The transaction has been reported to the commissioner immediately after such approval.
(2) Quorum and voting.
Directors whose interest or status make the transaction subject to this section may be counted in determining a quorum for a board meeting approving a transaction under sub. (1) (b)
, but may not vote. Approval requires an affirmative vote of a majority of those present.
(3) Restricted transactions.
The commissioner may by rule require that for any classes of transactions subject to sub. (1)
which by their nature tend to be unreasonable or unfair to the interests of the corporation the report under sub. (1) (c)
shall be submitted to the commissioner in advance of the proposed effective date. Such a transaction shall not be carried out even though approved under sub. (1) (b)
, until the commissioner approves the transaction, or does not disapprove it for failure to comply with sub. (1) (a)
within 30 days after receiving the report under sub. (1) (c)
(4) Excepted transactions.
This section does not apply to transactions subject to s. 611.61
, nor to transactions made between an insurance corporation and its wholly owned subsidiary, nor to policies of insurance, other than reinsurance, issued in the normal course of business. Nothing in this section deprives any person of any rights accruing under a policy of insurance written at usual terms, other than reinsurance. The commissioner may by rule exempt other classes of transactions from the reporting requirement of sub. (1) (c)
, to the extent that the purposes of this section can be achieved without the report.
History: 1971 c. 260
; 1979 c. 102
s. 236 (21)
Transactions of insurers with affiliates. 611.61(1)(1)
No transaction may be entered into between an insurer authorized to do business in this state and any affiliate unless:
The transaction at the time it is entered into is reasonable and fair to the interests of the insurer;
The books, accounts and records of each party to the transaction are kept in a manner that clearly and accurately discloses the nature and details of the transaction and in accordance with generally accepted accounting principles permits ascertainment of charges relating to the transaction; and
If the transaction is a reinsurance transaction, it is reported to the commissioner immediately if the insurer is a domestic corporation.
Transactions entered into by domestic corporations in violation of sub. (1)
are voidable by the corporation.
History: 1971 c. 260
; 1979 c. 102
Directors' and officers' liability and indemnification. 611.63
Executive compensation. 611.63(2)
(2) Approval of board action by shareholders.
Any benefits or payments to any director or officer on account of services rendered to a stock corporation more than 90 days before the agreement or decision to give the benefit or make the payment, and any new pension plan, profit-sharing plan, stock option plan or any amendment to an existing plan which so far as it pertains to any director or officer substantially increases the financial burden on the corporation shall be approved by a vote of the shareholders.
(3) Notice to commissioner.
Any action taken by the board of a mutual insurance corporation on any of the subjects specified in sub. (1)
shall be reported to the commissioner within 30 days.
(4) Annual report to commissioner.
The amount of all direct and indirect remuneration for services, including retirement and other deferred compensation benefits and stock options, paid or accrued each year for the benefit of each director and each officer and member of executive management, as defined by the commissioner, whose remuneration exceeds an amount established by the commissioner, and for all directors and officers as a group shall be included in the annual report made to the commissioner.
(5) Prohibited criteria.
No arrangement for compensation or other employment benefits for any director, officer or employee with decision-making power may be made if it would:
Measure the compensation or other benefits in whole or in part by any criteria that would create a financial inducement for him or her to act contrary to the best interests of the corporation; or
Have a tendency to make the corporation depend for continuance or soundness of operation upon continuation in his or her position of any director, officer or employee.
(6) Effect of rehabilitation and liquidation proceedings.
If an order of rehabilitation or liquidation is issued under s. 645.32
, the contractual obligations of the insurer for unperformed services of any director, principal officer or person in fact performing similar functions or having similar powers is thereupon terminated.
Exclusive agency contracts. 611.66(1)
Except under sub. (2)
, no corporation may enter into any contract whereby any person is granted or obtains directly or indirectly the exclusive right or privilege of soliciting, producing or receiving a fee or commission on all or substantially all of the insurance business of the corporation or on all or substantially all of the insurance business of the corporation in this state.
