Section 445.2 - Surplus notes(a) A director, officer, person, corporation or other entity may advance cash, or other admitted assets having readily determinable values and liquidity satisfactory to the Insurance Commissioner, to a domestic insurer in exchange for a surplus note only as prescribed under this section. In addition, if a director, officer, person, corporation or other entity would acquire control of an insurer as a result of an advance, as control is defined in Article XIV , the advance may be made only after the director, officer, person, corporation or other entity has complied with the requirements relating to filing and approval of acquisitions of control prescribed under Article XIV.(b) An advance may not be made unless the insurer has provided the Insurance Commissioner with written notice at least thirty days prior to the intended date of the advance, or such shorter period as the Insurance Commissioner may permit, and the Insurance Commissioner has not disapproved the advance prior to the intended date. The written notice shall include the form and amount of the advance, the content of the surplus note and other information relating to the advance as required by the Insurance Commissioner.(c) Commissions, promotion expenses or finders fees may not be paid in connection with an advance except for commissions, expenses and fees customarily incurred within the context of public or private placement offerings underwritten by an investment banking or similar entity.(d) Payment of principal or interest on a surplus note may not be made without the prior written approval of the Insurance Commissioner. The insurer shall provide the Insurance Commissioner with written notice at least thirty days prior to the intended date of the payment of principal or interest on a surplus note or such shorter period as the Insurance Commissioner may permit.(e) Payment of principal or interest on a surplus note shall be subordinated to payment of all other liabilities of the insurer.(f) Payment of interest on a surplus note may be made only from the unassigned funds of the insurer.(g) An insurer shall report the issuance and holding of surplus notes, including principal repayment and interest, in financial statements filed with the Insurance Commissioner in compliance with statutory accounting practices prescribed or otherwise permitted by the Insurance Commissioner. Statutory accounting practices are the practices and procedures prescribed by the Accounting Practices and Procedures Manual published by the National Association of Insurance Commissioners, or successor organization, or as otherwise provided by law, regulation or order of the Insurance Commissioner. Principal or interest on a surplus note may not be recorded as a liability or an expense against the insurer except to the extent that payment has been approved by the Insurance Commissioner.(h) The term "insurer" when used in this section shall mean a domestic insurance company, association or exchange; reciprocal or interinsurance exchange; employers' mutual liability insurance association; nonprofit health plan corporation, whether operating a hospital plan or a professional health services plan; fraternal benefit society or beneficial association; health maintenance organization; preferred provider organization; the Industry Placement Facility under the act of July 31, 1968 (P.L. 738, No. 233), known as "The Pennsylvania Fair Plan Act"; a joint underwriting association under Chapter 7 of theact of March 20, 2002 (P.L. 154, No. 13) , known as the "Medical Care Availability and Reduction of Error (MCARE) Act"; or another person, corporation, company, partnership, association or other entity acting as an insurer.1921, May 17, P.L. 682, No. 284, art. III, § 322.2, added 2004, Nov. 30, P.L. 1690, No. 216, § 2, imd. effective.