Section 27-27-26

Link to law: http://alisondb.legislature.state.al.us/alison/codeofalabama/1975/27-27-26.htm
Published: 2015

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Section 27-27-26

Section 27-27-26Pecuniary interests of officers, etc., of domestic insurers.

(a) No officer or director of a domestic insurer, and no member of any committee or employee of a domestic insurer who is charged with the duty of investing or handling the funds of the insurer, shall do any of the following:



(1) Deposit or invest the funds except in the corporate name of the insurer; except, that the insurer may for its convenience hold any equity investment in a street name or in the name of a nominee.



(2) Borrow the funds of the insurer.



(3) Be pecuniarily interested in any loan, pledge or deposit, security, investment, sale, purchase, exchange, reinsurance, or other similar transaction or property of the insurer except as follows:



a. As a stockholder or member of the insurer.



b. As a holder or owner of common stock or equity-like preferred stock in any corporation or business entity trading on a national or international stock exchange.



c. As a holder or owner of shares of mutual funds, bond funds, or private equity funds registered with the United States Securities and Exchange Commission.



d. As a holder or owner of bonds and other evidences of indebtedness of governmental units in the United States or Canada or private business entities domiciled in the United States or Canada.



e. As a holder or owner of bonds and other evidences of indebtedness of international development organizations of which the United States is a member.



(4) Take or receive to his or her own use any fee, brokerage, commission, gift, or other consideration for, or on account of, any such transaction made by, or on behalf of, the insurer.



(b) No insurer shall guarantee any financial obligation of any of its officers or directors.



(c) This section shall not prohibit such a director, or officer, or member of a committee or employee from becoming a policyholder of the insurer and enjoying the usual rights so provided for its policyholders, nor shall it prohibit any officer, director, or member of a committee or employee from participating as beneficiary in any pension trust, deferred compensation plan, profit-sharing plan, or stock option plan authorized by the insurer and to which he or she may be eligible, nor shall it prohibit any director or member of a committee from receiving a reasonable fee for legal services actually rendered to the insurer.



(d) The commissioner may, by regulations from time to time, define and permit additional exceptions to the prohibition contained in subsection (a) of this section solely to enable payment of reasonable compensation to a director who is not otherwise an officer or employee of the insurer, or to a corporation or firm in which a director is interested, for necessary services performed or sales or purchases made to, or for, the insurer in the ordinary course of the business of the insurer and in the usual private professional or business capacity of the director or the corporation or firm.

(Acts 1971, No. 407, p. 707, §522; Act 2012-370, p. 921, §1; Act 2013-397, p. 1513, §1.)