N.J. Stat. tit. 17B, ch. 18

N.J. Stat. tit. 17B, ch. 18
in effect

N.J. Stat. § 17B:18-1 Scope of chapter

This chapter shall be applicable only to domestic stock and domestic mutual insurers, authorized to do one or more of the kinds of business defined in sections 17B:17-3, 17B:17-4 and 17B:17-5, except as otherwise stated in section 17B:17-1. L.1971, c. 144, s. 17B:18-1.

N.J. Stat. § 17B:18-2 Stock insurer defined

A domestic stock insurer is an insurer incorporated in accordance with the laws of this State with its capital divided into shares and owned by its stockholders. L.1971, c. 144, s. 17B:18-2.

N.J. Stat. § 17B:18-3 Mutual insurer defined

A domestic mutual insurer is an insurer incorporated in accordance with the laws of this State without permanent capital stock, the governing body of which, except while temporary capital stock is outstanding as provided in section 17B:18-9 and except as provided in section 17B:18-20, is elected by its policyholders. L.1971, c. 144, s. 17B:18-3.

N.J. Stat. § 17B:18-4 Organization of stock or mutual insurer

a. Ten or more persons may form a domestic stock or domestic mutual insurer to engage in the business of writing any or all of the kinds of insurance defined in sections 17B:17-3, 17B:17-4 and 17B:17-5 by signing a certificate stating their intention to form a corporation pursuant to this Code setting forth: (1) The name of the insurer, which shall contain the words "insurance company" or words of similar connotation which shall not so closely resemble that of any existing insurer or other corporation as to be likely to mislead the public, and shall be approved by the commissioner; (2) The place where its principal office in this State is to be located and the name of its agent at that office upon whom process may be served; (3) The kind or kinds of insurance proposed to be written by the insurer, stating the section of this code defining the same; (4) Whether the insurer is to be a stock or mutual insurer; (5) If a stock insurer, the amount of its capital stock which shall not be less than that required by section 17B:18-35, the classes and number of shares of each into which it is divided and the par value of each share, which shall not be less than $5.00; (6) The period, if any, limited for the duration of the insurer. b. The certificate may contain such other particulars as may be necessary to explain and make manifest or limit the objects and purposes of the insurer, and such other provisions not inconsistent with this Code, or the Constitution or laws of this State, which the corporators may choose to insert for the conduct of the affairs of the insurer, the regulation of its business, or for defining, regulating and limiting the powers of the directors or stockholders. c. No domestic stock insurer shall create more than one class of stock except, however, that preferred or non-voting stock, or both, may be issued if the amount of the stock so issued shall not at any time exceed the amount of common or voting stock, or both, then issued and outstanding, but preferred stock may be issued without limitation when such preferred stock is to be purchased or loaned upon by any corporation, association or agency created by or organized under any law of the United States of America. d. A company may be formed: (1) For the purpose of transacting one or more of the kinds of business described in sections 17B:17-3, 17B:17-4 and 17B:17-5; or (2) For the purpose of transacting business described in section 17B:17-4 by complying with the provisions of this Code and of transacting any of those kinds of business other than those described in sections 17B:17-3, 17B:17-4 and 17A:17-5 by complying with the provisions of Title 17, not inconsistent with this Code. L.1971, c. 144, s. 17B:18-4.

N.J. Stat. § 17B:18-5 Approval of certificate by commissioner; recording and filing

The certificate of incorporation shall be proved or acknowledged as required for deeds of real estate and be submitted to, and examined by, the commissioner, and if found by him to be in accordance with this Code and not inconsistent with the constitution and laws of this State, he shall indorse thereon or annex thereto his certificate to that effect. The certificate of incorporation shall then be recorded in a book kept for that purpose in the office of the clerk of the county wherein the principal office and place of business of the corporation is to be located, and after being so recorded, filed with the commissioner. Thereupon, such persons, their successors and assigns, shall, from the date of the filing, be a corporation by the name set forth in the certificate. All amendments of the certificate of incorporation shall be subject to the requirements of this section. The certificate and amendments thereof, or copies thereof, duly certified by the commissioner, shall be evidence in all courts and places. L.1971, c. 144, s. 17B:18-5.

N.J. Stat. § 17B:18-6 Stipulations in stock subscriptions and applications

Every subscription to the capital stock of a stock insurer shall contain the stipulation that no sum shall be used for commission, promotion or organization expenses in excess of a per cent of the amount paid upon the stock subscription, to be named in the stipulation, in an amount to be named by the commissioner. Every subscription for stock and every application for insurance in the insurer made prior to the granting to the insurer by the commissioner of the certificate of authority shall contain the stipulation that the money advanced by the applicant shall be returned to him without any deduction if the insurer fails to complete its organization or procure the certificate or issue the policy applied for in the application. L.1971, c. 144, s. 17B:18-6.

N.J. Stat. § 17B:18-7 Certificate of incorporation of mutual insurer; election of directors

a. The certificate of incorporation of any mutual insurer of this State hereafter incorporated may contain provisions for the elections of directors in the manner set forth in sections 17B:18-11 to 17B:18-17, inclusive, and any amendment of the certificate of incorporation or of the charter of any mutual insurance corporation of this State heretofore or hereafter incorporated pursuant to the provisions of any general or special law of this State, may, at the option of such corporation, contain such provisions. Such certificate of incorporation or amendment thereof or of the charter of such insurer may provide that any vacancy in its board of directors may be filled by a majority vote of the board for the unexpired term to which such vacancy relates. b. The periods at which directors of any such corporation shall be elected, the time of the election, the number of directors to be elected at any one time, and the terms for which they shall respectively be elected may be prescribed by its certificate of incorporation or charter or amendment thereof; provided, however, that one or more directors shall be elected at least once in every 2 years and that no director shall be elected for a term longer than 5 years. L.1971, c. 144, s. 17B:18-7.

N.J. Stat. § 17B:18-8 Loan to mutual insurer for organizational expenses

A mutual insurer organized under this Code may borrow or assume a liability for the repayment of a sum of money sufficient to defray the reasonable expenses of its organization, or to enable it to comply with any requirement of law or as a guaranty fund, upon agreement, which shall first be submitted to and approved by the commissioner, that the loan or advance, with interest, shall be repaid only out of the surplus, earnings or profits of the corporation with the approval of the commissioner whenever, in his judgment, its financial condition shall warrant. Any such loan or advance shall not form a part of the legal liabilities of the insurer, but until repaid all statements published or filed with the commissioner by the insurer shall show the amount thereof then unpaid. L.1971, c. 144, s. 17B:18-8.

N.J. Stat. § 17B:18-10 Election of directors of mutual insurer pursuant to provision in certificate of incorporation

If the certificate of incorporation or charter of a mutual insurer, or any amendment thereto contains provisions for the election of directors in the manner set forth in sections 17B:18-11 to 17B:18-17, inclusive, as provided in section 17B:18-7, then, subject to the provisions of section 17B:18-18, the directors of any such insurer shall be elected in such manner and no other. Each director elected and qualified pursuant to such sections shall hold office until his successor shall have been duly elected and qualified. L.1971, c. 144, s. 17B:18-10.

N.J. Stat. § 17B:18-11 Nomination of candidates for director

At least seven months before the day fixed for any election of directors, the board of directors shall by a vote of a majority of its number nominate a candidate for each office of director to be filled at such next ensuing election and shall file with the commissioner a certificate of such nominations giving the name, occupation and address of each nominee. Qualified voters of the insurer as hereinafter defined to a number of not less than 1/10 % of the number of policies of the corporation in force as set forth in the next preceding annual statement of the insurer filed with the commissioner may nominate a candidate for each office of director to be filled at such next ensuing election by filing with the commissioner at least 5 months before the day fixed for such election a certificate, which may be in any number of counterpart originals, signed and acknowledged by each of them, giving his name, address and the number of his policy and giving the name, occupation and address of each candidate so nominated, together with a statement signed by each such candidate to the effect that he will accept if elected, and by serving upon the secretary of the corporation at least 5 months before the day fixed for such election a duplicate original of such certificate and of such statement. L.1971, c. 144, s. 17B:18-11.

N.J. Stat. § 17B:18-12 Death, withdrawal or incapacity of candidates for director

In case of the death, withdrawal or incapacity of any candidate nominated by the board of directors prior to election, the board of directors shall by a vote of a majority of its number nominate a candidate in his place by filing prior to the day fixed for the election a certificate similar to that required for an original nomination by the board of directors, and in case of the death, withdrawal or incapacity of any candidate nominated by others prior to election, such other persons or a majority of them may nominate a candidate in his place by filing and serving prior to the day fixed for the election duplicate certificates and statements similar to those required for an original nomination by such persons. L.1971, c. 144, s. 17B:18-12.

