(a) This subchapter, Subtitle C, and Subchapter A, Chapter 5, may not be construed to prohibit:
(1) a stock company, mutual insurance company, reciprocal or interinsurance exchange, or Lloyd’s plan from operating under this subchapter, Subchapter A, Chapter 5, and Subtitle C; or
(2) a stock company, mutual insurance company, reciprocal or interinsurance exchange, or Lloyd’s plan from issuing participating policies.
(b) An insurer must obtain commissioner approval before distributing a policyholder dividend if the dividend amount exceeds 10 percent of surplus. The commissioner may not approve a distribution of profits or dividends until the insurer has adequate reserves. The reserves must be computed on the same basis for all classes of insurers operating under this subchapter, Subtitle C, and Subchapter A, Chapter 5.

(c) The insurer must notify the commissioner in writing of each distribution if the insurer’s policyholder dividend amount is not greater than 10 percent of surplus.