{"data":{"id":"us-ky/krs-304.24-300","jurisdiction":"us-ky","citation":"KRS 304.24-300","heading":"Borrowed surplus.","body":"(1) A domestic stock or mutual insurer may borrow money to defray the expenses of its\norganization, provide it with surplus funds, or for any purpose of its business, upon\na written agreement that such money is required to be repaid only out of the\ninsurer's surplus in excess of that stipulated in such agreement. The agreement may\nprovide for interest, which interest shall or shall not constitute a liability of the\ninsurer as to its funds other than such excess of surplus, as stipulated in the\nagreement. No com mission or promotion expense shall be paid in connection with\nany such loan, except that if public offering and sale is made of the loan securities,\nthe insurer may pay the reasonable costs thereof approved by the commissioner.\n(2) Money so borrowed, toget her with the interest thereon if so stipulated in the\nagreement, shall not form a part of the insurer's legal liabilities except as to its\nsurplus in excess of the amount thereof stipulated in the agreement, or be the basis\nof any setoff; but until repaid,  financial statements filed or published by the insurer\nshall show as a footnote thereto the amount thereof then unpaid together with any\ninterest thereon accrued but unpaid. A surplus note shall be reported as surplus and\nnot as debt only if the surplus note contains the following provisions:\n(a) Subordination to policyholder;\n(b) Subordination to claimant and beneficiary claims;\n(c) Subordination to all other classes of creditors other than surplus note holders;\nand\n(d) Interest payments and principal repayments require prior approval of the state\nof domicile.\n(3) Any such loan shall be subject to the commissioner's approval. The insurer shall in\nadvance of the loan, file with the commissioner a statement of the purpose of the\nloan and a copy of the propos ed loan agreement. The loan and agreement shall be\ndeemed approved unless within fifteen (15) days after date of such filing the insurer\nis notified of the commissioner's disapproval and the reasons therefor. The\ncommissioner shall disapprove any proposed loan or agreement if he or she finds\nthe loan is unnecessary or excessive for the purpose intended, or that the terms of\nthe loan agreement are not fair and equitable to the parties and to other similar\nlenders, if any, to the insurer, or that the informat ion so filed by the insurer is\ninadequate.\n(4) Any such loan or substantial portion thereof shall be repaid by the insurer when no\nlonger reasonably necessary for the purpose originally intended. No repayment of\nsuch a loan shall be made unless approved in advance by the commissioner.\n(5) This section shall not apply to other kinds of loans obtained by the insurer in\nordinary course of business, nor to loans secured by pledge or mortgage of assets.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=29562","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:51Z","sha256":"5a112358604b558dc7223b244a670047454284ad800d02fd259af0dd9faae00b","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.24-290","next":"us-ky/krs-304.24-310"},"notice":"GroundRules: Original legal text. Not legal advice."}