§ 38-9-80 — Certificates of deposits or securities required; amounts; factors considered in setting amounts; limits.

South Carolina § 38-9-80

• Jurisdiction: South Carolina
• Title 38: INSURANCE
• Ch. 9: CAPITAL, SURPLUS, RESERVES, AND OTHER FINANCIAL MATTERS

Text

(A) The director or his designee shall require every insurer transacting, or desiring to transact, business in this State to deposit with him certificates of deposit of building and loan associations chartered by South Carolina or federal savings and loan associations located within the State in which deposits are guaranteed by the Federal Savings and Loan Insurance Corporation, not to exceed the amount covered by insurance, or of national banks located within the State or banks chartered by South Carolina in which deposits are guaranteed by the Federal Deposit Insurance Corporation, not to exceed the amount covered by insurance, or other securities which: (1) qualify as legal investments under the laws of this State for public sinking funds; (2) are not in default as to principal or interest; (3) have a current market value of not less than ten thousand nor more than two hundred thousand dollars, as determined by the director or his designee pursuant to the standards promulgated by the department. (B) The director or his designee shall prescribe the amount, within the limits of this section, of the securities required, and he subsequently may increase or decrease the amount required. (C) Notwithstanding the limitations in this section as to the amount of deposits required, the director or his designee may require an insurer to deposit an amount of securities in excess of the limits based on his consideration of the following: (1) adverse findings reported in financial condition and market conduct examination reports; (2) the National Association of Insurance Commissioners Insurance Regulatory Information System and its related reports; (3) the ratios of commission expense, general insurance expense, policy benefits, and reserve increases as to annual premium and net investment income which could lead to a significant adjustment to an insurer's capital and surplus; (4) whether the insurer's asset portfolio when viewed in light of current economic conditions is not of sufficient value, liquidity, or diversity to assure the insurer's ability to meet its outstanding obligations as they mature; (5) whether an insurer had a significant operating loss in the last twelve months or a shorter time; (6) whether an affiliate, subsidiary, or a reinsurer is insolvent, threatened with insolvency, or delinquent in payment of its monetary or other obligations; (7) contingent liabilities, pledges, or guaranties which individually or collectively involve a total amount which in the opinion of the director or his designee may affect the solvency of the insurer; (8) whether the management of an insurer, including officers, directors, or other persons who directly or indirectly controls the operation of the insurer, fails to possess and demonstrate the competence, fitness, and reputation necessary to serve the insurer in that position; (9) whether management has failed to respond to inquiries relative to the condition of the insurer or has furnished false and misleading information concerning an inquiry; (10) whether the insurer has grown so rapidly and to an extent that it lacks adequate financial and administrative capacity to meet its obligations in a timely manner; (11) whether the insurer has experienced or will experience in the foreseeable future cash flow or liquidity problems.

Legislative History

HISTORY: Former 1976 Code SECTION 38-9-80 [1947 (45) 322; 1949 (46) 600; 1952 Code SECTION 37-147; 1962 Code SECTION 37-147] recodified as SECTION 38-55-50 by 1987 Act No. 155, SECTION 1; Former 1976 Code SECTION 38-5-680 [1962 Code SECTION 37-185.1; 1962 (52) 2148; 1969 (56) 212; 1975 (58) 279; 1986 Act No. 429, SECTION 1] recodified as SECTION 38-9-80 by 1987 Act No. 155, SECTION 1; 1992 Act No. 280, SECTION 1; 1993 Act No. 181, SECTION 535; 2000 Act No. 259, SECTION 4.