NORTH CAROLINA GENERAL ASSEMBLY
1963 SESSION
CHAPTER 943
SENATE BILL 360
AN ACT TO AMEND G.S. 58-77 RELATING TO THE AMOUNT OF CAPITAL AND/OR SURPLUS REQUIRED OF INSURANCE COMPANIES.
The General Assembly of North Carolina do enact:
Section 1. G.S. 58-77 of the General Statutes is hereby rewritten to read as follows:
"G.S. 58-77. Amount of Capital and/or Surplus Required. The amount of capital and/or surplus requisite to the formation and organization of companies under the provisions of this Chapter shall be as follows:
(1) Stock Life Insurance Companies.
(a) A stock corporation may be organized in the manner prescribed in this Chapter and licensed to do the business of life insurance, only when it shall have a paid-in capital of at least three hundred thousand dollars ($300,000.00) and a paid-in initial surplus of an amount at least equal to such capital, and it may in addition do any one or more of the kinds of business specified in subdivisions (2) and (3) of G.S. 58-72, without having additional capital or surplus. Every such company shall at all times thereafter maintain a minimum capital of not less than three hundred thousand dollars ($300,000.00) and a minimum surplus of at least seventy-five thousand dollars ($75,000.00).
(b) If the Commissioner, after such investigation as he may deem it expedient to make, finds that a corporation may be organized to do the business of life insurance, or the writing of annuities or both, that its operations are restricted solely to one state, and that the organization of such corporation is in the public interest, he may permit the organization of a stock corporation to do on such restricted plan either or both of the kinds of business specified in subdivisions (1) and (2) of G.S. 58-72, with the minimum paid-in capital and a minimum paid-in surplus in an amount to be prescribed by him, but in no event to be less than a paid-in capital of two hundred thousand dollars ($200,000.00) and a paid-in surplus of two hundred thousand dollars ($200,000.00). Every such company shall at all times thereafter maintain such prescribed minimum capital and a minimum surplus of at least fifty thousand dollars ($50,000.00).
(2) Stock Accident and Health Insurance Companies.
a. A stock corporation may be organized in the manner prescribed in this Chapter and licensed to do only the kind of insurance specified in subdivision (3) a. of G.S. 58-72, when it shall have a paid-in capital of not less than two hundred thousand dollars ($200,000.00), and a paid-in surplus at least equal to such capital. Every such company shall at all times thereafter maintain a minimum capital of not less than two hundred thousand dollars ($200,000.00) and a minimum surplus of at least fifty thousand dollars ($50,000.00).
b. Any company organized under the provisions of paragraph a. of this subdivision may, by the provisions of its original Charter or any amendment thereto, acquire the power to do the kind of business specified in paragraph b. of subdivision (3) of G.S. 58-72, if it has a paid-in capital at least equal to three hundred thousand dollars ($300,000.00), and a paid-in initial surplus at least equal to such capital. Every such company shall at all times maintain a minimum capital of not less than three hundred thousand dollars ($300,000.00) and a minimum surplus of at least fifty thousand dollars ($50,000.00).
(3) Stock Fire and Marine Companies. A stock corporation may be organized in the manner prescribed in this Chapter and licensed to do one or more of the kinds of insurance specified in subdivisions (4), (5),(6), (7), (8), (11), (12), (19), (20), (21) and (22) of G.S. 58-72 only when it shall have a paid-in capital of not less than four hundred thousand dollars ($400,000.00) and a contributed surplus equivalent to not less than such paid-in capital. Every such company shall at all times thereafter maintain a minimum capital of not less than four hundred thousand dollars ($400,000.00) and a minimum surplus of at least one hundred thousand dollars ($100,000.00) provided that, any such corporation may do all the kinds of insurance authorized for casualty, fidelity and surety companies, as set out in subdivision (4) hereof where its Charter so permits, when and if it meets all additional requirements as to capital and surplus as fixed in said Section, and maintains the same.
(4) Stock Casualty and Fidelity and Surety Companies. A stock corporation may be organized in the manner prescribed in this Chapter and licensed to do one or more of the kinds of insurance specified in subdivisions (3), (6), (7), (8), (9), (10), (11), (12), (13), (14), (15), (16), (17),(18), (19), (21) and (22) of G.S. 58-72 only when it shall have a paid-in capital of not less than five hundred thousand dollars ($500,000.00) and a contributed surplus equivalent to not less than such paid-in capital. Every such company shall at all times thereafter maintain a minimum capital of not less than five hundred thousand dollars ($500,000.00) and a minimum surplus of at least one hundred and twenty-five thousand dollars ($125,000.00). If the Commissioner, after such investigation as he may deem it expedient to make, finds that a corporation may be organized to do one or more of such kinds of insurance, that its operations are restricted solely to one state, and that the organization of such corporation is in the public interest, he may permit such corporation to be organized and licensed to write the lines set out in this Section with a paid-in capital of not less than three Hundred thousand dollars ($300,000.00) and a contributed surplus equivalent to not less than such paid-in capital, and every such company shall hereafter maintain a minimum capital of not less than three hundred thousand dollars ($300,000.00) and a minimum surplus of at least seventy-five thousand dollars ($75,000.00) provided that, any casualty, fidelity and surety corporation may do all the kinds of insurance authorized for fire and marine companies, as set out in subdivision (3) hereof where its Charter so permits, when and if it meets all additional requirements as to capital and surplus as fixed in said Section, and maintains the same.
