Terms Used In Tennessee Code > Title 33 > Chapter 1 > Part 2 - Policies, Values, and Principles

• Acceptable collateral: means :
  (A) As to securities lending transactions, and for the purpose of calculating counterparty exposure amount, cash, cash equivalents, letters of credit, direct obligations of, or securities that are fully guaranteed as to principal and interest by, the government of the United States, or by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, and as to lending foreign securities, sovereign debt rated NAIC-SVO 1. See Tennessee Code 56-3-302
• Admitted assets: means assets permitted to be reported as admitted assets on the statutory financial statement of the insurer most recently required to be filed with the commissioner, but:
  (A) Excluding the assets of separate accounts, the investments of which are not subject to this part. See Tennessee Code 56-3-302
• Affiliate: means , as to any person, another person that, directly or indirectly through one (1) or more intermediaries, controls, is controlled by, or is under common control with the person. See Tennessee Code 56-3-302
• Amortization: Paying off a loan by regular installments.
• Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
• Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
• Attorney-in-fact: A person who, acting as an agent, is given written authorization by another person to transact business for him (her) out of court.
• Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
• Business entity: includes a sole proprietorship, corporation, limited liability company, association, general or limited partnership, joint stock company, joint venture, mutual fund, bank, trust, real estate investment trust, joint tenancy or other similar form of business organization, whether organized for-profit or not-for-profit. See Tennessee Code 56-3-302
• Cap: means an agreement obligating the seller to make payments to the buyer with each payment based on the amount by which a reference price or level or the performance or value of one (1) or more underlying interests exceeds a predetermined number, sometimes called the strike rate or strike price. See Tennessee Code 56-3-302
• Capital and surplus: means the sum of the capital and surplus of the insurer required to be shown on the statutory financial statement of the insurer most recently required to be filed with the commissioner. See Tennessee Code 56-3-302
• Cash equivalents: means highly rated, highly liquid and readily marketable investments or securities with a remaining term to maturity of one (1) year or less, which includes money market funds as defined in §. See Tennessee Code 56-3-302
• Code: includes the Tennessee Code and all amendments and revisions to the code and all additions and supplements to the code. See Tennessee Code 1-3-105
• Commissioner: means the commissioner of commerce and insurance. See Tennessee Code 56-1-102
• Contract: A legal written agreement that becomes binding when signed.
• Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
• Counterparty exposure amount: means :
  (A) For an over-the-counter derivative instrument not entered into pursuant to a written master agreement which provides for netting of payments owed by the respective parties:

  (i) The market value of the over-the-counter derivative instrument if the liquidation of the derivative instrument would result in a final cash payment to the insurer. See Tennessee Code 56-3-302
• Department: means the department of mental health and substance abuse services. See Tennessee Code 33-1-101
• Derivative instrument: means any agreement, option or instrument, or any series or combinations of an agreement, option or instrument:
  (i) To make or take delivery of, or assume or relinquish, a specified amount of one (1) or more underlying interests, or to make a cash settlement in lieu thereof. See Tennessee Code 56-3-302
• Derivative instruments: includes options, warrants (not attached to another financial instrument purchased by the insurer), caps, floors, collars, swaps, swaptions, forwards, futures and any other agreements, options or instruments substantially similar thereto, or any series or combinations thereof. See Tennessee Code 56-3-302
• Derivative transaction: means a transaction involving the use of one (1) or more derivative instruments. See Tennessee Code 56-3-302
• Dollar roll transaction: means two (2) simultaneous transactions with settlement dates no more than ninety-six (96) days apart so that in one (1) transaction an insurer sells to a business entity, and in the other transaction the insurer is obligated to purchase from the same business entity, substantially similar securities of the following types:
  (A) Mortgage-backed securities issued, assumed or guaranteed by the Government National Mortgage Association, the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation or their respective successors. See Tennessee Code 56-3-302
• Domestic insurance company: means an insurance company, other than life and fraternal insurance companies, nonprofit hospital and medical service corporations, nonprofit dental service corporations, nonprofit vision service corporations and title insurance companies, incorporated under the laws of this state. See Tennessee Code 56-3-401
• Entitlement: A Federal program or provision of law that requires payments to any person or unit of government that meets the eligibility criteria established by law. Entitlements constitute a binding obligation on the part of the Federal Government, and eligible recipients have legal recourse if the obligation is not fulfilled. Social Security and veterans' compensation and pensions are examples of entitlement programs.
• Equity interests: includes common stock, an equity investment in an investment company, other than a money market mutual fund described in §. See Tennessee Code 56-3-302
• Escrow: Money given to a third party to be held for payment until certain conditions are met.
• Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
• Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
• Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
• Fixed charges: includes interest on all bonds and other evidence of indebtedness, and amortization of debt discount and expenses. See Tennessee Code 56-3-401
• Fixed charges: includes interest on all obligations and amortization of debt discount and expenses. See Tennessee Code 56-3-302
• Floor: means an agreement obligating the seller to make payments to the buyer in which each payment is based on the amount by which a predetermined number, sometimes called the floor rate or price, exceeds a reference price, level, performance or value of one (1) or more underlying interests. See Tennessee Code 56-3-302
• Foreign: when used without limitation, includes all companies formed by authority of any other state or government. See Tennessee Code 56-1-102
• Foreign jurisdiction: means :
  (A) A jurisdiction other than a domestic jurisdiction. See Tennessee Code 56-3-302
• Future: means an agreement, traded on a futures exchange, to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance or value of, one (1) or more underlying interests. See Tennessee Code 56-3-302
• Futures exchange: means a foreign or domestic exchange, contract market or board of trade on which trading in futures is conducted and, in the United States, that has been authorized for such trading by the commodities futures trading commission or any successor of the commodities futures trading commission. See Tennessee Code 56-3-302
• Guarantor: A party who agrees to be responsible for the payment of another party's debts should that party default. ^{Source: OCC}
• Hedging transaction: means a derivative transaction that is entered into and maintained to manage:
  (A) The risk of a change in the value, yield, price, cash flow or quantity of assets or liabilities, or a portfolio of assets and/or liabilities, that the insurer has acquired or incurred or anticipates acquiring or incurring. See Tennessee Code 56-3-302
• highly rated: means an investment rated "P-1" by Moody's Investors Service, Inc. See Tennessee Code 56-3-302
• Income generation transaction: means a derivative transaction which is entered into to generate income. See Tennessee Code 56-3-302
• Institution: includes a corporation, a joint-stock association and a business trust. See Tennessee Code 56-3-401
• Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. ^{Source: OCC}
• Investment practices: means transactions of the types described in §. See Tennessee Code 56-3-302
• Joint tenancy: A form of property ownership in which two or more parties hold an undivided interest in the same property that was conveyed under the same instrument at the same time. A joint tenant can sell his (her) interest but not dispose of it by will. Upon the death of a joint tenant, his (her) undivided interest is distributed among the surviving joint tenants.
• Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
• Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). ^{Source: OCC}
• Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
• Lien: A claim against real or personal property in satisfaction of a debt.
• Market value: means the price for the security or derivative instrument obtained from a generally recognized source or the most recent quotation from the source or, to the extent no generally recognized source exists, the price for the security or derivative instrument as determined pursuant to the terms of the instrument or in good faith by the insurer as can be reasonably demonstrated to the commissioner upon request, plus accrued but unpaid income on the security or derivative instrument to the extent not included in the price as of the date. See Tennessee Code 56-3-302
• Mental illness: means a psychiatric disorder, alcohol dependence, or drug dependence, but does not include intellectual disability or other developmental disabilities as defined in title 52. See Tennessee Code 33-1-101
• Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
• Mortgage loan: A loan made by a lender to a borrower for the financing of real property. ^{Source: OCC}
• NAIC: means the National Association of Insurance Commissioners. See Tennessee Code 56-3-302
• NAIC-SVO: means the securities valuation office of the National Association of Insurance Commissioners. See Tennessee Code 56-3-302
• Net earnings available for fixed charges: means net income determined on either a consolidated or an unconsolidated basis after allowance for operating and maintenance expenses, depreciation and depletion, and taxes, other than federal and state income taxes, but excluding extraordinary nonrecurring items of income or expense appearing in the regular financial statements of the issuing, assuming or guaranteeing business entity. See Tennessee Code 56-3-302
• Obligation: means a note, bond, debenture, trust certificate, equipment trust certificate, production payment, negotiable bank certificate of deposit, bankers' acceptance, asset-backed security, NAIC-SVO credit tenant loan, loan secured by financing a net lease or net leases, and other evidence of indebtedness for the payment of money, or participations, certificates or other evidences of an interest in any of the obligations listed in this subdivision (29), whether constituting a general obligation of the issuer or payable only out of certain revenues or certain funds pledged or otherwise dedicated for payment. See Tennessee Code 56-3-302
• Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
• Option: means an agreement giving the buyer the right to buy or receive, known as a "call option" sell or deliver, known as a "put option" enter into, extend or terminate or effect a cash settlement based on the actual or expected price, spread, level, performance or value of one (1) or more underlying interests. See Tennessee Code 56-3-302
• Over-the-counter derivative instrument: means a derivative instrument entered into with a business entity, other than through a securities exchange, futures exchange, or cleared through a qualified clearinghouse. See Tennessee Code 56-3-302
• Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
• Person: means an individual, a business entity, a multilateral development bank or a government or quasi-governmental body, such as a political subdivision or a government sponsored enterprise. See Tennessee Code 56-3-302
• Person: includes a corporation, firm, company or association. See Tennessee Code 1-3-105
• Person: means any association, aggregate of individuals, business, company, corporation, individual, joint-stock company, Lloyds-type organization, organization, partnership, receiver, reciprocal or interinsurance exchange, trustee or society. See Tennessee Code 56-16-102
• Potential exposure: means :
  (A) As to a futures position, the amount of initial margin required for that position. See Tennessee Code 56-3-302
• Precedent: A court decision in an earlier case with facts and law similar to a dispute currently before a court. Precedent will ordinarily govern the decision of a later similar case, unless a party can show that it was wrongly decided or that it differed in some significant way.
