2006 Code of Virginia § 38.2-1330.1 - Dividends and other distributions

38.2-1330.1. Dividends and other distributions.

A. Except as otherwise provided by law, a domestic insurer shall not declareor pay a dividend or other distribution from any source other than earnedsurplus without the Commission's prior written approval. For purposes of thissection, "earned surplus" means an amount equal to the unassigned funds(surplus) of an insurer as set forth in the most recent annual statement ofthe insurer filed with the Commission including all or part of the surplusarising from unrealized capital gains or revaluation of assets. No domesticinsurer shall pay an extraordinary dividend or make any other extraordinarydistribution to its shareholders until the earlier of:

1. Thirty days after the Commission has received written notice of thedeclaration thereof and has not within such period disapproved such payment;or

2. The Commission's approval of such payment.

B. For purposes of this section, an extraordinary dividend or distributionincludes any dividend or distribution of cash or other property whose fairmarket value together with that of other dividends or distributions madewithin the preceding 12 months exceeds the greater of (i) 10% of suchinsurer's surplus as regards policyholders as of the immediately precedingDecember 31 or (ii) the net gain from operations of such insurer, if suchinsurer is a life insurer, or the net income, if such insurer is not a lifeinsurer, not including realized capital gains, for the 12 month period endingthe immediately preceding December 31, but shall not include pro ratadistributions of any class of the insurer's own securities.

C. Notwithstanding any other provision of law, an insurer may declare anextraordinary dividend or distribution that is conditional upon theCommission's approval thereof, and such declaration shall confer no rightsupon shareholders until:

1. The Commission has approved the payment of such dividend or distribution;or

2. The Commission has not disapproved such payment within the 30-day perioddescribed in subsection A.

D. The Commission may limit or disallow the payment of ordinary dividends bya domestic insurer if the insurer is presently or potentially financiallydistressed or troubled. The Commission shall set forth the specific reasonsfor limiting or disallowing the payment of any ordinary dividends.

(2006, c. 577.)