S T A T E O F N E W Y O R K
________________________________________________________________________
9107
I N A S S E M B L Y
January 27, 2016
___________
Introduced by M. of A. BRINDISI -- read once and referred to the Commit-
tee on Insurance
AN ACT to amend the insurance law, in relation to the distribution of
dividends by domestic stock life insurers
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Subsection (a) of section 4207 of the insurance law, as
amended by a chapter of the laws of 2015 amending the insurance law
relating to the distribution of dividends by domestic stock life insur-
ers, as proposed in legislative bills numbers S.1380-B and A.5202-B, is
amended to read as follows:
(a)(1) FOR PURPOSES OF THIS SUBSECTION, "EARNED SURPLUS" MEANS AN
AMOUNT EQUAL TO AN INSURER'S POSITIVE UNASSIGNED FUNDS, EXCLUDING EIGHT-
Y-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 STATE-
MENT FILED WITH THE SUPERINTENDENT PURSUANT TO SECTION THREE HUNDRED
SEVEN OF THIS CHAPTER.
(2) Notwithstanding paragraph [two] 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 calen-
dar year, not including realized capital gains, not to exceed[: (i)
fifteen percent of its surplus to policyholders as of the immediately
preceding calendar year, if its net gain from operations, not including
realized capital gains, has been negative in any one or more of the
immediately preceding three calendar years or otherwise (ii) twenty-
five] THIRTY percent of its surplus to policyholders as of the imme-
diately preceding calendar year; provided, however, that, notwithstand-
ing this paragraph, in no event may a dividend be distributed without
approval of the superintendent, in accordance with paragraph [two] FIVE
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD06932-09-6
A. 9107 2
of this subsection, in the calendar year immediately following a calen-
dar year for which its net gain from operations, not including realized
capital gains, was negative.
[(2)] (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 CALEN-
DAR 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 CALEN-
DAR YEAR, NOT INCLUDING REALIZED CAPITAL GAINS.
(4) AN INSURER SHALL NOT DISTRIBUTE A DIVIDEND PURSUANT TO BOTH PARA-
GRAPH TWO AND PARAGRAPH THREE OF THIS SUBSECTION.
(5) Except as provided in [paragraph one] PARAGRAPHS TWO AND THREE of
this subsection, no domestic stock life insurance company shall distrib-
ute 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 [he] THE SUPERINTENDENT finds that the financial condition
of the company does not warrant such distribution.
[(3)] (6) With respect to dividends to shareholders distributed pursu-
ant to paragraph [one] 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.
[(4)] (7) A domestic stock life insurance company's surplus to policy-
holders following any distribution of dividends to its shareholders
under paragraph [one] 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 DISAL-
LOW 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.
S 2. This act shall take effect on the same date and in the same
manner as a chapter of the laws of 2015 amending the insurance law
relating to the distribution of dividends by domestic stock life insur-
ers, as proposed in legislative bills numbers S.1380-B and A.5202-B,
takes effect.