Investments and Loans

V.S.A. tit. 8, ch. 101, subch. 4

in effect

8 V.S.A. § 3461 Definitions

3461. Definitions As used in this chapter: (1) “Admitted assets” means assets permitted to be reported as admitted assets on the annual statutory financial statement of the insurer for the next preceding year or as shown by a current financial statement. (2) “Appraised” or “appraised value” when used in connection with real estate shall refer to appraisals made or examined and approved by an insurer or its agents. An insurer shall have the right to make one or more renewals or extensions of a loan secured by real estate, provided any renewal or extension is based upon a reexamination of the facts and upon an appraisal made within three years. (3) “Asset-backed security” means a security or other instrument, excluding a mutual fund, evidencing an interest in, or the right to receive payments from, or payable from distributions on, an admitted asset, a pool of admitted assets, or specifically divisible cash flows that are legally transferred to a trust or another special purpose bankruptcy-remote business entity, on the following conditions: (A) The trust or other business entity is established solely for the purpose of acquiring specific types of admitted assets or rights to cash flows, issuing securities and other instruments representing an interest in or right to receive cash flows from those admitted assets or rights, and engaging in activities required to service the admitted assets or rights and any credit enhancement or support features held by the trust or other business entity. (B) The admitted assets of the trust or other business entity consist solely of interest-bearing obligations or other contractual obligations representing the right to receive payment from the cash flows from the admitted assets or rights. However, the existence of credit enhancements, such as letters of credit or guarantees, or support features such as swap agreements, shall not cause a security or other instrument to be ineligible as an asset-backed security. (4) “Canada” means Canada, any province of Canada, or any political subdivision of Canada. (5) “Cap” means an agreement obligating the seller to make payments to the buyer, with each payment based on the amount by which a reference price or level or the performance or value of one or more underlying interests exceeds a predetermined number, sometimes called the strike rate or strike price. (6) “Collar” means an agreement to receive payments as the buyer of an option, cap, or floor and to make payments as the seller of a different option, cap, or floor. (7) “Counterparty exposure amount” means: (A) The net amount of credit risk attributable to a derivative instrument entered into with a business entity other than through a qualified exchange or qualified foreign exchange or cleared through a qualified clearinghouse. Such derivative instruments are hereinafter referred to as “over-the-counter derivative instruments.” The amount of credit risk equals: (i) the market value of the over-the-counter derivative instrument if the liquidation of the derivative instrument would result in a final cash payment to the insurer; or (ii) zero, if the liquidation of the derivative instrument would not result in a final cash payment to the insurer. (B) If over-the-counter derivative instruments are entered into under a written master agreement that provides for netting of payments owed by the respective parties, and the domiciliary jurisdiction of the counterparty is either within the United States or, if not within the United States, within a foreign jurisdiction listed in the Purposes and Procedures of the NAIC Investment Analysis Office as eligible for netting, the net amount of credit risk shall be the greater of zero or the net sum of: (i) the market value of the over-the-counter derivative instruments entered into under the agreement, the liquidation of which would result in a final cash payment to the insurer; and (ii) the market value of the over-the-counter derivative instruments entered into under the agreement, the liquidation of which would result in a final cash payment by the insurer to the business entity. (C) For open transactions, market value shall be determined at the end of the most recent quarter of the insurer’s fiscal year and shall be reduced by the market value of acceptable collateral held by the insurer or placed in escrow by one or both parties. (8) “Covered” means that an insurer owns or can immediately acquire, through the exercise of options, warrants, or conversion rights already owned, the underlying interest in order to fulfill or secure its obligations under a call option, cap, or floor it has written or has set aside under a custodial or escrow agreement cash or cash equivalents with a market value equal to the amount required to fulfill its obligations under a put option it has written, in an income generation transaction. (9) “Derivative instrument” means an agreement, option, instrument, or a series or combination thereof: (A) to make or take delivery of, or assume or relinquish, a specified amount of one or more underlying interests or to make a cash settlement in lieu thereof; or (B) that has a price, performance, value, or cash flow based primarily upon the actual or expected price, level, performance, value, or cash flow of one or more underlying interests. Derivative instruments include options, warrants used in a hedging transaction and not attached to another financial instrument, caps, floors, collars, swaps, forwards, futures, and any other agreements, options, or instruments substantially similar thereto or any series or combination thereof and any agreements, options, or instruments permitted under this chapter. Derivative instruments shall not include an investment authorized under subdivisions 3463(a)(1) through (a)(14) and (a)(16) through (a)(29) of this title. (10) “Derivative transaction” means a transaction involving the use of one or more derivative instruments. (11) “Direct” when used in connection with “obligation” means that a designated obligor shall be primarily liable on the instrument representing the obligation. (12) “Domestic jurisdiction” means the United States, any state of the United States, or any political subdivision of any of the foregoing. (13) “Equity interest” means any of the following that are not rated credit instruments: (A) common stock; (B) preferred stock; (C) trust certificate; (D) equity investment in an investment company other than a money market mutual fund or a listed bond mutual fund; (E) investment in a common trust fund of a bank regulated by a federal or state agency; (F) an ownership interest in minerals, oil, or gas, the rights to which have been separated from the underlying fee interest in the real estate where the minerals, oil, or gas is located; (G) instruments that are mandatorily, or at the option of the issuer, convertible to equity; (H) limited partnership interests; (I) member interests in limited liability companies; (J) warrants or other rights to acquire equity interests that are created by the person that owns or would issue the equity to be acquired; or (K) instruments that would be rated credit instruments except for the provisions of subdivision (38)(B) of this section. (14) “Floor” means an agreement obligating the seller to make payments to the buyer in which each payment is based on the amount by which a predetermined number, sometimes called the floor rate or price, exceeds a reference price, level, performance, or value of one or more underlying interests. (15)(A) “Foreign investment” means an investment in a foreign jurisdiction, or an investment in a person, real estate, or asset domiciled in a foreign jurisdiction, that is substantially of the same type as those eligible for investment under this subchapter, other than under subdivision 3463(a)(28) of this title. An investment shall not be deemed to be foreign if the issuing person, qualified primary credit source, or qualified guarantor is a domestic jurisdiction or Canada or a person domiciled in a domestic jurisdiction or Canada, unless: (i) the issuing person is a shell business entity; and (ii) the investment is not assumed, accepted, guaranteed, or insured or otherwise backed by a domestic jurisdiction or Canada or a person that is not a shell business entity domiciled in a domestic jurisdiction or Canada. (B) For purposes of this definition: (i) “Qualified guarantor” means a guarantor against which an insurer has a direct claim for full and timely payment, evidenced by a contractual right for which an enforcement action can be brought in a domestic jurisdiction or Canada. (ii) “Qualified primary credit source” means the credit source to which an insurer looks for payment as to an investment and against which an insurer has a direct claim for full and timely payment, evidenced by a contractual right for which an enforcement action can be brought in a domestic jurisdiction or Canada. (iii) “Shell business entity” means a business entity having no economic substance except as a vehicle for owning interests in assets issued, owned, or previously owned by a person domiciled in a foreign jurisdiction. (16) “Foreign jurisdiction” means a jurisdiction other than a domestic jurisdiction or Canada. (17) “Forward” means an agreement (other than a future) to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance, or value of, one or more underlying interests. (18) “Future” means an agreement, traded on a qualified exchange or qualified foreign exchange, to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance, or value of, one or more underlying interests. (19) “Guaranteed” means that the guarantor will perform the obligation of the obligor or will purchase the obligation to the extent of the guaranty. (20) “Hedging transaction” means a derivative transaction that is entered into and maintained to reduce: (A) the risk of a change in the value, yield, price, cash flow, or quantity of assets or liabilities that the insurer has acquired or incurred or anticipates acquiring or incurring; or (B) the currency exchange rate risk or the degree of exposure as to assets or liabilities that an insurer has acquired or incurred or anticipates acquiring or incurring. (21) “High grade investment” means a rated credit instrument rated 1 or 2 by the SVO or that meets and continues to meet the conditions for exemption as provided in section 3461d of this title. (22) “Income generation transaction” means a derivative transaction involving the writing of covered call options, covered put options, covered caps, or covered floors that is intended to generate income or enhance return. (23) “Institution” or “business entity” includes a sole proprietorship, corporation, limited liability company, association, partnership, joint stock company, joint venture, mutual fund, trust, joint tenancy, or other similar form of business organization, whether organized for profit or not for profit. (24) “Listed bond mutual fund” means a mutual fund that at all times qualifies for inclusion on the “bond fund list” within the Purposes and Procedures of the NAIC Investment Analysis Office or any successor publication. (25) “Lower grade investment” or “lower grade obligation” means a rated credit instrument rated 4, 5, or 6 by the SVO. (26) “Medium grade investment” or “medium grade obligation” means a rated credit instrument rated 3 by the SVO. (27) “Money market mutual fund” means a mutual fund that meets the conditions of 17 C.F.R. Part 270.2a-7, under the Investment Company Act of 1940 (15 U.S.C. § 80a-1 et seq.), as amended or renumbered. (28) “Mortgage loan” means an obligation secured by a mortgage, deed of trust, trust deed, or other consensual lien on real estate. (29) “Mutual fund” means an investment company or, in the case of an investment company that is organized as a series company, an investment company series that, in either case, is registered with the U.S. Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. § 80a-1 et seq.), as amended. (30) “NAIC” means the National Association of Insurance Commissioners. (31) “Obligation” means a bond, note, debenture, trust certificate, including an equipment certificate, production payment, negotiable bank certificate of deposit, bankers’ acceptance, credit tenant plan, loan secured by financing net leases, and other evidence of indebtedness for the payment of money (or participations, certificates, or other evidences of interest in any of the foregoing). (32) “Option” means an agreement giving the buyer the right to buy or receive (a “call option”), sell or deliver (a “put option”), enter into, extend, or terminate or effect a cash settlement based on the actual or expected price, level, performance, or value of one or more underlying interests. (33) “Potential exposure” means the amount determined in accordance with the NAIC Annual Statement Instructions. (34) “Qualified bank” means: (A) a national bank, state bank, or trust company that at all times is no less than adequately capitalized as determined by standards adopted by U.S. banking regulators, and that is either regulated by state banking laws or is a member of the Federal Reserve System; or (B) a bank or trust company incorporated or organized under the laws of a country other than the United States that is regulated as a bank or trust company by that country’s government or an agency thereof and that at all times is no less than adequately capitalized as determined by the standards adopted by international banking authorities. (35) “Qualified clearinghouse” means a clearinghouse for, and subject to the rules of, a qualified exchange or a qualified foreign exchange, which provides clearing services, including acting as a counterparty to each of the parties to a transaction, such that the parties no longer have credit risk as to each other. (36) “Qualified exchange” means: (A) a securities exchange registered as a national securities exchange or a securities market regulated under the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.), as amended; (B) a board of trade or commodities exchange designated as a contract market by the Commodity Futures Trading Commission or any successor thereof; (C) Private Offerings, Resales and Trading through Automated Linkages (PORTAL); (D) a designated offshore securities market as defined in Securities Exchange Commission Regulation S, 17 C.F.R. Part 230, as amended; or (E) a qualified foreign exchange. (37) “Qualified foreign exchange” means a foreign exchange, board of trade, or contract market located outside the United States, its territories, or possessions: (A) that has received regulatory comparability relief under Commodity Futures Trading Commission (CFTC) Rule 30.10 (as set forth in Appendix C to Part 30 of the CFTC’s Regulations, 17 C.F.R. Part 30); (B) that is, or its members are, subject to the jurisdiction of a foreign futures authority that has received regulatory comparability relief under CFTC Rule 30.10 (as set forth in Appendix C to Part 30 of the CFTC’s Regulations, 17 C.F.R. Part 30) as to futures transactions in the jurisdiction where the exchange, board of trade, or contract market is located; or (C) upon which foreign stock index futures contracts are listed that are the subject of no-action relief issued by the CFTC’s Office of General Counsel, provided that an exchange, board of trade, or contract market that qualifies as a “qualified foreign exchange” only under this subdivision shall only be a “qualified foreign exchange” as to foreign stock index futures contracts that are the subject of no-action relief. (38)(A) “Rated credit instrument” means a contractual right to receive cash or another rated credit instrument from another entity, which instrument: (i) is rated or required to be rated by the SVO or meets and continues to meet the conditions for exemption as provided in section 3461d of this title; (ii) in the case of an instrument with a maturity of 397 days or less, is issued, guaranteed, or insured by an entity that is rated by, or another obligation of such entity is rated by, the SVO or by a nationally recognized statistical rating organization recognized by the SVO; (iii) in the case of an instrument with a maturity of 90 days or less, is issued by a qualified bank; (iv) is a share of a listed bond mutual fund; or (v) is a share of a money market mutual fund. (B) “Rated credit instrument” does not mean: (i) an instrument that is mandatorily or, at the option of the issuer, convertible to an equity interest; or (ii) a security that has a par value and whose terms provide that the issuer’s net obligation to repay all or part of the security’s par value is determined by reference to the performance of an equity, a commodity, a foreign currency, or an index of equities, commodities, foreign currencies, or combinations thereof. (39) “Special rated credit instrument” means a rated credit instrument that is: (A) An instrument that is structured so that, if it is held until retired by or on behalf of the issuer, its rate of return, based on its purchase cost and any cash flow stream possible under the structure of the transaction, may become negative due to reasons other than the credit risk associated with the issuer of the instrument; however, a rated credit instrument shall not be a special rated credit instrument under this subdivision if it is: (i) a share in a listed bond mutual fund; (ii) an instrument, other than an asset-backed security, with payments of par value fixed as to amount and timing, or callable but in any event payable only at par or greater, and interest or dividend cash flows that are based on either a fixed or variable rate determined by reference to a specified rate or index; (iii) an instrument, other than an asset-backed security, that has a par value, and is purchased at a price no greater than 110 percent of par; (iv) an instrument, including an asset-backed security, whose rate of return would become negative only as a result of a prepayment due to casualty, condemnation or economic obsolescence of collateral, or change of law; (v) an asset-backed security that relies on collateral that meets the requirements of subdivision (ii) of this subdivision (39)(A), the par value of which collateral: (I) is not permitted to be paid sooner than one-half of the remaining term to maturity from the date of acquisition; (II) is permitted to be paid prior to maturity only at a premium sufficient to provide a yield to maturity for the investment, considering the amount prepaid and reinvestment rates at the time of early repayment, at least equal to the yield to maturity of the initial investment; or (III) is permitted to be paid prior to maturity at a premium at least equal to the yield of a treasury issue of comparable remaining life; or (vi) an asset-backed security that relies on cash flows from assets that are not prepayable at any time at par, but is not otherwise governed by subdivision (v) of this subdivision (39)(A), if the asset-backed security has a par value reflecting principal payments to be received if held until retired by or on behalf of the issuer, and is purchased at a price no greater than 105 percent of such par amount. (B) An asset-backed security that: (i) relies on cash flows from assets that are prepayable at par at any time; (ii) does not make payments of par that are fixed as to amount and timing; and (iii) has a negative rate of return at the time of acquisition if a prepayment threshold assumption is used with such prepayment threshold assumption defined as either: (I) two times the prepayment expectation reported by a recognized, publicly available source as being the median of expectations contributed by broker dealers or other entities, except insurers, engaged in the business of selling or evaluating such securities or assets. The prepayment expectation used in this calculation shall be, at the insurer’s election, the prepayment expectation for pass-through securities of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association, or for other assets of the same type as the assets that underlie the asset-backed security, in either case with a gross weighted average coupon comparable to the gross weighted average coupon of the assets that underlie the asset-backed security; or (II) another prepayment threshold assumption specified by the Commissioner by rule. (C) For purposes of subdivision (B) of this subdivision (39), if the asset-backed security is purchased in combination with one or more other asset-backed securities that are supported by identical underlying collateral, the insurer may calculate the rate of return for these specific combined asset-backed securities in combination. The insurer must maintain documentation demonstrating that such securities were acquired and are continuing to be held in combination. (40) “State of the United States” means any state of the United States of America, the District of Columbia, and the Commonwealth of Puerto Rico. (41) “SVO” means the Securities Valuation Office of the NAIC or any successor office established by the NAIC. (42) “Swap” means an agreement to exchange or to net payments at one or more times based on the actual or expected price, level, performance, or value of one or more underlying interests. (43) “Underlying interest” means the assets, liabilities, other interests, or a combination thereof underlying a derivative instrument, such as any one or more securities, currencies, rates, indices, commodities, or derivative instruments. (44) “Warrant” means an instrument that gives the holder the right to purchase an underlying financial instrument at a given price and time or at a series of prices and times outlined in the warrant agreement. Warrants may be issued alone or in connection with the sale of other securities, for example, as part of a merger or recapitalization agreement or to facilitate divestiture of the securities of another business entity. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 5, art. 4, §§ 1-10); amended 1999, No. 84 (Adj. Sess.), § 1, eff. April 19, 2000; 2017, No. 134 (Adj. Sess.), § 2; 2025, No. 91 (Adj. Sess.), § 30, eff. April 30, 2026.

