Section 4207. Dividends to shareholders of life, and accident and health insurance companies

(a)  (1)  Notwithstanding  paragraph  two  of  this  subsection,  any  domestic stock life insurance company may distribute a
  dividend  to  its  shareholders  where  the  aggregate  amount  of  such
  dividends in any calendar year does not exceed the lesser of:
    (A)  ten percent of its surplus to policyholders as of the immediately
  preceding calendar year; or
    (B) its  net  gain  from  operations  for  the  immediately  preceding
  calendar year, not including realized capital gains.
    (2)  Except  as  provided  in  paragraph  one  of  this subsection, no
  domestic stock life insurance company shall distribute any  dividend  to
  its  shareholders  unless  a  notice  of  its  intention to declare such
  dividend  and  the  amount  thereof  shall  have  been  filed  with  the
  superintendent  not  less  than  thirty days in advance of such proposed
  declaration. The superintendent  may  disapprove  such  distribution  by
  giving  written  notice  to  such  company within thirty days after such
  filing that he finds that the financial condition of  the  company  does
  not warrant such distribution.
    (b)  (1)  Except  as  provided  in paragraph three hereof, no domestic
  stock accident and health insurance company shall declare or  distribute
  any  dividend  on  its  capital  stock, except out of earned surplus, as
  defined in subsection (a) of section four thousand one hundred  five  of
  this  chapter.  Notwithstanding  the  forgoing,  the  superintendent may
  permit a domestic stock accident and health 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 accident and health insurance company  shall  declare  or
  distribute  any  dividend  to shareholders which, together with all such
  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
  for  such  period  unless,  upon   prior   application   therefor,   the
  superintendent  approves  a  greater  dividend  payment  based  upon his
  finding that the insurer will retain sufficient surplus to  support  its
  obligations and writings.  Within the meaning of this section, "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; "surplus" means
  the amount of the insurer's admitted assets in excess of its capital and
  its liabilities; and both "surplus" and "surplus to policyholders" shall
  include  any  voluntary  reserves,  or  any  part thereof, which are not
  required by law.
    (2) If the superintendent finds, after notice to and hearing  of  such
  company, that any such company has distributed any dividend in violation
  of  this  subsection,  he  may order such company to cease doing any new
  business until the amount of such dividend has  been  restored  to  such
  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 such company to the extent of the
  dividend so declared and paid, and every shareholder receiving any  such
  dividend shall be liable to such creditors of such company to the extent
  of the dividend received by such shareholder.

    (3)  Any  domestic  stock  accident  and  health insurance company may
  declare and distribute a stock dividend to its shareholders whenever  it
  shall have a surplus as defined in paragraph one hereof, in an amount at
  least  equal  to  the  sum  of  such  dividend and thirty percent of its
  unearned premium liability as shown by its last statement on file in the
  office  of  the  superintendent  and, for such purpose, such 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  such  additional  or  increased stock to its shareholders in
  proportion to the stock held by each, respectively.
    (c) Any stock accident and health insurance company authorized  to  do
  business   in  this  state  may  include  in  its  charter  a  provision
  authorizing the board of directors to permit its policyholders from time
  to time to participate in the profits  of  its  operations  through  the
  payment  of dividends to policyholders. For the purpose of carrying into
  effect any such provision, the board of directors may from time to  time
  make  reasonable  classifications of policies. Every such classification
  of risks shall be  filed  with  the  superintendent  and  shall  not  be
  effective  as  to  policies  issued  or  delivered  in this state unless
  approved by the superintendent as fair and equitable  and  not  unfairly
  discriminatory.  Any  such classification approved by the superintendent
  shall remain in effect in this state until disapproved by him  or  until
  withdrawn  or modified with his approval by the company filing the same.
  No dividends to policyholders shall be declared  or  paid  by  any  such
  company  except  out of its earned surplus, as defined in subsection (a)
  of section four thousand one hundred five of this chapter.