NY Ins L § 4207 (2021)
2021 New York Laws ISC - Insurance Article 42 - Life Insurance Companies and Accident and Health Insurance Companies and Legal Services Insurance Companies 4207 - Dividends to Shareholders of Life, and Accident and Health Insurance Companies.

§  4207.  Dividends  to  shareholders of life, and accident and health insurance companies. (a)(1) For purposes  of  this  subsection,  "earned surplus"  means  an  amount  equal  to  an insurer's positive unassigned funds, excluding eighty-five percent of the  change  in  net  unrealized capital  gains  or  losses  less  capital gains tax, for the immediately preceding calendar year as set forth in the insurer's most recent annual statutory financial statement filed with the superintendent pursuant  to section three hundred seven of this chapter.  (2)  Notwithstanding  paragraph  five of this subsection, any domestic stock  life  insurance  company  may  distribute  a  dividend   to   its shareholders  out  of  earned surplus where the aggregate amount of such dividends in any calendar year does not exceed the greater of:  (A) ten percent of its surplus to policyholders as of the  immediately preceding calendar year; or  (B)  its  net  gain  from  operations  for  the  immediately preceding calendar year, not including  realized  capital  gains,  not  to  exceed thirty  percent  of  its  surplus to policyholders as of the immediately preceding calendar year; provided, however, that,  notwithstanding  this paragraph, in no event may a dividend be distributed without approval of the   superintendent,   in   accordance  with  paragraph  five  of  this subsection, in the calendar year immediately following a  calendar  year for  which  its net gain from operations, not including realized capital gains, was negative.  (3) Notwithstanding paragraph five of this  subsection,  any  domestic stock   life   insurance  company  may  distribute  a  dividend  to  its shareholders where  the  aggregate  amount  of  such  dividends  in  any calendar year does not exceed the lesser of:  (A)  ten percent of its surplus to policyholders as of the immediately preceding calendar year; or  (B) its  net  gain  from  operations  for  the  immediately  preceding calendar year, not including realized capital gains.  (4)  An  insurer  shall  not  distribute  a  dividend pursuant to both paragraph two and paragraph three of this subsection.  (5) Except as provided in paragraphs two and three of this subsection, no domestic stock life insurance company shall distribute  any  dividend to  its  shareholders  unless  a notice of its intention to declare such dividend  and  the  amount  thereof  shall  have  been  filed  with  the superintendent  not  less  than  thirty days in advance of such proposed declaration. The superintendent  may  disapprove  such  distribution  by giving  written  notice  to  such  company within thirty days after such filing that the superintendent finds that the financial condition of the company does not warrant such distribution.  (6) With respect to dividends to shareholders distributed pursuant  to paragraph  two  of  this subsection, every domestic stock life insurance company shall report to the superintendent  all  such  dividends  within five  business  days  following the declaration thereof and at least ten days prior to the payment thereof.  (7) A domestic stock life insurance company's surplus to policyholders following any  distribution  of  dividends  to  its  shareholders  under paragraph  two of this subsection shall be reasonable in relation to the company's outstanding liabilities and adequate  to  meet  its  financial needs.  (8)  With respect to dividends to shareholders distributed pursuant to paragraph two of  this  subsection,  the  superintendent  may  limit  or disallow dividends if the superintendent determines that the:  (A)  domestic  stock life insurance company's surplus to policyholders is not reasonable in relation to the company's  outstanding  liabilities and not adequate to meet its financial needs; or  (B) domestic stock life insurance company is financially distressed or troubled.  (b)  (1)  Except  as  provided  in paragraph three hereof, no domestic stock accident and health insurance company shall declare or  distribute any  dividend  on  its  capital  stock, except out of earned surplus, as defined in subsection (a) of section four thousand one hundred  five  of this  chapter.  Notwithstanding  the  forgoing,  the  superintendent may permit a domestic stock accident and health insurance company to restate its earned surplus under a plan of  quasi-reorganization  in  accordance with  regulations  as  may  be  promulgated  by  the  superintendent. No domestic stock accident and health insurance company  shall  declare  or distribute  any  dividend  to shareholders which, together with all such dividends declared or distributed by it during the next preceding twelve months,  exceeds  the  lesser  of  ten  percent  of   its   surplus   to policyholders,  as  shown  by  its  last  statement  on  file  with  the superintendent, or one hundred percent of adjusted net investment income for  such  period  unless,  upon   prior   application   therefor,   the superintendent  approves  a  greater  dividend  payment  based  upon his finding that the insurer will retain sufficient surplus to  support  its obligations and writings.  Within the meaning of this section, "adjusted net investment income" means net investment income for the twelve months immediately  preceding  the  declaration  or distribution of the current dividend increased by the excess, if any, of net investment income  over dividends   declared   or   distributed  during  the  period  commencing thirty-six months prior  to  the  declaration  or  distribution  of  the current dividend and ending twelve months prior thereto; "surplus" means the amount of the insurer's admitted assets in excess of its capital and its liabilities; and both "surplus" and "surplus to policyholders" shall include  any  voluntary  reserves,  or  any  part thereof, which are not required by law.  (2) If the superintendent finds, after notice to and hearing  of  such company, that any such company has distributed any dividend in violation of  this  subsection,  he  may order such company to cease doing any new business until the amount of such dividend has  been  restored  to  such company.  The  directors  of  any  such company who vote in favor of the declaration and distribution  of  any  dividend  in  violation  of  this section  shall,  in  addition  to  all  other  liabilities  or penalties prescribed by law, be jointly and severally  liable  to  the  creditors, including  policyholder  creditors, of such company to the extent of the dividend so declared and paid, and every shareholder receiving any  such dividend shall be liable to such creditors of such company to the extent of the dividend received by such shareholder.  (3)  Any  domestic  stock  accident  and  health insurance company may declare and distribute a stock dividend to its shareholders whenever  it shall have a surplus as defined in paragraph one hereof, in an amount at least  equal  to  the  sum  of  such  dividend and thirty percent of its unearned premium liability as shown by its last statement on file in the office of the superintendent and, for such  purpose,  such  company  may increase its capital stock from such surplus in the manner prescribed in section  one  thousand  two  hundred  six  of this chapter, and it shall distribute such additional or increased stock  to  its  shareholders  in proportion to the stock held by each, respectively.  (c)  Any  stock accident and health insurance company authorized to do business  in  this  state  may  include  in  its  charter  a   provision authorizing the board of directors to permit its policyholders from time to  time  to  participate  in  the profits of its operations through the payment of dividends to policyholders. For the purpose of carrying  into effect  any such provision, the board of directors may from time to time  make reasonable classifications of policies. Every  such  classification of  risks  shall  be  filed  with  the  superintendent  and shall not be effective as to policies  issued  or  delivered  in  this  state  unless approved  by  the  superintendent as fair and equitable and not unfairly discriminatory. Any such classification approved by  the  superintendent shall  remain  in effect in this state until disapproved by him or until withdrawn or modified with his approval by the company filing the  same. No  dividends  to  policyholders  shall  be declared or paid by any such company except out of its earned surplus, as defined in  subsection  (a) of section four thousand one hundred five of this chapter.