Chap. 4.—-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, so as to permit certain additional investments.

[S. B. 16]
Approved March 27, 1945

Be it enacted by the General Assembly of Virginia:

1. That section one of an act entitled “An act to regulate invest-
ments of domestic life insurance companies.”, approved March twenty-six,
nineteen hundred thirty-two, as HEreiiOre amended, be amended and
re-enacted, so as to read as follows:

Section 1. No domestic stock life insurance company shall invest
its funds or assets, exclusive of its capital in excess of one hundred
thousand dollars and its surplus in excess of fifty thousand dollars, nor
shall any domestic mutual life-insurance company invest its funds or
assets except

(a) In bonds, or other evidences of indebtedness, not in default
as to principal or interest, which are valid and legally authorized obliga-
tions issued, assumed or guaranteed by the United States of America or
by any state thereof or by any territory or possession of the United
States or by the District of Columbia or by any county, city, town, village,
municipality or district therein or by any political subdivision thereof or
by any civil division or publc instrumentality of one or more of the
foregoing, if, by statutory or other legal requirements applicable thereto,
such obligations of such civil division or public instrumentality are pay-
able, as to both principal and interest, from taxes levied or by such law
required to be levied upon all taxable property or all taxable income
within the jurisdiction of such governmental unit or from adequate special
revenues pledged or otherwise appropriated or by such law required to
be provided for the purpose of such payment, but not including any
obligations payable solely out of special assessments on properties
benefited by localimprovements; |

~ (b) 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, or bonds fully guaranteed as to payment of principal and in-
terest by the Dominion of Canada, provided said bonds are payable both
as to principal and interest in lawful money of the United States of
America, and provided that the total investments under this subsection
(b) shall not exceed ten per centum of the investing company’s assets ;

(c) 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 common 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, or where in the case of issuance of new bonds such average
net annual income for the five years preceding such investment has been
at least one and one-half times the pro forma annual interest on the new
bonds, on prior obligations and on bonds of equal rank, and where the
total investment in any one issue of bonds under this subsection (c) 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, and where
the total: investments under this subsection (c) in bonds of Canadian
corporations do not exceed ten per centum of the investing company’s
assets ; |
(d) In adequately secured equipment trust certificates or other
adequately secured instruments evidencing an interest in railroad trans-
portation equipment, wholly or in part within the United States, and a
right to receive determined portions of rental, purchase or other fixed
obligatory payments for the use or purchase of such transportation
equipment ;

(e) In the bonds, debentures or notes of any solvent institution
incorporated under the laws of the United States, or of any state thereof
(though such bonds, debentures or notes be not secured, as provided by
subsection (c) of this section) where such institution, after taxes, includ-
ing income taxes, and after deducting proper charges for replacements,
depreciation and obsolescence, has not failed in any one of the three fiscal
years next preceding such investment, to have earned a sum applicable
to interest on its outstanding indebtedness equal at least to twice the
amount of interest due for that year, or where in the case of new issues
such earnings applicable to interest are equal to at least twice the amount
of pro forma annual interest on such institution’s obligations after giving
effect to such new financing, and where the total investment in any one
issue of bonds, debentures or notes under subsection (c) of this section
does not exceed two per centum of the investing company’s assets; °

(f) In bonds secured by first mortgage upon terminal, depot or
tunnel property, including lands, buildings and appurtenances, used in
the service of transportation by one or more railroad corporations the
bonds, debentures or notes of which are eligible as investments under
either subsection (c) or subsection (e) of this section, provided that
such bonds be the direct obligation of, or that payment of principal and
interest thereof be guaranteed by endorsement by, or guaranteed by
endorsement which guaranty has been assymed by, one or more railroad
corporations whose bonds, debentures or notes are eligible as invest-
ments under either subsection (c) or subsection (e) of this section;
when the guarantee or assumption of guarantee is by two or more railroad
corporations it shall be joint and several as to each;

(g) In preferred stock of any solvent institution incorporated
under the laws of the United States, or of any state thereof, where such
institution has not failed in any one of the three fiscal years next preced-
ing stich investment, to have earned a sum applicable to dividends on
such preferred stock equal at least to three times the amount of dividends
due in that year, or where in case of issuance of new preferred stock
such earnings applicable to dividends are equal at least to three times
the amount of pro forma annual dividend requirements after giving effect
to such new financing, and where the bonds, debentures or notes, if any,
of such institution, are eligible as investments under the provisions of sub-
section (e) of this section, and where the total investment in any one
issue of such preferred stock does not exceed one per centum of the
investing company’s assets; |

