38.2-1429 - Lending of securities.
§ 38.2-1429. Lending of securities.
A. A domestic insurer may lend securities held by it pursuant to §§ 38.2-1415through 38.2-1427.2 if:
1. Simultaneously with the delivery of the securities, the insurer receivescollateral from the borrower consisting of cash or consisting of securitiesissued, assumed or guaranteed by the United States, an agency of the UnitedStates or any state. The securities shall have a present market value of atleast 102 percent of the market value of the securities loaned;
2. The securities are loaned only for the purpose of making delivery ofsecurities in the case of short sales, in the case of failure to receivesecurities requested for delivery or in other similar cases;
3. Prior to the loan, the borrower furnishes the insurer with the most recentstatement of the borrower's financial condition and a representation by theborrower that there has been no material adverse change in its financialcondition since the date of that statement;
4. The insurer receives a reasonable fee related to the value of the borrowedsecurities and to the duration of the loan;
5. The loan is made pursuant to a written loan agreement; and
6. The borrower is required to furnish by the close of each business dayduring the term of the loan a report of the market value of all collateraland the market value of all borrowed securities as of the close of trading onthe previous business day. If at the close of any business day the marketvalue of the collateral is less than 102 percent of the market value of thesecurities loaned, then the borrower shall deliver by the close of the nextbusiness day an additional amount of cash or securities. The market value ofthese additional securities, together with the market value of all previouslydelivered collateral, shall equal at least 102 percent of the market value ofthe securities loaned.
B. For the purposes of this section, "market value" includes accruedinterest.
(1983, c. 457, § 38.1-217.32; 1986, c. 562; 1992, c. 588.)