| Understanding Capital Contribution |
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The capital contribution becomes part of the surplus capital that backs the company as equity funding. It is there to keep the company going in the event of adverse underwriting results-so it is at risk. It grows as more member insureds join the company. It is carried by member insureds as an asset on their financial statements. If a member insured leaves the company during the first year, then the member insured is not entitled to any return of capital. Otherwise, the member insured can receive its capital contribution up to three years after departure from the company at whatever value the capital is worth at that time subject to the approval of the Board of Directors and Insurance Departments. Member-Insureds of PCH Mutual may not be assessed. PCH Mutual business plan filed with the District of Columbia Department of Insurance, Securities, and Banking has no component permitting assess ability of member-insureds for additional monies. In addition, the by-laws have no provision permitting assessing the member-insureds. If profits are made, they are used to reduce rates going forward. It can also be applied to loss reserves in order to be conservative about the disposition of current claims. Start saving money now! Call PCALIC today at |