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CHAPTER 73.

An Act to amend an act entitled "An act to provide for

the regulation and incorporation of insurance companies, and to regulate the transaction of insurance business in this State," approved April third, one 'thousand nine hundred and two.

Section 6 amended.

If mutual fire company.

BE IT ENACTED by the Senate and General Assembly of the State of New Jersey:

I. Section six of the act to which this is an amendment is hereby amended so as to read as follows:

6. No stock insurance company organized under this Capital necesact shall be entitled to commence business, unless it has business. a capital stock of at least one hundred thousand dollars, actually paid in cash, with an additional capital stock of fifty thousand dollars, actually paid in cash, for every kind of insurance more than one which it is authorized to transact as specified in section two of this act; no mutual fire insurance company so organized shall be entitled to commence business until engagements shall have been entered into for insurance with said company, the premiums on which shall amount to ten thousand dollars, and notes of solvent parties, based on bona fide applications for insurance upon property located within this State, shall have been received in advance therefor: such notes shall be considered the capital stock of such company, and shall be valid and collectible for paying any losses which may accrue, or for any other lawful use or purpose; no mutual life, health or accident in- If mutual life surance company so organized shall be entitled to commence business until engagements by not less than one hundred insurable persons shall have been entered into for insurance with said company, the premiums on which shall amount to at least thirty thousand dollars, and shall have been received by the proposed corporators of said company in cash.

or accident company.

Temporary capital of mutual life companies.

Dividend.

A mutual life insurance company may be organized with a temporary capital stock of not less than one hundred thousand dollars, which shall be invested in the same manner as is provided for the investment of its other funds, and in such case the amount of premiums required to be engaged and collected before commencing business shall be ten thousand dollars. The holders of said stock shall elect such number of the directors of the company as shall constitute a bare majority of the entire board, and the rest of the directors shall be elected by the policyholders in such manner and with such representation as may be provided in its certificate of incorporation; and after the retirement of such capital stock all the directors shall be so elected by the policyholders. Out of the net surplus of the company the holders of the temporary capital stock may receive a dividend of not more than ten per centum per annum, which may be cumulative. Such stock shall not be a liability of the company, except that it shall be retired when the surplus of the company becomes sufficient to pay the same at its par value and leave a surplus of not less than the amount of the temporary capital so retired.

2. Section sixteen of the act to which this is an amendment is hereby amended to read as follows:

16. Any insurance company of this State, for the purpose of investing its capital, surplus and other funds, or any part thereof, may purchase, or hold as collateral security or otherwise, and sell and convey any bonds or public stock issued or created by the United States, or by this State, or by any of the other States of the United States, or the District of Columbia, or by any of the incorporated cities, counties, townships or other municipal corporations thereof or bonds authorized to be issued by any commission appointed by the Supreme Court of this State, or invest said capital, surplus and other funds, or any part thereof, in bonds or notes secured by mortgages or trust deeds on unencumbered real estate located within said States, or the District of Columbia, worth at least one-half more than the sum invested or loaned, or lend on or purchase mortgage bonds of railroad companies organized under the laws of said States, or the

Section 16 amended.

Investments, character of.

limited.

District of Columbia, or of the Dominion of Canada, or operated wholly or partly in such States or country; or the capital stock, bonds, securities or evidences of indebtedness created by any corporation of the United States or of any State. No such life insurance company Amount in shall purchase or acquire more than twenty per centum porations of the stock of any one corporation, unless it be a municipal corporation, nor shall the amount so invested by any life insurance company in the stock of any one corporation exceed two per centum of the assets of said life insurance company, nor shall the amount invested in the bonds of any one corporation exceed ten per centum of said assets, except that nothing herein contained shall prevent any company from holding as much as fifty thousand dollars, par value, of the bonds of any corporation, when none of the stock of such corporation is held by said company. Any such life insurance company now holding a larger amount than above provided of the stock of any corporation shall divest itself of said excess within five years from the first day of July, one thousand nine hundred and seven, unless upon petition to the Chancellor, and notice to the Insurance Commissioner, the Chancellor shall for good cause shown allow further time for the disposal of such stock, and then within the time so allowed; provided, that no loan Proviso. shall be made or retained on any of the above-mentioned securities, except the bonds or stock issued or created by the United States or this State, exceeding ninety per centum of the market value thereof; and no such life insurance company shall at any time lend in the aggregate more than two per centum of its assets upon the security of the stock of any one corporation, nor more than ten per centum of its assets upon the security of the bonds of any one corporation; and further, that no Proviso. such life insurance company shall keep on deposit in any one bank or trust company for more than ten days consecutively a sum exceeding three per centum of the assets of the said life insurance company, but this provision shall not in any case limit the deposit to less than one hundred thousand dollars; and provided further, Proviso. that no purchases of the stock of any company which has not regularly paid dividends for the past five years preceding the time of purchases shall be made; and that no

