GENERAL ASSEMBLY OF NORTH CAROLINA
1989 SESSION
CHAPTER 320
AN ACT TO PERMIT MUTUALS INSURANCE COMPANIES WITH GUARANTY CAPITAL TO PAY DIVIDENDS.
The General Assembly of North Carolina enacts:
Section 1. G.S. 58-96 reads as rewritten:
"§ 58-96. Mutual companies with a guaranty capital.
A mutual insurance company formed as provided in this
Chapter, in lieu of the contributed surplus required for the organization of mutual
companies under the provisions of G.S. 58-77, or a mutual insurance company now
existing, may establish a guaranty capital or surplus of not less than
twenty-five thousand dollars ($25,000), divided into shares of one hundred
dollars ($100.00) each, which shall be invested in the same manner as is
provided in this Subchapter for the investment of the capital stock of
insurance companies. The board of directors of a company may declare and pay
dividends to the stockholders of the guaranty capital of a company or
owners of guaranty surplus are entitled to an annual dividend of not more
than ten per centum (10%) on their respective shares and, in the discretion of
the board of directors of a company, said dividend may be increased in any year
to not more than fifteen per centum (15%), if the net profits or unused
premiums left after all expenses, losses, and liabilities then incurred,
together with the reserve as provided for, are sufficient to pay the same. The
guaranty capital or surplus shall be applied to the payment of losses only when
the company has exhausted its cash in hand and the invested assets, exclusive
of uncollected premiums, and when thus impaired, the directors may make good
the whole or any part of it by assessments upon the contingent funds of the
company at the date of such impairment. Shareholders and members of such
companies are subject to the same provisions of law in respect to their right
to vote as apply respectively to shareholders in stock companies and
policyholders in purely mutual companies. This guaranty capital or surplus may
be reduced or retired by vote of the policyholders of the company and the
assent of the Commissioner of Insurance, if the net assets of the company above
its reserve and all other claims and obligations, exclusive of guaranty capital
or surplus, for two years immediately preceding and including the date of its
last annual statement, is not less than twenty-five per centum (25%) of the
guaranty capital or surplus. Due notice of such proposed action on the part of
the company must be mailed to each policyholder of the company not less than 30
days before the meeting when the action may be taken, and must also be
advertised in two papers of general circulation, approved by the Commissioner
of Insurance, not less than three times a week for a period of not less than
four weeks before such meeting. No insurance company with a guaranty capital or
surplus, which has ceased to do new business, shall divide to its stockholders
any part of its assets or guaranty capital or surplus, except income from
investments, until it has performed or canceled its policy obligations."
Sec. 2. This act is effective upon ratification.
In the General Assembly read three times and ratified this the 14th day of June, 1989.