401 Mass. 1211 | Mass. | 1987
The Justices of the Supreme Judicial Court respectfully submit these answers to the questions set forth in an order adopted by the House of Representatives on May 7,1987, and transmitted to us on May 12, 1987.
We summarize the principal features of the bill. Section 1 of the bill would insert a new G. L. c. 178A, which would
Within sixty days of its incorporation, the directors of the company shall submit to the commissioner a plan pursuant to which the company would “assume the ownership and operation of the insurance department of each savings and insurance bank, whether or not such savings and insurance bank shall have elected to participate in the formation of the company.” § 5. This would not, however, foreclose savings and insurance banks from continuing to sell insurance. The plan would provide that “savings and insurance banks and savings banks and their respective officers and employees may act as agents and brokers exclusively” for the company in the sale of insurance
The plan would further require that the company continue to treat as participating all policies of savings bank life insurance assumed by it. § 7. It also would provide for the payment of additional annual dividends on such assumed policies
“in an amount equal to the total surplus of the company on the date of conversion multiplied by the net portfolio rate of interest earned by the company in the fiscal year prior to the year of distribution reduced by state and federal income taxes, if any, allocated to such amount. The payment of such additional dividends shall continue until the sum of all such additional dividends and allocated state and federal income taxes thereon equals the surplus of the company on the date of conversion. ...”
§ 7.
Within forty-five days of his receipt of the plan of assumption, the commissioner shall hold a public hearing, notice of which shall have been sent to each savings and insurance bank. § 8. The notice is to be accompanied by a summary of the plan which shall describe its effect on savings and insurance
Upon the issuance to the company by the commissioner of a certificate required by G. L. c. 175, § 32, the company would immediately assume all of the assets (including any surplus), rights and interests and all of the obligations and liabilities of the insurance departments of all savings and insurance banks and of the Savings Bank Life Insurance Council, and the company simultaneously would issue shares of its capital stock to each such savings and insurance bank in accordance with the plan of assumption, “whereupon, all operations of the insurance departments shall cease.” §§5,9. At the same time, the offices of the commissioner and deputy commissioner of savings bank life insurance, the State medical director and the State actuary, and the division of savings bank life insurance and the Savings Bank Life Insurance Council would be abolished, § 10, and the present c. 178 would be repealed, S-3, § 14.
The bill further provides that the presently existing General Insurance Guaranty Fund (Fund) (see G. L. c. 26, § 10; c. 178, § 14) shall continue its existence and shall exercise powers with respect to the company substantially identical to the powers which the Fund now exercises with respect to the insurance departments of savings and insurance banks under G. L. c. 178, §§ 18 and 18A. § 12.
Finally, the bill provides that the company may only distribute such dividends to its capital stockholders as the trustees of the Fund shall approve after reviewing the operations of the company and satisfying themselves that the company “is being operated soundly and that its expenses are consistent with the purpose of providing safe, low-cost life insurance.” § 12. The commissioner “may veto any such approval if, after a hearing, he determines that the payment of such dividends would impair the company’s financial stability or its ability to offer safe, low-cost life insurance.” § 12.
“1.) Would enactment of Sections 2 and 4 of S-3 which provide the method for the establishment of the Savings Bank Life Insurance Company of Massachusetts violate Articles I, X, XI and XII of Part First of the Constitution of the Commonwealth and the Fifth and Fourteenth Amendments to the Constitution of the United States by depriving individual savings and insurance banks, which have elected not to participate in the formation of the said Company, of property rights without due process of law by requiring them to be participants and to be without representation as incorporators and directors of the said Company?
“2.) Would the enactment of Section 5 of S-3 which requires the Savings Bank Life Insurance Company of Massachusetts to submit, within sixty days of its formation, a Plan of Assumption to the commissioner of insurance for his approval, in accordance with the provisions of Section 8 of said bill and based solely upon his determination that it provides adequate protection for individual policyholders, whereby the said Company would assume the ownership and operation of the insurance department of each savings and insurance bank, whether or not such bank has elected to participate in the formation of the said Company, violate Articles I, X, XI and XII of Part First of the Constitution of the Commonwealth and the Fifth and Fourteenth Amendments to the Constitution of the United States by depriving such banks of property rights without due process of law?