8 V.S.A. § 3461a General limitations and diversification requirements for property and casualty, financial guaranty and mortgage guaranty insurers

3461a. General limitations and diversification requirements for property and casualty, financial guaranty and mortgage guaranty insurers (a) General five percent diversification. (1) Except as otherwise specified in this subchapter, a domestic property and casualty, financial guaranty or mortgage guaranty insurer shall not acquire directly or indirectly through an investment subsidiary an investment under this subchapter if, as a result of and after giving effect to the investment, the insurer would hold more than five percent of its admitted assets in investments of all kinds issued, assumed, accepted, insured, or guaranteed by a single person. (2) This five percent limitation shall not apply to the aggregate amounts insured by a single financial guaranty insurer with the highest generic rating issued by a nationally recognized statistical rating organization. (3) Asset-backed securities shall not be subject to the limitations of subdivision (1) of this subsection; however, an insurer shall not acquire an asset-backed security if, as a result of and after giving effect to the investment, the aggregate amount of asset-backed securities secured by or evidencing an interest in a single asset or single pool of assets held by a trust or other business entity then held by the insurer would exceed five percent of its admitted assets. (b) An insurer subject to this section shall comply with applicable regulations addressing investments in lower and medium grade obligations. (c) Canadian investments. (1) An insurer subject to this section shall not acquire, directly or indirectly through an investment subsidiary, any Canadian investments authorized by this subchapter, if, as a result of and after giving effect to the investment, the aggregate amount of these investments then held by the insurer would exceed 40 percent of its admitted assets or if the aggregate amount of Canadian investments not acquired under subdivision 3461c(2) of this subchapter then held by the insurer would exceed 25 percent of its admitted assets. (2) However, as to an insurer that is authorized to do business in Canada or that has outstanding insurance, annuity or reinsurance contracts on lives or risks resident or located in Canada and denominated in Canadian currency, the limitations of subdivision (1) of this subsection shall be increased by the greater of: (A) the amount the insurer is required by Canadian law to invest in Canada or to be denominated in Canadian currency; or (B) 125 percent of the amount of its reserves and other obligations under contracts on risks resident or located in Canada. Added 1999, No. 84 (Adj. Sess.), § 2, eff. April 19, 2000.