N.J. Stat. § 17B:18-13 Qualified voters; "policyholder" defined

The qualified voters of the insurer shall consist of every policyholder who is 18 years of age or more and whose policy has been in force for at least 1 year. For the purposes of this section the term "policyholder" shall mean a. the person insured under an individual policy of life or health insurance, except where such policy declares some other person to be the owner thereof, in which case such owner shall be deemed to be the policyholder, b. the person to whom any annuity or pure endowment is presently or prospectively payable by the terms of an individual annuity or pure endowment contract except where the policy or contract declares some other person to be the owner thereof, in which case such owner shall be deemed to be the policyholder, c. the policyholder of any group life or health policy and d. the contract holder of any group annuity contract. L.1971, c. 144, s. 17B:18-13. Amended by L.1973, c. 22, s. 4, eff. Feb. 8, 1973.

N.J. Stat. § 17B:18-14 Elections of directors of mutual insurers; procedure, ballots

Each qualified voter of the insurer at such election shall be entitled to cast one vote in person or by proxy. The president, or, in his absence, a vice-president of the insurer, shall preside at the election and the secretary, or, in his absence, an assistant secretary of the insurer shall make and keep a record of the proceedings. Voting shall be by ballot and tellers to receive and count the votes and to determine the validity thereof shall be elected by a head vote of policyholders and their proxies present at the meeting. Ballots shall be prepared and furnished by the insurer to all voters at the election. No ballot shall be counted unless it shall set forth the number of the voter's policy and be signed by him or by his proxy, and no ballot shall be counted if cast for any person other than one nominated as herein provided. The polls shall remain open in no case for less than 4 hours. L.1971, c. 144, s. 17B:18-14.

N.J. Stat. § 17B:18-15 Nominations by others than board of directors; notice of election

In case any nomination shall have been made by others than by the board of directors, the insurer shall cause notice of the time and place of the election and of the several nominations of candidates to be published at least 4 times at intervals of not less than 1 week, the first publication to be not more than 60 days and the last publication not less than 15 days prior to such election in at least 3 newspapers published in each State of the United States and in each province of Canada in which the insurer is authorized to do business, one of such publications in each State or province to be, whenever possible, in a newspaper published in the capital city of each such State or province. Such notice shall contain the names of the persons nominated by the board of directors and by others at the time of commencement of publication and the death, withdrawal or incapacity of any such nominee or the nomination of any person in his stead before or after the completion of publication shall not invalidate such notice, nor shall the omission of any publication herein prescribed invalidate such notice or the election to which it relates; provided, the insurer shall have made diligent effort to cause such publication to be made. L.1971, c. 144, s. 17B:18-15.

N.J. Stat. § 17B:18-16 Canvass of votes; tie vote

All ballots voted shall be received by the tellers subject to verification and ascertainment of the validity thereof and of the qualification of the voters, and, in the case of ballots voted by proxy, the respective proxy instruments shall be filed with the tellers. Immediately upon the closing of the polls the tellers shall proceed to canvass the votes. The canvass shall proceed from day to day until completed. All ballots and proxy instruments received by the tellers shall immediately upon the completion of the canvass be placed in sealed packages and preserved by them for at least 1 year from the date of election. The person receiving the highest number of votes for each office of director to be filled shall be elected for a full term. In case 2 or more persons shall receive the same number of votes for the same office, the tellers shall decide the election by lot. L.1971, c. 144, s. 17B:18-16.

N.J. Stat. § 17B:18-17 Report of result of election

At the conclusion of the canvass the tellers shall report in writing to the secretary of the corporation the result thereof and he shall thereupon make a certificate, duly sworn to, setting forth the result of the election as shown by such report and shall file the same with the commissioner. L.1971, c. 144, s. 17B:18-17.

N.J. Stat. § 17B:18-18 Choosing of directors for mutual life insurers having in excess of ten million policies in force

The directors of any mutual insurer of this State heretofore or hereafter incorporated pursuant to the provisions of the laws of this State which now or hereafter shall have in excess of ten million life insurance policies of the insurer in force as set forth in any annual statement of such insurer filed with the commissioner shall be of the number and shall be chosen in the manner set forth in sections 17B:18-19 to 17B:18-28, inclusive, any provision of law or of the certificate of incorporation or charter of such corporation to the contrary notwithstanding. L.1971, c. 144, s. 17B:18-18.

N.J. Stat. § 17B:18-19 Number of directors; appointment of public directors; ex officio directors

Subject to the provisions of section 17B:18-21 as to the number of elected directors, the number of the directors of any such mutual insurer to which sections 17B:18-18 to 17B:18-28, inclusive, apply, shall be twenty-three, except where the chairman of the board and not the president is the chief executive officer of the corporation in which case the number shall be twenty-four, all of whom shall be policyholders of the corporation. Six of such directors shall be appointed as hereinafter provided by the Chief Justice of the Supreme Court of New Jersey and are hereinafter called the public directors. Sixteen of such directors shall be elected in the manner hereinafter provided and are hereinafter called the elected directors. The president of the corporation shall be ex officio a director, and the chairman of the board, if he is the chief executive officer of the corporation, shall also be ex officio a director; and if the president or such chairman of the board shall be a director by appointment or election either at the time of his election as president or chairman of the board, or on the date that sections 17B:18-18 to 17B:18-28, inclusive, become applicable to such corporation, the office of director so held by the president or such chairman of the board shall become vacant. L.1971, c. 144, s. 17B:18-19.

N.J. Stat. § 17B:18-20 Public directors; carry-overs; appointments; terms; vacancies; powers

Each director of any such mutual insurer heretofore appointed as a public director in accordance with P.L.1953, chapter 156 and holding office as such on the effective day of this Code, shall continue in office as a public director until the expiration of the term for which he shall have been appointed. Whenever the provisions of sections 17B:18-18 to 17B:18-28, inclusive, shall for the first time become applicable to any mutual insurer, other than a mutual insurer then having public directors in accordance with the first sentence of this section, the Chief Justice of the Supreme Court of New Jersey shall thereupon appoint the 6 public directors for respective terms beginning on the date of appointment, such that the term of one public director shall expire on the date of the annual election of directors in each of the first 6 calendar years following the year in which sections 17B:18-18 to 17B:18-28, inclusive, for the first time become applicable to such mutual insurer. When such mutual insurer has public directors pursuant to either the first or second sentence of this section, thereafter one public director shall be appointed annually by the Chief Justice of the Supreme Court of New Jersey for a term of 6 years and shall hold office until his successor has been appointed and has qualified. In case any vacancy shall occur in the office of public director, such vacancy shall be filled by the appointment of another public director by the Chief Justice of the Supreme Court of New Jersey for the unexpired term to which such vacancy relates. The public directors shall have the same powers, privileges and duties as the other directors, and such additional powers as provided in said sections. L.1971, c. 144, s. 17B:18-20.

N.J. Stat. § 17B:18-21 Elected directors; carry-overs; terms; vacancies

Each director of any mutual insurer, other than its president and other than the chairman of the board if he is the chief executive officer and other than one appointed as a public director in accordance with the provisions of P.L.1953, chapter 156, holding office as such at the time sections 17B:18-18 to 17B:18-26, inclusive, for the first time become applicable to such insurer shall continue in office as an elected director until the expiration of the term for which he shall have been elected, notwithstanding the number of elected directors shall be greater or less than 16. At each annual election of directors, commencing with the annual election in the calendar year following the first year in which such insurer becomes subject to sections 17B:18-18 to 17B:18-28, inclusive, or, in the case of an insurer which on the effective date of this Code has directors who were elected in accordance with the provisions of P.L.1953, chapter 156, commencing with the first annual election of directors following the effective date of this Code, 4 elected directors shall be elected in the manner hereinafter provided, each for a term of 4 years, and each such elected director shall hold office until his successor has been elected and has qualified. Except as otherwise provided in sections 17B:18-18 to 17B:18-28, inclusive, in case any vacancies shall occur in the office of an elected director, such vacancies shall be filled by the board of directors by majority vote of its entire number for the unexpired term to which such vacancy relates. L.1971, c. 144, s. 17B:18-21.

N.J. Stat. § 17B:18-22 Elected directors; manner of electing

The elected directors shall be elected in the manner provided in sections 17B:18-23 to 17B:18-27, inclusive, by the qualified voters of the corporation at the annual election of directors to be held on the date and at the place prescribed by the corporation's certificate of incorporation or charter, by-laws, or otherwise. L.1971, c. 144, s. 17B:18-22.

N.J. Stat. § 17B:18-23 Qualified voters; "policyholder" for purpose of election defined

The qualified voters of the insurer shall consist of every policyholder who is 18 years of age or more and whose policy has been in force for at least 1 year. For the purposes of this section the term "policyholder" shall mean a. the person insured under an individual policy of life or health insurance, except where such policy declares some other person to be the owner thereof, in which case such owner shall be deemed to be the policyholder, b. the person to whom any annuity or pure endowment is presently or prospectively payable by the terms of an individual annuity or pure endowment contract except where the policy or contract declares some other person to be the owner thereof, in which case such owner shall be deemed to be the policyholder, c. the policyholder of any group life or health policy and d. the contract holder of any group annuity contract. L.1971, c. 144, s. 17B:18-23. Amended by L.1973, c. 22, s. 5, eff. Feb. 8, 1973.