“3.) Would the enactment of said Section 5 which requires that the said Plan of Assumption provide for the issuance of shares of the capital stock of the Savings Bank
“4.) Would enactment of Section 7 of S-3 which provides for the payment by the Savings Bank Life Insurance Company of Massachusetts to all individual policyholders of the aggregate surplus of the insurance departments of all savings and insurance banks as of the date of conversion into the said Company while permitting the said Company to retain the said surplus and to make such payments in the form of additional annual dividends at an undetermined annual net portfolio rate until such time as the aggregate amount of such additional annual dividends equals the amount of said surplus as of the date of conversion violate Articles I, X, XI and XII of Part First of the Constitution of the Commonwealth and the Fifth and Fourteenth Amendments to the Constitution of the United States by depriving the said policyholders of any property rights in said surplus without due process of law?
“5.) Would the enactment of Section 5 or Section 7 which provides for the assumption by the Savings Bank Life Insurance Company of Massachusetts of all savings bank life insurance policies and the requirement that the same be treated as participating policies by the said Company violate Articles I, X, XI and XII of Part First of the Constitution of the Commonwealth and Article 1, Section 10 and the Fifth and Fourteenth Amendments of the Constitution of the United States by the impairment of contract rights since it allows the substitution of the Savings Bank Life Insurance Company of Massachusetts for the appro
“6.) Would the enactment of Section 9 of S-3 which provides for the immediate assumption by the Savings Bank Life Insurance Company of Massachusetts, upon certification by the commissioner of insurance, of all of the assets (including any surplus), rights and interests and all of the obligations and liabilities of the insurance departments of savings and insurance banks and of the Savings Bank Life Insurance Council violate Articles I, X, XI, and XII of Part First of the Constitution of the Commonwealth and the Fifth and Fourteenth Amendments to the Constitution of the United States by depriving the policyholders of such banks and the said banks of any property rights without due process of law?”
Discussion
It will be convenient to address question 6 first, as that question asks whether the end result sought to be achieved by the bill — the assumption by a new Savings Bank Life Insurance Company of Massachusetts of the assets, rights, interests, obligations, and liabilities of the insurance departments of savings and insurance banks and of the Savings Bank Life Insurance Council — would unconstitutionally deprive banks and policyholders of their property rights without due process of law. In connection with our discussion of policyholders’ due process rights, we shall also consider question 5, concerning whether such an assumption unconstitutionally would impair the contract rights of the policyholders. We will then address the remaining questions.
We note that question 6, like most of the questions posed, asks whether proposed c. 178A would deprive savings and insurance banks or their policyholders of property rights without due process of law under various provisions of our State and Federal Constitutions. Under the Federal Constitution, a preliminary inquiry is “ ‘whether the statute bears a reasonable relation to a permissible legislative objective.’ Pinnick v. Cleary, 360 Mass. 1, 14 (1971). Under the State Constitution the issue is whether the statute ‘bears a real and substantial
We turn now to a major thrust of question 6: whether there would be an unconstitutional taking of property of banks if the proposed legislation were enacted. We first consider the nature of the interest of savings and insurance banks in the assets of their insurance departments. Only if the assets of a bank’s insurance department could be considered the property of the bank could the bank claim any constitutionally protected right to such assets. Cf. Employers’ Commercial Union Ins. Co. v. Commissioner of Ins., 362 Mass 34, 39-40 (1972) (no unconstitutional taking or impairment of contract resulted from retroactive downward adjustment of premiums where premiums were provisional and subject to change). In order to determine this question, we must first analyze the present statutory provisions governing a bank’s participation in the Massachusetts savings bank life insurance system.
Under present c. 178, most aspects of savings bank life insurance are strictly regulated. The operation of the savings bank life insurance system is overseen by the Commissioner of Insurance, the Commissioner of Banks and a gubematorially appointed, seven member board of trustees of the General Insurance Guaranty Fund.
At the direction of the trustees of the Fund, participating banks contribute up to ten per cent of all premiums received by them each month to the Fund. The trustees hold such sums as a guaranty for the obligations of all savings and insurance banks on their respective policies and annuity contracts and may also use those funds in various ways to protect the integrity of the savings bank life insurance system. G. L. c. 178, §§ 18, 18A, 23. Chapter 178 also provides a mechanism for compensating for the extent to which each particular bank’s mortality experience varies from that of all banks combined. G. L. c. 178, § 15. Thus, in large measure, the State’s savings bank life insurance system already operates as a single entity.
