Section 613.33. Authorized securities.

 

(1)   Service insurance corporation bonds. The articles of a service insurance corporation may authorize service insurance corporation bonds of one or more classes and shall specify the amount of each class of bonds the corporation is authorized to issue, their designations, preferences, limitations, rates of interest and relative rights, subject to the following provisions:

(a) During the first year after the initial issuance of a certificate of authority, the corporation may issue only a single class of bonds with identical rights.

(b) After the first year but within 5 years after the initial issuance of a certificate of authority, additional classes of bonds may be authorized after approval of the commissioner, who shall approve on a finding that policyholders and prior bondholders will not be prejudiced.

(c) The rate of interest shall be fair and reasonable.

(d) The bonds shall bear a maturity date not later than 10 years from the date of issuance, when principal and accrued interest shall be due and payable, subject to sub. (4) .

(2)   Contribution notes. Any service insurance corporation may issue contribution notes if the commissioner approves. The commissioner may approve only on a finding that:

(a) The notes will not be issued in denominations of less than $500, and no single issue will be sold to more than 15 persons;

(b) No discount, commission or other fee will be paid or allowed;

(c) The notes will not be the subject of a public offering;

(d) Their terms are not prejudicial to policyholders, holders of service insurance corporation bonds or of prior contribution notes; and

(e) The corporation's articles and bylaws do not forbid their issuance.

(3)   Prohibited transactions. No service insurance corporation may:

(a) If it has any outstanding obligations on service insurance corporation bonds or contribution notes, borrow on contribution notes from, or sell bonds to, any other insurer without approval of the commissioner; or

(b) Make any loan to another insurer except a fully secured loan at usual market rates of interest.

(4)   Repayment. Payment of the principal or interest on service insurance corporation bonds or contribution notes may be made in whole or in part only after approval by the commissioner. Approval shall be given if all financial requirements of the issuer to do the insurance business it is then doing will continue to be satisfied after payment and if the interests of its insureds and the public are not thereby endangered. In the event of liquidation under ch. 645 , unpaid amounts of principal and interest on contribution notes shall be subordinated to the payment of principal and interest on any service insurance corporation bonds issued by the corporation at any time.

(5)   Other obligations. Nothing in this section prevents a service insurance corporation from borrowing money on notes which are its general obligations, nor from pledging any part of its disposable assets therefor.

1975 c. 223 , 421 ; 1979 c. 102 .