8 V.S.A. § 3461b General limitations and diversification requirements for life and health insurers

3461b. General limitations and diversification requirements for life and health insurers (a) General three percent diversification. (1) Except as otherwise specified in this subchapter, a domestic life and health insurer shall not acquire, directly or indirectly through an investment subsidiary, an investment under this subchapter if, as a result of and after giving effect to the investment, the insurer would hold more than three percent of its admitted assets in investments of all kinds issued, assumed, accepted, insured or guaranteed by a single person. (2) This three percent limitation shall not apply to the aggregate amounts insured by a single financial guaranty insurer with the highest generic rating issued by a nationally-recognized statistical rating organization. (3) Asset-backed securities shall not be subject to the limitations of subdivision (1) of this subsection; however, an insurer shall not acquire an asset-backed security if, as a result of and after giving effect to the investment, the aggregate amount of asset-backed securities secured by or evidencing an interest in a single asset or single pool of assets held by a trust or other business entity then held by the insurer would exceed three percent of its admitted assets. (b) An insurer subject to this section shall comply with applicable regulations addressing investments in lower and medium grade obligations. (c) Canadian investments. (1) An insurer subject to this section shall not acquire, directly or indirectly through an investment subsidiary, a Canadian investment authorized by this subchapter if, as a result of and after giving effect to the investment, the aggregate amount of these investments then held by the insurer would exceed 40 percent of its admitted assets or if the aggregate amount of Canadian investments not acquired under subdivision 3461c(2) of this title then held by the insurer would exceed 25 percent of its admitted assets. (2) However, as to an insurer that is authorized to do business in Canada or that has outstanding insurance, annuity or reinsurance contracts on lives or risks resident or located in Canada and denominated in Canadian currency, the limitations of subdivision (1) of this subsection shall be increased by the greater of: (A) the amount the insurer is required by Canadian law to invest in Canada or to be denominated in Canadian currency; or (B) 115 percent of the amount of its reserves and other obligations under contracts on lives or risks resident or located in Canada. Added 1999, No. 84 (Adj. Sess.), § 3, eff. April 19, 2000.

8 V.S.A. § 3461c Rated credit investments

3461c. Rated credit investments Subject to the limitations of subdivision (6) of this section, an insurer may acquire rated credit instruments. (1) Subject to applicable limitations of subsection 3461a(b) or 3461b(b) of this subchapter, but not the limitations of subsection 3461a(a) or 3461b(a), an insurer may acquire rated credit instruments issued, assumed, guaranteed or insured by: (A) the United States; or (B) a government-sponsored enterprise of the United States, if the instruments of the government-sponsored enterprise are assumed, guaranteed, or insured by the United States or are otherwise backed or supported by the full faith and credit of the United States. (2) Subject to applicable limitations of subsection 3461a(b) or 3461b(b) of this subchapter, but not the limitations of subsection 3461a(a) or 3461b(a) of this subchapter, an insurer may acquire rated credit instruments issued, assumed, guaranteed or insured by: (A) Canada; or (B) a government-sponsored enterprise of Canada, if the instruments of the government-sponsored enterprise are assumed, guaranteed, or insured by Canada or are otherwise backed or supported by the full faith and credit of Canada; (C) an insurer shall not acquire an instrument under this subdivision if, as a result of and after giving effect to the investment, the aggregate amount of investments then held by the insurer under this subdivision would exceed 40 percent of its admitted assets. (3)(A) Subject to applicable limitations of subsection 3461a(b) or 3461b(b) of this subchapter, but not the limitations of subsection 3461a(a) or 3461b(a) of this subchapter, an insurer may acquire rated credit instruments, excluding asset-backed securities: (i) issued by a government money market mutual fund or a listed bond mutual fund; (ii) issued, assumed, guaranteed, or insured by a government-sponsored enterprise of the United States other than those eligible under subdivision (i) of this subdivision (3)(A); (iii) issued, assumed, guaranteed, or insured by a state, if the instruments are general obligations of the state; or (iv) issued by a multilateral development bank. (B) However, an insurer shall not acquire an instrument of any one fund, any one enterprise or entity or any one state under this section if, as a result of and after giving effect to the investment, the aggregate amount of investments then held in any one fund, enterprise, or entity or state under this subdivision would exceed 10 percent of its admitted assets. (4) Subject to the applicable limitations of section 3461a or 3461b of this subchapter, an insurer may acquire preferred stocks that are not foreign investments and that meet the requirements of rated credit instruments if, as a result of and after giving effect to the investment: (A) the aggregate amount of preferred stocks then held by the insurer under this subdivision does not exceed 20 percent of its admitted assets; and (B) the aggregate amount of preferred stocks then held by the insurer under this subdivision that are not sinking fund stocks or rated P1 or P2 by the SVO does not exceed 10 percent of its admitted assets or does not meet or continue not to meet the conditions for exemption as provided in section 3461d of this title. (5) Subject to the applicable limitations of section 3461a or 3461b of this subchapter, in addition to those investments eligible under subdivisions (1), (2), (3), and (4) of this section, an insurer may acquire rated credit instruments that are not foreign investments. (6) An insurer shall not acquire special rated credit instruments under this section if, as a result of and after giving effect to the investment, the aggregate amount of special rated credit instruments then held by the insurer would exceed five percent of its admitted assets. Added 1999, No. 84 (Adj. Sess.), § 4, eff. April 19, 2000; amended 2017, No. 134 (Adj. Sess.), § 3.

8 V.S.A. § 3461d Registration or filing exemption

3461d. Registration or filing exemption Notwithstanding the provisions of any other section of subchapter 4 of this chapter, an insurer shall not be required to register or file with the SVO any security that meets and continues to meet the conditions for exemption for certain nationally recognized statistical rating organization rated securities consistent with the Purposes and Procedures Manual of the NAIC Investment Analysis Office or any successor publication. Added 1999, No. 84 (Adj. Sess.), § 5, eff. Jan. 1, 2000; amended 2017, No. 134 (Adj. Sess.), § 4.

8 V.S.A. § 3462 Investments—Foreign insurers

3462. Investments—Foreign insurers The investments of a foreign or alien insurer shall be as permitted by the laws of its domicile if of a quality substantially as high as that required under this chapter for similar funds of like domestic insurers. 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 5, art. 2).

