Cal. Code Regs. tit. 10 § 2612.02

Current through Register 2024 Notice Reg. No. 24, June 14, 2024

Section 2612.02 - Form of

The body of the form of contribution certificate, when authorized, shall be substantially as shown herein. The following form is for an interinsurance exchange; other entities having to resort to this device shall adapt the substance thereof.

ABC INSURANCE EXCHANGE 1 Market Street __________, California

CERTIFICATE OF CONTRIBUTION

Certificate No. __________

THIS IS TO CERTIFY THAT XYZ UNDERWRITERS (hereinafter called "Contributor"), Attorney-in-Fact for ABC INSURANCE EXCHANGE, has advanced to ABC INSURANCE EXCHANGE, a reciprocal insurer (hereinafter called the "Exchange"), the sum of __________Thousand Dollars ($__________) in cash, lawful money of the United States (hereinafter called the "Principal Sum").

This Certificate of Contribution is used pursuant to the authority granted by Permit No.__________ of the Insurance Commissioner of the State of California and is hereby designated "Certificate Number__________"*

The Principal Sum of this Certificate, to wit, __________Thousand Dollars ($__________) shall, upon presentation of this Certificate for endorsement of any partial payment, or upon complete surrender for cancellation in return for final payment in full, be payable by the Exchange at its Home Office at____________________, California, only out of the excess of the admitted assets of the Exchange over the sum of:

1. All liabilities (including, but not limited to claims, losses, reserves, reinsurance, dividends, production and administrative expenses, taxes, loans, and advances), but excluding any amounts for or on account of any outstanding Certificates of Contribution, including this Certificate; and

2. An amount (of surplus) equal to the largest of (a) or (b) or (c) hereinafter:

a) One and one-half times the amount required by the laws of California at the time of such repayment for the issuance of a Certificate of Authority to transact the classes of insurance which it is then transacting anywhere, or which it is authorized to transact in California, or the amount required by the laws of any other jurisdiction for the retention of its Certificate of Authority in that jurisdiction, whichever is the largest amount; or

b) In the event the exchange at the time of repayment of this or any other Contribution Certificate has any non-assessable policies outstanding, an amount equal to one and one-half times the minimum paid-in capital required of incorporated insurers issuing policies on a reserve basis and transacting the same classes of insurance; or

c) $__________

______________________________

*NOTE: In any case here contribution certificates are to be issued to more than one lender, a paragraph or paragraphs will be inserted containing the following provisions and information:

There are __________certificates in an aggregate amount of $__________ already issued and outstanding that are senior to all certificates bearing the same issue date as this certificate bears. __________certificates in an aggregate amount of $__________ were issued on the same date as this certificate.

III

The Principal Sum of this Certificate shall not be payable in whole or in part, except upon approval in writing by the Insurance Commissioner given after the decision of a majority of the Governing Board of the Exchange made and recorded at a regular or special meeting; provided, however, that the Governing Board of Exchange shall be required to exercise such option and vote payment of such Principal Sum, either in whole or in part, whenever the condition of the Exchange is such that it no longer reasonably requires the sum proposed to be paid upon the Principal Sum of this Certificate.

Interest at the rate of ___% per annum, not compounded shall be due and payable semi-annually by the Exchange at its Home Office at____________________, California upon the unpaid balance of the Principal Sum of this Certificate to the extent, and only to the extent, that funds of the Exchange exist on each such due date to discharge all liabilities within the meaning of Paragraph II (1) herein above plus the sum of $__________ (the minimum surplus required by law to be maintained over and above all liabilities for the classes of insurance it is transacting) or the amount of surplus required by the laws of any jurisdiction in which it is licensed to do business to retain unimpaired its Certificate of Authority there, whichever is the larger amount. If no such funds in whole or in part exist on any such due date, such interest for which no funds for payment exist shall not become due or payable but shall accrue and shall become due and payable when and to the extent such funds do come into existence thereafter. Any interest both due and payable by the terms of this paragraph shall create a cause of action in the Contributor and be a liability of the Exchange.

The obligation evidenced by this Certificate shall not be a liability or claim against the Exchange or its funds or assets at any time except to the extent that the Principal Sum hereof, in whole or in part, shall be due and payable in accordance with the provisions of Paragraphs II and III hereof and except to the extent that interest on this Certificate, in whole or in part, shall be due and payable in accordance with the provisions of Paragraph IV hereof.

Should the Exchange at any time discontinue the insurance business, then, after the payment or provision for payment of all the obligations described in subdivision (1) of Paragraph II hereof, following the determination of such facts by the Insurance Commissioner of the State of California, any remaining funds or assets of the Exchange shall first be applied to the payment of any interest accrued hereon, then to the remaining unpaid balance of the Principal Sum of this Certificate.

**VII

Nothing in this shall be construed to prevent the Governing Board of the Exchange from declaring and paying dividends or savings to the policyholders in the manner and to the extent permitted by law.

VIII

It is understood and agreed that the Contributor has made the foregoing contribution upon the terms and conditions herein set forth, after having been furnished with a copy of the permit of the Insurance Commissioner of the State of California authorizing the issuance of this Certificate and having read the same, and that this Certificate evidences the complete understanding and agreement between the Contributor and the Exchange.

IN WITNESS WHEREOF, ABC INSURANCE EXCHANGE has executed this Certificate

at____________________, California, this __________ day of__________, 19__________.

ABC INSURANCE EXCHANGE

By______________________________

Chairman-Board of Governors

______________________________

Secretary

APPROVED AND ACCEPTED:

XYZ UNDERWRITERS, Contributor

By ______________________________

President

By ______________________________

Secretary

______________________________

**See above Note and the following paragraph:

The order of repayment of this and other contribution certificates bearing the same date hereof shall be simultaneous in time and equal in amount. This certificate and others, if any, issued on the same date as this certificate shall be senior to other contribution certificates that may be issued hereafter, and junior to already issued and outstanding certificates.

STATE OF CALIFORNIA	)
	)	ss
___________________________COUNTY OF	)

On this __________ day of__________, 19__________, personally appeared____________________ and ____________________ known to me to be the person whose names are subscribed above as Chairman and Secretary, respectively, of ABC Insurance Exchange, and they and each of them duly acknowledged to me that they and each of them executed this instrument pursuant to authority granted by the Board of Governors of ABC INSURANCE EXCHANGE.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal this day and year.

Date __________

______________________________

Notary Public in and for said

County and State

"RESOLVED:

That ____________________ and ____________________ are hereby authorized to apply to the Insurance Commission of the State of California for authority to issue (additional) Contribution Certificates of ABC Insurance Exchange to XYZ Underwriters in an amount not to exceed $__________."

STATE OF CALIFORNIA	)
	)	ss
___________________________COUNTY OF	)

____________________, being first duly sworn, deposes and says:

That he is the Assistant Secretary of the Board of Governors of ABC Insurance Exchange; and that the resolution stated above was passed and adopted by the Executive Committee of the Board of Governors of ABC Insurance Exchange at a special meeting on__________, __________ 19 __________.

Subscribed and sworn to before me this __________ day of __________19__________.

______________________________

NOTARY PUBLIC in and for the County of ____________________

State of California

My Commission expires __________

Cal. Code Regs. Tit. 10, § 2612.02