2007 California Insurance Code Article 2. Dividends

CA Codes (ins:10530)

10530.  (a) A domestic incorporated life insurer issuing policies on
the reserve plan shall not make any dividends, except from earned
surplus.
   (b) No dividends shall be declared out of earned surplus derived
from the mere appreciation in the value of assets not yet realized,
nor shall any dividends be declared from any part of earned surplus
derived from an exchange of assets, unless and until earned surplus
has been realized, or unless the assets received are currently
realizable in cash.
   (c) An insurer may declare and distribute a dividend otherwise
prohibited by this section if (1) following payment of the dividend
the insurer's surplus as regards policyholders is (A) reasonable in
relation to its outstanding liabilities and (B) adequate to its
financial needs as prescribed in Section 1215.5, and (2) the
commissioner has given approval for the dividend prior to payment.
   (d) For purposes of this section, "earned surplus" means
unassigned funds, as required to be reported on the insurer's annual
statement.