(a)A domestic stock or mutual insurer may borrow money to
defray the expenses of its organization, provide it with surplus
funds or for any other purpose of its business, upon a written
agreement that the money is required to be repaid only out of
the insurer's surplus in excess of that stipulated in the
agreement. The agreement may provide for interest not exceeding
six percent (6%) per annum, which interest shall or shall not
constitute a liability of the insurer as to its funds other than
the excess of surplus, as stipulated in the agreement. No
commission or promotion expense shall be paid in connection with
any such loan, except that if public offering and sale is made
of the loan securities, the insurer may pay the reasonable costs
thereof the commissioner approves.
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(a) A domestic stock or mutual insurer may borrow money to
defray the expenses of its organization, provide it with surplus
funds or for any other purpose of its business, upon a written
agreement that the money is required to be repaid only out of
the insurer's surplus in excess of that stipulated in the
agreement. The agreement may provide for interest not exceeding
six percent (6%) per annum, which interest shall or shall not
constitute a liability of the insurer as to its funds other than
the excess of surplus, as stipulated in the agreement. No
commission or promotion expense shall be paid in connection with
any such loan, except that if public offering and sale is made
of the loan securities, the insurer may pay the reasonable costs
thereof the commissioner approves.
(b) Any money borrowed as provided in subsection (a) of
this section, together with the interest thereon if stipulated
in the agreement, shall not form a part of the insurer's legal
liabilities except as to its surplus in excess of the amount
stipulated in the agreement, or be the basis of any setoff.
Until the money is repaid financial statements filed or
published by the insurer shall show as a footnote thereto the
amount then unpaid together with any interest thereon accrued
but unpaid.
(c) Any loan under this section is subject to the
commissioner's approval. The insurer, in advance of the loan,
shall file with the commissioner a statement of the purpose of
the loan and a copy of the proposed loan agreement. The loan and
agreement are deemed approved unless within fifteen (15) days
from the date of filing, the insurer is notified of the
commissioner's disapproval and the reasons therefor. The
commissioner shall disapprove any proposed loan or agreement if
he finds the loan is unnecessary or excessive for the purpose
intended, or that the terms of the loan agreement are not fair
and equitable to the parties and to other similar lenders, if
any, to the insurer, or that the information filed by the
insurer is inadequate.
(d) Any loan, under this section, or substantial portion
thereof, to a mutual insurer shall be repaid by the insurer when
no longer reasonably necessary for the purpose originally
intended. No repayment of a loan shall be made by a mutual
insurer unless the commissioner approves it in advance.
(e) This section does not apply to other kinds of loans
obtained by the insurer in ordinary course of business, nor to
loans secured by pledge or mortgage of assets.