1.1                          A bill for an act 
  1.2             relating to insurance; solvency; regulating 
  1.3             disclosures, reinsurance, capital stock, managing 
  1.4             general agents, and contracts issued on a variable 
  1.5             basis; regulating certain health coverage and policy 
  1.6             forms; amending Minnesota Statutes 1994, sections 
  1.7             13.71, by adding a subdivision; 60A.03, subdivision 9; 
  1.8             60A.07, subdivision 10; 60A.093, subdivision 2; 
  1.9             60A.11, subdivisions 18 and 20; 60A.705, subdivision 
  1.10            8; 60A.75; 60H.02, subdivision 4; 60H.05, subdivision 
  1.11            1; 60H.08; 61A.19; 61A.31, subdivision 3; 62A.10, 
  1.12            subdivisions 1 and 2; 62L.02, subdivision 26; 67A.231; 
  1.13            and 136E.04, by adding a subdivision; proposing coding 
  1.14            for new law in Minnesota Statutes, chapter 60A. 
  1.15  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.16     Section 1.  Minnesota Statutes 1994, section 13.71, is 
  1.17  amended by adding a subdivision to read: 
  1.18     Subd. 18.  [MATERIAL TRANSACTION REPORTS.] Reports required 
  1.19  to be filed by insurers regarding certain material transactions 
  1.20  are classified under section 60A.135, subdivision 4. 
  1.21     Sec. 2.  Minnesota Statutes 1994, section 60A.03, 
  1.22  subdivision 9, is amended to read: 
  1.23     Subd. 9.  [CONFIDENTIALITY OF INFORMATION.] The 
  1.24  commissioner may not be required to divulge any information 
  1.25  obtained in the course of the supervision of insurance 
  1.26  companies, or the examination of insurance companies, including 
  1.27  examination related correspondence and workpapers, until the 
  1.28  examination report is finally accepted and issued by the 
  1.29  commissioner, and then only in the form of the final public 
  1.30  report of examinations.  Nothing contained in this subdivision 
  2.1   prevents or shall be construed as prohibiting the commissioner 
  2.2   from disclosing the content of this information to the insurance 
  2.3   department of another state or the National Association of 
  2.4   Insurance Commissioners if the recipient of the information 
  2.5   agrees in writing to hold it as nonpublic data as defined in 
  2.6   section 13.02, in a manner consistent with this subdivision.  
  2.7   This subdivision does not apply to the extent the commissioner 
  2.8   is required or permitted by law, or ordered by a court of law to 
  2.9   testify or produce evidence in a civil or criminal proceeding.  
  2.10  For purposes of this subdivision, a subpoena is not an order of 
  2.11  a court of law. 
  2.12     Sec. 3.  Minnesota Statutes 1994, section 60A.07, 
  2.13  subdivision 10, is amended to read: 
  2.14     Subd. 10.  [SPECIAL PROVISIONS AS TO LIFE COMPANIES.] (1) 
  2.15  [PREREQUISITES OF LIFE COMPANIES.] No mutual life company shall 
  2.16  be qualified to issue any policy until applications for at least 
  2.17  $200,000 of insurance, upon lives of at least 200 separate 
  2.18  residents, have been actually and in good faith made, accepted, 
  2.19  and entered upon its books and at least one full annual premium 
  2.20  thereunder, based upon the authorized table of mortality, 
  2.21  received in cash or in absolutely payable and collectible 
  2.22  notes.  A duplicate receipt for each premium, conditioned for 
  2.23  the return thereof unless the policy be issued within one year 
  2.24  thereafter, shall be issued, and one copy delivered to the 
  2.25  applicant and the other filed with the commissioner, together 
  2.26  with the certificate of a solvent authorized bank in the state, 
  2.27  of the deposit therein of such cash and notes, aggregating the 
  2.28  amount aforesaid, specifying the maker, payee, date, maturity, 
  2.29  and amount of each.  Such cash and notes shall be held by it not 
  2.30  longer than one year, and at or before the expiration thereof to 
  2.31  be by it paid or delivered, upon the written order of the 
  2.32  commissioner, to such company or applicants, respectively. 
  2.33     (2)  [FOREIGN COMPANIES MAY BECOME DOMESTIC.] Any company 
  2.34  organized under the laws of any other state or country, which 
  2.35  might have been originally incorporated under the laws of this 
  2.36  state, and which has been admitted to do business therein for 
  3.1   either or both the purpose of life or accident insurance, upon 
  3.2   complying with all the requirements of law relative to the 
  3.3   execution, filing, recording and publishing of original 
  3.4   certificates and payment of incorporation fees by like domestic 
  3.5   corporations, therein designating its principal place of 
  3.6   business at a place in this state, may become a domestic 
  3.7   corporation, and be entitled to like certificates of its 
  3.8   corporate existence and license to transact business in this 
  3.9   state, and be subject in all respects to the authority and 
  3.10  jurisdiction thereof. 
  3.11     (3)  [TEMPORARY CAPITAL STOCK OF MUTUAL LIFE COMPANIES.] A 
  3.12  new mutual life insurance company which has complied with the 
  3.13  provisions of clause (1) or an existing mutual life insurance 
  3.14  company may establish, a temporary capital of, such amount not 
  3.15  less than $100,000, as may be approved by the commissioner.  
  3.16  Such temporary capital shall be invested by the company in the 
  3.17  same manner as is provided for the investment of its other 
  3.18  funds.  Out of the net surplus of the company the holders of the 
  3.19  temporary capital stock may receive a dividend ~~of not more than~~ 
  3.20  ~~eight percent per annum,~~ which may be cumulative.  This capital 
  3.21  stock shall not be a liability of the company but shall be 
  3.22  retired within a reasonable time and according to terms approved 
  3.23  by the commissioner.  At the time for the retirement of this 
  3.24  capital stock, the holders shall be entitled to receive from the 
  3.25  company the par value thereof and any dividends thereon due and 
  3.26  unpaid, and thereupon the stock shall be surrendered and 
  3.27  canceled.  In the event of the liquidation of the company, the 
  3.28  holders of temporary capital stock shall have the same 
  3.29  preference in the assets of the company as shareholders have in 
  3.30  a stock insurance company.  Dividends on this stock are subject 
  3.31  to section 60D.20, subdivision 2. 
  3.32     Temporary capital stock may be issued with or without 
  3.33  voting rights.  If issued with voting rights, the holders shall, 
  3.34  at all meetings, be entitled to one vote for each $10 of 
  3.35  temporary capital stock held.  
