{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/38.2-4232.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/38.2-4232.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/38.2-4232.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/38.2-4232.html"}],"law_id":72616,"edition_id":1,"section_id":72616,"structure_id":15019,"section_number":"38.2-4232","catch_line":"Standards for transactions with affiliates; adequacy of surplus; dividends and other distributions","history":"1989, c. 606; 1992, c. 588.","full_text":"A\n\nTransactions by nonstock corporations licensed under this chapter with their affiliates shall be subject to the following standards:1\n\nThe terms shall be fair and reasonable;2\n\nCharges and fees for service performed shall be reasonable;3\n\nExpenses incurred and payments received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied;4\n\nThe books, accounts, and records of each party shall disclose clearly and accurately the precise nature and details of the transactions;5\n\nThe 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; and6\n\nThe transaction is in the best interest of the subscribers.B\n\nFor 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\n\nThe size of the nonstock corporation as measured by its assets, surplus, reserves, business in force, and other appropriate criteria;2\n\nThe nonstock corporation’s method of operation and manner of doing business;3\n\nThe nature and extent of the nonstock corporation’s risk-sharing arrangements;4\n\nThe quality, diversification, and liquidity of the nonstock corporation’s investment portfolio;5\n\nThe recent past and projected future trend in the size of the nonstock corporation’s surplus;6\n\nThe adequacy of the nonstock corporation’s reserves; and7\n\nThe 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.","order_by":null,"text":{"0":{"id":261379,"text":"Transactions by nonstock corporations licensed under this chapter with their affiliates shall be subject to the following standards:","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"A1"},"1":{"id":261380,"text":"The terms shall be fair and reasonable;","type":"section","prefixes":["A","1"],"prefix":"1","entire_prefix":"A1","prefix_anchor":"A1","level":2,"prior_prefix":"A","next_prefix":"A2"},"2":{"id":261381,"text":"Charges and fees for service performed shall be reasonable;","type":"section","prefixes":["A","2"],"prefix":"2","entire_prefix":"A2","prefix_anchor":"A2","level":2,"prior_prefix":"A1","next_prefix":"A3"},"3":{"id":261382,"text":"Expenses incurred and payments received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied;","type":"section","prefixes":["A","3"],"prefix":"3","entire_prefix":"A3","prefix_anchor":"A3","level":2,"prior_prefix":"A2","next_prefix":"A4"},"4":{"id":261383,"text":"The books, accounts, and records of each party shall disclose clearly and accurately the precise nature and details of the transactions;","type":"section","prefixes":["A","4"],"prefix":"4","entire_prefix":"A4","prefix_anchor":"A4","level":2,"prior_prefix":"A3","next_prefix":"A5"},"5":{"id":261384,"text":"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","type":"section","prefixes":["A","5"],"prefix":"5","entire_prefix":"A5","prefix_anchor":"A5","level":2,"prior_prefix":"A4","next_prefix":"A6"},"6":{"id":261385,"text":"The transaction is in the best interest of the subscribers.","type":"section","prefixes":["A","6"],"prefix":"6","entire_prefix":"A6","prefix_anchor":"A6","level":2,"prior_prefix":"A5","next_prefix":"B"},"7":{"id":261386,"text":"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:","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A6","next_prefix":"B1"},"8":{"id":261387,"text":"The size of the nonstock corporation as measured by its assets, surplus, reserves, business in force, and other appropriate criteria;","type":"section","prefixes":["B","1"],"prefix":"1","entire_prefix":"B1","prefix_anchor":"B1","level":2,"prior_prefix":"B","next_prefix":"B2"},"9":{"id":261388,"text":"The nonstock corporation’s method of operation and manner of doing business;","type":"section","prefixes":["B","2"],"prefix":"2","entire_prefix":"B2","prefix_anchor":"B2","level":2,"prior_prefix":"B1","next_prefix":"B3"},"10":{"id":261389,"text":"The nature and extent of the nonstock corporation’s risk-sharing arrangements;","type":"section","prefixes":["B","3"],"prefix":"3","entire_prefix":"B3","prefix_anchor":"B3","level":2,"prior_prefix":"B2","next_prefix":"B4"},"11":{"id":261390,"text":"The quality, diversification, and liquidity of the nonstock corporation’s investment portfolio;","type":"section","prefixes":["B","4"],"prefix":"4","entire_prefix":"B4","prefix_anchor":"B4","level":2,"prior_prefix":"B3","next_prefix":"B5"},"12":{"id":261391,"text":"The recent past and projected future trend in the size of the nonstock corporation’s surplus;","type":"section","prefixes":["B","5"],"prefix":"5","entire_prefix":"B5","prefix_anchor":"B5","level":2,"prior_prefix":"B4","next_prefix":"B6"},"13":{"id":261392,"text":"The adequacy of the nonstock corporation’s reserves; and","type":"section","prefixes":["B","6"],"prefix":"6","entire_prefix":"B6","prefix_anchor":"B6","level":2,"prior_prefix":"B5","next_prefix":"B7"},"14":{"id":261393,"text":"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.","type":"section","prefixes":["B","7"],"prefix":"7","entire_prefix":"B7","prefix_anchor":"B7","level":2,"prior_prefix":"B6"}},"ancestry":[{"id":15019,"edition_id":1,"name":"Holding Companies","identifier":"2","label":"article","depth":3,"order_by":1,"parent_id":12967,"metadata":{},"date_created":"2026-06-26 03:51:33","date_modified":"2026-06-26 03:51:33","permalink":{"id":216809,"object_type":"structure","relational_id":15019,"identifier":"2","token":"38.2\/42\/2","url":"\/38.2\/42\/2\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12967,"edition_id":1,"name":"Health Services Plans","identifier":"42","label":"chapter","depth":2,"order_by":1,"parent_id":12698,"metadata":{},"date_created":"2026-06-26 03:44:05","date_modified":"2026-06-26 03:44:05","permalink":{"id":216657,"object_type":"structure","relational_id":12967,"identifier":"42","token":"38.2\/42","url":"\/38.2\/42\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12698,"edition_id":1,"name":"Insurance","identifier":"38.2","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:49","date_modified":"2026-06-26 03:43:49","permalink":{"id":210661,"object_type":"structure","relational_id":12698,"identifier":"38.2","token":"38.2","url":"\/38.2\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":57275,"structure_id":15019,"section_number":"38.2-4230","catch_line":"Definitions","url":"\/38.2-4230\/","token":"38.2\/42\/2\/38.2-4230","metadata":false},{"id":73870,"structure_id":15019,"section_number":"38.2-4231","catch_line":"Registration of nonstock corporations that are members of holding company system","url":"\/38.2-4231\/","token":"38.2\/42\/2\/38.2-4231","metadata":false},{"id":72616,"structure_id":15019,"section_number":"38.2-4232","catch_line":"Standards for transactions with affiliates; adequacy of surplus; dividends and other distributions","url":"\/38.2-4232\/","token":"38.2\/42\/2\/38.2-4232","metadata":false},{"id":76421,"structure_id":15019,"section_number":"38.2-4233","catch_line":"Commission approval required for certain transactions","url":"\/38.2-4233\/","token":"38.2\/42\/2\/38.2-4233","metadata":false},{"id":72404,"structure_id":15019,"section_number":"38.2-4234","catch_line":"Examinations","url":"\/38.2-4234\/","token":"38.2\/42\/2\/38.2-4234","metadata":false},{"id":73864,"structure_id":15019,"section_number":"38.2-4235","catch_line":"Confidential treatment of information and documents","url":"\/38.2-4235\/","token":"38.2\/42\/2\/38.2-4235","metadata":false}],"previous_section":{"id":73870,"structure_id":15019,"section_number":"38.2-4231","catch_line":"Registration of nonstock corporations that are members of holding company system","url":"\/38.2-4231\/","token":"38.2\/42\/2\/38.2-4231","metadata":false},"next_section":{"id":76421,"structure_id":15019,"section_number":"38.2-4233","catch_line":"Commission approval required for certain transactions","url":"\/38.2-4233\/","token":"38.2\/42\/2\/38.2-4233","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/38.2-4232\/","history_text":"

