N.Y. Insurance Law § 1307: Contingent liability for borrowings

§ 1307. Contingent liability for borrowings. (a) Any domestic stock,

mutual or co-operative insurance company or reciprocal insurer may,

without pledging any of its assets, receive advances or borrow funds to:

(1) conduct its business,

(2) enable it to comply with any surplus requirement or make good any

impairment or deficiency or other requirement of this chapter,

(3) defray the reasonable expenses of its organization,

(4) provide any fund to be voluntarily contributed to surplus, or

(5) organize, acquire or invest in any subsidiaries authorized by this

chapter.

(b) Such borrowing may only be made upon an agreement that such moneys

and such interest thereon as may be agreed upon, at a rate not exceeding

the maximum rate provided in section 5-501 of the general obligations

law, in effect at the time the agreement is executed, shall be repaid

only out of free and divisible surplus of such insurer with the approval

of the superintendent whenever, in his judgment, the financial condition

of such insurer warrants. In the event of insolvency of a mutual or

co-operative insurance company unearned premiums shall be deemed to be

part of its free and divisible surplus.

(c) Any sum so advanced or borrowed shall not be part of the legal

liabilities of such insurer and shall not be a basis of any set-off but

until repaid all statements published by such insurer or filed with the

superintendent shall show, as a footnote, the amount then remaining

unpaid.

(d) No such insurance company or reciprocal insurer shall directly or

indirectly make any agreement for any advance or borrowing pursuant to

this section unless such agreement is in writing and shall have been

approved by the superintendent as not unfair, misleading or contrary to

law.