  3.36     Sec. 4.  Minnesota Statutes 1994, section 60A.093, 
  4.1   subdivision 2, is amended to read: 
  4.2      Subd. 2.  [LETTERS OF CREDIT CONTINUED ACCEPTANCE.] Letters 
  4.3   of credit meeting applicable standards of issuer acceptability 
  4.4   as of the dates of their issuance or confirmation must~~,~~ 
  4.5   ~~notwithstanding the issuing or confirming institution's~~ 
  4.6   ~~subsequent failure to meet applicable standards of issuer~~ 
  4.7   ~~acceptability,~~ continue to be acceptable as security until their 
  4.8   expiration, extension, renewal, modification, or amendment, 
  4.9   whichever comes first~~, unless the issuing or confirming~~ 
  4.10  ~~institution fails the following standards:~~. 
  4.11     ~~(1) fails to maintain a minimum ratio of three percent tier~~ 
  4.12  ~~I capital to total risk adjusted assets, leverage ratio, as~~ 
  4.13  ~~required by the Federal Reserve System as disclosed by the bank~~ 
  4.14  ~~in any call report required by state or federal regulatory~~ 
  4.15  ~~authority and available to the ceding insurer; or~~ 
  4.16     ~~(2) has its long-term deposit rating or long-term debt~~ 
  4.17  ~~rating lowered to a rating below Aa2 as found in the current~~ 
  4.18  ~~monthly publication of Moody's credit opinions or its equivalent.~~
  4.19  The letter of credit of an institution failing the standards of 
  4.20  subdivision 1, clause ~~(1) or this clause~~ (3) continues to be 
  4.21  acceptable for no more than 30 days. 
  4.22     Sec. 5.  Minnesota Statutes 1994, section 60A.11, 
  4.23  subdivision 18, is amended to read: 
  4.24     Subd. 18.  [STOCKS AND LIMITED PARTNERSHIPS.] (a) Stocks 
  4.25  issued or guaranteed by any corporation incorporated under the 
  4.26  laws of the United States of America or any state, commonwealth, 
  4.27  or territory of the United States, including the District of 
  4.28  Columbia, or the laws of the Dominion of Canada or any province 
  4.29  or territory of Canada, or stocks or stock equivalents, 
  4.30  including American Depository Receipts or unit investment 
  4.31  trusts, listed or regularly traded on a national securities 
  4.32  exchange on the following conditions:  
  4.33     (1) A company may not invest more than a total of 25 
  4.34  percent of its total admitted assets in stocks, stock 
  4.35  equivalents, and convertible issues.  Not more than ten percent 
  4.36  of a company's total admitted assets may be invested in stocks, 
  5.1   stock equivalents, and convertible issues not traded or listed 
  5.2   on a national securities exchange or designated or approved for 
  5.3   designation upon notice of issuance on the NASDAQ/National 
  5.4   Market System.  This limitation does not apply to investments 
  5.5   under clause (4); 
  5.6      (2) A company may not invest in more than two percent of 
  5.7   its total admitted assets in preferred stocks of any corporation 
  5.8   which are traded on a national securities exchange and may also 
  5.9   invest in other preferred stocks if the issuer has qualified net 
  5.10  earnings and if current or cumulative dividends are not then in 
  5.11  arrears; 
  5.12     (3) A company may not invest in more than two percent of 
  5.13  its total admitted assets in common stocks, common stock 
  5.14  equivalents, or securities convertible into common stock or 
  5.15  common stock equivalents of any corporation or business trust 
  5.16  which are traded on a national securities exchange or designated 
  5.17  or approved for designation upon notice of issuance on the 
  5.18  NASDAQ/National Market System, and may also invest in other 
  5.19  common stocks, stock equivalents, and convertible issues subject 
  5.20  to the limitations specified in clause (1); 
  5.21     (4) A company may organize or acquire and hold voting 
  5.22  control of a corporation or business trust through its ownership 
  5.23  of common stock, common stock equivalents, or other securities, 
  5.24  provided the corporation or business trust is:  (a) a 
  5.25  corporation providing investment advisory, banking, management 
  5.26  or sale services to an investment company or to an insurance 
  5.27  company, (b) a data processing or computer service company, (c) 
  5.28  a mortgage loan corporation engaged in the business of making, 
  5.29  originating, purchasing or otherwise acquiring or investing in, 
  5.30  and servicing or selling or otherwise disposing of loans secured 
  5.31  by mortgages on real property, (d) a corporation if its business 
  5.32  is owning and managing or leasing personal property, (e) a 
  5.33  corporation providing securities underwriting services or acting 
  5.34  as a securities broker or dealer, (f) a real property holding, 
  5.35  developing, managing, brokerage or leasing corporation, (g) any 
  5.36  domestic or foreign insurance company, (h) any alien insurance 
  6.1   company, if the organization or acquisition and the holding of 
  6.2   the company is subject to the prior approval of the commissioner 
  6.3   of commerce, which approval must be given upon good cause shown 
  6.4   and is deemed to have been given if the commissioner does not 
  6.5   disapprove of the organization or acquisition within 30 days 
  6.6   after notification by the company, (i) an investment subsidiary 
  6.7   to acquire and hold investments which the company could acquire 
  6.8   and hold directly, if the investments of the subsidiary are 
  6.9   considered direct investments for purposes of this chapter and 
  6.10  are subject to the same percentage limitations, requirements and 
  6.11  restrictions as are contained herein, or (j) any corporation 
  6.12  whose business has been approved by the commissioner as 
  6.13  complementary or supplementary to the business of the company.  
  6.14  A company may invest up to an aggregate of ten percent of its 
  6.15  total admitted assets under subclauses (a) to (e) of this clause.
  6.16  The diversification requirement of subdivision 12, paragraph 
  6.17  (b), does not apply to this clause; 
  6.18     (5) A company may invest in warrants and rights granted by 
  6.19  an issuer to purchase securities of the issuer if that security 
  6.20  of the issuer, at the time of the acquisition of the warrant or 
  6.21  right to purchase, would qualify as an investment under 
  6.22  paragraph (a), clause (2) or (3), whichever is applicable, 
  6.23  provided that security meets the standards prescribed in the 
  6.24  clause at the time of acquisition of the securities; and 
  6.25     (6)(i) A company may invest in the securities of any face 
  6.26  amount certificate company, unit investment trust, or management 
  6.27  type investment company, registered or in the process of 
  6.28  registration under the Investment Company Act of 1940 as from 
  6.29  time to time amended, provided that the aggregate of all these 
  6.30  investments other than in securities of money market mutual 
  6.31  funds or mutual funds investing primarily in United States 
  6.32  government securities, determined at cost, shall not exceed five 
  6.33  percent of its total admitted assets; investments may be made 
  6.34  under this clause without regard to the percentage limitations 
  6.35  applicable to investments in voting securities. 
