Chap. 237.—-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 209]

Approved March 26, 1938

1. Be it enacted by the General Assembly of Virginia, That sec-
tion 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 in-
vest 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 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, 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
in loans insured by the Federal housing administrator where the loan
exceeds sixty per centum of the fair market value of the real estate,
as determined by at least two competent and impartial appraisers.
but does not exceed the amount for which such loan is insured b:
the Federal housing administrator; or in securities issued by an
national mortgage association established pursuant to the provision.
of the National Housing Act or amendments thereof ; or

(e) In loans secured by mortgages (including security deeds
vendor’s liens and deeds of trust), upon leaseholds for a term o}
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 centur
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
aiter 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 obli-
gations 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
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
ive 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
iverage amount of its capital stock outstanding during such five-year
yeriod, and where such institution, after taxes, including income taxes,
ind after deducting proper charges for replacements, depreciation and
»bsolescence, has not failed in any one of the five fiscal years next
receding such investment to earn a sum, applicable to interest on its
utstanding indebtedness, equal at least to twice the amount of interest
ue for that year upon its outstanding indebtedness, and where the
otal investment in any one issue of such bonds, debentures or notes
oes not exceed two per centum of the investine companv’s ascets.
ror more than ten per centum Of Me tOtd) Issel Ce EB?
lebentures or notes of such institution; or

(h) In preferred or guaranteed stocks of any solvent institution
ncorporated under the laws of the United States, or of any State
hereof, where the average of the annual earnings, applicable to divi-
lends, of such institutions, or, in the case of guaranteed stock, the
yuaranteeing corporation, during the period of five fiscal years next
preceding such investment, shall equal at least four per centum upon
he 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
»f 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
4 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 institution, 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
institution; 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 Owners’ 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 marke’
value thereof.

(m) Any domestic life insurance company which shall own or
the effective date of this act, any stocks, bonds, notes or other evi
dences of indebtedness, or loans upon the security thereof, which ar
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 th
State Corporation Commission that its interests will suffer materiall:
by a forced sale, in which event the time for the sale may be ex
tended to such time as the State Corporation Commission shall direc
in such certificate, but in no event to exceed an additional period o
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
accepted 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 accommo-
dation 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 hold-
ing legal title to real property as security for loans made in good
faith.