J. MILLARD TAWES, Governor                       1031

103.    Reserve Investments Required.

(1)   After satisfying requirements for minimum capital invest-
ments specified in section 102, an insurer may invest its funds in, or
otherwise acquire, or loan upon, only the classes of reserve invest-
ments as specified in section 104; and it shall at all times have and
maintain cash and such reserve investments (including its minimum
capital investments), free from any lien or pledge, in an amount
equal to at least fifty per cent of the aggregate amount of its
unearned premium and loss reserves. The term "lien or pledge" as
used in this section shall not include any deposit of securities or
cash or trusteed assets, held by any state for the benefit or protec-
tion of all or any class of the policyholders, or policyholders and
creditors, of such insurer.

(2)   No security or investment (other than real property acquired
under section 104 (8) of this subtitle) shall be eligible for acquisi-
tion as a reserve investment unless it is interest bearing or interest
accruing or dividend or income paying, is not then in default in any
respect, and the insurer is entitled to receive for its account and bene-
fit the interest or income accruing thereon.

104.    Classes of Reserve Investments.

The reserve investments of an insurer shall consist of the follow-
ing classes of assets subject to the limit, if any, set forth with regard
to each type or class of asset:

(1)   Government Obligations.

Bonds or other evidences of indebtedness, not in default as to
principal or interest, which are valid and legally authorized obliga-
tions 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 sub-
division thereof or by any civil division or public instrumentality
of one or more of the foregoing, if, by statutory or other legal re-
quirements applicable thereto, such obligations are payable, as to
both principal and interest, from taxes levied or by such law re-
quired to be levied upon all taxable property or all taxable income
within the jurisdiction of such governmental unit or from adequate
special revenues pledged or otherwise appropriated or by such 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.; AND OBLIGA-
TIONS ISSUED OR GUARANTEED BY THE INTERNATIONAL
BANK FOR RECONSTRUCTION AND DEVELOPMENT.

(2)   Corporate Obligations.

Obligations, other than those eligible for investment under sub-
section (6), issued, assumed or guaranteed by any solvent institution
created or existing under the laws of the United States or of any
state, district or territory thereof, which are not in default as to
principal or interest, and which are qualified under any of the fol-
lowing paragraphs:

(i) Obligations which are secured by adequate collateral security
and bear fixed interest and if during each of any three, including