1032                           LAWS OF MARYLAND                      [CH. 553

either of the last two, of the five fiscal years next preceding the date
of acquisition by such insurer, the net earnings of the issuing, assum-
ing or guaranteeing institution available for its fixed charges, as
hereinafter defined, shall have been not less than one and one-quarter
times the total of its fixed charges for such year, or obligations
which, at the date of acquisition by such insurer, are adequately
secured and have investment qualities and characteristics wherein
the speculative elements are not predominant. In determining the
adequacy of collateral security, not more than one-third of the total
value of such required collateral shall consist of stock other than
stock meeting the requirements of subdivision (3).

(ii) Fixed interest-bearing obligations, other than those described
in paragraph (i) if the net earnings of the issuing, assuming or
guaranteeing institution available for its fixed charges for a period
of five fiscal years next preceding the date of acquisition by such
insurer shall have averaged per year not less than one and one-half
times its average annual fixed charges applicable to such period and
if during the last year of such period such net earnings shall have
been not less than one and one-half times its fixed charges for such
year.

(iii) Adjustment, income or other contingent interest obligations
if the net earnings of the issuing, assuming or guaranteeing institu-
tion available for its fixed charges for a period of five fiscal years
next preceding the date of acquisition by such insurer shall have
averaged per year not less than one and one-half times the sum of
its average annual fixed charges and its average annual maximum
contingent interest applicable to such period and if during each of
the last two years of such period such net earnings shall have been
not less than one and one-half times the sum of its fixed charges and
maximum contingent interest for such year.

Within the meaning of this section the term "obligation" shall
include bonds, debentures, notes or other evidences of indebtedness;
the term "institution" shall include a corporation, a joint stock asso-
ciation and a business trust. The term "net earnings available for
fixed charges" shall mean net income after deducting operating and
maintenance expenses, taxes other than federal and State income
taxes, depreciation and depletion, but excluding extraordinary non-
recurring items of income or expense appearing in the regular
financial statements of the issuing, assuming or guaranteeing insti-
tutions. The term "fixed charges" shall include interest on funded
and unfunded debt amortization of debt discount, and rentals for
leased properties. If net earnings are determined in reliance upon
consolidated earnings statements of parent and subsidiary institu-
tions, such net earnings shall be determined after provision for
income taxes of subsidiaries and after proper allowance for minority
stock interest, if any; and the required coverage of fixed charges
shall be computed on a basis including fixed charges and preferred
dividends of subsidiaries other than those payable by such sub-
sidiaries to the parent corporation or to any other of such sub-
sidiaries, except that if the minority common stock interest in the
subsidiary corporation is substantial, the fixed charges and preferred
dividends may be apportioned in accordance with regulations pre-
scribed by the Commissioner.

In applying the earnings tests under this section to any issuing,