What's happening
This bill doubles the allowable surplus for New York life insurance companies and excludes certain borrowed funds from surplus calculations.
Why it matters
Increases financial flexibility for life insurers. By doubling the allowable surplus from 10% to 20% of policy reserves and liabilities, the bill enables companies to retain more capital, potentially making them more resilient to market fluctuations or unexpected claims.
Could impact policyholder dividends and company investments. Higher surplus limits may allow insurers to take a more conservative approach with their capital, potentially affecting how profits are distributed to policyholders or how much is reinvested in the business.
Excludes borrowed funds from surplus calculations. By ensuring that funds borrowed under Section 1307 are not counted toward the surplus cap, the bill encourages insurers to seek additional financial backing in times of need without breaching regulatory limits, supporting solvency and operational stability.
May affect competition and regulatory oversight. Larger surplus allowances could benefit bigger or more aggressive insurers, potentially intensifying competition, while also requiring regulators to closely monitor how these higher surpluses are managed to protect consumers.
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Who cares
Headline styles
Increase Insurance Surplus Limits
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to insurance
- Referred to insurance
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5212
2019-2020 Regular Sessions
IN SENATE
April 16, 2019
Introduced by Sen. BRESLIN -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to the limitation on the accumulation of surplus of life insurance companies
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Paragraphs 1 and 2 of subsection (a) section 4219 of the insurance law, as amended by chapter 340 of the laws of 2005, are amended and a new subsection (d) is added to read as follows:
(1) Any domestic mutual life insurance company may maintain a surplus, above all of its reserves and liabilities required or specifically permitted by this chapter, not exceeding the greatest of (A) eight hundred fifty thousand dollars, or (B) [ten] twenty percent of its policy reserves and policy liabilities, or (C) [ten] twenty percent of its policy reserves and policy liabilities plus (i) the product of three and its authorized control level RBC as determined in accordance with section one thousand three hundred twenty-two of this chapter minus (ii) the asset valuation reserve as reported in its annual statement, or (D) the minimum amount of capital and surplus required by law of another state in which the company is authorized to do business.
(2) Any domestic stock life insurance company issuing participating policies only or both participating and non-participating policies or contracts in accordance with subsection (f) of section four thousand two hundred thirty-one of this article, may maintain a participating policyholders' surplus, above all of its reserves and liabilities arising out of participating policies, required or specifically permitted by the provisions of this chapter, not exceeding the greatest of (A) two hundred fifty thousand dollars, or (B) [ten] twenty percent of such policy reserves and such policy liabilities, or (C) [ten] twenty percent of such policy reserves and policy liabilities plus the amount derived by prorating, based upon the ratio of participating assets to admitted
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11221-01-9
S. 5212 2
assets, (i) the product of three and its authorized control level RBC as determined in accordance with section one thousand three hundred twenty-two of this chapter minus (ii) the asset valuation reserve as reported in its annual statement.
(d) Notwithstanding any other provision of this chapter, the amount of any funds advanced or borrowed by any domestic insurer pursuant to section one thousand three hundred seven of this chapter shall be excluded from the calculation of the maximum surplus prescribed by subsection (a) of this section.
§ 2. Section 1307 of the insurance law is amended by adding a new subsection (e) to read as follows:
(e) Any sum so advanced or borrowed shall be excluded from the calculation of the maximum surplus prescribed by subsection (a) of section four thousand two hundred nineteen of this chapter.
§ 3. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the insurance law, in relation to the limitation on the accumulation of surplus of life insurance companies
Summary of provisions
Section one amends section 4219 of the insurance law to increase the maximum surplus calculation formula from ten percent to twenty percent and clarify that surplus notes are excluded from the maximum surplus calculation.
Section two amends section 1307 of the insurance law to clarify that surplus notes are excluded from the maximum surplus calculation in section 4219 of the insurance law.
Purpose
Relates to increasing the maximum surplus calculation formula for domes- tic mutual companies and clarifying that surplus notes are excluded from the maximum surplus calculation
Justification
This proposal would amend Insurance Law Section 4219 to increase the maximum surplus calculation formula from ten percent to twenty percent for domestic mutual life insurance companies and domestic stock life insurance companies issuing participating and non-participating policies or contracts. Massachusetts recently increased its surplus cap for mutu- al companies domiciled in that state from twelve percent to twenty percent, and Pennsylvania eliminated its surplus cap, which now places certain New York domestic mutual companies at a disadvantage as compared to companies headquartered in these neighboring states when engaging in corporate transactions at the national level.
The proposal would also clarify that surplus notes are excluded from the calculation of the surplus cap set forth in Insurance Law Section 4219. Surplus notes are excluded because they are neither earned nor accumu- lated surplus, but instead represent debt or amounts that will need to be paid back at a future date.
Legislative history
New Bill
Effective date
Immediately
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.