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2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2915 - Qualifications of directors

(1) Each Director of an insurer shall meet the following requirements:
(a) Must be a stockholder of the insurer, if a stock insurer, or a member of the insurer, if a mutual insurer.
(b) Must have never been adjudicated a bankrupt or made a general assignment for the benefit of creditors.
(c) Must have never been convicted of an offense involving moral turpitude.
(d) Not to be a director or official of any of the institutions described in § 304-1 of this title. None of the provisions herein shall prevent a person from serving as a director of an insurer if he/she holds office as director or official of the financial holding company or the depository institution with which said insurer has a direct or indirect relationship as owner, subsidiary or affiliate, provided said requirements of the Gramm-Leach-Bliley Act.
(2) Not less than the majority of directors of an insurer shall be residents of and actually reside in Puerto Rico. At least three-fourths of the directors shall be citizens of the United States.
(3) An insurer may provide reasonable additional qualifications in its bylaws including, in the case of a mutual, requirements as to amount of insurance held and duration of membership.
History —Ins. Code § 29.150; July 23, 1974, No. 151, Part 1, p. 695, § 11; July 20, 1979, No. 165, p. 420, § 8; Sept. 6, 2000, No. 382, § 10.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2916 - Election of directors—Supervision, terms

(1) Election of directors shall be held annually at the annual meeting of stockholders or members, and shall be subject to the supervision of the Commissioner.
(2) The regular term of office of a director shall be not less than one year nor more than three years as provided in the bylaws. The annual election shall be of all directors, or of one-half of all directors, or of one-third thereof.
(3) Vacancies occurring among the directors between annual meetings shall be filled for the unexpired term by the remaining directors or otherwise as provided in the bylaws.
History —Ins. Code § 29.160.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2917 - Election of directors—Inspectors

(1) For every election of directors there shall be appointed in the manner provided by the bylaws, three inspectors of the election from among individuals present at such election.
(2) Such inspectors shall fairly and honestly discharge the following duties and responsibilities:
(a) Receipt and custody of votes sent by mail.
(b) Examination of proxies and determining validity thereof.
(c) Determining right to vote.
(d) Directing the vote.
(e) Examination and count of votes cast.
(f) After the election has been held, the inspectors shall enclose all ballots, letters, and other election documents coming into their possession, in a sealed package and leave such package with the insurer’s president.
History —Ins. Code § 29.170.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2918 - Election of directors—Lists of stockholders or members for inspection

(1) Commencing at least ten days prior to any election of directors, the insurer shall maintain at its principal place of business a complete and true alphabetical record of all its stockholders or members entitled to vote, showing the address and number of votes held by each. Such record shall be in such form as is convenient for inspection.
(2) During the customary business hours in such ten-day period such record shall be readily available and open to inspection by any stockholder or member of the insurer or his representative.
(3) Any director, officer, employee, or other person in charge of such record who refuses to allow or obstructs such examination thereof, is guilty of a misdemeanor punishable by a fine of not more than five hundred dollars ($500), or by imprisonment for not more than three months, or by both penalties.
History —Ins. Code § 29.180.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2919 - Election of directors—Determining right of stockholder to vote

(1) No person shall be deemed to be a stockholder of a stock insurer for the purposes of election of directors, right to inspect records, or voting at any meeting of stockholders, unless shown to be a stockholder by the insurer’s register of stock subscribed, or issued, or transferred.
(2) The board of directors shall cause such registers to be present throughout all meetings at which election of directors is to be held. No member of a board of directors may be re-elected at any meeting of stockholders in the absence of such registers.
(3) Any stockholder entitled to vote at any such meeting, or to inspect records, but not shown to be such by the register, may, upon due notification to the insurer, apply to the Court of First Instance in whose jurisdiction is located the insurer’s principal place of business, for a summary order directing correction of the register.
History —Ins. Code § 29.190.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2920 - Control of stock insurer

