H.B. 422                                                        VETOES

(3) (I) THIS PARAGRAPH APPLIES IF AN INSURER:

1.        HAS AN EARNED SURPLUS THAT EXCEEDS 10% OF
POLICYHOLDER SURPLUS AS OF THE 31ST DAY OF DECEMBER NEXT PRECEDING;
AND

2.        HAS IN THE PRECEDING CALENDAR YEAR IN EXCESS OF
75% OF ITS GROSS DIRECT WRITTEN PREMIUM IN PERSONAL LINES HOMEOWNERS
INSURANCE, PRIVATE PASSENGER AUTOMOBILE LIABILITY INSURANCE, AND PRIVATE
PASSENGER AUTOMOBILE PHYSICAL DAMAGE INSURANCE.

(II) EXTRAORDINARY DIVIDEND OR DISTRIBUTION INCLUDES
ANY DIVIDEND OR DISTRIBUTION OF CASH OR OTHER PROPERTY, NOT TO EXCEED
THE AMOUNT OF THE INSURER'S EARNED SURPLUS AND, BUT NOT INCLUDING PRO
RATA DISTRIBUTIONS OF ANY CLASS OF THE INSURER'S OWN SECURITIES, WHOSE
FAIR MARKET VALUE TOGETHER WITH THAT OF OTHER DIVIDENDS OR
DISTRIBUTIONS MADE WITHIN THE PRECEDING 12 MONTHS EXCEEDS THE GREATER
OF:

1.         10% OF THE INSURER'S SURPLUS AS REGARDS
POLICYHOLDERS AS OF THE 31ST DAY OF DECEMBER NEXT PRECEDING; OR

2.        FOR THE 12-MONTH PERIOD ENDING THE 31ST DAY OF
DECEMBER NEXT PRECEDING, THE NET GAIN FROM OPERATION OF THE INSURER,
IF. THE INSURER IS A LIFE INSURER, OR THE NET INCOME IF THE INSURER IS NOT A
LIFE INSURER.

(c) Notwithstanding any other provision of law, an insurance company subject to
a registration under § 495 may declare an extraordinary dividend or distribution
conditional upon the Commissioner's approval thereof, and the declaration confers no
rights upon shareholders until:

(1)      The Commissioner has approved the payment of the dividend or
distribution, or

(2)      The Commissioner has not disapproved the payment within the
thirty-day period referred to above.

(D) AN INSURANCE COMPANY SUBJECT TO REGISTRATION UNDER § 495 OF
THIS ARTICLE MAY NOT PAY ANY DIVIDEND OR MAKE ANY DISTRIBUTION TO ITS
SHAREHOLDERS UNLESS THE INSURER HAS NOTIFIED THE COMMISSIONER OF THE
PAYMENT WITHIN 5 BUSINESS DAYS FOLLOWING DECLARATION AND AT LEAST 10
DAYS PRIOR TO THE PAYMENT DATE. THE NOTICE SHALL BE KEPT CONFIDENTIAL
UNTIL THE PAYMENT DATE OF THE DIVIDEND. THE COMMISSIONER MAY ORDER
THAT A DIVIDEND NOT BE PAID IF HE FINDS THAT THE SURPLUS OF THE INSURANCE
COMPANY AS REGARDS POLICYHOLDERS FOLLOWING THE PAYMENT TO
SHAREHOLDERS WOULD BE INADEQUATE OR COULD LEAD THE INSURANCE
COMPANY TO A HAZARDOUS FINANCIAL CONDITION.

661.

(a) In this subtitle the following terms have the meanings indicated.

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