                                 CODE OF VIRGINIA

USE OF SAFETY FUND, REPAYMENT, ETC (§ 38.2-1720)

A. The purpose of the safety fund is to provide for the payment of covered
claims in the event the assessment limit specified in subsection E of &#xA7;
38.2-1705 is reached.

B. In the event the assets of the safety fund are needed to pay covered claims,
these assets shall be loaned to the respective account listed in subsection A of
&#xA7; 38.2-1702. This loan shall be the general obligation of the Association
members and shall be evidenced by an agreement approved by the Commission.

C. Interest on this 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 market rates of interest.

D. This loan shall be repaid by levying assessments 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 subsection E of &#xA7; 38.2-1705.

E. Subject to the approval of the Commission assets of the safety fund may be
loaned to any account in subsection A of &#xA7; 38.2-1702 even though the
maximum assessment in subsection E of &#xA7; 38.2-1705 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 safety fund assets set forth in subsection D of &#xA7; 38.2-1718 may
be used to pay the Association&#8217;s covered claims without the members
incurring a liability to repay the safety fund.

HISTORY: 1986, c. 562.