liability representing the proportion of such obligation ceded to it calculated in the same way.

Any contract of reinsurance, other than life, whereby an insurer cedes more than seventy-five per centum of the total amount of its outstanding risks shall, if such insurer is incorporated by or, if an insurer of a foreign country, has its principal office in this state, be subject to approval in writing by the superintendent of insurance of this state.

Every life insurance corporation doing business in this state may reinsure any part or all of any life risk in any other insurance corporation, provided that no domestic life insurance company shall reinsure its whole risk or any individual life except by permission of the superintendent of insurance, but may reinsure any portion of an individual risk and receive credit for the reserve on any policy covering a risk reinsured, if the reinsuring corporation is authorized to transact business in this state and may also receive credit for taxes on the premium paid on any such policy. Nothing in this chapter contained shall be construed as permitting the reinsurance of a life insurance corporation having over two hundred and fifty million dollars of insurance outstanding and in force.

The superintendent of insurance shall require schedules of reinsurance to be filed by every insurer at the time of making the annual report and at such other times as he may direct.

Nothing in this section shall be deemed to permit the ceding insurer to receive through the cession of the whole of any risk or risks any advantage in respect to its unearned premium reserve if an insurer other than life, or, if a life company, in the net value of its policies involving life contingencies, that would reduce the same below the actual amount thereof.

For the purposes of this section, the word "insurer" shall be deemed to include the word "reinsurer," and the words "issue policies" shall be deemed to include the words "make contracts of reinsurance."

§ 3. This act shall take effect on the first day of July, nineteen hundred and nineteen.

Chap. 389

AN ACT to amend the insurance law, in relation to mutual automobile casualty insurance corporations.

Became a law May 5, 1919, with the approval of the Governor. Passed, three-fifths being present.

The People of the State of New York, represented in Senate and Assembly, do enact as follows:

Section 1. Sections three hundred and forty-one, three hundred and forty-four and three hundred and forty-five of chapter thirtythree of the laws of nineteen hundred and nine, entitled "An act in relation to insurance corporations, constituting chapter twentyeight of the consolidated laws," as added by chapter thirteen of the laws of nineteen hundred and sixteen, are hereby amended to read as follows:

§ 341. Completion of organization. Upon receipt of a certified copy of the certificate of incorporation from the superintendent of insurance, the persons signing such certificate may open books to receive applications for membership therein. No such corporation shall issue any policies of insurance unless, and until, the persons signing such certificate shall have published notice of their intention to form such corporation in a public newspaper in the county where its principal office is to be located, once a week for two successive weeks; nor until at least one thousand persons. owning at least one thousand automobiles have agreed to become members of such corporation, and have applied for, and agreed to take, insurance therein, covering one or more of the kinds of insurance specified in section three hundred and forty; nor until such persons have paid into the corporation at least five dollars each amounting in the aggregate to at least five thousand dollars, as evidence of their good faith, such amounts to be credited against such members' first year's premiums; nor unless the annual premium cost of the insurance thus agreed to be taken shall be not less than one hundred thousand dollars at the rates charged by the company, nor until the facts specified in this section have been certified under oath to the superintendent of insurance by at least three of the persons signing the original certificate and the superintendent of insurance has issued

a certificate of authority to such corporation, authorizing it to begin writing the insurance specified in this article; nor until the superintendent of insurance shall be satisfied by an examination of the corporation or otherwise that the applications for membership are bona fide, which applications shall state that the applicants agree to accept and take the policies of insurance referred to therein within a period of three months from the date of the issuance to the corporation by the superintendent of insurance of a certificate of authority to transact the business of insurance specified in this article. If at any time it shall appear from an examination of such corporation, or from any statement filed by it, that the premium cost of the insurance on existing policies falls below one hundred thousand dollars, the superintendent of insurance shall issue an order directing the corporation, within a period of ninety days thereafter, to secure bona fide applications for insurance in the corporation, the premium cost of which insurance, together with the premium cost of existing policies, shall be not less than one hundred thousand dollars. In the event that such applications for insurance shall not be obtained within such period, the superintendent of insurance may, in his discretion, take the proceedings for the liquidation of such corporation under section sixty-three of this chapter.

