                                 CODE OF VIRGINIA

COMMISSION APPROVAL REQUIRED FOR CERTAIN TRANSACTIONS (§ 38.2-4233)

A. Prior written approval of the Commission shall be required for any
transaction between a nonstock corporation licensed under this chapter and any
of its affiliates, if such transaction involves more than three-fourths of one
percent of admitted assets or five percent of surplus as of the immediately
preceding December 31, whichever is less. Failure of the Commission to act
within sixty days after notification by the nonstock corporation shall
constitute approval of the transaction.

B. Nothing contained in this section shall authorize or permit any transaction
that would be otherwise contrary to law.

C. The Commission, in reviewing any transaction under this section, shall
consider whether the transaction complies with the standards set forth in &#xA7;
38.2-4232. The Commission shall set forth the specific reasons for the
disapproval of any transaction.

D. The approval of any transaction under this section shall be deemed an
amendment under subsection D of &#xA7; 38.2-4231 to a nonstock
corporation&#8217;s registration statement without further filing.

E. The Commission shall have continuing oversight over the terms and conditions
of all continuing transactions by a nonstock corporation licensed under this
chapter with its affiliates. The Commission may prohibit the continuation of any
continuing transaction if the Commission finds that, because of changed
circumstances or material information unknown to the Commission at the time of
the approval of the transaction, the transaction does not comply with the
standards set forth in &#xA7; 38.2-4232.

F. Existing transactions entered into between a nonstock corporation and its
affiliates prior to July 1, 1989, shall be filed with the Commission for
approval no later than September 1, 1989, if such transaction involves more than
three-fourths of one percent of admitted assets or five percent of surplus as of
the immediately preceding December 31, whichever is less. Failure of the
Commission to act within 120 days after such filings shall constitute approval
of such transactions. The Commission shall not disapprove any transaction
entered into prior to July 1, 1989, if such transaction was lawful when entered
into, but if any such transaction is found not to meet the standards of this
section, such transaction shall not be renewed or extended except upon terms
approved by the Commission.

G. Any nonstock corporation aggrieved by a disapproval or withdrawal of approval
under this section may proceed under the provisions of &#xA7; 38.2-222.

H. For the purposes of this section, a &#8220;transaction between a nonstock
corporation licensed under this chapter and any of its affiliates&#8221;
includes any transaction between a nonstock corporation licensed under this
chapter and a nonaffiliate if such transaction involves (i) any loan or
extension of credit where the licensee makes such loan or extension of credit
with the agreement or understanding that the proceeds of such transaction, in
whole or substantial part, are to be used to make any loan or extension of
credit to, to purchase assets of, or to make investments in any affiliate of the
licensee or (ii) any reinsurance agreement or risk-sharing arrangement, or
modifications thereto, which requires as consideration the transfer of assets
from a licensee to a nonaffiliate, if an agreement or understanding exists
between the licensee and the nonaffiliate that any portion of such assets will
be transferred to one or more affiliates of the licensee.

HISTORY: 1989, c. 606; 1993, c. 158.