State Codes and Statutes

Statutes > Texas > Insurance-code > Title-4-regulation-of-solvency > Chapter-403-dividends

INSURANCE CODE

TITLE 4. REGULATION OF SOLVENCY

SUBTITLE A. GENERAL PROVISIONS

CHAPTER 403. DIVIDENDS

SUBCHAPTER A. PAYMENT OF DIVIDENDS

Sec. 403.001. LIMITATION ON DIVIDENDS. An insurer organized

under the laws of this state, including a life, health, fire,

marine, or inland marine insurance company, may not pay a

dividend except from surplus profits arising from the insurer's

business.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 403.002. DIVIDENDS TO POLICYHOLDERS IN COMMERCIAL LINES.

(a) An insurer may pay to a commercial policyholder or group of

commercial policyholders a dividend that covers more than one

class or line of commercial business only:

(1) after the insurer establishes on an aggregate basis adequate

loss reserves for the classes or lines of commercial insurance

included within the dividend; and

(2) if the insurer has sufficient surplus from which to pay the

dividend.

(b) Not later than the 15th day before an insurer pays a

dividend described by Subsection (a), the insurer shall file with

the department notice of the insurer's intent to pay the

dividend.

(c) The classes or lines of commercial business for which

dividends are authorized under this section include any

commercial class or line of commercial business regulated by

Title 10 or Chapter 5.

(d) An insurer's limitation of a dividend on one or more classes

or lines of commercial business to a group of commercial

policyholders is not unfair discrimination if the group:

(1) has clearly identifiable underwriting characteristics; or

(2) is an association or group of business entities engaged in

similar undertakings.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

SUBCHAPTER B. ESTIMATE OF PROFITS

Sec. 403.051. ESTIMATE OF PROFITS. An insurer organized under

the laws of this state may not include the following in the

estimate of the insurer's profits for the purpose of paying

dividends under Section 403.001:

(1) the reserve on all unexpired risks computed in the manner

provided by this code;

(2) the amount of all unpaid losses, whether adjusted or

unadjusted; and

(3) all other debts due and payable, or to become due and

payable, by the insurer.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 403.052. ESTIMATE OF PROFITS OF CERTAIN INSURERS. A life,

health, fire, marine, or inland marine insurance company

organized under the laws of this state may not include the

following in the estimate of the company's profits for the

purpose of paying dividends under Section 403.001:

(1) the reserve on all unexpired risks computed in the manner

provided by this code;

(2) the amount of all unpaid losses, whether adjusted or

unadjusted;

(3) each amount due the company on bonds, mortgages, stocks, or

book-accounts on which no part of the principal or interest has

been paid during the year preceding the estimate of profits and

for which:

(A) a suit for foreclosure or collection has not been commenced;

or

(B) a judgment obtained in a suit for foreclosure or collection

has remained unsatisfied for a period of more than two years and

no interest has been paid on the judgment; and

(4) if no interest has been paid on a judgment described by

Subdivision (3)(B), any interest that is due or accrued on the

judgment and remains unpaid.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 403.053. ACQUIRED EARNED SURPLUS. (a) This section

applies only to:

(1) a stock domestic insurance company authorized to engage in

the business of life, accident, or health insurance in this

state;

(2) a stock foreign or alien life, health, or accident insurance

company;

(3) a stock insurance company authorized to engage in the

business of property, casualty, or fire insurance; and

(4) a domestic Lloyd's plan, reciprocal or interinsurance

exchange, or title insurance company.

(b) In determining the amount of "surplus profits arising from

the insurer's business" or "earned surplus" for the purpose of

paying dividends to shareholders, the insurer may include the

acquired earned surplus of an insurance subsidiary acquired by

the insurer to the extent that:

(1) the inclusion is permitted by an order of the commissioner

made in accordance with commissioner rules; and

(2) the earned surplus of the acquired subsidiary on the date of

acquisition that exists on the date of the commissioner's order

is not otherwise reflected in the insurer's earned surplus.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

SUBCHAPTER C. PENALTIES

Sec. 403.101. PENALTIES. (a) The department may revoke the

charter of an insurer organized under the laws of this state that

pays a dividend in violation of Sections 403.001 and 403.051. If

the department revokes an insurer's charter under this

subsection, the department shall immediately revoke the insurer's

certificate of authority.

