(A)(1) Except as provided in subsection (B), unless an insurer has notified the director in writing of its intention to enter into the transaction at least thirty days before entering into it, or a shorter period as the director may permit, and the director has not disapproved the transaction within the time period, the insurer may not, directly or indirectly:

(a) make a loan to or other investment in an officer or director of the insurer or a person in which the officer or director has any direct or indirect financial interest;

Terms Used In South Carolina Code 38-12-70

  • Affiliate: means , in respect to a person, another person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the person. See South Carolina Code 38-12-30
  • Contract: A legal written agreement that becomes binding when signed.
  • directly: when used in connection with an obligation, means that the designated obligor is primarily liable on the instrument representing the obligation. See South Carolina Code 38-12-30
  • Director: means the person who is appointed by the Governor upon the advice and consent of the Senate and who is responsible for the operation and management of the department. See South Carolina Code 38-1-20
  • Insurer: includes a corporation, fraternal organization, burial association, other association, partnership, society, order, individual, or aggregation of individuals engaging or proposing or attempting to engage as principals in any kind of insurance or surety business, including the exchanging of reciprocal or interinsurance contracts between individuals, partnerships, and corporations. See South Carolina Code 38-1-20
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Person: means an individual, a business entity, a multilateral development bank, or a government or quasi-governmental body, such as a political subdivision or a government sponsored enterprise. See South Carolina Code 38-12-30
  • Policy: means a contract of insurance. See South Carolina Code 38-1-20
  • State: means a state, territory, or possession of the United States of America, the District of Columbia, or the Commonwealth of Puerto Rico. See South Carolina Code 38-12-30

(b) make a guarantee for the benefit of or in favor of an officer or director of the insurer or a person in which the officer or director has any direct or indirect financial interest; or

(c) enter into an agreement for the purchase or sale of property from or to an officer or director of the insurer or a person in which the officer or director has any direct or indirect financial interest.

(2) For purposes of this section, an officer or director is not considered to have a financial interest by reason of an interest that is held directly or indirectly through the ownership of equity interests representing less than two percent of all outstanding equity interests issued by a person that is a party to the transaction, or for the sole reason of the position of that individual as a director or officer of a person that is a party to the transaction.

(3) This subsection does not permit an investment that is prohibited by § 38-12-60.

(4) This subsection does not apply to a transaction between an insurer and its subsidiaries or affiliates that is entered into in compliance with Chapter 21 of this title other than a transaction between an insurer and its officer or director.

(B) An insurer, without the previous written approval of the director, may make:

(1) policy loans in accordance with the terms of the policy or contract and § 38-12-310;

(2) advances to officers or directors for expenses reasonably expected to be incurred in the ordinary course of the insurer’s business or guarantees associated with credit or charge cards issued or credit extended for the purpose of financing these expenses;

(3) loans secured by the principal residence of an existing or new officer of the insurer made in connection with the officer’s relocation at the request of the insurer, if the loans comply with the requirements of § 38-12-270 or 38-12-480 and the terms and conditions otherwise are the same as those generally available from unaffiliated third parties;

(4) secured loans to an existing or new officer of the insurer made in connection with the officer’s relocation at the request of the insurer, if the loans:

(a) do not have a term exceeding two years;

(b) are required to finance mortgage loans outstanding at the same time on the previous and new residences of the officer;

(c) do not exceed an amount equal to the equity of the officer in the previous residence; and

(d) are required to be fully repaid upon the earlier of the end of the two- year period or the sale of the previous residence; and

(5) loans and advances to officers or directors made in compliance with state or federal law specifically related to the loans and advances by a regulated noninsurance subsidiary or affiliate of the insurer in the ordinary course of business and on terms no more favorable than available to other customers of the entity.

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