Wisconsin Statutes 617.21 – Transactions with affiliates
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Terms Used In Wisconsin Statutes 617.21
- Acquire: when used in connection with a grant of power to any person, includes the acquisition by purchase, grant, gift or bequest. See Wisconsin Statutes 990.01
- Following: when used by way of reference to any statute section, means the section next following that in which the reference is made. See Wisconsin Statutes 990.01
- Injunction: An order of the court prohibiting (or compelling) the performance of a specific act to prevent irreparable damage or injury.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Person: includes all partnerships, associations and bodies politic or corporate. See Wisconsin Statutes 990.01
- Promulgate: when used in connection with a rule, as defined under…. See Wisconsin Statutes 990.01
- State: when applied to states of the United States, includes the District of Columbia, the commonwealth of Puerto Rico and the several territories organized by Congress. See Wisconsin Statutes 990.01
(1) General requirements. Except as provided under s. 617.11 (2), neither an insurer authorized to do business in this state nor an affiliate of the insurer may enter into a transaction between the insurer and affiliate unless all of the following apply:
(a) The transaction at the time it is entered into is reasonable and fair to the interests of the insurer.
(b) 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.
(c) The insurer’s surplus following any dividends or distributions to shareholders or a person having control of the insurer is reasonable in relation to the insurer’s outstanding liabilities and adequate to its financial needs.
(cm) Any cost-sharing services or management agreements involved in the transaction include such provisions as the commissioner requires by rule.
(d) The transaction complies with any other standard that the commissioner prescribes by rule.
(2) Transactions of domestic insurers subject to disclosure.
(a)
1. Except as provided under sub. (3t), the commissioner may promulgate rules requiring a domestic insurer, a person attempting to acquire or having control of a domestic insurer and affiliates of a domestic insurer to report a transaction or a group or series of transactions, if all of the following are satisfied:
a. The transaction is between a domestic insurer and a person attempting to acquire or having control of the domestic insurer or an affiliate of the domestic insurer, or the transaction directly or indirectly benefits the person or affiliate.
b. The transaction is, or the group or series of transactions are, material to the domestic insurer.
2. Transactions which are material to a domestic insurer for the purposes of subd. 1. include, but are not limited to, management contracts, service contracts and cost-sharing arrangements.
(b) Except as provided under sub. (3t), no domestic insurer, person attempting to acquire or having control of a domestic insurer or affiliate of the domestic insurer may enter into a transaction required to be reported to the commissioner under this subsection unless the domestic insurer, person and affiliate report the transaction to the commissioner in the form and by the date before the effective date of the transaction that are prescribed by the commissioner by rule. The commissioner may not require the transaction to be reported earlier than at least 30 days before the effective date.
(3) Disapproval. The commissioner may, within the period prescribed in sub. (2), disapprove any transaction reported under sub. (2) if the commissioner finds that it would violate the law or would be contrary to the interests of insureds, stockholders or the public.
(3g) Transactions prohibited. Except as provided under sub. (3t), no domestic insurer, person attempting to acquire or having control of the insurer or affiliate of the insurer may enter into a transaction that is not reported as required under sub. (2) or that is disapproved by the commissioner under sub. (3).
(3m) Voidable transactions. If a domestic insurer, person attempting to acquire or having control of the insurer or affiliate enters into a transaction in violation of this section, the insurer may void the transaction and obtain an injunction and recovery from the person or affiliate of the amount necessary to restore the insurer to its condition had the transaction not occurred. The commissioner may order an insurer to void the transaction, to commence an action against the person or affiliate or to take other action.
(3r) Required surplus. The commissioner may promulgate rules for determining adequacy of surplus under this section.
(3t) Exemption if insurer reports. Section 617.21 (2) to (3g) does not apply to a person attempting to acquire or having control of, or an affiliate of, an insurer, if the insurer reports as required under sub. (2) on behalf of the person or on behalf of the affiliate, and the transaction is not disapproved by the commissioner under sub. (3).