(b) Not later than the 10th day before the date on which the

department intends to revoke an insurer's certificate of

authority under this section, the department shall give the

insurer written notice of the department's intent. The notice

must include the specific reasons for the revocation.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 403.102. PENALTIES FOR CERTAIN INSURERS. The department

may revoke the charter of a life, health, fire, marine, or inland

marine insurance company organized under the laws of this state

that pays a dividend in violation of Sections 403.001 and

403.052. If the department revokes a company's charter under

this section, the department shall immediately revoke the

company's certificate of authority.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

State Codes and Statutes

Statutes > Texas > Insurance-code > Title-4-regulation-of-solvency > Chapter-403-dividends

INSURANCE CODE

TITLE 4. REGULATION OF SOLVENCY

SUBTITLE A. GENERAL PROVISIONS

CHAPTER 403. DIVIDENDS

SUBCHAPTER A. PAYMENT OF DIVIDENDS

Sec. 403.001. LIMITATION ON DIVIDENDS. An insurer organized

under the laws of this state, including a life, health, fire,

marine, or inland marine insurance company, may not pay a

dividend except from surplus profits arising from the insurer's

business.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 403.002. DIVIDENDS TO POLICYHOLDERS IN COMMERCIAL LINES.

(a) An insurer may pay to a commercial policyholder or group of

commercial policyholders a dividend that covers more than one

class or line of commercial business only:

(1) after the insurer establishes on an aggregate basis adequate

loss reserves for the classes or lines of commercial insurance

included within the dividend; and

(2) if the insurer has sufficient surplus from which to pay the

dividend.

(b) Not later than the 15th day before an insurer pays a

dividend described by Subsection (a), the insurer shall file with

the department notice of the insurer's intent to pay the

dividend.

(c) The classes or lines of commercial business for which

dividends are authorized under this section include any

commercial class or line of commercial business regulated by

Title 10 or Chapter 5.

(d) An insurer's limitation of a dividend on one or more classes

or lines of commercial business to a group of commercial

policyholders is not unfair discrimination if the group:

(1) has clearly identifiable underwriting characteristics; or

(2) is an association or group of business entities engaged in

similar undertakings.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

SUBCHAPTER B. ESTIMATE OF PROFITS

Sec. 403.051. ESTIMATE OF PROFITS. An insurer organized under

the laws of this state may not include the following in the

estimate of the insurer's profits for the purpose of paying

dividends under Section 403.001:

(1) the reserve on all unexpired risks computed in the manner

provided by this code;

(2) the amount of all unpaid losses, whether adjusted or

unadjusted; and

(3) all other debts due and payable, or to become due and

payable, by the insurer.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 403.052. ESTIMATE OF PROFITS OF CERTAIN INSURERS. A life,

health, fire, marine, or inland marine insurance company

organized under the laws of this state may not include the

following in the estimate of the company's profits for the

purpose of paying dividends under Section 403.001:

(1) the reserve on all unexpired risks computed in the manner

provided by this code;

(2) the amount of all unpaid losses, whether adjusted or

unadjusted;

(3) each amount due the company on bonds, mortgages, stocks, or

book-accounts on which no part of the principal or interest has

been paid during the year preceding the estimate of profits and

for which:

(A) a suit for foreclosure or collection has not been commenced;

or

(B) a judgment obtained in a suit for foreclosure or collection

has remained unsatisfied for a period of more than two years and

no interest has been paid on the judgment; and

(4) if no interest has been paid on a judgment described by

Subdivision (3)(B), any interest that is due or accrued on the

judgment and remains unpaid.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 403.053. ACQUIRED EARNED SURPLUS. (a) This section

applies only to:

(1) a stock domestic insurance company authorized to engage in

the business of life, accident, or health insurance in this

state;

(2) a stock foreign or alien life, health, or accident insurance

company;

(3) a stock insurance company authorized to engage in the

business of property, casualty, or fire insurance; and

(4) a domestic Lloyd's plan, reciprocal or interinsurance

exchange, or title insurance company.

(b) In determining the amount of "surplus profits arising from

the insurer's business" or "earned surplus" for the purpose of

paying dividends to shareholders, the insurer may include the

acquired earned surplus of an insurance subsidiary acquired by

the insurer to the extent that:

(1) the inclusion is permitted by an order of the commissioner

made in accordance with commissioner rules; and

(2) the earned surplus of the acquired subsidiary on the date of

acquisition that exists on the date of the commissioner's order

is not otherwise reflected in the insurer's earned surplus.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

SUBCHAPTER C. PENALTIES

Sec. 403.101. PENALTIES. (a) The department may revoke the

charter of an insurer organized under the laws of this state that

pays a dividend in violation of Sections 403.001 and 403.051. If

the department revokes an insurer's charter under this

subsection, the department shall immediately revoke the insurer's

certificate of authority.

(b) Not later than the 10th day before the date on which the

department intends to revoke an insurer's certificate of

authority under this section, the department shall give the

insurer written notice of the department's intent. The notice

must include the specific reasons for the revocation.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 403.102. PENALTIES FOR CERTAIN INSURERS. The department

may revoke the charter of a life, health, fire, marine, or inland

marine insurance company organized under the laws of this state

that pays a dividend in violation of Sections 403.001 and

403.052. If the department revokes a company's charter under

this section, the department shall immediately revoke the

company's certificate of authority.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.


