(A)

1. (1) In connection with mortgage loans, an insurer:

   1. (a) may acquire obligations secured by mortgages on real estate situated within a domestic jurisdiction, subject to the limitations of Section 38-12-430, either directly or indirectly through:

      1. (i) limited partnership interests and general partnership interests not otherwise prohibited by Section 38-12-60(A)(4);
      2. (ii) joint ventures;
      3. (iii) stock of an investment affiliate;
      4. (iv) membership interests in a limited liability company;
      5. (v) trust certificates; or
      6. (vi) other similar instruments; and

   2. (b) may not acquire a mortgage loan secured by other than a first lien pursuant to this item unless the insurer is the holder of the first lien. The obligations held by the insurer and obligations with an equal lien priority, at the time of acquisition of the obligation, may not exceed:

      1. (i) ninety percent of the fair market value of the real estate, if the mortgage loan is secured by a purchase money mortgage or like security received by the insurer upon disposition of the real estate;
      2. (ii) eighty percent of the fair market value of the real estate, if the mortgage loan requires immediate scheduled payment in periodic installments of principal and interest over an amortization period of thirty years or less, and periodic payments are required at least annually. Each periodic payment must be sufficient to ensure that at all times the outstanding principal balance of the mortgage loan is not greater than the outstanding principal balance that would be outstanding pursuant to a mortgage loan with the same original principal balance and the same interest rate and requiring equal payments of principal and interest with the same frequency over the same amortization period. Mortgage loans that otherwise are permitted pursuant to this subsection may provide for a payment of the principal balance before the end of the period of amortization of the loan. For residential mortgage loans, the eighty percent limitation may be increased to ninety-seven percent if acceptable private mortgage insurance has been obtained; or
      3. (iii) seventy-five percent of the fair market value of the real estate for mortgage loans that do not meet the requirements of subsubitem (i) or (ii).
2. (2) For purposes of item (1), the amount of an obligation required to be included in the calculation of the loan-to-value ratio may be reduced to the extent the obligation is insured by the Federal Housing Administration or guaranteed by the Administrator of Veterans Affairs, or their successors.

3. (3)

   1. (a) Subject to the limitations of Section 38-12-430, an insurer may acquire obligations secured by a second mortgage on real estate situated within a domestic jurisdiction, in addition to that which is authorized under item (1), either directly or indirectly through:

      1. (i) limited partnership interests and general partnership interests not otherwise prohibited by Section 38-12-60(A)(4);
      2. (ii) joint ventures;
      3. (iii) stock of an investment affiliate;
      4. (iv) membership interests in a limited liability company;
      5. (v) trust certificates; or
      6. (vi) other similar instruments.
   2. (b) The obligation held by the insurer must be the sole second lien priority obligation and, at the time of acquisition of the obligation, may not exceed seventy percent of the amount by which the fair market value of the real estate exceeds the amount outstanding under the first mortgage.
4. (4) A mortgage loan that is held by an insurer pursuant to Section 38-12-40(F) or acquired pursuant to this section and is restructured in a manner that meets the requirements of a restructured mortgage loan in accordance with the NAIC accounting manual continues to qualify as a mortgage loan pursuant to this chapter.

5. (5) Subject to the limitations of Section 38-12-430, a credit lease transaction that does not qualify for investment pursuant to Section 38-12-440 is exempt from the provisions of item (1) if:

   1. (a) the loan amortizes over the initial fixed lease term in an amount at least sufficient so that the loan balance at the end of the lease term does not exceed the original appraised value of the real estate;
   2. (b) the lease payments cover or exceed the total debt service over the life of the loan;
   3. (c) a tenant or its affiliated entity whose rated credit instruments have a SVO 1 or 2 designation or a comparable rating from a nationally recognized statistical rating organization recognized by the SVO has a full faith and credit obligation to make the lease payments;
   4. (d) the insurer holds or is the beneficial holder of a first lien mortgage on the real estate;
   5. (e) the expenses of the real estate are passed through to the tenant, excluding exterior, structural, parking, and heating, ventilation, and air conditioning replacement expenses, unless annual escrow contributions, from cash flows derived from the lease payments, cover the expense shortfall; and
   6. (f) there is a perfected assignment of the rents due pursuant to the lease to or for the benefit of the insurer.

