Unauthorized Insurance on Wisconsin Risks — Sections
610.11 and
618.43, Statutes
This report is to be filed with the Commissioner of Insurance, State of Wisconsin, Madison, Wisconsin 53702, on or before
March 1, 2 .
-
See PDF for table 
-
See PDF for table Ins 6.19 Note
Note: 2011 Wisconsin Act 224 changed the penalty tax rate for surplus lines insurance which is ocean marine insurance to the same 5% penalty rate for all other surplus lines insurance. Any previous reference to a 2% penalty rate for ocean marine insurance in this rule is not enforceable as that rate is now the same 5% penalty rate for all surplus lines insurance.
Ins 6.19 Appendix 1
NOTICE OF DIRECTLY PLACED UNAUTHORIZED INSURANCE
To: Commissioner of Insurance
State of Wisconsin
P.O. Box 7873
Madison, WI 53707-7873
1. Name of Person or Organization Insured
2. Address of Insured
3. Contract Number
4. Effective Date
5. Expiration Date
6. Name and Address of Insurance Company
7. Description or Type of Coverage
8. Premium Charged
The undersigned certifies that this report is true and correct according to the best of his or her information, knowledge, and belief.
, 2
Ins 6.19 Note
Note: This report, pursuant to s.
618.42 (2), Stats., must be filed with the Commissioner of Insurance within 60 days after effectuation of any new or renewal insurance contract independently procured from an unauthorized insurer. A separate report is required for each new or renewal insurance contract. A 3% Tax on the premiums charged for such contracts during the calendar year ending December 31 must be paid to the Commissioner on or before March 1 next succeeding.
Ins 6.19 Appendix 2
PREMIUM TAX REPORT
Year Ending December 31, 2
Directly Placed Unauthorized Insurance — Sections
618.42 and
618.43, Wisconsin Statutes
This report is to be filed with the Commissioner of Insurance, State of Wisconsin, Madison, Wisconsin 53702, on or before
March 1, 2
-
See PDF for table -
See PDF for table
Ins 6.19 Note
Note: 2011 Wisconsin Act 224 changed the tax rate for surplus lines insurance which is ocean marine insurance to the same 3% rate for all other surplus lines insurance. Any previous reference to a ½ of 1% rate for ocean marine insurance in this rule is not enforceable as that insurance is now taxed at the same 3% rate for all surplus lines insurance.
Ins 6.20
Ins 6.20
Investments of insurance companies. Ins 6.20(1)(1)
Purpose. The purpose of this rule is to implement and interpret
ch. 620, Stats., for the purpose of establishing procedures and requirements for investments of insurance companies.
Ins 6.20(2)
(2) Scope. This rule shall apply to all insurers subject to
ch. 620, Stats.
Ins 6.20(3)(a)
(a) "Call option" means an option contract under which the holder of the option contract has the right, in accordance with the terms of the contract, to purchase, or to make a cash settlement in lieu thereof, the amount of the underlying financial instrument covered by the option contract.
Ins 6.20(3)(b)
(b) "Financial futures contract" means an exchange-traded agreement to make or take delivery, or to make cash settlement in lieu thereof, of a specified amount of financial instruments on or before a specified date or period of time, under terms and conditions regulated by the commodity futures trading commission.
Ins 6.20(3)(c)
(c) "Financial instrument" means a security, currency, or index of a group of securities or currencies.
Ins 6.20(3)(d)
(d) "Financial options contract" means options on a financial futures contract and any other option contract for a financial instrument which is traded on an exchange, board of trade, or an over-the-counter market regulated under the laws of the United States.
Ins 6.20(3)(e)
(e) "Fixed charges" includes interest on all debt, and amortization of debt discount.
Ins 6.20(3)(f)
(f) "Money market mutual fund" means a fund that meets the conditions of 17 Code of Federal Regulations Par. 270.2a-7, under the Investment Company Act of 1940 (
15 USC 80a-1 et seq.), as amended or renumbered.
Ins 6.20(3)(g)
(g) "Net earnings available for fixed charges" means income after allowance for operating and maintenance expenses, depreciation and depletion, and taxes other than federal and state income taxes, but without allowance for extraordinary nonrecurring items of income or expense appearing in the regular financial statements of the issuing company. If the issuing company has acquired, prior to the date of investment, substantially all the assets of another company by purchase, merger, consolidation or otherwise, the net earnings available for fixed charges of the other company for the portion of the test period that preceded acquisition may be included in accordance with a consolidated earnings statement covering the period.
