SB354 Alabama 2013 Session

To repeal portions of Title 27 of the Code of Alabama 1975

Relating to the Alabama Insurance Code, to repeal the following: 27-3-8 (a) In addition to the minimum paid-in capital stock (stock insurers) or minimum surplus (mutual and reciprocal insurers) required by Section 27-3-7, special surplus shall be possessed by insurers hereafter applying for original certificates of authority in this state as follows: (1) All stock insurers and foreign mutual and foreign reciprocal insurers which have actively transacted insurance in their states or countries of domicile as an authorized insurer for less than five years and which do not meet the requirements of paragraphs (2) a or (2) b of Section 27-3-4, when first authorized to transact insurance in this state shall have a surplus or additional surplus equal to 150 percent of the paid-up capital stock, if a stock insurer, or surplus, if a foreign mutual or foreign reciprocal insurer, otherwise required under Section 27-3-7 for the kinds of insurance to be transacted; and (2) An insurer that has actively transacted insurance as an authorized insurer in its state or country of domicile for more than five years, or which meets the requirements of paragraphs (2) a or (2) b of Section 27-3-4, shall possess when first authorized in this state surplus, if a stock insurer, or additional surplus, if a mutual or reciprocal insurer, equal to 100 percent of the paid-in capital stock, if a stock insurer, or surplus, if a foreign mutual or foreign reciprocal insurer, otherwise required under Section 27-3-7. (b) If within five years after date of its original certificate of authority to transact insurance in this state such an insurer requests authority to transact an additional kind or kinds of insurance, it shall not be so authorized unless it then possesses surplus, if a stock insurer, or additional surplus, if a mutual or reciprocal insurer, in such an amount as would be required under this section as for an original certificate of authority covering all the kinds of insurance the insurer then proposes to transact. (c) After issuance of its original certificate of authority the insurer may use the special surplus required under this section in the normal course of its business only. (d) Execution by a mutual or reciprocal surety insurer as sole surety of certain bonds or undertakings required or permitted by law or by certain political subdivisions, public bodies, or public officers is subject further to surplus requirement as provided in Section 27-24-3. 27-3-9 The minimum capital required to form and organize a new domestic stock life insurance company shall be $1,000,000.00, and in addition thereto the minimum surplus to form such a company shall be $1,000,000.00. 27-3-10 (a) For the purposes of this section, the following words and phrases shall have the following meanings: (1) DOMESTIC STOCK INSURER. A corporation incorporated under the laws of the State of Alabama with its capital divided into shares and owned by its stockholders which is engaged as indemnitor, surety or contractor in the business of entering into contracts of insurance. (2) CAPITAL SURPLUS. Such term shall have the meaning given thereto in the statutes of this state relating to the powers and procedures of domestic private corporations formed for profit. (3) EARNED SURPLUS. Such term shall have the meaning given thereto in the statutes of this state relating to the powers and procedures of domestic private corporations formed for profit. (b) A domestic stock insurer which has the minimum unimpaired paid-in capital stock required for the transaction of insurance by such domestic stock insurer by the statutes of this state governing domestic stock insurers may, by resolution of its board of directors, apply any part, or all, of its capital surplus to the reduction or elimination of any deficit, however incurred, but only after first eliminating the then earned surplus, if any, of the domestic stock insurer by applying such earned surplus against such deficit. Each such application of capital surplus shall, to the extent thereof, effect a reduction of capital surplus. 27-3-11 (a) The commissioner shall not issue or permit to exist a certificate of authority as to any insurer, other than an alien insurer, unless it has deposited and maintains deposited in trust with the Treasurer of this state cash or securities eligible under Section 27-6-3 and having a value at all times of not less than $100,000.00 or the minimum paid-in capital stock, if a stock insurer, or surplus, if a mutual or reciprocal insurer, required to be maintained by the insurer under this title for authority to transact the kinds of insurance to be transacted, whichever is the smaller amount. (b) The deposit shall be for the general benefit and protection of the insurer's policyholders or its policyholders and creditors. (c) In lieu of such deposit, or part thereof, in this state of a foreign insurer, the commissioner shall, subject to the retaliatory law, Section 27-3-29, accept the current certificate in proper form of the public official having supervision over insurers in any other state to the effect that a like deposit, or part thereof, of such insurer, comprised of cash or securities of substantially the same character as required under subsection (a) of this section, of similar deposits in this state, is being maintained under law in public custody or control in such state in trust for the purpose, among other reasonable purposes of protection of policyholders or policyholders and creditors, of the protection of all the insurer's policyholders or of its policyholders and creditors in this state. (d) All such deposits in this state shall be subject to the applicable provisions of Chapter 6 of this title. (e) Any insurance company, with respect to its general account or separate accounts, is authorized to deposit or arrange for the deposit of securities which it may own in a clearing corporation, as defined in Section 7-8-102(3), or in a federal reserve bank under the book-entry system. When such securities are so deposited, certificates representing securities of the same class of the same insurer may be merged and held in bulk in the name of the nominee of such clearing corporation with any other securities deposited in such clearing corporation by any person, regardless of the ownership of such securities, and securities of small denominations may be merged into one or more certificates of larger denominations. Title to such securities may be transferred by bookkeeping entry on the books of such clearing corporation or federal reserve bank without physical delivery of certificates representing such securities. Any company making deposits by means of such securities shall provide to the commissioner evidence customarily issued by federal reserve banks and clearing corporations establishing that the securities are actually recorded in a book-entry account or actually held in safekeeping by a clearing corporation. Securities deposited