N.J. Stat. § 17B:18-24 Nomination of candidates; demand by public directors

The board of directors shall by a vote of a majority of its entire number nominate a candidate for each office of elected director to be filled at each annual election of directors commencing with the first election at which 4 elected directors are to be elected pursuant to the provisions of section 17B:18-21 after sections 17B:18-18 to 17B:18-28, inclusive, become applicable to such insurer. Not more than 10 months, nor less than 9 months, before the date of each such annual election, the secretary of the corporation shall file a certificate of such nominations with the commissioner, giving the name, address and occupation of each candidate, together with a statement in writing from each of such candidates that he will accept if elected. If a majority of the public directors of the corporation shall determine that other candidates should be nominated in the best interests of the insurer, its policyholders and the public, they shall file with the commissioner not more than 9 months nor less than 8 months before the date of the next ensuing annual election of directors, a statement of their determination and a demand signed by a majority of them that other candidates be nominated. L.1971, c. 144, s. 17B:18-24.

N.J. Stat. § 17B:18-25 Method of electing when no demand is made by public directors

If the public directors shall file no demand that other candidates be nominated, the election shall be according to the method prescribed in this section as follows: a. The candidates shall be those so nominated by the board of directors and no others, subject to the nomination of substitute candidates in the case of death or withdrawal of a candidate as provided in paragraph d. of this section. b. Tellers to receive and count the votes and to determine the validity thereof shall be appointed by the chief executive officer of the corporation and such tellers shall conduct the election. Ballots shall be prepared by the corporation and shall be furnished to voters present at the election. Any qualified voter who shall make proper application to the corporation therefor in writing not later than 60 days before the date of the election, stating his name, address, policy number and date of birth, shall be furnished a ballot not less than 30 days before the date of the election, accompanied by a gummed postpaid return envelope addressed to the corporation at the place of the election, on which the words "Ballot for Directors" shall be printed and such ballot so applied for and furnished may be cast by mail. Each qualified voter of the corporation shall be entitled to cast one vote and no ballot shall be counted unless it is cast in person by a qualified voter at the election, or, in the case of a ballot cast by mail, unless it is received by the tellers at the place of the election before the polls close on the date of the election. No ballot shall be counted unless it shall set forth the number of the voter's policy and be signed by him in person, nor if cast for any person other than one nominated as herein provided. The polls shall be open between 10 o'clock in the forenoon and 2 o'clock in the afternoon on the date of the election, and no other business shall be transacted at the election. c. All ballots voted shall be received by the tellers subject to verification and ascertainment of the validity thereof and of the qualification of the voters. Immediately upon the closing of the polls, the tellers shall proceed to canvass the votes. All ballots received by the tellers shall at the conclusion of the election be placed in sealed packages and preserved by them for at least 1 year from the date of the election. At the conclusion of the canvass, the tellers shall report in writing the result thereof to the secretary of the corporation and he shall thereupon make a certificate setting forth the result of the election as shown by such report and shall file the same with the commissioner. d. In case of the death or withdrawal of any candidate prior to a date 50 days before the date of the election, the board of directors shall by a vote of a majority of its entire number nominate a candidate in his place by filing not later than 40 days before the date of the election a certificate similar to that required for an original nomination by the board of directors; and in case of the death or withdrawal of any candidate within 50 days of the date of the election, no substitution of a candidate shall be made to take the place of the candidate so dying or withdrawing and the election shall nevertheless proceed. If the report of the canvass of the votes at the election shows that the candidate so dying or withdrawing, for whom no substitution shall have been made, would have been elected except for the fact of his death or withdrawal, a vacancy in the board of directors shall be deemed to have occurred as of the date of the election. e. No election shall be held invalid by reason of any irregularity or failure in preparation or forwarding of any ballots pursuant to sections 17B:18-18 to 17B:18-28, inclusive. All voting shall be by the ballots so provided and shall be according to the provisions of said sections, any existing law of the State to the contrary notwithstanding. L.1971, c. 144, s. 17B:18-25.

N.J. Stat. § 17B:18-26 Method of election when demand is made by public directors that other candidates be nominated

If the public directors shall file a demand pursuant to section 17B:18-24 that other candidates be nominated, the election shall be according to the method prescribed in this section as follows: a. The commissioner within 30 days after the receipt of such demand by the public directors, shall appoint a nominating committee of 15 of such qualified voters who shall appear to the commissioner to be willing and qualified to select a candidate for each of the offices of the elected directors whose terms of office expire at the date of the next ensuing election. No officer, director, employee or agent of the corporation, nor any relative thereof by blood or connection by marriage in nearer degree than second cousin, nor any person who shall have served on such a nominating committee at any previous time, shall be eligible to be named by the commissioner to serve upon such nominating committee. The commissioner shall forthwith cause notice of the time and place of the first meeting of such committee to be sent to each member thereof. Within 30 days following the appointment or within such further period of time not exceeding 15 days as may be determined by the commissioner, the nominating committee shall by a majority vote select a candidate, suitable by training and experience to serve, for each such office of elected director, other than any candidate nominated by the board of directors, and shall within such period file with the commissioner a certificate setting forth the names, addresses and occupations of the candidates so nominated, together with a statement in writing from each of such candidates that he will accept if elected. The commissioner shall notify the secretary of the corporation of the names, addresses and occupations of the candidates so selected by the nominating committee. b. When nominations shall have been made by such nominating committee, the commissioner shall cause notice of the election to be published at least 4 times at intervals of not less than 1 week, the first publication to be not more than 5 months and the last publication not less than 3 months prior to the date of the election in at least three newspapers published in each state of the United States and in each province of Canada in which the corporation is authorized to do business, one of such publications in each state or province to be, whenever possible, in a newspaper published in the capital city of such state or province. Not less than 4 months prior to the date of the election, copies of such notice shall be posted in such offices maintained by the corporation as the commissioner may direct, in a conspicuous place to which the general public has access, and shall remain so posted until the record date hereinafter specified. Such notice shall contain the names, addresses and occupations of the candidates nominated by the board of directors and of the candidates nominated by the nominating committee, and shall advise the policyholders as to the procedure required by sections 17B:18-18 to 17B:18-28, inclusive, to be followed in voting. The death or withdrawal of any candidate or the nomination of any candidate in his place before or after the completion of publication or posting shall not invalidate such notice. The omission of any publication or posting herein prescribed shall not invalidate such notice nor the election to which it relates. c. The commissioner shall prepare the form of ballot which shall contain: (1) the names of the candidates for director nominated by the board of directors, and so designated, and separately the names of the candidates for director nominated by the nominating committee, and so designated; (2) the following statement: "The Commissioner of Insurance of New Jersey neither approves nor disapproves the nomination of any of the aforesaid candidates" ; (3) blank lines for the insertion of the policy number and signature of the qualified voter; and (4) such instructions for the proper completion of the ballot as the commissioner may deem necessary, including a statement of the date of the election and that the ballot must be received on or before such date. Each ballot shall be accompanied by a gummed postpaid return envelope, addressed to the commissioner, on which the words "Ballot for Directors" shall be printed. The commissioner shall cause ballots to be mailed at least 30 days prior to the date of the election to all applicants for ballots who appear to him, after checking the applications against the records of the corporation, to be qualified voters of the corporation on the record date. No election shall be held invalid by reason of any irregularity or failure in the preparation or forwarding of any ballots pursuant hereto. d. Each qualified voter of the corporation shall be entitled to cast one vote and all ballots shall be cast by mail upon the forms provided and shall be according to the provisions of sections 17B:18-18 to 17B:18-28, inclusive, any existing law of this State to the contrary notwithstanding. Policyholders who are qualified voters may obtain ballots by applying therefor either in person or by mail to the commissioner, or to any office maintained by the corporation, on or before the record date which shall be 70 days prior to the date of the election, stating in such application for a ballot, the name, address, policy number and date of birth of the applicant. The corporation shall prepare a list or other catalog of the applicants for ballots in such form as the commissioner may direct, showing the name, address and policy number of the applicant, whether or not he is 18 years of age or more and whether his policy has been in force at least 1 year; and such list or catalog shall specify any applicants for ballots appearing not to be qualified voters of the corporation according to its records, with a statement of the reason therefor. Such list or catalog shall be transmitted at least 40 days before the date of the election to the commissioner. The commissioner shall cause notice of disqualification to be given to any applicant who shall appear to him to be not a qualified voter of the corporation, with a statement of the reason therefor; and shall grant such applicant reasonable opportunity, within such period as may be fixed by the commissioner in his sole discretion, to present facts in support of his application. The list or catalog shall remain on file with the commissioner until 30 days after the election and shall be open to inspection by any qualified voter of the corporation, as the commissioner shall determine. e. Ballots received by the commissioner on or before the date of the election shall be canvassed by the commissioner. The commissioner may employ such persons to assist him in canvassing the ballots as he deems necessary. No ballot shall be counted unless it is received by the commissioner on or before the date of the election, nor unless it shall set forth the number of the qualified voter's policy, be signed by him in person and be completed in accordance with the instructions appearing thereon; and no ballot shall be counted if cast for any person other than for one nominated as provided in sections 17B:18-18 to 17B:18-28, inclusive, nor if cast for more than the number of elected directors whose offices are to be filled at such election. The commissioner shall be the sole judge as to the qualifications of the voters and the proper casting of the ballots. All ballots received by the commissioner shall at the conclusion of the election be placed in sealed packages and preserved by him for at least 1 year from the date of the election. The four persons receiving the highest number of votes for the offices of elected director to be filled shall be elected for full terms. In case two or more persons shall receive the same number of votes for the same office, the commissioner shall decide the election by lot. At the conclusion of the election, the commissioner shall certify in writing to the secretary of the corporation the result thereof. f. In case of the death or withdrawal of any candidate prior to a date 50 days before the date of the election, the board of directors or the nominating committee, whichever shall have nominated such candidate, shall nominate a candidate in his place by filing not later than 40 days before the date of the election a certificate similar to that required for the original nominations; and in case of the death or withdrawal of any candidate within 50 days before the date of the election, no substitution of a candidate shall be made to take the place of the candidate so dying or withdrawing, and the election shall nevertheless proceed. If the report of the canvass of the votes at the election shows the number of votes so cast for the candidates so dying or withdrawing, for whom no substitution shall have been made, was such that he would have been elected except for the fact of his death or withdrawal, a vacancy in the board of directors shall be deemed to have occurred as of the date of the election and the same shall be filled by a majority vote of the entire number of either the board of directors or the nominating committee, whichever shall have nominated such candidate. g. The commissioner shall conduct the election, may make such reasonable regulations for the conduct of the election not inconsistent with the provisions of sections 17B:18-18 to 17B:18-28, inclusive, as may appear to him to be necessary or desirable, and shall authorize payment of expenses incurred by the corporation for the purpose of advising policyholders, to the extent and in the manner he deems appropriate, as to the qualifications of the candidates. He may employ such persons as he may consider necessary to assist him in the performance of the duties imposed upon him under sections 17B:18-18 to 17B:18-28, inclusive, and may require the corporation to furnish assistance in such respects and in such manner as he may direct. All expenses incurred by the commissioner or by the nominating committee with the approval of the commissioner, in performing any of the duties imposed upon them by this act shall be borne by the corporation, and shall be paid by it upon the order of the commissioner. If the commissioner shall so request, the corporation shall advance to the commissioner funds reasonably sufficient to defray such expenses and the commissioner shall remit such funds to the State Treasurer as custodian thereof. The State Treasurer shall hold such funds separate from all other State moneys and shall disburse the same only upon vouchers signed by the commissioner, who shall account to the corporation therefor. L.1971, c. 144, s. 17B:18-26. Amended by L.1973, c. 22, s. 6, eff. Feb. 8, 1973.