  6.36     (ii) A company may invest in any proportion of the shares 
  7.1   or investment units of an investment company or investment 
  7.2   trust, whether or not registered under the Investment Company 
  7.3   Act of 1940, which is managed by an insurance company, member 
  7.4   bank, trust company regulated by state or federal authority or 
  7.5   an investment manager or adviser registered under the Investment 
  7.6   Advisers Act of 1940 or qualified to manage the investments of 
  7.7   an investment company registered under the Investment Company 
  7.8   Act of 1940, provided that the investments of the investment 
  7.9   company or investment trust are qualified investments made under 
  7.10  this section and that the articles of incorporation, bylaws, 
  7.11  trust agreement, investment management agreement, or some other 
  7.12  governing instrument limits its investments to investments 
  7.13  qualified under this section.  
  7.14     (b) A company may invest in or otherwise acquire and hold a 
  7.15  limited partnership interest in any limited partnership formed 
  7.16  under the laws of any state, commonwealth, or territory of the 
  7.17  United States or under the laws of the United States of 
  7.18  America.  A company may invest in or otherwise acquire and hold 
  7.19  a member interest in any limited liability company formed under 
  7.20  the laws of any state, commonwealth, or territory of the United 
  7.21  States or under the laws of the United States.  No limited 
  7.22  partnership or limited liability company member interest shall 
  7.23  be acquired if the investment, valued at cost, exceeds two 
  7.24  percent of the admitted assets of the company or if the 
  7.25  investment, plus the book value on the date of the investment of 
  7.26  all limited partnership and limited liability company interests 
  7.27  then held by the company and held under the authority of this 
  7.28  subdivision, exceeds ten percent of the company's admitted 
  7.29  assets.  Limited partnership and limited liability company 
  7.30  interests traded on a national securities exchange must be 
  7.31  classified as stock equivalents and are not subject to the 
  7.32  percentage limitations contained in this paragraph. 
  7.33     Sec. 6.  Minnesota Statutes 1994, section 60A.11, 
  7.34  subdivision 20, is amended to read: 
  7.35     Subd. 20.  [REAL ESTATE.] (a) Except as provided in 
  7.36  paragraphs (b) to (d), a company may only acquire, hold, and 
  8.1   convey real estate which:  
  8.2      (1) has been mortgaged to it in good faith by way of 
  8.3   security for loans previously contracted, or for money due; 
  8.4      (2) has been conveyed to it in satisfaction of debts 
  8.5   previously contracted in the course of its dealings; 
  8.6      (3) has been purchased at sales on judgments, decrees or 
  8.7   mortgages obtained or made for the debts; and 
  8.8      (4) is subject to a contract for deed under which the 
  8.9   company holds the vendor's interest to secure the payments the 
  8.10  vendee is required to make thereunder.  
  8.11     All the real estate specified in clauses (1) to (3) must be 
  8.12  sold and disposed of within five years after the company has 
  8.13  acquired title to it, or within five years after it has ceased 
  8.14  to be necessary for the accommodation of the company's business, 
  8.15  and the company must not hold this property for a longer period 
  8.16  unless the company elects to hold the real estate under another 
  8.17  section, or unless it procures a certificate from the 
  8.18  commissioner of commerce that its interest will suffer 
  8.19  materially by the forced sale thereof, in which event the time 
  8.20  for the sale may be extended to the time the commissioner 
  8.21  directs in the certificate.  The market value of real estate 
  8.22  specified in clauses (1) to (3) must be established by the 
  8.23  written certification of a licensed real estate appraiser.  The 
  8.24  appraisal is required at the time the company elects to hold the 
  8.25  real estate under clauses (1) to (3).  
  8.26     (b) A company may acquire and hold real estate for the 
  8.27  convenient accommodation of its business.  
  8.28     (c) A company may acquire real estate or any interest in 
  8.29  real estate, including oil and gas and other mineral interests, 
  8.30  as an investment for the production of income, and may hold, 
  8.31  improve or otherwise develop, subdivide, lease, sell and convey 
  8.32  real estate so acquired directly or as a joint venture or 
  8.33  through a limited, limited liability, or general partnership in 
  8.34  which the company is a partner or through a limited liability 
  8.35  company in which the company is a member.  
  8.36     (d) A company may also hold real estate (1) if the purpose 
  9.1   of the acquisition is to enhance the sale value of real estate 
  9.2   previously acquired and held by the company under this section, 
  9.3   and (2) if the company expects the real estate so acquired to 
  9.4   qualify under paragraph (b) or (c) above within five years after 
  9.5   acquisition.  
  9.6      (e) A company may, after securing the approval of the 
  9.7   commissioner, acquire and hold real estate for the purpose of 
  9.8   providing necessary living quarters for its employees.  The 
  9.9   company must dispose of the real estate within five years after 
  9.10  it has ceased to be necessary for that purpose unless the 
  9.11  commissioner agrees to extend the holding period upon 
  9.12  application by the company.  
  9.13     (f) A company may not invest more than 25 percent of its 
  9.14  total admitted assets in real estate.  The cost of any parcel of 
  9.15  real estate held for both the accommodation of business and for 
  9.16  the production of income must be allocated between the two uses 
  9.17  annually.  No more than ten percent of a company's total 
  9.18  admitted assets may be invested in real estate held under 
  9.19  paragraph (b).  No more than 15 percent of a company's total 
  9.20  admitted assets may be invested in real estate held under 
  9.21  paragraph (c).  No more than three percent of its total admitted 
  9.22  assets may be invested in real estate held under paragraph (e).  
  9.23  Upon application by a company, the commissioner of commerce may 
  9.24  increase any of these limits up to an additional five percent. 
  9.25     Sec. 7.  [60A.135] [REPORT.] 
  9.26     Subdivision 1.  [REQUIREMENT.] Every insurer domiciled in 
  9.27  this state shall file a report with the commissioner disclosing 
  9.28  material acquisitions and dispositions of assets or material 
  9.29  nonrenewals, cancellations, or revisions of ceded reinsurance 
  9.30  agreements unless the acquisitions and dispositions of assets or 
  9.31  material nonrenewals, cancellations, or revisions of ceded 
  9.32  reinsurance agreements have been submitted to the commissioner 
  9.33  for review, approval, or information purposes pursuant to other 
  9.34  provisions of law, rule, or other requirements. 
  9.35     Subd. 2.  [DATE DUE.] The report required in subdivision 1 
  9.36  is due within 15 days after the end of the calendar month in 
 10.1   which the transactions occur. 