(1) No person shall make any offer to acquire or to sell voting stock of a stock insurer issued or outstanding which constitutes ten percent (10%) or more of the total of said stock insurer’s stock issued and outstanding or of the total stock issued or outstanding of a corporation which has control of an insured, without having the prior approval of the Commissioner.
(2) It will be the duty of the proposed buyer or seller to fully disclose any plans he has regarding changes in the insurer’s administration to the Commissioner.
(3) The Commissioner may require all the information he deems necessary from the proposed buyer or seller to determine if the purchase or sale complies with the provisions of this title.
(4) The Commissioner shall make his determination regarding the approval or disapproval of the transaction within a term of thirty (30) days from the date on which the petition is received in his office, unless during said term the Commissioner should request any additional information from the proposed buyer or seller, in which case the latter shall have a term of thirty (30) days to make his determination after receiving the papers.
The Commissioner shall adopt the rules and regulations which shall contain the criteria to be used to approve or disapprove the transactions referred to in this section.
(5) When the Commissioner makes his determination as to whether said transaction may affect the public interest adversely, he shall evaluate the following among other things:
(a) The buyer’s experience and his moral and financial responsibility;
(b) whether said experience and moral and financial responsibility guarantee or affect the effective functioning of the insurer, and
(c) whether the transfer of the insurer’s control may jeopardize the interests of the insured, claimants, or of the other insurer’s stockholders.
(6) The Commissioner, through regulations to that effect, shall oversee the relationship between an insurer, producer or general agent and its holding company, pursuant to the model legislation for insurance holding companies recommended by the National Association of Insurance Commissioners.
History —Ins. Code, added as § 29.200 on Feb. 16, 1979, No. 15, p. 28, § 14; Sept. 6, 2000, No. 382, § 11; Jan. 19, 2006, No. 10, § 9, eff. 120 days after Jan. 19, 2006.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2921 - Officers, in general

(1) The insurer’s officers shall consist of a president, vice president, treasurer, secretary, and such other officers as may be necessary and provided for in the bylaws. All officers shall be elected by the board of directors, and shall have such qualifications, such powers and duties, and serve for such terms as may be prescribed in the bylaws.
(2) Unless otherwise required by the bylaws, no officer other than the president need be a stockholder, director, or member of the insurer.
(3) One of such officers shall be corporate secretary, who shall, among his other duties, keep the corporate records on which he shall enter or cause to be entered actions of the board of directors and meetings of members and the voting thereon. The secretary shall take an oath faithfully to perform the duties of his office.
(4) The officials of the insurer cannot be officials or directors of any of the institutions described in § 304-1 of this title. None of the provisions herein shall prevent a person from serving as an official of an insurer if he/she holds office as director of the financial holding company or the depository institution with which said insurer has a direct or indirect relationship as owner, subsidiary or affiliate, provided said relationship complies with the applicable provisions and requirements of the Gramm-Leach-Bliley Act.
[Provided, That every insurer who fails to comply with this subsection on the date it takes effect shall have three years from its effectiveness to comply therewith.]
History —Ins. Code, § 29.210; July 23, 1974, No. 151, Part 1, p. 695, § 12; July 20, 1979, No. 165, p. 420, § 9; Sept. 6, 2000, No. 382, § 12.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2922 - Salaries and compensation, authorization

(1) Unless the board of directors had in advance authorized said salary, compensation or emolument, or the contract by virtue of which it has been earned, an insurer shall not pay any salary, compensation or emoluments to any director, officer or employee which in the aggregate exceeds twelve thousand dollars ($12,000) in any one year, and no such salary, compensation, or emolument shall be considered earned.
(2) This section shall not apply as to contracts providing for compensation on a commission basis with respect to insurance business produced and in force, entered into in good faith in regular course of business with bona fide insurance general agents, or producers.
History —Ins. Code § 29.220; May 10, 1976, No. 32, p. 84, § 19; Jan. 19, 2006, No. 10, § 9, eff. 120 days after Jan. 19, 2006.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2923 - Prohibited interest of officers and directors in certain transactions

