§ 58-8-25. Dividends to policyholders. - North Carolina Statutes

§ 58‑8‑25. Dividends to policyholders.

(a)        Any participatingor dividend‑paying company, stock or mutual or foreign or domestic, thatwrites other than life insurance or workers' compensation insurance andemployers' liability insurance in connection therewith, may declare and pay adividend to policyholders from its unassigned surplus, as reflected in thecompany's most recent annual or quarterly statement filed with the Commissionerunder G.S. 58‑2‑165, which shall include only its surplus in excessof any required minimum surplus. No such dividend shall be paid unless it isfair and equitable and for the best interest of the company and itspolicyholders. In declaring any dividend to its policyholders, any such companymay make reasonable classifications of policies expiring during a fixed period,upon the basis of each general kind of insurance covered by those policies andby territorial divisions of the location of risks by states, except that infixing the amount of dividends to be paid on each general kind of insurance,the dividends shall be uniform in rate and applicable to the majority of riskswithin that general kind of insurance, and exceptions may be made as to anyclass or classes of risk and a different rate or amount of dividends paid on theclass or classes if the conditions applicable to the class or classes differsubstantially from the condition applicable to the kind of insurance as awhole. Every such company shall have an equal rate of dividend for the sameterm on all policies insuring risks in the same classification. The payment ofdividends to policyholders shall not be contingent upon the maintenance orrenewal of the policy. All dividends shall be paid to the policyholder unless awritten assignment of those dividends is executed. Neither the payment ofdividends nor the rate of the dividends may be guaranteed by any company, orits agent, before the declaration of the dividend by the board of directors ofthe company. The holders of policies of insurance issued by a company in compliancewith the orders of any public official, bureau or committee, in conformity withany statutory requirement or voluntary arrangement, for the issuance ofinsurance to risks not otherwise acceptable to the company, may be establishedas a separate class of risks.

(b)        Any participatingor dividend‑paying company, stock or mutual or foreign or domestic, thatwrites workers' compensation insurance and employers' liability insurance inconnection therewith may declare and pay a dividend to policyholders from itsunassigned surplus, as reflected in the company's most recent statement filedwith the Commissioner under G.S. 58‑2‑165, which shall include onlyits surplus in excess of any required minimum surplus. No such dividend shallbe paid unless it is fair and equitable and for the best interest of thecompany and its policyholders. In declaring any dividend to its policyholders,any such company may make reasonable classifications of policies expiringduring a fixed period. The payment of dividends to policyholders shall not becontingent upon the maintenance or renewal of the policy. All dividends shallbe paid to the policyholder unless a written assignment of those dividends isexecuted. Neither the payment of dividends nor the rate of the dividends may beguaranteed by any company, or its agent, before the declaration of the dividendby the board of directors of the company. The holders of policies of insuranceissued by a company in compliance with the orders of any public official,bureau, or committee, in conformity with any statutory requirement or voluntaryarrangement, for the issuance of insurance to risks not otherwise acceptable tothe company, may be established as a separate class of risks. (1899, c. 54, s. 35; Rev., s.4741; C.S., s. 6351; 1935, c. 89; 1945, c. 386; 1947, c. 721; 1955, c. 645;1983, c. 374, ss. 2, 3; 2001‑223, s. 9.2.)