(2) Subsidiaries. Subsection (1)
does not apply to contracts in which a corporation is the exclusive agent of its insurance subsidiary authorized under s. 611.26 (1)
or in which the subsidiary is the exclusive agent of the corporation.
History: 1971 c. 260
Management contract services. 611.67(1)(c)
"Management authority" means the authority to exercise any management control of the corporation or of its underwriting, loss adjustment, investment, general servicing or production function or other major corporate function.
Except as provided in sub. (3)
, a corporation may not be a party to a contract which has the effect of delegating management authority to a person to the substantial exclusion of the board.
An insurer that offers a health maintenance organization, limited service health organization or preferred provider plan may delegate management authority with regard to the health maintenance organization, limited service health organization or preferred provider plan to a person other than an officer, director or employee of the insurer if the person exercises the management authority according to the terms of a written contract between the insurer and the person and if the contract is filed with the commissioner and not disapproved by the commissioner under sub. (4)
The commissioner may disapprove a contract under sub. (3)
within a 30-day period after the date of filing or within a reasonable extension period following the 30-day period if the extension period is specified by notice to the health care plan within the 30-day period.
The commissioner may disapprove a contract under sub. (3)
only if the commissioner makes one of the findings specified in s. 618.22 (2)
History: 1985 a. 29
See also s. Ins 42.07
, Wis. adm. code.
Dividends and other distributions. 611.69(2)
(2) Unclaimed dividends and distributions. Chapter 177
applies to stock corporations.
History: 1971 c. 260
; 1989 a. 303
Acquisition of all of the shares or of a class of shares of an insurance corporation. 611.71(1)
Exchange of shares permitted.
A domestic stock insurance corporation may acquire, in the manner provided by this section, in exchange for its shares, all the shares, or all the shares of any class, of any other domestic stock insurance corporation, provided no law is violated by the acquisition.
The acquiring corporation shall submit by 1st class mail to all holders of the shares to be acquired a written offer which shall:
Specify the shares to which the offer relates;
Prescribe the terms and conditions of the proposed exchange, including the method of acceptance and the manner of exchanging the shares;
Provide such information respecting both corporations as the commissioner prescribes by rule;
Contain a statement summarizing the rights of the shareholders under sub. (5) (b)
Provide for the payment of cash or scrip in lieu of the issuance of fractional shares of the acquiring corporation.
(3) Copy of offer.
One copy of the offer shall be filed with the commissioner immediately.
The exchange shall be consummated if, within 120 days after the date of the mailing, the offer is accepted by the holders of not less than 90% of the shares of each class to which it relates. In ascertaining what percentage have accepted, shares may not be counted if at the date of mailing of the offer they were already held by, or by a nominee for, the acquiring corporation or any affiliate.
If there is acceptance satisfying sub. (4)
, the acquiring corporation shall, within 60 days:
Execute and file with the commissioner a certificate setting forth the acceptances; and
Give written notice of the satisfaction of the requirement, by registered or certified mail return receipt requested, to each holder of shares to which the offer relates who has not yet accepted the offer. The notice, the form of which must be approved by the commissioner, shall include, or be accompanied by, a statement that such shareholders may dissent from the offer by notification to the offeror within 120 days after the date of the mailing and be paid the fair value of their shares as determined under ss. 180.1325
, and that failure so to notify the offeror shall be deemed acceptance of the offer. For purposes of s. 180.1325
, notification to the offeror in accordance with this paragraph constitutes a demand for payment under s. 180.1323
(6) Issuance of certificates or information statements.
Upon the filing of the certificate under sub. (5) (a)
All shares in exchange for which shares of the acquiring corporation are issued shall become the property of the acquiring corporation, whether or not any certificates representing the shares have been surrendered for exchange;
If the articles of incorporation or bylaws of the acquired corporation require shares to be issued with certificates, the acquiring corporation shall be entitled to have new certificates for the shares under par. (a)
registered in its name as the holder;
The acquiring corporation shall do all of the following:
Cause certificates for its shares to be issued and delivered to the holders of shares who have already accepted, and thereafter immediately upon acceptance to those who accept or are deemed to have accepted.