N.J. Stat. § 17B:18-27 Mailing of ballot; effect

The mailing of a ballot to any person shall not be construed as an admission of the validity of any policy or that such person was a policyholder; and no such mailing shall be competent evidence in any action or proceeding in which the question of the validity of any policy is involved. L.1971, c. 144, s. 17B:18-27.

N.J. Stat. § 17B:18-28 Filing certificate on number of policies; copy delivered to Chief Justice

If any annual statement of any domestic mutual insurer heretofore or hereafter filed with the commissioner sets forth a number of life insurance policies of the insurer in force in excess of ten million, such insurer shall thereafter during its corporate existence be subject to the provisions of sections 17B:18-18 to 17B:18-28, inclusive, any provisions of law or of the certificate of incorporation or charter of the corporation to the contrary notwithstanding. When any domestic mutual insurer at any time after the effective date of this Code files for the first time during its corporate existence an annual statement which shows that the number of life insurance policies of said insurer then in force is in excess of ten million, it shall immediately cause to be filed with the commissioner a certificate of the number of life insurance policies so set forth in such annual statement and the commissioner shall cause a copy thereof, duly certified by the commissioner, to be delivered to the Chief Justice of the Supreme Court of New Jersey. L.1971, c. 144, s. 17B:18-28.

N.J. Stat. § 17B:18-29 Election of directors in mutual insurer issuing temporary stock

A bare majority of the entire board of directors of a domestic mutual insurer which issues temporary capital stock, as provided in section 17B:18-9, shall be elected by the holders of the temporary stock, and the rest of the directors shall be elected by the policyholders, in the manner and with the representation provided in its certificate of incorporation. After the retirement of the capital stock all the directors shall be so elected by the policyholders. L.1971, c. 144, s. 17B:18-29.

N.J. Stat. § 17B:18-30 Proxy voting permitted at elections

At any election of directors, managers or other officers of a domestic insurer, except any election of directors held pursuant to N.J.S. 17B:18-18 to 17B:18-28, inclusive, every person entitled to vote at the election may vote in person or by attorney or proxy, but no proxy shall be voted, allowed or received after 3 years from its date. L.1971, c. 144, s. 17B:18-30.

N.J. Stat. § 17B:18-31 Emergency by-laws

The board of directors of any domestic insurer may at any time adopt emergency by-laws, subject to repeal or change by action of those having power to adopt regular by-laws for the insurer, which shall be operative during a national emergency caused by an attack on the United States or by a nuclear, atomic or other disaster which makes it impossible or impracticable for an insurer to conduct its business in strict accord with applicable provisions of law, its by-laws, or its certificate of incorporation or charter. Such emergency by-laws may, notwithstanding any different provisions of the regular by-laws, or of the applicable statutes, or of the insurer's certificate of incorporation or charter, make any provision that may be reasonably necessary for the operation of the insurer during the period of such emergency. L.1971, c. 144, s. 17B:18-31.

N.J. Stat. § 17B:18-32 Failure to adopt emergency by-laws; procedure

In the event that the board of directors of a domestic insurer has not adopted emergency by-laws, the following provisions shall become effective upon the occurrence of such a national emergency: a. Three directors shall constitute a quorum for the transaction of business at all meetings of the board. b. Any vacancy in the board may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director. c. If there are no surviving directors, but at least 3 vice-presidents of the company survive, the 3 vice-presidents with the longest term of service in that office shall be the directors and shall possess all of the powers of the previous board of directors and such powers as are granted herein or by subsequently enacted legislation. By majority vote such emergency board of directors may elect other directors. If there are not at least 3 surviving vice-presidents, the commissioner or duly designated person exercising the powers of commissioner shall appoint 3 persons as directors who shall possess all of the powers of the previous board of directors and such powers as are granted herein or by subsequently enacted legislation, and these persons by majority vote may elect other directors. L.1971, c. 144, s. 17B:18-32.

N.J. Stat. § 17B:18-33 National emergency; succession

At any time the board of directors of a domestic insurer may, by resolution, provide that in the event of such a national emergency and in the event of the death or incapacity of the Chairman of the Board and chief executive officer, the President, the Secretary or the Treasurer of the company, such officers, or any of them, shall be succeeded in the office by the person named or described in a succession list adopted by the board of directors. Such list may be on the basis of named persons or position titles, shall establish the order of priority and may prescribe the conditions under which the powers of the office shall be exercised. L.1971, c. 144, s. 17B:18-33.

N.J. Stat. § 17B:18-34 National emergency; relocation of principal place of business

At any time the board of directors of a domestic insurer may, by resolution, provide that in the event of such a national emergency the home office or principal place of business of the company shall be at such location in the United States of America as is named or described in the resolution. Such resolution may provide for alternate locations and establish an order of preference. L.1971, c. 144, s. 17B:18-34.

