(a)(1) In addition to the general power and authority to borrow money for its regular business purposes, if a domestic insurance company obtains prior written approval for a stated maximum amount, it may borrow money by the issuance of notes to:
(A) Pay the reasonable expenses of its organization;
(B) Provide contingency loss funds;
(C) Provide additional surplus funds;
(D) Satisfy a deficiency; or
(E) Provide the amount of required minimum surplus.
(2) The notes issued for the purposes stated in paragraph (1) of this subsection shall be known as surplus notes and shall fully recite the purpose for which the money was borrowed. The amount of the outstanding principal and unpaid interest of the surplus notes shall be stated in each annual report.
(b) The principal indebtedness of surplus notes issued on or after October 21, 2000, shall not be a liability or claim against any of the assets of the company. The principal of, and interest on, the notes may be paid from time to time, either in full or in part, from available surplus funds of the company only if the amount of the surplus of the company is twice the amount of principal and interest being paid. The company may make such payments whenever it is able to do so if it receives the prior written approval of the Commissioner. The Commissioner shall use the standards set forth in subchapter I of Chapter 7 of this title, relating to adequacy of surplus in determining whether or not to approve the payments. Upon a dissolution of the company, the principal and accrued and unpaid interest of the surplus notes shall be payable from surplus.
(June 19, 1934, 48 Stat. 1152, ch. 672, ch. III, § 34; May 21, 1997, D.C. Law 11-268, § 10(k), 44 DCR 1730; Oct. 21, 2000, D.C. Law 13-189, § 2, 47 DCR 7077; June 19, 2001, D.C. Law 13-313, § 13, 48 DCR 1873.)
1981 Ed., § 35-633.
1973 Ed., § 35-534.
D.C. Law 13-189 rewrote this section which prior thereto provided: “A mutual company organized under chapters 3 to 8 1981 Ed. of this title may borrow or assume a liability for the repayment of a sum of money sufficient to defray the reasonable expenses of its organization or to enable it to comply with any requirement of the law or as a guaranty fund upon agreement, which shall first be submitted to and approved by the Commissioner, that such loan or advance, with interest at a rate not exceeding 6% per annum, shall be repaid out of the earnings, or profits of such corporation with the approval of the Commissioner whenever in his judgment the financial condition of the company shall warrant; but such approval shall not be withheld if, after such repayment shall be made, the company shall have and be in possession of a surplus equal to 10% or more of its gross annual premiums. Any such loan or advance shall not form a part of the legal liabilities of the company, but until repaid all statements published by such company or filed with the Commissioner shall show the amount thereof then remaining unpaid.”
D.C. Law 13-313 substituted “prior written approval” for “prior approval” in the third sentence of subsec. (b).
Department of Insurance abolished: See Historical and Statutory Notes following § 31-4402.
Structure District of Columbia Code
Title 31 - Insurance and Securities
Chapter 44 - Domestic Life Companies
§ 31–4401. Formation — Required contents of articles of incorporation
§ 31–4402. Formation — Filing, notice and bond requirements
§ 31–4404. Formation — Authority to solicit stock subscriptions or insurance applications
§ 31–4405. Formation — Disposition of sums paid upon stock subscriptions
§ 31–4407. Formation — Time limitation for issuance of policies
§ 31–4408. Minimum capital and surplus requirements
§ 31–4409. Amendment of articles of incorporation
§ 31–4410. Increase of capital stock
§ 31–4411. Decrease of capital stock
§ 31–4412. Liability of stockholders; rights of fiduciary stockholders and persons pledging stock
§ 31–4413. Payments for capital stock
§ 31–4414. Capital stock transfers
§ 31–4415. Capital stock records
§ 31–4416. Mutual companies — Corporations, boards, or associations as agents or members thereof
§ 31–4417. Mutual companies — Requirements before doing business
§ 31–4418. Reincorporation of existing corporations
§ 31–4419. Conversion of stock companies into mutual life companies
§ 31–4420. Applicability of provisions to existing corporations
§ 31–4421. Directors — Annual election; qualifications; limitation on proxies
§ 31–4422. Directors — Power to make bylaws
§ 31–4423. Directors — General election procedure
§ 31–4424. Directors — Cumulative voting in stock company election
§ 31–4425. Voting powers under group policies
§ 31–4426. Liability of directors
§ 31–4427. Salaries to be authorized by directors
§ 31–4428. Limitation of payments to stockholders and policyholders
§ 31–4429. Election or appointment of officers; required security
§ 31–4430. Officers and directors not to be pecuniarily interested in transactions
§ 31–4431. Voting-trust agreements
§ 31–4432. Maximum and contingent premiums of mutual companies. [Repealed]
§ 31–4434. Power of mutual company to borrow or assume liability
§ 31–4435. Investments and loans. [Repealed]
§ 31–4436. Domestic company real-estate holdings. [Repealed]
§ 31–4437. Reinsurance by domestic companies in authorized companies. [Repealed]
§ 31–4438. Reinsurance of risks. [Repealed]
§ 31–4439. Vouchers or affidavits as evidence of disbursements
§ 31–4440. Manner of keeping books, records, accounts, and vouchers
§ 31–4441. Acquisition of own capital stock. [Repealed]
§ 31–4442. Variable or modified guaranteed contracts
§ 31–4443. Effect of merger or consolidation
§ 31–4444. Procedure for merger of domestic companies
§ 31–4445. Procedure for consolidating domestic companies
§ 31–4446. Merger or consolidation of domestic and foreign companies
§ 31–4447. Merger or consolidation — Approval by Mayor
§ 31–4448. Merger or consolidation — Procedures before voting
§ 31–4449. Merger or consolidation — Approval by shareholders
§ 31–4450. Merger or consolidation — Rights of dissenting shareholders