8 V.S.A. § 3463 Domestic insurers

3463. Domestic insurers (a) Subject to the provisions of sections 3461a, 3461b, and 3461c of this title, a domestic insurer, including a hospital service corporation established or licensed under the provisions of chapter 123 of this title and a medical service corporation established or licensed under the provisions of chapter 125 of this title, may prudently invest its assets in any of the following: (1) Government obligations. Direct obligations of the United States for the payment of money, or obligations for the payment of money that are guaranteed or insured as to the payment of principal and interest by the United States. (2) Government agency—Instrumentality obligations. Direct obligations for the payment of money, issued by an agency or instrumentality of the United States, or obligations for the payment of money that are guaranteed or insured as to the payment of principal or interest by an agency or instrumentality of the United States. (3) State obligations. Bonds and other legally created direct general obligations of any state of the United States for the payment of money provided that any such state at the date of such investment shall not be in default in the payment of principal or interest on any of its direct general obligations. (4) State political subdivision obligations. Bonds and other legally created direct general obligations of any political subdivision of any state of the United States for the payment of money provided that any such political subdivision at the date of such investment shall not be in default in the payment of principal or interest on any of its direct general obligations. (5) Development credit corporations. Evidences of indebtedness, and shares of stock issued by a development credit corporation incorporated under the general laws of the State of Vermont and subject to supervision by the Commissioner as provided by the laws of the State. (6) Obligations and stock of certain federal agencies. An insurer may invest in the obligations or stock, or both, of the following agencies of the government of the United States of America, whether or not such obligations are guaranteed by such government: (A) Commodity Credit Corporation. (B) Federal Intermediate Credit Banks. (C) Federal Land Banks. (D) Central Bank for Cooperatives and Banks for Cooperatives. (E) Federal Home Loan Banks. (F) Federal National Mortgage Association. (G) Any other similar agency of the government of the United States of America and of similar financial quality. (7) International bank for reconstruction and development. Obligations issued or guaranteed by the international bank for reconstruction and development; provided, however, that the aggregate amount of such investments that are held at any time shall not exceed five percent of its total admitted assets. (8) Inter-American Development Bank. Obligations issued or guaranteed by the Inter-American Development Bank; provided, however, that the aggregate amount of such investments that are held at any time by any domestic insurer shall not exceed five percent of its total admitted assets. (9) Revenue bonds. Bonds and other obligations of the United States of America, of any state thereof, or of any political subdivision thereof, or of any public authority or instrumentality of one or more of the foregoing, that are payable as to both principal and interest from adequate special revenues pledged or otherwise appropriated or by law required to be provided for the purpose of such payment, but not including any obligations payable solely out of special assessments on properties benefited by local improvements. (10) Equipment trust obligations. Equipment trust obligations or other instruments evidencing an interest in or ownership of personal property where there is a right to receive determined portions of rental, purchase or other fixed obligatory payments for the use or purchase of such personal property, provided the aggregate investments therein shall not exceed 10 percent of the total admitted assets of such life insurance company. (11) Corporate obligations. Fixed interest and variable interest bearing obligations issued, assumed or guaranteed by any solvent institution, whether or not secured, that are not in default as to principal or interest and that have been or will be registered with the SVO or that meet and continue to meet the conditions for exemption as provided in section 3461d of this title. (12) Equity interests. (A) An insurer may acquire equity interests in business entities organized under the laws of any domestic jurisdiction or Canada. (B) A life and health insurer shall not acquire an investment under this section if, as a result of and after giving effect to the investment, the aggregate amount of investments then held by the insurer under this subdivision would exceed 20 percent of its admitted assets or the amount of equity interests then held by the insurer that are not listed on a qualified exchange would exceed five percent of its admitted assets. An accident and health insurer shall not be subject to this section but shall be subject to the same aggregate limitation on equity interests as a property and casualty insurer under subdivision (C) of this subdivision (12). (C) A property and casualty insurer shall not acquire an investment under this section if, as a result of and after giving effect to the investment, the aggregate amount of investments then held by the insurer under this section would exceed the greater of 25 percent of its admitted assets or 100 percent of its surplus as regards policyholders. (D) An insurer shall not acquire under this section any investments that the insurer may acquire under subdivisions (a)(19) through (a)(25) of this section. (E) An insurer shall not short sell equity investments unless the insurer covers the short sale by owning the equity investment or an unrestricted right to the equity instrument exercisable within six months of the short sale. (13) Asset-backed securities. An insurer’s investment in the asset-backed securities secured by or representing an interest in a single asset or pool of assets held by a trust or other business entity shall not exceed five percent of the insurer’s admitted assets. (14) Stock and obligations of mortgage companies. (A) Stock and obligations of any solvent institution created or existing under the laws of the United States or of any state thereof that is engaged primarily in the business of making, originating, purchasing, or otherwise acquiring or investing in, and servicing, or selling or otherwise disposing of, loans secured by mortgages on real property located in the United States, whether for its own account or as mortgage loan correspondent for others, or both, provided that immediately prior to such investment by a domestic insurer such institution shall be acting as, or shall be under a contract to act as, a mortgage loan correspondent for such insurer. (B) The amount invested under this subdivision in any one such institution shall not exceed one-tenth of one percent of the admitted assets of such insurer. The cost of any investment made under this subdivision when added to the aggregate cost of all other investments made under this subdivision and then held by such insurer shall not exceed one-half of one percent of the admitted assets of such insurer. (15) Derivative investments and transactions. An insurer may, directly or indirectly through an investment subsidiary, engage in derivative transactions under this subdivision, on the following conditions: (A) General conditions. (i) An insurer may use derivative instruments under this subchapter to engage in hedging transactions and certain income generation transactions; (ii) An insurer shall be able to demonstrate to the Commissioner the intended hedging characteristics and the ongoing effectiveness of the derivative transaction or combination of the transactions through cash flow testing or other appropriate analyses. (B) Limitations on hedging transactions. An insurer may enter into hedging transactions under this section if, as a result of and after giving effect to the transaction: (i) The aggregate statement value of options, caps, floors, and warrants not attached to another financial instrument purchased and used in hedging transactions does not exceed seven and one-half percent of its admitted assets; (ii) The aggregate statement value of options, caps, and floors written in hedging transactions does not exceed three percent of its admitted assets; or (iii) The aggregate potential exposure of collars, swaps, forwards, and futures used in hedging transactions does not exceed six and one-half percent of its admitted assets. (C) Limitations on income generation transactions. An insurer may enter into the following types of income generation transactions if, as a result of and after giving effect to the transactions, the aggregate statement value of the fixed income assets that are subject to call or that generate the cash flows for payments under the caps or floors, plus the face value of fixed income securities underlying a derivative instrument subject to call, plus the amount of the purchase obligations under the puts, does not exceed 10 percent of its admitted assets: (i) sales of covered call options on noncallable fixed income securities, callable fixed income securities if the option expires by its terms prior