Loans of marine companies.

Investments authorized by directors.

No joint transactions,

loan shall be made by any such company on its own stock; and any life insurance company may purchase any policy of insurance, or other obligation of the company, and any claims of its policyholders, and may lend to the holder of any policy of the company a sum which shall not exceed the surrender value of the policy at the time the loan is made, which loan shall be a lien upon the policy and all additions or credits thereon; and any company organized for the purpose of marine insurance may, in addition to the foregoing, lend their funds on bottomry and respondentia bonds and change and reinvest the same as occasion may from time to time require.

No investment shall be made by any life insurance company, unless the same shall first have been authorized by the board of directors, or by a committee thereof charged with the duty of supervising such investment. No such company shall underwrite or participate in any underwriting of the purchase or sale of securities or property, or enter into any transaction for such purchase or sale on account of such company jointly with any other person, firm or corporation, nor shall any such company enter into any agreement to withhold from sale any of its property, but the disposition of its property shall be at all times within the control of its board of directors; any company, however, shall be free to subscribe for any proposed issue of bonds of the United States, or of any other bonds of the character hereinbefore permitted, provided such subscription be made for a definite amount and at a definite price.

3. Section eighteen of the act to which this is amendatory hereby is amended by striking out subdivision two, which reads as follows:

"Such as shall have been mortgaged to it in good faith by way of security for loans previously contracted, or for moneys due; or” and by changing the numbers of the next two subdivisions from three and four to two and three, respectively.

4. Section twenty-four of the act to which this is an amendment is hereby amended so as to read as follows:

24. The Commissioner of Banking and Insurance shall annually make or cause to be made valuations of all outstanding policies of every life insurance company

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doing business in this State. All valuations made by him or by his authority shall be upon a net premium Basis of basis, or such modification thereof as hereinafter expressly provided, and all policies issued prior to January first, one thousand nine hundred and one, shall be valued according to the actuaries' table of mortality, with compound interest at the rate of four per centum per annum, except in cases where any such policies were valued for the date of December thirty-first, one thousand nine hundred, according to the American experience table of mortality, with compound interest at the rate of either three or three and one-half per centum per annum; such latter policies and all policies issued on or after said first day of January, one thousand nine hundred and one, shall be valued according to the American experience table of mortality, with compound interest at the rate of three and one-half per centum per annum; except in cases where any life insurance company may elect or shall have elected to have its policies or any class thereof valued according to the American experience table of mortality with a lower rate of interest than three and one-half

per centum per annum. The Commissioner of Commissioners Banking and Insurance may vary the standards of in- standards of terest and mortality in the case of annuities and indus- mortality. trial policies and of invalid lives and other extra hazards. When the actual premium charged for an insurance policy is less than the net premium for such insurance, computed according to the table of mortality and rate of interest prescribed herein, the value of such policy shall be increased by the value of an annuity, the amount of which shall equal the difference between such premiums, and the term of which in years shall equal the number of future annual payments receivable on such insurance after the date of valuation.

In the case of policies of life insurance issued on or after January first, one thousand nine hundred and policies seven, he shall, upon the request of any company, with computed. the exceptions and under the conditions hereinafter provided, compute or direct the computation of the values of such policies of said company during their first four policy years upon a modified net reserve plan in the following manner :

Values of certain

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