Chap. 325.—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 172]

Approved March 27, 1946

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 heretofore 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 thou-
sand 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 obligations
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, munici-
pality or district therein or by any political subdivision thereof or by any
civil division or public instrumentality of one or more of the foregoing,
if, by statutory or other legal requirements applicable thereto, such ob-
ligations of such civil division or public instrumentality are payable, 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 pay-
able solely out of special assessments on properties benefited by local
improvements ; }

(b) In bonds of the Dominion of Canada or of any province there-
of or of any municipality thereof having a population of at least one hun-
dred thousand, or bonds fully guaranteed as to payment of principal and
interest 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 Cana-
dian corporations do not exceed ten per centum of the investing com-
pany’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,
including income taxes, and after deducting proper charges for replace-
ments, 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 tun-
nel 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 sub-
section (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 assumed by, one or more railroad corporations
whose bonds, debentures or notes are eligible as investments 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 un-
der the laws of the United States, or of any state thereof, where such in-
stitution has not failed in any one of the three fiscal years next preced-
ing such 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
subsection (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 in-
vesting 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 in-
terest 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 com-
pany’s assets;

(1) In loans secured by mortgages (including security deeds, ven-
dors’ 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 guaranteed by
the Administration of Veterans’ Affairs under the provisions of Title
III of an Act of the Congress of the United States, approved June twen-
ty-second, nineteen hundred forty-four, entitled the “Servicemen’s Re-
adjustment 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 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 un-
expired, 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 eS ervicemen’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 on 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
Administrator 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 Read-
justment Act of nineteen hundred and forty-four” as heretofore or here-
after 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 (in-
tluding possessions of the United States) in which it may be doing busi-
ness, 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
a amount which does not exceed eighty per centum of the market value

reof ; |

(n) In real estate used or held for home office purposes, or req-
uisite for convenient accommodation in the transaction of its business,
or acquired in satisfaction of debts previously owing to the investing
company in the transaction of its business, or acquired at sales on judg-
ments or decrees obtained for such debts, or upon foreclosure of mort-
gage 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 De-
cember thirty-first, nineteen hundred forty-nine, for the purpose of im-
proving the same to provide decent, safe and sanitary dwelling accom-
modations for persons of low and moderate income, which will tend to
telieve 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 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 investments 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
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. Except as hereinafter pro-
vided, 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 there-
for. The application shall contain the name of the city in or adjacent to
which the real estate lies, a description of the proposed improvement
thereof, a statement or estimates of the cost of such real estate and im-
provements, and such other information with reference to the proposed
investment and the investing company as the commission may require.
Such authorization may be granted if the commission shall find that
the investment is in accordance with the provisions of this subsection
(o) and will not endanger the ability of the company to meet its obliga-
tions, and that in any one city or county the maximum number of apart-
ment, 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 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 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 pur-
suant 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 (o) it shall within five years from the date
upon which it acquired such real estate sell and dispose of the same un-
less within that period it substantially completes such a housing project
thereon in accordance with description or amendments thereof fled with
the commission; but the commission may in its discretion extend such
period of five years for such further period or periods as the circum-
stances 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 com-
mission may in its discretion extend such period for such further period
or periods as the circumstances of the case may require. The commis-
sion may issue to any foreign life insurance company making applica-
tion therefor in conformity with any provision of this subsection (0)
which is applicable to a domestic life insurance company an authoriza-
tion 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 years, or in real estate
already leased for an unexpired period of not less than fifteen years of
an original period of not less than twenty years, under the following
terms and conditions: (1) that the lessee shall at his own cost erect, or
that there has already been 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; but if the lease be entered
into simultaneously with the purchase of the real estate, the lessor may
agree to erect such improvements on such real estate; (2) that the said
improvements shall remain on the said property during the period of the
lease, with provision when such improvements are put upon the said
property at the cost of the lessee that at the termination of the lease
the ownership of such improvements free of liens shall vest in the own-
er of the real estate; (3) that the lessee shall during the term of the
lease, or the unexpired period of the lease if the property be bought
subject to the lease, pay to the owner of the real estate rent in such
amount as will enable the owner to write off the said investment at or
before the normal termination of the lease, or at or before the end of
fifty years should the lease, or the unexpired period of the lease, be for a
longer period than fifty years; and (4) 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 im-
provements in good repair and shall provide and maintain for the benefit
of the lessor fire insurance on such improvements at least equal to the in-
surable value of the improvements, or at least equal to the amount invest-
ed 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 investment hereunder unless and until the improvements herein re-
quired shall have been constructed and the lease agreement entered into in
accordance with the terms of this subsection; but if the lessee be a cor-
poration the bonds, debentures, notes or preferred stock of which are eli-
gible as investments under either subsection (e) or subsection (g) of this
section, the requirements of this subsection (p) as to the erection of im-
provements by the lessee, the cost of such improvements and the vesting of
ownership of such improvements in the owner of the real estate shall not
be applicable. The amount at which real estate acquired pursuant to this
subsection (p) shall be treated as an investment hereunder shall not ex-
ceed the amount actually invested reduced each year by equal decrements
sufficient to write off completely the investment at the normal termination
of the lease or at the end of fifty years should the term of the lease, or the
unexpired period of the lease, be for a longer period than fifty years. The
total investments of any company under this subsection (p) shall not
exceed five per centum of its assets. No investment shall be made by
any company pursuant 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 com-
pany equals or exceeds fifteen per centum of its assets.