                                 CODE OF VIRGINIA

EXCEPTION (§ 38.2-1447)

A. This article shall not apply to those assets of any insurer that are held,
deposited, pledged, hypothecated or otherwise encumbered as provided herein to
secure, offset, protect, or meet those reserve liabilities of such insurer which
are established, incurred, or required under the provisions of a reinsurance
agreement whereby such insurer has reinsured the insurance policy liabilities of
a ceding insurer, provided:

   1. The ceding insurer and the reinsurer are both licensed to transact business
   in this Commonwealth; and

   2. Pursuant to a written agreement between the ceding insurer and the
   reinsurer, reserve assets substantially equal to the reserve liabilities
   required to be established by the ceding insurer on the reinsured business are
   either (i) deposited by or are withheld from the reinsurer and are in the
   custody of the ceding insurer as security for the payment of the
   reinsurer&#8217;s obligations under the reinsurance agreement, and such assets
   are held subject to withdrawal by and under control of the ceding insurer or
   (ii) are deposited and held in a trust account for such purpose and under such
   conditions with a qualified United States financial institution defined as
   eligible to act as a fiduciary of a trust by &#xA7; 38.2-1316.1.

B. The Commission shall have the right to examine any such assets, reinsurance
agreements, or deposit arrangements at any time in accordance with its authority
to make examinations of insurers as conferred by other provisions of this title.

HISTORY: 1992, c. 588.