(a) If the minimum surplus of a stock insurer required to be maintained by
§ 4-105 of this article becomes impaired, or if the assets of a
mutual insurer are less than its liabilities and the minimum amount of
surplus required to be maintained by §§ 3-106 and 3-107 of this
subtitle for authority to engage in the kinds of insurance business
being transacted, the Commissioner immediately shall:
(1) determine the amount of deficiency; and
(2) serve notice on the insurer to cure the deficiency within 60 days after
service of the notice.
(b) An insurer may cure the deficiency:
(1) in cash or in assets eligible for the investment of the insurer's
funds under Title 5, Subtitle 5 or Subtitle 6 of this article;
(2) if a stock insurer, by reducing its capital to an amount not below the
minimum required for the kinds of insurance that the stock insurer will
transact; or
(3) if a mutual insurer, by amending its certificate of authority to cover
only the kinds of insurance for which the mutual insurer has sufficient
surplus under this article.
(c) (1) Except as provided in paragraph (2) of this subsection, if an insurer
does not cure the deficiency and file proof that it has done so with
the Commissioner within the 60-day period:
(i) the insurer is considered insolvent; and
(ii) the Commissioner shall institute delinquency proceedings against the
insurer under Title 9, Subtitle 2 of this article.
(2) If the deficiency exists because the Commissioner required increased
loss reserves, disallowed certain assets, or reduced the value at which
certain assets are carried in the insurer's accounts, the
Commissioner, on application and good cause shown, may extend for not
more than an additional 60 days the period within which the insurer may
cure the deficiency and file proof that it has done so.
(d) The directors of an insurer are individually liable for losses incurred
under policies that are issued by the insurer:
(1) after expiration of the period provided for curing a deficiency of the
insurer's capital stock or surplus; and
(2) before the deficiency is cured.
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