• Preferred dividend requirements: means dividends at the maximum prescribed rate on all preferred stock of the same class as that being acquired by the insurance company and on all stock ranking as to dividends on a parity with the dividends or prior to the dividends, whether or not the dividends are cumulative. See Tennessee Code 56-3-302
• Preferred dividend requirements: means dividends at the maximum prescribed rate on all preferred stock of the same class as that being acquired by the insurance company and on all stock ranking as to dividends on a parity with the dividends or prior to the dividends, whether or not the dividends are cumulative. See Tennessee Code 56-3-401
• Property: includes both personal and real property. See Tennessee Code 1-3-105
• Qualified clearinghouse: means a clearinghouse subject to the rules of a securities exchange or a futures exchange that provides clearing services, including acting as a counterparty to each of the parties to a transaction such that the parties no longer have credit risk to each other. See Tennessee Code 56-3-302
• Qualified primary credit source: means the credit source to which an insurer looks for payment as to an investment and against which an insurer has a direct claim for full and timely payment, evidenced by a contractual right for which an enforcement action can be brought in a domestic jurisdiction. See Tennessee Code 56-3-302
• real property: include lands, tenements and hereditaments, and all rights thereto and interests therein, equitable as well as legal. See Tennessee Code 1-3-105
• Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
• Reciprocal: means the aggregation of subscribers under a common name. See Tennessee Code 56-16-102
• Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
• Replication transaction: means a derivative transaction or combination of derivative transactions effected either separately or in conjunction with cash market investments included in the insurer's investment portfolio in order to replicate the risks and returns of another authorized transaction, investment or instrument and/or operate as a substitute for cash market transactions. See Tennessee Code 56-3-302
• Repurchase transaction: means a transaction in which an insurer purchases securities from a business entity that is obligated to repurchase the purchased securities or equivalent securities from the insurer at a specified price, either within a specified period of time or upon demand. See Tennessee Code 56-3-302
• Securities exchange: means :
  (A) An exchange registered as a national securities exchange or a securities market registered under the Securities Exchange Act of 1934 (15 U. See Tennessee Code 56-3-302
• Securities lending transaction: means a transaction in which securities are loaned by an insurer to a business entity that is obligated to return the loaned securities or equivalent securities to the insurer, either within a specified period of time or upon demand. See Tennessee Code 56-3-302
• Serious emotional disturbance: means a condition in a child who currently or at any time during the past year has had a diagnosable mental, behavioral, or emotional disorder of sufficient duration to meet psychiatric diagnostic criteria that results in functional impairment that substantially interferes with or limits the child's role or functioning in family, school, or community activities and includes any mental disorder, regardless of whether it is of biological etiology. See Tennessee Code 33-1-101
• Service recipient: means a person who is receiving service, has applied for service, or for whom someone has applied for or proposed service because the person has mental illness or serious emotional disturbance. See Tennessee Code 33-1-101
• Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
• Shell business entity: means a business entity having no economic substance, except as a vehicle for owning interests in assets issued, owned or previously owned by a person domiciled in a foreign jurisdiction. See Tennessee Code 56-3-302
• State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
• State: includes the several states, the District of Columbia, the Commonwealth of Puerto Rico and the possessions of the United States. See Tennessee Code 56-3-401
• State: includes the several states, the District of Columbia, the Commonwealth of Puerto Rico and the possessions of the United States. See Tennessee Code 56-3-302
• Statute: A law passed by a legislature.
• Support: means any activity or resource that enables a service recipient to participate in a service for mental illness or serious emotional disturbance or in community life. See Tennessee Code 33-1-101
• SVO Rating: means the numerical ranking designation of one (1) through six (6) assigned to securities as determined by the NAIC-SVO. See Tennessee Code 56-3-302
• Swap: means an agreement to exchange or to net payments at one (1) or more times based on the actual or expected price, yield, level, performance or value of one (1) or more underlying interests. See Tennessee Code 56-3-302
• Swaption: means an option to purchase or sell a swap at a given price and time or at a series of prices and times. See Tennessee Code 56-3-302
• Trustee: A person or institution holding and administering property in trust.
• Underlying interest: means the assets, liabilities or other interests, or a combination of assets, liabilities or other interests, underlying a derivative instrument, such as any one (1) or more securities, currencies, rates, indices, commodities or derivative instruments. See Tennessee Code 56-3-302
• United States: includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
• Warrant: means an instrument that gives the holder the right to purchase or sell the underlying interest at a given price and time or at a series of prices and times outlined in the warrant agreement. See Tennessee Code 56-3-302
• written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
• Year: means a calendar year, unless otherwise expressed. See Tennessee Code 1-3-105