PARRIS N. GLENDENING, Governor

Ch. 36

(2) IN DETERMINING WHETHER AN INSURER'S ASSETS AND SURPLUS AS
REGARDS POLICYHOLDERS ARE REASONABLE IN RELATION TO THE INSURER'S
OUTSTANDING LIABILITIES AND ADEQUATE TO ITS FINANCIAL NEEDS, THE
FOLLOWING FACTORS, AMONG OTHERS, SHALL BE CONSIDERED:

(I)      THE SIZE OF THE INSURER AS MEASURED BY ITS ASSETS,
CAPITAL AND SURPLUS, RESERVES, PREMIUM WRITINGS, INSURANCE IN FORCE,
AND OTHER APPROPRIATE CRITERIA;

(II)    THE EXTENT TO WHICH THE INSURER'S BUSINESS IS
DIVERSIFIED AMONG THE SEVERAL LINES OF INSURANCE;

(III)   THE NUMBER AND SIZE OF RISKS INSURED IN EACH LINE OF
INSURANCE;

(IV)   THE GEOGRAPHICAL DISPERSION OF THE INSURER'S INSURED
RISKS;

(V)     THE NATURE AND EXTENT OF REINSURANCE OF THE
INSURER'S RISKS;

(VI)   THE QUALITY, DIVERSIFICATION, AND LIQUIDITY OF THE
INSURER'S INVESTMENT PORTFOLIO;

(VII)  THE RECENT PAST AND PROJECTED FUTURE TRENDS IN THE
SIZE OF THE INSURER'S SURPLUS AS REGARDS POLICYHOLDERS;

(VIII)  THE SURPLUS AS REGARDS POLICYHOLDERS MAINTAINED BY
COMPARABLE INSURERS; AND

(IX)   THE FINANCIAL POSITION OF THE INSURER, AFTER
EXCLUDING FROM ASSETS INVESTMENTS IN AND OTHER TRANSACTIONS WITH
PERSONS THAT DIRECTLY OR INDIRECTLY, THROUGH ONE OR MORE
INTERMEDIARIES, CONTROL, ARE CONTROLLED BY, OR ARE UNDER COMMON
CONTROL WITH ANOTHER PERSON.

REVISOR'S NOTE: This section is new language derived without substantive
change from former Art. 48A, § 47(1), (2), and (5).

In subsection (a) of this section, the reference to capital and surplus
requirements "for an insurer" is added for clarity.

Also in subsection (a) of this section, the phrase "regardless of where the
insurance business is transacted" is substituted for the former phrase "in any
and all areas in which it operates, whether or not only a portion of such kinds
of business is to be transacted in this State" for clarity. The Insurance Article
Review Committee notes this substitution for consideration by the General
Assembly.

In the introductory language of subsection (b) of this section, the reference to
"capital stock" requirements is added to reflect the minimum capital stock
requirements for stock insurers contained in § 4-104 of this subtitle, and
referenced in this subsection.

- 851 -