N.J. Stat. § 17B:18-37 Definitions; deposit prerequisite to authorization

17B:18-37. a. As used in this section and in N.J.S.17B:18-38 and N.J.S.17B:18-39: (1) "Bank" means a State or federally chartered bank, savings bank, or savings and loan association which has trust powers and which has its principal office in New Jersey. (2) "Custodian" means a bank which performs fiduciary functions in the maintenance of deposits. (3) "Deposit" means those deposits of securities required to be made by insurance companies prior to their authorization to transact business within any jurisdiction. (4) "Federal Reserve book-entry system" means the computerized system sponsored by the United States Department of the Treasury and certain agencies and instrumentalities of the United States for holding and transferring securities of the United States government and the agencies and instrumentalities, respectively, in Federal Reserve Banks through banks which are members of the Federal Reserve System or which otherwise have access to this computerized system. (5) "Policyholders" means those persons including subscribers, certificate holders, and others who are named in or covered by a contract of insurance. (6) "Securities" means and shall only include: (a) Bills, bonds and notes issued by the United States Treasury; (b) Debt obligations of the State of New Jersey, its authorities, counties and municipalities; and (c) Certificates of deposit of a State or federally chartered bank, savings bank, or savings and loan association with its principal office in New Jersey. b. The commissioner shall appoint one or more custodians which shall be selected on the basis of bids submitted by banks to perform such fiduciary functions as the commissioner deems necessary in the maintenance of deposits. c. No domestic insurer shall be issued a certificate of authority until it has deposited with the custodian on behalf of the commissioner, securities having a market value of at least $100,000.00 to be held in physical form or purchased for its account in the Federal Reserve book-entry system. The deposits are to be held for the benefit and security of all of the policyholders of the company depositing them. The records of the custodian, through which an insurance company holds securities in the Federal Reserve book-entry system or in physical form, shall at all times show that these securities are held for an insurance company and for which accounts thereof. d. The Commissioner of Insurance may, from time to time after the company has commenced business, require it to make further deposits of securities, up to the sum of $250,000.00, as the commissioner may deem necessary to protect the policyholders of the depositing company. L.1971, c.144; amended 1989,c.264,s.5.

N.J. Stat. § 17B:18-38 Deposits; interest on; substitution of

17B:18-38. The commissioner shall hold the securities deposited pursuant to N.J.S.17B:18-37 for the benefit and security of all the policyholders of the insurer depositing them, but shall, so long as it continues solvent and complies with all the requisites of the laws applicable to it, permit the insurer to collect the interest or dividends on the securities so deposited, and, from time to time to withdraw any of the securities, on depositing with him other eligible securities to the extent required to maintain the market value of the total deposit at the amount required by the commissioner. L.1971, c.144; amended 1989,c.264,s.6.

N.J. Stat. § 17B:18-39 Deposits to do business in other jurisdictions

17B:18-39. The custodian, on behalf of the commissioner, may receive from any domestic insurer a deposit of securities necessary to enable it to transact business in any other state, territory, dependency or Federal District of the United States or in any foreign country under the laws thereof. Such securities shall be held by the custodian, on behalf of the commissioner, as long as the insurer desires to transact business in the state, territory, dependency or Federal District of the United States or foreign country requiring the deposit but the insurer may draw the dividends or receive the interest on the securities. When the insurer desires to discontinue its business therein and the deposit is no longer required by the laws thereof, the commissioner shall return the securities to the insurer depositing them. Before the commissioner shall return the securities deposited with him as aforesaid, the company shall institute an action and obtain a judgment therefore in the Superior Court substantially similar to that provided in R.S.17:20-3. L.1971, c.144; amended 1989,c.264,s.7.

N.J. Stat. § 17B:18-39.1 Fees for services of custodian required pursuant to N.J.S.17B:18-37 et seq.

The Commissioner of Insurance shall establish, by regulation, the fees to be charged insurance companies for the services of the custodian pursuant to the requirements of N.J.S.17B:18-37 through N.J.S.17B:18-39. L.1989, c.264, s.8.

N.J. Stat. § 17B:18-41 Examination before commencing business

Before issuing a certificate of authority to a domestic insurer, the commissioner shall be satisfied, by such examination and evidence as he sees fit to make and require, that the whole amount of the capital stock set forth in the certificate of incorporation and the required minimum surplus of the insurer, if a stock company, has been actually paid in cash, and is possessed by the company in money, or in stocks, bonds, or bonds and mortgages authorized for insurers by chapter 20 of this code; or, if a mutual company, that it has received and is in possession of the cash premiums, and bona fide engagements for insurance to the extent and of the value required in section 17B:18-36. L.1971, c. 144, s. 17B:18-41.

N.J. Stat. § 17B:18-42 Certificate of authority; when issuable.

17B:18-42. When satisfied that a domestic insurer has complied with all the requirements of this code to entitle it to engage in business and that the proposed methods of operation of the insurer are not such as would render its operation hazardous to the public or its policyholders, the commissioner shall issue to the insurer a certificate authorizing it to commence business, specifying in the certificate the particular kind or kinds of insurance it is authorized to transact. The commissioner may refuse to issue a certificate of authority if he finds that any of the insurer's directors or officers has been convicted of a crime involving fraud, dishonesty, or like moral turpitude or that said persons are not persons of good character and integrity. Any applicant for a license pursuant to this section and any officer, director, partner or owner of a controlling interest of a corporation or partnership for licensure shall submit to the commissioner the applicant's name, address, fingerprints and written consent for a criminal history record background check to be performed. The commissioner is authorized to exchange fingerprint data with and receive criminal history record information from the State Bureau of Identification in the Division of State Police and the Federal Bureau of Investigation consistent with applicable State and federal laws, rules and regulations, for the purposes of facilitating determinations concerning licensure eligibility. The applicant shall bear the cost for the criminal history record background check, including all costs of administering and processing the check. The Division of State Police shall promptly notify the commissioner in the event a current holder of a license or prospective applicant, who was the subject of a criminal history record background check pursuant to this section, is arrested for a crime or offense in this State after the date the background check was performed. No insurer shall transact the business for which it is incorporated until it has received the certificate from the commissioner. If any insurer fails to obtain the certificate of authority within one year from the date of the certificate of the commissioner to its certificate of incorporation, as provided in section 17B:18-5, and such failure is the result of its lack of due diligence in meeting the requirements therefor, the insurer shall, ipso facto, be dissolved and its certificate of incorporation be null and void. L.1971, c.144; amended 2003, c.199, s.14.

N.J. Stat. § 17B:18-43 Domestic insurers, powers, duties--general corporation law

a. Any domestic insurer and its stockholders, members and directors, shall have all the powers granted and be subject to all the duties and obligations imposed by New Jersey Business Corporation Act (N.J.S. 14A:1-1 et seq.), except so far as they may be inconsistent with the provisions of this Code. b. Subject to the approval of the commissioner, a domestic insurer may, independently of any insurance or annuity contract, provide services of the kinds it performs in the normal conduct of its insurance or annuity business, including but not limited to consultative, administrative, investment, actuarial, loss prevention, data processing, accounting, claims and collection services. In granting any such approval, the commissioner may impose any limitations he may deem necessary for the protection of the interests of the policyholders of said insurer. In granting or withholding his approval, the commissioner shall take into account the effect of said insurer's providing such services on its existing insurance and annuity business and its surplus, and the risks inherent in said insurer's providing such services. L.1971, c. 144, s. 17B:18-43.

N.J. Stat. § 17B:18-44 Stock of other insurance company

A domestic insurer which purchases stock of another insurance company in compliance with section 17B:20-4 may pay therefor in cash or its equivalent or in its own capital stock, and may issue its capital stock in payment to the persons from whom the same may be purchased or acquired, or otherwise for the purpose of the purchase or acquisition. The stock so purchased or acquired shall constitute lawful payment for the capital stock issued to purchase or acquire it and any capital stock so issued shall be deemed a part of the capital of the issuing company. The company may exhibit the amount of capital so paid up in its advertisements. L.1971, c. 144, s. 17B:18-44. Amended by L.1973, c. 22, s. 7, eff. Feb. 8, 1973.

N.J. Stat. § 17B:18-45 Authority to acquire, hold and convey real estate

Any domestic insurer, in addition to the authority contained in sections 17B:20-1 to 17B:20-5, inclusive, may acquire, hold and convey any real estate as may be convenient in its operations, provided that if the commissioner shall determine after a hearing pursuant to the Administrative Procedure Act (P.L.1968, c. 410) and any rules adopted thereunder, that the interest of such insurer's policyholders requires that any specific real estate so acquired be disposed of, then such insurer shall dispose of such real estate within such reasonable time as the commissioner shall direct. L.1971, c. 144, s. 17B:18-45.

N.J. Stat. § 17B:18-46 Limitation on dividends to stockholders

No profits on participating policies and contracts heretofore or hereafter issued by a domestic stock insurer in excess of the larger of a. 10% of such profits before payment of policyholder dividends, or b. $0.50 per year per $1,000.00 of participating life insurance in force at the end of the year, shall inure to the benefit of the stockholders. In any annual statement made hereafter by such insurer to the commissioner, it shall exhibit the amount of participating policyholders' surplus. Both participating and nonparticipating policies or contracts may provide that, in addition to any rate of interest guaranteed by the issuing insurer to be paid on deferred payments of the proceeds thereof, additional interest may be paid thereon at such rate as the insurer may annually declare; and the inclusion of such provision in any nonparticipating policy shall not be deemed to make the policy participating. L.1971, c. 144, s. 17B:18-46.