(1) No director or officer of an insurer shall accept, except for the insurer, or be the beneficiary of any fee, brokerage, gift, or other emolument because of any investment, loan, deposit, purchase, sale, exchange, reinsurance, or other similar transaction made by or for the insurer, or be pecuniarily interested therein in any capacity except on behalf of the insurer.
(2) This section does not prohibit such a director or officer from becoming a policyholder of the insurer and enjoying thereunder all the rights and privileges usually and customarily provided therein for holders of such policies in general. This section shall not apply with respect to bona fide insurance agency contracts to which any such director or officer is a party on his own account or on account of parties other than the insurer.
History —Ins. Code § 29.230.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2924 - Management and exclusive agency contracts

(1) No cooperative or mutual cooperative stock insurer shall make any contract whereby any person is granted or is to enjoy in fact the management of the insurer or the controlling or preemptive right to produce substantially all insurance business for the insurer, unless such contract is filed with the Commissioner and be subject to his disapproval. The contract shall be deemed effective unless disapproved by the Commissioner within thirty days after date of filing, subject to such reasonable extension of time as the Commissioner may require by notice given within such thirty days. Each disapproval shall be delivered to the insurer in writing, stating the grounds therefor.
(2) The Commissioner shall disapprove any such contract if he finds that it:
(a) Subjects the insurer to excessive charges; or
(b) is to extend for any unreasonable length of time; or
(c) does not contain fair and adequate standards of performance, or
(d) contains other inequitable provisions or provisions which jeopardize the proper interests of stockholders, partners, or members of the insurer.
History —Ins. Code § 29.240; June 25, 1965, No. 86, p. 200, § 16.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2925 - Limitation of expenses, mutuals

(1) For any calendar year after its first two full calendar years of operation, no domestic mutual insurer on the cash premium plan, other than an insurer issuing nonassessable policies, shall incur any costs or expense in the writing or administration of disability, property, and casualty insurance (other than boiler and machinery or elevator) transacted by it which, exclusive of losses paid, loss adjustment expenses, investment expenses, dividends, and taxes, exceed the sum of:
(a) Forty percent (40%) of the net premium income during that year after deducting therefrom net earned reinsurance premiums for such year, plus
(b) all of the reinsurance commissions received on reinsurance ceded by it.
(2) The bylaws of a domestic mutual agricultural insurer on the assessment premium plan shall impose a reasonable limitation upon its expenses.
(3) The officers and directors of an insurer violating this section shall be jointly and severally liable to the insurer for any excess of expenses incurred. If the insurer fails to exercise reasonable diligence or refuses to enforce such liability, the Commissioner may prosecute action thereon for the benefit of the insurer. Such failure or refusal constitutes grounds for revocation of the insurer’s certificate of authority.
History —Ins. Code § 29.250.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2926 - Accounts, vouchers for expenditures

(1) An insurer shall keep its records and books of account in its principal place of business in Puerto Rico.
(2) An insurer shall not make any disbursement of twenty-five dollars ($25) or more unless evidenced by a voucher correctly describing the consideration for the payment and supported by a check or receipt endorsed or signed by or on behalf of the person receiving the money. If the disbursement is for services and reimbursement, the voucher shall describe the services and itemize the expenditures by principal classifications.
History —Ins. Code § 29.260.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2927 - Stock certificates; transfers

(1) Subject to § 2814(5) of this title as to stock in insurers being formed, each stockholder who has paid in full for the shares to which he has subscribed, shall be entitled to have issued to him by the corporation a stock certificate or certificates representing such shares. The certificate shall be signed by the president or vice president and the secretary or treasurer of the insurer, and be authenticated by its corporate seal.
(2) Stock shall be transferable upon the books of the corporation in the manner provided in the bylaws. But no such transfer shall be made while the subscriber or stockholder is in default as to any payments then due thereon to the corporation, and an unrecorded transfer shall not relieve the subscriber of any such liability. If a stockholder is otherwise indebted to the corporation, the insurer may refuse transfer of his stock until the indebtedness is paid.
History —Ins. Code § 29.270.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2928 - Stock registers

