CODE OF VIRGINIA

USE OF SAFETY FUND, REPAYMENT, ETC (§ 38.2-1622)

A. The purpose of the safety fund is to provide for the payment of covered
claims in the event the assessment limit specified in subdivision A 3 of §
38.2-1606 is reached.

B. In the event the assets in the safety fund are needed to pay covered claims,
these assets shall be loaned to the respective account specified in §
38.2-1604. This loan shall be the general obligation of the Association.

C. Assets in the safety fund derived from borrowed moneys obtained under the
provisions of subdivision B 7 of § 38.2-1606 shall be lent to an account at the
rate of interest the Association is paying the lender providing such moneys.
Interest on any other loan shall be compounded quarterly and be based upon the
average ninety-day treasury bill rate for the most recently completed calendar
quarter as published in the Federal Reserve Bulletin. This rate will be updated
quarterly in order to conform with the market rates of interest.

D. Loans shall be repaid by levying assessments pursuant to subdivision A 3 of
§ 38.2-1606 against the members for the account on whose behalf the loan was
negotiated. Unless otherwise approved by the Commission, the loan shall be
repaid within six months of its issuance. This assessment in conjunction with
any other assessments levied, shall not exceed the limit specified in
subdivision A 3 of § 38.2-1606.

E. Subject to the approval of the Commission, assets in the safety fund may be
loaned to any account specified in § 38.2-1604 even though the maximum
assessment in subdivision A 3 of § 38.2-1606 has not been levied if the
directors of the Association determine that this action will minimize the cost
to the Association in paying covered claims.

F. Excess assets in the safety fund set forth in subsection D of § 38.2-1620
may be used to pay the Association’s covered claims without the members
incurring a liability to repay the safety fund.

HISTORY: 1986, c. 562; 1998, c. 230.