to the end of the noncallable period or derivative instruments based on fixed income securities; (ii) sales of covered call options on equity securities if the insurer holds in its portfolio or can immediately acquire through the exercise of options, warrants, or conversion rights already owned, the equity securities subject to call during the complete term of the call option sold; (iii) sales of covered puts on investments that the insurer is permitted to acquire under this subchapter if the insurer has escrowed or entered into a custodian agreement, segregating cash or cash equivalents with a market value equal to the amount of its purchase obligations under the put during the complete term of the put option sold; or (iv) sales of covered caps or floors if the insurer holds in its portfolio the investments generating the cash flow to make the required payments under the caps or floors during the complete term that the cap or floor is outstanding. (D) Counterparty exposure. An insurer shall include all counterparty exposure amounts in determining compliance with the limitations of sections 3461a and 3461b of this title. (16) Policy loans. Indebtedness secured by the extent thereof by the loan value of life insurance policies or annuity contracts. (17) Collateral loans. Obligations secured by a pledge of personal property, whether the same be tangible or intangible, upon the condition that the collateral be marketable and is fairly worth sufficiently in excess of the amount of the loan to make it a sound and prudent investment. (18) Unsecured loans. Unsecured obligations of any person or corporation, provided that any such loan or investment in excess of $2,500.00 shall be supported by the signed financial statement of the borrower, or supported by any other assurances satisfactory to insurer, which evidence the financial stability of such obligator. No insurer shall loan or make investments under this section in an amount greater than one-fourth of one percent of its admitted assets as to any one loan transaction or investment, nor shall the aggregate amounts so loaned or invested exceed two percent of the admitted assets of such insurer. (19) Acceptances and bills of exchange. Bank certificates of deposit and bankers’ acceptances, and other bills of exchange of the kind and maturities made eligible by law for purchase in the open market by federal reserve banks. (20) Mortgage loans—Real estate. Obligations for the payment of money secured by first mortgages on real estate situated within any state or territory of the United States or the District of Columbia upon the following conditions: (A) The security for the loan shall be a first lien upon timberland or improved real estate, including mines, and quarries, except that a first mortgage on lands impressed with a public use, sometimes known as society or glebe lands, but held under a durable lease, or lands subject to lease under which rents are reserved to the owner and with all of the owner’s rights and options under the lease are collaterally assigned to the insurer as security, shall nonetheless be deemed to be a first lien as in this subdivision (A) required; provided, however, there is no condition or right of reentry or forfeiture, not insured against by a responsible title insurance company qualified to do business in the state wherein the mortgaged property is located, under which, in the case of real estate other than leaseholds, such lien can be cut off or subordinated or otherwise disturbed or under which, in the case of leaseholds, the insurer is unable to continue the lease in force for the duration of the loan. (i) Nothing herein shall prohibit any loan or investment by reason of the existence of any prior lien for grounds rents, taxes, assessments, or other similar charges not delinquent. (ii) Real estate shall not be deemed to be encumbered, within the meaning of this subdivision, by reason of the existence of instruments reserving or granting rights-of-way, mineral rights, oil or timber rights or easements, provided such interests do not unreasonably interfere with the use of the real estate contemplated at the time of investment. (iii) A leasehold estate shall constitute real estate under this subdivision only if it has an unexpired term of not less than 21 years, inclusive of the term or terms that may be provided by enforceable options of renewal, provided the underlying fee simple estate is not subject to any prior lien or encumbrance; and no mortgage loan upon a leasehold shall be made or acquired unless the terms thereof shall provide for the complete amortization of principal by the end of four-fifths of the period of the leasehold, inclusive of the period or periods that may be provided by enforceable options of renewal, that is unexpired at the time the loan is made, and shall further provide that the amount of required principal and interest payable in any prior full year. (B) No such mortgage loan or loans made or acquired on any one property shall exceed 75 percent of the appraised value of the real estate, and the terms thereof shall provide for: (i) payments of principal, whatever the period of the loan so that at no time during the period of the loan shall the aggregate payments of principal theretofore required to be made under the terms of the loan be less than would have been necessary for a loan payable completely by the end of 30 years through payments of interest only for five years; and (ii) substantially equal payments of principal and interest at the end of each year thereafter, except that loans secured by dwellings for use by not more than two families may exceed 75 percent of the appraised value of the real estate but shall not be greater than 80 percent unless the secured real estate be located in the state of Vermont, in which event said loans shall not be greater than 90 percent; and, anything in this subdivision to the contrary notwithstanding, loans secured chiefly by timberland, mines or quarries shall not exceed 50 percent of the appraised value of the real estate nor have a maturity greater than five years. If there is no provision for substantially complete amortization of principal as hereinabove provided, then in that event no such mortgage loan or loans made or acquired on any one property shall exceed 66⅔ percent of the appraised value and the same shall be made payable upon demand or within not to exceed two years. (C) The appraised value of real estate securing any mortgage loan shall be established and evidenced by the written appraisal of a qualified real estate appraiser who may be an employee of the insurer, except that in the case of property to be qualified hereunder as timberland, mines or quarries, the appraisal must be made by an engineer or geologist or other person qualified in the relevant field. (D) If the obligation is purchased, no payment thereon shall be more than 30 days overdue at the time of the investment. (E) No mortgage loan made or acquired that is a participation or a part of a series or issue secured by the same mortgage shall be a lawful investment under this subdivision unless (i) the entire series or issue is held by such insurer, or (ii) the insurer holds a participation in such mortgage giving it, by written agreement with all other participants, substantially, rights of a first mortgagee, or (iii) the loan is evidenced by bonds, notes or evidences of indebtedness forming part of an issue of bonds, notes or evidences of indebtedness secured by a mortgage that, if there are more than five holders of such issue at the time such mortgage loan is made or acquired by such insurer, or if there are more than three holders of such issue at that time and such issue aggregates less than $5,000,000.00 in original principal amount, shall be to a bank, trust company, or national bank duly authorized and licensed to act as a corporate trustee in its state of domicile (with or without a co-trustee), provided that such issue is all of equal rank. (F) Each mortgage loan must be supported by evidence satisfactory to insurer that such mortgage is a first lien on the secured real estate as in this subdivision provided. (G) Insurer shall not invest more than 60 percent of its admitted assets pursuant to this subdivision. (H) Insurer shall not invest under this subdivision more than two percent of its admitted assets in obligations of any one obligor. (21) Mortgage loans—Insured or guaranteed. Obligations for the payment of money secured by mortgages guaranteed or insured, as the case may be, as follows: (A) by the Federal Housing Administration under the terms of an act of Congress of the United States of June 27, 1934, entitled the “National Housing Act,” as heretofore or hereafter amended; (B) by the Administrator of Veterans’ Affairs, pursuant to the provisions of Title III of an act of Congress of the United States of June 22, 1944, entitled the “Servicemen’s Readjustment Act of 1944,” as heretofore or hereafter amended, provided that any excess investment over 80 percent of the appraised value is guaranteed; (C) by the United States, any state, territory, or district thereof, or of any instrumentality, agency, or political subdivision of one or more of the foregoing, provided that any excess investment over 75 percent of the appraised value is so insured or guaranteed; (D) any mortgage loan so guaranteed or insured as in this subdivision (21) provided, shall