(1) A stock insurer shall keep a stock register showing ownership of its shares, and a transfer register showing all transfers of its shares recorded by it. No transfer shall be valid as to the insurer, its other stockholders, and creditors, unless entered upon the transfer register following delivery to the insurer for the purpose of the certificate representing the stock to be transferred. The transfer register shall show names and addresses of transferor and transferee, and shares transferred.
(2) During the insurer’s usual office hours the stock registers and stock transfer registers shall be kept in its principal place of business and there be available and open to the inspection of any stockholder of the insurer, with the right to make notes of entries appearing therein.
History —Ins. Code § 29.280.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2929 - Lien for debt of shareholder or member

(1) If so provided in the insurer’s articles of incorporation, a stock insurer shall have a lien upon the shares of a stockholder and dividends accruing thereon, as security for payment of obligations owing to the insurer by such stockholder.
(2) If so provided in the policy issued by a mutual insurer, such an insurer shall have a lien upon dividends and benefits payable under the policy, as security for payment of obligations owing to the insurer by the policyholder member.
History —Ins. Code § 29.290.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2930 - Borrowed funds

(1) A domestic insurer, with the Commissioner’s advance approval and without the pledge of any of its assets, may borrow money to defray the expenses of his organization, provide it with surplus funds or for any purpose required by his business, upon agreement that such money and the interest thereon shall only be paid out of the insurer’s surplus in excess of that stipulated in such agreement.
(2) Money so borrowed shall not form a part of the insurer’s legal liabilities except as to its surplus in excess of the amount thereof stipulated in the loan agreement, or be the basis of any set-off; but until repaid, financial statements filed or published by the insurer shall show by a footnote thereto the amount thereof then unpaid together with any interest thereon accrued but unpaid.
(3) The loan agreement may contain other terms and conditions not inconsistent with the foregoing. It may provide for payment at the option of the insurer out of any available funds, and for payment, in event of liquidation of the insurer, out of assets remaining after payment of policy obligations but before distribution of assets to stockholders or members. The form and terms of the loan agreement shall be subject to the Commissioner’s approval.
(4) If the money is to be borrowed upon multiple agreements, the agreements shall be serially numbered. No loan agreement or series thereof shall have or be given any preferential rights over any other such loan agreement or series.
(5) This section shall not apply to loans obtained by the insurer in ordinary course of business from banks and other financial institutions, or to loans secured by pledge of assets.
History —Ins. Code § 29.300; Feb. 16, 1979, No. 15, p. 28, § 13.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2931 - Repayment of borrowed funds

(1) The insurer may repay any loan received pursuant to § 2930 of this title, or any part thereof as approved by the Commissioner, only as provided in the loan agreement. Unless on liquidation of the insurer, no repayment shall be made which reduces the insurer’s assets below the amount reasonably required for continuance of its operations.
(2) The insurer shall repay any such loan or the largest possible part thereof when the purposes for which the funds were borrowed have been fulfilled, and when the insurer’s surplus is adequate to so repay without unreasonable impairment of its operations.
(3) No repayment of such loan shall be made unless approved by the Commissioner. The insurer shall notify the Commissioner in writing not less than sixty days in advance of its intention to repay such loan or part thereof, and the Commissioner shall forthwith ascertain whether the insurer’s financial condition is such that repayment can properly be made.
History —Ins. Code § 29.310.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2932 - Transactions in other countries

(1) A domestic insurer may transact in another state or country such insurance as it may be authorized to transact in Puerto Rico; and for the purpose thereof may issue policies containing such provisions as may be required or permitted by the laws of such state or country, subject, however, to approval of the Commissioner if required pursuant to § 1111(6) of this title.
(2) If the Commissioner finds, after a hearing thereon, that continued operation of such insurer in any such state or country constitutes a threat to or impairment of the solvency of the insurer or the protection of its policyholders in Puerto Rico and elsewhere, the Commissioner shall order the insurer to discontinue assumption of new risks in such state or country within such reasonable time as shall be specified in the order, and the insurer shall not assume any new risks in such state or country after such date and while such order remains in effect.
(3) If such insurer is transacting insurance in any state or country wherein it has not fully qualified as an authorized insurer, the Commissioner may order the discontinuance of such transactions if a similar restraint with respect to transactions in Puerto Rico is imposed by public authority upon insurers domiciled in such state or country.
History —Ins. Code § 29.320.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2933 - Participating policies

