2023 New York Laws › ISC - Insurance › Article 41 - Property/casualty Insurance Companies › 4105 - Domestic Stock Companies; Declaration and Payment of Dividends.

§   4105.   Domestic  stock  companies;  declaration  and  payment  of
dividends.  (a) Except as provided in subsection (c) of this section  no
domestic  stock  property/casualty  insurance  company  shall declare or
distribute any dividend to shareholders except out  of  earned  surplus.
Notwithstanding  the foregoing, the superintendent may permit a domestic
stock property/casualty 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
property/casualty  insurance  company  shall  declare  or distribute any
dividend to shareholders which, together with all 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 during such period unless, upon  prior
application  therefor,  the  superintendent  approves a greater dividend
distribution based  upon  his  finding  that  the  insurer  will  retain
sufficient surplus to support its obligations and writings.
In this section, (1) "earned surplus" means the portion of the surplus
that  represents  the net earnings, gains or profits, after deduction of
all losses, that have  not  been  distributed  to  the  shareholders  as
dividends,  or  transferred  to  stated  capital  or  capital surplus or
applied to  other  purposes  permitted  by  law  but  does  not  include
unrealized appreciation of assets;
(2) "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; and
(3) "surplus"  means  the  amount  of the insurer's admitted assets in
excess of its capital and liabilities, and both "surplus"  and  "surplus
to  policyholders"  include any voluntary reserves, or any part thereof,
which are not required by law.
(b) If the superintendent finds, after notice and  hearing,  that  any
such  company has distributed any dividend in violation of this section,
he may order the company to cease  doing  any  new  business  until  the
amount  of  the dividend has been restored to the 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 the company to the extent of the dividend so declared  and
distributed,  and every shareholder receiving any such dividend shall be
liable to the creditors of the company to the  extent  of  the  dividend
received by such shareholder.
(c)  Such  company  may declare and distribute a stock dividend to its
shareholders whenever it shall have a surplus, as defined in  subsection
(a)  hereof,  in an amount at least equal to the sum of the dividend and
thirty percent of its unearned premium liability as shown  by  its  last
statement  on  file  with  the superintendent and, for such purpose, the
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  the  additional  or  increased   stock   to   its
shareholders in proportion to the stock held by each, respectively.