                                 CODE OF VIRGINIA

LENDING OF SECURITIES (§ 38.2-1429)

A. A domestic insurer may lend securities held by it pursuant to §§ 38.2-1415
through 38.2-1427.2 if:

   1. Simultaneously with the delivery of the securities, the insurer receives
   collateral from the borrower consisting of cash or consisting of securities
   issued, assumed or guaranteed by the United States, an agency of the United
   States or any state. The securities shall have a present market value of at
   least 102 percent of the market value of the securities loaned;

   2. The securities are loaned only for the purpose of making delivery of
   securities in the case of short sales, in the case of failure to receive
   securities requested for delivery or in other similar cases;

   3. Prior to the loan, the borrower furnishes the insurer with the most recent
   statement of the borrower&#8217;s financial condition and a representation by
   the borrower that there has been no material adverse change in its financial
   condition since the date of that statement;

   4. The insurer receives a reasonable fee related to the value of the borrowed
   securities and to the duration of the loan;

   5. The loan is made pursuant to a written loan agreement; and

   6. The borrower is required to furnish by the close of each business day
   during the term of the loan a report of the market value of all collateral and
   the market value of all borrowed securities as of the close of trading on the
   previous business day. If at the close of any business day the market value of
   the collateral is less than 102 percent of the market value of the securities
   loaned, then the borrower shall deliver by the close of the next business day
   an additional amount of cash or securities. The market value of these
   additional securities, together with the market value of all previously
   delivered collateral, shall equal at least 102 percent of the market value of
   the securities loaned.

B. For the purposes of this section, &#8220;market value&#8221; includes accrued
interest.

HISTORY: 1983, c. 457, § 38.1-217.32; 1986, c. 562; 1992, c. 588.