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ROBERT L. EHRLICH, JR., Governor
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Ch. 514
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reorganizing certain provisions of law relating to mutual insurers; repealing a
certain provision of law requiring the Commissioner's written consent for the
repayment or withdrawal of a certain loan or advance made to a stock insurer or
mutual insurer; and generally relating to loans and advances made to stock
insurers and mutual insurers.
BY repealing and reenacting, with amendments,
Article - Insurance
Section 3-116
Annotated Code of Maryland
(2003 Replacement Volume and 2005 Supplement)
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF
MARYLAND, That the Laws of Maryland read as follows:
Article - Insurance
3-116.
(a) (1) [(i)] A director, officer, or member of a stock insurer OR MUTUAL
INSURER or any other person may lend or advance to the stock insurer OR MUTUAL
INSURER any money necessary to enable it to comply with a surplus requirement or
any other requirement of law.
[(ii) Interest on the loan or advance to a stock insurer may not
exceed 6% per year.]
(2) THE INSTRUMENT EVIDENCING A LOAN OR ADVANCE UNDER THIS
SUBSECTION SHALL:
(I) BE APPROVED AS TO FORM AND CONTENT BY THE
COMMISSIONER; AND
(II) CONTAIN PROVISIONS THAT SPECIFY THAT:
1. THE INSTRUMENT IS SUBORDINATE TO POLICYHOLDERS,
CLAIMANT AND BENEFICIARY CLAIMS. AND ALL OTHER CLASSES OF CREDITORS
OTHER THAN SURPLUS NOTE HOLDERS: AND
2. INTEREST PAYMENTS AND PRINCIPAL REPAYMENTS MAY
NOT BE MADE WITHOUT PRIOR APPROVAL OF THE COMMISSIONER
(3) A loan or advance under this subsection and any interest on it:
(i) SUBJECT TO THE APPROVAL OF THE COMMISSIONER, is payable
only out of the surplus remaining after the stock insurer OR MUTUAL INSURER
provides for all reserves and other liabilities; and
(ii) is not otherwise a liability or claim against the stock insurer OR
MUTUAL INSURER or any of its assets.
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- 2569 -
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