§ 4105 — Domestic stock companies; declaration and payment of dividends

New York § 4105

• Jurisdiction: New York
• Law ISC: Insurance
• Art. 41: Property/casualty Insurance Companies

Text

§ 4105. Domestic stock companies; declaration and payment of\ndividends. (a) Except as provided in subsection (c) of this section no\ndomestic stock property/casualty insurance company shall declare or\ndistribute any dividend to shareholders except out of earned surplus.\nNotwithstanding the foregoing, the superintendent may permit a domestic\nstock property/casualty insurance company to restate its earned surplus\nunder a plan of quasi-reorganization in accordance with regulations as\nmay be promulgated by the superintendent. No domestic stock\nproperty/casualty insurance company shall declare or distribute any\ndividend to shareholders which, together with all dividends declared or\ndistributed by it during the next preceding twelve months, exceeds the\nlesser of ten percent of its surplus to policyholders as shown by its\nlast statement on file with the superintendent, or one hundred percent\nof adjusted net investment income during such period unless, upon prior\napplication therefor, the superintendent approves a greater dividend\ndistribution based upon his finding that the insurer will retain\nsufficient surplus to support its obligations and writings.\n In this section, (1) "earned surplus" means the portion of the surplus\nthat represents the net earnings, gains or profits, after deduction of\nall losses, that have not been distributed to the shareholders as\ndividends, or transferred to stated capital or capital surplus or\napplied to other purposes permitted by law but does not include\nunrealized appreciation of assets;\n (2) "adjusted net investment income" means net investment income for\nthe twelve months immediately preceding the declaration or distribution\nof the current dividend increased by the excess, if any, of net\ninvestment income over dividends declared or distributed during the\nperiod commencing thirty-six months prior to the declaration or\ndistribution of the current dividend and ending twelve months prior\nthereto; and\n (3) "surplus" means the amount of the insurer's admitted assets in\nexcess of its capital and liabilities, and both "surplus" and "surplus\nto policyholders" include any voluntary reserves, or any part thereof,\nwhich are not required by law.\n (b) If the superintendent finds, after notice and hearing, that any\nsuch company has distributed any dividend in violation of this section,\nhe may order the company to cease doing any new business until the\namount of the dividend has been restored to the company. The directors\nof any such company who vote in favor of the declaration and\ndistribution of any dividend in violation of this section shall, in\naddition to all other liabilities or penalties prescribed by law, be\njointly and severally liable to the creditors, including policyholder\ncreditors, of the company to the extent of the dividend so declared and\ndistributed, and every shareholder receiving any such dividend shall be\nliable to the creditors of the company to the extent of the dividend\nreceived by such shareholder.\n (c) Such company may declare and distribute a stock dividend to its\nshareholders whenever it shall have a surplus, as defined in subsection\n(a) hereof, in an amount at least equal to the sum of the dividend and\nthirty percent of its unearned premium liability as shown by its last\nstatement on file with the superintendent and, for such purpose, the\ncompany may increase its capital stock from such surplus in the manner\nprescribed in section one thousand two hundred six of this chapter, and\nit shall distribute the additional or increased stock to its\nshareholders in proportion to the stock held by each, respectively.\n