State Codes and Statutes

State Codes and Statutes

Statutes > Texas > Insurance-code > Title-4-regulation-of-solvency > Chapter-403-dividends

INSURANCE CODE

TITLE 4. REGULATION OF SOLVENCY

SUBTITLE A. GENERAL PROVISIONS

CHAPTER 403. DIVIDENDS

SUBCHAPTER A. PAYMENT OF DIVIDENDS

Sec. 403.001. LIMITATION ON DIVIDENDS. An insurer organized

under the laws of this state, including a life, health, fire,

marine, or inland marine insurance company, may not pay a

dividend except from surplus profits arising from the insurer's

business.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 403.002. DIVIDENDS TO POLICYHOLDERS IN COMMERCIAL LINES.

(a) An insurer may pay to a commercial policyholder or group of

commercial policyholders a dividend that covers more than one

class or line of commercial business only:

(1) after the insurer establishes on an aggregate basis adequate

loss reserves for the classes or lines of commercial insurance

included within the dividend; and

(2) if the insurer has sufficient surplus from which to pay the

dividend.

(b) Not later than the 15th day before an insurer pays a

dividend described by Subsection (a), the insurer shall file with

the department notice of the insurer's intent to pay the

dividend.

(c) The classes or lines of commercial business for which

dividends are authorized under this section include any

commercial class or line of commercial business regulated by

Title 10 or Chapter 5.

(d) An insurer's limitation of a dividend on one or more classes

or lines of commercial business to a group of commercial

policyholders is not unfair discrimination if the group:

(1) has clearly identifiable underwriting characteristics; or

(2) is an association or group of business entities engaged in

similar undertakings.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

SUBCHAPTER B. ESTIMATE OF PROFITS

Sec. 403.051. ESTIMATE OF PROFITS. An insurer organized under

the laws of this state may not include the following in the

estimate of the insurer's profits for the purpose of paying

dividends under Section 403.001:

(1) the reserve on all unexpired risks computed in the manner

provided by this code;

(2) the amount of all unpaid losses, whether adjusted or

unadjusted; and

(3) all other debts due and payable, or to become due and

payable, by the insurer.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 403.052. ESTIMATE OF PROFITS OF CERTAIN INSURERS. A life,

health, fire, marine, or inland marine insurance company

organized under the laws of this state may not include the

following in the estimate of the company's profits for the

purpose of paying dividends under Section 403.001:

(1) the reserve on all unexpired risks computed in the manner

provided by this code;

(2) the amount of all unpaid losses, whether adjusted or

unadjusted;

(3) each amount due the company on bonds, mortgages, stocks, or

book-accounts on which no part of the principal or interest has

been paid during the year preceding the estimate of profits and

for which:

(A) a suit for foreclosure or collection has not been commenced;

or

(B) a judgment obtained in a suit for foreclosure or collection

has remained unsatisfied for a period of more than two years and

no interest has been paid on the judgment; and

(4) if no interest has been paid on a judgment described by

Subdivision (3)(B), any interest that is due or accrued on the

judgment and remains unpaid.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 403.053. ACQUIRED EARNED SURPLUS. (a) This section

applies only to:

(1) a stock domestic insurance company authorized to engage in

the business of life, accident, or health insurance in this

state;

(2) a stock foreign or alien life, health, or accident insurance

company;

(3) a stock insurance company authorized to engage in the

business of property, casualty, or fire insurance; and

(4) a domestic Lloyd's plan, reciprocal or interinsurance

exchange, or title insurance company.

(b) In determining the amount of "surplus profits arising from

the insurer's business" or "earned surplus" for the purpose of

paying dividends to shareholders, the insurer may include the

acquired earned surplus of an insurance subsidiary acquired by

the insurer to the extent that:

(1) the inclusion is permitted by an order of the commissioner

made in accordance with commissioner rules; and

(2) the earned surplus of the acquired subsidiary on the date of

acquisition that exists on the date of the commissioner's order

is not otherwise reflected in the insurer's earned surplus.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

SUBCHAPTER C. PENALTIES

Sec. 403.101. PENALTIES. (a) The department may revoke the

charter of an insurer organized under the laws of this state that

pays a dividend in violation of Sections 403.001 and 403.051. If

the department revokes an insurer's charter under this

subsection, the department shall immediately revoke the insurer's

certificate of authority.

(b) Not later than the 10th day before the date on which the

department intends to revoke an insurer's certificate of

authority under this section, the department shall give the

insurer written notice of the department's intent. The notice

must include the specific reasons for the revocation.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 403.102. PENALTIES FOR CERTAIN INSURERS. The department

may revoke the charter of a life, health, fire, marine, or inland

marine insurance company organized under the laws of this state

that pays a dividend in violation of Sections 403.001 and

403.052. If the department revokes a company's charter under

this section, the department shall immediately revoke the

company's certificate of authority.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.