North Carolina General Statutes 58-47-85. Surplus requirements
Every group shall maintain minimum surplus under one of the options in subdivision (1), (2), or (3) of this section:
(1) Maintain minimum surplus in accordance with Article 12 of this Chapter. A group organized and authorized before the effective date of this section shall comply with this section under the following schedule:
a. Forty percent (40%) of the surplus, in accordance with Article 12, by January 1, 1999.
b. Fifty-five percent (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-five percent (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.
The Commissioner shall not approve any dividend request that results in a surplus that is less than one hundred percent (100%) of the minimum surplus required by Article 12 of this Chapter.
Terms Used In North Carolina General Statutes 58-47-85
- Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
- following: when used by way of reference to any section of a statute, shall be construed to mean the section next preceding or next following that in which such reference is made; unless when some other section is expressly designated in such reference. See North Carolina General Statutes 12-3
(2) Maintain minimum surplus at an amount equal to ten percent (10%) of the group’s total undiscounted outstanding claim liability, according to the group’s annual statement filing, or such other amount as the Commissioner prescribes based on, but not limited to, the financial condition of the group and the risk retained by the group. In addition, the group shall:
a. Maintain specific excess insurance or reinsurance that provides the coverage limits in N.C. Gen. Stat. § 58-47-95(a). The group shall retain no specific risk greater than five percent (5%) of the group’s total annual earned premium according to the group’s annual statement filing.
b. Maintain aggregate excess insurance or reinsurance with a coverage limit being the greater of two million dollars ($2,000,000) or twenty percent (20%) of the group’s annual earned premium, according to the group’s annual statement filing. The aggregate excess attachment point shall be one hundred ten percent (110%) of the annual earned premium, according to the group’s annual statement filing. The required attachment point shall be reduced by each point, or fraction of a point, that a group’s expense ratio exceeds thirty percent (30%). Conversely, the required attachment point may be increased by each point, or fraction of a point, that a group’s expense ratio is less than thirty percent (30%), but in no event shall the attachment point be greater than one hundred fifteen percent (115%) of the annual earned premium.
c. Adopt a policy whereby every member:
1. Pays a deposit to the group of twenty-five percent (25%) of the member’s estimated annual earned premium, or another amount that the Commissioner prescribes based on, but not limited to, the financial condition of the group and the risk retained by the group; or
2. Once every year files 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 does not show a deficit equity and is appropriate for membership in the group. At the request of the Commissioner, the group shall make these filings available for review. These filings shall be kept confidential; provided that the Commissioner may use that information in any judicial or administrative proceeding.
(3) Maintain minimum surplus at an amount equal to three hundred thousand dollars ($300,000). The group shall immediately assess its members if, at any time, the group’s surplus is less than the minimum surplus amount. In addition, the group shall maintain:
a. Specific excess insurance or reinsurance that provides coverage limits pursuant to N.C. Gen. Stat. § 58-47-95(a). The group shall retain no specific risk greater than five percent (5%) of the group’s total annual earned premium according to the group’s annual statement filing.
b. Aggregate excess insurance or reinsurance with a coverage limit being the greater of two million dollars ($2,000,000) or twenty percent (20%) of the group’s annual earned premium, according to the group’s annual statement filing. The aggregate excess attachment point shall be one hundred ten percent (110%) of the annual earned premium, according to the group’s annual statement filing. The required attachment point shall be reduced by each point, or fraction of a point, that a group’s expense ratio exceeds thirty percent (30%). Conversely, the required attachment point may be increased by each point, or fraction of a point, that a group’s expense ratio is less than thirty percent (30%), but in no event shall the attachment point be greater than one hundred fifteen percent (115%) of the annual earned premium.
The Commissioner may require different levels, or waive the requirement, of specific and aggregate excess loss 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.)