SECTIONS 1580-1599 - California Statutes

INSURANCE CODE

SECTION 1580-1599

1580. As used in this article, the term "alien insurer" means a
foreign insurer organized under the laws of any jurisdiction other
than a State of the United States.

1581. Except as otherwise expressly provided for particular
insurers, an alien insurer shall not transact any insurance in this
State without first making the deposit required by this article nor,
subject to the exception specified in Section 1582, without first
complying with all other provisions of this article.

1582. The amount of such deposit shall be equal to the minimum
amount of the paid-in capital required for admission of incorporated
insurers issuing policies on a reserve basis and transacting the same
classes of insurance which such alien insurer is transacting in the
United States, but the commissioner may accept such deposit in excess
of such amount. Such deposit may be treated as a part of the assets
of the depositing insurer. For the purpose of computing the amount of
the deposit, the value of the securities shall not be estimated in
excess of the par value nor of the market value thereof.

1583. The deposit required by Section 1581
(a) Shall be continuously maintained so long as any obligation
arising out of any insurance transacted by such alien insurer in the
United States remains in existence for any purpose whatever;
(b) Shall consist of securities authorized for investment of the
assets of domestic incorporated insurers;
(c) Shall be in addition to any deposits required by law for
purposes other than those specified in Section 1586;
(d) May be made with the insurance authority, or with the auditor,
controller or general fiscal officer of any State of the United
States in which such alien insurer is authorized to transact
insurance, or otherwise held in trust as provided by the laws of the
State of deposit, for the purposes specified in Section 1586.

1585. If such deposit is not so maintained in this State, it shall
be deemed to be in existence as required by this article only when a
certificate, issued by the proper authority of the State of deposit
and showing in detail the constituent securities thereof and the
purpose thereof, is delivered to the commissioner at least annually
and at such other times as may be required by the commissioner.

1586. Such deposit, if maintained in this State, shall be for the
benefit and security of all the policyholders and creditors of such
alien insurer in the United States, and if maintained in another
State, for the benefit and security of all the policyholders, or of
all the policyholders and creditors, of such alien insurer in the
United States.

1587. Securities deposited with the commissioner pursuant to this
article shall be specially deposited by him in the State Treasury, in
packages marked with the name of the insurer from whom the
securities were received.

1588. As long as the depositing insurer is solvent and the
deposited securities are sufficient under this article, it may
collect the income on the deposited securities. From time to time it
may withdraw such securities if it deposits other securities, of the
character and value specified in this article in the stead of those
to be withdrawn, but deposited securities shall not be withdrawn from
the State Treasury except upon the written order of the depositing
insurer, indorsed by the commissioner or, if such indorsement is
refused, under the authority of some court of competent jurisdiction.

1589. Whenever such a deposit is made with the commissioner, he
shall issue to the depositing insurer a certificate under his
official seal stating the items and amount of securities so
deposited, and their value, to the best of his knowledge. In case of
withdrawal and substitution, he shall issue a supplemental
certificate of similar nature.
The commissioner shall require the payment of fifty dollars ($50)
in lawful money of the United States in advance as a fee for issuing
the first such certificate provided for in this article to each
insurer, and twenty-five dollars ($25) for each additional
certificate or each supplemental certificate evidencing any
withdrawal, substitution, or other change in the securities
deposited. There shall be no other or additional fee for attaching
the commissioner's seal to a securities deposit schedule in such
instances. The fees prescribed herein are separate from and not
cumulative upon those prescribed by Article 11 (commencing with
Section 939), Chapter 1, Part 2, Division 1 of this code.

1590. The commissioner shall require the payment of twenty-nine
dollars ($29) in lawful money of the United States, in advance, as a
fee for filing a certificate of deposit of securities under this
article.

