SECTIONS 1152-1155 - California Statutes

INSURANCE CODE

SECTION 1152-1155

1152. (a) Domestic incorporated stock insurers, except those
governed by Sections 10530, 12373, and 12640.06, shall be governed by
the provisions of this section and, if the insurer is subject to
registration pursuant to Sections 1215.4 and 1215.5, as to payment or
distribution of dividends to stockholders. Such insurers may make
dividends only from earned surplus.
(b) No dividends shall be declared out of earned surplus derived
from the mere net appreciation in the value of assets not yet
realized, nor shall any dividends be declared from any part of such
earned surplus derived from an exchange of assets, unless and until
such earned surplus have been realized or unless the assets received
are currently realizable in cash.
(c) An insurer may declare and distribute a dividend otherwise
prohibited by this section if (1) following payment of the dividend
the insurer's surplus as regards policyholders is (A) reasonable in
relation to its outstanding liabilities and (B) adequate to its
financial needs as prescribed in Section 1215.5, and (2) the
commissioner has given approval for the dividend prior to payment.
(d) For purposes of this section, "earned surplus" means
unassigned funds, as required to be reported on the insurer's annual
statement.

1153. An insurer shall not be admitted within three years from and
after the time when it commences business as an insurer, nor within
three years from and after the time when it is first incorporated,
unless assets equal to the sum of its liabilities and the minimum
capital and surplus required for admission are maintained in cash or
one or more of the following:
(a) Securities specified in Sections 1170 to 1175, inclusive.
(b) Premiums that are in the course of collection, or agents'
balances representing premiums, on policies effected not more than 90
days prior to the date on which these premiums or balances are
valued for the purpose of this section, and earned service fees
receivable, not over 90 days due, and evidences of debt representing
those assets.
(c) In the case of a life insurer, the amount of current deferred
premiums receivable, after deducting therefrom the amount of the
loading.
(d) Interest accrued and dividends declared, receivable on any of
the assets specified in subdivisions (a) to (c), inclusive, no part
of which interest or dividends has been due in excess of one year.
(e) Amount of reinsurance recoverable from admitted insurers.
(f) With the prior approval of the commissioner, any investments
authorized by this code if the following conditions are met:
(1) The insurer has previously been authorized to write life or
health insurance, or is seeking authority to write life or health
insurance.
(2) The solvency of the insurer is guaranteed by another insurer
(the "guaranteeing insurer") that meets the following criteria:
(A) The guaranteeing insurer has an ownership interest of at least
50 percent in the insurer.
(B) The guaranteeing insurer, which may be a reciprocal or
interinsurance exchange, has been admitted to do business in this
state for not less than 10 years.
(C) The guaranteeing insurer has maintained a surplus of admitted
assets over all liabilities of at least five hundred million dollars
($500,000,000) for not less than three years.
(3) The commissioner, in his or her discretion, determines that
the proposed investment is sound in relation to the insurer's
business plan and operations.

1153.5. An admitted insurer which has been in business as an
insurer less than three years from and after the time when it
commenced business as an insurer shall maintain its assets during the
balance of such three-year period in the types of assets specified
in Section 1153, excepting such of its assets as are in excess of the
sum of its liabilities and the surplus and capital requirements for
admission. On its failure so to do, the commissioner may revoke its
certificate of authority. The proceedings shall be conducted in
accordance with Chapter 5 of Part 1 of Division 3 of Title 2 of the
Government Code, and the commissioner shall have all the powers
granted therein.

1154. After the period specified in Sections 1153 and 1153.5, the
requirements of those sections shall no longer be applicable to any
insurer specified therein and shall no longer affect or modify the
application or nonapplication of any section of this code.
The provisions of Sections 1153 and 1153.5 shall not govern or
limit the investments of any insurer formed by merger, consolidation,
or reinsurance of the entire business of any one or more admitted
insurers if any one or more of the merged, consolidated, reinsuring
or reinsured insurers was, prior to such consolidation, merger, or
reinsurance, admitted, or authorized to do business as an insurer in
any state, for a period of three or more years.

1155. An insurer, within such limits as may be set by the board of
directors, may contribute to community funds or to charitable,
philanthropic, or benevolent instrumentalities conducive to public
welfare or civic betterment.