Chap. 116.—An ACT to amend and re-enact Section 1 of an act entitled “an act
to regulate investments of domestic life insurance companies,” approved
March 26, 1932, as heretofore amended. [S B 158]

Approved March 5, 1936

1. Be it enacted by the General Assembly of Virginia, That section
one of an act entitled an act to regulate investments of domestic life
insurance companies, approved March twenty-sixth, nineteen hundred
and thirty-two, as heretofore amended, be amended and re-enacted so
as to read as follows:

Section 1. No domestic mutual life insurance company shall invest
its funds or assets, nor shall any domestic stock life insurance company
invest its funds or assets exclusive of an amount equal to its surplus
and its capital in excess of the minimum required by the laws of this
State, except

(a) In stock, bonds, treasury notes and other evidences of indebted-
ness of the United States government ; or

(b) In stock, bonds, or other evidences of indebtedness of the
District of Columbia or of any state of the United States, or of any
county, municipality or other political subdivision thereof; or

(c) In bonds of the Dominion of Canada or of any province
thereof or of any municipality thereof having a population of at least
one hundred thousand, provided said bonds are payable both as to
principal and interest in lawful money of the United States of America
of the present standard of weight and fineness, and provided, that the
total investments under this clause (c) shall not exceed ten per centum
of the investing company’s assets; or

(d) In loans secured by mortgages (including security deeds,
vendor’s liens and deeds of trust) in fee on improved unencumbered
real estate in the District of Columbia or in any state of the United
States where the amount loaned on such real estate does not exceed
sixty per centum of the fair market value of the real estate, as deter-
mined by at least two competent and impartial appraisers; or

(e) In loans secured by mortgages (including security deeds,
vendor’s liens and deeds of trust), upon leaseholds for a term of
ninety-nine years or longer, on improved unencumbered real estate in
the District of Columbia, or in any state of the United States where
the amount loaned on such leasehold does not exceed fifty per centum
of the fair market value of the leasehold estate, as determined by at
least two competent and impartial appraisers and only where at least
fifty years of the term is unexpired; or in similar loans where the
amount loaned exceeds sixty per centum but is not in excess of eighty
eed

per centum of the fair market value of the real estate, as determined
by at least two competent and impartial appraisers, but only if such
loans are insured by the Federal housing administrator; or

(f) In interest bearing bonds of any solvent institution which is
incorporated under the laws of the United States, or of any state
thereof, or the Dominion of Canada or any province thereof, where
such bonds are secured by adequate security or collateral at least two-
thirds in value of which security or collateral shall be other than com-
mon stock, and where such corporation has not during any time within
five years next preceding such investment defaulted in the payment of
interest on such bonds and where for the five fiscal years preceding
said investment the average net annual income of such corporation,
before interest charges but after taxes, including income taxes, and
after deducting proper charges for replacements, depreciation and
obsolescence, has been at least one and one-half times the average
annual interest for the same period on such issue of bonds, on prior
obligations and on obligations of equal rank, and where the total in-
vestment in any one issue of such bonds does not exceed two per
centum of the investing company’s assets. and where such bonds, if
issued by a Canadian corporation, are payable both as to principal and
interest in lawful money of the United States of the present standard
of weight and fineness; or

(zg) In the bonds, debentures or notes of any solvent institution
incorporated under the laws of the United States, or of any state there-
of (though such bonds, debentures or notes be not secured, as provided
by clause (f) hereof) where the average of the annual earnings,
applicable to dividends, of such institution during the period of five
fiscal years next preceding such investment shall equal at least four
per centum upon the par value (or, in case of stock having no par
value, then upon the value upon which such stock was issued) of the
average amount of its capital stock outstanding during such five-year
period, and where such institution, after taxes, including income taxes,
and after deducting proper charges for replacements, depreciation and
obsolescence, has not failed in any one of the five fiscal years next
preceding such investment to earn a sum, applicable to interest on its
outstanding indebtedness, equal at least to twice the amount of interest
due for that year upon its outstanding indebtedness, and where the
total investment in any one issue of such bonds, debentures or notes
does not exceed two per centum of the investing company’s assets,
nor more than ten per centum of the total issued and outstanding
bonds, debentures or notes of such institution; or