1591. In addition to complying with all other applicable
requirements of this code, every admitted alien insurer shall on or
before the first day of March in each year after the year 1941, file
with the commissioner a statement on a form prescribed by him,
showing as of the 31st day of December then next preceding, the
following information:
(a) All of its assets within the United States on deposit with
officers of any state thereof for the benefit and security of all the
policyholders, or of all the policyholders and creditors, of such
alien insurer within the United States. Such assets so deposited are
designated "general state deposits."
(b) All of its assets within the United States, other than general
state deposits, on deposit with officers of any state thereof for
the benefit and security of all the policyholders, or policyholders
and creditors, of such alien insurer within the state of deposit or
of certain classes of policyholders, or policyholders and creditors,
either within the state of deposit or within the United States. Such
assets so deposited are designated "special state deposits." The
value to be allowed in such statement for any special state deposit
shall not exceed the liability secured thereby.
(c) All of its assets within the United States, other than general
state deposits and special state deposits, held by any trustee for
the benefit and security of all the policyholders or of all the
policyholders and creditors, of such alien insurer within the United
States. Such assets so held are designated "trusteed assets."
(d) The amount of interest receivable, accrued at the date of such
statement on the general state deposits, the special state deposits,
and the trusteed assets of such alien insurer, if such interest is
collectible by the State or trustee.
(e) All of the reserves and other liabilities arising out of
policies or obligations issued, assumed or incurred by such alien
insurer in the United States. Said reserves and other liabilities are
designated as "liabilities in the United States."
For the purpose of determining the liabilities in the United
States of such alien insurer there may be deducted:
(1) From the amount of such liabilities for unpaid losses, the
amount, included therein, of reinsurance recoverable thereon from
insurers authorized to do business in any state of the United States,
subject to the same limitations as are contained in Sections 922.2
to 922.4, inclusive, and in Sections 922.6 and 922.8.
(2) From the amount of such liabilities for unearned premiums,
first, the unearned portion, included in such amount, of premiums
receivable by such alien insurer from its agents or policyholders
under policies issued by it in the United States and not more than 90
days past due on the date of such statement, and second, subject to
the same limitations as are contained in Section 922.4, the unearned
portion, included in such amount of reinsurance premiums receivable
by such alien insurer from other insurers authorized to do business
in any state of the United States.
(3) The ratable portion, included in such liabilities, of the
gross liabilities and reserves on risks reinsured, in whole or in
part, by an alien insurer which complies with this article and
includes in the statements required thereby all reserves and
liabilities arising out of such reinsurance, or, subject to the same
limitations as are contained in Sections 922.2 to 922.8, inclusive,
by another insurer which is authorized to transact insurance in any
state of the United States, except in the case of excess loss and
catastrophe reinsurance where the deduction shall be on the basis of
the actual reinsurance premiums and the actual reinsurance terms.
(4) Those liabilities in the United States, pertaining to any
asset in the United States of such alien insurer, other than the
assets described in subdivisions (a), (b), (c), and (d), but such
deduction shall in no case exceed that portion of the value of such
asset which is applicable to the liability pertaining thereto.
(5) If such alien insurer is a life insurer, the amount of the
unpaid principal and interest of any loan made by it to the holder
of, and solely on the security of, any policy of life insurance or
annuity contract issued or assumed by it, on the life of or to any
person in the United States. Such amount shall in no case exceed the
amount of the reserve required to be maintained on such policy or
annuity contract by such insurer. Such amount is designated as
"policy loans in the United States."
(f) Such further information required by the commissioner, as he
deems necessary to apply the provisions of this article.

1592. The statement required by Section 1591 shall be verified in
the manner prescribed in Sections 903 and 903.5 and there shall be
filed therewith the certificate of each trustee in the United States
holding trusteed assets of the alien insurer, showing the description
and amount of the trusteed assets, and the purpose for which they
are held. The statement shall be filed in quadruplicate by the alien
insurer with the office of the department in Los Angeles. Upon
receipt of the four copies, the commissioner shall ensure that one
copy is maintained at the department's office in Los Angeles, one
copy at the department's office in San Francisco, and one copy at the
department's office in Sacramento.
The commissioner may at other times require any admitted alien
insurer to file with him or her similar statements, showing the
information specified in Section 1591 with respect to such other date
as he or she may prescribe.

1593. The excess of the sum of those items in such statement, which
are described in subdivision (a), (b), (c) and (d) of Section 1591,
over the liabilities in the United States of such alien insurer is
designated the "trusteed surplus in the United States" of such alien
insurer.

1594. Whenever it appears to the commissioner that the trusteed
surplus in the United States of an alien insurer is less than an
amount equal to the minimum amount of the capital paid in or
available cash assets required by this code for the classes of
insurance transacted by such alien insurer in the United States, he
shall determine the amount of such deficiency and make requisition
upon such alien insurer in writing, addressed to its attorney in the
United States or to its United States manager, to repair such
deficiency within such time, not less than 60 nor more than 90 days
from the service of such requisition, as he may therein designate.
The commissioner may revoke or suspend the certificate of authority
of such alien insurer or order it to cease issuing new policies in
the United States, while such deficiency exists.
If at the expiration of the period designated in such requisition
such alien insurer has failed to repair such deficiency, the
commissioner may proceed against it under the provisions of Article
14, Chapter 1, Part 2, Division 1 as against an insurer whose
condition is such that its further transaction of business will be
hazardous to its policyholders, or creditors, or to the public.

1595. Whenever an admitted alien insurer is required or permitted
to deposit assets with a trustee for the benefit and security of its
policyholders, or of its policyholders and creditors, in the United
States, the trustee of any such trust hereafter created shall be a
solvent bank or trust company in the United States acceptable to the
commissioner and authorized to act as such trustee by the laws of any
State or of the United States. All trusteed assets shall be
continuously kept within the United States. Any such trust heretofore
created and now existing and any such trust hereafter created and
existing when such alien insurer seeks to be admitted, shall be
continued in accordance with the terms of the instrument creating it,
unless inconsistent with the provisions of this article, in which
case said instrument shall, after reasonable notice to and hearing of
the alien insurer by the commissioner, be amended to conform to the
requirements of this article. No amendment of any deed of trust,
whether heretofore or hereafter created, shall be effective unless
approved in writing by the commissioner. If the trustees of any such
trust heretofore created are natural persons, and if the number of
such trustees is reduced, by death, resignation, or from any other
cause, to less than three, then the commissioner shall require the
substitution for such trustees of a solvent bank or trust company in
the United States acceptable to him and authorized to act as such
trustee by the laws of any State or of the United States. The
commissioner may from time to time approve modifications of, or
variations in, any deed of trust, which in his judgment are not
prejudicial to the interests of the people of this State.