(5) Mutual Fire and Marine Companies.
a. Limited assessment companies. A limited assessment mutual company may be organized in the manner prescribed in this Chapter and licensed to do one or more of the kinds of insurance specified in subdivisions (4), (5), (6), (7), (8), (11), (12), (19), (20), (21), and. (22) of G.S. 58-72 only when it has no less than five hundred thousand dollars ($500,000.00) of insurance in not fewer than five hundred separate risks subscribed with a contributed initial surplus of at least one hundred thousand dollars ($100,000.00), which surplus shall at all times be maintained. The assessment liability of a policyholder of a company organized in accordance with the provisions of this paragraph shall not be limited to less than five annual premiums; provided, such limited assessment company may reduce the assessment liability of its policyholders from five annual premiums as set out herein to one additional annual premium when the free surplus of such company amounts to not less than two hundred thousand dollars ($200,000.00), which surplus shall at all times be maintained.
b. Assessable mutual companies. An assessable mutual company may be organized in the manner prescribed in this Chapter and licensed to do one or more of the kinds of insurance specified in subdivisions (4), (5), and (6) of G.S. 58-72 with an unlimited assessment liability of its policyholders only when it shall have not less than five hundred thousand dollars ($500,000.00) of insurance in not fewer than five hundred separate risks subscribed with contributed surplus equal to twice the amount of the maximum net retained liability under the largest policy of insurance issued by such company; but not less than twenty thousand dollars ($20,000.00), which surplus shall at all times be maintained. Provided such company, when its Charter so permits, in addition may be licensed to do one or more of the kinds of insurance specified in subdivisions (7), (8), (11), (12), (19), (20), (21) and (22) of G.S. 58-72, with an unlimited assessment liability of its policyholders, when its free surplus amounts to not less than fifty thousand dollars ($50,000.00), which surplus shall at all times be maintained.
c. Nonassessable mutual companies. A nonassessable mutual company may be organized in the manner prescribed in this Chapter and licensed to do one or more of the kinds of insurance specified in subdivisions (4), (5), (6), (7), (8), (11), (12), (19), (20), (21), and (22) of G.S. 58-72 and may be authorized to issue policies under the terms of which a policyholder is not liable for any assessments in addition to the premium set out in the policy only when it shall have not less than five hundred thousand dollars ($500,000.00) of insurance in not fewer than five hundred separate risks subscribed with a contributed initial surplus of not less than four hundred thousand dollars ($400,000.00), which surplus shall at all times be maintained.
d. Town or county mutual insurance companies. A town or county mutual insurance company, with unlimited assessment liability, may be organized in the manner prescribed in this Chapter and licensed to do the kinds of insurance specified in subdivision (4) of G.S. 58-72 only when it shall have not less than fifty thousand dollars ($50,000.00) of insurance in not fewer than fifty separate risks subscribed with a contributed surplus at all times not less than the maximum net retained liability under the largest risk written or to be written whichever is the greater sum, which surplus shall at all times be maintained. A town or county mutual insurance company may, in addition to writing the business specified in subdivision (4) of G.S. 58-72, cover in the same policy the hazards usually insured against under an extended coverage endorsement when such company has and at all times maintains in addition to the surplus hereinbefore required, an additional surplus of not less than twenty-five thousand dollars ($25,000.00) or not less than an amount equivalent to one per cent (1%) of the total amount of net retained insurance in force, whichever is the larger sum: Provided, that such company may not operate in more than three adjacent counties in this State.
