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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

                            CHAPTER 214-S.F.No. 1033 
                  An act relating to insurance; solvency; regulating 
                  disclosures, reinsurance, capital stock, managing 
                  general agents, and contracts issued on a variable 
                  basis; amending Minnesota Statutes 1994, sections 
                  13.71, by adding a subdivision; 60A.03, subdivision 9; 
                  60A.07, subdivision 10; 60A.093, subdivision 2; 
                  60A.11, subdivisions 18 and 20; 60A.705, subdivision 
                  8; 60A.75; 60H.02, subdivision 4; 60H.08; 61A.19; 
                  61A.31, subdivision 3; and 67A.231; proposing coding 
                  for new law in Minnesota Statutes, chapter 60A. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1994, section 13.71, is 
        amended by adding a subdivision to read: 
           Subd. 19.  [MATERIAL TRANSACTION REPORTS.] Reports required 
        to be filed by insurers regarding certain material transactions 
        are classified under section 60A.135, subdivision 4. 
           Sec. 2.  Minnesota Statutes 1994, section 60A.03, 
        subdivision 9, is amended to read: 
           Subd. 9.  [CONFIDENTIALITY OF INFORMATION.] The 
        commissioner may not be required to divulge any information 
        obtained in the course of the supervision of insurance 
        companies, or the examination of insurance companies, including 
        examination related correspondence and workpapers, until the 
        examination report is finally accepted and issued by the 
        commissioner, and then only in the form of the final public 
        report of examinations.  Nothing contained in this subdivision 
        prevents or shall be construed as prohibiting the commissioner 
        from disclosing the content of this information to the insurance 
        department of another state or the National Association of 
        Insurance Commissioners if the recipient of the information 
        agrees in writing to hold it as nonpublic data as defined in 
        section 13.02, in a manner consistent with this subdivision.  
        This subdivision does not apply to the extent the commissioner 
        is required or permitted by law, or ordered by a court of law to 
        testify or produce evidence in a civil or criminal proceeding.  
        For purposes of this subdivision, a subpoena is not an order of 
        a court of law. 
           Sec. 3.  Minnesota Statutes 1994, section 60A.07, 
        subdivision 10, is amended to read: 
           Subd. 10.  [SPECIAL PROVISIONS AS TO LIFE COMPANIES.] (1) 
        [PREREQUISITES OF LIFE COMPANIES.] No mutual life company shall 
        be qualified to issue any policy until applications for at least 
        $200,000 of insurance, upon lives of at least 200 separate 
        residents, have been actually and in good faith made, accepted, 
        and entered upon its books and at least one full annual premium 
        thereunder, based upon the authorized table of mortality, 
        received in cash or in absolutely payable and collectible 
        notes.  A duplicate receipt for each premium, conditioned for 
        the return thereof unless the policy be issued within one year 
        thereafter, shall be issued, and one copy delivered to the 
        applicant and the other filed with the commissioner, together 
        with the certificate of a solvent authorized bank in the state, 
        of the deposit therein of such cash and notes, aggregating the 
        amount aforesaid, specifying the maker, payee, date, maturity, 
        and amount of each.  Such cash and notes shall be held by it not 
        longer than one year, and at or before the expiration thereof to 
        be by it paid or delivered, upon the written order of the 
        commissioner, to such company or applicants, respectively. 
           (2)  [FOREIGN COMPANIES MAY BECOME DOMESTIC.] Any company 
        organized under the laws of any other state or country, which 
        might have been originally incorporated under the laws of this 
        state, and which has been admitted to do business therein for 
        either or both the purpose of life or accident insurance, upon 
        complying with all the requirements of law relative to the 
        execution, filing, recording and publishing of original 
        certificates and payment of incorporation fees by like domestic 
        corporations, therein designating its principal place of 
        business at a place in this state, may become a domestic 
        corporation, and be entitled to like certificates of its 
        corporate existence and license to transact business in this 
        state, and be subject in all respects to the authority and 
        jurisdiction thereof. 
           (3)  [TEMPORARY CAPITAL STOCK OF MUTUAL LIFE COMPANIES.] A 
        new mutual life insurance company which has complied with the 
        provisions of clause (1) or an existing mutual life insurance 
        company may establish, a temporary capital of, such amount not 
        less than $100,000, as may be approved by the commissioner.  