(h) In stocks guaranteed by any solvent institution incorporated
under the laws of the United States, or any state thereof where the
guaranteeing corporation has not failed in any one of the three fiscal
years next preceding such investment to have earned a sum applicable
to interest on outstanding indebtedness and dividends on all guaranteed
stocks equal to at least twice the amount of interest and guaranteed
dividends due for that year, and where the total investment in any one
issue of such guaranteed stock does not exceed one per centum of the
investing company’s assets; ,

(1) In loans secured by mortgages (including security deeds,
vendors’ 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 of any such loan does not exceed sixty-six and two-
thirds per centum of the fair market value of the real estate securing
same as determined by at least two competent and impartial appraisers,
except that any such loan may exceed sixty-six and two-thirds per
centum of such fair market value to the extent that such loan is guaran-
teed by the Administrator of Veterans’ Affairs under the provisions of
Title III of an Act of the Congress of the United States, approved June
twenty-second, nineteen hundred forty-four, entitled the ‘“Servicemen’s
Readjustment Act of nineteen hundred and forty-four’’, as heretofore or
hereafter amended; or in mortgage loans guaranteed or insured by the
Federal Housing Administrator under the terms of an Act of Congress
of the United States of June twenty-seventh, nineteen hundred thirty-
four, entitled the “National Housing Act” as heretofore or hereafter
amended ;

(j) In loans secured by mortgages (including security deeds, ven-
dors’ liens and deeds of trust) upon leaseholds for a term of ninety-nine
years or longer on improved unencumbered real estate in the Uistrict ot
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, except that any such loan may exceed fifty per centum of such
fair market value to the extent that such loan is guaranteed by the Ad-
ministrator of Veterans’ Affairs under the provisions of Title III of an
Act of the Congress of the United States, approved June twenty-second,
nineteen hundred forty-four, entitled the “Servicemen’s Readjustment
Act of nineteen hundred and forty-four’, as heretofore or hereafter
amended ; | |

(j-1) In loans secured by mortgages (including security deeds,
vendors’ liens and deeds of trust) on real estate or an interest in real
estate, when such real estate is in the District of Columbia or in any state
of the United States and when such loan is fully guaranteed by the Ad-
ministrator of Veterans’ Affairs, pursuant to the provisions of Title III
of an Act of Congress of the United States, approved June twenty-second,
nineteen hundred forty-four, entitled the “Servicemen’s Readjustment
Act of nineteen hundred and forty-four’ as heretofore or hereafter
amended ;

(k) 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 ;

(1) In securities in conformity to the laws of a foreign country
(including possessions of the United States) in which it may be doing
business, such foreign securities to be substantially of the same kinds,
classes and investment grades as such company is allowed by law to
acquire in the United States, and not to exceed in amount the investing
company’s obligations in such foreign country ;

(m) In loans upon the pledge of any of the aforesaid securities in
an amount which does not exceed eighty per centum of the market value
thereof; ,

(n) In real estate used or held for home office purposes, or requi-
site for convenient accommodation in the transaction of its business, or
acquired in satisfaction of debts previously owing to the investing com-
pany in the transaction of its business, or acquired at sales on judgments
or decrees obtained for such debts, or upon foreclosure of mortgage loans
owned by it, or acquired where necessary or convenient for the purpose
of enhancing the sale value of real property theretofore owned by it, or
acquired in part payment of the’ consideration of the sale of other real
property owned by it if such transaction shall effect a net reduction in
the amount in dollars of the company’s investment in real property;

(o) In real estate acquired by the company on or before December
thirty-first, nineteen hundred forty-nine, for the purpose of improving the
same to provide decent, safe and sanitary dwelling accommodations for
persons of low and moderate income, which will tend to relieve the
emergency in the housing situations in large cities and their environs,
such real estate to be located in a state (including in the term “state” the
District of Columbia) in which the company is doing the business of
16 ACTS OF ASSEMBLY [va., Ex. 1945

