                                 CODE OF VIRGINIA

DIVIDENDS AND OTHER DISTRIBUTIONS (§ 38.2-1330.1)

A. Except as otherwise provided by law, a domestic insurer shall not declare or
pay a dividend or other distribution from any source other than earned surplus
without the Commission&#8217;s prior written approval. For purposes of this
section, &#8220;earned surplus&#8221; means an amount equal to the unassigned
funds (surplus) of an insurer as set forth in the most recent annual statement
of the insurer filed with the Commission including all or part of the surplus
arising from unrealized capital gains or revaluation of assets. No domestic
insurer shall pay an extraordinary dividend or make any other extraordinary
distribution to its shareholders until the earlier of:

   1. Thirty days after the Commission has received written notice of the
   declaration thereof and has not within such period disapproved such payment;
   or

   2. The Commission&#8217;s approval of such payment.

B. For purposes of this section, an extraordinary dividend or distribution
includes any dividend or distribution of cash or other property whose fair
market value together with that of other dividends or distributions made within
the preceding 12 months exceeds the greater of (i) 10 percent of such
insurer&#8217;s surplus as regards policyholders as of the immediately preceding
December 31 or (ii) the net gain from operations of such insurer, if such
insurer is a life insurer, or the net income, if such insurer is not a life
insurer, not including realized capital gains, for the 12-month period ending
the immediately preceding December 31, but shall not include pro rata
distributions of any class of the insurer&#8217;s own securities.

C. In determining whether a dividend or distribution is extraordinary, an
insurer other than a life insurer may carry forward net income from the previous
two calendar years that has not already been paid out as dividends. This
carry-forward shall be computed by taking the net income from the second and
third preceding calendar years, not including realized capital gains, less
dividends paid in the second and immediate preceding calendar years.

D. Notwithstanding any other provision of law, an insurer may declare an
extraordinary dividend or distribution that is conditional upon the
Commission&#8217;s approval thereof, and such declaration shall confer no rights
upon shareholders until:

   1. The Commission has approved the payment of such dividend or distribution;
   or

   2. The Commission has not disapproved such payment within the 30-day period
   described in subsection A.

E. The Commission may limit or disallow the payment of ordinary dividends by a
domestic insurer if the insurer is presently or potentially financially
distressed or troubled. The Commission shall set forth the specific reasons for
limiting or disallowing the payment of any ordinary dividends.

HISTORY: 2006, c. 577; 2014, c. 309.