§ 27-5-18 - Computation of profits. - Rhode Island Statutes

SECTION 27-5-18

   § 27-5-18  Computation of profits. –(a) In estimating the profit of any company for the purpose of making adivision between its guaranty surplus fund and its special reserve fund, untilthose funds shall together amount to a sum equal to the capital stock of thecompany, there shall be deducted from the gross assets of the company,including for this purpose the amount of the special reserve fund, the sum ofthe following items:

   (1) The amount of all outstanding claims;

   (2) An amount sufficient to meet the liability of the companyfor the unearned premiums upon its unexpired policies, which amount shall atleast equal one half ( 1/2) of the premiums received on policies having lessthan one year to run from the date of the policy, and a pro rata proportion ofthe premiums received on the policies having more than one year to run from thedate of the policy, and shall be known as the reinsurance liability;

   (3) The amount of its guaranty surplus fund and of itsspecial reserve fund;

   (4) The amount of the capital of the company; and

   (5) Interest at the rate of eight percent (8%) per annum uponthe amount of the capital and six percent (6%) per annum upon the amount of thefunds for whatever time shall have elapsed since the last preceding cashdividend.

   (b) The balance shall constitute the net surplus of thecompany, any portion of which is subject to an equal division between the fundsas provided in this section.