Public Laws

124th Legislature

Second Regular Session


Parts: A B C D E

Chapter 511

H.P. 1059 - L.D. 1510

PART A

Sec. A-1. 24-A MRSA §221-A, sub-§3,  as amended by PL 1999, c. 113, §5, is further amended to read:

3. Audits required.   All insurers, excepting insurers transacting business in this State pursuant to the terms of chapter 51, shall cause to be conducted an annual audit by an independent certified public accountant. Each domestic insurer shall file an audited financial report with the superintendent on or before June 1st for the year ending December 31st preceding. An extension of the filing deadline may be granted by the superintendent upon a showing by the insurer or its accountant that there exists valid justification for such an extension. A foreign or alien insurer shall file an audited financial report upon the superintendent's request. A firm of independent certified public accountants engaged to perform an audit of an insurer shall substitute the appointed audit partner in charge with another audit partner in charge at least once every 7 5 years. An accountant substituted for pursuant to this subsection may not serve as a partner in charge of that audit until 2 5 years after the date of substitution , unless the superintendent waives this requirement on the basis of unusual circumstances upon application by the insurer.

Sec. A-2. 24-A MRSA §221-A, sub-§7,  as amended by PL 1999, c. 113, §7, is repealed and the following enacted in its place:

7 Exemptions.   Upon written application of any insurer subject to this section, the superintendent may grant an exemption of the filing requirements under this section if the superintendent finds upon review of the application that compliance would constitute a financial hardship upon the insurer.

An insurer is exempt from the filing requirements of this section for any year in which the insurer’s annual statement reflects:

A Nationwide business in an amount less than $1,000,000 in written premium plus reinsurance assumed; and
B Outstanding loss reserves in an amount less than $1,000,000.

Sec. A-3. 24-A MRSA §222, sub-§11-A,  as amended by PL 1999, c. 113, §12, is repealed.

Sec. A-4. 24-A MRSA §222, sub-§11-B,  as enacted by PL 1993, c. 313, §12, is repealed.

Sec. A-5. 24-A MRSA §222, sub-§11-C  is enacted to read:

11-C Dividends and distributions.   The superintendent shall review all dividends and distributions declared or paid by any insurer registered under subsection 8 at least annually.
A An insurer shall notify the superintendent within 5 days after the declaration of any dividend or distribution. If the dividend or distribution is not disapproved pursuant to paragraph B and is not an extraordinary dividend as defined in paragraph C, the insurer may pay the dividend or distribution once the superintendent has approved the payment or 10 days have elapsed after the superintendent’s receipt of notice.
B The superintendent shall issue an order restricting or disallowing the payment of dividends and distributions if the superintendent determines that the insurer’s surplus would not be reasonable in relation to the insurance company’s outstanding liabilities, that the insurer’s surplus would be inadequate to that company’s financial needs or that the insurer’s financial condition would constitute a condition hazardous to policyholders, claimants or the public.
C An extraordinary dividend may not be paid until affirmatively approved by the superintendent or until at least 60 days after the superintendent has received a request to pay an extraordinary dividend.

(1) For purposes of this subsection, "extraordinary dividend" means any dividend or distribution, other than a pro rata distribution of a class of the insurer’s own securities, that:

(a) Exceeds 10% of the insurer's surplus to policyholders as of December 31st of the preceding year or the net gain from operations for the preceding calendar year, whichever is greater;

(b) Is declared within 5 years after any acquisition of control of a domestic insurer or of any person controlling that insurer, unless it has been approved by a number of continuing directors equal to a majority of the directors in office immediately preceding that acquisition of control; or

(c) Is not paid entirely from unassigned funds. For purposes of this division, 50% of the net of unrealized capital gains and unrealized capital losses, reduced, but not to less than zero, by that portion of the asset valuation reserve attributable to equity investments, must be excluded from the calculation of unassigned funds.

(2) An insurer may declare an extraordinary dividend on a conditional basis, subject to the superintendent’s approval. A declaration pursuant to this subparagraph does not confer any rights upon stockholders until the superintendent has approved the payment or the 60-day review period has elapsed.

Sec. A-6. 24-A MRSA §788,  as amended by PL 2007, c. 386, §16, is further amended to read:

§ 788.  Dividends

The special purpose reinsurance vehicle may not declare or pay dividends in any form to its owners unless the dividends do not cause the reinsurance vehicle or any of its protected cells to become impaired and, after giving effect to the dividends, the assets of the reinsurance vehicle, including assets held in trust pursuant to the terms of the insurance securitization, must be sufficient to meet its obligations. Except for dividends specifically provided for in the approved plan of operation under section 782, subsection 2, paragraph H, the prior approval of the superintendent is required for any dividend paid during the term of coverage or while the reinsurance vehicle has undischarged obligations to the ceding insurer. The dividends may be declared by the board of directors of the reinsurance vehicle if the dividends would not violate the provisions of this subchapter or the approved plan of operation and would not jeopardize the fulfillment of the obligations of the reinsurance vehicle or the trustee pursuant to the special purpose reinsurance vehicle insurance securitization, the special purpose reinsurance vehicle contract or any related transaction. The provisions of section 222, subsections 11-A and 11-B subsection 11-C do not apply to such dividends.

Office of the Revisor of Statutes
State House, Room 108
Augusta, ME 04333