On application by the organizers of a municipal insurance mutual under s. 611.11 (4)
, the commissioner may by order, after a hearing, relax any requirements of this chapter to facilitate the formation, financing and governance of the mutual. In the same order, the commissioner shall impose substitute requirements designed to implement the purposes of s. 611.02 (2)
as elaborated in this chapter.
Except as provided in sub. (3)
, the provisions of chs. 600
that apply to other mutuals organized or operating under this chapter apply also to municipal insurance mutuals.
(3) Inapplicable provisions.
do not apply to such mutuals. The commissioner may by order, after a hearing, exempt such a mutual from any other provisions on a finding that they are unnecessary for the protection of the interests of the municipalities and their citizens.
Segregated accounts in general. 611.24(1)(1)
Mandatory segregated accounts.
A corporation shall establish segregated accounts for the following classes of insurance business, if it also does other classes of insurance business:
Unless the corporation is exempted by the commissioner by rule or order, financial guaranty insurance, if the corporation commences this class of insurance business on or after March 25, 1988, or if the corporation engages in this class of business on or after November 1, 1988; and
Life insurance including fixed and variable annuities. Disability insurance may be included in a life insurance account.
(2) Optional segregated accounts.
With the approval of the commissioner, a corporation may establish a segregated account for any part of its business. The commissioner shall approve unless he or she finds that the segregated account would be contrary to the law or to the interests of any class of insureds.
(3) Special provisions for segregated accounts. 611.24(3)(a)(a)
Capital and surplus.
The commissioner shall specify in the certificate of authority of a newly organized corporation the minimum capital or the minimum permanent surplus and the initial expendable surplus to be provided for each segregated account. If a segregated account is established after a certificate of authority has been issued, the commissioner shall require the corporation to have and maintain an adequate amount of capital and surplus in the segregated account.
The income and assets attributable to a segregated account shall always remain identifiable with the particular account but unless the commissioner so orders, the assets need not be kept physically separate from other assets of the corporation. The income, gains and losses, whether or not realized, from assets attributable to a segregated account shall be credited to or charged against the account without regard to other income, gains or losses of the corporation.
Except under par. (e)
, assets attributable to a segregated account shall not be chargeable with any liabilities arising out of any other business of the corporation, nor shall any assets not attributable to the account be chargeable with any liabilities arising out of it, except under par. (i)
Incidental business done by a corporation under s. 610.21
may be done under the general account or under any segregated account approved by the commissioner. Expenses and income for such business shall be allocated among the general account and all segregated accounts in accordance with generally accepted accounting principles.
Each segregated account shall be deemed an insurer within the meaning of s. 645.03 (1) (f)
. A liquidation order under s. 645.42
for the general account or for any segregated account shall have effect as a rehabilitation order under s. 645.32
for all other accounts of the corporation. Claims remaining unpaid after completion of the liquidation under ch. 645
shall have liens on the interests of shareholders, if any, in all of the corporation's assets that are not liquidated, and the rehabilitator may transform the liens into ownership interests under s. 645.33 (5)
Assets allocated to segregated accounts are the property of the corporation, which is not and shall not hold itself out to be a trustee of the assets.
A corporation may own a particular asset in determinate proportions for segregated accounts, for its general account or as a trustee when acting as such within its legal powers.
The corporation may by an identifiable act transfer assets for fair consideration among the segregated accounts, the general account and any trust accounts of the corporation.
Expenses, loans, and services.
The general account of the corporation, or any segregated account, may for a fair consideration provide loans or guarantees in connection with, perform services for, or reinsure other accounts, subject to rules promulgated by the commissioner. Generally accepted accounting principles and realistic actuarial tables may be considered to ascertain what is a fair consideration. Notwithstanding s. 645.68
, the commissioner may assign a general or segregated account obligation to a segregated account an order of distribution higher in priority than provided for under s. 645.68 (5)
Special provisions for separate accounts for variable contracts. 611.25(1)(1)
Separate accounts under this section form a special category of segregated accounts and may be designated by any appropriate name the corporation wishes to use.
With the approval of the commissioner, any corporation may establish one or more separate accounts and allocate to them any amounts paid or remitted to or held by the corporation under designated contracts or classes of contracts which amounts are to be applied to provide benefits payable partly or wholly in variable dollar amounts. Such amounts may also be applied to provide benefits in fixed and guaranteed dollar amounts and other incidental benefits.
(3) Special rights and procedures.
To the extent necessary to comply with the federal investment company act of 1940, as now or later amended, or any rules issued thereunder, the corporation may adopt special procedures for the conduct of the business and affairs of a separate account, and may, for persons having beneficial interests therein, provide special voting and other rights, including special rights and procedures relating to investment policy, investment advisory services, selection of certified public accountants, and selection of a committee, the members of which need not be otherwise affiliated with the corporation, to manage the business and affairs of the account.
(4) Applicable general provisions.
