ROBERT L. EHRLICH, JR., Governor

Ch. 399

(4)     (i) Cash received in a transaction under this subsection shall be
invested in accordance with this subtitle and in a manner that recognizes the
liquidity needs of the transaction or used by the insurer for its general corporate
purposes.

(ii) For so long as the transaction remains outstanding, the insurer,
its agent, or custodian shall maintain, as to acceptable collateral received in a
transaction under this subsection, either physically or through the book entry
systems of the Federal Reserve, Depository Trust Company, Participants Trust
Company, or other securities depositories approved by the Commissioner:

1.       possession of the acceptable collateral;

2.       a perfected security interest in the acceptable collateral; or

3.       in the case of a jurisdiction outside the United States, title
to, or rights of a secured creditor to, the acceptable collateral.

(5)     (i) The limitations of § 5-507 of this subtitle do not apply to the
business entity counterparty exposure created by transactions under this subsection.

(ii) For purposes of calculations made to determine compliance with
this subsection, no effect will be given to the insurer's future obligation to resell
securities, in the case of a repurchase transaction, or to repurchase securities, in the
case of a reverse repurchase transaction.

(iii) An insurer may not enter into a transaction under this
subsection if, as a result of and after giving effect to the transaction:

1.       A. the aggregate amount of securities then loaned, sold
to, or purchased from any one business entity counterparty under this subsection
would exceed 5% of its admitted assets; and

B. in calculating the amount sold to or purchased from a
business entity counterparty under repurchase or reverse repurchase transactions,
effect may be given to netting provisions under a master written agreement; or

2.       the aggregate amount of all securities then loaned, sold to,
or purchased from all business entities under this subsection would exceed 40% of its
admitted assets.

(6)     (i) In a securities lending transaction, the insurer shall receive
acceptable collateral having a market value as of the transaction date at least equal
to 102% of the market value of the securities loaned by the insurer in the transaction
as of that date.

(ii) If at any time the market value of the acceptable collateral is
less than the market value of the loaned securities, the business entity counterparty
shall be obligated to deliver additional acceptable collateral, the market value of
which, together with the market value of all acceptable collateral then held in
connection with the transaction, at least equals 102% of the market value of the
loaned securities.

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