Subject 120-2-30 ISSUANCE AND REPAYMENT OF SURPLUS LOANS OF DOMESTIC MUTUAL INSURERS
The purpose of this Regulation is to establish guidelines and procedures for the issuance and repayment of surplus loans of mutual insurers issued pursuant to Section 33-14-15 of the Georgia Insurance Code.
|(1)||"Commissioner" shall mean the Georgia Insurance Commissioner.|
|(2)||"Domestic mutual insurer" shall mean an insurance company incorporated under the laws of Georgia without capital stock or shares, and is owned and governed by its policyholders.|
|(3)||"Earned surplus" shall mean those funds remaining after deducting required liabilities and contingent liabilities, special surplus, gross paid in and contributed surplus from net admitted assets of a domestic mutual insurer.|
|(4)||"Surplus loan" shall mean money borrowed to defray the expenses of an insurer's organization, to provide it with surplus funds, or for any purpose required by its business, upon a written agreement that such money is required to be repaid only out of the insurer's surplus in excess of that stipulated in such agreement.|
|(5)||"Surplus note" or "surplus certificate" shall mean the written agreement referred to in subsection .03(4) of this Chapter.|
|(1)||Prior to the making of any surplus loan, the borrowing insurer must file with the Georgia Insurance Department a sample copy of each series and type of surplus note or certificate to be issued and a statement which relates the purposes of the loan and reasons why such loan should be approved.|
|(2)|| The loan
and the note or certificate shall be subject to the Commissioner's approval.
Without the approval of both the loan and the note or certificate, the loan
cannot be made and no note or certificate may be issued.
The body of the note or certificate shall provide that:
|(a)||All payment of interest and principal shall be payable only out of earned surplus in excess of that surplus required by law to transact the kind(s) of insurance for which the company is authorized.|
|(b)||All proposed payments of any interest and principal shall be submitted to the Commissioner for his approval prior to any payments being made.|
|(c)||The Commissioner may disapprove the repayment of any surplus loan if it is found that a reduction of the insurer's surplus would be hazardous to its policyholders or to the public.|
|(1)||All payments of any interest and principal shall be payable only out of earned surplus in excess of that surplus required by law to transact the kind(s) of insurance for which the company is authorized, or in excess of the insurer's surplus at the time the loan was made, whichever is greater.|
|(2)||All payments are payable only after providing for all reserves and other liabilities of the issuing insurer.|
|(3)||All proposed payments of any interest and principal shall be submitted to the Commissioner for his approval prior to payment being made.|
|(4)||The Commissioner may disapprove the repayment of any surplus loan if it is found that a reduction of the insurer's surplus would be hazardous to its policyholders or to the public.|
|(5)||The issuing insurer may reserve the right to repay the principal and any accrued interest or unpaid interest of a surplus note or certificate at any time.|
|(1)||The principal together with the interest shall not be considered on the financial statement of the insurer as a legal liability or be the basis of any set off.|
|(2)||The total amount of principal for all surplus loans, then unpaid, shall be entered in the annual statement, in a form approved for current use by the Commissioner, on the Liabilities, Surplus, and Other Funds page under the caption, "Unassigned Funds (Surplus)," with appropriate footnote disclosing the amount of such surplus loans therein contained, together with any interest thereon accrued but unpaid.|