Ins 6.20(3)(h)
(h) "Net earnings available for fixed charges and dividends" shall be determined in the same manner as "net earnings available for fixed charges" but after allowance for federal and state income taxes.
Ins 6.20(3)(i)
(i) "Preferred dividend requirements" include dividends at the maximum prescribed rate on all stock ranking as to dividends on parity with or prior to that being acquired, whether or not the dividends are cumulative.
Ins 6.20(3)(j)
(j) "Put option" means an option contract under which the holder of the contract has the right, in accordance with the terms of the contract, to sell, or to make a cash settlement in lieu thereof, the amount of the underlying financial instrument covered by the put option contract.
Ins 6.20(3)(k)
(k) "Real estate" or "real property" includes leaseholds.
Ins 6.20(3)(L)
(L) "Repurchase transaction" means a transaction in which an insurer purchases securities from a business entity which is obligated to repurchase the purchased securities or equivalent securities from the insurer at a specified price, either within a specified period or upon demand.
Ins 6.20(4)
(4) General limitations on restricted insurers. No insurer restricted under s.
620.03, Stats., may invest thereafter in any of the following classes of assets except by permission of the commissioner:
Ins 6.20(4)(a)
(a) Any securities of an issuer who has defaulted on any payment on any debt security within the previous 5 years;
Ins 6.20(4)(c)
(c) Any financial futures contract or financial options contract.
Ins 6.20(5)
(5) Special limitations on restricted insurers other than town mutuals. An insurer which is restricted under s.
620.03, Stats., and which is not a town mutual, shall not invest:
Ins 6.20(5)(a)
(a) Evidences of indebtedness. In evidences of indebtedness under s.
620.22 (1), Stats., unless they are lawfully authorized and:
Ins 6.20(5)(a)1.
1. They are rated AAA, AA or A by Fitch Investors Service, Inc. or by Standard & Poor's Corporation, or Aaa, Aa or A by Moody's Investors Service, Inc.; or
Ins 6.20(5)(a)2.
2. They are evidences of indebtedness of a municipally owned public utility of this state created pursuant to section 3 of
article XI of the constitution, and the net book value of the property pledged as security for the bonds has been established or approved by the public service commission and the total issue of the bonds does not exceed 50% of the net book value of such property; or
Ins 6.20(5)(a)3.
3. They are payable from revenues of a public utility or railroad owned by or held for the benefit of any governmental unit in the United States or Canada, if they are adequately secured by mortgage or lien on property or by specific pledge or revenues, and lawful authorizing resolutions or ordinance of the governing body of the unit require that during the life of the evidence of indebtedness the rates, fees, tolls or charges together with any other revenues pledged shall at all times produce revenues sufficient to pay all expenses of operation and maintenance, interest as promised and the principal sum when due; or
Ins 6.20(5)(a)4.
4. They are evidences of indebtedness of public utilities in the United States or Canada and are either adequately secured by mortgage, pledge or other collateral, or have had net earnings available for fixed charges that for the previous 3 fiscal years have averaged per year not less than 1 1/2 times the average annual fixed charges; or
Ins 6.20(5)(a)5.
5. They are evidences of indebtedness of a United States or Canadian private corporation, and they are either adequately secured by mortgage, pledge or other collateral, or are issued by a corporation which has had net earnings available for fixed charges that have averaged for the previous 5 years and equalled for each of the previous 2 years an annual amount which exceeded average annual fixed charges by at least 50%, or 25% in the case of corporations engaged primarily in wholesale or retail merchandising, installment, commercial and consumer financing, factoring or small loan business.
Ins 6.20(5)(b)
(b) Equipment securities. In equipment securities or in certificates of an equipment trust under
sub. (8) (b) unless the obligor's net earnings have averaged at least 2 times its average annual fixed charges for the previous 3 years.
Ins 6.20(5)(c)1.
1. On the security of encumbered property, but property shall not be deemed encumbered because of unpaid but not delinquent assessments and taxes, mineral, oil or timber rights, easements for public highways, private roads, railroads, telegraph, telephone, electric light and power lines, drains, sewers or other similar easements, liens for service and maintenance of water rights when not delinquent, party wall agreements, building restrictions, or other restrictive covenants or conditions, with or without a reversionary clause, or leases under which rents or profits are reserved to the owner;
Ins 6.20(5)(c)2.