 10.2      Subd. 3.  [FILING.] One complete copy of the report, 
 10.3   including exhibits or other attachments filed as part of it, 
 10.4   must be filed with the National Association of Insurance 
 10.5   Commissioners. 
 10.6      Subd. 4.  [CONFIDENTIALITY.] Reports filed with the 
 10.7   commissioner pursuant to sections 60A.135 to 60A.137 must be 
 10.8   held as nonpublic data as defined in section 13.02, are not 
 10.9   subject to subpoena, and may not be made public by the 
 10.10  commissioner, the National Association of Insurance 
 10.11  Commissioners, or other person, except to insurance departments 
 10.12  of other states, without the prior written consent of the 
 10.13  insurer to which it pertains.  However, the commissioner may 
 10.14  publish all or part of a report in the manner the commissioner 
 10.15  considers appropriate if, after giving the affected insurer 
 10.16  notice and an opportunity to be heard, the commissioner 
 10.17  determines that the interest of policyholders, shareholders, or 
 10.18  the public will be served by the publication. 
 10.19     Sec. 8.  [60A.136] [ACQUISITIONS AND DISPOSITIONS OF 
 10.20  ASSETS.] 
 10.21     Subdivision 1.  [MATERIALITY.] No acquisitions or 
 10.22  dispositions of assets need be reported pursuant to section 
 10.23  60A.135 if the acquisitions or dispositions are not material.  
 10.24  For purposes of sections 60A.135 to 60A.137, a material 
 10.25  acquisition (or the aggregate of any series of related 
 10.26  acquisitions during any 30-day period) or disposition (or the 
 10.27  aggregate of any series of related dispositions during any 
 10.28  30-day period) is one that is nonrecurring and not in the 
 10.29  ordinary course of business and involves more than five percent 
 10.30  of the reporting insurer's total admitted assets as reported in 
 10.31  its most recent statutory statement filed with the commissioner 
 10.32  of commerce. 
 10.33     Subd. 2.  [SCOPE.] (a) Asset acquisitions subject to 
 10.34  sections 60A.135 to 60A.137 include every purchase, lease, 
 10.35  exchange, merger, consolidation, succession, or other 
 10.36  acquisition other than the construction or development of real 
 11.1   property by or for the reporting insurer or the acquisition of 
 11.2   materials for this purpose. 
 11.3      (b) Asset dispositions subject to sections 60A.135 to 
 11.4   60A.137 include every sale, lease, exchange, merger, 
 11.5   consolidation, mortgage, hypothecation, assignment (whether for 
 11.6   the benefit of creditors or otherwise), abandonment, 
 11.7   destruction, or other disposition. 
 11.8      Subd. 3.  [INFORMATION TO BE REPORTED.] (a) The following 
 11.9   information is required to be disclosed in a report of a 
 11.10  material acquisition or disposition of assets: 
 11.11     (1) date of the transaction; 
 11.12     (2) manner of acquisition or disposition; 
 11.13     (3) description of the assets involved; 
 11.14     (4) nature and amount of the consideration given or 
 11.15  received; 
 11.16     (5) purpose of, or reason for, the transaction; 
 11.17     (6) manner by which the amount of consideration was 
 11.18  determined; 
 11.19     (7) gain or loss recognized or realized by the insurer as a 
 11.20  result of the transaction; and 
 11.21     (8) name of each person from whom the assets were acquired 
 11.22  or to whom they were disposed. 
 11.23     (b) Insurers are required to report material acquisitions 
 11.24  and dispositions on a nonconsolidated basis unless the insurer 
 11.25  is part of a consolidated group of insurers that uses a pooling 
 11.26  arrangement or 100 percent reinsurance agreement that affects 
 11.27  the solvency and integrity of the insurer's reserves and the 
 11.28  insurer ceded substantially all of its direct and assumed 
 11.29  business to the pool.  An insurer is considered to have ceded 
 11.30  substantially all of its direct and assumed business to a pool 
 11.31  if the insurer has less than $1,000,000 total direct plus 
 11.32  assumed written premiums during a calendar year that are not 
 11.33  subject to a pooling arrangement and the net income of the 
 11.34  business not subject to the pooling arrangement represents less 
 11.35  than five percent of the insurer's capital and surplus. 
 11.36     Sec. 9.  [60A.137] [NONRENEWALS, CANCELLATIONS, OR 
 12.1   REVISIONS OF CEDED REINSURANCE AGREEMENTS.] 
 12.2      Subdivision 1.  [MATERIALITY.] (a) No nonrenewals, 
 12.3   cancellations, or revisions of ceded reinsurance agreements need 
 12.4   be reported pursuant to section 60A.135 if the nonrenewals, 
 12.5   cancellations, or revisions are not material.  For purposes of 
 12.6   sections 60A.135 to 60A.137, a material nonrenewal, 
 12.7   cancellation, or revision for: 
 12.8      (1) property and casualty business, including accident and 
 12.9   health business when written by a property and casualty insurer 
 12.10  is one that affects:  (i) more than 50 percent of an insurer's 
 12.11  ceded written premium; or (ii) more than 50 percent of the 
 12.12  insurer's total ceded indemnity and loss adjustment reserves; 
 12.13     (2) life, annuity, and accident and health business, is one 
 12.14  that affects more than 50 percent of the total reserve credit 
 12.15  taken for business ceded, on an annualized basis as indicated in 
 12.16  the insurer's most recently filed statutory statement.  
 12.17     (b) With respect to either property and casualty or life, 
 12.18  annuity, and accident and health business, either of the 
 12.19  following events constitute a material revision that must be 
 12.20  reported under section 60A.135: 
 12.21     (1) an authorized reinsurer representing more than ten 
 12.22  percent of a total cession is replaced by one or more 
 12.23  unauthorized reinsurers; or 
 12.24     (2) previously established collateral requirements have 
 12.25  been reduced or waived for one or more unauthorized reinsurers 
 12.26  representing collectively more than ten percent of a total 
 12.27  cession. 
 12.28     (c) Notwithstanding paragraphs (a) and (b), no filing is 
 12.29  required: 
 12.30     (1) for property and casualty business, including accident 
 12.31  and health business written by a property and casualty insurer 
 12.32  if the insurer's total ceded written premium represents, on an 
 12.33  annualized basis, less than ten percent of its total written 
 12.34  premium for direct and assumed business; or 
 12.35     (2) for life, annuity, and accident and health business if 
 12.36  the total reserve credit taken for business ceded represents, on 
 13.1   an annualized basis, less than ten percent of the statutory 
 13.2   reserve requirement before any cession. 
 13.3      Subd. 2.  [INFORMATION TO BE REPORTED.] (a) The following 
 13.4   information is required to be disclosed in a report of a 
 13.5   material nonrenewal, cancellation, or revision of ceded 
 13.6   reinsurance agreements: 
 13.7      (1) effective date of the nonrenewal, cancellation, or 
 13.8   revision; 
 13.9      (2) the description of the transaction with an 
 13.10  identification of the initiating entity; 
 13.11     (3) purpose of, or reason for, the transaction; and 
 13.12     (4) if applicable, the identity of the replacement 
 13.13  reinsurers. 
