20-708. Limited stock insurers

A. Domestic limited stock insurers may be formed, with capital and surplus as specified in sections 20-210 and 20-211, to transact life and disability insurance only or both, except as provided in subsection B of this section, but such an insurer may not:

1. Issue any policy or policies or combination of policies of life or disability insurance whether individual or group as a direct writer.

2. Accept any risk as a reinsurer under which the maximum possible benefits payable on the death or on the disability of any one insured shall exceed five thousand dollars nor without reinsuring the excess over three thousand dollars by noncancellable reinsurance authorized under section 20-261. Any risk accepted as a reinsurer under this paragraph shall be a risk under which the ceding life or disability insurer remains liable for the payment of all policyholder claims.

B. Prior to, but not after January 31, 1980, any domestic limited stock insurer that on January 31, 1969 was the holder of a valid certificate of authority and that on or before such date had policy forms approved as provided by this title and had sold and issued any such policies shall continue to have the right and privilege to issue life and disability policies direct without regard to the prohibition prescribed in subsection A of this section, but such company shall not:

1. Issue any policy or combination of life insurance policies or accept any risk direct under which the maximum possible benefits payable on the death of any one insured shall exceed five thousand dollars nor without reinsuring the excess over three thousand dollars by noncancellable reinsurance authorized under section 20-261.

2. Issue any policy or combination of disability insurance policies, or accept any disability risk direct under which the maximum possible benefits payable to or on account of any one insured shall exceed five thousand dollars.

3. Issue pure endowment policies or annuity contracts, but this paragraph does not prohibit the insurer from issuing life insurance endowment policies, limited payment life and other standard plans of life insurance policies, nor from providing therein standard settlement options.

C. With appropriate powers in its articles of incorporation by increase of its authorized and paid-in capital and its surplus funds to the minimum amount required by this title as for an insurer newly formed and on application to the director, a domestic limited stock insurer may become a domestic stock insurer free from the restrictions otherwise imposed by this section.

D. A domestic limited stock insurer may accept reinsurance of risks of life or disability stock insurers or stock reinsurers, subject to limits as to amount of insurance as to anyone insured as set forth in this section.