        Such temporary capital shall be invested by the company in the 
        same manner as is provided for the investment of its other 
        funds.  Out of the net surplus of the company the holders of the 
        temporary capital stock may receive a dividend of not more than 
        eight percent per annum, which may be cumulative.  This capital 
        stock shall not be a liability of the company but shall be 
        retired within a reasonable time and according to terms approved 
        by the commissioner.  At the time for the retirement of this 
        capital stock, the holders shall be entitled to receive from the 
        company the par value thereof and any dividends thereon due and 
        unpaid, and thereupon the stock shall be surrendered and 
        canceled.  In the event of the liquidation of the company, the 
        holders of temporary capital stock shall have the same 
        preference in the assets of the company as shareholders have in 
        a stock insurance company.  Dividends on this stock are subject 
        to section 60D.20, subdivision 2. 
           Temporary capital stock may be issued with or without 
        voting rights.  If issued with voting rights, the holders shall, 
        at all meetings, be entitled to one vote for each $10 of 
        temporary capital stock held.  
           Sec. 4.  Minnesota Statutes 1994, section 60A.093, 
        subdivision 2, is amended to read: 
           Subd. 2.  [LETTERS OF CREDIT CONTINUED ACCEPTANCE.] Letters 
        of credit meeting applicable standards of issuer acceptability 
        as of the dates of their issuance or confirmation must, 
        notwithstanding the issuing or confirming institution's 
        subsequent failure to meet applicable standards of issuer 
        acceptability, continue to be acceptable as security until their 
        expiration, extension, renewal, modification, or amendment, 
        whichever comes first, unless the issuing or confirming 
        institution fails the following standards:. 
           (1) fails to maintain a minimum ratio of three percent tier 
        I capital to total risk adjusted assets, leverage ratio, as 
        required by the Federal Reserve System as disclosed by the bank 
        in any call report required by state or federal regulatory 
        authority and available to the ceding insurer; or 
           (2) has its long-term deposit rating or long-term debt 
        rating lowered to a rating below Aa2 as found in the current 
        monthly publication of Moody's credit opinions or its equivalent.
        The letter of credit of an institution failing the standards of 
        subdivision 1, clause (1) or this clause (3) continues to be 
        acceptable for no more than 30 days. 
           Sec. 5.  Minnesota Statutes 1994, section 60A.11, 
        subdivision 18, is amended to read: 
           Subd. 18.  [STOCKS AND LIMITED PARTNERSHIPS.] (a) Stocks 
        issued or guaranteed by any corporation incorporated under the 
        laws of the United States of America or any state, commonwealth, 
        or territory of the United States, including the District of 
        Columbia, or the laws of the Dominion of Canada or any province 
        or territory of Canada, or stocks or stock equivalents, 
        including American Depository Receipts or unit investment 
        trusts, listed or regularly traded on a national securities 
        exchange on the following conditions:  
           (1) A company may not invest more than a total of 25 
        percent of its total admitted assets in stocks, stock 
        equivalents, and convertible issues.  Not more than ten percent 
        of a company's total admitted assets may be invested in stocks, 
        stock equivalents, and convertible issues not traded or listed 
        on a national securities exchange or designated or approved for 
        designation upon notice of issuance on the NASDAQ/National 
        Market System.  This limitation does not apply to investments 
        under clause (4); 
           (2) A company may not invest in more than two percent of 
        its total admitted assets in preferred stocks of any corporation 
        which are traded on a national securities exchange and may also 
        invest in other preferred stocks if the issuer has qualified net 
        earnings and if current or cumulative dividends are not then in 
        arrears; 
           (3) A company may not invest in more than two percent of 
        its total admitted assets in common stocks, common stock 
        equivalents, or securities convertible into common stock or 
        common stock equivalents of any corporation or business trust 
        which are traded on a national securities exchange or designated 
        or approved for designation upon notice of issuance on the 
        NASDAQ/National Market System, and may also invest in other 
        common stocks, stock equivalents, and convertible issues subject 
        to the limitations specified in clause (1); 
           (4) A company may organize or acquire and hold voting 
        control of a corporation or business trust through its ownership 
        of common stock, common stock equivalents, or other securities, 
        provided the corporation or business trust is:  (a) a 
        corporation providing investment advisory, banking, management 
        or sale services to an investment company or to an insurance 
        company, (b) a data processing or computer service company, (c) 
        a mortgage loan corporation engaged in the business of making, 
        originating, purchasing or otherwise acquiring or investing in, 
        and servicing or selling or otherwise disposing of loans secured 
        by mortgages on real property, (d) a corporation if its business 
        is owning and managing or leasing personal property, (e) a 
        corporation providing securities underwriting services or acting 
        as a securities broker or dealer, (f) a real property holding, 
        developing, managing, brokerage or leasing corporation, (g) any 
        domestic or foreign insurance company, (h) any alien insurance 
        company, if the organization or acquisition and the holding of 
        the company is subject to the prior approval of the commissioner 
        of commerce, which approval must be given upon good cause shown 
        and is deemed to have been given if the commissioner does not 
        disapprove of the organization or acquisition within 30 days 
        after notification by the company, (i) an investment subsidiary 
        to acquire and hold investments which the company could acquire 
        and hold directly, if the investments of the subsidiary are 
        considered direct investments for purposes of this chapter and 
        are subject to the same percentage limitations, requirements and 
        restrictions as are contained herein, or (j) any corporation 
        whose business has been approved by the commissioner as 
        complementary or supplementary to the business of the company.  
