Chap. 283.—An ACT to amend and reenact Section 1 of an act entitled “An
Act to regulate investments of domestic life insurance companies”, approved
March 26, 1932, as heretofore amended. {H 374]

Approved March 16, 1948

Be it enacted by the General Assembly of Virginia:

1. That section one of an act entitled “An act to regulate
investments of domestic life insurance companies.”, approved
March twenty-six, nineteen hundred thirty-two, as heretofore
amended, be amended and reenacted 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
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, municipality 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 obligations of
such civil division or public instrumentality are payable, as to
both principal and interest, from taxes levied or by such law re-
quired 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 local improvements ;

(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 pay-
ment 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; :

(b-1) In obligations issued or guaranteed by the International
Bank for Reconstruction and Development, provided that the total
investments under this subsection (b-1) shall not exceed five 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 income
of such corporation, before investment 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 aver-
age net 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 transportation 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 institu-
tion 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 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 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 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
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 preceding 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 issu-
ance 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 invest-
ing company’s assets;

(h) In stocks guaranteed by any solvent institution incor-
porated 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 divi-
dends 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;

(i) 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 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 twenty-second,
nineteen hundred forty-four, entitled the “Servicemen’s Readjust-
ment 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 here-
tofore or hereafter amended ; :

(j) In loans secured by mortgages (including security deeds,
vendors’ 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, 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 Adminis-
trator 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 hereto-
fore 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 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 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 securi-
ties 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
requisite 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 sale 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 Dec-
ember 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 life insurance, and in or
within ten miles of a city (including in the term “city” the Dis-
trict of Columbia) in the United States having a population accord-
ing to the last preceding United States census of one hundred
thousand or more; and in the erection on such real estate of apart-
ment, 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
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 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 improvements, 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
obligations, and that in any one city or county the maximum num-
ber of apartment, tenement and other dwelling houses to be pro-
vided pursuant to such authorization, or provided and to be pro-
vided 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 substantially
completes such a housing project thereon in accordance with
description 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 discretion extend such period
for such further period or periods as the circumstances 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 domes-
tic 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 years, or in real
estate already leased for an unexpired period of not less than
fiftéen 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, there-
on free of liens a building or other improvements costing an amount
at least equal to the value of the said real estate exclusive of im-
provements; 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 owner 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 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 ts
less. Real estate acquired pursuant to the provisions of this sub-
section (p) shall not be treated as an investment hereunder unless
and until the improvements herein required shall have been con-
structed 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 investments 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, the cost of such improve-
ments 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 exceed 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 sub-
section (p) which will cause such company’s investments 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.