ARTICLE 5

FINANCIALCONDITION

 

PART I. STANDARDS

 

§431:5-101  Impairment of capital.

(a) (1)  A domestic stock insurer's capital stockshall be deemed to be impaired if its qualified assets at any time are lessthan its liabilities, including its capital stock as a liability.

(2)  If a domestic insurer's capital stock is deemedto be impaired, the commissioner shall at once determine the amount of thedeficiency and serve notice upon the insurer to cure the deficiency withinninety days after service of such notice.

(b)  The insurer may cure the deficiency byassessment of stockholders, by action of its board of directors, or by otherlawful means.  The deficiency shall be cured:

(1)  By the provision of cash or other assets eligibleunder this code for the investment of the insurer's funds; or

(2)  By reduction of the insurer's capital stock to anamount not below the minimum required by either section 431:3-205, section431:3-207 or section 431:3-208 for the classes of insurance to be thereaftertransacted.

(c)  Shares as to which such an assessment,made pursuant to this section, is not paid within sixty days after demand,shall be forfeitable and may be cancelled by vote of the directors and newshares issued to make up the deficiency.

(d)  If the deficiency is not cured and proofthereof filed with the commissioner within the ninety-day period, the insurershall be deemed insolvent and shall be proceeded against as authorized byarticle 15.

(e)  If the deficiency is not cured, theinsurer shall not issue or deliver any policy after the expiration of theninety-day period.  Any officer or director who violates or knowingly permitsthe violation of this provision shall be fined not less than $500 nor more than$10,000 for each violation. [L 1987, c 347, pt of §2]