Thus, generally speaking, savings and insurance banks presently have an extremely tenuous right to control the assets of their insurance departments and nothing approaching a constitutionally protected property interest in those assets. With the possible exception noted below, the assets of those insurance departments, including the net profits generated and the accumulated surplus, are devoted exclusively to the benefit of the policyholders.
However, in one respect not alluded to above, a savings and insurance bank might possibly be said to have an interest in the assets of its insurance department. Under present law, when a savings bank desires to establish an insurance department, it must set aside and place at the risk of such department at least twenty-five thousand dollars, which will be held in a special expense guaranty fund and special insurance guaranty fund. G. L. c. 178, §§ 3, 4, and 5. A bank’s right to recover its “investment” (with interest) in these funds depends upon
For several reasons, a bank’s potential property rights in the portion of the assets and liabilities of its insurance department representing the bank’s investment in the guaranty funds established under G. L. c. 178, §§3,4, and 5, would not be denied without due process of law if the company were to assume those assets and liabilities as provided for in proposed c. 178A, § 9.
The assumption of the assets and liabilities of each bank’s insurance department contemplated by the proposed c. 178A is reasonable in the degree to which the bank’s existing interest in its investment in its insurance department might be said to be impaired. The proposed statute does not provide that the bank’s investment would be forfeited. Rather, the liability to repay that investment would be included among the liabilities assumed by the company when it assumes the assets and liabilities of all bank insurance departments.
We conclude, therefore, from a facial examination of the proposed statutory language, that the provisions in § 9 of proposed c. 178A, whereby the company would assume all of the assets and liabilities of the insurance departments of savings and insurance banks, would not deprive savings and insurance banks of property rights without due process of law.
We next consider whether policyholders would be deprived of property rights without due process of law by the company’s assumption of the assets and liabilities of the bank insurance departments (question 6) and whether their contract rights would be unconstitutionally impaired (question 5) by virtue of the fact that the company would be substituted for the savings and insurance bank with which they had contracted without the policyholders’ consent.
It also appears unlikely that a policyholder would be materially disadvantaged by the change in entity with which he or she had an insurance contract. The new entity — the company — would assume all of the assets and liabilities of the insurance department of the bank involved, its operations would be subject to the supervision of the Fund in 'much the same manner as the operations of such insurance departments now are (compare G. L. c. 178, §§ 18 and 18A, with proposed c. 178A, § 12), and the Fund’s assets and credit would continue to be available to ensure that the insurer’s obligations under each policy or annuity contract would be met. Thus, the change in
Moreover, proposed c. 178A, § 7, would require the company “to continue to treat as participating all policies of savings bank life insurance assumed by it.”
Accordingly, we conclude that provisions of the bill which would permit the substitution of the company for a savings and insurance bank, without the policyholders’ consent, would not amount to an unconstitutional impairment of the policyholders’ contract rights. Nor would the concomitant assumption by the company of the assets and liabilities of all savings bank insurance departments deprive policyholders of property rights without due process of law.
Thus, we answer questions 5 and 6, “No.”
Questions 1,2, and 3 all appear to be directed to the provisions in proposed c. 178A by which a majority of savings and insurance banks would effectively be given the power (a) to cause the formation of the company, and thereby set in motion the restructuring of the savings bank life insurance system; and (b) to decide how the stock of the company would be allocated among all savings and insurance banks, including the minority of banks not represented among the directors of the company.
We think that the issues raised by question 1, 2, and 3 are whether the coercion of nonparticipating banks to be involved would violate due process rights; whether the procedure is fair and whether any property rights would be taken improperly; and whether there is a violation of due process in forcing a bank to join against its will in the way this statute indicates.
