§ 38.2-4232 Standards for transactions with affiliates; adequacy of surplus; dividends and other distributions
A. Transactions by nonstock corporations licensed under this chapter with their affiliates shall be subject to the following standards:
2. Charges and fees for service performed shall be reasonable;
3. Expenses incurred and payments received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied;
4. The books, accounts, and records of each party shall disclose clearly and accurately the precise nature and details of the transactions;
5. The nonstock corporation’s surplus following any transaction with affiliates involving more than one-sixth of one percent of admitted assets or one percent of surplus as of the immediately preceding December 31, whichever is less, shall be reasonable in relation to the nonstock corporation’s outstanding liabilities and adequate to its financial needs; and
6. The transaction is in the best interest of the subscribers.
B. For purposes of this article, in determining whether a nonstock corporation’s surplus is reasonable in relation to the nonstock corporation’s outstanding liabilities and adequate to its financial needs, the following factors, among others, shall be considered:
1. The size of the nonstock corporation as measured by its assets, surplus, reserves, business in force, and other appropriate criteria;
2. The nonstock corporation’s method of operation and manner of doing business;
3. The nature and extent of the nonstock corporation’s risk-sharing arrangements;
4. The quality, diversification, and liquidity of the nonstock corporation’s investment portfolio;
5. The recent past and projected future trend in the size of the nonstock corporation’s surplus;
7. The quality and liquidity of investments in subsidiaries. The Commission in its judgment may classify any investment as a nonadmitted asset for the purpose of determining the adequacy of surplus.
History
This law was first created in 1989. The record of its establishment is cataloged in chapter 606 of that year’s edition of “Acts of Assembly,” the annual state publication listing all changes made to the Code of Virginia in that year. Unfortunately, the 1989 “Acts” aren’t available online. It has been modified 1 time. Those modifications are cataloged by “The Acts of Assembly,” a state publication, by year and chapter. Those modifications that can be read on the General Assembly’s website will be linked accordingly. That modification is as follows: in 1992, chapter 588.
1989, c. 606; 1992, c. 588.