Chap. 14. 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. [H B 9]

Approved January 13, 1937

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 Dis-
trict 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 there-
of 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 investigating company’s assets; or

(d) In loans secured by mortgages (including security deeds, ven-
dor’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 determined by at
least two competent and impartial appraisers; or

(e) In loans secured by mortgages (including security deeds, ven-
dor’s liens and deeds of trust), upon leaseholds for a term of ninety-
nine years or longer, on improved unencumbered real estate in the Dis-
trict 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 com-
petent 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 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 there-
of, 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 invest-
ment 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 obli-
gations of equal rank, and where the total investment in any one issue
of such bonds does not exceed two per centum of the investing com-
pany’s assets, and where such bonds, if issued by a Canadian corpora-
tion, are payable both as to principal and interest in lawful money of
the United States of the present standard of weight and fineness; or

(g) 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 clause (f) hereof) where the average of the annual earn-
ings, 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 which such stock was issued) of the
52 ACTS OF ASSEMBLY VA

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 imter-
est 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
thereof, where the average of the annual earnings, applicable to divi-
dends, of such institutions, or, in the case of guaranteed stocks, the
guaranteeing corporation, during the period of five fiscal years next
preceding 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 ap-
plicable 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 insti-
tution, 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

(i) 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
securities in such foreign country that such company is allowed by
law to invest in the United States, and not to exceed in amount the
investing company’s obligations in such foreign country; or

(k) Bonds of the Home Owner’s Loan Corporation, a corpora-
tion created pursuant to an Act of the Congress of the United States,
approved 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 evi-
dences of indebtedness, or loans upon the security thereof, which are
not included 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, unless it shall procure a certificate from the State
Corporation Commission that its interest will suffer materially by a
forced sale thereof, in which event the time for the sale may be ex-
tended to such time as the State Corporation Commission shall direct
in such certificate, but in no event to exceed an additional period of
five years; 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 reorganization and the securities are approved in writing by the
Commissioner 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 of
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 Insur-
ance and Banking, or other official designated to administer the insur-
ance 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.