        A company may invest up to an aggregate of ten percent of its 
        total admitted assets under subclauses (a) to (e) of this clause.
        The diversification requirement of subdivision 12, paragraph 
        (b), does not apply to this clause; 
           (5) A company may invest in warrants and rights granted by 
        an issuer to purchase securities of the issuer if that security 
        of the issuer, at the time of the acquisition of the warrant or 
        right to purchase, would qualify as an investment under 
        paragraph (a), clause (2) or (3), whichever is applicable, 
        provided that security meets the standards prescribed in the 
        clause at the time of acquisition of the securities; and 
           (6)(i) A company may invest in the securities of any face 
        amount certificate company, unit investment trust, or management 
        type investment company, registered or in the process of 
        registration under the Investment Company Act of 1940 as from 
        time to time amended, provided that the aggregate of all these 
        investments other than in securities of money market mutual 
        funds or mutual funds investing primarily in United States 
        government securities, determined at cost, shall not exceed five 
        percent of its total admitted assets; investments may be made 
        under this clause without regard to the percentage limitations 
        applicable to investments in voting securities. 
           (ii) A company may invest in any proportion of the shares 
        or investment units of an investment company or investment 
        trust, whether or not registered under the Investment Company 
        Act of 1940, which is managed by an insurance company, member 
        bank, trust company regulated by state or federal authority or 
        an investment manager or adviser registered under the Investment 
        Advisers Act of 1940 or qualified to manage the investments of 
        an investment company registered under the Investment Company 
        Act of 1940, provided that the investments of the investment 
        company or investment trust are qualified investments made under 
        this section and that the articles of incorporation, bylaws, 
        trust agreement, investment management agreement, or some other 
        governing instrument limits its investments to investments 
        qualified under this section.  
           (b) A company may invest in or otherwise acquire and hold a 
        limited partnership interest in any limited partnership formed 
        under the laws of any state, commonwealth, or territory of the 
        United States or under the laws of the United States of 
        America.  A company may invest in or otherwise acquire and hold 
        a member interest in any limited liability company formed under 
        the laws of any state, commonwealth, or territory of the United 
        States or under the laws of the United States.  No limited 
        partnership or limited liability company member interest shall 
        be acquired if the investment, valued at cost, exceeds two 
        percent of the admitted assets of the company or if the 
        investment, plus the book value on the date of the investment of 
        all limited partnership and limited liability company interests 
        then held by the company and held under the authority of this 
        subdivision, exceeds ten percent of the company's admitted 
        assets.  Limited partnership and limited liability company 
        interests traded on a national securities exchange must be 
        classified as stock equivalents and are not subject to the 
        percentage limitations contained in this paragraph. 
           Sec. 6.  Minnesota Statutes 1994, section 60A.11, 
        subdivision 20, is amended to read: 
           Subd. 20.  [REAL ESTATE.] (a) Except as provided in 
        paragraphs (b) to (d), a company may only acquire, hold, and 
        convey real estate which:  
           (1) has been mortgaged to it in good faith by way of 
        security for loans previously contracted, or for money due; 
           (2) has been conveyed to it in satisfaction of debts 
        previously contracted in the course of its dealings; 
           (3) has been purchased at sales on judgments, decrees or 
        mortgages obtained or made for the debts; and 
           (4) is subject to a contract for deed under which the 
        company holds the vendor's interest to secure the payments the 
        vendee is required to make thereunder.  
           All the real estate specified in clauses (1) to (3) must be 
        sold and disposed of within five years after the company has 
        acquired title to it, or within five years after it has ceased 
        to be necessary for the accommodation of the company's business, 
        and the company must not hold this property for a longer period 
        unless the company elects to hold the real estate under another 
        section, or unless it procures a certificate from the 
        commissioner of commerce that its interest will suffer 
        materially by the forced sale thereof, in which event the time 
        for the sale may be extended to the time the commissioner 
        directs in the certificate.  The market value of real estate 
        specified in clauses (1) to (3) must be established by the 
        written certification of a licensed real estate appraiser.  The 
        appraisal is required at the time the company elects to hold the 
        real estate under clauses (1) to (3).  
