(a) Notice of Ordinary and Extraordinary Dividends and Other Distributions. Complete subsections (a) and (b) of this section for an Ordinary Dividend under §7.203(o) of this title (relating to Registration of Insurers) and complete subsections (a) - (c) of this section for an Extraordinary Dividend under §7.204(d) of this title (relating to Transactions Subject to Prior Notice).
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(b) Dividend or distribution.
  (1) Name of insurer.
  (2) Address of insurer.
  (3) Declaration of dividend:
    (A) Amount of declared dividend or distribution: $
    (B) Recipient of declared dividend or distribution.
    (C) Declaration date.
    (D) Proposed payment date.
  (4) The dividend or distribution is in compliance with the Act and is indicated in subparagraphs (A) and (B) of this paragraph:
    (A) Calculation.
      (i) Amount of current dividend or distribution: $
      (ii) Dividends or distributions paid during preceding 12 months, excluding current dividend or distribution but including declaration date, payment date, type of dividend or distribution, and amount: $
      (iii) Total of (i) and (ii): $
      (iv) Surplus as regards policyholders (net worth for HMO) as of preceding December 31: $
        (I) 10 percent of (iv) for Life, P&C, and HMO: $
        (II) 20 percent of (iv) for Title: $
      (v) Operating income:
        (I) Net gain from operations before realized capital gains as of preceding December 31 for Life, Title and HMO: $
        (II) Net income as of preceding December 31 for P&C: $
      (vi) Greater of calculated surplus from (iv) or the operating income from (v): $
    (B) If the amount from (iii) exceeds the amount from (vi), then provide the information required by subsection (c) relating to extraordinary dividend and distribution.
  (5) Earned surplus, defined as the unassigned funds (surplus), must be greater than the current dividend or distribution amount stated in (4)(A)(i) of this subsection. Earned surplus must be calculated as of the most recent financial information available.
  (6) Supporting documentation of the balance sheet, summary of operations including capital and surplus account, and cash flow statement of the most recently filed monthly, quarterly, or annual statement, together with documentation to support the standards specified in Insurance Code §823.008.
  (7) Additional requirements are as follows:
    (A) Identify property, including bank accounts, to be used to pay the dividend or distribution or to be converted to pay the dividend or distribution.
    (B) Provide insurer's ratio of net written premium to capital and surplus for 12 months as of the end of the last calendar year. In addition, provide the same ratio after deducting the total amount of the present dividend or distribution.
    (C) Identify and describe any reason (other than general business trends) that earnings are expected to decrease.
    (D) Identify any investment or contribution by the insurer to subsidiaries made since the last calendar year or to be made in the immediate future.
    (E) Give a brief statement as to the effect upon the insurer's capital and surplus or HMO's net worth and the reasonableness of remaining capital and surplus or net worth after payment of dividend or distribution in relation to the insurer's outstanding liabilities and the adequacy of capital and surplus or net worth relative to the insurer's financial needs.
  (8) Certification that there has been no material adverse change in the financial condition of the insurer since the date of the most recent financial statement filed with the department and the payment of the dividend or distribution does not adversely affect the interest of policyholders.
  (9) Certification that the declaration or payment of the dividend or distribution does not violate any of the provisions of Insurance Code Chapter 403 or §841.253, as applicable, and that the amount of the dividend or distribution declared was calculated based on the amount of cash and the current fair market value of any other property to be paid or distributed.
  (10) Signature.
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(c) Extraordinary Dividend and Distribution.
  (1) State purpose of dividend or distribution.
  (2) On request of the commissioner, furnish a copy of directors' resolution declaring dividend and any shareholders resolution supporting the declaration are to be attached to this form.
  (3) Effect of declaration.
    (A) Give the total amount of dividend or distribution in dollars when so expressed, or if declared in some other terms, the approximate dollar value and identify the exact property in which the dividend or distribution is payable if not cash (include method of valuing the property other than cash).
    (B) Explain any difference in treatment and basis with regard to any share of issued and outstanding stock that will not be treated equally in distribution of dividend, excluding treatment of classes of stock.
    (C) Explain basis concerning the different treatment in distribution of dividend given by class of stock.
    (D) Give number of shares by class to whom proposed dividend is payable, the dividend per share of each class and total amount of dividend by class of stock.
    (E) By class of stock, give total amount of each dividend declared, the amount payable per share, and the date of declaration for the five calendar years preceding this notice.
    (F) Give the net gain or loss from operations after dividends to policyholders and federal income taxes, excluding capital gains and losses of the insurer for each of the last five calendar years as reported in the insurer's annual statement to the department.
  (4) Provide a balance sheet, income statement, and cash flow statement for the interim period from the last annual statement to the end of the month preceding the month in which this application is submitted.
  (5) Provide the National Association of Insurance Commissioners authorized control level Risk Based Capital Ratio before and after dividend or distribution and projected for year end and the following year end.
  (6) Explain any restrictions on the volume of the insurer's underwritings within the last year or in the immediate future that did not previously exist.
  (7) Explain any limitations and reasons for limitations established for geographical underwriting within the last year or in immediate future that did not previously exist.
  (8) Describe the existing reinsurance program of insurer, including limits of retention.
  (9) Identify and describe any deviation of more than 10 percent in value of any loans or investments held by insurer (other than replacement of maturing securities with comparable securities) from that disclosed in your last annual statement.
  (10) Signature and certification of the following form is required:
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Source Note: The provisions of this §7.213 adopted to be effective May 26, 2013, 38 TexReg 3033