There are two aspects to the coercion issue:
(a) the methodology by which the restructuring may occur and
(b) how the capital stock will be divided. We think the-Legislature could determine that the restructuring would occur, with
Questions 1,2, and 3 may also be construed to ask whether the procedural due process rights of banks — particularly banks which have “elected not to participate in the formation of the Company” — would be violated by virtue of the fact that decisions affecting them would be made by the incorporators, none of whom would be representatives of such banks. While the meaning of question 2 is not entirely free from doubt, that question also appears to seek our views on whether the banks would be deprived of property rights without due process of law as a result of the fact that the commissioner would review the plan of assumption only to determine whether it provided adequate protection for individual policyholders. The question appears to focus upon the lack of review by the commissioner of the plan’s proposed allocation of capital stock
“A claim of procedural due process presents two distinct issues. The first is whether due process applies at all. If it is found to apply, the second is concerned with the procedures required in the circumstances of the case. The first issue involves an analysis of the nature of the interest at stake. The second goes to the weight of that interest.” Lotto v. Commonwealth, 369 Mass. 775, 777 (1976). In order to invoke the protection of due process, a property interest must rise to the level of an entitlement. Allen v. Assessors of Granby, 387 Mass. 117, 119-120 (1982). In this case, whether a bank’s interest in the capital stock of the company amounts to an entitlement would depend upon the rules and understandings created by State law. Id. Regents of State Colleges v. Roth, 408 U.S. 564, 577 (1972).
A savings and insurance bank’s right to some of the capital stock of the company would be created by proposed c. 178A, §§ 5, 6,
Even if, under proposed c. 178A, §§ 5 and 9, a bank would have a constitutionally protected property interest in a proper allocation of stock to it, the question would then arise, “’ [W]hat process is due?’ Morrissey v. Brewer, 408 U.S. 471, 481 (1972). Inquiry on this point requires the defining and weighing of competing interests stemming from the facts in each case.” Lotto v. Commonwealth, supra at 780. Haverhill Manor, Inc. v. Commissioner of Pub. Welfare, 368 Mass. 15, 24-30 (1975). Where, as here, only property rights would be involved, the fact that a bank might not be afforded any sort of notice or hearing before the plan of incorporation was submitted to the commissioner would not amount to a denial of due process. See Haverhill Manor, Inc., supra at 27-28.
Proposed c. 178A, § 8, requires that within forty-five days of his receipt of the plan of assumption, the commissioner shall hold a public hearing. Notice of the hearing must be provided to each savings and insurance bank. The notice must “be accompanied by a summary of the plan of assumption which shall describe the effect of such plan of assumption on savings and insurance banks and on individual policyholders.” Chapter 178A, § 8. Although according to § 8 and question 2, the commissioner would base his approval of the plan “solely upon his determination that it provides adequate protection for individual policyholders” (question 2), these provisions would effectively provide banks with notice of how the proposed plan of assumption would affect them. Thereafter, any bank which believed that its statutorily conferred (or constitutional) rights would be denied by the plan could institute an action for declaratory and injunctive relief under G. L. c. 231A. In such a declaratory judgment proceeding, a bank “would receive a plenary judicial hearing of the factual and legal bases for its grievance. The availability of this hearing satisfies [any potential] constitutional requirement that some opportunity for a hearing must be afforded before the deprivation of property
In view of the foregoing discussion, we answer questions 1, 2, and 3, “No.”
Question 4 asks whether § 7 of c. 178A, which provides for the payment by the company to policyholders, all at once or over a period of years, of the aggregate surplus of the banks’ insurance departments as of the date of conversion, would deprive the policy holders of any property rights in said surplus without due process of law.
The surplus in this context represents an amount set aside annually “from the net profits, if any, which have been earned in [a bank’s] insurance department . . ..” G. L. c. 178, § 21. The amount which may be so set aside is limited by statute, although, in certain instances, deviations from those limits may occur if the State actuary approves. § 21. More important for present purposes are the uses to which the surplus may be put.
“Such surplus shall be maintained and held or used so far as necessary to meet losses in [a bank’s] insurance department whether from unexpectedly great mortality, depreciation in its securities, or otherwise, and, after said surplus amounts to twenty thousand dollars, for the maintenance of a stable dividend scale, and for the payment of settlement or maturity dividends or both in such manner and in such amounts if any, as may from time to time be directed by the state actuary.”
G. L. c. 178, § 21. The surplus, then, acts as a sort of monetary cushion which may be drawn upon by the insurance department for certain specified purposes. Although those purposes include maintenance of a stable dividend scale — which in this context
In White Fuel Corp. v. Liberty Mutual Ins. Co., 313 Mass. 165 (1943), we rejected a claim by a policyholder of a mutual insurance company to a pro rata share of profits accumulated and set aside as a surplus, where the applicable statutes permitted the accumulation of such a surplus and provided that “such accumulation may be used from time to time in the payment of losses, dividends and expenses.” Id. at 167. The court held that the defendant insurance company could “accumulate in addition to the calculated policy reserves, surplus funds for the general strengthening of the company, for which funds it is not obligated to account to those who were policyholders during the period of accumulation.” Id. In relevant respects, the present statutory provisions regulating the accumulation of a surplus by savings and insurance banks are analogous to those construed in White Fuel Corp. Thus, although in some sense policyholders may be considered the equitable owners of a bank’s surplus, 18 J. Appleman, Insurance Law and Practice 148 (1945), they normally would have no right to require it or any portion of it to be returned to them.
