Oklahoma § 36-2125 - Borrowed surplus

§ 36-2125. Borrowed surplus

A. A domestic stock or mutual insurer may borrow money to

defray the expenses of its organization, provide it with surplus

funds, or for any purpose required by its business, upon a written

agreement that such money is required to be repaid only out of the

insurer's surplus in excess of that stipulated in such agreement.

The form of the agreement must be submitted for approval to

theCommissioner to assure it is consistent with the requirements of

this section. If such agreement is not approved or disapproved by

the Commissioner within fifteen (15) days after the date of its

filing, it shall be deemed approved. The agreement may provide for

interest at the rate agreed upon, but not exceeding a rate of

interest approved by the Insurance Commissioner, which interest

shall or shall not constitute a liability of the insurer as to its

funds other than such excess of surplus, as stipulated in the

agreement. Repayment of such loan shall not be made unless it is

approved in advance by the Commissioner. Such repayment shall be

deemed approved unless within fifteen (15) days after the date of

such filing the insurer is notified in writing of the Commissioner's

disapproval and the reasons therefor.

B. Money so borrowed, together with the interest thereon if so

stipulated in the agreement, shall not form a part of the insurer's

legal liabilities except as to its surplus in excess of the amount

thereof stipulated in the agreement, or be the basis of any setoff;

but until repaid, financial statements filed or published by the

insurer shall show as a footnote thereto the amount thereof then

unpaid together with any interest thereon accrued but unpaid.

C. If a domestic mutual insurer, the insurer in advance of any

such loan shall file with the Insurance Commissioner a statement of

the purposes of the loan and a copy of the proposed loan agreement,

which shall be subject to the approval of the Commissioner. The

loan and agreement shall be deemed approved unless within fifteen

(15) days after date of such filing the insurer is notified in

writing of the Commissioner's disapproval and the reasons therefor.

The Commissioner shall so disapprove any such proposed loan or

agreement if he finds that the loan is reasonably unnecessary or

excessive for the purpose intended, or that the terms of the loan

agreement are not fair and equitable to the parties, and to other

similar lenders, if any, to the insurer, or that the information so

filed by the insurer is inadequate, specifying the respects in which

it is so inadequate.

D. Any such loan to a mutual insurer or substantial portion

thereof shall be repaid by the insurer out of earned surplus when no

longer reasonably necessary for the purpose originally intended. No

repayment of such a loan shall be made by a mutual insurer unless in

advance approved by the Commissioner.

Oklahoma Statutes - Title 36. Insurance

E. This section shall not apply to loans obtained by the

insurer in ordinary course of business from banks and other

financial institutions, nor to loans secured by pledge of assets.

Amended by Laws 1983, c. 99, § 3, emerg. eff. May 9, 1983.