N.J. Stat. § 17B:18-47 Increase or decrease of capital stock

Any domestic stock insurer may increase its capital stock or decrease it to an amount not less than the minimum required by this code by proceeding in the manner and subject to the conditions of section 17B:18-56. The whole of the increased capital stock shall be paid and may be invested, and an examination thereof shall be made in the manner provided by section 17B:18-41 for the original capital stock. Thereupon the increase shall be deemed a part of the capital of the insurer, subject to all the provisions of this code applicable thereto. When any insurer increases its capital stock by more than $50,000.00, an examination thereof shall be made whenever and as often as $50,000.00 or more of the increase is paid in, as is provided in said section 17B:18-41 for the original capital stock. Thereupon the increase of $50,000.00 or more shall be deemed a part of the capital of the insurer subject to all the provisions of this Code applicable thereto. L.1971, c. 144, s. 17B:18-47.

N.J. Stat. § 17B:18-48 Advertisement of assets to include liabilities

When an insurer doing business in this State advertises its assets, it shall, in the same connection and equally conspicuously, advertise its liabilities, the same to be determined in the manner required in making the annual statements to the commissioner. All advertisements purporting to show the capital of the company shall exhibit only the amount of capital actually paid in cash. In the case of a company organized under the laws of a foreign country, its assets shall be considered to be only the amounts deposited with the officials of the several states of the union or held by trustees in the United States for the benefit of the policyholders and creditors of the company in the United States. All policies, renewals, signs, circulars, cards, or other means by which public announcements are made, shall be held to be advertisements within the meaning of this section. L.1971, c. 144, s. 17B:18-48. Amended by L.1973, c. 22, s. 8, eff. Feb. 8, 1973.

N.J. Stat. § 17B:18-49 Cash disbursements to be evidenced by voucher

No domestic insurer shall make any cash disbursement of $100.00 or more unless it is evidenced by a voucher, signed by or on behalf of the person receiving the money, and correctly describing the consideration for the payment. If the expenditure is for both services and disbursements, the voucher shall set forth the services rendered and an itemized statement of the disbursements made. When the voucher cannot be obtained, the expenditure shall be evidenced by an affidavit describing the character and object of the expenditure, and stating the reason for not obtaining the voucher. L.1971, c. 144, s. 17B:18-49.

N.J. Stat. § 17B:18-50 Payment of taxes, charges and fees prior to determination of invalidity

The directors of any domestic insurer are authorized to pay, and to appropriate money to pay, such taxes, charges and fees as have been or may be imposed against the property, business, income or franchises of such insurer by the laws of this or any other State or jurisdiction in which such insurer is doing business unless, prior to the payment of any such tax, charge or other fee, the law imposing the same shall have been expressly held invalid by the State court having final appellate jurisdiction in the premises or by the Supreme Court of the United States. L.1971, c. 144, s. 17B:18-50.

N.J. Stat. § 17B:18-51 Compensation of directors

The director of any domestic insurer when acting as its officer, counsel, agent or representative, and also for each occasion of his attendance at meetings of the board or its committees, may receive such compensation as a majority of the board deems just and reasonable. L.1971, c. 144, s. 17B:18-51.

N.J. Stat. § 17B:18-52 Insurer payments to senior officers restricted

No domestic insurer shall: a. Pay any salary, compensation or emolument to any of its senior officers, directors or trustees, unless the payment is first authorized by a vote of its board of directors; b. Make any agreement with any of its officers, senior officers, directors, trustees or salaried employees whereby it agrees that for any service rendered or to be rendered he shall receive any salary, compensation or emolument that will extend beyond a period of 24 months from the date of the agreement, but nothing herein shall be construed to prevent a domestic insurer from deferring the payment of any salary, compensation or emolument for such period of time and upon such terms as it may determine or from entering into contracts with its agents or brokers for the payment of renewal commissions; c. Grant any pension to any officer, senior officer, director, general agent, employee or trustee thereof or to any member of his family after his death, except in accordance with a written plan approved by its board of directors it may: (1) grant to its salaried officers, senior officers, directors, general agents and employees retirement and disability allowances and death benefits; (2) establish a profit sharing plan which meets the requirements of subsection (a) of section 401 of the Internal Revenue Code of 1954, 68A Stat. 134, 26 U.S.C. s. 401, or any similar legislation which might take its place and which plan, at the option of the insurer, may be in addition to any existing pension plan; and except that it may with the approval of the commissioner provide reasonable supplemental retirement allowances to any of its salaried officers, senior officers and employees and their dependents, whose retirement benefits under the insurer's plan or plans are, in the opinion of its board of directors, inadequate. The term "senior officers" as used in this section means each officer of an insurer within the four highest salary categories of such insurer; but in instances where an insurer does not have an aggregate of at least five officers from all of the four highest salary categories, then "senior officers" for such insurer shall be the five highest salaried officers of that insurer. L. 1971, c. 144; amended by L. 1973, c. 22, s. 9; 1983, c. 189; 1987, c. 61, s. 1.

N.J. Stat. § 17B:18-53 Reporting amount of stock owned and changes therein by director, officer, and principal stockholders of domestic stock insurers

Every person who is directly or indirectly the beneficial owner of more than 10% of any class of stock of a domestic stock insurer or who is a director or officer of such insurer shall file in the office of the commissioner within 10 days after he becomes such beneficial owner, director or officer a statement, in such form as the commissioner may prescribe, of the amount of all stock of such insurer of which he is the beneficial owner, and within 10 days after the close of each calendar month thereafter, if there has been a change in such ownership during such month, shall file in the office of the commissioner a statement, in such form as the commissioner may prescribe, indicating his ownership at the close of the calendar month and such changes in his ownership as have occurred during such calendar month. L.1971, c. 144, s. 17B:18-53.

N.J. Stat. § 17B:18-54 Suit for profits realized by director, officer, and principal stockholders

For the purpose of preventing the unfair use of information which may have been obtained by such beneficial owner, director or officer by reason of his relationship to such insurer, any profit realized by him from any purchase and sale, or any sale and purchase, of any stock of such insurer within any period of less than 6 months, unless such stock was acquired in good faith in connection with a debt previously contracted, shall inure to and be recoverable by the insurer, irrespective of any intention on the part of such beneficial owner, director or officer in entering into such transaction of holding the stock purchased or of not repurchasing the stock sold for a period exceeding 6 months. Suit to recover such profit may be instituted at law or in equity in any court of competent jurisdiction by the insurer or by the owner of any stock of the insurer in the name and in behalf of the insurer if the insurer shall fail or refuse to bring such suit within 60 days after request or shall fail diligently to prosecute the same thereafter; but no such suit shall be brought more than 2 years after the date such profit was realized. This section shall not be construed to cover any transaction where such beneficial owner was not such both at the time of the purchase and sale, or the sale and purchase, of the stock involved, or any transaction or transactions which the commissioner may by rules and regulations exempt as not comprehended within the purpose of this paragraph. L.1971, c. 144, s. 17B:18-54.

N.J. Stat. § 17B:18-55 Limitation on sale of stock by director, officer and principal stockholders

It shall be unlawful for any such beneficial owner, director or officer, directly or indirectly, to sell any stock of such insurer if the person selling the stock or his principal a. does not own the stock sold, or b. if owning the stock, does not deliver it against such sale within 20 days thereafter, or does not within 5 days after such sale deposit it in the mails or other usual channels of transportation; but no person shall be deemed to have violated this section if he proves that notwithstanding the exercise of good faith he was unable to make such delivery or deposit within such time, or that to do so would cause undue inconvenience or expense. L.1971, c. 144, s. 17B:18-55.

N.J. Stat. § 17B:18-56 Stock insurers; change of name, extension of corporate existence or amendment of charter or certificate of incorporation

a. Any stock insurer heretofore or hereafter incorporated under any general or special law of this State may change its name, extend its corporate existence either before or after the expiration of the period limited for its duration or amend its charter or certificate of incorporation for any lawful purpose or restate its certificate of incorporation through procedures prescribed by the statutes of this State as to business corporations in general, and by complying with the requirements of subsection b. b. Upon adoption of such change of name, extension of corporate existence, amendment or restatement of charter, a certificate thereof shall be signed by the president or a vice-president and secretary or assistant secretary under the corporate seal and be acknowledged or proved as in the case of deeds of real estate. The certificate shall be submitted to the commissioner for his approval as provided for certificates of incorporation. When so approved, it shall be filed in the Department of Insurance whereupon the charter or certificate of incorporation shall be deemed to be amended accordingly. L.1971, c. 144, s. 17B:18-56.