           (b) A company may acquire and hold real estate for the 
        convenient accommodation of its business.  
           (c) A company may acquire real estate or any interest in 
        real estate, including oil and gas and other mineral interests, 
        as an investment for the production of income, and may hold, 
        improve or otherwise develop, subdivide, lease, sell and convey 
        real estate so acquired directly or as a joint venture or 
        through a limited, limited liability, or general partnership in 
        which the company is a partner or through a limited liability 
        company in which the company is a member.  
           (d) A company may also hold real estate (1) if the purpose 
        of the acquisition is to enhance the sale value of real estate 
        previously acquired and held by the company under this section, 
        and (2) if the company expects the real estate so acquired to 
        qualify under paragraph (b) or (c) above within five years after 
        acquisition.  
           (e) A company may, after securing the approval of the 
        commissioner, acquire and hold real estate for the purpose of 
        providing necessary living quarters for its employees.  The 
        company must dispose of the real estate within five years after 
        it has ceased to be necessary for that purpose unless the 
        commissioner agrees to extend the holding period upon 
        application by the company.  
           (f) A company may not invest more than 25 percent of its 
        total admitted assets in real estate.  The cost of any parcel of 
        real estate held for both the accommodation of business and for 
        the production of income must be allocated between the two uses 
        annually.  No more than ten percent of a company's total 
        admitted assets may be invested in real estate held under 
        paragraph (b).  No more than 15 percent of a company's total 
        admitted assets may be invested in real estate held under 
        paragraph (c).  No more than three percent of its total admitted 
        assets may be invested in real estate held under paragraph (e).  
        Upon application by a company, the commissioner of commerce may 
        increase any of these limits up to an additional five percent. 
           Sec. 7.  [60A.135] [REPORT.] 
           Subdivision 1.  [REQUIREMENT.] Every insurer domiciled in 
        this state shall file a report with the commissioner disclosing 
        material acquisitions and dispositions of assets or material 
        nonrenewals, cancellations, or revisions of ceded reinsurance 
        agreements unless the acquisitions and dispositions of assets or 
        material nonrenewals, cancellations, or revisions of ceded 
        reinsurance agreements have been submitted to the commissioner 
        for review, approval, or information purposes pursuant to other 
        provisions of law, rule, or other requirements. 
           Subd. 2.  [DATE DUE.] The report required in subdivision 1 
        is due within 15 days after the end of the calendar month in 
        which the transactions occur. 
           Subd. 3.  [FILING.] One complete copy of the report, 
        including exhibits or other attachments filed as part of it, 
        must be filed with the National Association of Insurance 
        Commissioners. 
           Subd. 4.  [CONFIDENTIALITY.] Reports filed with the 
        commissioner pursuant to sections 60A.135 to 60A.137 must be 
        held as nonpublic data as defined in section 13.02, are not 
        subject to subpoena, and may not be made public by the 
        commissioner, the National Association of Insurance 
        Commissioners, or other person, except to insurance departments 
        of other states, without the prior written consent of the 
        insurer to which it pertains.  However, the commissioner may 
        publish all or part of a report in the manner the commissioner 
        considers appropriate if, after giving the affected insurer 
        notice and an opportunity to be heard, the commissioner 
        determines that the interest of policyholders, shareholders, or 
        the public will be served by the publication. 
           Sec. 8.  [60A.136] [ACQUISITIONS AND DISPOSITIONS OF 
        ASSETS.] 
           Subdivision 1.  [MATERIALITY.] No acquisitions or 
        dispositions of assets need be reported pursuant to section 
        60A.135 if the acquisitions or dispositions are not material.  
        For purposes of sections 60A.135 to 60A.137, a material 
        acquisition (or the aggregate of any series of related 
        acquisitions during any 30-day period) or disposition (or the 
        aggregate of any series of related dispositions during any 
        30-day period) is one that is nonrecurring and not in the 
        ordinary course of business and involves more than five percent 
        of the reporting insurer's total admitted assets as reported in 
        its most recent statutory statement filed with the commissioner 
        of commerce. 
           Subd. 2.  [SCOPE.] (a) Asset acquisitions subject to 
        sections 60A.135 to 60A.137 include every purchase, lease, 
        exchange, merger, consolidation, succession, or other 
        acquisition other than the construction or development of real 
        property by or for the reporting insurer or the acquisition of 
        materials for this purpose. 
