Office of the Revisor of Statutes
Minnesota Session Laws - 1995, Regular Session
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.
Official Publication of the State of Minnesota
Revisor of Statutes