Assuming, arguendo, that policyholders could claim a property interest in the surplus which would rise to the level of an entitlement, § 7 of proposed c. 178A, by requiring the return to policyholders of the surplus at the time of conversion, would appear to strengthen, rather than in any way impair, whatever interest policyholders might be considered to have in the surplus. Therefore, the facts that that return would be accomplished “in the form of additional annual dividends at an undetermined annual net portfolio rate,” and that the company
We, therefore, answer question 4 “No.”
Conclusion
In summary, we answer all six reported questions, “No.”
The foregoing answers are submitted by the Chief Justice and the Associate Justices subscribing hereto on the 7th day of December, 1987.
Edward F. Hennessey
Herbert P. Wilkins
Paul J. Liacos
Ruth I. Abrams
Joseph R. Nolan
Neil L. Lynch
Francis P. O’Connor
We invited interested persons to file briefs on or before June 2, 1987. We acknowledge the assistance of a brief filed by the Division of Savings Bank Life Insurance and the Savings Bank Life Insurance Council.
Section 2 of the proposed c. 178A provides that the company would be incorporated “for the purposes of conducting life and accident and health insurance business only . . ..” Other sections of c. 178A, however, appear to contemplate that the company may sell “life, annuity and accident and health insurance policies or contracts.” §§ 1, 5. Section 9 provides that “[a]ll savings bank life insurance policies and annuities authorized for use by savings and insurance banks under the provisions of chapter 178 . . . shall be deemed approved for use by the company under the provisions of chapter 175.” Amici, which include the sponsor of an earlier version of the bill now before us, state that “[t]he company would be created by special charter to conduct life, annuity and accident and health insurance business . . . .” For purposes of answering the questions submitted to us, we assume that the company would be able to continue to administer annuity contracts previously entered into by savings and insurance banks.
Section 5 of c. 178A provides in relevant part:
“The plan of assumption shall provide that each savings and insurance bank shall be issued shares of the capital stock of the company in such proportion as the surplus of the insurance department of such savings and insurance bank calculated at the fair market value of its assets bears to the total surplus of the insurance departments of all savings and insurance banks as of the December 31 immediately preceding the date of incorporation of the company or in such other manner that is deemed to be fair and equitable by the incorporators. ”
Section 7 provides further that the commissioner, for good cause shown, may permit the company to defer payment of additional dividends in any year. It also makes provision, upon the liquidation of the company, for the distribution to such participating holders of in-force policies of the previously undistributed portion of the surplus at the time of conversion, after taking into account the income taxes thereon.
From their context, it is clear that the references in the questions to various sections of S-3 are intended to refer to the sections of chapter 178A, which would be inserted by section 1 of S-3.
Each trustee must be a trustee of a savings bank or of a savings and insurance bank. G. L. c. 26, § 10.
The limited purposes for which the surplus may be used are discussed below in connection with our response to question 4. See G. L. c. 178, § 21.
The Council is managed by the trustees of the Fund, with the advice of the incorporators of the Council, consisting of the treasurers (or other officers) of all savings and insurance banks. The Council may act to provide centralized services to savings and insurance banks and their policyholders and may act as agent for the receipt of funds and for making payments due under insurance policies and annuity contracts issued by any savings and insurance bank. The expenses of the Council are paid by the banks, and are apportioned among them by the trustees “in proportion to their premium income, or on such other basis as the trustees shall deem equitable and proper . . . .” G. L. c. 178, § 32 (1986 ed.).
The present statute provides a means by which, subject to the approval of the State actuary, the expenses of a bank’s insurance department may be paid out of premiums, fees and charges received. G. L. c. 178, §§ 4 and 8 (as amended by St. 1986, c. 569, § 1). Proposed c. 178A contemplates that the company will assume the ownership and operation of the insurance department and that, upon such assumption, all operations of the insurance department shall cease. Chapter 178A, §§ 5 and 9. Thereafter, by virtue of such cessation of operation, it would appear that a bank would have no reasonable basis for claiming any property right to continued receipt of such funds.
