HERBERT R. O'CONOR, GOVERNOR. 1709

section shall not include any deposit of securities or cash
with any government, nor trusteed assets, held in trust for
the benefit or protection of all or any class of the policy-
holders, or policyholders and creditors, of such insurer.

(2) No securities or other investments shall be eligible
for purchase or acquisition under this section unless they are
interest bearing or income paying, but defaults in interest or
income occurring subsequent to such purchase or acquisition
shall not affect the allowance thereof as an admitted asset at
the market value thereof unless otherwise specifically provided
in this Act.

(3) Nothing contained in this sub-section shall prohibit the
acquisition by an insurer of other securities of property if
distributed to it as a dividend or if acquired by it pursuant to a
lawful plan of reorganization, or if acquired by it pursuant to
a lawful and bona fide agreement of bulk reinsurance or con-
solidation.

(4) Any domestic stock or mutual insurance company or
Lloyds Association, other than a life insurance company or a
fraternal benefit association, which has investments fully com-
plying with the requirements of sub-division (1) of this sub-
section, may acquire investments eligible under the provisions
of Sub-section 4. Any such insurer whose investments do not
fully comply with such requirements may, during a period of
ten years from the effective date of this Act, acquire such addi-
tional kinds of securities if acquired in substitution for other
securities heretofore lawfully acquired by it and if such sub-
stitution results in a net reduction in the aggregate amount
of the insurer's investments in securities not eligible under
Sub-section 3.

3. CLASSES OF RESERVE INVESTMENTS.

The reserve investments of every domestic stock and mutual
insurance company and Lloyds Association, other than a life
insurance company or a fraternal benefit association, shall
consist of the following:

(1) GOVERNMENT OBLIGATIONS. Bonds or other evidences
of indebtedness, not in default as to principal or interest,
which are valid and legally authorized obligations issued,
assumed or guaranteed by the United States of America or
by any state thereof or by any territory or possession of the
United States or by the District of Columbia or by any
county, city, town, village, municipality or district therein
or by any political subdivision thereof or by any civil divi-