Section 4105. Domestic stock companies; declaration and payment of dividends

(a) Except as provided in subsection (c) of this section  no  domestic  stock  property/casualty  insurance  company  shall declare or
  distribute any dividend to shareholders except out  of  earned  surplus.
  Notwithstanding  the foregoing, the superintendent may permit a domestic
  stock property/casualty insurance company to restate its earned  surplus
  under  a  plan of quasi-reorganization in accordance with regulations as
  may  be  promulgated  by   the   superintendent.   No   domestic   stock
  property/casualty  insurance  company  shall  declare  or distribute any
  dividend to shareholders which, together with all dividends declared  or
  distributed  by  it during the next preceding twelve months, exceeds the
  lesser of ten percent of its surplus to policyholders as  shown  by  its
  last  statement  on file with the superintendent, or one hundred percent
  of adjusted net investment income during such period unless, upon  prior
  application  therefor,  the  superintendent  approves a greater dividend
  distribution based  upon  his  finding  that  the  insurer  will  retain
  sufficient surplus to support its obligations and writings.
    In this section, (1) "earned surplus" means the portion of the surplus
  that  represents  the net earnings, gains or profits, after deduction of
  all losses, that have  not  been  distributed  to  the  shareholders  as
  dividends,  or  transferred  to  stated  capital  or  capital surplus or
  applied to  other  purposes  permitted  by  law  but  does  not  include
  unrealized appreciation of assets;
    (2) "adjusted  net  investment income" means net investment income for
  the twelve months immediately preceding the declaration or  distribution
  of  the  current  dividend  increased  by  the  excess,  if  any, of net
  investment income over dividends  declared  or  distributed  during  the
  period   commencing  thirty-six  months  prior  to  the  declaration  or
  distribution of the current dividend  and  ending  twelve  months  prior
  thereto; and
    (3) "surplus"  means  the  amount  of the insurer's admitted assets in
  excess of its capital and liabilities, and both "surplus"  and  "surplus
  to  policyholders"  include any voluntary reserves, or any part thereof,
  which are not required by law.
    (b) If the superintendent finds, after notice and  hearing,  that  any
  such  company has distributed any dividend in violation of this section,
  he may order the company to cease  doing  any  new  business  until  the
  amount  of  the dividend has been restored to the company. The directors
  of  any  such  company  who  vote  in  favor  of  the  declaration   and
  distribution  of  any  dividend  in  violation of this section shall, in
  addition to all other liabilities or penalties  prescribed  by  law,  be
  jointly  and  severally  liable to the creditors, including policyholder
  creditors, of the company to the extent of the dividend so declared  and
  distributed,  and every shareholder receiving any such dividend shall be
  liable to the creditors of the company to the  extent  of  the  dividend
  received by such shareholder.
    (c)  Such  company  may declare and distribute a stock dividend to its
  shareholders whenever it shall have a surplus, as defined in  subsection
  (a)  hereof,  in an amount at least equal to the sum of the dividend and
  thirty percent of its unearned premium liability as shown  by  its  last
  statement  on  file  with  the superintendent and, for such purpose, the
  company may increase its capital stock from such surplus in  the  manner
  prescribed  in section one thousand two hundred six of this chapter, and
  it  shall  distribute  the  additional  or  increased   stock   to   its
  shareholders in proportion to the stock held by each, respectively.