(A) No domestic insurer may pay an extraordinary dividend or make another extraordinary distribution to its shareholders until the director or his designee:

(1) has approved the payment, or

(2) has not disapproved the payment within fifteen days after receiving notice of the declaration.

(B)(1) For purposes of this section, an extraordinary dividend or distribution includes a dividend or distribution of cash or other property whose fair market value together with that of other dividends or distributions made within the preceding twelve months:

(a) when paid from other than earned surplus exceeds the lesser of:

(i) ten percent of the insurer's surplus as regards policyholders as shown in the insurer's most recent annual statement; or

(ii) the net gain from operations for life insurers, or the net income, for nonlife insurers, not including net realized capital gains or losses as shown in the insurer's most recent annual statement;

(b) when paid from earned surplus exceeds the greater of:

(i) ten percent of the insurer's surplus as regards policyholders as shown in the insurer's most recent annual statement; or

(ii) the net gain from operations for life insurers, or the net income, for nonlife insurers, not including net realized capital gains or losses as shown in the insurer's most recent annual statement.

(2) It does not include pro rata distributions of a class of the insurer's own securities.

(C) An insurer may declare an extraordinary dividend or distribution which is conditional upon the approval of the director or his designee. The declaration confers no rights upon shareholders until the director or his designee:

(1) has approved the payment of the dividend or distribution, or

(2) has not disapproved the payment within fifteen days after receiving notice of the declaration.

HISTORY: Former 1976 Code Section 38-21-270 [1947 (45) 322; 1952 Code Section 37-877; 1962 Code Section 37-877] recodified as Section 38-37-270 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-29-260 [1962 Code Section 37-1424; 1971 (57) 351; 1986 Act No. 426, Section 17] recodified as Section 38-21-270 by 1987 Act No. 155, Section 1; 1988 Act No. 370; 1991 Act No. 13, Section 15; 1993 Act No. 70, Section 6; 1993 Act No. 181, Section 583; 2002 Act No. 228, Section 4, eff May 1, 2002; 2003 Act No. 73, Section 4, eff June 25, 2003.