Bill would make permanent '05 law on life insurers' surplus limits.
ALBANY, N.Y., May 24 -- A bill to make permanent 2005 legislation regarding the maximum amount of surplus that domestic mutual life insurers and domestic stock life insurers that issue participating policies are permitted to accumulate passed the Senate and was sent to the Assembly on May 8.
If it is signed into law, this bill, sponsored by Senator James L. Seward (R/C/I-Chenango), Chairman of the Senate Insurance Committee, would eliminate the December 31, 2007 sunset date for the earlier 2005 law.
The 2005 law updated the formulas used to calculate the maximum amount of surplus these types of insurers are allowed to accumulate on participating policies to bring the limits up "to more realistic levels" It also extended the use of the risk-based capital formula to stock life insurers. Mutual life insurers were already using that formula.
In support of this legislation, Diane D. Stuto of the Life Insurance Council of the State of New York (LICONY) said that "company surplus serves many purposes. It supports reserves, liabilities, and other company obligations. It may also be needed in the event of an unforeseen, catastrophic loss of life. It also may be used to make a substantial investment."
Stuto also said that "since mutual companies cannot issue stock or debt instruments, growth through acquisition must be funded largely by surplus. The current formula for calculating the surplus limit allows a company to retain more surpluses to meet these needs and is critical to the continued vitality of New York's domestic mutual insurers, large and small."
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|Title Annotation:||NEW YORK|
|Date:||Jun 4, 2007|
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