                                 CODE OF VIRGINIA

DEFINITIONS (§ 38.2-1401)

As used in this chapter:		&#8220;Admitted assets&#8221; means, for purposes of
the limitations and standards imposed by Articles 1 and 2 of this chapter, the
amount thereof as permitted to be reported on the statutory financial statement
of the insurer most recently required to be filed with the Commission pursuant
to §§ 38.2-1300 and 38.2-1301 or other similar provisions within this title,
but excluding the assets allocated to separate accounts pursuant to Article 3
(§ 38.2-1443 et seq.) of this chapter.		&#8220;Business entity&#8221; means a
corporation, association, partnership, joint venture, trust, church, or
religious body.		&#8220;Cap&#8221; means an agreement obligating the seller to
make payments to the buyer, with each payment based on the amount by which a
reference price or level or the performance or value of one or more underlying
interests exceeds a predetermined number, sometimes called the strike rate or
strike price.		&#8220;Category 1 investment&#8221; means any investment
complying with Article 1 (§ 38.2-1400 et seq.) and either Article 2 (§
38.2-1412 et seq.) or 3 (§ 38.2-1443 et seq.), or both Articles 2 and 3, of
this chapter.		&#8220;Category 2 investment&#8221; means any investment
complying with Article 1, but with neither Article 2 nor Article 3, of this
chapter.		&#8220;Claimants&#8221; means any owners, beneficiaries, assignees,
certificate holders, or third-party beneficiaries of any insurance benefit or
right arising out of and within the coverage of an insurance policy, annuity
contract, benefit contract, or subscription contract.		&#8220;Collar&#8221;
means an agreement to receive payments as the buyer of an option, cap, or floor
and to make payments as the seller of a different option, cap, or
floor.		&#8220;Counterparty exposure amount&#8221; means the amount of credit
risk attributable to an over-the-counter derivative instrument, which amount of
credit risk is equal to (i) the market value of the over-the-counter derivative
instrument if the liquidation of the derivative instrument would result in a
final cash payment to the insurer or (ii) zero if the liquidation of the
derivative instrument would not result in a final cash payment to the insurer.
However, if an over-the-counter derivative instrument is entered into under a
written master agreement that provides for netting of payments owed by the
respective parties, and the domicile of the counterparty is either within the
United States or, if not within the United States, within a foreign jurisdiction
listed in the Purposes and Procedures Manual of the Securities Valuation Office
as eligible for netting, the amount of credit risk attributable to the
over-the-counter derivative instrument shall be the greater of zero or the net
sum of (a) the market value of the over-the-counter derivative instruments
entered into under the agreement, the liquidation of which would result in a
final cash payment to the insurer, and (b) the market value of the
over-the-counter derivative instruments entered into under the agreement, the
liquidation of which would result in a final cash payment by the insurer to the
business entity. With respect to open transactions, the market value of the
over-the-counter derivative instrument shall be determined at the end of the
most recent quarter of the insurer&#8217;s fiscal year and shall be reduced by
the market value of acceptable collateral held by the insurer or placed in
escrow by one or both parties.		&#8220;Date of investment&#8221; means the date
on which funds are disbursed for an investment.		&#8220;Derivative
instrument&#8221; means an agreement, instrument, or a series or combination
thereof (i) to make or take delivery of, or assume or relinquish, a specified
amount of one or more underlying interests or to make a cash settlement in lieu
thereof or (ii) that has a price, performance, value, or cash flow based
primarily upon the actual or expected price, level, performance, value, or cash
flow of one or more underlying interests. Derivative instruments include
options, warrants used in a hedging transaction and not attached to another
financial instrument, caps, floors, collars, swaps, forwards, futures, and any
other agreements, options, or instruments substantially similar thereto or any
series or combination thereof and any agreements or instruments permitted under
rules adopted under § 38.2-1428.		&#8220;Derivative transaction&#8221; means a
transaction involving the use of one or more derivative
instruments.		&#8220;Domestic governmental entity&#8221; means the United
States, any state, or any municipality or district in any such state, or any
political subdivision, civil division, agency or instrumentality of one or more
of the foregoing.		&#8220;Fair market value&#8221; means the price that property
will bring when (i) offered for sale by one who desires, but who is not
obligated, to sell it; (ii) bought by one who is under no necessity of having
it; and (iii) sufficient time has elapsed to allow interested buyers the
opportunity to become informed of the offer for sale.		&#8220;Fixed
charges&#8221; means actual interest incurred in each year on funded and
unfunded debt, excluding interest on bank deposit accounts, and annual
apportionment of debt discount or premium. Where interest is partially or
entirely contingent upon earnings, &#8220;fixed charges&#8221; includes
contingent interest payments.		&#8220;Floor&#8221; means an agreement obligating
the seller to make payments to the buyer in which each payment is based on the
amount by which a predetermined number, sometimes called the floor rate or
price, exceeds a reference price, a level, or the performance or value of one or
more underlying interests.		&#8220;Forward&#8221; means an agreement, other than
a future, to make or take delivery of, or effect a cash settlement based on the
actual or expected price, level, performance or value of, one or more underlying
interests.		&#8220;Future&#8221; means an agreement, traded on a qualified
exchange or qualified foreign exchange, to make or take delivery of, or effect a
cash settlement based on the actual or expected price, level, performance or
value of, one or more underlying interests and includes an insurance
future.		&#8220;Hedging transaction&#8221; means:

1. A derivative transaction that is entered into and maintained to reduce:
			a. The risk of a change in the value, yield, price, cash flow, or quantity of
assets or liabilities that the insurer has acquired or incurred or anticipates
acquiring or incurring; or			b. The currency exchange rate risk or the degree of
exposure as to assets or liabilities that the insurer has acquired or incurred
or anticipates acquiring or incurring; or

2. Any other derivative transaction specified as constituting a hedging
transaction in rules adopted pursuant to &#xA7; 38.2-1428.
			&#8220;High grade obligations&#8221; means obligations which (i) are rated
one or two by the Securities Valuation Office of the National Association of
Insurance Commissioners or (ii) if not rated by the Securities Valuation Office,
are rated in an equivalent grade by a national rating agency recognized by the
Commission.			&#8220;Insurance future&#8221; means a future relating to an index
or pool that is based on insurance-related items.			&#8220;Insurance futures
option&#8221; means an option on an insurance future.			&#8220;Insurer&#8221;
means a company licensed pursuant to Chapter 10 (&#xA7; 38.2-1000 et seq.), 11
(&#xA7; 38.2-1100 et seq.), 12 (&#xA7; 38.2-1200 et seq.), 25 (&#xA7; 38.2-2500
et seq.), 26 (&#xA7; 38.2-2600 et seq.), 38 (&#xA7; 38.2-3800 et seq.), 39
(&#xA7; 38.2-3900 et seq.), 40 (&#xA7; 38.2-4000 et seq.), 41 (&#xA7; 38.2-4100
et seq.), 42 (&#xA7; 38.2-4200 et seq.), 43 (&#xA7; 38.2-4300 et seq.), 45
(&#xA7; 38.2-4500 et seq.), 46 (&#xA7; 38.2-4600 et seq.), 51 (&#xA7; 38.2-5100
et seq.), or 61 (&#xA7; 38.2-6100 et seq.) of this title.			&#8220;Life
insurer&#8221; means any insurer authorized to transact life insurance or to
grant annuities as defined in &#xA7;&#xA7; 38.2-102 through 38.2-107 or
authorized pursuant to the provisions of Chapter 38, 39, 40 or 41, or any other
chapter of this title, to provide any one of the following contractual benefits
in any form: death benefits, endowment benefits, annuity benefits or monument or
tombstone benefits.			&#8220;Lower grade obligations&#8221; means obligations
which (i) are rated four, five, or six by the Securities Valuation Office of the
National Association of Insurance Commissioners or (ii) if not rated by the
Securities Valuation Office, are rated in an equivalent grade by a national
rating agency recognized by the Commission.			&#8220;Medium grade
obligations&#8221; means obligations which (i) are rated three by the Securities
Valuation Office of the National Association of Insurance Commissioners or (ii)
if not rated by the Securities Valuation office, are rated in an equivalent
grade by a national rating agency recognized by the Commission.			&#8220;Minimum
capital and surplus&#8221; means the minimum surplus to policyholders, or
minimum net worth, a particular insurer must have to obtain and maintain its
license to transact business in this Commonwealth pursuant to the applicable
provisions of this title. In no case shall an insurer&#8217;s minimum capital
and surplus be less than zero.			&#8220;Net earnings available for fixed
charges&#8221; means income minus operating expenses, maintenance expenses,
taxes other than income taxes, depreciation, and depletion. Extraordinary
nonrecurring income and expense items are excluded from the calculation of
&#8220;net earnings available for fixed
charges.&#8221;			&#8220;Obligation&#8221; means a bond, debenture, note or
other evidence of indebtedness.			&#8220;Option&#8221; means an agreement giving
the buyer the right to buy or receive, sell or deliver, enter into, extend,
terminate, or effect a cash settlement based on the actual or expected price,
level, performance, or value of one or more underlying interests.
&#8220;Option&#8221; includes an insurance futures
option.			&#8220;Over-the-counter derivative instrument&#8221; means a
derivative instrument that is entered into with a business entity other than
through a qualified exchange or qualified foreign exchange or that is cleared
other than through a qualified clearinghouse.			&#8220;Potential exposure&#8221;
means the amount determined in accordance with the National Association of
Insurance Commissioners Annual Statement Instructions.			&#8220;Prohibited
investment&#8221; means any investment prohibited by &#xA7;
38.2-1407.			&#8220;Qualified clearinghouse&#8221; means a clearinghouse for,
and that is subject to the rules of, a qualified exchange or a qualified foreign
exchange, which clearinghouse provides clearing services, including acting as a
counterparty to each of the parties to a transaction such that the parties no
longer have credit risk as to each other.			&#8220;Qualified exchange&#8221;
means:

1. A securities exchange registered as a national securities exchange, or a
securities market regulated under the Securities Exchange Act of 1934 (15 U.S.C.
&#xA7; 78a et seq.), as amended;

2. A board of trade or commodities exchange designated as a contract market by
the Commodity Futures Trading Commission or any successor thereof;

3. Private Offerings, Resales and Trading through Automated Linkages (PORTAL);

4. A designated offshore securities market as defined in Securities Exchange
Commission Regulation S, 17 C.F.R. Part 230, as amended; or

5. A qualified foreign exchange.
			&#8220;Qualified foreign exchange&#8221; means a foreign exchange, board of
trade, or contract market located outside the United States:

1. That has received regulatory comparability relief under Commodity Futures
Trading Commission (CFTC) Rule 30.10 (as set forth in Appendix C to Part 30 of
the CFTC&#8217;s regulations at 17 C.F.R. Part 30);

2. That is, or whose members are, subject to the jurisdiction of a foreign
futures authority that has received regulatory comparability relief under CFTC
Rule 30.10 (as set forth in Appendix C to Part 30 of the CFTC&#8217;s
regulations at 17 C.F.R. Part 30) as to futures transactions in the jurisdiction
where the exchange, board of trade, or contract market is located; or

3. Upon which foreign stock index futures contracts are listed that are the
subject of no-action relief issued by the CFTC&#8217;s Office of General
Counsel, provided that an exchange, board of trade, or contract market that
qualifies as a &#8220;qualified foreign exchange&#8221; only under this
subsection shall only be a &#8220;qualified foreign exchange&#8221; as to
foreign stock index futures contracts that are the subject of no-action relief.
			&#8220;Replication transaction&#8221; means a derivative transaction that is
intended to replicate the performance of one or more assets that an insurer is
authorized to acquire under this chapter. A derivative transaction that is
entered into as a hedging transaction shall not be considered a replication
transaction.			&#8220;Reserve liabilities&#8221; means those liabilities which
are required to be established by an insurer for all of its outstanding
insurance policies, annuity contracts, benefit contracts and subscription
contracts, in accordance with this title, as amended or as hereafter
amended.			&#8220;Statement value&#8221; means the amount determined in
accordance with the National Association of Insurance Commissioners Annual
Statement Instructions.			&#8220;Swap&#8221; means an agreement to exchange or
to net payments at one or more times based on the actual or expected price,
level, performance, or value of one or more underlying
interests.			&#8220;Underlying interest&#8221; means the assets, liabilities, or
other interests, or a combination thereof, underlying a derivative instrument,
such as any one or more securities, currencies, rates, indices, commodities, or
derivative instruments.			&#8220;Warrant&#8221; means an instrument that gives
the holder the right to purchase an underlying financial instrument at a given
price and time or at a series of prices and times outlined in the warrant
agreement. Warrants may be issued alone or in connection with the sale of other
securities.			&#8220;Wrap-around mortgage&#8221; means a loan made by an insurer
to a borrower, secured by a mortgage or deed of trust on real property
encumbered by a first mortgage or first deed of trust, where the total amount of
the obligation of the borrower to the insurer under the loan is not less than
the sum of (i) the principal amount initially disbursed by the insurer on
account of the loan and (ii) the unpaid principal balance of the obligation
secured by the preexisting mortgage or deed of trust.

HISTORY: 1983, c. 457, § 38.1-217.2; 1986, c. 562; 1992, c. 588; 1994, c. 503;
1998, c. 42; 2004, c. 668; 2008, c. 216; 2011, c. 198.