Separate accounts under this section are subject to s. 611.24 (3)
History: 1971 c. 260
An insurance corporation may form or acquire subsidiaries to do any lawful insurance business. There is no limit on the amount of investment in such subsidiaries except that the commissioner may by order or rule establish a limit and, for purposes of ss. 623.11
, the total value of the outstanding shares of such a subsidiary shall be deemed to equal the amount of surplus possessed by the subsidiary in excess of its security surplus, as determined by the commissioner under s. 623.12
(2) Investment subsidiaries.
An insurance corporation may form or acquire subsidiaries to hold or manage any assets that it might hold or manage directly. There is no limit on investment in such subsidiaries except that imposed by s. 620.23 (3)
An insurance corporation may form or acquire subsidiaries to perform functions or provide services that are ancillary to its insurance operations. It may have up to 10 percent of its assets invested in such subsidiaries, unless the commissioner by order or rule provides otherwise.
Subsidiaries are ancillary subsidiaries if they are engaged principally in one or more of the following:
Investing, reinvesting or trading in securities, or acting as a securities broker, dealer or marketing representative, for its own account or for the account of any affiliate.
Managing of investment companies registered under the federal investment company act of 1940, as amended, including related sales and services.
Acting as administrative agent for a government instrumentality performing an insurance, public assistance or related function.
Providing services related to insurance operations, including accounting, actuarial, appraisal, auditing, claims adjusting, collection, data processing, loss prevention, premium financing, safety engineering and underwriting services.
Holding or managing property used by the corporation alone or with its affiliates for the convenient transaction of its business.
Providing such other services or performing such other activities as the commissioner may declare ancillary by rule.
Owning corporations which would be authorized as subsidiaries under subds. 1.
and under subs. (1)
(4) Other subsidiaries.
An insurance corporation may form or acquire other subsidiaries than those under subs. (1)
. The investment in such subsidiaries may be counted toward satisfaction of the compulsory surplus requirement of s. 623.11
and the security surplus standard of s. 623.12
to the extent that the investment is a part of the leeway investments of s. 620.22 (9)
for the first $200,000,000 of assets or to the extent that the investment is within the limitations under s. 620.23 (2) (a)
for other assets. The commissioner may limit investment in subsidiaries under this subsection by rule or order. Unless approved by the commissioner, an insurance corporation may not do any of the following:
Invest in one or more subsidiaries more than 10 percent of its assets or 50 percent of its capital and surplus, whichever is less.
Invest in one or more subsidiaries to the extent that the insurer's capital and surplus with regard to policyholders will not be reasonable in relation to the insurer's outstanding liabilities or adequate to meet the insurer's financial needs.
(5) Notice to commissioner.
An insurance corporation shall notify the commissioner promptly of the formation or acquisition of any subsidiary under this section.
Changes in business plan. 611.28(1)(1)
Within 5 years after the initial issuance of a certificate of authority no substantial change, alteration or amendment may be made in the business plan and the insurer may not substantially deviate from it unless notice of the proposed change is filed with the commissioner 30 days in advance of the proposed effective date. The commissioner may defer the effective date for an additional period not exceeding 30 days by written notice to the corporation before expiration of the initial 30-day period. The commissioner may, within the 30-day period or its extension, prohibit the proposed action if it is contrary to law or to the interests of insureds, creditors or the public in this state.
(2) Continuing control.
The commissioner may by rule or order specify portions of the business plan to which the requirement of sub. (1)
shall apply even after the initial 5-year period, if he or she finds after a hearing that it is required to protect the interests of insureds, creditors or the public in this state.
Amendment of articles. 611.29(1)(1)
Right to amend articles.
A stock corporation may amend its articles under ss. 180.0726
and 180.1708 (4)
and a mutual may amend its articles under ss. 181.1001
, 181.1002 (1)
, except that papers required by those sections to be filed with the department of financial institutions shall instead be filed with the commissioner. Subject to sub. (3)
, the stock corporation or mutual may amend its articles in any desired respect including substantial changes of its original purposes. No amendment may be made contrary to s. 611.12 (1)
For 5 years after the initial issuance of a certificate of authority, proposed amendments of the articles which are not changes in the business plan shall be filed with the commissioner at least 30 days before the amendment is submitted to the shareholders or policyholders for approval, or if such approval is not required, at least 30 days before the effective date.
(3) Articles of amendment; mutuals.
In addition to the requirements of s. 181.1005
, the articles of amendment of a mutual shall, if mail voting is used, state the number of policyholders voting by mail and the number of such policyholders voting for and against the amendment.
(4) Filing of articles of amendment.
No amendment may become effective until the articles of amendment have been filed with the commissioner.
(5) Effect of amendment of articles.
applies to stock corporations and s. 181.1008
applies to mutuals.
SECURITIES OF DOMESTIC INSURANCE CORPORATIONS
Securities regulation. 611.31(1)(1)
No securities issued by a domestic insurance corporation may be sold by or for the corporation unless they are registered or exempt from registration under ch. 551
(2) Approval by commissioner.
Securities of a domestic insurance corporation may not be registered under ch. 551
without prior approval of the commissioner of insurance. Issuance of an organization permit under s. 611.13
constitutes such approval for the securities described in the permit.
(3) Holding companies.