           (b) Asset dispositions subject to sections 60A.135 to 
        60A.137 include every sale, lease, exchange, merger, 
        consolidation, mortgage, hypothecation, assignment (whether for 
        the benefit of creditors or otherwise), abandonment, 
        destruction, or other disposition. 
           Subd. 3.  [INFORMATION TO BE REPORTED.] (a) The following 
        information is required to be disclosed in a report of a 
        material acquisition or disposition of assets: 
           (1) date of the transaction; 
           (2) manner of acquisition or disposition; 
           (3) description of the assets involved; 
           (4) nature and amount of the consideration given or 
        received; 
           (5) purpose of, or reason for, the transaction; 
           (6) manner by which the amount of consideration was 
        determined; 
           (7) gain or loss recognized or realized by the insurer as a 
        result of the transaction; and 
           (8) name of each person from whom the assets were acquired 
        or to whom they were disposed. 
           (b) Insurers are required to report material acquisitions 
        and dispositions on a nonconsolidated basis unless the insurer 
        is part of a consolidated group of insurers that uses a pooling 
        arrangement or 100 percent reinsurance agreement that affects 
        the solvency and integrity of the insurer's reserves and the 
        insurer ceded substantially all of its direct and assumed 
        business to the pool.  An insurer is considered to have ceded 
        substantially all of its direct and assumed business to a pool 
        if the insurer has less than $1,000,000 total direct plus 
        assumed written premiums during a calendar year that are not 
        subject to a pooling arrangement and the net income of the 
        business not subject to the pooling arrangement represents less 
        than five percent of the insurer's capital and surplus. 
           Sec. 9.  [60A.137] [NONRENEWALS, CANCELLATIONS, OR 
        REVISIONS OF CEDED REINSURANCE AGREEMENTS.] 
           Subdivision 1.  [MATERIALITY.] (a) No nonrenewals, 
        cancellations, or revisions of ceded reinsurance agreements need 
        be reported pursuant to section 60A.135 if the nonrenewals, 
        cancellations, or revisions are not material.  For purposes of 
        sections 60A.135 to 60A.137, a material nonrenewal, 
        cancellation, or revision for: 
           (1) property and casualty business, including accident and 
        health business when written by a property and casualty insurer 
        is one that affects: 
           (i) more than 50 percent of an insurer's ceded written 
        premium; or 
           (ii) more than 50 percent of the insurer's total ceded 
        indemnity and loss adjustment reserves; and 
           (2) life, annuity, and accident and health business, is one 
        that affects more than 50 percent of the total reserve credit 
        taken for business ceded, on an annualized basis as indicated in 
        the insurer's most recently filed statutory statement.  
           (b) With respect to either property and casualty or life, 
        annuity, and accident and health business, either of the 
        following events constitute a material revision that must be 
        reported under section 60A.135: 
           (1) an authorized reinsurer representing more than ten 
        percent of a total cession is replaced by one or more 
        unauthorized reinsurers; or 
           (2) previously established collateral requirements have 
        been reduced or waived for one or more unauthorized reinsurers 
        representing collectively more than ten percent of a total 
        cession. 
           (c) Notwithstanding paragraphs (a) and (b), no filing is 
        required: 
           (1) for property and casualty business, including accident 
        and health business written by a property and casualty insurer 
        if the insurer's total ceded written premium represents, on an 
        annualized basis, less than ten percent of its total written 
        premium for direct and assumed business; or 
           (2) for life, annuity, and accident and health business if 
        the total reserve credit taken for business ceded represents, on 
        an annualized basis, less than ten percent of the statutory 
        reserve requirement before any cession. 
           Subd. 2.  [INFORMATION TO BE REPORTED.] (a) The following 
        information is required to be disclosed in a report of a 
        material nonrenewal, cancellation, or revision of ceded 
        reinsurance agreements: 
           (1) effective date of the nonrenewal, cancellation, or 
        revision; 
           (2) the description of the transaction with an 
        identification of the initiating entity; 
           (3) purpose of, or reason for, the transaction; and 
           (4) if applicable, the identity of the replacement 
        reinsurers. 
           (b) Insurers are required to report all material 
        nonrenewals, cancellations, or revisions of ceded reinsurance 
        agreements on a nonconsolidated basis unless the insurer is part 
        of a consolidated group of insurers that utilizes a pooling 
        arrangement or 100 percent reinsurance agreement that affects 
        the solvency and integrity of the insurer's reserves and the 
        insurer ceded substantially all of its direct and assumed 
        business to the pool.  An insurer is considered to have ceded 
        substantially all of its direct and assumed business to a pool 
        if the insurer has less than $1,000,000 total direct plus 
        assumed written premiums during a calendar year that are not 
        subject to a pooling arrangement and the net income of the 
        business not subject to the pooling arrangement represents less 
        than five percent of the insurer's capital and surplus. 
