Iowa Admin. Code r. 191-5.12
The collateral pledged to secure a loan must qualify as a legal investment for insurance companies before the loan it secures may so qualify [Iowa Code section 515.35(3)"a"(2)]. The statute provides that a company may not invest in excess of 30 percent of its capital and funds in stocks and not more than 10 percent of its capital and surplus in the stock or bonds, or both, of any one corporation.
Normally, a loan is little better than the collateral securing it. Therefore, in order to conform to the intent and purpose of the legislature it would appear that the same limitations should likewise be applied to the stock securing a collateral loan. The statute also provides that the value of the collateral must exceed the amount of the loan by 10 percent.
Iowa Admin. Code r. 191-5.12