N.Y. Insurance Law § 1311: Impairment of a mutual or reciprocal insurer

§ 1311. Impairment of a mutual or reciprocal insurer. (a) In this

section "required surplus" includes any guaranty surplus or special

contingent surplus or other specifically reserved surplus account of a

domestic mutual insurer, a domestic reciprocal insurer or any other

domestic insurer without capital stock, required by the provisions of

this chapter to be maintained for any purpose, including: (i) issuance

of non-assessable policies, (ii) payment of dividends, or (iii)

transaction of business after a license has been issued by the

superintendent.

(b) Whenever the superintendent finds from a financial statement or

report on examination that the total admitted assets of any insurer

required to maintain such required surplus are less than the aggregate

amount of its liabilities and required surplus, he shall determine the

amount of such impairment and order the insurer or its attorney-in-fact

to eliminate such impairment within such period he designates, not

exceeding ninety days from service of such order. He may also by order

prohibit such insurer, while such impairment exists, from:

(1) issuing any non-assessable policies if its required surplus for

the purpose of item (i) of subsection (a) hereof is impaired, or

(2) paying dividends if its required surplus for the purpose of item

(ii) of subsection (a) hereof is impaired, or

(3) issuing new policies if its minimum surplus for the purpose of

item (iii) of subsection (a) hereof is impaired.

(c) If the impairment so determined is such that such insurer does not

have the minimum surplus required for item (iii) of subsection (a)

hereof, and if when such designated period expires the insurer has not

satisfied the superintendent that such impairment has been eliminated,

the superintendent may proceed against such insurer pursuant to the

provisions of article seventy-four of this chapter on the ground that

its further transaction of business will be hazardous to its

policyholders, its creditors or the public.

(d) If the required minimum surplus of any authorized foreign mutual

or reciprocal insurer is found by the superintendent to be impaired, the

superintendent may order such insurer not to issue during such time as

he prescribes any new policies in this state, and may, after notice and

hearing, revoke its license to do business in this state.