           Sec. 10.  Minnesota Statutes 1994, section 60A.705, 
        subdivision 8, is amended to read: 
           Subd. 8.  [REINSURANCE INTERMEDIARY-MANAGER.] "Reinsurance 
        intermediary-manager" or "RM" means any person, firm, 
        association, or corporation who has authority to bind or manages 
        all or part of the assumed reinsurance business of a reinsurer, 
        including the management of a separate division, department, or 
        underwriting office, and acts as an agent for that reinsurer 
        whether known as an RM, manager, or other similar term.  
        However, the following persons are not considered an RM, with 
        respect to that reinsurer, for the purposes of sections 60A.70 
        to 60A.756: 
           (1) an employee of the reinsurer; 
           (2) a United States manager of the United States branch of 
        an alien reinsurer; 
           (3) an underwriting manager which, pursuant to contract, 
        manages all or part of the reinsurance operations of the 
        reinsurer, is under common control with the reinsurer, subject 
        to the holding company act, and whose compensation is not based 
        on the volume of premiums written; or 
           (4) the manager of a group, association, pool, or 
        organization of insurers which engage in joint underwriting or 
        joint reinsurance and who are subject to examination by the 
        insurance commissioner of the state in which the manager's 
        principal business office is located. 
           Sec. 11.  Minnesota Statutes 1994, section 60A.75, is 
        amended to read: 
           60A.75 [VIOLATIONS.] 
           Subdivision 1.  [ADMINISTRATIVE AND CIVIL PENALTIES AND 
        LIABILITIES.] A reinsurance intermediary, insurer, or reinsurer 
        found by the commissioner, after a hearing conducted in 
        accordance with chapter 14, to be in violation of any provision 
        of sections 60A.70 to 60A.756, shall: 
           (1) for each separate violation, pay a penalty in an amount 
        not exceeding $5,000; and 
           (2) be subject to revocation or suspension of its license. 
           Subd. 2.  [CIVIL REMEDIES.] (a) If it was found that 
        because of the violation the insurer or reinsurer has suffered 
        loss or damage, the commissioner may maintain a civil action for 
        recovery of compensatory damages for the benefit of the 
        reinsurer or insurer and its policyholders and creditors or seek 
        other appropriate relief. 
           (b) If an order of rehabilitation or liquidation of the 
        insurer has been entered pursuant to chapter 60B, and the 
        receiver appointed under that order determines that the 
        reinsurance intermediary or any other person has violated 
        sections 60A.70 to 60A.756, or any rule or order adopted under 
        those sections, and the insurer suffered any loss or damage, the 
        receiver may maintain a civil action for recovery of damages or 
        other appropriate sanctions for the benefit of the insurer. 
           Subd. 3.  [JUDICIAL REVIEW.] The decision, determination, 
        or order of the commissioner pursuant to subdivision 1 is 
        subject to judicial review pursuant to chapter 14.  
           Subd. 3. 4.  [OTHER PENALTIES.] Nothing contained in this 
        section affects the right of the commissioner to impose any 
        other penalties provided in the insurance laws. 
           Sec. 12.  Minnesota Statutes 1994, section 60H.02, 
        subdivision 4, is amended to read: 
           Subd. 4.  [MANAGING GENERAL AGENT.] (a) "Managing general 
        agent" means a person, firm, association or corporation who:  
        (1) negotiates and binds ceding reinsurance contracts on behalf 
        of an insurer, or (2) manages all or part of the insurance 
        business of an insurer, including the management of a separate 
        division, department, or underwriting office, and (2) acts as an 
        agent for the insurer whether known as a managing general agent, 
        manager, or other similar term, who, with or without the 
        authority, either separately or together with affiliates, 
        produces, directly or indirectly, and underwrites an amount of 
        gross direct written premium equal to or more than five percent 
        of the policyholder surplus as reported in the last annual 
        statement of the insurer in any one quarter or year, together 
        with one or more of the following activities related to the 
        business produced:  (i) adjusts or pays claims in excess of an 
        amount determined by the commissioner, or (ii) negotiates 
        reinsurance on behalf of the insurer. 
           (b) Notwithstanding paragraph (a), the following persons 
        shall not be considered as managing general agents for the 
        purposes of this chapter: 
           (1) an employee of the insurer; 
           (2) a United States manager of the United States branch of 
        an alien insurer; 
           (3) an underwriting manager who, pursuant to contract, 
        manages all or a part of the insurance or reinsurance operation 
        of the insurer, is under common control with the insurer, 
        subject to the Insurance Holding Company Act, chapter 60D, and 
        whose compensation is not based on the volume of premiums 
        written; or 
           (4) an attorney in fact authorized by and acting for the 
        subscribers of a reciprocal insurer or interinsurance exchange 
        under powers of attorney.  