 13.14     (b) Insurers are required to report all material 
 13.15  nonrenewals, cancellations, or revisions of ceded reinsurance 
 13.16  agreements on a nonconsolidated basis unless the insurer is part 
 13.17  of a consolidated group of insurers that utilizes a pooling 
 13.18  arrangement or 100 percent reinsurance agreement that affects 
 13.19  the solvency and integrity of the insurer's reserves and the 
 13.20  insurer ceded substantially all of its direct and assumed 
 13.21  business to the pool.  An insurer is considered to have ceded 
 13.22  substantially all of its direct and assumed business to a pool 
 13.23  if the insurer has less than $1,000,000 total direct plus 
 13.24  assumed written premiums during a calendar year that are not 
 13.25  subject to a pooling arrangement and the net income of the 
 13.26  business not subject to the pooling arrangement represents less 
 13.27  than five percent of the insurer's capital and surplus. 
 13.28     Sec. 10.  Minnesota Statutes 1994, section 60A.705, 
 13.29  subdivision 8, is amended to read: 
 13.30     Subd. 8.  [REINSURANCE INTERMEDIARY-MANAGER.] "Reinsurance 
 13.31  intermediary-manager" or "RM" means any person, firm, 
 13.32  association, or corporation who has authority to bind or manages 
 13.33  all or part of the assumed reinsurance business of a reinsurer, 
 13.34  including the management of a separate division, department, or 
 13.35  underwriting office, and acts as an agent for that reinsurer 
 13.36  whether known as an RM, manager, or other similar term.  
 14.1   However, the following persons are not considered an RM, with 
 14.2   respect to that reinsurer, for the purposes of sections 60A.70 
 14.3   to 60A.756: 
 14.4      (1) an employee of the reinsurer; 
 14.5      (2) a United States manager of the United States branch of 
 14.6   an alien reinsurer; 
 14.7      (3) an underwriting manager which, pursuant to contract, 
 14.8   manages all or part of the reinsurance operations of the 
 14.9   reinsurer, is under common control with the reinsurer, subject 
 14.10  to the holding company act, and whose compensation is not based 
 14.11  on the volume of premiums written; or 
 14.12     (4) the manager of a group, association, pool, or 
 14.13  organization of insurers which engage in joint underwriting or 
 14.14  joint reinsurance and who are subject to examination by the 
 14.15  insurance commissioner of the state in which the manager's 
 14.16  principal business office is located. 
 14.17     Sec. 11.  Minnesota Statutes 1994, section 60A.75, is 
 14.18  amended to read: 
 14.19     60A.75 [VIOLATIONS.] 
 14.20     Subdivision 1.  [ADMINISTRATIVE AND CIVIL PENALTIES AND 
 14.21  LIABILITIES.] A reinsurance intermediary, insurer, or reinsurer 
 14.22  found by the commissioner, after a hearing conducted in 
 14.23  accordance with chapter 14, to be in violation of any provision 
 14.24  of sections 60A.70 to 60A.756, shall: 
 14.25     (1) for each separate violation, pay a penalty in an amount 
 14.26  not exceeding $5,000; and 
 14.27     (2) be subject to revocation or suspension of its license. 
 14.28     Subd. 2.  [CIVIL REMEDIES.] (a) If it was found that 
 14.29  because of the violation the insurer or reinsurer has suffered 
 14.30  loss or damage, the commissioner may maintain a civil action for 
 14.31  recovery of compensatory damages for the benefit of the 
 14.32  reinsurer or insurer and its policyholders and creditors or seek 
 14.33  other appropriate relief. 
 14.34     (b) If an order of rehabilitation or liquidation of the 
 14.35  insurer has been entered pursuant to chapter 60B, and the 
 14.36  receiver appointed under that order determines that the 
 15.1   reinsurance intermediary or any other person has violated 
 15.2   sections 60A.70 to 60A.756, or any rule or order adopted under 
 15.3   those sections, and the insurer suffered any loss or damage, the 
 15.4   receiver may maintain a civil action for recovery of damages or 
 15.5   other appropriate sanctions for the benefit of the insurer. 
 15.6      Subd. 3.  [JUDICIAL REVIEW.] The decision, determination, 
 15.7   or order of the commissioner pursuant to subdivision 1 is 
 15.8   subject to judicial review pursuant to chapter 14.  
 15.9      Subd. ~~3.~~ 4.  [OTHER PENALTIES.] Nothing contained in this 
 15.10  section affects the right of the commissioner to impose any 
 15.11  other penalties provided in the insurance laws. 
 15.12     Sec. 12.  Minnesota Statutes 1994, section 60H.02, 
 15.13  subdivision 4, is amended to read: 
 15.14     Subd. 4.  [MANAGING GENERAL AGENT.] (a) "Managing general 
 15.15  agent" means a person, firm, association or corporation who:  
 15.16  (1) ~~negotiates and binds ceding reinsurance contracts on behalf~~ 
 15.17  ~~of an insurer, or (2)~~ manages all or part of the insurance 
 15.18  business of an insurer, including the management of a separate 
 15.19  division, department, or underwriting office, and (2) acts as an 
 15.20  agent for the insurer whether known as a managing general agent, 
 15.21  manager, or other similar term, who, with or without the 
 15.22  authority, either separately or together with affiliates, 
 15.23  produces, directly or indirectly, and underwrites an amount of 
 15.24  gross direct written premium equal to or more than five percent 
 15.25  of the policyholder surplus as reported in the last annual 
 15.26  statement of the insurer in any one quarter or year, together 
 15.27  with one or more of the following activities related to the 
 15.28  business produced:  (i) adjusts or pays claims in excess of an 
 15.29  amount determined by the commissioner, or (ii) negotiates 
 15.30  reinsurance on behalf of the insurer. 
 15.31     (b) Notwithstanding paragraph (a), the following persons 
 15.32  shall not be considered as managing general agents for the 
 15.33  purposes of this chapter: 
 15.34     (1) an employee of the insurer; 
 15.35     (2) a United States manager of the United States branch of 
 15.36  an alien insurer; 
 16.1      (3) an underwriting manager who, pursuant to contract, 
 16.2   manages all or a part of the insurance or reinsurance operation 
 16.3   of the insurer, is under common control with the insurer, 
 16.4   subject to the Insurance Holding Company Act, chapter 60D, and 
 16.5   whose compensation is not based on the volume of premiums 
 16.6   written; or 
 16.7      (4) an attorney in fact authorized by and acting for the 
 16.8   subscribers of a reciprocal insurer or interinsurance exchange 
 16.9   under powers of attorney.  