2. In excess of 2/3 of the fair market value, including buildings covered by the mortgage. If the value of buildings constitute part of the security, the buildings must be insured adequately to protect the insurer's security interest. The 2/3 limitation shall not apply to any loan fully insured by a federal insurance corporation; nor
Ins 6.20(5)(c)3.
3. On the security of a leasehold interest in real property unless it is unencumbered except by rentals owed to the owner of the fee, has at least 25 years yet to run, and then for no more than 50% of the fair market value of the leasehold less the present value of all rentals due upon it to the owner of the fee.
Ins 6.20(5)(d)
(d) Preferred shares. In preferred shares unless the issuing company has had, disregarding fixed charges on indebtedness and dividend requirements on preferred stock for the retirement of which provision has been made at the date of the investment, net earnings:
Ins 6.20(5)(d)1.
1. Available for fixed charges and dividends that during the previous 5 fiscal years have averaged not less than twice the sum of the fixed charges, maximum contingent interest and preferred dividend requirements of the issuing company; or
Ins 6.20(5)(d)2.
2. Available for fixed charges and dividends that for each of the previous 3 fiscal years have been not less than 1 1/2 times the sum of the fixed charges, maximum contingent interest and preferred dividend requirements of the issuing company; or
Ins 6.20(5)(d)3.
3. Available to meet preferred dividend requirements of the previous 5 years, after allowance for fixed charges and federal and state income taxes, that have averaged not less than 3 times the preferred dividend requirements.
Ins 6.20(5)(e)1.
1. In accordance with a plan of acquisition proposed by the insurer and approved by the commissioner; and
Ins 6.20(5)(e)2.
2. In common stocks which are authorized securities for NASDAQ, the automated quotation system of the National Association of Securities Dealers.
Ins 6.20(5)(f)
(f) Real property. In any investment under s.
620.22 (4) or
(5), Stats., except with prior written approval of the commissioner.
Ins 6.20(5)(g)1.1. Except as permitted under
subd. 2., more than 3% of assets in securities of any single issuer unless it obtains the prior written permission of the commissioner or unless the investment is in securities of the government of the United States or its instrumentalities or in securities guaranteed by the full faith and credit of the United States; or
Ins 6.20(5)(g)2.
2. More than 10% of assets in the securities of one state, of one instrumentality of a state, or of one governmental unit of a state.
Ins 6.20(6)(a)(a) Town mutual insurance companies authorized to operate under the provisions of
ch. 612, Stats., are restricted insurers and are subject to the restrictions of ss.
612.36 and
620.03 (1), Stats.,
sub. (4) and other applicable provisions of this section. The commissioner may grant exemptions under s.
620.03 (2), Stats.
Ins 6.20(6)(b)
(b)
Permitted investments. Except as permitted by
pars. (c),
(d) and
(e) a town mutual insurer may only invest in one or more of the following:
Ins 6.20(6)(b)1.
1. Treasury bonds, treasury notes, treasury bills or any other direct obligations of the United States Government or agencies or instrumentalities of the United States Government with a final maturity 15 years or less, except that no part of the amount determined under this paragraph shall be invested in zero coupon bonds or collateralized mortgage obligations;
Ins 6.20(6)(b)2.
2. Demand deposit, interest bearing accounts and certificates of deposit in financial institutions, including banks, savings and loan associations and credit unions, except that the amount of an insurer's investment with each such financial institution shall be limited to the total amount eligible for insurance under the financial institution's depositor insurance program;
Ins 6.20(6)(b)3.
3. Bonds of any United State or Canadian corporation that at the time of purchase have a "BBB" or better rating from Standard and Poor's Corporation or Moody's Investment Service or bonds rated "1" by the National Association of Insurance Commissioners Securities Valuation Office, except that no part of the amount determined under this paragraph shall be invested in zero coupon bonds, collateralized mortgage obligations, payment in kind bonds or bonds with a final maturity of more than 15 years;
Ins 6.20(6)(b)4.