(6) Mutual Life, Accident and Health Insurance Companies. A nonassessable mutual insurance company may be organized in the manner prescribed in this Chapter, and licensed to do only one or more of the kinds of insurance specified in subdivisions (1), (2) and (3) of G.S. 58-72 when it has complied with the requirements of this Chapter and with those hereinafter set forth in paragraphs (a) to (d), inclusive, of this subdivision, whichever shall be applicable.
a. If organized to do only the kinds of insurance specified in subdivisions (1) and (2) of G.S. 58-72, such company shall have not less than five hundred bona fide applications for life insurance in an aggregate amount not less than five hundred thousand dollars ($500,000.00), and shall have received from each such applicant in cash the full amount of one annual premium on the policy applied for by him, in an aggregate amount at least equal to ten thousand dollars ($10,000.00), and shall in addition have a contributed surplus of one hundred thousand dollars ($100,000.00), and shall have and maintain at all times a minimum surplus of fifty thousand dollars ($50,000.00).
b. If organized to do only the kind of insurance specified in paragraph a. of subdivision (3) of G.S. 58-72 such company shall have not less than two hundred and fifty bona fide applications for such insurance, and shall have received from each such applicant in cash the full amount of one annual premium on the policy applied for by him in an aggregate amount of at least ten thousand dollars ($10,000.00), and shall have a contributed surplus of one hundred thousand dollars ($100,000.00) and shall have and maintain at all times a minimum surplus of fifty thousand dollars ($50,000.00).
c. If organized to do the kinds of insurance specified in subdivision (1) and in paragraph a. of subdivision (3) of G.S. 58‑72, such company shall have complied with the provisions of both paragraph a. and paragraph b. hereof.
d. If organized to do the kind of insurance specified in paragrapH. B. of subdivision (3) of G.S. 58-72, in addition to the kind or kinds of insurance designated in any one of the foregoing paragraphs of this subdivision, such company shall have a contributed surplus, and shall maintain a minimum surplus, each in an amount of at least fifty thousand dollars ($50,000.00) in excess of the respective amounts required by paragraphs a., b. and c. hereof where applicable.
(7) Organization of Mutual Casualty Fidelity and Surety Companies, a. Nonassessable mutual companies. A mutual insurance company with no assessment liability provided for its policyholders may be organized in the manner prescribed in this Chapter and licensed to do one or more of the kinds of insurance specified in subdivisions (3), (6), (7), (8), (9),(10), (11), (12), (13), (14), (15), (16), (17), 18), (19), (21) and (22) of G.S. 58-72 when it has a minimum contributed surplus of five hundred thousand dollars ($500,000.00) and not less than five hundred thousand dollars ($500,000.00) in insurance subscribed in not less than five hundred separate risks. The surplus of such company shall at all times be maintained at or above the amount required hereinabove for organization of such company.
b. Assessable mutual companies. A mutual insurance company with assessment liability provided for its policyholders may be organized in the manner prescribed in this Chapter and licensed to do one or more of the kinds of insurance specified in subdivisions (3), (6), (7), (8),(9), (10), (11), (12), (13), (14), (15), (16), (17), (18), (19), (21), and (22) of G. S. 58-72 when it has a minimum contributed surplus of two hundred thousand dollars ($200,000.00) and not less than five hundred thousand dollars ($500,000.00) of insurance subscribed in not less than five hundred separate risks. Such company shall at all times maintain a surplus in an amount not less than two hundred thousand dollars ($200,000.00). The assessment liability of a policyholder of such company shall not be limited to less than one annual premium.
(8) a. A company may do all the kinds of insurance authorized to be done by a company organized under the provisions of paragraph a. of subdivision (5), and paragraph b. of subdivision (7) where its Charter so permits when and if it meets the combined maximum requirements of said paragraphs. The assessment liability of policyholders of such a company shall not be limited to less than one annual premium within any one policy year.
b. A company may do all the kinds of insurance authorized to be done by a company organized under the provisions of paragraph c. of subdivision (5), and paragraph a. of subdivision (7) where its Charter so permits when and if it meets the combined maximum requirements of said paragraphs. The policyholder of such a company shall not be subject to any assessment liability.
(9) Any domestic, foreign or alien company licensed to do business in North Carolina prior to July 1, 1963, shall be permitted to continue to do the same kinds of business which it was authorized to do on such date without being required to increase its capital and/or surplus, provided, however, such insurers shall increase the capital and surplus requirements to the amounts set forth herein on or before July 1, 1969, but the requirements of this Section as to capital and surplus shall apply to such companies as a prerequisite to writing additional lines of business.
(10) Whenever the Commissioner finds from a financial statement made by any such company, or from a report of examination of any such company, that its admitted assets are less than the aggregate amount of its liabilities and its outstanding capital stock and/or required minimum surplus, he shall determine the amount of such impairment of capital and/or surplus and issue an order in writing requiring the company to eliminate the impairment within such period of not more than ninety (90) days as he shall designate. The Commissioner may, by order served upon the company, prohibit the company from issuing any new policies while such impairment exists. If at the expiration of the designated period the company has not satisfied the Commissioner that the impairment has been eliminated, an order for the rehabilitation or liquidation of the company may be entered as provided in Article 17A, Chapter 58 of the General Statutes of North Carolina."
Sec. 2. All laws and clauses of laws in conflict with this Act are hereby repealed.
Sec. 3. This Act shall be in full force and effect on and after July 1, 1963.
In the General Assembly read three times and ratified, this the 18th day of June, 1963.