Chap. 343.—An ACT to regulate investments of domestic life insurance companies.
[H B 330]
Approved March 26, 1932

1. Be it enacted by the general assembly of Virginia, That no do-
mestic 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 indebt-
edness of the United States government; or

(b) In stocks, 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 there-
of or of any municipality thereof having a population of at least one
huridred thousand, provided said bonds are payable both as to princi-
pal and interest in gold coin 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

(ce) 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

(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 ob-
solescence, has been at least one and one-half times the average annual
interest for the same period on such issue of bonds, on prior obliga-
tions and on obligations of equal rank, and where the total investment
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
gold coin of the United States of the present standard of weight and
fineness ; or

(¢) 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 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, deprecia-
tion 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 in-
terest 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 institution, 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 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 guaran-
teed 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

(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 re-
serve 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) 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.

(1) 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 (k) 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 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 accepted
and which are not of the classes authorized by this act shall be dis-
posed of as soon as practicable. In no case are they to be held for a
period exceeding five years.

(m) <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. ]

(Z) 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
loans owned by it.

All such real property specified in subdivisions two and three of
clause (m) 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
(m) 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 interests will suffer materially by the forced
sale 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 (m) 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.

2. No domestic life insurance company shall invest in securities
subjecting it to assessment, other than for taxes.

3. Nothing in this act shall be deemed to prohibit a domestic life
insurance company from renewing or extending a real estate loan for
the original or a lesser amount where a shrinkage in value of the
oroperty securing same would cause the indebtedness to exceed sixty
per centum of the value thereof, nor to prohibit a company from ac-
cepting as part payment for real estate sold by it a mortgage or lien
thereon for more than sixty per centum of the purchase price of such
real estate.

4. In the construction and application of clauses (d) and (e) of
section one of this act, easements, rights of way, joint driveways, party
wall agreements, current taxes and assessments not delinquent, re-
strictions as to building, use and occupancy if there is not a right of re-
entry or forfeiture for violation and instruments reserving mineral,
oil or timber rights shall not be deemed to be prior liens or encum-
brances, nor shall leases under which rents are reserved to the owner
of the real estate be deemed prior liens or encumbrances in the con-
struction and application of said clause (d).

5. Nothing in section one of this act shall be construed as affecting
the legality or requiring the sale of an investment made by a domestic
life insurance company after the effective date of this act, if in accord-
ance with this act at the time of the making of such investment.

6. Nothing in section one of this act shall be construed to prevent
a domestic stock life insurance company from investing or keeping
invested in such manner as its board of directors may determine its
assets in an amount equal to its surplus and its capital in excess of
the minimum required by law.

7 This act shall not be construed to repeal or in any way affect
the provisions of sections forty-two hundred and four and forty-two
hundred and eighteen-a of the Code.