not be subject to the provisions of any law of this state prescribing the nature, amount or form of security, or requiring security upon which loans or advances of credit may be made, or prescribing or limiting the period or principal amount for that loans or advances of credit may be made, or prescribing or limiting the interest that may be charged or taken upon any loan or advance of credit. (22) Mortgage loans—Additionally secured by assignment of certain leases. Obligations for the payment of money under the following conditions: (A) the obligation shall be secured by a first mortgage or lien on real or personal property and additionally secured by assignment of the mortgagor’s interest, as lessor, on a lease or leases on said property located within any state of the United States, any territory thereof, or the District of Columbia; (B) such lease or leases shall be collaterally assigned for the benefit of the insurer, and shall be nonterminable upon foreclosure of any lien upon the leased property; (C) the rents payable under such lease or leases shall be sufficient to provide for amortization during the term of the lease of not less than 60 percent of the investment with interest thereon as to real property and 80 percent as to personal property; (D) such lease or leases shall be noncancelable by lessee during the term of the lease or period of the obligation, whichever is less, other than in the event of lessor’s default therein, condemnation, or destruction of the leased property to the extent that it is no longer tenantable for the purposes to which it was devoted at the time of destruction, by any hazard excluding, however, from the provisions of this subdivision (D) leases to the United States government or its agencies; (E) the lessee or lessees under the lease or leases, or any corporation or corporations that have assumed or guaranteed any lessee’s performance thereunder shall be the United States government, its agencies, any state of the United States, or political subdivision thereof, or a corporation or corporations whose obligations would be eligible for investment by an insurer in accordance with the provisions of subdivision (11) of this section; (F) insurer shall not invest more than 10 percent of its admitted assets pursuant to this section; and (G) insurer shall not invest under this subdivision more than two percent of its admitted assets in the obligations of any one obligor or in obligations secured by leases to any one corporation. (23) Mortgage loans—Personal property. Obligations for the payment of money secured by first mortgages or liens, including conditional sale contracts, on tangible personal property situated within any state, territory or district of the United States, provided no such investment made or acquired shall at the time of acquisition exceed 75 percent of the fair market value of the property secured. (24) Real estate—Company business. Real estate (including leasehold interests) for the convenient accommodation of the insurer’s business operations, including home office, branch office and field operations, on the following conditions: (A) any parcel of real estate acquired under this provision may include excess space for rent to others if it is reasonably anticipated that such excess will be required by the insurer for expansion or if the excess is reasonably required in order to have a building that will be an economic unit; (B) such real estate may be subject to a mortgage; and (C) an insurer’s aggregate investment under this provision will not exceed 10 percent of its admitted assets, except with the permission of the commissioner if he or she finds that such percentage of its admitted assets are insufficient to provide convenient accommodation for the insurer’s business. (25) Real estate and personal property under lease. Real estate in the United States or its territories under lease or commitment for lease and personal property for intended use in the United States under lease, or commitment for lease, on the following conditions: (A) the lessee or the guarantor of lessee’s obligations under the lease is a corporation with tangible net worth of $500,000.00 or more; (B) the lease provides for a net rental sufficient to amortize the investment with interest over the primary term of the lease or 40 years, whichever is less; (C) insurer shall not invest in real estate under lease more than 10 percent of its admitted assets pursuant to this subdivision; and (D) insurer shall not invest in personal property under lease more than five percent of its admitted assets pursuant to this subdivision. (26) Real estate—Income producing. Real estate and equipment incident and related to the operation of said real estate for the production of income, or as may be acquired to be improved or developed for such investment purpose pursuant to an existing program therefor, situated in any state of the United States of America, any territory thereof, or the District of Columbia, and the construction thereon of improvements, on the following conditions: (A) The term “real estate” as used in this subdivision shall include any real property and interest therein, including any interest on, above, or below the surface of the land; any leasehold estate therein; and any interest held or to be held by the insurer in cotenancy with one or more other institutions. (B) The insurer’s investment shall not exceed the reasonable value of the property or of the interest therein acquired. (C) The insurer 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. (D) The property may be encumbered by leases 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 company against loss or damage arising from such encumbrances or reversionary rights. (E) Insurer shall not invest more than 10 percent of its admitted assets under this subdivision. (27) Real estate—Participation. Any of the investments that are authorized by subdivisions (24), (25), and (26) of this subsection may be made by an insurer through ownership of: (A) voting capital stock of a corporation; (B) an interest in a partnership, joint venture, or other form of business entity. (28) Foreign investments. Investments in foreign jurisdictions subject to the following: (A) Any domestic insurer that is authorized to do business in a foreign jurisdiction or possession of the United States or that has outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or located in a foreign jurisdiction or possession of the United States may invest in, or otherwise acquire or loan upon securities and investments in such foreign jurisdiction or possession that are substantially of the same kind, classes, and investment grades as those eligible for investment under the provisions of this chapter; but the aggregate amount of such investments in a foreign jurisdiction or a possession of the United States and of cash in the currency of such jurisdiction or possession that is at any time held by such insurer shall not exceed one and one-half times the amount of its reserves and other obligations under such contracts or the amounts that such insurer is required by law to invest in such jurisdiction or possession; (B) In addition to the foreign investments permitted under subdivision (A) of this subdivision (28), any domestic insurer may invest or otherwise acquire or loan upon securities and investments in foreign countries that are substantially of the same kinds, classes, and investment grades as those eligible for investment under this chapter; but: (i) The aggregate amount of such investments made pursuant to this subdivision (B) shall not exceed 20 percent of its admitted assets; and (ii) The aggregate amount of foreign investments then held by the insurer under this subdivision in a single foreign jurisdiction shall not exceed 10 percent of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO 1 or five percent of its admitted assets as to any other foreign jurisdiction (three percent in the case of life and health insurers). Of the investments permitted under this subdivision, the aggregate amount of investments denominated in foreign currencies may not exceed 15 percent of the insurer’s admitted assets (10 percent in the case of life and health insurers). Such investments denominated in the foreign currency of a single foreign jurisdiction that has a sovereign debt rating of SVO 1 may not exceed 10 percent of the insurer’s admitted assets. Such investments denominated in the foreign currency of a single foreign jurisdiction that does not have a sovereign debt rating of SVO 1 may not exceed five percent of the insurer’s admitted assets (three percent in the case of life and health insurers). (29) Other loans or investments. Loans or investments not qualifying or permitted under this chapter in an amount not exceeding 10 percent of a domestic insurer’s admitted assets regardless of whether the same or similar type investment has been included in or omitted from any provision of this chapter. (b) Investments in subsidiaries are subject to section 3682 of this title and are not subject to any other investment limitations contained in this subchapter. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 5, art. 1, §§ 1-28); amended 1969, No. 12, eff. Feb. 26, 1969; 1981, No. 15, § 1; 1999, No. 84 (Adj. Sess.), § 6, eff. April 19, 2000; 2001, No. 71, § 5, eff. June 16, 2001; 2003, No. 163 (Adj. Sess.), § 43, eff. June 10, 2004.

