PARRIS N. GLENDENING, Governor

Ch. 11

REVISOR'S NOTE: This section is new language derived without substantive
change from former Art. 48A, § 362(a).

In subsection (b) and the introductory language of subsection (c) of this
section, the former term "rules" is deleted in light of the term "regulations".
See the General Revisor's Note to this article.

Defined terms: "Annuity contract" § 1-101
"Commissioner" § 1-101
"Insurer" § 1-101
"Life insurance" § 1-101
"Mutual insurer" § 1-101
"Stock insurer" § 1-101

16-602. INVESTMENTS OF SEGREGATED ASSET ACCOUNTS.

(A)     IN GENERAL.

(1)     EXCEPT AS PROVIDED IN PARAGRAPHS, (2) AND (3) OF THIS
SUBSECTION, THE INVESTMENTS OF A SEGREGATED ASSET ACCOUNT ARE SUBJECT
TO THE PROVISIONS OF THIS ARTICLE.

(2)     PREFERRED AND COMMON STOCK INVESTMENTS OF AMOUNTS
ALLOCATED TO A SEGREGATED ASSET ACCOUNT MAY NOT BE INCLUDED IN
APPLYING THE 10% LIMITATIONS UNDER § 5-511(F) OF THIS ARTICLE.

(3)     UP TO 25% OF THE ASSETS OF A SEGREGATED ASSET ACCOUNT MAY
BE INVESTED IN NONDIVIDEND PAYING STOCK IF THE ISSUER OF THE STOCK HAS
NOT HAD A NET OPERATING LOSS:

(I)      IN MORE THAN 2 OF ITS 12 FISCAL QUARTERS IMMEDIATELY
PRECEDING THE DATE OF PURCHASE OF THE STOCK; OR

(II)     IN MORE THAN 2 OF ITS FISCAL QUARTERS FROM THE DATE OF
ITS INCORPORATION IF IT HAS NOT BEEN INCORPORATED FOR AT LEAST 3 YEARS
BEFORE THE DATE OF PURCHASE OF THE STOCK.

(B)     COMPLIANCE WITH REGULATIONS REQUIRED.

THE INVESTMENTS OF A SEGREGATED ASSET ACCOUNT SHALL COMPLY WITH
THE REGULATIONS OF THE COMMISSIONER.

(C)     LIABILITIES FROM OTHER BUSINESS.

TO THE EXTENT PROVIDED UNDER THE APPLICABLE CONTRACTS, THE PART
OF THE ASSETS OF A SEGREGATED ASSET ACCOUNT EQUAL TO THE RESERVES AND
OTHER CONTRACT LIABILITIES WITH RESPECT TO THE ACCOUNT MAY NOT BE
CHARGEABLE WITH LIABILITIES ARISING OUT OF ANY OTHER BUSINESS THAT THE
INSURER MAY CONDUCT.

REVISOR'S NOTE: This section is new language derived without substantive
change from former Art. 48A, § 362(b) and (d).

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