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The 192nd General Court of the Commonwealth of Massachusetts

Section 64: Investments

Section 64. All investments and deposits of the funds of any such company shall be made either in its corporate name or in the name of a nominee appointed for the purpose of facilitating security trading, money management and certificate delivery; and no director or officer shall receive, in addition to his fixed salary or compensation from such company, any money or valuable thing, either directly or indirectly, for negotiating, procuring, recommending or aiding in any purchase, sale or loan made by such company in connection with its investments, nor shall he have any substantial interest, direct or indirect, in any such purchase, sale or loan, except that, if a policyholder, he shall be entitled to all the benefits accruing under the terms of his contract. The words ''substantial interest'' as used in this paragraph shall mean the beneficial ownership of five per cent or more of the outstanding voting stock of any corporation, other than such company or of five per cent or more of the proprietary interest of any unincorporated enterprise.

No investment, sale or loan, except loans on its own policies, shall be made which has not first been authorized by the board of directors, or by a committee thereof charged with the duty of investing or loaning the funds of the company; nor shall any deposit be made in a bank or banking institution unless such bank or banking institution has first been approved as a bank of deposit by the board of directors or said committee thereof, and unless the vote authorizing such investment, sale or loan or approval of the place of deposit has been duly recorded in the books of the company. The board of directors, or committee thereof, referred to above, may authorize by vote duly recorded in the books of the company, one or more officers of the company or of any other person in the investment advisory business to acquire or dispose of investments for such company between meetings of said board or committee, under such restrictions and conditions as said board, or committee thereof, shall deem advisable, and a copy of such authorization shall be filed with the commissioner; provided, however, that for the purpose of this sentence any such person in the investment advisory business, except a company which controls, is controlled by, or is under common control with such domestic company, shall be registered as an investment adviser under the Investment Advisers Act of 1940 enacted by Congress on August twenty-second, nineteen hundred and forty as amended from time to time, or any similar statute enacted in substitution therefor, and have at least one hundred million dollars of assets under management. All such acquisitions and disposals shall be reported to the board of directors, or committee, and recorded in the minutes of their next meeting.

No domestic company hereafter acquiring title to real estate under the conditions of any mortgage owned by it, or by purchase or set-off on execution upon judgment for debts due it previously contracted in the course of its business, or by other process in settlement for debts, shall hold it for a longer period than five years without the written permission of the commissioner, provided, however, that within said period or any extension thereof such company may, upon written notice to the commissioner, elect to hold such property pursuant to section sixty-six B, in which event thereafter such property shall not be subject to the limitations of this section but shall be subject to the provisions of said section sixty-six B and for the purposes of said section sixty-six B the original cost or value of such property so acquired shall be valued in accordance with the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, unless modified by the commissioner as the commissioner considers appropriate. Except as provided herein, and except as authorized by sections sixty-six A and sixty-six B of this chapter and sections seven A and eighteen of chapter one hundred and twenty-one A, no such company shall hold real estate except to the extent that may be necessary for its convenient accommodation in the transaction of its business and then only to an amount not exceeding ten per centum of its invested assets, including cash in banks, as shown by its last annual statement to the commissioner; provided, however, that such company may hold real estate for the health, welfare or convenience of its employees and their families which shall be limited to an investment by such company of three million dollars, but shall also be subject to the limitation on the total amount of real estate such company may hold, as herein provided.

Such company shall not engage in buying or selling goods, wares or merchandise, except for resale to its employees, and except articles insured by it on which losses are claimed, and except in replacing, rebuilding or repairing insured property as provided in its policies.

Nothing in this section shall be construed to prohibit any such company from selling and transferring to any director or other officer thereof not exceeding ten shares of the capital stock of any other insurance company for the purpose of enabling such director or other officer to qualify as a director in such other company; provided, that all transactions under this paragraph shall be approved in advance by the commissioner.