           Sec. 13.  Minnesota Statutes 1994, section 60H.08, is 
        amended to read: 
           60H.08 [PENALTIES AND LIABILITIES.] 
           Subdivision 1.  [COMMISSIONER'S AUTHORITY.] If the 
        commissioner finds pursuant to the procedural requirements of 
        section 45.027 that a person has violated a provision of this 
        chapter, the commissioner may take any action authorized under 
        that section.  
           Subd. 2.  [ADDITIONAL PENALTY.] In addition to authority 
        granted by section 45.027 for each separate violation, the 
        commissioner may impose a penalty of up to $10,000 for each day 
        the violation continues and order the managing general agent to 
        reimburse the insurer, rehabilitator, or liquidator of the 
        insurer for any losses incurred by the insurer caused by a 
        violation of this chapter committed by the managing general 
        agent. 
           Subd. 3.  [CIVIL REMEDIES.] (a) If the commissioner finds 
        that because of the violation that the insurer has suffered loss 
        or damage, the commissioner may maintain a civil action for 
        recovery of compensatory damages for the benefit of the insurer 
        and its policyholders and creditors or other appropriate relief. 
           (b) If an order of rehabilitation or liquidation of the 
        insurer has been entered pursuant to chapter 60B, and the 
        receiver appointed under that order determines that the managing 
        general agent or any other person has violated this chapter, or 
        any rule or order adopted under this chapter, and the insurer 
        suffered loss or damage, the receiver may maintain a civil 
        action for recovery of damages or other appropriate sanctions 
        for the benefit of the insurer.  
           Subd. 4.  [JUDICIAL REVIEW.] The decision, determination, 
        or order of the commissioner under subdivision 1 is subject to 
        judicial review as provided under chapter 14.  
           Subd. 4. 5.  [IMPOSITION OF OTHER PENALTIES.] Nothing 
        contained in this section shall affect the right of the 
        commissioner to impose any other penalties provided for by law. 
           Subd. 5. 6.  [POLICYHOLDER RIGHTS.] Nothing contained in 
        this chapter is intended to or shall in any manner limit or 
        restrict the rights of policyholders, claimants, and auditors. 
           Sec. 14.  Minnesota Statutes 1994, section 61A.19, is 
        amended to read: 
           61A.19 [COMPANY REQUIREMENTS.] 
           No company shall deliver or issue for delivery within this 
        state contracts on a variable basis unless it is licensed or 
        organized to do a life insurance or annuity business in this 
        state, and the commissioner is satisfied that its condition or 
        method of operation in connection with the issuance of such 
        contracts will not render its operation hazardous to the public 
        or its policyholders in this state.  In this connection, the 
        commissioner shall consider among other things: 
           (a) The history and financial condition of the company; 
           (b) The character, responsibility and fitness of the 
        officers and directors of the company; and 
           (c) The law and regulation under which the company is 
        authorized in the state of domicile to issue such contracts.  
        The state of entry of an alien company shall be deemed to be 
        state of domicile for this purpose.  
           A licensed company which issues contracts on a variable 
        basis and which is a subsidiary of, or affiliated through common 
        management or ownership with, another life insurance company 
        authorized to do business in this state may be deemed to have 
        met the provisions of this section if either it or the parent or 
        affiliated company satisfies the aforementioned provisions.  
