                                 CODE OF VIRGINIA

REAL ESTATE (§ 38.2-1441)

A. A domestic insurer may invest in real estate, as set forth in subsections B,
C and D of this section, unless the property is to be used primarily for
agricultural, horticultural, ranch, recreational, amusement or club purposes.
The term &#8220;real estate&#8221; as used in this section shall include a
leasehold of real estate having an unexpired term of not less than twenty years.

B. A domestic insurer may invest in dwellings, offices and other properties
(including leasehold estates) for the production of income, other than real
estate which is the subject of subsection C, situated in the United States, and
the construction thereon of improvements, under the following conditions:

   1. The insurer shall either directly or through a land trust own the entire
   property, except that it may share ownership with one or more insurers
   authorized to do business in this state, or other business entities, excluding
   sole proprietorships, having a net worth of at least five million dollars
   under agreements that will assume concerted action in management and control
   of the property in case of the insolvency of any participating company,
   provided that each investment made pursuant to this subsection by the insurer
   and by each participant shall not be less than $100,000;

   2. The insurer alone or in conjunction with participants qualified under
   subdivision B 1 may let contracts for construction and pay costs of
   construction and leasing, hold, maintain, lease, and manage the property,
   collect rents and other income therefrom, and sell the property in whole or in
   part;

   3. The property may be encumbered by lease to tenants and by rights-of-way,
   easements, mineral reservations, building restrictions, and restrictive
   covenants, provided none of them can interfere substantially with the use of
   the property or result in a forfeiture of the property, unless a policy of
   title insurance, issued by a responsible title insurer qualified to do
   business in the state wherein the property is located, insures the insurer
   against loss or damage arising from such encumbrances or reversionary rights;
   and

   4. An insurer shall not invest under this subsection more than four percent of
   its admitted assets in any one property or in any one grouping of contiguous
   properties.

C. A domestic insurer may invest in real estate, including leasehold estates,
for the convenient accommodation of the insurer&#8217;s business operations,
including home office, branch office and field office operations, under the
following conditions:

   1. Any parcel of real estate acquired under this subsection may include excess
   space for rent to others if it is reasonably anticipated that the excess will
   be required by the insurer for expansion or if the excess is reasonably
   required in order to have one or more buildings that will function as an
   economic unit;

   2. The real estate may be subject to a mortgage;

   3. An insurer shall not invest under this subsection more than ten percent of
   the insurer&#8217;s admitted assets, except with the permission of the
   Commission if it is found that such percentage of the insurer&#8217;s admitted
   assets is insufficient to provide convenient accommodation for the
   insurer&#8217;s business; and

   4. The permission of the Commission shall be obtained by an insurer prior to
   the purchase of any real estate under this subsection if the insurer has been
   authorized in this Commonwealth for a period of less than five years.

D. Real property serving as the residence of an employee of any domestic
insurer, other than a director or trustee of the insurer, may be acquired only
in connection with the (i) relocation by the insurer of the place of employment
of the employee, or (ii) any relocation in connection with the initial
employment of the employee. The purchase price shall not exceed the fair market
value of the property as determined by written appraisals of at least two
competent independent real estate appraisers for the purpose of the acquisition.
The employee shall have made reasonable efforts otherwise to dispose of the
property for a period of not less than one month immediately prior to the
acquisition.

HISTORY: 1983, c. 457, § 38.1-217.44; 1986, c. 562; 1992, c. 588.