Dividends

PURPOSE: This rule effectuates or aids in Company Regulation the interpretation of section 375.380, RSMo and implements section 382.210, RSMo with regard to payments of dividends by insurers. (1) Constructive Dividends. (A) Any payment or other distribution of property by an insurer made or attributable to a shareholder with respect to its stock shall be deemed a dividend under sections 375.380 and 382.210, RSMo, except as stated in subsection (1)(B) of this rule. (B) From the payments or other distributions under subsection (1)(A) of this rule: 1. There is allowed as a deduction all the ordinary and necessary expenses paid or incurred in carrying on any trade or business, including: A. A reasonable allowance for salaries or other compensation for personal services actually rendered; B. Traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business; and C. Rentals or other payments made as a requisite condition to the continued use or possession, for purposes of the trade or business, of property to which the insurer has not taken or is not taking title or in which it has no equity; and 2. There is allowed as a deduction, but only to the extent not deducted under paragraph (1)(B)1. of this rule, the fair market value of any property, to which the insurer has taken or is taking title or in which it has equity, received in consideration of that payment or other distribution. (C) As used in this section of this rule the following terms mean: 1. Insurer means only a stock insurance company organized under the laws of Missouri; except a foreign insurance company is deemed an insurer if the laws of the foreign insurer's state of domicile do not include provisions substantially similar to sections 382.010–382.300, RSMo; 2. Property means money, securities, and other property; except that this term does not include stock in the insurer making the distribution (or rights to acquire the stock); and 3. Shareholder means any person directly or indirectly owning or controlling stock in an insurer. (D) A shareholder's interest in a partnership, estate, or trust, and a shareholder's stock in a corporation, includes the interests or stock owned by the shareholder's spouse, children, grandchildren, or parents, as qualified under paragraphs (1)(D)2. and 3. of this rule. A payment or other distribution to a partnership, estate, or corporation includes any payment or other distribution to any entity controlled by that partnership, estate, or corporation. For purposes of this section of this rule, a payment or other distribution is attributable to a shareholder if it is made— 1. Directly to the shareholder; 2. To the shareholder's spouse (other than a spouse who is legally separated from the shareholder under a decree of divorce or separate maintenance); 3. To the shareholder's children, grandchildren, or parents (a legally adopted child is treated as a child by blood); 4. To a partnership or estate, in proportion to the shareholder's interest in the partnership or estate; 5. To a trust, in proportion to the shareholder's actuarial interest as a beneficiary of that trust; or 6. To a corporation, in proportion to the shareholder's stock in that corporation. (2) Surplus Profits. (A) Surplus profits as used in section 375.380, RSMo means the amount stated in the company's financial statements as unassigned funds. A company has surplus profits only to the extent it has positive unassigned funds. AUTHORITY: sections 374.045 and 382.240, RSMo 2016.* Original rule filed Feb. 18, 1993, effective Nov. 8, 1993. Amended: Filed Dec. 1, 1993, effective July 10, 1994. Amended: Filed Dec. 13, 2018, effective July 30, 2019. *Original authority: 374.045, RSMo 1967, amended 1993, 1995, 2008 and 382.240, RSMo 1971.