Marvin Mandel, Governor                         847

(1)    Government obligations.—Bonds or other evidences of indebt-
edness, 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 division or public instrumentality of one or more of the fore-
going, if, by statutory or other legal requirements applicable thereto,
such obligations are payable, as to both principal and interest,
from taxes levied or by such law required 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 obligations issued or guaranteed by the
International Bank for Reconstruction and Development or by the
Asian Development Bank.

(2)    Corporate obligations.—Obligations, other than those eligible
for investment under subsection (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 following paragraphs:

(i) Obligations which are secured by adequate collateral security
and bear fixed interest and if during each of any three, including
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,
assuming 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 obliga-
tions which, at the date of acquisition by such insurer, are ade-
quately secured and have investment qualities and characteristics
wherein the speculative elements are not predominant. In deter-
mining 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 de-
scribed 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 in-
stitution 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