life insurance, and in or within ten miles of a city (including in the term
“city” the District of Columbia) in the United States having a population
according to the last preceding United States census of one hundred
thousand or more; and in the erection on such real estate of apartment,
tenement and other dwelling houses, not including hotels, comprising
buildings sufficient for the accommodation of not less than two hundred
and not more than twenty-five hundred families, and in conjunction
therewith in the erection of buildings for the accommodation of retail
stores, shops, offices and other community services reasonably incident
,to said apartment, tenement and other dwelling houses. The total invest-
ments of any company under this subsection (0) shall not exceed ten
per centum of its assets. No investment shall be made by any company
pursuant to this subsection (0) which will cause such company’s invest-
ment in all real property owned by it to exceed fifteen per centum of its
assets or when all real property owned by such company equals or ex-
ceeds fifteen per centum of its assets. Except as hereinafter provided, no
such company may invest in real estate for any such housing project, or
begin the erection of houses or other improvements for any such housing
project, before and until the company has applied for and secured from
the State Corporation Commission an authorization therefor. The appli-
cation shall contain the name of the city in or adjacent to which the real
estate lies, a description of the proposed. improvement thereof, a state-
ment or estimate of the cost of such real estate and improvements, and
such other information with reference to the proposed investment and
the investing company as the commission may require. Such authoriza-
tion may be granted if the commission shall find that the investment is in
accordance with the provisions of this subsection (0) and will not en-
danger the ability of the company to meet its obligations, and that in any
one city or county the maximum number of apartment, tenement and
other dwelling houses to be provided pursuant to such authorization, or
provided and to be provided pursuant to such authorization and any
other authorizations granted under the provisions of this subsection (0),
shall not be sufficient for the accommodation of more than twenty-five
hundred families. If any such company prior to the date when this amend-
ment takes effect has invested in real estate for any such housing project
or begun the erection of improvements for any such housing project and
its application for authorization shall be made within sixty days after the
effective date of this act its application shall be deemed to have been
made in due time and authorization issued pursuant thereto shall legalize
the said investments as if issued prior to the making of the same. When
any such company invests in real estate pursuant to this subsection (0)
it shall within five years from the date upon which it acquired such real
estate sell and dispose of the same unless within that period it substan-
tially completes such a housing project thereon in accordance with de-
scription or amendments thereof filed with the commission; but the
commission may in its discretion extend such period of five years for
such further period or periods as the circumstances of the case may
require. When any such company prior to the date when this amendment
takes effect has invested in real estate for any such housing project or
begun the erection of improvements for any such housing project and
thereafter fails to secure authorization therefor from the commission it
shall within five years from the date upon which it acquired such real
estate sell and dispose of the same; but the commission may in its discre-
tion extend such period for such further period or periods as the circum-
stances of the case may require. The commission may issue to any foreign
life insurance company making application therefor in conformity with
any provision of this subsection (0) which is applicable to a domestic life
insurance company an authorization for an investment pursuant to this
subsection (0) in this State, as herein provided ;

(p) In real estate acquired for the purpose of leasing the same to
any person for a period of not less than twenty-five years or in real estate
already leased for an unexpired period of not less than twenty-five years,
under an agreement (1) that the lessee shall at his own cost erect, or
whereunder the lessee has at his own cost already erected, thereon free
of liens a building or other improvements costing an amount at least equal
to the value of the said real estate exclusive of improvements, (2) that
the said improvements shall remain on the said property during the
period of the lease with provision that at the termination of the lease the
ownership of such improvements free of liens shall vest in the owner of
the real estate, and (3) that during the term of the lease the tenant shall
pay all taxes and assessments levied on or against the said real estate,
including improvements, shall keep and maintain the said improvements
in good repair and shall provide and maintain for the benefit of the lessor
fire insurance on such improvements at least equal to the insurable value
of the improvements, or at least equal to the amount invested by the
lessor in such real estate, whichever is less. Real estate acquired pursuant
to the provisions of this subsection (p) shall not be treated as an invest-
ment hereunder unless and until the improvements herein required shall
have been constructed and the lease agreement entered into in accordance
with the terms of this subsection; but if the lessee be a corporation the
bonds, debentures, notes or preferred stock of which are eligible as invest-
ments under either subsection (e) or subsection (g) of this section, the
requirements of this subsection (p) as to the erection of improvements
by the lessee and the vesting of ownership of such improvements in the
owner of the real estate shall not be applicable. Nor shall real estate
acquired pursuant to this subsection (p) be treated as an investment
hereunder in an amount exceeding the amount actually invested reduced
each year by equal decrements sufficient to write off completely the in-
vestment at the normal termination of the lease. The total investments
of any company under this subsection (p) shall not exceed three per
centum of its assets. No investment shall be made by any company pur-
suant to this subsection (p) which will cause such company’s investment
in all real property owned by it to exceed fifteen per centum of its assets
or when all real property owned by such company equals or exceeds
fifteen per centum of its assets.

2, An emergency existing, this act shall be in force from its passage.