This law was first created in 1989. The record of its establishment is cataloged in chapter 606 of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year. Unfortunately, the 1989 \u201cActs\u201d aren\u2019t available online. It has been modified 1 time. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. That modification is as follows: in 1992, chapter 588.<\/p>","references":[{"id":76421,"section_number":"38.2-4233","catch_line":"Commission approval required for certain transactions","order_by":null,"url":"\/38.2-4233\/"}],"refers_to":false,"permalink":{"id":216819,"object_type":"law","relational_id":72616,"identifier":"38.2-4232","token":"38.2\/42\/2\/38.2-4232","url":"\/38.2-4232\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/38.2-4232\/","token":"38.2\/42\/2\/38.2-4232","dublin_core":{"Title":"Standards for transactions with affiliates; adequacy of surplus; dividends and other distributions","Type":"Text","Format":"text\/html","Identifier":"\u00a7 38.2-4232","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> Transactions<\/span> by nonstock corporations<\/span> licensed under this chapter with their affiliates<\/span> shall be subject to the following standards: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> The terms shall be fair and reasonable; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> Charges and fees for service performed shall be reasonable; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> Expenses incurred and payments received shall be allocated to the insurer<\/span> in conformity with customary insurance<\/span> accounting practices consistently applied; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> The books, accounts, and records of each party<\/span> shall disclose clearly and accurately the precise nature and details of the transactions<\/span>; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