 16.10     Sec. 13.  Minnesota Statutes 1994, section 60H.05, 
 16.11  subdivision 1, is amended to read: 
 16.12     Subdivision 1.  [INDEPENDENT FINANCIAL EXAMINATION.] The 
 16.13  insurer shall have on file an independent financial examination, 
 16.14  in a form acceptable to the commissioner, of each managing 
 16.15  general agent with which it has done business.  In lieu of an 
 16.16  independent examination the commissioner may approve, on an 
 16.17  annual basis, an examination performed by the internal audit 
 16.18  department of the insurer or its affiliate if: 
 16.19     (a) the internal audit department is solely responsible and 
 16.20  accountable to an audit committee appointed by the insurer's or 
 16.21  its affiliate's board of directors; 
 16.22     (b) the audit committee is comprised of board members who 
 16.23  do not also function as a part of the executive staff 
 16.24  responsible for ongoing operations of the insurer or its 
 16.25  affiliates; and 
 16.26     (c) the commissioner determines that the internal audit 
 16.27  department has the resources and expertise to perform the 
 16.28  examination. 
 16.29     Sec. 14.  Minnesota Statutes 1994, section 60H.08, is 
 16.30  amended to read: 
 16.31     60H.08 [PENALTIES AND LIABILITIES.] 
 16.32     Subdivision 1.  [COMMISSIONER'S AUTHORITY.] If the 
 16.33  commissioner finds pursuant to the procedural requirements of 
 16.34  section 45.027 that a person has violated a provision of this 
 16.35  chapter, the commissioner may take any action authorized under 
 16.36  that section.  
 17.1      Subd. 2.  [ADDITIONAL PENALTY.] In addition to authority 
 17.2   granted by section 45.027 for each separate violation, the 
 17.3   commissioner may impose a penalty of up to $10,000 for each day 
 17.4   the violation continues and order the managing general agent to 
 17.5   reimburse the insurer, rehabilitator, or liquidator of the 
 17.6   insurer for any losses incurred by the insurer caused by a 
 17.7   violation of this chapter committed by the managing general 
 17.8   agent. 
 17.9      Subd. 3.  [CIVIL REMEDIES.] (a) If the commissioner finds 
 17.10  that because of the violation that the insurer has suffered loss 
 17.11  or damage, the commissioner may maintain a civil action for 
 17.12  recovery of compensatory damages for the benefit of the insurer 
 17.13  and its policyholders and creditors or other appropriate relief. 
 17.14     (b) If an order of rehabilitation or liquidation of the 
 17.15  insurer has been entered pursuant to chapter 60B, and the 
 17.16  receiver appointed under that order determines that the managing 
 17.17  general agent or any other person has violated this chapter, or 
 17.18  any rule or order adopted under this chapter, and the insurer 
 17.19  suffered loss or damage, the receiver may maintain a civil 
 17.20  action for recovery of damages or other appropriate sanctions 
 17.21  for the benefit of the insurer.  
 17.22     Subd. 4.  [JUDICIAL REVIEW.] The decision, determination, 
 17.23  or order of the commissioner under subdivision 1 is subject to 
 17.24  judicial review as provided under chapter 14.  
 17.25     Subd. ~~4.~~ 5.  [IMPOSITION OF OTHER PENALTIES.] Nothing 
 17.26  contained in this section shall affect the right of the 
 17.27  commissioner to impose any other penalties provided for by law. 
 17.28     Subd. ~~5.~~ 6.  [POLICYHOLDER RIGHTS.] Nothing contained in 
 17.29  this chapter is intended to or shall in any manner limit or 
 17.30  restrict the rights of policyholders, claimants, and auditors. 
 17.31     Sec. 15.  Minnesota Statutes 1994, section 61A.19, is 
 17.32  amended to read: 
 17.33     61A.19 [COMPANY REQUIREMENTS.] 
 17.34     No company shall deliver or issue for delivery within this 
 17.35  state contracts on a variable basis unless it is licensed or 
 17.36  organized to do a life insurance or annuity business in this 
 18.1   state, and the commissioner is satisfied that its condition or 
 18.2   method of operation in connection with the issuance of such 
 18.3   contracts will not render its operation hazardous to the public 
 18.4   or its policyholders in this state.  In this connection, the 
 18.5   commissioner shall consider among other things: 
 18.6      (a) The history and financial condition of the company; 
 18.7      (b) The character, responsibility and fitness of the 
 18.8   officers and directors of the company; and 
 18.9      (c) The law and regulation under which the company is 
 18.10  authorized in the state of domicile to issue such contracts.  
 18.11  The state of entry of an alien company shall be deemed to be 
 18.12  state of domicile for this purpose.  
 18.13     ~~A licensed company which issues contracts on a variable~~ 
 18.14  ~~basis and which is a subsidiary of, or affiliated through common~~ 
 18.15  ~~management or ownership with, another life insurance company~~ 
 18.16  ~~authorized to do business in this state may be deemed to have~~ 
 18.17  ~~met the provisions of this section if either it or the parent or~~ 
 18.18  ~~affiliated company satisfies the aforementioned provisions.~~  
 18.19     Sec. 16.  Minnesota Statutes 1994, section 61A.31, 
 18.20  subdivision 3, is amended to read: 
 18.21     Subd. 3.  [ACQUISITION OF PROPERTY.] Any domestic life 
 18.22  insurance company may: 
 18.23     (a) acquire real property or any interest in real property, 
 18.24  including oil and gas and other mineral interests, in the United 
 18.25  States or any state thereof, or in the Dominion of Canada or any 
 18.26  province thereof, as an investment for the production of income, 
 18.27  and hold, improve or otherwise develop, and lease, sell, and 
 18.28  convey the same either directly or as a joint venturer or 
 18.29  through a limited, limited liability, or general partnership in 
 18.30  which the company is a partner or through a limited liability 
 18.31  company in which the company is a member.  A company may not 
 18.32  invest in any real property asset other than property held for 
 18.33  the convenience and accommodation of its business if the 
 18.34  investment causes:  (1) the company's aggregate investments in 
 18.35  the real property assets to exceed ten percent of its admitted 
 18.36  assets; or (2) the company's investment in any single parcel of 
 19.1   real property to exceed one-half of one percent of its admitted 
 19.2   assets; 
 19.3      (b) acquire personal property in the United States or any 
 19.4   state thereof, or in the Dominion of Canada or any province 
 19.5   thereof, under lease or leases or commitment for lease or leases 
 19.6   if:  (1) either the fair value of the property exceeds the 
 19.7   company's investment in it or the lessee, or at least one of the 
 19.8   lessees, or a guarantor, or at least one of the guarantors, of 
 19.9   the lease is a corporation with a net worth of $1,000,000 or 
 19.10  more; and (2) the lease provides for rent sufficient to amortize 
 19.11  the investment with interest over the primary term of the lease 
 19.12  or the useful life of the property, whichever is less.  A 
 19.13  company may not invest in the personal property if the 
 19.14  investment causes the company's aggregate investments in the 
 19.15  personal property to exceed three percent of its admitted 
 19.16  assets; 
 19.17     (c) acquire and hold real estate (1) if the purpose of the 
 19.18  acquisition is to enhance the sale value of real estate 
 19.19  previously acquired and held by the company under this section 
 19.20  and (2) if the company expects the real estate so acquired to 
 19.21  qualify and be held by the company under paragraph (a) within 
 19.22  five years after acquisition; and 
 19.23     (d) not acquire real property under paragraphs (a) to (c) 
 19.24  if the property is to be used primarily for agricultural, 
 19.25  horticultural, ranch, mining, or church purposes. 