1596. To satisfy the purposes of this article, any alien insurer
admitted or seeking to be admitted is hereby authorized to make and
execute a deed of trust by virtue of which any assets of an alien
admitted insurer are held by a trustee as trusteed assets within the
meaning of subdivision (c) of Section 1591. Such deed of trust shall:
(a) Vest the legal title to the trusteed assets in the trustee and
its successors lawfully appointed, in trust for the benefit and
security of all the policyholders, or of all the policyholders and
creditors, of such alien insurer within the United States;
(b) Provide for the substitution of a new trustee in the event of
a vacancy by death, resignation or from any other cause, subject to
the approval of the commissioner;
(c) Require that the trusteed assets shall at all times be
maintained within the United States as a trust fund separate and
distinct from all other assets, and that the trustee shall
continuously maintain a record at all times sufficient to identify
such fund;
(d) Prescribe the conditions, satisfactory to the commissioner and
not inconsistent with the purposes of this article, under which any
or all income, earnings, dividends or interest accumulations of such
fund may be paid over to the United States manager of such alien
insurer;
(e) Prohibit the withdrawal, other than as provided in accordance
with subdivision (d), of any trusteed assets from such fund without
the written approval of the commissioner, except as follows:
1. For the purpose of making general State deposits required by
law in any State.
2. For the purpose of paying obligations due from such alien
insurer to policyholders and creditors in the United States, and for
the purpose of making special State deposits required by law in any
State, if such payments and deposits do not impair the trusteed
surplus in the United States of such alien insurer to an amount less
than the minimum amount specified in Section 1594, and such fact is
certified to the trustee by the insurer or its United States manager
duly authorized for that purpose.
3. For the purpose of substituting other assets permitted by law
and at least equal in value to those to be withdrawn, upon the
specific written direction of the United States manager or an
assistant United States manager or other representative in the United
States of such alien insurer when duly empowered and acting pursuant
to either general or specific written authority previously given or
delegated by the board of directors thereof, except as provided in
the paragraph numbered 5 of this subdivision.
4. For the purpose of transferring such assets to an official
conservator, rehabilitator, or liquidator pursuant to an order of a
court of competent jurisdiction.
5. In the case of an alien life insurer organized under the laws
of the Dominion of Canada or of any province thereof, the provisions
of this section applicable to the United States manager or an
assistant United States manager or other representative in the United
States of such alien insurer shall be deemed to refer to the
president, vice president, secretary or treasurer of such insurer at
its principal place of business in said Dominion or province thereof,
when duly authorized for such purpose.

1596.5. Trusteed assets may be held by a trustee in the name of a
nominee of the trustee, when permitted by and in accordance with the
law authorizing the trustee to act as trustee. For the purposes of
this article, the trustee is deemed to have legal title to trusteed
assets so held.

1597. In respect of the appointment or substitution of a trustee in
another state in which an admitted alien insurer is authorized to
transact insurance, in respect of withdrawal of trusteed assets held
in the other state (except withdrawals as provided in Section 1596),
and in respect of the amendment of such deed of trust not affecting
the interests or security of the beneficiaries thereof, written
approval under any provision in the deed of trust which requires such
written approval by the official of such other state, supervising
insurance therein, shall be deemed compliance with any applicable
approval requirements of Sections 1595 and 1596. Where an alien
insurer organized under the laws of the Dominion of Canada or of any
province thereof maintains trusteed assets in another state and under
the deed of trust written approval is required by an official
supervising insurance in any state in which such insurer is
authorized to transact insurance and in which it heretofore
maintained and hereafter continues to maintain a general state
deposit at least equal in amount to the deposit required by Section
1582, written approval by such official in respect of the appointment
or substitution of a trustee thereunder, in respect of withdrawal of
such trusteed assets (except withdrawals as provided in Section
1596), and in respect of the amendment of such deed of trust not
affecting the interests or security of the beneficiaries thereof,
shall also be deemed compliance with any applicable approval
requirements of Sections 1595 and 1596. The alien insurer shall
furnish proof of approvals authorized by this section to and notify
the commissioner in writing of such appointment or substitution, of
the nature and extent of such withdrawal, and of the text of such
amendment.

1598. The commissioner may from time to time examine the trusteed
assets of any alien admitted insurer pursuant to Section 736, and may
from time to time require the trustee holding trusteed assets of an
alien admitted insurer to file with the commissioner a statement, in
such form as he may prescribe, certifying such trusteed assets and
the amounts thereof. Refusal or neglect on the part of such trustee
to comply with such requirement shall be ground for the revocation of
such alien insurer's certificate of authority or for proceedings
against it under the provisions of Article 14, Chapter 1, Part 2,
Division 1.

1599. The commissioner shall require the payment of twelve dollars
($12) in lawful money of the United States, in advance, as a fee for
filing each certificate of a trustee required to be filed by Section
1592.