CODE OF VIRGINIA

DEPOSITS REQUIRED OF INSURERS GENERALLY (§ 38.2-1045)

A. Except as otherwise provided in this title, before the Commission issues a
license to transact the business of insurance in this Commonwealth to any
insurer, that insurer shall deposit with the State Treasurer securities that (i)
are legal investments under the laws of this Commonwealth for public sinking
funds or for other public funds, (ii) are not in default as to principal or
interest, (iii) have a current market value of not less than $ 50,000 nor more
than $ 500,000, and (iv) are issued pursuant to a system of book-entry
evidencing ownership interests of the securities with transfers of ownership
interests effected on the records of a depository and its participants pursuant
to rules and procedures established by the depository.

B. The Commission may require a reasonable amount of additional deposits in
securities that meet the requirements of clauses (i), (ii) and (iv) of
subsection A of this section, whenever the Commission determines that the
insurer’s financial condition, method of operation, or manner of doing
business is such that the Commission is not satisfied that it can meet its
obligations to all policyholders.

C. Neither the deposit referred to in this section nor the alternate deposit
permitted by § 38.2-1049 shall be required of (i) any mutual assessment
property and casualty insurance company, (ii) any fraternal benefit society, or
(iii) any insurer transacting exclusively an ocean marine business in this
Commonwealth.

D. Any insurer which on June 30, 1991, instead of the deposit of securities
required by subsection A, has entered into a bond with surety, approved by the
Commission, with any conditions the Commission requires, shall have until the
next renewal, anniversary, or expiration date of such bond, or until June 30,
1992, whichever comes first, to comply with the deposit provisions of subsection
A.  The surety shall be licensed in this Commonwealth to transact the business
of suretyship and shall not be directly or indirectly under the same ownership
or management as the principal on the bond.

E. Every insurer subject to the provisions of this section having physical
securities deposited with the State Treasurer on or before June 30, 1992, shall
comply with the provisions of clause (iv) in subsection A not later than January
1, 1993.

HISTORY: Code 1950, § 38-39; 1952, c. 317, § 38.1-108; 1956, c. 234; 1960, c.
558; 1964, c. 605; 1973, c. 178; 1975, c. 556; 1986, c. 562; 1991, c. 261; 1992,
c. 14.