(1) If so provided in its articles of incorporation, a domestic stock or mutual insurer may issue any or all of its policies with or without participation in profits, savings, or unabsorbed portions of premiums, may classify policies issued on a participating or nonparticipating basis, and may determine the right to participate and the extent of participation of any class or classes of policies. Any such classification or determination shall be reasonable, and shall not unfairly discriminate as between such classes or as between policyholders within the same such classification.
(2) No dividend, otherwise earned, shall be made contingent upon the payment of renewal premium on any policy.
History —Ins. Code § 29.330.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2934 - Dividends to stockholders

(1) A domestic stock insurer shall not pay any cash dividend to stockholders except out of that part of its available surplus funds which is derived from any realized net profits on its business.
(2) A stock dividend may be paid out of any available surplus funds except funds representing loans to the insurer pursuant to § 2930 of this title.
(3) A dividend otherwise proper, may be payable out of the insurer’s earned surplus even though its total surplus may then be less than the aggregate of its past contributed surplus.
History —Ins. Code § 29.340.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2935 - Dividends to mutual policyholders

(1) The directors of a domestic mutual insurer may from time to time apportion and pay or credit to its members as entitled thereto under its policies, dividends only out of that part of its surplus funds which represent net realized savings and net realized earnings from its business.
(2) No dividend shall be paid which reduces the insurer’s surplus below an amount equal to five percent (5%) of all its liabilities.
(3) A dividend otherwise proper, may be payable out of such savings and earnings even though its total surplus may then be less than the aggregate of its contributed surplus.
History —Ins. Code § 29.350.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2936 - Illegal dividends, penalty

(1) Any director of a cooperative or mutual stock insurer who votes for or concurs in declaration or payment of dividend prohibited by this title shall be guilty of a misdemeanor, punishable by a fine of up to five hundred dollars ($500) or imprisonment for not more than three (3) months, or by both penalties.
(2) The stockholders, partners, or members receiving such an illegal dividend shall be liable in the amount thereof to the insurer.
(3) The Commissioner may revoke or suspend the certificate of authority of an insurer which has declared or paid such an illegal dividend.
History —Ins. Code § 29.360; June 25, 1965, No. 86, p. 200, § 17.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2937 - Stockholder’s liability for debts of insurer

A stockholder of a stock insurer shall be liable for the insurer’s debts and obligations only to the extent of the amount, if any, remaining unpaid on his stock subscription, but subject to the provisions of § 2812 of this title as to expenses and obligations incurred during organization. A stockholder shall not be relieved of any such liability by transfer or assignment of his stock or by merger or consolidation of the insurer with another.
History —Ins. Code § 29.370.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2938 - Member’s liability for debts of mutual insurer

(1) Each member of a domestic mutual insurer, except as otherwise provided in § 2942 of this title, shall have a contingent liability, pro rata and not one for another, for the discharge of its obligations incurred for the period during which the member was a policyholder. The contingent liability shall be in such maximum amount as is stated in the insurer’s articles of incorporation, but shall be not less than one, nor more than five, additional premiums for the member’s policy at the annual premium rate and for a term of one year.
(2) Every policy issued by the insurer shall contain a concise statement of the contingent liability.
(3) Termination of the policy of any such member shall not relieve the member of liability for his proportion of the obligations of the insurer incurred while the policy was in force.
(4) Such contingent liability shall be in addition to any liability of the member for unpaid premium or his other obligations.
(5) Any such contingent liability of members to assessment which has not been reduced to funds in hand does not constitute an asset of the insurer in any determination of its financial condition.
History —Ins. Code § 29.380.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2939 - Impairment of capital or assets