(B)

1. (1) Subject to the limitations of Section 38-12-430, an insurer may acquire, manage, and dispose of real estate situated in a domestic jurisdiction, either directly or indirectly, through:

   1. (a) limited partnership interests and general partnership interests not otherwise prohibited by Section 38-12-60(A)(4);
   2. (b) joint ventures;
   3. (c) stock of an investment affiliate;
   4. (d) membership interests in a limited liability company;
   5. (e) trust certificates; or
   6. (f) other similar instruments.
2. (2) The real estate must be income producing or intended for improvement or development for investment purposes under an existing program, in which case the real estate is considered to be income producing. The real estate may be subject to mortgages, liens, or other encumbrances, the amount of which must be deducted from the amount of the investment of the insurer in the real estate to the extent that the obligations secured by the mortgages, liens, or encumbrances are without recourse to the insurer for purposes of determining compliance with items (2) and (3) of subsection (D).

(C) An insurer may acquire, manage, and dispose of real estate for the convenient accommodation of the business operations, including home office, branch office, and field office operations of the insurer or its affiliates.

1. (1) Real estate acquired pursuant to this subsection may include excess space for rent to others, if the excess space when valued at its fair market value, would otherwise be a permitted investment pursuant to subsection (B) and is so qualified by the insurer.
2. (2) The real estate acquired pursuant to this subsection may be subject to one or more mortgages, liens, or other encumbrances, the amount of which must be deducted from the amount of the investment of the insurer in the real estate to the extent that the obligations secured by the mortgages, liens, or encumbrances are without recourse to the insurer for purposes of determining compliance with subsection (D)(4).
3. (3) For purposes of this subsection, business operations do not include that portion of real estate used for the direct provision of health care services for its insureds, other than employees of the insurer and its affiliates and their families, by an insurer whose insurance premiums and required statutory reserves for accident and health insurance are at least ninety-five percent of total premium consideration or total statutory required reserves, respectively. An insurer may acquire real estate used for these purposes pursuant to subsection (B).

(D) An insurer may not acquire:

1. (1) an investment pursuant to subsection (A) 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 subsection (A) exceeds:

   1. (a) one percent of its admitted assets in mortgage loans covering any one secured location;
   2. (b) one quarter of one percent of its admitted assets in construction loans covering any one secured location; or
   3. (c) one percent of its admitted assets in construction loans in the aggregate;

2. (2) an investment pursuant to subsection (B) if as a result of and after giving effect to the investment and any outstanding guarantees made by the insurer in connection with the investment the aggregate amount of investments then held by the insurer pursuant to subsection (B), plus the guarantees then outstanding, exceeds:

   1. (a) one percent of its admitted assets in any one parcel or group of contiguous parcels of real estate, except that this limitation does not apply to that portion of real estate used for the direct provision of health care services by an insurer whose insurance premiums and required statutory reserves for accident and health insurance are at least ninety-five percent of total premium consideration or total statutory required reserves, respectively, such as hospitals, medical clinics, medical professional buildings, or other health facilities used for the purpose of providing health services; or
   2. (b) the lesser of ten percent of its admitted assets or forty percent of its surplus as regards policyholders in the aggregate, except that for an insurer whose insurance premiums and required statutory reserves for accident and health insurance are at least ninety-five percent of total premium consideration or total statutory required reserves, respectively, this limitation must be increased to fifteen percent of its admitted assets in the aggregate;
3. (3) an investment pursuant to subsection (A) or (B) if as a result of and after giving effect to the investment and any guarantees made by the insurer in connection with the investment the aggregate amount of all investments then held by the insurer pursuant to subsections (A) and (B), plus the guarantees then outstanding, exceeds twenty-five percent of its admitted assets; or
4. (4) real estate pursuant to subsection (C) if as a result of and after giving effect to the acquisition the aggregate amount of real estate then held by the insurer pursuant to subsection (C) exceeds ten percent of its admitted assets. Additional amounts of real estate may be acquired, with the permission of the director, pursuant to subsection (C). The limitations of Section 38-12-430 do not apply to an insurer's acquisition of real estate pursuant to subsection (C).