J. MILLARD TAWES, Governor                     1121

(c) Unrealized contingent liability of members does not constitute
an asset of the insurer in any determination of its financial condition.

260.    Levy of Contingent Liability.

(a)   If at any time the assets of a domestic mutual insurer are
less than its liabilities and the minimum amount of surplus required
to be maintained by it by this article for authority to transact the
kinds of insurance being transacted, and the deficiency is not cured
from other sources, its directors shall levy an assessment only upon
its members who held policies providing for contingent liability at
any time within the thirty-six (36) months preceding the date notice
of such assessment was mailed to them, and such members shall be
liable to the insurer for the amount so assessed.

(b)   The assessment shall be for such an amount as is required
to cure such deficiency and to provide a reasonable amount of work-
ing funds above such minimum amount of surplus, but such working
funds so provided shall not exceed five percent (5%) of the insurer's
liabilities as of the date as of which the amount of such deficiency
was determined.

(c)   In levying an assessment upon a policy providing for con-
tingent liability, the assessment shall be computed on the basis of
the premiums earned on such policy during the period to which the
assessment relates.

(d)   No member shall have an offset against any assessment for
which he is liable, on account of any claim for unearned premium
or loss payable.

261.    Enforcement of Contingent Liability.

(a)   Any assessment made by an insurer under section 260 of
this subtitle shall be deemed to be prima facie correct. The amount
of such assessment to be paid by each member as determined by the
insurer shall be deemed to be likewise prima facie correct.

(b)   The insurer shall notify each member of the amount of the
assessment to be paid by written notice mailed to the address of the
member last of record with the insurer. Failure of the member to
receive the notice so mailed, within the time specified therein for
the payment of the assessment or at all, shall be no defense in any
action to collect the assessment.

(c)   If a member fails to pay the assessment within the period
specified in the notice, which period shall not be less than twenty

(20) days after mailing, the insurer may institute suit to collect
the same.

262.    Nonassessable Policies, Mutual Insurers.

(a)   While possessing surplus funds in amount not less than the
paid-in capital stock and surplus required of a domestic stock
insurer transacting like kinds of insurance, a domestic mutual in-
surer may, upon receipt of the Commissioner's order so authorizing,
extinguish the contingent liability of its members as to all its policies
in force and may omit provisions imposing contingent liability in
all its policies currently issued.

(b)   A foreign or alien mutual insurer may issue nonassessable
policies to its members in this State pursuant to its articles of incor-