§ 1307 — Contingent liability for borrowings

New York § 1307

• Jurisdiction: New York
• Law ISC: Insurance
• Art. 13: Assets and Deposits

Text

§ 1307. Contingent liability for borrowings. (a) Any domestic stock,\nmutual or co-operative insurance company or reciprocal insurer may,\nwithout pledging any of its assets, receive advances or borrow funds to:\n (1) conduct its business,\n (2) enable it to comply with any surplus requirement or make good any\nimpairment or deficiency or other requirement of this chapter,\n (3) defray the reasonable expenses of its organization,\n (4) provide any fund to be voluntarily contributed to surplus, or\n (5) organize, acquire or invest in any subsidiaries authorized by this\nchapter.\n (b) Such borrowing may only be made upon an agreement that such moneys\nand such interest thereon as may be agreed upon, at a rate not exceeding\nthe maximum rate provided in section 5-501 of the general obligations\nlaw, in effect at the time the agreement is executed, shall be repaid\nonly out of free and divisible surplus of such insurer with the approval\nof the superintendent whenever, in his judgment, the financial condition\nof such insurer warrants. In the event of insolvency of a mutual or\nco-operative insurance company unearned premiums shall be deemed to be\npart of its free and divisible surplus.\n (c) Any sum so advanced or borrowed shall not be part of the legal\nliabilities of such insurer and shall not be a basis of any set-off but\nuntil repaid all statements published by such insurer or filed with the\nsuperintendent shall show, as a footnote, the amount then remaining\nunpaid.\n (d) No such insurance company or reciprocal insurer shall directly or\nindirectly make any agreement for any advance or borrowing pursuant to\nthis section unless such agreement is in writing and shall have been\napproved by the superintendent as not unfair, misleading or contrary to\nlaw.\n