If the shares are issued without certificates, cause information statements that comply with s. 180.0626 (2)
to be issued and delivered to the persons described in subd. 1.
The acquiring corporation or a corporate fiduciary designated by it and acceptable to the commissioner, shall hold in trust, for delivery or payment to the persons entitled thereto but not at once located, the certificates or information statements for its shares and cash payable under sub. (2) (e)
or (5) (b)
(7) Other exchange offers.
This section does not prevent a person from making an offer to purchase the shares of an insurance corporation conditioned upon acceptance by holders of less than 90% of the shares to which the offer relates. Such an offer may be joined as an alternate offer with an offer made under this section; but the acquiring corporation shall have the right to avail itself of this section only if the requirements of subs. (1)
(8) Acquisition of a small minority of shares.
If at least 90% of any class of shares of any domestic stock insurance corporation are held by any other domestic insurance corporation or its nominee, the owning corporation may proceed under subs. (2)
, even if the offer is accepted by less than the required number of shareholders.
Merger or other acquisition of control of a stock insurance corporation. 611.72(1)
Subject to this section, ss. 180.1101
, and 180.1708 (5)
apply to the merger of a domestic stock insurance corporation or its parent insurance holding corporation, except that papers required by those sections to be filed with the department of financial institutions shall instead be filed with the commissioner.
(2) Approval required.
No proposed plan of merger under s. 180.1101
or other plan for acquisition of control of any domestic stock insurance corporation or its parent insurance holding corporation participating in the transaction may be executed unless it has been approved by the commissioner.
The commissioner shall approve the plan if the commissioner finds, after a hearing, unless a hearing is not required under sub. (3m)
, that it would not violate the law or be contrary to the interests of the insureds of any participating domestic corporation or of the Wisconsin insureds of any participating nondomestic corporation and that:
After the change of control, the domestic stock insurance corporation or any domestic stock insurance corporation controlled by the insurance holding corporation would be able to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed;
The effect of the merger or other acquisition of control would not be to create a monopoly or substantially to lessen competition in insurance in this state;
The financial condition of any acquiring party is not likely to jeopardize the financial stability of the domestic stock insurance corporation or its parent insurance holding corporation, or prejudice the interests of its Wisconsin policyholders;
The plans or proposals which the acquiring party has to liquidate the domestic stock insurance corporation or its parent insurance holding corporation, sell its assets, merge it with any person or make any other material change in its business or corporate structure or management, are fair and reasonable to policyholders of the domestic stock insurance corporation or in the public interest; and
The competence and integrity of those persons who would control the operation of the domestic stock insurance corporation or its parent insurance holding corporation are such that it would be in the interest of the policyholders of the corporation and of the public to permit the merger or acquisition of control.
If the proposed merger or other acquisition of control will require the approval of more than one commissioner, the hearing under par. (am)
may be held on a consolidated basis upon the request of a person filing a statement with the commissioner of insurance of this state under s. Ins 40.02 (2)
, Wis. Adm. Code, which request must be made when the statement is filed. That person shall file a copy of the statement under s. Ins 40.02 (2)
, Wis. Adm. Code, with the National Association of Insurance Commissioners within 5 days after making the request for a consolidated hearing. A hearing conducted on a consolidated basis shall be public and held within the United States before the commissioners of the states in which the insurers involved in the merger or other acquisition of control are domiciled. The commissioners may hear and receive evidence. A commissioner may attend the hearing in person or by telecommunication.
The commissioner of insurance of this state may opt out of a consolidated hearing, and shall provide notice to the person requesting the consolidated hearing of the opt out within 10 days after the commissioner receives the statement under s. Ins 40.02 (2)
, Wis. Adm. Code.
(3m) Hearing not required.
A hearing is not required under sub. (3)
before approval of a proposed plan of merger or other plan for acquisition of control if the proposed merger is with, or the proposed acquirer is, an affiliate of the insurer and the proposed merger or other acquisition of control does not change the controlling person of the insurer.