Code of Virginia

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Code of Virginia
Title 38.2. Insurance
Chapter 25. Mutual Assessment Property and Casualty Insurers
11/30/2021

Article 5. Financial Provisions.

§ 38.2-2526. Surplus to policyholders.

A. Surplus to policyholders in addition to the required surplus specified in subsections A and B of § 38.2-2503 may be accumulated in amounts as determined by the board of directors. The surplus may be used for the payment of losses and operating expenses of the insurer.

B. Income earned on any surplus to policyholders may be used to pay losses, operating expenses, or added to surplus.

C. The provisions of this section shall become effective July 1, 1986.

D. Any mutual assessment property and casualty insurer already licensed on July 1, 1986, shall comply with the minimum surplus requirements of § 38.2-2503 by July 1, 1991. Any mutual assessment property and casualty insurer that does not meet the surplus requirements of this section as of July 1, 1986, and is not writing any of the classes authorized in subsections B and C of § 38.2-2503 on July 1, 1986, shall not write any of those classes until the specified surplus requirement is met.

1986, c. 562.

§ 38.2-2527. Limitation on single risk to be assumed.

A. No single risk shall be assumed by a mutual assessment property and casualty insurer in an amount exceeding ten percent of its surplus to policyholders. Any risk or portion of any risk which has been reinsured in accordance with § 38.2-2528 shall be deducted in determining the limitation of risk prescribed by this section. For the purposes of this section the amount of surplus to policyholders shall be determined on the basis of the last financial statement of the insurer, or the last report of examination filed with the Commission, whichever is more recent, at the time the risk is assumed. Mutual assessment property and casualty insurers licensed on or before July 1, 1986, shall conform to this limitation by July 1, 1991.

B. Until July 1, 1991, the following single risk limits after deducting for reinsurance will apply:

1. No insurer having less than $2 million insurance in force shall insure any 1 risk for more than $10,000;

2. No insurer having more than $2 million but less than $5 million insurance in force shall insure any 1 risk for more than $12,000;

3. No insurer having more than $5 million but less than $10 million insurance in force shall insure any 1 risk for more than $20,000;

4. No insurer having more than $10 million insurance in force shall insure any 1 risk for a sum in excess of 15 cent(s) for each $100 insurance it has in force; and

5. An insurer may insure any one risk in larger sums than prescribed in this section if (i) the excess over such prescribed maximum is reinsured as authorized in this chapter or (ii) the excess may be increased by the extent of twenty-five percent of the surplus of the insurer as of the time the insurance is written.

1986, c. 562.

§ 38.2-2528. Reinsurance.

Any mutual assessment property and casualty insurer may reinsure the whole or any part of its risks with any solvent insurer licensed in this Commonwealth or licensed or approved in any other state and meeting standards of solvency at least equal to those required in this Commonwealth if the reinsurance is ceded without contingent liability on the part of the reinsured insurer. Any mutual assessment property and casualty insurer having a surplus in excess of $800,000 may accept or assume reinsurance from any licensed property and casualty insurer. Any of those companies may accept or assume reinsurance on risks located within or without the territory in which it is authorized to transact insurance.

Nothing in this section shall be construed to prohibit the participation of a mutual assessment property and casualty insurer in a pool or other plan among similar companies approved by the Commission for the purpose of spreading losses or providing reinsurance or catastrophe coverage for participants. The acceptance of reinsurance by any insurer outside the territory in which it is authorized to transact the business of insurance shall not be construed to enlarge its territory so as to affect any tax exemption to which it may be entitled.

1952, c. 317, § 38.1-675; 1986, c. 562.

§ 38.2-2529. Unearned premium reserves required.

A. Advance assessments received by mutual assessment property and casualty insurers shall be considered premiums and, except as provided in subsection B of this section, shall be subject to the requirement of an unearned premium reserve computed in accordance with § 38.2-1312. The reserves may be reduced for applicable reinsurance in accordance with the provisions of Article 3.1 (§ 38.2-1316.1 et seq.) of Chapter 13 of this title.

B. The amount each insurer shall maintain in reserves for unearned premium reserves shall be as follows:

1. For calendar year 1987, at least ten percent of the unearned premium reserve as calculated in subsection A of this section; and

2. For each subsequent year, at least an additional ten percent as calculated in subsection A for that subsequent year in order that the full amount of unearned premium reserves shall be established by December 31, 1996.

1986, c. 562; 1994, c. 316.