No issuer of securities which is being organized in this state or elsewhere solely or partly for the purpose of organizing a corporation under this chapter may register or sell its securities in this state unless it obtains an organization permit under s. 611.13
. No security may be registered or sold in this state if there is any representation that an insurer will be organized or purchased in this state with the proceeds of the sale, unless the issuer obtains an organization permit under s. 611.13
Every person who is directly or indirectly the beneficial owner of more than 10 percent of any class of any equity security of a domestic stock insurance corporation, or who is a director or officer thereof, shall file in the office of the commissioner within 10 days after becoming a beneficial owner or a director or officer, and within 10 days after the close of any calendar month thereafter in which there has been a change in his or her ownership or office, a statement in the form prescribed by the commissioner, of the office and of all equity securities of the company of which the person is the beneficial owner, and of all changes in either.
For the purpose of preventing the unfair use of information which may have been obtained by such a beneficial owner or by a director or officer because of his or her relationship to the corporation, any profit realized by him or her from any purchase and sale or sale and purchase of any equity security of the corporation within any period of less than 6 months, unless the security was acquired in good faith in connection with a debt previously contracted, shall be recoverable by the corporation, irrespective of any intention by the beneficial owner, director or officer in entering into the transaction to hold the security purchased or not to repurchase the security sold for a period exceeding 6 months. Suit to recover the profit may be instituted in any court of competent jurisdiction by the corporation, or if the corporation fails to bring suit within 60 days after request or fails to prosecute it diligently thereafter by the owner of any security thereof, in the name and in behalf of the corporation; but no such suit may be brought more than 2 years after the date the profit was realized. This paragraph does not cover any transaction where the beneficial owner was not such both at the time of the purchase and sale, or the sale and purchase, of the security involved, nor does it cover any transaction which the commissioner by rule exempts as not comprehended within the purpose of this paragraph.
It is unlawful for any director or officer, or any beneficial owner subject to par. (a)
, to sell any equity security of the corporation, directly or indirectly, unless the director, officer or beneficial owner or the director's, officer's or beneficial owner's principal owns the security sold and either delivers it within 20 days after the sale or deposits it within 5 days after the sale in the mails or other usual channels of transportation. A person has not violated this paragraph if the person proves that despite the exercise of good faith the person was unable to deliver or deposit the securities within the specified times, or could only have done so with unreasonable inconvenience or expense.
does not apply to a purchase and sale or sale and purchase and par. (c)
does not apply to a sale of any equity security of a domestic stock insurance corporation not then or earlier held by him or her in an investment account, by a dealer in the ordinary course of his or her business and incident to his or her establishment or maintenance of a primary or secondary market (otherwise than on an exchange as defined in the federal securities exchange act of 1934) for the security. The commissioner may by rule define and prescribe terms and conditions with respect to securities held in an investment account and transactions made in the ordinary course of business and incident to the establishment or maintenance of a primary or secondary market.
do not apply to foreign or domestic arbitrage transactions unless made in contravention of rules the commissioner adopts in order to carry out this subsection.
do not apply to equity securities of a corporation if:
The securities are registered, or are required to be registered, pursuant to s. 12 of the federal securities exchange act of 1934, as amended; or
The corporation did not have any class of its equity securities held of record by 100 or more persons on the last business day of the year preceding the year in which equity securities of the corporation would otherwise be subject to pars. (a)
In this subsection “
equity security" means any stock or similar security; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right; or any other security which the commissioner deems to be of similar nature and designates as an equity security by rules promulgated in the public interest or for the protection of investors.
(5) Proxy solicitation.
No person may, in contravention of rules the commissioner promulgates for the protection of investors or the public, solicit or permit the use of his or her name to solicit any proxy or consent or authorization in respect of any equity security of a domestic stock corporation having 100 or more shareholders of record.
(6) Effect of reliance on commissioner's rule.
No provision of sub. (4)
imposing any liability applies to any act done or omitted in good faith in conformity with any rule of the commissioner, even if the rule is, after the act or omission, amended or rescinded or determined by judicial or other authority to be invalid.
(7) Effect of violation.
A contract for subscription to or the purchase of shares in any corporation made in violation of this chapter or of ch. 551
is valid and enforceable against but not in favor of the corporation or the insider, except that the contract is valid and enforceable in favor of the corporation against an insider.
History: 1971 c. 260
; 1979 c. 102
, 236 (13)
See also ss. Ins 6.41
, and 6.43
, Wis. adm. code.
During the period of effectiveness of the organization permit the incorporators, directors, and principal officers of a stock corporation shall among themselves subscribe and pay, at the public offering price, at least $100,000 in cash or in property of equivalent value approved by the commissioner, for shares offered by the corporation under the organization permit.
No person may subscribe for promoter stock on terms more favorable than those on which subscriptions are being solicited from the general public.
Except under this section and s. 611.18 (2) (a) 2.
, and except for stock dividends, no promoter stock may be issued for 5 years following the initial issuance of the certificate of authority, without the approval of the commissioner which may be granted by the commissioner only if he or she finds that:
The corporation is in need of additional capital; and
The value proposed to be given for the stock is fair to existing shareholders and has a reasonable relation to the current value of the outstanding shares.
This subsection shall not affect the exercise of preemptive rights.