(1) If the capital stock of a stock insurer, or the assets of a mutual insurer, become impaired, the Commissioner shall at once determine the amount of the deficiency and serve notice upon the insurer to make good the deficiency, either by requiring its stockholders (if a stock insurer) or its members (if a mutual insurer) to make good the deficiency or otherwise, within ninety days after service of such notice.
(2) The deficiency shall be made good in cash, or in assets eligible under this title for the investment of the insurer’s funds, or by reduction of the insurer’s capital stock (if a stock insurer) to an amount not below the minimum required for the kinds of insurance to be thereafter transacted.
(3) If the deficiency is not made good and proof thereof filed with the Commissioner within such ninety-day period, the insurer shall be deemed insolvent and shall be proceeded against as authorized by this title.
(4) If the deficiency is not made good, the insurer shall not issue or deliver any policy after the expiration of such ninety-day period. Any officer or director who violates or knowingly permits the violation of this provision shall be subject to fine of not over one thousand dollars ($1,000) for each violation.
(5) For the purposes of this section, a mutual insurer shall be deemed to have an impairment of assets to the extent that its liabilities exceed its assets, both determined as provided in Chapter V, but including as a liability any surplus required to be maintained for authority to transact the kinds of insurance being transacted.
History —Ins. Code § 29.390.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2940 - Assessment of stockholders to cure impairment

(1) If authorized by a vote of not less than two-thirds of all outstanding shares (whether nominally voting or non-voting shares) of a stock insurer at a special meeting of all such stockholders called for the purpose, the board of directors may levy a special assessment pro rata upon all outstanding shares of the corporation to secure all or part of funds for the curing of an impairment of capital pursuant to notice and requisition of the Commissioner as provided in § 2939 of this title.
(2) Immediate written notice of such levy shall be transmitted by registered mail to each such stockholder at his address last of record with the insurer, requiring payment of such assessment prior to expiration of all except five days of the ninety-day period specified in § 2939 of this title. With the consent of the Commissioner, such notice may provide that if the stockholder fails to pay the assessment when due, his shares, or so much thereof as may be necessary for the purpose, shall be subject to sale at public sale to the highest bidder for cash on a date within such five-day period specified in the notice. Any proceeds of any such sale which are in excess of the amount of the stockholder’s share of the assessment shall be the property of the stockholder. The sale and purchase of any shares at such sale shall be entered on the corporate records and shall be fully binding and effective as to all parties.
The Commissioner may, in his discretion, require publication of advance notice of such sale in such publications and manner as he deems advisable for the protection of the interests of stockholders. The insurer or its creditors shall not have any additional remedy against a stockholder who fails to pay an assessment so levied.
History —Ins. Code § 29.400.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2941 - Assessment to mutual policyholders to cure impairment

(1) If an impairment of assets of a mutual insurer is not cured or to be cured from other sources, the insurer’s board of directors may, with the prior written consent of the Commissioner, make an assessment only on its members who, within the two years immediately preceding the date such assessment was authorized by its directors, held policies providing for contingent liability. The Commissioner shall not give such consent unless he deems the assessment and the continued operation of the insurer to be in the best interests of its policyholders.
(2) The assessment shall be for such an amount as is required, in the opinion of the Commissioner, to render the insurer fully solvent, but not to result in surplus in excess of five percent (5%) of the insurer’s liabilities as of the date of the assessment.
(3) A member’s proportionate part of any such assessment shall be computed by applying to the premium earned, during such two-year period, on his contingently liable policy or policies the ratio of the total assessment to the total premium earned during the same period on all contingently liable policies which are subject to the assessment.
(4) No member shall have an offset against any assessment for which he is liable, on account of any claim for unearned premium or loss payable.
(5) The member so assessed shall be liable to the insurer for payment of the assessment. In the case of a mutual life insurer, this liability may, with the consent of the Commissioner, be secured by a lien on behalf of the insurer upon any reserves held by the insurer which are available to the policyholder.
History —Ins. Code § 29.410.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2942 - Nonassessable policies