4. Bonds of any United States municipality that at the time of purchase have a "BBB" or better rating from Standard and Poors Corporation or Moody's Investment Service or bonds rated "1" by the National Association of Insurance Commissioners Securities Valuation Office with a final maturity of 15 years or less, except that no amount shall be invested in zero coupon bonds;
Ins 6.20(6)(b)5.
5. No more than an aggregate of 10% of assets in preferred stock of any United States or Canadian corporation that at the time of purchase has a "BBB" or better rating from Standard and Poor's Corporation or Moody's Investment Service or preferred stock rated "1" by the National Association of Insurance Commissioners Securities Valuation Office; or
Ins 6.20(6)(b)6.
6. No more than an aggregate of 10% of assets in money market mutual funds.
Ins 6.20(6)(c)
(c) A town mutual insurer may invest in assets permitted under
par. (d) only if on December 31 of the preceding year its assets invested in accordance with
par. (b) are an amount at least equal to the sum of its liabilities plus the greater of:
Ins 6.20(6)(c)1.
1. 50% of the net written premiums and assessments for the 12-month period ending December 31;
Ins 6.20(6)(c)2.
2. 33% of the gross written premiums and assessments for the 12-month period ending December 31; or
Ins 6.20(6)(d)
(d) A town mutual insurer may invest assets in excess of the amount determined under
par. (c) in one or more of the following:
Ins 6.20(6)(d)1.
1. Unrated bonds of a Wisconsin municipality or political subdivision not included in
par. (b). Any bonds purchased under this subdivision must be direct obligations of the municipality or political subdivision, and no investment shall be made in unrated industrial revenue or industrial development bonds. Such investments shall not exceed 3% of assets in any single issue or 10% of assets in a single issuer or its affiliates;
Ins 6.20(6)(d)2.
2. Bonds with a final maturity of more than 15 years that would otherwise be classified within
par. (b) 1.,
3. or
4.
Ins 6.20(6)(d)3.
3. An aggregate of no more than 25% of the insurer's assets in one or more of the following:
Ins 6.20(6)(d)3.a.
a. Stock which is either common stock or preferred stock of a licensed insurance company domiciled in this state which reinsured town mutual insurers in this state at the time it converted from a mutual insurance corporation to a stock insurance corporation.
Ins 6.20(6)(d)3.b.
b. Common or preferred stock or convertible securities of any United States, Canadian or foreign corporation not included in
par. (b) that are traded on a federally regulated securities exchange.
Ins 6.20(6)(d)3.c.
c. Any mutual fund that invests in common or preferred stock or convertible securities of any United States, Canadian or foreign corporation not included in
par. (b) that has a minimum four-star rating from Morningstar Mutual Funds Inc. A town mutual insurer shall not exceed 10% of assets in any single family of mutual funds.
Ins 6.20(6)(d)4.
4. Any subsidiaries formed to provide services ancillary to the town mutual insurer's insurance operations. Subsidiaries are considered ancillary subsidiaries if they are engaged principally in insurance-related activities such as acting as an insurance agent or providing claims adjusting services. A town mutual insurer may invest in a subsidiary only with the prior written approval of the commissioner and the investment may not exceed the amount approved by the commissioner or 10% of assets, whichever is less.
Ins 6.20(6)(d)5.
5. Any mutual fund not included in
par. (b) or this paragraph that has a minimum four-star rating from Morningstar Mutual Funds Inc. Total investment under this paragraph shall not exceed 10% of assets in any single family of mutual funds and 25% of assets in aggregate.
Ins 6.20(6)(d)6.
6. Real property needed for the convenient transaction of the insurer's business, provided that the insurer obtains the prior written approval of the commissioner.
Ins 6.20(6)(d)7.
7. Real estate loans on property meeting the requirements of
sub. (5) (c) and investment in real estate partnerships. Any investment in real estate partnerships shall be with the prior approval of the commissioner.
Ins 6.20(6)(d)8.
8. Collateralized mortgage obligations or tranche bonds whose principal repayment is divided into multiple categories of preferential repayment classes, with final maturities of not more than 20 years for the entire mortgage obligation. Such investments shall not exceed 3% of assets in any single issue or 10% of assets in the aggregate.
Ins 6.20(6)(d)9.
9. Investments not otherwise permitted by this paragraph, and not specifically prohibited by statute or rule, to the extent of not more than 5% of the insurer's assets.