8 V.S.A. § 3463a Valuation of investments

3463a. Valuation of investments Investments of domestic insurers shall be valued in accordance with the valuation procedures established by the National Association of Insurance Commissioners, unless the Commissioner requires or finds another method of valuation that is not inconsistent with the valuation method promulgated by the National Association of Insurance Commissioners and is reasonable under the circumstances. Added 1991, No. 101, § 3; amended 1993, No. 12, § 11, eff. April 26, 1993.

8 V.S.A. § 3465 Exemption from investment limitations

3465. Exemption from investment limitations (a) Nothing in this chapter or other statute law of the State shall be construed as denying to an insurer the right to invest its funds, operate a business, manage or deal in property, or take any other action over whatever period of time may be reasonably necessary to avoid loss on a loan or investment previously made or an obligation created in good faith, the conditions and limitations of the investment of funds in this chapter to the contrary notwithstanding. (b) No investment limitation contained in this chapter shall prohibit an insurer from investing in or acquiring securities or other properties of another insurance company in connection with a lawful agreement of bulk reinsurance, merger, consolidation, sale of assets, or acquisition of a subsidiary under subchapter 13 of this chapter. (c) No investment limitation contained in this chapter shall prohibit the acquisition and retention by an insurer of substitute or additional securities or property if: (1) received as a dividend; (2) a lawful distribution of assets; (3) through the exercise of rights of conversion, warrants, or rights to purchase stock or preemptive rights to subscribe to stock, contained in or attached to a previously existing investment in such company; (4) pursuant to a lawful plan of reorganization. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 5, art. 3, § 1); amended 2003, No. 163 (Adj. Sess.), § 44, eff. June 10, 2004.

8 V.S.A. § 3467 Qualification of investments

3467. Qualification of investments (a) Any restriction, exclusion, or provision appearing in any section of this chapter shall apply only with respect to the authorization of the particular section in which it appears and shall not be applicable to any other section. The qualification or disqualification of an investment under one section shall not prevent its qualification in whole or in part under another section, and an investment authorized by more than one section may be held under whatever authorizing section the insurer elects. An investment may be transferred from time to time at the election of the insurer to the authority of any section under which it qualifies whether originally qualifying thereunder or not. (b) The qualification of an investment under a particular section of this chapter shall be determined as of the date of its acquisition by the insurer or as of the date on which the insurer becomes legally obligated to acquire the same as the case may be. (c) As used herein, the word “section” shall include any subsections or specific provisions authorizing a particular kind or class of investments. (d) An investment instrument not specifically qualified under this subchapter shall be deemed to qualify under this subchapter, based on the underlying nature of the actual securities that comprise such investment instrument subject to the prior written permission of the Commissioner. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 5, art. 3, § 3); amended 1999, No. 84 (Adj. Sess.), § 8, eff. April 19, 2000.

8 V.S.A. § 3468 Investments qualified under prior law

3468. Investments qualified under prior law The provisions of this chapter shall not affect or operate to disqualify any investment that an insurer has made or that it is legally obligated to acquire prior to the effective date of this subchapter; provided, however, that an insurer at its option may transfer any previously made investment to the authority of the provisions of this chapter whereupon such investments shall be subject to and governed thereby. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 5, art. 3, § 4).

8 V.S.A. § 3469 Loans to directors and officers—Restrictions

3469. Loans to directors and officers—Restrictions No domestic insurer shall invest in or loan upon any property, directly or indirectly, whether real or personal, in which any officer or director of such insurer has a financial interest, nor shall any such insurer make a loan of any kind to any officer or director of such insurer unless such officer or director neither participates in, nor votes at any management decision or meeting regarding such loan. This section shall not apply to policy loans or first mortgage loans on dwellings of not more than two families to be occupied by such officer as a residence, nor in circumstances where the financial interest of such officer or director is only nominal, trifling, or so remote as not to give rise to a conflict of interest. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 5, art. 3, § 5).

8 V.S.A. § 3471 Mortgages on real and personal property as liens; priorities

3471. Mortgages on real and personal property as liens; priorities Any mortgages acquired by an insurer on real or personal property so written as to secure a present debt and any future advances by the mortgagee or an assignee shall be a lien upon the mortgaged property for the full amount of debt directly created between the mortgagor and the mortgagee and between the mortgagor and an assignee of the mortgagee subsequent to assignment, due to the mortgagee or assignee at any given time provided that if the mortgaged property includes a homestead, the spouse of the mortgagor must consent in writing to the creation of any subsequent indebtedness. Any such mortgage may be assigned for the full amount due thereon at the time of such assignment. A subsequent mortgage on the same premises shall be inferior to the first mortgage unless the second mortgagee in writing notifies the first mortgagee of the incidence of his or her mortgage, in which case indebtedness created by the mortgagor to the first mortgagee subsequent to such notice shall be inferior to the lien of the second mortgagee. In any conflict with other provisions of Vermont statutes this section shall control. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 5, art. 3, § 7).

8 V.S.A. § 3472 Earnings statements and income ratios—Special situations

3472. Earnings statements and income ratios—Special situations In the application of the provisions and requirements of this subchapter to determine whether a particular investment in any corporation, association, or institution is qualified the following shall be applicable: (1) When a corporation, association, or institution, whether or not it has been in existence during the whole or whatever period may be required by the particular provision of this chapter under which it is sought to be qualified as an investment, has been constituted in the form that it has at the time of such investment by consolidation, acquirement of merger, the adjusted pro forma consolidated earnings statement may be used to determine the income ratios as provided by any such provisions. (2) Similarly, for the purpose of determining such income ratios for holding corporations or institutions with subsidiaries, the consolidated earnings statement of parent and subsidiary institutions may be used. Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 5, art. 3, § 8).

Source: Vermont General Assembly (legislature.vermont.gov)URL: https://legislature.vermont.gov/statutes/chapter/08/101Fetched: 10/21/2026