H-3684              _______________________________________________

                                                   HOUSE BILL NO. 2515

                        _______________________________________________

State of Washington                               51st Legislature                              1990 Regular Session

By Representatives P. King, Winsley, Baugher, Chandler, Zellinsky, Beck, Crane and Inslee

Read first time 1/15/90 and referred to Committee on Financial Institutions & Insurance.

AN ACT Relating to the maintenance and investment of assets by reciprocal insurance exchanges; amending RCW 48.13.060; and adding a new section to chapter 48.13 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

        Sec. 1.  Section .13.06, chapter 79, Laws of 1947 and RCW 48.13.060 are each amended to read as follows:

          (1) Certain terms used are defined for the purposes of this chapter as follows:

          (a) "Obligation" includes bonds, debentures, notes or other evidences of indebtedness.

          (b) "Institution" includes corporations, joint stock associations, and business trusts.

          (c) "Net earnings available for fixed charges" means net income after deducting operating and maintenance expenses, taxes other than federal and state income taxes, depreciation and depletion, but excluding extraordinary nonrecurring items of income or expense appearing in the regular financial statements of such institution.

          (d) "Fixed charges" includes interest on funded and unfunded debt, amortization of debt discount, and rentals for leased properties.

(e) "Reciprocal insurance exchange" or "exchange" means an unincorporated aggregation of subscribers operating individually and collectively through an attorney in fact to provide reciprocal insurance among themselves.

          (2) If net earnings are determined in reliance upon consolidated earnings statements of parent and subsidiary institutions, such net earnings shall be determined after provision for income taxes of subsidiaries and after proper allowance for minority stock interest, if any; and the required coverage of fixed charges shall be computed on a basis including fixed charges and preferred dividends of subsidiaries other than those payable by such subsidiaries to the parent corporation or to any other of such subsidiaries, except that if the minority common stock interest in the subsidiary corporation is substantial, the fixed charges and preferred dividends may be apportioned in accordance with regulations prescribed by the commissioner.

NEW SECTION. Sec. 2.  A new section is added to chapter 48.13 RCW to read as follows:

          Every exchange, in its own name, as in the case of an individual, may purchase, receive, own, hold, lease, mortgage, pledge, or encumber, by deed of trust or otherwise, manage, and sell real estate for the purposes and objects of the exchange, including, but not limited to, investment for the production of income, or for its accommodation in the convenient transaction of its business.  Any contract, including, but not limited to, deeds, leases, mortgages, deeds of trust, purchase or sale agreements, or any other contract to be executed in the name of the exchange, may be executed by the attorney in fact designated by the exchanges' subscribers.  This provision shall be retroactive and shall apply to any real property purchased, received, owned, held, leased, mortgaged, pledged, encumbered by deed of trust or otherwise, managed or sold by any exchange prior to the effective date of this act.