Mutual fire companies; guaranty capital; dividends; retirement
Section 79. A mutual fire company may, at the time of its formation or, if two thirds of the votes of its policyholders cast at a meeting duly called for the purpose are recorded in favor of such action, at any time after its formation, establish a guaranty capital of not less than the combined capital and surplus provisions required under section forty-eight, divided into shares of a par value of one hundred dollars each, to be invested as provided by this chapter for the investment of the capital stock of domestic stock companies. Any such company may, at any time by a like vote, increase said guaranty capital subject to the written approval of the commissioner. The holders of shares of guaranty capital shall be entitled to a semi-annual dividend of not more than seven per cent on their respective shares if the net profits or unused premiums, left after all expenses, losses and liabilities then incurred, with the reserve for reinsurance, are provided for, shall be sufficient to pay the same. Shareholders and members of such companies shall, except as otherwise provided herein, be subject to the same provisions of law relative to their right to vote as apply respectively to shareholders in stock companies and policyholders in mutual fire companies. The guaranty capital shall be applied to the payment of losses only when the company has exhausted its assets, exclusive of uncollected premiums; and when thus impaired, the directors may make good the whole or any part of it by assessments upon the contingent funds of the company at the date of such impairment. Such guaranty capital shall be retired by the directors of the company at par when the profits accumulated under section eighty equal two per cent of its insurance in force; and such guaranty capital may, upon the recording in favor of such action of two thirds of the votes cast at a special meeting duly called for the purpose, as provided in the by-laws of the company, and with the written approval of the commissioner, be reduced or retired, if the net assets of the company above its reinsurance reserve and all other claims and obligations, exclusive of guaranty capital, for two years last preceding and including the date of its last annual statement under section twenty-five has been not less than one hundred per cent of the amount of the guaranty capital. Due notice of any proposed action under this section shall be given to the policyholders in the manner provided in the by-laws of the company for the amendment of such by-laws or for the calling of a special meeting. No company with a guaranty capital which has ceased to do new business shall retire such capital or pay any dividends thereon, except from income from its investments, until it shall have performed or cancelled its policy obligations. The holders of the guaranty capital of a mutual fire company shall not be entitled in any event to share in the distribution of its assets beyond the amount of the par value of their shares and any dividends declared and payable thereon.