ARTICLE 5



FINANCIAL
CONDITION



 



PART I. 
STANDARDS



 



§431:5-101  Impairment of capital.



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



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



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



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



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



(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 new
shares issued to make up the deficiency.



(d)  If the deficiency is not cured and proof
thereof filed with the commissioner within the ninety-day period, the insurer
shall be deemed insolvent and shall be proceeded against as authorized by
article 15.



(e)  If the deficiency is not cured, the
insurer shall not issue or deliver any policy after the expiration of the
ninety-day period.  Any officer or director who violates or knowingly permits
the 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]