 19.26     All real property acquired or held under this subdivision 
 19.27  must be carried at a value equal to the lesser of (1) cost plus 
 19.28  the cost of capitalized improvements, less normal depreciation, 
 19.29  or (2) market value. 
 19.30     Sec. 17.  Minnesota Statutes 1994, section 62A.10, 
 19.31  subdivision 1, is amended to read: 
 19.32     Subdivision 1.  [REQUIREMENTS.] Group accident and health 
 19.33  insurance is hereby declared to be that form of accident and 
 19.34  health insurance covering not less than two employees nor less 
 19.35  than ten members, and which may include the employee's or 
 19.36  member's dependents, consisting of husband, wife, children, and 
 20.1   actual dependents residing in the household, written under a 
 20.2   master policy issued to any governmental corporation, unit, 
 20.3   agency, or department thereof, or to any corporation, 
 20.4   copartnership, individual, employer, or to any association as 
 20.5   defined by section 60A.02, subdivision 1a, or to a trust or to 
 20.6   the trustee of a fund established or adopted by two or more 
 20.7   employers or maintained for the benefit of members of an 
 20.8   association, where officers, members, employees, or classes or 
 20.9   divisions thereof, may be insured for their individual benefit. 
 20.10     Any insurer authorized to write accident and health 
 20.11  insurance in this state shall have power to issue group accident 
 20.12  and health policies. 
 20.13     Sec. 18.  Minnesota Statutes 1994, section 62A.10, 
 20.14  subdivision 2, is amended to read: 
 20.15     Subd. 2.  [POLICY FORMS.] No policy of group accident and 
 20.16  health insurance may be issued or delivered in this state unless 
 20.17  the same has been approved by the commissioner in accordance 
 20.18  with section 62A.02, subdivisions 1 to 6.  These forms shall 
 20.19  contain the standard provisions relating and applicable to 
 20.20  health and accident insurance and shall conform with the other 
 20.21  requirements of law relating to the contents and terms of 
 20.22  policies of accident and sickness insurance in so far as they 
 20.23  may be applicable to group accident and health insurance, and 
 20.24  also the following provisions: 
 20.25     (1) [ENTIRE CONTRACT.] A provision that the policy and the 
 20.26  application of the employer, trustee, or executive officer or 
 20.27  trustee of any association, and the individual applications, if 
 20.28  any, of the employees or members insured, shall constitute the 
 20.29  entire contract between the parties, and that all statements 
 20.30  made by the employer or any executive officer or trustee in 
 20.31  behalf of the group to be insured, shall, in the absence of 
 20.32  fraud, be deemed representations and not warranties, and that no 
 20.33  such statement shall be used in defense to a claim under the 
 20.34  policy, unless it is contained in the written application; 
 20.35     (2) [MASTER POLICY-CERTIFICATES.] A provision that the 
 20.36  insurer will issue a master policy to the employer, trustee, or 
 21.1   to the executive officer or trustee of the association; and the 
 21.2   insurer shall also issue to the employer, trustee, or to the 
 21.3   executive officer or trustee of the association, for delivery to 
 21.4   the employee or member who is insured under the policy, an 
 21.5   individual certificate setting forth a statement as to the 
 21.6   insurance protection to which the employee or member is entitled 
 21.7   and to whom payable, together with a statement as to when and 
 21.8   where the master policy, or a copy thereof, may be seen for 
 21.9   inspection by the individual insured; this individual 
 21.10  certificate may contain the names of, and insure the dependents 
 21.11  of, the employee or member, as provided for herein; 
 21.12     (3) [NEW INSUREDS.] A provision that to the group or class 
 21.13  thereof originally insured may be added, from time to time, all 
 21.14  new employees of the employer or members of the association 
 21.15  eligible to and applying for insurance in that group or class 
 21.16  and covered or to be covered by the master policy. 
 21.17     Sec. 19.  Minnesota Statutes 1994, section 62L.02, 
 21.18  subdivision 26, is amended to read: 
 21.19     Subd. 26.  [SMALL EMPLOYER.] (a) "Small employer" means a 
 21.20  person, firm, corporation, partnership, association, or other 
 21.21  entity actively engaged in business, including a political 
 21.22  subdivision of the state, that, on at least 50 percent of its 
 21.23  working days during the preceding 12 months, employed no fewer 
 21.24  than two nor more than 29, or after June 30, 1995, more than 49, 
 21.25  current employees, the majority of whom were employed in this 
 21.26  state.  If an employer has only two eligible employees and one 
 21.27  is the spouse, child, sibling, parent, or grandparent of the 
 21.28  other, the employer must be a Minnesota domiciled employer and 
 21.29  have paid social security or self-employment tax on behalf of 
 21.30  both eligible employees.  If an employer has only one eligible 
 21.31  employee who has not waived coverage, the sale of a health plan 
 21.32  to or for that eligible employee is not a sale to a small 
 21.33  employer and is not subject to this chapter and may be treated 
 21.34  as the sale of an individual health plan.  A small employer plan 
 21.35  may be offered through a domiciled association to self-employed 
 21.36  individuals and small employers who are members of the 
 22.1   association, even if the self-employed individual or small 
 22.2   employer has fewer than two current employees.  Entities that 
 22.3   are eligible to file a combined tax return for purposes of state 
 22.4   tax laws are considered a single employer for purposes of 
 22.5   determining the number of current employees.  Small employer 
 22.6   status must be determined on an annual basis as of the renewal 
 22.7   date of the health benefit plan.  The provisions of this chapter 
 22.8   continue to apply to an employer who no longer meets the 
 22.9   requirements of this definition until the annual renewal date of 
 22.10  the employer's health benefit plan.  
