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 purpose required by its business, upon a written agreement that such money is required to be repaid only out of the insurer's surplus in excess of that stipulated in such agreement. The form of the agreement must be submitted for approval to theCommissioner to assure it is consistent with the requirements of this section. If such agreement is not approved or disapproved by the Commissioner within fifteen (15) days after the date of its filing, it shall be deemed approved. The agreement may provide for interest at the rate agreed upon, but not exceeding a rate of interest approved by the Insurance Commissioner, which interest shall or shall not constitute a liability of the insurer as to its funds other than such excess of surplus, as stipulated in the agreement. Repayment of such loan shall not be made unless it is approved in advance by the Commissioner. Such repayment shall be deemed approved unless within fifteen (15) days after the date of such filing the insurer is notified in writing of the Commissioner's disapproval and the reasons therefor.
B. Money so borrowed, together with the interest thereon if so 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 thereof stipulated in the agreement, or be the basis of any setoff; but until repaid, financial statements filed or published by the insurer shall show as a footnote thereto the amount thereof then unpaid together with any interest thereon accrued but unpaid.
C. If a domestic mutual insurer, the insurer in advance of any such loan shall file with the Insurance Commissioner a statement of the purposes of the loan and a copy of the proposed loan agreement, which shall be subject to the approval of the Commissioner. The loan and agreement shall be deemed approved unless within fifteen (15) days after date of such filing the insurer is notified in writing of the Commissioner's disapproval and the reasons therefor. The Commissioner shall so disapprove any such proposed loan or agreement if he finds that the loan is reasonably 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 so filed by the insurer is inadequate, specifying the respects in which it is so inadequate.
D. Any such loan to a mutual insurer or substantial portion thereof shall be repaid by the insurer out of earned surplus when no longer reasonably necessary for the purpose originally intended. No repayment of such a loan shall be made by a mutual insurer unless in advance approved by the Commissioner.
E. This section shall not apply to loans obtained by the insurer in ordinary course of business from banks and other financial institutions, nor to loans secured by pledge of assets.
Amended by Laws 1983, c. 99, § 3, emerg. eff. May 9, 1983.