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2006 SESSION

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SB 546 Insurance companies; dividends and distributions.

Introduced by: Walter A. Stosch | all patrons    ...    notes | add to my profiles

SUMMARY AS PASSED: (all summaries)

Insurance companies; dividends and distributions.  Prohibits a domestic insurer from declaring or paying a dividend or other distribution from any source other than earned surplus without the State Corporation Commission's prior approval. The measure defines an extraordinary dividend or distribution, and provides that insurers may declare an extraordinary dividend or distribution conditioned upon the Commission's approval. The Commission is authorized to limit or disallow the payment of ordinary dividends by insurers that are financially distressed or troubled. The bill also (i) prohibits domestic insurers from entering into transactions with persons within an insurance company holding system if their purpose is to avoid the review that is required of material transactions between insurers that are members of an insurance company holding system and their affiliates; (ii) requires the quality of an insurer's earnings and the extent to which the earnings include extraordinary items to be considered in determining whether an insurer's surplus to policyholders is reasonable in relation to its outstanding liabilities; and (iii) requires insurers that are members of an insurance company holding system to report dividends and other distributions to the Commission within five business days following their declaration and at least 30 days prior to their payment; currently, such distributions must be reported within two days following their declaration.


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