N.J. Stat. § 17B:18-57 Mutual insurers; change of name, extension of corporate existence or amendment of charter or certificate of incorporation

Mutual insurers; change of name, extension of corporate existence or amendment of charter or certificate of incorporation. a. Any mutual insurer heretofore or hereafter incorporated under any general or special law of this State may change its name and extend its corporate existence or amend its charter or certificate of incorporation for any lawful purpose by a three-fourths vote of its directors present at any regular or special meeting, held in accordance with its charter and bylaws, held not less than 30 nor more than 90 days after notice of the proposed amendment has been given to the directors and to the commissioner. b. Upon adoption, a certificate of such adoption setting forth such change of name, extension or amendment shall be made and filed by the president or a vice-president of the insurer and by the secretary or an assistant secretary under the corporate seal and shall be acknowledged or proved as in the case of deeds of real estate and shall be submitted to the commissioner for his approval. If the commissioner finds that such change of name, extension or amendment is in conformity with law and does not unreasonably affect the interests of the policyholders, he may endorse his approval on the certificate. When so approved, it shall be filed in the Department of Insurance whereupon the charter or certificate of incorporation shall be deemed to be amended accordingly. c. The refusal of the commissioner to give any approval shall be subject to judicial review. d. To the extent that an amendment of the charter or certificate of incorporation of a mutual insurer is adopted in accordance with subsection (3) of N.J.S. 14A:2-7, the commissioner shall approve such amendment unless he finds that it unreasonably affects the interest of the policyholders. Amended 1987, c.35, s.5; 1989,c.17,s.4.

N.J. Stat. § 17B:18-58 Mutual insurers; adoption of amended charter or certificate of incorporation

When any mutual insurer adopts an amendment to its charter or certificate of incorporation, as provided for in this chapter, the board of directors of the insurer, at the time of adopting the amendment, may adopt and ratify in its entirety an amended charter or certificate of incorporation to the end that it shall fully and completely set forth all the terms and conditions of the charter or certificate of incorporation under which the insurer shall thereafter transact business. The amended charter or certificate of incorporation shall be executed, acknowledged, approved and filed in accordance with section 17B:18-5. L.1971, c. 144, s. 17B:18-58.

N.J. Stat. § 17B:18-59 Mutualization of stock insurers

a. A stock insurer may become a mutual insurer under such plan and procedure as may be approved by the commissioner after a hearing thereon. b. The commissioner shall not approve any such plan, procedure or mutualization unless: (1) It is equitable to stockholders and policyholders; (2) It is subject to approval by the holders of not less than 2/3 of the insurer's outstanding capital stock having voting rights and by not less than 2/3 of the insurer's policyholders who are qualified voters and who vote on such plan in person, by proxy or by mail pursuant to such notice and procedure as may be approved by the commissioner; (3) Mutualization will result in retirement of shares of the insurer's capital stock at a price not in excess of the fair market value thereof as determined by competent disinterested appraisers; (4) The plan provides for the purchase of the shares of any nonconsenting stockholder in the same manner and subject to the same applicable conditions as provided in New Jersey Business Corporation Act (N.J.S. 14A:1-1 et seq.) as to rights of nonconsenting stockholders, with respect to consolidation or merger of private corporations; (5) The plan provides for definite conditions to be fulfilled by a designated early date upon which such mutualization will be deemed effective; and (6) The mutualization leaves the insurer with surplus funds reasonably adequate for the security of its policyholders and to enable it to continue successfully in business in the States in which it is then authorized to transact insurance, and for the kinds of insurance included in its certificates of authority in such States. c. This section shall not apply to mutualization under order of court pursuant to rehabilitation or reorganization of an insurer under chapter 32 of this Title. L.1971, c. 144, s. 17B:18-59.

N.J. Stat. § 17B:18-60 Merger and consolidation of stock insurers

a. A domestic stock insurer may merge or consolidate with one or more domestic or foreign stock insurers in the following manner and subject to the following provisions. b. (1) Mergers or consolidations may be initially proposed at any meeting of the board of directors of a domestic stock insurer by the affirmative vote of 2/3 of the total number of directors of the insurer, or at any meeting of the stockholders of the insurer by the affirmative vote of a majority of the total number of shares of stock outstanding and entitled to vote, provided the notice of such meeting shall set forth such proposal. (2) The plan of merger or consolidation proposed as required by paragraph (1) of this subsection, shall be submitted to a meeting of the stockholders of record of each domestic stock insurer, and may become effective only if adopted at such meeting by the affirmative vote, in person or by proxy, of 2/3 of the total number of shares of stock outstanding and entitled to vote. The said meeting shall be held upon such reasonable notice as has been approved by the commissioner and the notice shall fully set forth the terms and conditions of the proposed plan and agreement of merger or consolidation. c. No such merger or consolidation shall be effectuated unless in advance thereof the plan and agreement therefor have been filed with the commissioner and approved in writing by him after a hearing thereon. The commissioner shall give such approval within a reasonable time after such hearing unless he finds such plan or agreement: (1) Is contrary to law; or (2) Inequitable to the stockholders of any insurer involved; or (3) Would substantially reduce the security of and service to be rendered to policyholders of the domestic insurer in this State or elsewhere. (4) Involves the merger of a domestic insurer into a nonadmitted foreign insurer. d. No director, officer, agent or employee of any insurer party to such merger or consolidation shall receive any fee, commission, compensation or other valuable consideration whatsoever for in any manner aiding, promoting or assisting therein except as set forth in such plan or agreement. e. If the commissioner does not approve any such plan or agreement he shall so notify the insurer in writing specifying in detail his reasons therefor. f. Any plan or proposal through which a stock insurer proposes to acquire a controlling stock interest in another stock insurer through an exchange of stock of the first insurer issued for the purpose is deemed to be a plan or proposal of merger of the second insurer into the first insurer for the purposes of this section and is subject to the applicable provisions hereof. g. Upon such merger or consolidation all the rights, franchises, and interest of the insurers so merging or consolidating, in and to every species of property and things in action belonging to them, or either of them, shall be deemed to be transferred to and vested in the insurer resulting from such merger or consolidation, without any other deed or transfer, and the merged or consolidated insurer shall hold and enjoy the same to the same extent as if the merging or consolidating insurers, or either of them, had continued to retain their titles and transact business. h. The insurer so formed by or resulting from such merger or consolidation may require the return of the original certificates of stock held by each stockholder in each of the insurers involved in such merger or consolidation, and may convert said certificates into new certificates for such number of shares of the merged or consolidated insurer as each stockholder is entitled to receive. Any stockholder refusing or neglecting to so convert his stock shall be governed by the provisions of New Jersey Business Corporation Act (N.J.S. 14A:1-1 et seq.), concerning nonconsenting stockholders with respect to consolidation or merger of private corporations. L.1971, c. 144, s. 17B:18-60.

N.J. Stat. § 17B:18-61 Merger and consolidation of mutual insurers

a. A domestic mutual insurer may merge or consolidate with one or more domestic or foreign mutual insurers in the following manner and subject to the following provisions: b. (1) The plan for merger or consolidation may be proposed at any meeting of the board of directors of a domestic insurer by the affirmative vote of 2/3 of the total number of directors of the insurer. (2) The plan for consolidation or merger proposed as required by paragraph (1) of this subsection, shall be submitted to a meeting of the policyholders of each domestic insurer, and may be effective only if adopted at such meeting by the affirmative vote, in person or by proxy, of a majority of the votes cast by policyholders who are qualified voters and who vote thereon. The said meeting shall be held upon such reasonable notice as has been approved by the commissioner and the notice shall fully set forth the terms and conditions of the proposed plan and agreement of merger or consolidation. c. No such merger or consolidation shall be effectuated unless in advance thereof the plan and agreement therefor have been filed with the commissioner and approved in writing by him after a hearing thereon. The commissioner shall give such approval within a reasonable time after such hearing unless he finds such plan or agreement: (1) Is contrary to law; or (2) Inequitable to the policyholders of any insurer involved; or (3) Would substantially reduce the security of and service to be rendered to policyholders of the domestic insurer in this State or elsewhere. (4) Involves the merger of a domestic insurer into a nonadmitted foreign insurer. d. No director, officer, agent or employee of any insurer party to such merger or consolidation shall receive any fee, commission, compensation or other valuable consideration whatsoever for in any manner aiding, promoting or assisting therein except as set forth in such plan or agreement. e. If the commissioner does not approve any such plan or agreement he shall so notify the insurer in writing specifying in detail his reasons therefor. f. Upon such merger or consolidation all the rights, franchises, and interest of the insurers so merging or consolidating, in and to every species of property and things in action belonging to them, or either of them, shall be deemed to be transferred to and vested in the insurer resulting from such merger or consolidation, without any other deed or transfer, and the merged or consolidated insurer shall hold and enjoy the same to the same extent as if the merging or consolidating insurers, or either of them, had continued to retain their titles and transact business. L.1971, c. 144, s. 17B:18-61.

N.J. Stat. § 17B:18-62 "Reinsurance" defined

"Reinsurance" is a contract under which an originating insurer, called the "ceding insurer" , procures insurance for itself in another insurer, called the "assuming insurer," with respect to part or all of an insurance risk of the originating insurer. L.1971, c. 144, s. 17B:18-62.

N.J. Stat. § 17B:18-63 Reinsurance of risks

An insurer may reinsure such risks as it is authorized to insure, subject to the provisions of this Code. L.1971, c. 144, s. 17B:18-63.