(1) While it maintains surplus funds in amount not less than the capital required of a domestic stock insurer transacting the same kinds of insurance, a domestic mutual insurer, by resolution of its board of directors approved by the Commissioner, may extinguish the contingent liability of each and all of its policyholders and issue policies without such contingent liability.
(2) If the insurer ceases to have such required amount of surplus, or if the board of directors adopts a resolution for the reinstatement of contingent liability, the Commissioner shall withdraw his approval previously given and the insurer shall not thereafter issue any policy without contingent liability, or renew or accept further premium on policies then in force without written endorsement thereon providing for contingent liability.
(3) A foreign mutual insurer may issue nonassessable policies in Puerto Rico if it satisfies the Commissioner that such policies are in fact nonassessable under the laws of the insurer’s domicile.
History —Ins. Code § 29.420.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2943 - Mutualization of stock insurer

(1) A domestic stock insurer may become a domestic mutual insurer pursuant to such plan and procedure as are approved by the Commissioner in advance of such mutualization.
(2) The Commissioner shall not approve any such plan, procedure, or mutualization unless:
(a) It is equitable to both shareholders and policyholders.
(b) It is approved by a vote of the holders of not less than three-fourths of the insurer’s outstanding capital stock (whether or not nominally having voting rights), and by a vote of not less than two-thirds of the insurer’s policyholders who vote on such plan, pursuant to such notice and procedure as may be approved by the Commissioner. Such vote may be in person, by mail, or by proxy.
(c) If a life insurer, the right to vote thereon is limited to those whose policies have face amounts of not less than five hundred dollars ($500) and have been in force one (1) year or more.
(d) Mutualization will result in retirement of shares of the insurer’s capital stock at a price not in excess of its fair market value as determined by competent disinterested appraisers.
(e) The plan requires that non-consenting shareholders deposit their shares by a date specified therein for redemption at the same price as is set for shares in general. All rights of any such stockholder shall terminate upon expiration of such date, save only the right to receive in cash the said price for his shares when surrendered for the purpose.
(f) The plan provides for definite conditions to be fulfilled by a designated early date upon which such mutualization shall be deemed effective.
(g) The mutualization leaves the insurer with surplus funds reasonably adequate to preserve the security of its policyholders and its ability to continue successfully in business in the jurisdictions in which it is to be authorized, and in the kinds of insurance it is then authorized to transact.
(3) This section shall not apply to a mutualization under orders of court pursuant to rehabilitation or reorganization of an insurer under §§ 4001–4024 of this title.
History —Ins. Code § 29.430.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2944 - Converting mutual insurer

(1) A domestic mutual insurer may be converted into a domestic stock insurer pursuant to such plan and procedure as are approved by the Commissioner in advance of such conversion.
(2) The Commissioner shall not approve any such plan, procedure, or conversion unless:
(a) It is approved by the vote of not less than three-fourths of the insurer’s policyholders who vote on such plan, pursuant to such notice and procedure as may be approved by the Commissioner. Such vote may be in person, by mail, or by proxy.
(b) The equity of each policyholder in the insurer is determinable under a fair formula approved by the Commissioner, which such equity shall be based upon not less than the insurer’s entire surplus plus a reasonable present equity in its reserves and in all nonadmitted assets.
(c) The plan gives to each policyholder a preemptive right to acquire his proportionate part of all of the proposed capital stock of the insurer within a designated reasonable period, and to apply upon the purchase thereof the amount of his equity in the insurer as determined under clause (b) above.
(d) Shares are so offered to policyholders at a price not greater than to be thereafter offered to others. Such price may be at such premium as is reasonably necessary to provide adequate contributed surplus.
(e) The plan provides for payment in cash to each policyholder of his equity in the insurer as determined pursuant to clause (b) above, to the extent that the policyholder has not used the same toward purchase of shares.
(f) The plan applies as to all policyholders who would be entitled to share in the assets of the insurer on liquidation under § 2954 of this title.
(g) The plan is otherwise fair and equitable to policyholders.
History —Ins. Code § 29.440.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2945 - Reinsurance of mutual insurer