           Sec. 15.  Minnesota Statutes 1994, section 61A.31, 
        subdivision 3, is amended to read: 
           Subd. 3.  [ACQUISITION OF PROPERTY.] Any domestic life 
        insurance company may: 
           (a) acquire real property or any interest in real property, 
        including oil and gas and other mineral interests, in the United 
        States or any state thereof, or in the Dominion of Canada or any 
        province thereof, as an investment for the production of income, 
        and hold, improve or otherwise develop, and lease, sell, and 
        convey the same either directly or as a joint venturer or 
        through a limited, limited liability, or general partnership in 
        which the company is a partner or through a limited liability 
        company in which the company is a member.  A company may not 
        invest in any real property asset other than property held for 
        the convenience and accommodation of its business if the 
        investment causes:  (1) the company's aggregate investments in 
        the real property assets to exceed ten percent of its admitted 
        assets; or (2) the company's investment in any single parcel of 
        real property to exceed one-half of one percent of its admitted 
        assets; 
           (b) acquire personal property in the United States or any 
        state thereof, or in the Dominion of Canada or any province 
        thereof, under lease or leases or commitment for lease or leases 
        if:  (1) either the fair value of the property exceeds the 
        company's investment in it or the lessee, or at least one of the 
        lessees, or a guarantor, or at least one of the guarantors, of 
        the lease is a corporation with a net worth of $1,000,000 or 
        more; and (2) the lease provides for rent sufficient to amortize 
        the investment with interest over the primary term of the lease 
        or the useful life of the property, whichever is less.  A 
        company may not invest in the personal property if the 
        investment causes the company's aggregate investments in the 
        personal property to exceed three percent of its admitted 
        assets; 
           (c) acquire and hold real estate (1) if the purpose of the 
        acquisition is to enhance the sale value of real estate 
        previously acquired and held by the company under this section 
        and (2) if the company expects the real estate so acquired to 
        qualify and be held by the company under paragraph (a) within 
        five years after acquisition; and 
           (d) not acquire real property under paragraphs (a) to (c) 
        if the property is to be used primarily for agricultural, 
        horticultural, ranch, mining, or church purposes. 
           All real property acquired or held under this subdivision 
        must be carried at a value equal to the lesser of (1) cost plus 
        the cost of capitalized improvements, less normal depreciation, 
        or (2) market value. 
           Sec. 16.  Minnesota Statutes 1994, section 67A.231, is 
        amended to read: 
           67A.231 [DEPOSIT OF FUNDS; INVESTMENT; LIMITATIONS.] 
           The directors of any township mutual insurance company may 
        authorize the treasurer to invest any of its funds and 
        accumulations in:  
           (a) Bonds, notes, mortgages, or other obligations 
        guaranteed by the full faith and credit of the United States of 
        America and those for which the credit of the United States is 
        pledged to pay principal, interest or dividends, including 
        United States agency and instrumentality bonds, debentures, or 
        obligations; 
           (b) Bonds, notes, evidence of indebtedness, or other public 
        authority obligations guaranteed by this state; 
           (c) Bonds, notes, evidence of the indebtedness or other 
        obligations guaranteed by the full faith and credit of any 
        county, municipality, school district, or other duly authorized 
        political subdivision of this state; 
           (d) Bonds or other interest bearing obligations, payable 
        from revenues, provided that the bonds or other interest bearing 
        obligations are at the time of purchase rated among the highest 
        four quality categories used by a nationally recognized rating 
        agency for rating the quality of similar bonds or other interest 
        bearing obligations, and are not rated lower by any other such 
        agency; or obligations of a United States agency or 
        instrumentality that have been determined to be investment grade 
        (as indicated by a "yes" rating) rated in one of the two highest 
        categories established by the Securities Valuation Office of the 
        National Association of Insurance Commissioners.  A company may 
        not invest more than 20 percent of its admitted assets in the 
        obligations of any one corporation.  This is not applicable to 
        bonds or other interest bearing obligations in default as to 
        principal; 
           (e) Investments in the obligations stated in paragraphs 
        (a), (b), (c), and (d), may be made either directly or in the 
        form of securities of, or other interests in, an investment 
        company registered under the Federal Investment Company Act of 
        1940.  Investment company shares authorized pursuant to this 
        subdivision shall not exceed 20 percent of the company's 
        surplus.  These obligations must be carried at the lower of cost 
        or market on the annual statement filed with the commissioner 
        and adjusted to market on an annual basis; 
           (f) Loans upon improved and unencumbered real property in 
        this state worth at least twice the amount loaned thereon, not 
        including buildings, unless insured by property insurance 
        policies payable to and held by the security holder; 
           (g) Real estate, including land, buildings and fixtures, 
        located in this state and used primarily as home office space 
        for the insurance company; 
           (h) Demand or time deposits or savings accounts in 
        federally insured depositories located in this state to the 
        extent that the deposit or investment is insured by the Federal 
        Deposit Insurance Corporation, Federal Savings and Loan 
        Corporation, or the National Credit Union Administration; 
           (i) Guarantee fund certificates of a mutual insurer which 
        reinsures the business of the township mutual insurance 
        company.  The commissioner may by rule limit the amount of 
        guarantee fund certificates which the township mutual insurance 
        company may purchase and this limit may be a function of the 
        size of the township mutual insurance company; and 
           (j) Up to $1,500 in stock of an insurer which issues 
        directors and officers liability insurance to township mutual 
        insurance company directors and officers. 
           Presented to the governor May 22, 1995 
           Signed by the governor May 24, 1995, 10:28 a.m.