N.J. Stat. § 17B:18-64 Prerequisites to reinsurance

a. No domestic insurer may become a ceding insurer with respect to all or any substantial part of its outstanding insurance risks or become an assuming insurer with respect to all or any substantial part of the outstanding insurance risks of another insurer until the contract of reinsurance between the ceding insurer and the assuming insurer shall have been submitted to the commissioner together with satisfactory evidence that the interests of the policyholders of each of such insurers which is authorized to do an insurance business in this State are fully protected and until such contract of reinsurance shall have been approved by him; provided however, that this section shall not be applicable to contracts of reinsurance heretofore or hereafter entered into providing for the reinsuring of single risks or policies, in whole or in part, or risks covered by any group policy or contract, in whole or in part. b. If a domestic mutual insurer cedes all or any substantial part of its insurance risks to a stock insurer, the agreement must be approved by the commissioner. The commissioner shall not approve any such agreement unless: (1) It is equitable to the insurer's policyholders; (2) It is subject to approval by vote of not less than 2/3 of the insurer's current policyholders who are qualified voters and who vote thereon in person, by proxy, or by mail at a meeting of policyholders called for the purpose pursuant to such reasonable notice and procedure as may be approved by the commissioner; (3) The equity of each policyholder in the insurer is determinable under a fair formula approved by the commissioner, which such equity shall be based upon not less than the insurer's entire surplus (after deducting contributed or borrowed surplus funds) plus a reasonable present equity in its reserves and in all nonadmitted assets; (4) In all cases involving the ceding of all the risks of a domestic mutual insurer to a stock insurer, there shall be a proviso in such agreement that upon the consummation of such transactions, said domestic insurer shall then be automatically dissolved. L.1971, c. 144, s. 17B:18-64.

N.J. Stat. § 17B:18-65 Extended reinsurance

In addition to the reinsurance specified in 17B:18-63, an insurer authorized to do the business specified in section 17B:17-3, 17B:17-4 and 17B:17-5 may through reinsurance assume any insurance risk and may retrocede any portion thereof; provided, however, no insurer may undertake any such extended reinsurance business without the prior approval of the commissioner. L.1971, c. 144, s. 17B:18-65. Amended by L.1975, c. 80, s. 1, eff. May 2, 1975.

N.J. Stat. § 17B:18-65.1 Rules and regulations

The commissioner is authorized to adopt, promulgate and enforce such rules and regulations as he determines to be necessary to implement this act. L.1975, c. 80, s. 2, eff. May 2, 1975.

N.J. Stat. § 17B:18-66 Reinsurance pooling

Any reinsurance authorized by sections 17B:18-63 or 17B:18-65 or any reinsurance of blanket accident insurance referred to in section 4 of Public Law 1939, c. 305 (17B:27-32) may be provided through pooling arrangements with other insurers for purposes of spreading the insurance risk. L.1971, c. 144, s. 17B:18-66.

N.J. Stat. § 17B:18-67 Short title

1. Sections 2 through 6 of this act shall be known and may be cited as the "Dynamic Capital and Surplus Act of 1993." L.1993,c.235,s.1.

N.J. Stat. § 17B:18-68 Surplus, capital required

2. Except as provided by section 3 of P.L.1993, c.235 (C.17B:18-69), no domestic insurer shall commence business in this State unless the insurer has surplus and capital actually paid in cash of at least the following amounts, and no domestic insurer shall otherwise continue to transact business in this State unless it has surplus and capital of at least the following amounts: a. For either kind or both kinds of business specified in N.J.S.17B:17-3 and N.J.S.17B:17-5, $1,000,000 in capital and $4,000,000 in surplus for a stock insurer, and $4,000,000 in surplus for a mutual insurer; b. For the kind of business specified in N.J.S.17B:17-4, $700,000 in capital and $2,800,000 in surplus for a stock insurer, and $3,000,000 in surplus for a mutual insurer; and c. For all three kinds of business specified in N.J.S.17B:17-3, N.J.S.17B:17-4 and N.J.S.17B:17-5, $1,530,000 in capital and $6,120,000 in surplus for a stock insurer, and $6,300,000 in surplus for a mutual insurer. For purposes of this section, "surplus" means unencumbered assets in excess of capital and all required reserves and other liabilities. L.1993,c.235,s.2; amended 1995,c.380,s.1.

N.J. Stat. § 17B:18-69 Temporary waiver of capital, surplus requirements

3. An insurer authorized to transact the kind of business specified in N.J.S.17B:17-3, N.J.S.17B:17-4 or N.J.S.17B:17-5 prior to and on the effective date of this act may apply to the commissioner for a temporary waiver of the applicable capital and surplus requirements set forth in section 2 of this act. The commissioner may, in his discretion, temporarily waive the applicable capital and surplus requirements for that insurer for a period of no more than five years, except that the insurer shall remain subject to capital and surplus requirements of no less amounts than those in effect immediately prior to the effective date of this act. In considering such a temporary waiver, the commissioner shall consider: the size of the insurer's deficiency in meeting the applicable capital and surplus requirements; the adequacy of the insurer's financial plan to meet the applicable capital and surplus requirements; and any other factors deemed appropriate by the commissioner. L.1993,c.235,s.3.

N.J. Stat. § 17B:18-70 Increase in amount of required capital, surplus

4. The commissioner may increase the amount of capital or surplus required of any insurer pursuant to section 2 of this act, or subsequently revise or redetermine that increase, using appropriate methods and procedures established by rules and regulations adopted by him in order to provide adequate protection against risks affecting the insurer's financial condition that are not adequately or fully covered by its reserves or other assets, but under no circumstance shall an insurer's capital or surplus be less than the capital or surplus required pursuant to section 2 or, where applicable, section 3 of this act; provided, however, that any increase of capital or surplus pursuant to this section, including any increase required by a subsequent revision or redetermination, shall be made only after a formal departmental hearing, on a record, unless that hearing is waived by the affected insurer. All matters pertaining to a hearing or to an increase of capital or surplus pursuant to this section shall be confidential and not subject to subpoena or public inspection, except to the extent that the commissioner finds release of information necessary to protect the public. The hearing shall be initiated within 20 days after written notice to the insurer. Any decision regarding an increase of capital or surplus pursuant to this section, including an increase required by a subsequent revision or redetermination, shall contain findings specifying the factors deemed significant in regard to the particular insurer, and shall set forth the reasons supporting the increase of capital or surplus ordered by the commissioner. In determining any increase, revision or redetermination in the amount of capital or surplus, the commissioner shall consider the risks of: a. Increases or decreases in the frequency and severity of losses under normal operating conditions, as well as increases or decreases in those values, beyond or below the levels contemplated by the rates that it charged for insurance and beyond or below those reasonably expected under normal conditions; b. Increases or decreases in expenses under normal operating conditions, as well as increases or decreases in those values, beyond or below the levels contemplated by the rates that it charged for insurance and beyond or below those reasonably expected under normal conditions; c. Increases or decreases in the value of, or return on, invested assets under normal operating conditions, as well as increases or decreases in those values, beyond or below those levels anticipated under normal conditions; d. Changes in economic, social and market conditions that could adversely or favorably affect the financial condition of the insurer, including conditions that would make liquidity more or less important than contemplated and would prevent or facilitate timely investments or force or prohibit untimely sales of assets; and e. Any other contingencies, including reinsurance and unfunded or extracontractual obligations, which may affect the insurer's financial condition. L.1993,c.235,s.4.

N.J. Stat. § 17B:18-71 Factors for determination of increase, revision, redetermination

5. In determining any increase, revision or redetermination in the capital or surplus of an insurer pursuant to the provisions of section 4 of this act, the commissioner shall take into account the following factors: a. Methods and techniques used to measure risk exposure and variability; b. The information available relating to the magnitude of the various risks described in section 4 of this act; c. The extent to which the risks described in section 4 of this act are independent or interrelated, and whether any dependency is direct or inverse; d. The insurer's financial history, projections of profits or losses and other operational characteristics; e. The extent to which the insurer has provided protection against contingencies in ways other than the establishment of surplus, including, but not limited to: redundancy of premiums; margin in reserves and liabilities; adjustability of contracts pursuant to the terms of the contracts; voluntary or mandatory investment valuation reserves; reinsurance; the use of conservative actuarial assumptions to provide a margin of security; reserve adjustments after rate increases for policies written at earlier and less adequate rates; contingency or catastrophe reserves, and diversification of assets and underwriting risks; and f. Any other relevant factors, including National Association of Insurance Commissioners' reports and independent judgments of the soundness of the insurer's financial condition, as evidenced by ratings and reports of reliable professional financial services. L.1993,c.235,s.5.

N.J. Stat. § 17B:18-72 Suspension, revocation of authority to do business

6. The commissioner may suspend or revoke the authority to do business in this State of any insurer that does not comply with the provisions of this act. L.1993,c.235,s.6.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.njleg.state.nj.us/legislative-activity/statutesFetched: 10/17/2026

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