Ch. 36

1995 LAWS OF MARYLAND

(II)     SUBJECT TO PARAGRAPH (3) OF THIS SUBSECTION, THE
OBLIGATIONS, AT THE DATE OF ACQUISITION BY THE INSURER, ARE ADEQUATELY
SECURED AND HAVE INVESTMENT QUALITIES AND CHARACTERISTICS IN WHICH
SPECULATIVE ELEMENTS ARE NOT PREDOMINANT;

(III)   THE OBLIGATIONS BEAR FIXED INTEREST AND ARE OTHER
THAN THOSE DESCRIBED IN SUBPARAGRAPH (I) OF THIS PARAGRAPH, AND THE NET
EARNINGS AVAILABLE FOR FIXED CHARGES OF THE ISSUING, ASSUMING, OR
GUARANTEEING INSTITUTION:

1.        FOR A PERIOD OF 5 FISCAL YEARS IMMEDIATELY
PRECEDING THE DATE OF ACQUISITION BY THE INSURER, MUST HAVE AVERAGED
EACH YEAR NOT LESS THAN ONE AND ONE-HALF TIMES THE INSTITUTION'S
AVERAGE ANNUAL FIXED CHARGES APPLICABLE TO THE PERIOD; AND

2.        DURING THE LAST YEAR OF THE 5-YEAR PERIOD, MUST
HAVE BEEN NOT LESS THAN ONE AND ONE-HALF TIMES THE INSTITUTION'S FIXED
CHARGES FOR THE YEAR; OR

(IV)    THE OBLIGATIONS ARE ADJUSTMENT, INCOME, OR OTHER
CONTINGENT INTEREST OBLIGATIONS, AND THE NET EARNINGS AVAILABLE FOR
FIXED CHARGES OF THE ISSUING, ASSUMING, OR GUARANTEEING INSTITUTION FOR
A PERIOD OF 5 FISCAL YEARS IMMEDIATELY PRECEDING THE DATE OF
ACQUISITION BY THE INSURER:

1.        MUST HAVE AVERAGED EACH YEAR NOT LESS THAN ONE
AND ONE-HALF TIMES THE SUM OF THE INSTITUTION'S AVERAGE ANNUAL FIXED
CHARGES PLUS THE INSTITUTION'S AVERAGE ANNUAL MAXIMUM CONTINGENT
INTEREST APPLICABLE TO THE PERIOD; AND

2.        DURING EACH OF THE LAST 2 YEARS OF THE 5-YEAR
PERIOD, MUST HAVE BEEN NOT LESS THAN ONE AND ONE-HALF TIMES THE SUM OF
THE INSTITUTION'S FIXED CHARGES PLUS MAXIMUM CONTINGENT INTEREST FOR
THE YEAR.

(3) TO DETERMINE THE ADEQUACY OF COLLATERAL SECURITY FOR
PURPOSES OF PARAGRAPH (2)(I) OR (II) OF THIS SUBSECTION NOT MORE THAN
ONE-THIRD OF THE TOTAL VALUE OF THE REQUIRED COLLATERAL MAY INCLUDE
STOCK OTHER THAN STOCK MEETING THE REQUIREMENTS OF SUBSECTION (F) OF
THIS SECTION.

(F) PREFERRED OR GUARANTEED STOCK.

(1)      IN THIS SUBSECTION, "PREFERRED DIVIDENDS REQUIREMENT"
MEANS CUMULATIVE OR NONCUMULATIVE DIVIDENDS WHETHER PAID OR UNPAID.

(2)      THE RESERVE INVESTMENTS OF AN INSURER MAY INCLUDE
PREFERRED OR GUARANTEED STOCK OF A SOLVENT INSTITUTION, CREATED OR
EXISTING UNDER THE LAWS OF THE UNITED STATES OR A STATE, IF:

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