                                 CODE OF VIRGINIA

RESTRICTIONS UPON PURCHASE AND SALE OF EQUITY SECURITIES OF DOMESTIC STOCK
INSURERS (§ 38.2-214)

A. Each person who is directly or indirectly the beneficial owner of more than
ten percent of a class of any equity security of a domestic insurer, or who is a
director or an officer of a domestic stock insurer, shall file a statement with
the Commission within ten days after becoming a beneficial owner, director or
officer. This statement shall be in a form prescribed by the Commission and
shall show the amount of all the domestic insurer&#8217;s equity securities of
which he is the beneficial owner. Within ten days after the close of each
calendar month, if there has been a change in his ownership during such month,
the person shall file with the Commission a statement prescribed by the
Commission indicating his ownership at the close of the calendar month and such
changes in his ownership as have occurred during such calendar month.

B. To prevent the unfair use of information obtained by any beneficial owner,
director or officer, any profit realized by such person within six months from
the purchase and sale, or any sale and purchase, of any of the insurer&#8217;s
equity securities shall inure to and be recoverable by the insurer. This
provision shall apply regardless of any intention of the beneficial owner,
director or officer to hold the equity security purchased or not to repurchase
any sold equity security for a period exceeding six months. However, this
provision shall not apply if the security was acquired in good faith in
connection with a debt previously contracted. The insurer may sue at law or in
equity to recover the profit in any court of competent jurisdiction. The owner
of any equity security of the insurer may sue in the name and in behalf of the
insurer if the insurer fails or refuses to bring suit within sixty days after
request or if the insurer fails to diligently prosecute after bringing suit. No
suit under this subsection shall be brought more than two years after the date
the profit was realized. This subsection shall not be construed to cover any
transaction where the person was not the beneficial owner at the time of either
the purchase or sale of the equity security involved. The Commission may by
rules and regulations exempt from the provisions of this subsection any
transaction that is not comprehended within the purpose of this subsection.

C. No beneficial owner, director or officer shall directly or indirectly sell
any equity security of the insurer if the person selling the security or his
principal (i) does not own the security sold, or (ii) owns the equity security
but does not deliver it within twenty days after the sale or does not mail it
within five days after the sale. No person shall be deemed to have violated this
subsection if he proves that, notwithstanding the exercise of good faith, he was
unable to deliver or mail the security within the required time, or that to do
so would cause undue inconvenience or expense. Any person violating this
subsection shall be guilty upon conviction of a Class 1 misdemeanor.

D. Subsections B and C of this section shall not apply to the transactions of a
dealer in an investment account that are conducted in the ordinary course of a
dealer&#8217;s business and incident to the establishment or maintenance of an
equity security&#8217;s primary or secondary market, other than on an exchange
defined in the Securities Exchange Act of 1934. The Commission may, by rules and
regulations, define and prescribe terms and conditions with respect to equity
securities held in an investment account and transactions made in the ordinary
course of business and incident to the establishment or maintenance of a primary
or secondary market.

E. Subsections A, B, and C of this section shall not apply to foreign or
domestic arbitrage transactions unless made in contravention of rules and
regulations adopted by the Commission to carry out the purposes of this section.

F. The term &#8220;equity security&#8221; when used in this section means (i)
any stock or similar security, (ii) any security that is convertible, with or
without consideration, into another security, (iii) any security that carries
any warrant or right to subscribe to or purchase a security, or (iv) any
warrant, right or other security that the Commission, by rules and regulations,
deems to be similar in nature to an equity security and considers the
classification necessary or appropriate for protecting the public or an
investor&#8217;s interest.

G. Subsections A, B, and C of this section shall not apply to equity securities
of a domestic stock insurer if (i) those equity securities are registered or are
required to be registered pursuant to &#xA7; 12 of the Securities Exchange Act
of 1934, as amended; or (ii) the domestic stock insurer does not have any class
of its equity securities held of record by 100 or more persons on the last
business day of the year immediately preceding the year in which equity
securities of the insurer would be subject to subsections A, B, and C of this
section.

H. The Commission may adopt rules and regulations pursuant to &#xA7; 38.2-223
for the execution of the functions vested in it by subsections A through G of
this section. The Commission may classify for that purpose any domestic stock
insurers, equity securities, and other persons or matters within its
jurisdiction. The Commission may exempt from the provisions of this section any
officer, director or beneficial owner of equity securities of any domestic stock
insurer under the terms and conditions, and for the period of time the
Commission considers necessary or appropriate if the Commission finds that the
action is consistent with the public interest or the protection of investors.
Any such exemption may be accomplished by (i) rules and regulations issued
pursuant to &#xA7; 38.2-223 or (ii) by order, upon application of any interested
person, after due notice and an opportunity for hearing has been given. No
provision of subsections A, B, and C of this section imposing any liability
shall apply to any act done or omitted in good faith in conformity with any rule
or regulation of the Commission. Notwithstanding the provisions of this
subsection, such rule or regulation may be amended, rescinded or determined by
judicial or other authority to be invalid for any reason after the act or
omission has occurred.

HISTORY: 1966, c. 265, § 38.1-36.1; 1986, c. 562.