Prior to enactment of St. 1986, c. 569, § 1, a bank had the right to deposit the funds of its insurance department in its savings department. G. L. c. 178, § 9. Conceivably, a bank’s savings department could make a profit on the funds so deposited which would not be subject to the restrictions of G. L. c. 178, § 21. As noted above, G. L. c. 178, § 9, was amended by St. 1986, c. 569, § 2, to provide that “all or any portion of the funds of the insurance department shall, at the discretion of the trustees of the General Insurance Guaranty Fund ... be paid to the Savings Bank Life Insurance Council ... for the purpose of making pooled investments for the benefit of such departments . . . .” The amendment would appear effectively to undercut any claim by a bank to a constitutionally protected property interest in the use of the funds of its insurance department. Cf. Haverhill Manor, Inc. v. Commissioner of Pub. Welfare, 368 Mass. 15, 23 (“The use of the funds, itself, is a property interest which may not be taken by the Commonwealth without due process of law” where the law of the Commonwealth creates a right to use of the funds), cert, denied, 423 U.S. 929 (1975). We express no views as to the constitutionality of the recent amendment to G. L. c. 178, § 9.
Conceivably, the plan of assumption might provide for repayment of such investments at the time of the assumption.
The relevant inquiries for resolving these two separate issues amount to much the same thing. See Nationwide Mut. Ins. Co. v. Commissioner of Ins., supra at 422 n.7; American Mfrs. Mut. Ins. Co. v. Commissioner of Ins., supra at 190. Therefore, the issues may be treated together. With respect to the principles applicable to assessing whether a given statute unconstitutionally would impair existing contract rights, we recently observed: “A statute is not per se unconstitutional merely because it has the effect of restricting, or barring altogether, the performance of contracts entered into prior to its [enactment]. . . . The Legislature may act pursuant to a valid exercise of its police power for the general good of the public, even though contracts previously entered into may be affected. . . . An impairment will be upheld if it is reasonable and necessary to serve an important public purpose. . . . Only those statutes which, on a balancing of opposing considerations, are deemed to be unreasonable will be held unconstitutional.” (Citations omitted.) Nationwide Mut. Ins. Co., supra at 423. As we said in another case, “Private contract rights are subject to reasonable and necessary legislation in furtherance of important public interests, and legislative judgments concerning reasonableness and necessity
We do not have before us any copies of life insurance policies or annuity contracts currently in use. Nor do we have the benefit of any findings as to whether there are considerations peculiar to certain banks which may have led consumers to choose to contract with those banks in particular. We think it unlikely that the contract language involved, or such considerations, would change the result of our analysis. On the present record, however, we cannot foreclose that possibility.
In this context, “[s]avings bank life insurance” refers to “policies or contracts of insurance, annuity contracts or other insurance products issued by a savings and insurance bank pursuant to chapter 178.” Chapter 178A, § 1 (1986 ed.) (definitions).
Under proposed c. 178A, §§ 2,4, and 5, there appears to be a possibility that, unless resolutions from all banks wishing to participate in the formation of the company were received by the commissioner at the same time, some banks favoring participation in the formation of the company might nonethe
We need not resolve whether a savings and insurance bank which opposed the restructuring of the savings bank life insurance system contemplated by S-3, but which also desired to participate in the formation of the company and in the preparation of the plan of assumption in the event a majority of banks favored such restructuring, could (a) submit a formal resolution to the commissioner to that effect and thereby preserve a right to participate in the formation of the company if resolutions from a majority of banks favoring formation of the company were received, or (b) wait until just after the commissioner had received resolutions from a majority of banks electing to participate in the formation of the company before submitting a resolution electing so to participate, and thereby accomplish the same result.
Proposed c. 178A, § 6, would impose various restrictions upon the sale or transfer of the capital stock of the company and would provide that “[n]o single savings and insurance bank or savings bank or affiliated group of such banks may hold greater than 15% of the outstanding shares of such capital stock at any time.”
General Laws c. 178, § 21, further provides that the balance of the net profits — i.e., those not set aside as part of the surplus — “shall annually be distributed equitably among the holders of [the bank’s] insurance policies and annuity contracts ....” Thus, by statute, the surplus represents amounts specifically excluded from the funds which must be distributed among policyholders.