Ch. 36

1995 LAWS OF MARYLAND

(B)     DETERMINATION OF NET EARNINGS.

(1)      (I) IF NET EARNINGS ARE DETERMINED BY RELYING ON
CONSOLIDATED EARNINGS STATEMENTS OF PARENT AND SUBSIDIARY
INSTITUTIONS:

1.        THE NET EARNINGS SHALL BE DETERMINED AFTER
PROVIDING FOR THE INCOME TAXES OF SUBSIDIARIES AND MAKING PROPER
ALLOWANCE FOR ANY MINORITY STOCK INTEREST; AND

2.        EXCEPT AS OTHERWISE PROVIDED IN SUBPARAGRAPH
(II) OF THIS PARAGRAPH, THE REQUIRED COVERAGE OF FIXED CHARGES SHALL BE
COMPUTED ON A BASIS. THAT INCLUDES FIXED CHARGES AND PREFERRED
DIVIDENDS OF SUBSIDIARIES OTHER THAN THOSE PAYABLE BY THE SUBSIDIARIES
TO THE PARENT CORPORATION OR TO OTHER SUBSIDIARIES.

(II) 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 ADOPTED
BY THE COMMISSIONER.

(2)      (I) THIS PARAGRAPH APPLIES TO AN ISSUING, ASSUMING, OR
GUARANTEEING INSTITUTION, WHETHER OR NOT IN LEGAL EXISTENCE DURING
THE ENTIRE 5-YEAR PERIOD IMMEDIATELY PRECEDING THE DATE OF INVESTMENT
BY THE INSURER, THAT HAS AT ANY TIME DURING THE 5-YEAR PERIOD ACQUIRED
THE ASSETS OF ANOTHER INSTITUTION SUBSTANTIALLY AS AN ENTIRETY BY
PURCHASE, MERGER, CONSOLIDATION, OR OTHERWISE, OR HAS BEEN
REORGANIZED PURSUANT TO BANKRUPTCY LAW.

(II) IN APPLYING THE EARNINGS TESTS UNDER THIS SECTION, THE
EARNINGS OF THE PREDECESSOR, CONSTITUENT, OR REORGANIZED INSTITUTION
AVAILABLE FOR INTEREST AND DIVIDENDS FOR THE PART OF THE PERIOD THAT
PRECEDED THE ACQUISITION OR REORGANIZATION MAY BE INCLUDED IN THE
EARNINGS OF THE ISSUING, ASSUMING, OR GUARANTEEING INSTITUTION FOR THE
PART OF THE PERIOD DETERMINED IN ACCORDANCE WITH ADJUSTED OR PRO
FORMA CONSOLIDATED EARNINGS STATEMENTS COVERING THAT PART OF THE
PERIOD AND GIVING EFFECT TO ALL STOCK OUTSTANDING AND ALL FIXED
CHARGES EXISTING IMMEDIATELY AFTER THE ACQUISITION OR REORGANIZATION.

(C)     CLASSES OF RESERVE INVESTMENTS.

THE RESERVE INVESTMENTS OF AN INSURER SHALL CONSIST OF THE CLASSES
OF ASSETS SET FORTH IN THIS SECTION, SUBJECT TO ANY LIMIT SET FOR EACH TYPE
OR CLASS OF ASSET.

(D)     GOVERNMENT OBLIGATIONS.

(1) THE RESERVE INVESTMENTS OF AN INSURER MAY INCLUDE:

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