§ 58-47-85. Surplus requirements.
§58‑47‑85. Surplus requirements.
Every group shall maintainminimum surplus under one of the options in subdivision (1), (2), or (3) ofthis section:
(1) Maintain minimumsurplus in accordance with Article 12 of this Chapter. A group organized andauthorized before the effective date of this section shall comply with thissection under the following schedule:
a. Forty percent (40%)of the surplus, in accordance with Article 12, by January 1, 1999.
b. Fifty‑fivepercent (55%) of the surplus, in accordance with Article 12, by January 1,2000.
c. Seventy percent(70%) of the surplus, in accordance with Article 12, by January 1, 2001.
d. Eighty‑fivepercent (85%) of the surplus, in accordance with Article 12, by January 1,2002.
e. One hundred percent(100%) of the surplus, in accordance with Article 12, by January 1, 2003.
TheCommissioner shall not approve any dividend request that results in a surplusthat is less than one hundred percent (100%) of the minimum surplus required byArticle 12 of this Chapter.
(2) Maintain minimumsurplus at an amount equal to ten percent (10%) of the group's totalundiscounted outstanding claim liability, according to the group's annualstatement filing, or such other amount as the Commissioner prescribes based on,but not limited to, the financial condition of the group and the risk retainedby the group. In addition, the group shall:
a. Maintain specificexcess insurance or reinsurance that provides the coverage limits in G.S. 58‑47‑95(a).The group shall retain no specific risk greater than five percent (5%) of thegroup's total annual earned premium according to the group's annual statementfiling.
b. Maintain aggregateexcess insurance or reinsurance with a coverage limit being the greater of twomillion dollars ($2,000,000) or twenty percent (20%) of the group's annualearned premium, according to the group's annual statement filing. The aggregateexcess attachment point shall be one hundred ten percent (110%) of the annualearned premium, according to the group's annual statement filing. The requiredattachment point shall be reduced by each point, or fraction of a point, that agroup's expense ratio exceeds thirty percent (30%). Conversely, the requiredattachment point may be increased by each point, or fraction of a point, that agroup's expense ratio is less than thirty percent (30%), but in no event shallthe attachment point be greater than one hundred fifteen percent (115%) of theannual earned premium.
c. Adopt a policywhereby every member:
1. Pays a deposit tothe group of twenty‑five percent (25%) of the member's estimated annualearned premium, or another amount that the Commissioner prescribes based on,but not limited to, the financial condition of the group and the risk retainedby the group; or
2. Once every yearfiles with the group the member's most recent year‑end balance sheet,which, at a minimum, is compiled by an independent certified public accountant.The balance sheet shall demonstrate that the member's financial position doesnot show a deficit equity and is appropriate for membership in the group. Atthe request of the Commissioner, the group shall make these filings availablefor review. These filings shall be kept confidential; provided that theCommissioner may use that information in any judicial or administrativeproceeding.
(3) Maintain minimumsurplus at an amount equal to three hundred thousand dollars ($300,000). Thegroup shall immediately assess its members if, at any time, the group's surplusis less than the minimum surplus amount. In addition, the group shall maintain:
a. Specific excessinsurance or reinsurance that provides coverage limits pursuant to G.S. 58‑47‑95(a).The group shall retain no specific risk greater than five percent (5%) of thegroup's total annual earned premium according to the group's annual statementfiling.
b. Aggregate excessinsurance or reinsurance with a coverage limit being the greater of two milliondollars ($2,000,000) or twenty percent (20%) of the group's annual earnedpremium, according to the group's annual statement filing. The aggregate excessattachment point shall be one hundred ten percent (110%) of the annual earnedpremium, according to the group's annual statement filing. The requiredattachment point shall be reduced by each point, or fraction of a point, that agroup's expense ratio exceeds thirty percent (30%). Conversely, the requiredattachment point may be increased by each point, or fraction of a point, that agroup's expense ratio is less than thirty percent (30%), but in no event shallthe attachment point be greater than one hundred fifteen percent (115%) of theannual earned premium.
The Commissioner may requiredifferent levels, or waive the requirement, of specific and aggregate excessloss coverage consistent with the market availability of excess loss coverage,the group's claims experience, and the group's financial condition. (1997‑362,s. 3; 1999‑132, s. 13.2.)