Ch. 36                                          1995 LAWS OF MARYLAND

3-117. LOANS TO AND GUARANTEES OF OBLIGATIONS OF DIRECTORS AND
OFFICERS.

(A)     LOANS TO DIRECTORS AND OFFICERS.

(1)      EXCEPT AS PROVIDED IN SUBSECTION (D) OF THIS SECTION, AN
AUTHORIZED INSURER OR ITS SUBSIDIARY MAY NOT MAKE, DIRECTLY OR
INDIRECTLY, A LOAN TO A DIRECTOR OR EXECUTIVE OFFICER OF THE
AUTHORIZED INSURER UNLESS THE LOAN:

(I) IS A BONA FIDE MORTGAGE LOAN MADE ON A PRINCIPAL
RESIDENCE OF THE DIRECTOR OR EXECUTIVE OFFICER; AND

(II)     IS APPROVED OR RATIFIED BY THE BOARD OF DIRECTORS OF
THE AUTHORIZED INSURER.

(2)      A DIRECTOR OR EXECUTIVE OFFICER MAY NOT ACCEPT, DIRECTLY
OR INDIRECTLY, A LOAN PROHIBITED BY PARAGRAPH (1) OF THIS SUBSECTION.

(B)     ADVANCES FOR FUTURE SERVICES.

AN AUTHORIZED INSURER MAY NOT MAKE AN ADVANCE TO A DIRECTOR OR
EXECUTIVE OFFICER OF THE AUTHORIZED INSURER FOR FUTURE SERVICES TO BE
PERFORMED MORE THAN 1 YEAR AFTER THE DATE OF MAKING THE ADVANCE.

(C)      GUARANTEES ' OF FINANCIAL OBLIGATIONS OF DIRECTORS AND
OFFICERS.

(1)      AN AUTHORIZED INSURER OR ITS AFFILIATE OR SUBSIDIARY MAY
NOT GUARANTEE, DIRECTLY OR INDIRECTLY, THE FINANCIAL OBLIGATION OF A
DIRECTOR OR EXECUTIVE OFFICER OF THE AUTHORIZED INSURER, AFFILIATE, OR
SUBSIDIARY.

(2)      A GUARANTEE MADE IN VIOLATION OF THIS SUBSECTION IS VOID.

(3)      THIS SUBSECTION DOES NOT PROHIBIT AN INSURER FROM MAKING
OR ENTERING INTO AN INSURANCE CONTRACT OR SURETY BOND THAT IS
AUTHORIZED BY ITS ARTICLES OF INCORPORATION FOR A DIRECTOR OR
EXECUTIVE OFFICER.

(D)     EXCEPTION.

THIS SECTION DOES NOT PROHIBIT A LIFE INSURER FROM MAKING A POLICY
LOAN TO A DIRECTOR OR EXECUTIVE OFFICER OF THE LIFE INSURER ON A POLICY
OR CONTRACT OF THE LIFE INSURER IN AN AMOUNT NOT EXCEEDING THE LOAN
VALUE OF THE POLICY OR CONTRACT.

REVISOR'S NOTE: This section is new language derived without substantive
change from former CA § 6-512.

In subsection (a)(1)(i) of this section, the reference to a "principal" residence
of a director or officer is substituted for the former reference to a "residence
used for his habitation" for clarity. The Insurance Article Review Committee

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