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Subscriber's operating reserve
Insurance (ISC) CHAPTER 28, ARTICLE 61
§ 6109. Subscriber's operating reserve. (a) (1) Every subscriber of an
authorized reciprocal insurer in which subscribers are subject to
contingent liability shall accumulate a minimum operating reserve, to be
credited to such subscriber on the books and records of such reciprocal
insurer, by authorizing the attorney-in-fact to credit to such account
at the end of the fiscal year of such reciprocal insurer, an amount not
less than one quarter of such subscriber's underwriting earnings during
such period.

(2) Such accumulation shall be made so long as such subscriber's
operating reserve is less than twice the amount of annual premiums in

(3) Notwithstanding the foregoing, the superintendent may, upon
application from the attorney-in-fact:

(A) approve other methods for accumulating such subscriber's operating
reserve; or

(B) permit the suspension of the accumulation of the operating reserve
for a fiscal year provided that those earnings are returned to the
subscriber in accordance with subparagraph (B) of paragraph two of
subsection (c) of this section.

(b) Any authorized reciprocal insurer may, pursuant to the terms of
the subscriber's agreement and to any action of its advisory committee
authorized thereunder, require its subscribers to accumulate
subscriber's operating reserves in excess of the minimum specified in
subsection (a) of this section and may require a longer period of notice
for the withdrawal of all or any part of such reserve than that herein

(c) (1) No subscriber shall have a secured or preferred claim against
any assets of the reciprocal insurer arising out of such operating
reserve, but all assets held by such insurer shall be available for the
payment of claims of policyholders and creditors of such reciprocal
insurer in preference to any claim for withdrawal by a subscriber as

(2) Any subscriber's operating reserve accumulated by any such
reciprocal insurer shall be maintained at all times, except that:

(A) a subscriber may, upon withdrawal from membership and cancellation
of all insurance contracts held by the subscriber in such insurer, and
after giving to the attorney-in-fact written notice of withdrawal at
least sixty days in advance, withdraw the amount of the subscriber's
operating reserve less such surrender charges as may be deducted
pursuant to the subscriber's agreement; or

(B) where the superintendent has determined that the suspension of the
accumulation of the operating reserve would not be harmful to
policyholders or the people of this state, the attorney-in-fact may, in
the fiscal year following the year for which the suspension of the
accumulation of the operating reserve was authorized, return to each
subscriber an amount equal to the underwriting earnings that would have
otherwise been credited to the subscriber's operating reserve.

(3) No withdrawal shall be permitted after an order of liquidation of,
or the appointment of a receiver or liquidating trustee for, any such
reciprocal insurer or, notwithstanding any other provision of law to the
contrary, where there is an authorized control level event or a
mandatory control level event as defined in section thirteen hundred
twenty-four of this chapter.