The members of the corporation shall be policyholders therein, and when any member shall cease to be a policyholder, he shall cease at the same time to be a member of the corporation. A corporation, partnership, association or joint stock company, may become a member of such insurance corporation, and may authorize any person to represent it in such insurance corporation, and such representative shall have all the rights of any individual member; but neither the representative nor the said corporation, partnership, association or joint stock company shall be subject to any greater liability than as if an individual member.

Such corporation may borrow, or agree to repay, any reasonable sum or sums of money, not exceeding five thousand dollars, used to defray the expenses of its organization, or any sum or sums of money deemed necessary to be provided for the purposes of enabling it to comply with any requirement of the law. Any director, officer or member of such corporation, or any other person, firm

or corporation, may loan or advance to such corporation any such sum or sums of money, upon an agreement that the same with interest at a rate not to exceed six per centum per annum shall be repaid only out of surplus earnings or profits of such corporation with the approval of the superintendent of insurance whenever, in his judgment, the financial condition of the corporation warrants it, except that such approval shall not be withheld if after such repayment shall be made, such corporation shall have and be in possession of a surplus equal to ten per centum or more of its gross annual premium income. Such surplus, however, shall be ascertained for the purposes of such repayment, upon the basis of the unearned premium reserves being charged at a sum equal to one hundred per centum of the unearned portion of the gross premiums charged to policyholders for the policies in force from their dates of issue. Any such sum or sums shall not form a part of the legal liabilities of the corporation, but until repaid all statements filed with the superintendent of insurance shall show the amount thereof.

Such corporation may classify the risks insured therein at the time of the insurance and issue policies under different rates.

§ 344. Assets; liabilities; reserves; suspension; cancellation and reinstatement of certificates; expenses. When an examination is made by the authority of the superintendent of insurance into the affairs of any such corporation, or any such corporation renders a statement to the insurance department, the superintendent shall allow as assets only such investments as are authorized by the existing laws of this state in relation to stock insurance companies at the date of such examination or of rendering such statement, but unpaid premiums on policies or renewals written within three months shall be admitted as available resources. In estimating its liabilities for the first five years after such corporation has commenced the business of writing insurance, there shall be charged a sum equal to eighty per centum of the unearned portion of the gross premium charged to its policyholders for the policies in force from their dates of issue. After such five year period such liability shall be computed at the full one hundred per centum of the unearned portion of the gross premiums so charged. Such corporation shall also be required to maintain a reserve for outstanding losses on the same basis as is required of stock insur

ance companies in relation to the same classes of insurance except that until the total premium income of such corporation exceeds the sum of five hundred thousand dollars per annum, the reserve for all liability policies shall be computed as follows:

1. For all liability policies written during the three years immediately preceding the date as of which the statement is made, such reserve shall be fifty per centum of the earned liability premiums of each of such three years less all loss and loss expense payments made under liability policies written in the corresponding years; but in any event such reserve shall, for each of such three years, be not less than the estimated amount of all outstanding liability claims.

2. For all liability claims under policies written more than three years prior to the date as of which the statement is made, the reserve shall be computed by estimating the amounts due under each individual claim.

The superintendent of insurance may suspend or cancel the certificate issued by him, authorizing such corporation to transact such insurance business, at any time when the assets of such corporation are insufficient to insure and secure the payment of its policy and other obligations; and he may reinstate or renew said certificate whenever by assessment or otherwise said assets have been increased to a sum sufficient to insure and secure the payment of the policy and other obligations of such corporation. The expenses of management of any such corporation shall not exceed in any one calendar year thirty per centum of its premium income in such year, but the expenses of management shall not be held to include taxes and expenses incurred in the investigation, adjustment and settlement of claims.

345. Dividends. The board of directors may from time to time fix and determine the amount to be declared and paid as a dividend, upon policies expiring during each year, after retaining sufficient sums to pay all outstanding policy and other obligations. Such dividends shall not take effect or be distributed until approved by the superintendent of insurance, after such investigation as he may deem necessary, but in no event shall such dividends be declared or paid during the first five years after the corporation has been authorized to transact business, unless its