A-9-24 NMSA 1978 if personal property or securities.

D. Notwithstanding any other provision of law, a domestic insurance company may deposit or arrange for the deposit of securities held in or purchased for its general account and its separate accounts in a clearing corporation or the federal reserve book-entry system. When securities are deposited with a clearing corporation, certificates representing securities of the same class of the same issuer may be merged and held in bulk in the name of the nominee of such clearing corporation with any other securities deposited with such clearing corporation by any person, regardless of the ownership of such securities, and certificates representing securities of small denominations may be merged into one or more certificates of larger denominations. The records of any member bank through which an insurance company holds securities in the federal reserve book-entry system, and the records of any custodian banks through which an insurance company holds securities in a clearing corporation, shall at all times show that such securities are held for such insurance company and for which accounts thereof. Ownership of, and other interests in, such securities may be transferred by bookkeeping entry on the books of such clearing corporation or in the federal reserve book-entry system without, in either case, physical delivery of certificates representing such securities. The superintendent of insurance is authorized to promulgate rules and regulations governing the deposit by insurance companies of securities with clearing corporations and in the federal reserve book-entry system.

(1) "Clearing corporation" means a corporation as defined in Section 55-8-102 NMSA 1978, except that with respect to securities issued by institutions organized or existing under the laws of any foreign country or securities used to meet the deposit requirements pursuant to the laws of a foreign country as a condition of doing business therein, "clearing corporation" may include a corporation which is organized or existing under the laws of any foreign country and is legally qualified under such laws to effect transactions in securities by computerized book-entry.

(2) "Direct participant" means a bank or trust company or other institution which maintains an account in its name in a clearing corporation and through which an insurance company participates in a clearing corporation.

(3) "Federal Reserve book-entry system" means the computerized systems sponsored by the United States department of the treasury and certain agencies and instrumentalities of the United States government and such agencies and instrumentalities, respectively, in federal reserve banks through banks which are members of the federal reserve system or which otherwise have access to such computerized systems.

(4) "Member bank" means a national bank, state bank or trust company which is a member of the federal reserve system and through which an insurance company participates in the federal reserve book-entry system.

(5) "Securities" means instruments as defined in Section 55-8-102 NMSA 1978.

History: Laws 1984, ch. 127, § 136; 1987, ch. 259, § 10.