5.<\/span> The nonstock corporation<\/span>’s surplus<\/span> following any transaction<\/span> with affiliates<\/span> involving more than one-sixth of one percent of admitted assets<\/span> or one percent of surplus<\/span> as of the immediately preceding December 31, whichever is less, shall be reasonable in relation to the nonstock corporation<\/span>’s outstanding liabilities and adequate to its financial needs; and <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

6.<\/span> The transaction<\/span> is in the best interest of the subscribers<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> For purposes of this article, in determining whether a nonstock corporation<\/span>’s surplus<\/span> is reasonable in relation to the nonstock corporation<\/span>’s outstanding liabilities and adequate to its financial needs, the following factors, among others, shall be considered: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> The size of the nonstock corporation<\/span> as measured by its assets<\/span>, surplus<\/span>, reserves, business in force, and other appropriate criteria; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> The nonstock corporation<\/span>’s method of operation and manner of doing business; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> The nature and extent of the nonstock corporation<\/span>’s risk-sharing arrangements; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> The quality, diversification, and liquidity of the nonstock corporation<\/span>’s investment portfolio; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

5.<\/span> The recent past and projected future trend in the size of the nonstock corporation<\/span>’s surplus<\/span>; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

6.<\/span> The adequacy of the nonstock corporation<\/span>’s reserves; and <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

7.<\/span> The quality and liquidity of investments in subsidiaries. The Commission<\/span> in its judgment<\/span> may classify any investment as a nonadmitted asset for the purpose of determining the adequacy of surplus<\/span>. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nSTANDARDS FOR TRANSACTIONS WITH AFFILIATES; ADEQUACY OF SURPLUS; DIVIDENDS AND\nOTHER DISTRIBUTIONS (\u00a7 38.2-4232)\n\nA. Transactions by nonstock corporations licensed under this chapter with their\naffiliates shall be subject to the following standards:\n\n 1. The terms shall be fair and reasonable;\n\n 2. Charges and fees for service performed shall be reasonable;\n\n 3. Expenses incurred and payments received shall be allocated to the insurer\n in conformity with customary insurance accounting practices consistently\n applied;\n\n 4. The books, accounts, and records of each party shall disclose clearly and\n accurately the precise nature and details of the transactions;\n\n 5. The nonstock corporation’s surplus following any transaction with\n affiliates involving more than one-sixth of one percent of admitted assets or\n one percent of surplus as of the immediately preceding December 31, whichever\n is less, shall be reasonable in relation to the nonstock corporation’s\n outstanding liabilities and adequate to its financial needs; and\n\n 6. The transaction is in the best interest of the subscribers.\n\nB. For purposes of this article, in determining whether a nonstock\ncorporation’s surplus is reasonable in relation to the nonstock\ncorporation’s outstanding liabilities and adequate to its financial needs,\nthe following factors, among others, shall be considered:\n\n 1. The size of the nonstock corporation as measured by its assets, surplus,\n reserves, business in force, and other appropriate criteria;\n\n 2. The nonstock corporation’s method of operation and manner of doing\n business;\n\n 3. The nature and extent of the nonstock corporation’s risk-sharing\n arrangements;\n\n 4. The quality, diversification, and liquidity of the nonstock\n corporation’s investment portfolio;\n\n 5. The recent past and projected future trend in the size of the nonstock\n corporation’s surplus;\n\n 6. The adequacy of the nonstock corporation’s reserves; and\n\n 7. The quality and liquidity of investments in subsidiaries. The Commission in\n its judgment may classify any investment as a nonadmitted asset for the\n purpose of determining the adequacy of surplus.\n\nHISTORY: 1989, c. 606; 1992, c. 588.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}