(h) In preferred or guaranteed stocks of any solvent institution
incorporated under the laws of the United States, or of any state there-
of, where the average of the annual earnings, applicable to dividends,
of such institutions, or, in the case of guaranteed stocks, the guar-
anteeing corporation, during the period of five fiscal years next preced-
ing such investment, shall equal at least four per centum upon the par
value (or, in the case of stock having no par value, then upon the
value upon which such stock was issued) of the average amount of
its capital stock outstanding during such five-year period, and where
such institution or guarantee corporation has not failed in any one of
the five fiscal years next preceding such investment to earn a sum
applicable to dividends on such preferred or guaranteed stocks, equal
at least to three times the amount which may be required to pay the
dividends for that year upon the outstanding preferred or guaranteed
stock, and where the bonds, debentures or notes, if any, of such in-
stitution, qualify as a lawful investment under the provisions of clause
(g) hereof, and where the total investment in any one issue of such
preferred or guaranteed stock does not exceed two per centum of the
investing company’s assets, nor more than ten per centum of the total
issued and outstanding preferred or guaranteed stock of such institu-
tion; or

(1) In loans to any policyholder upon the security of the value of
his policy, the amount of which loan does not exceed the lawful reserve
which is held thereon; or

(j) In conformity to the laws of a foreign country in which it may
be doing business, such investments to be in the same kinds of securi-
ties in such foreign country that such company is allowed by law to
invest in in the United States, and not to exceed in amount the invest-
ing company’s obligations in such foreign country; or

(k) Bonds of the Home Owners’ Loan Corporation, a corporation
created pursuant to an act of the Congress of the United States, ap-
proved June thirteenth, nineteen hundred and thirty-three; or

(1) In loans upon the pledge of any of the aforesaid securities in
an amount which does not exceed ninety per centum of the market
value thereof.

(m) Any domestic life insurance company which shall own on the
effective date of this act, any stocks, bonds, notes or other evidences
of indebtedness, or loans upon the security thereof, which are not in-
cluded in clauses (a) to (1) hereof, shall dispose of such stocks, bonds,
notes or other evidences of indebtedness or loans within five years from
such date, but nothing herein contained shall be deemed to prevent any
such company from protecting its interests where circumstances render
it necessary to accept reorganization securities, where the plan of re-
organization and the securities are approved in writing by the Com-
missioner of Insurance and Banking, or other official designated to
administer the insurance laws of this State. Any securities so ac-
cepted and which are not of the classes authorized by this act shall
be disposed of as soon as practicable. In no case are they to be held
for a period exceeding five years.

(n) A domestic life insurance company may purchase and hold real
property only for the following purposes and in the following manner:

(1) Such as shall be requisite for convenient accommodation in the
transaction of its business, including such as is used and/or held for
home office purposes.

(2) Such as shall have been conveyed to it in satisfaction of debts
previously contracted in course of its dealings.

(3) Such as shall have been purchased at sales on judgments or
decrees obtained for such debts, or upon foreclosure of real estate
owned by it.
All such real property specified in subdivisions two and three of
clause (n) of section one of this act, shall be sold and disposed ot
within ten years after the company shall have acquired title to the
same, and all such property specified in subdivision one of such clause
(n) shall be sold and disposed of within ten years after the same shall
have ceased to be necessary for the present or future accommodation
of its business, and it shall not hold such property for a longer period
unless it shall procure a certificate from the Commissioner of Insurance
and Banking, or other official designated to administer the insurance
laws of this State, that its interest will suffer materially by the forced
sales thereof; in which event, the time for the sale may be extended
to such time as the said official shall direct in such certificate, but in no
event to exceed an additional period of five years; provided that as to
real property purchased prior to the effective date of this act, the
periods herein provided shall not commence to run until that date.
Nothing in clause (n) of section one of this act shall be deemed to
prohibit a domestic life insurance company from acquiring or holding
legal title to real property as security for loans made in good faith.