J. MILLARD TAWES, Governor                     1033

assuming or guaranteeing institution, whether or not in legal exist-
ence during the whole of such five years next preceding the date of
investment by such insurer, which has at any time or times during
such five year period acquired the assets of any other institution or
institutions by purchase, merger, consolidation or otherwise, sub-
stantially as an entirety, or has been reorganized pursuant to the
bankruptcy law, the earnings of such other predecessor or constitu-
ent institutions, or of the institution so reorganized, available for
interest and dividends for such portion of such period as shall have
preceded such acquisition, or such reorganization, may be included
in the earnings of such issuing, assuming or guaranteeing institution
for such portion of such period as may be determined in accordance
with adjusted or pro forma consolidated earnings statements cover-
ing such portion of such period and giving effect to all stocks or
shares outstanding, and all fixed charges existing, immediately after
such acquisition, or such reorganization.

(3)   Preferred or Guaranteed Stocks or Shares.

Preferred or guaranteed stocks or shares of any solvent institu-
tion, created or existing under the laws of the United States or of
any state, district or territory thereof, if all of the prior obligations,
and prior preferred stocks, if any, of such institution at the date
of acquisition by such insurer are eligible as investments under this
article; and if qualified under paragraph (i) or paragraph (ii)
following:

(i) Preferred stocks or shares shall be deemed qualified if both
of the following requirements are met:

(A)   The net earnings of such 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 the sum of its average annual fixed
charges, if any, its average annual maximum contingent interest, if
any, and its average annual preferred dividend requirements appli-
cable to such period; and

(B)   During either 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, contingent interest and preferred dividend
requirements for such year. The term "preferred dividends require-
ments" shall be deemed to mean cumulative or noncumulative divi-
dends whether paid or not.

(ii) Guaranteed stocks or shares shall be deemed qualified if the
assuming or guaranteeing institution meets the requirements of
paragraph (ii) of subsection (2) of this subsection construed so as
to include as a fixed charge the amounts of guaranteed dividends of
such issue or the rental covering the guarantee of such dividends.

(4)   Trustees' or Receivers' Obligations.

(i) Certificates, notes or other obligations issued by trustees or
receivers of any institution created or existing under the laws of the
United States or of any state, district or territory thereof, which,
or the assets of which, are being administered under the direction
of any court having jurisdiction, if such obligation is adequately
secured as to principal and interest.