(1) A domestic mutual insurer may be wholly reinsured in and its assets transferred to and its liabilities assumed by another mutual or stock insurer under such terms and conditions as are approved by the Commissioner in advance of such reinsurance.
(2) The Commissioner shall not approve any such reinsurance agreement which does not determine the amount of and make adequate provision for paying to the insurer’s policyholders reasonable compensation for their equities as owners of such insurer, such compensation to be apportioned to policyholders as identified and in the manner prescribed in § 2954 of this title. The formula for determination of such equity shall be as provided in § 2944(2)(b) of this title.
History —Ins. Code § 29.450.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2947 - Effect of merger or consolidation

(1) Upon a merger or consolidation becoming effectuated as provided in § 2946 of this title, all rights and properties of the nonsurviving corporation shall be considered as transferred to the surviving or new corporation without need of further proceedings or conveyance, and the surviving or new corporation is bound to the obligations and liabilities of the merged or consolidated corporations as if contracted directly by such surviving or new corporation itself.
(2) No judicial action or proceeding pending at the time of the merger or consolidation shall be suspended on account thereof.
History —Ins. Code § 29.470.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2948 - Voluntary liquidation and dissolution—Preliminary steps

(1) A cooperative or mutual domestic stock insurer, while fully solvent and if not subject to action by the Commissioner pursuant to §§ 4001–4024 of this title, may accomplish its own voluntary liquidation and dissolution by proceeding as provided in §§ 2948–2953 of this title, inclusive.
(2) The insurer shall first notify the Commissioner of its intent to so liquidate and dissolve. The Commissioner shall thereupon make such examination of the insurer as he deems necessary to determine whether the insurer is solvent or whether it is subject to his action pursuant to §§ 4001–4024 of this title. The Commissioner shall promptly notify the insurer of the findings of the examination, and if such findings are to the effect that the insurer is solvent and is not then subject to action by the Commissioner under §§ 4001–4024 of this title, the insurer may proceed by complying with the following further preliminary requirements:
(a) Adoption of a resolution authorizing liquidation and dissolution by a vote of not less than three-fourths of all of the members of the insurer’s board of directors at a special meeting of the board called for the purpose, and directing the calling of a special assembly of the insurer’s stockholders, partners, or members for the purpose of considering and taking action upon a similar resolution.
(b) Adoption of the resolution authorizing liquidation and dissolution by the insurer’s stockholders, partners or members, at a special meeting thereof called for the purpose. If a stock insurer, the resolution must have been adopted by the affirmative vote of not less than two-thirds of all voting stock outstanding. If a mutual insurer, the resolution must have been adopted by the affirmative vote of not less than two-thirds of all members voting thereon pursuant to such reasonable notice, presentation of facts, and procedure as may have been approved by the Commissioner. If a cooperative insurer, the resolution must have been adopted by the affirmative vote of not less than two-thirds of all members.
History —Ins. Code § 29.480; June 25, 1965, No. 86, p. 200, § 19.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2950 - Voluntary liquidation—Further powers of Commissioner

(1) The insurer shall continue to be subject to the supervision of the Commissioner throughout the process of voluntary liquidation and dissolution.
(2) If, after a hearing thereon, the Commissioner at any time finds that such process is being conducted unfairly, or dishonestly, or without reasonable diligence, or contrary to law, he may make such order as may be necessary for the correction of such defect, or he may apply to the Court of First Instance for a receivership of the insurer in accordance with the procedure in §§ 4001–4024 of this title.
History —Ins. Code § 29.500.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 29 - Corporate Powers and Procedures of Domestic Stock and Mutual Insurers (§§ 2901 — 2954) › § 2951 - Voluntary liquidation—Termination of certificate of authority

After adoption of the resolutions required in § 2948 of this title, the Commissioner may suspend or revoke the insurer’s certificate of authority at such time as he deems advisable for the protection of the public and convenient to the orderly disposition of the insurer’s affairs. No such suspension or revocation shall be deemed to prevent the insurer from doing such things as may reasonably thereafter be necessary or convenient to the orderly and effective liquidation of its assets and disposition of its affairs.
History —Ins. Code § 29.510.