 22.11     (b) ~~Where an association, described in section 62A.10,~~ 
 22.12  ~~subdivision 1, comprised of employers contracts with a health~~ 
 22.13  ~~carrier to provide coverage to its members who are small~~ 
 22.14  ~~employers, the association shall be considered to be a small~~ 
 22.15  ~~employer, with respect to those employers in the association~~ 
 22.16  ~~that employ no fewer than two nor more than 29, or after June~~ 
 22.17  ~~30, 1995, more than 49, current employees, even though the~~ 
 22.18  ~~association provides coverage to its members that do not qualify~~ 
 22.19  ~~as small employers.  An association in existence prior to July~~ 
 22.20  ~~1, 1993, is exempt from this chapter with respect to small~~ 
 22.21  ~~employers that are members as of that date.  However, in~~ 
 22.22  ~~providing coverage to new employers after July 1, 1993, the~~ 
 22.23  ~~existing association must comply with all requirements of this~~ 
 22.24  ~~chapter.  Existing associations must register with the~~ 
 22.25  ~~commissioner of commerce prior to July 1, 1993.  With respect to~~ 
 22.26  ~~small employers having not fewer than 30 nor more than 49~~ 
 22.27  ~~current employees, the July 1, 1993, date in this paragraph~~ 
 22.28  ~~becomes July 1, 1995, and the reference to "after" that date~~ 
 22.29  ~~becomes "on or after."~~ "Small employer" does not include an 
 22.30  association comprised of employers, described in section 62A.10, 
 22.31  subdivision 1a, which contracts with a health carrier to provide 
 22.32  coverage to its members and their employees, nor does it include 
 22.33  members of the association who participate in the health plan 
 22.34  and who may otherwise qualify as small employers.  Health 
 22.35  carriers providing a health plan to an association as described 
 22.36  in this section must provide written notice of the existence of 
 23.1   the plan to the commissioner of commerce on or before June 30, 
 23.2   1995, or within 60 days following the effective date of the 
 23.3   plan, whichever comes later. 
 23.4      (c) If an employer has employees covered under a trust 
 23.5   specified in a collective bargaining agreement under the federal 
 23.6   Labor-Management Relations Act of 1947, United States Code, 
 23.7   title 29, section 141, et seq., as amended, or employees whose 
 23.8   health coverage is determined by a collective bargaining 
 23.9   agreement and, as a result of the collective bargaining 
 23.10  agreement, is purchased separately from the health plan provided 
 23.11  to other employees, those employees are excluded in determining 
 23.12  whether the employer qualifies as a small employer.  Those 
 23.13  employees are considered to be a separate small employer if they 
 23.14  constitute a group that would qualify as a small employer in the 
 23.15  absence of the employees who are not subject to the collective 
 23.16  bargaining agreement. 
 23.17     Sec. 20.  Minnesota Statutes 1994, section 67A.231, is 
 23.18  amended to read: 
 23.19     67A.231 [DEPOSIT OF FUNDS; INVESTMENT; LIMITATIONS.] 
 23.20     The directors of any township mutual insurance company may 
 23.21  authorize the treasurer to invest any of its funds and 
 23.22  accumulations in:  
 23.23     (a) Bonds, notes, mortgages, or other obligations 
 23.24  guaranteed by the full faith and credit of the United States of 
 23.25  America and those for which the credit of the United States is 
 23.26  pledged to pay principal, interest or dividends, including 
 23.27  United States agency and instrumentality bonds, debentures, or 
 23.28  obligations; 
 23.29     (b) Bonds, notes, evidence of indebtedness, or other public 
 23.30  authority obligations guaranteed by this state; 
 23.31     (c) Bonds, notes, evidence of the indebtedness or other 
 23.32  obligations guaranteed by the full faith and credit of any 
 23.33  county, municipality, school district, or other duly authorized 
 23.34  political subdivision of this state; 
 23.35     (d) Bonds or other interest bearing obligations, payable 
 23.36  from revenues, provided that the bonds or other interest bearing 
 24.1   obligations are at the time of purchase rated among the highest 
 24.2   four quality categories used by a nationally recognized rating 
 24.3   agency for rating the quality of similar bonds or other interest 
 24.4   bearing obligations, and are not rated lower by any other such 
 24.5   agency; or obligations of a United States agency or 
 24.6   instrumentality that have been ~~determined to be investment grade~~ 
 24.7   ~~(as indicated by a "yes" rating)~~ rated in one of the two highest 
 24.8   categories established by the Securities Valuation Office of the 
 24.9   National Association of Insurance Commissioners.  A company may 
 24.10  not invest more than 20 percent of its admitted assets in the 
 24.11  obligations of any one corporation.  This is not applicable to 
 24.12  bonds or other interest bearing obligations in default as to 
 24.13  principal; 
 24.14     (e) Investments in the obligations stated in paragraphs 
 24.15  (a), (b), (c), and (d), may be made either directly or in the 
 24.16  form of securities of, or other interests in, an investment 
 24.17  company registered under the Federal Investment Company Act of 
 24.18  1940.  Investment company shares authorized pursuant to this 
 24.19  subdivision shall not exceed 20 percent of the company's 
 24.20  surplus.  These obligations must be carried at the lower of cost 
 24.21  or market on the annual statement filed with the commissioner 
 24.22  and adjusted to market on an annual basis; 
 24.23     (f) Loans upon improved and unencumbered real property in 
 24.24  this state worth at least twice the amount loaned thereon, not 
 24.25  including buildings, unless insured by property insurance 
 24.26  policies payable to and held by the security holder; 
 24.27     (g) Real estate, including land, buildings and fixtures, 
 24.28  located in this state and used primarily as home office space 
 24.29  for the insurance company; 
 24.30     (h) Demand or time deposits or savings accounts in 
 24.31  federally insured depositories located in this state to the 
 24.32  extent that the deposit or investment is insured by the Federal 
 24.33  Deposit Insurance Corporation, Federal Savings and Loan 
 24.34  Corporation, or the National Credit Union Administration; 
 24.35     (i) Guarantee fund certificates of a mutual insurer which 
 24.36  reinsures the business of the township mutual insurance 
 25.1   company.  The commissioner may by rule limit the amount of 
 25.2   guarantee fund certificates which the township mutual insurance 
 25.3   company may purchase and this limit may be a function of the 
 25.4   size of the township mutual insurance company; and 
 25.5      (j) Up to $1,500 in stock of an insurer which issues 
 25.6   directors and officers liability insurance to township mutual 
 25.7   insurance company directors and officers. 
 25.8      Sec. 21.  Minnesota Statutes 1994, section 136E.04, is 
 25.9   amended by adding a subdivision to read: 
 25.10     Subd. 9.  [HEALTH COVERAGE; TECHNICAL COLLEGE 
 25.11  EMPLOYEES.] The state must provide at least one plan of health 
 25.12  coverage for technical college employees and their eligible 
 25.13  dependents which provides coverage of services rendered by at 
 25.14  least one hospital and one medical group located in each 
 25.15  community in which a technical college is located if there is a 
 25.16  hospital or medical group in that community. 
 25.17     Sec. 22.  [EFFECTIVE DATE.] 
 25.18     Sections 17 to 19 are effective the day following final 
 25.19  enactment.  
 25.20     Section 21 is effective July 1, 1995.