Chapter 620

CHAPTER 620

INSURANCE — INVESTMENTS

620.01   Purpose and scope.

620.02   Segregated account investments.

620.03   Special investment restrictions.

620.04   Specific orders.

620.05   Protection against currency fluctuations.

620.12   Disposal of prohibited assets.

620.21   Effect of investment restrictions.

620.22   Permitted classes of investments.

620.23   Limitations generally applicable.

620.25   Relationship to other statutes.

620.31   Valuation of assets.

620.32   Investment valuation reserves.

Ch. 620 Cross-reference Cross-reference: See definitions in ss. 600.03, 610.01, 628.02.

Ch. 620 Note NOTE: Chapter 260, laws of 1971, which created this chapter, contains explanatory notes.

620.01 620.01 Purpose and scope.

620.01(1) (1) Investment objectives. The purpose of this chapter is to protect and to further the interests of insureds, creditors and the public, by providing, with minimum interference with management initiative and judgment, standards for the development and administration of programs for the investment of the assets of insurers, which standards seek an optimal balance of the following objectives:

620.01(1)(a) (a) Safety of principal, and to the extent consistent therewith, maximum yield and growth;

620.01(1)(b) (b) Stability of value, except where higher risk and possible fluctuations of value are compensated by a commensurate increase in yield and growth possibilities, and either special reserves or surplus is available in sufficient amount to cover reasonably foreseeable fluctuations in value;

620.01(1)(c) (c) Sufficient liquidity to avoid the necessity in reasonably expected circumstances for selling assets at undue sacrifice;

620.01(1)(d) (d) Reasonable diversification with respect to geographical area, industry, maturity, types of investment, individual investments and other relevant variables; and

620.01(1)(e) (e) Reasonable relationship between liabilities and assets as to term and nature.

620.01(2) (2) Scope. Except as otherwise provided, this chapter and the rules promulgated to interpret and implement it, apply to all insurers authorized to do business in this state.

620.01 History History: 1971 c. 260.

620.01 Cross-reference Cross-reference: See also s. Ins 6.20, Wis. adm. code.

620.02 620.02 Segregated account investments.

620.02(1) (1) General. Each segregated or separate account established under s. 611.24 or 611.25 shall be evaluated separately to determine compliance with this chapter.

620.02(2) (2) Variable benefit separate accounts.

620.02(2)(a) (a) General. The amounts allocated to each account created under s. 611.25 and accumulations thereon may be invested and reinvested without regard to any requirements or limitations prescribed by this chapter.

620.02(2)(b) (b) Guaranteed benefits. To the extent that the corporation’s reserve liability, with regard to benefits guaranteed as to dollar amount and duration and funds guaranteed as to principal amount or stated rate of interest, is maintained in any separate account, a portion of the assets of the account at least equal to the reserve liability shall be invested in accordance with this chapter, or in accordance with such requirements as the commissioner prescribes by rule.

620.02(3) (3) Valuation of segregated account assets. Assets allocated to a segregated account shall be valued at their market value on the date of valuation, or if there is no readily available market, then in accordance with the applicable contract; but a portion of the assets of the account at least equal to the corporation’s reserve liability with regard to the guaranteed benefits and funds referred to in sub. (2), if any, shall be reported separately and valued in accordance with the rules otherwise applicable to the corporation’s assets or in accordance with rules promulgated under sub. (2). No securities valuation reserve or other reserve for fluctuation in the value of securities need be maintained for assets that do not have to comply with this chapter.

620.02 History History: 1971 c. 260.

620.03 620.03 Special investment restrictions.

620.03(1) (1) Special restrictions for new insurers. For the first 5 years after obtaining a certificate of authority in this state, an insurer shall be subject to the following restrictions:

620.03(1)(a) (a) Procedural requirements. The commissioner may by rule prescribe for all or for certain classes of such insurers special procedural requirements including special reports, prior approval or subsequent disapproval of investments.

620.03(1)(b) (b) Substantive restrictions. The commissioner may by rule prescribe for all, or separately for different classes of, such insurers substantive restrictions on investments, including:

620.03(1)(b)1. 1. Specification of classes of assets that may not be counted toward satisfaction of the compulsory surplus requirement or the security surplus standard even though they may be counted for unrestricted corporations;

620.03(1)(b)2. 2. Specification of maximum amounts of assets that may be invested in any single investment, or any issue, class or group of classes of investments, expressed as percentages of total assets, capital, surplus, legal reserves or other variables;

620.03(1)(b)3. 3. Prescription of qualitative tests for investments and conditions under which investments may be made, including requirements of specified ratings from investment advisory services, listing on specified stock exchanges, collateral, marketability, the financial and legal status of the issuer and its earnings capacity, and currency matching.

620.03(2) (2) Exemptions. The commissioner may by order grant an insurer exemption from any restriction under sub. (1) to the extent that the commissioner is satisfied that the interests of insureds, creditors and the public of this state are sufficiently protected in other ways, such as by the investment regulation actually exercised in the domicile of a nondomestic insurer; or by other evidence of the solidity of the insurer and the competence of its management and its investment advisers.

620.03(3) (3) Extensions. The commissioner may by rule apply to a class of insurers any restriction of sub. (1), more than 5 years after issuance of a certificate of authority, if the commissioner finds that financial condition or management require additional investment regulation for the protection of the interests of insureds, creditors or the public in this state.

620.03 History History: 1971 c. 260; 1979 c. 102 s. 236 (6).

620.04 620.04 Specific orders.

620.04(1) (1) Additional restrictions. If the commissioner finds that by reason of investment conditions generally or of the financial condition or current investment practice of an individual insurer, the interests of insureds, creditors, or the public are or may be endangered, the commissioner may do any of the following:

620.04(1)(a) (a) For insurers that are not restricted under s. 620.03, impose reasonable and temporary restrictions upon the investments of an individual insurer, including prohibition or divestment of a particular investment.

620.04(1)(b) (b) For insurers that are subject to s. 620.03, impose reasonable restrictions upon the investments of an individual insurer, including prohibition or divestment of a particular investment.

620.04(2) (2) Consent investments. The commissioner may count an asset toward satisfaction of the compulsory surplus requirement or the security surplus standard, or both, even if it does not conform to this chapter or rules promulgated thereunder, if the commissioner finds that counting it does not endanger the interests of insureds, creditors or the public.

620.04(3) (3) Alien investments. The commissioner may count toward satisfaction of the compulsory surplus requirement or the security surplus standard any assets in which an insurer must invest under the laws of a country other than the United States as a condition for doing business in that country if the commissioner finds that counting them does not endanger the interests of insureds, creditors or the public of this state.

620.04 History History: 1971 c. 260; 1979 c. 102 s. 236 (6); 1991 a. 316; 2015 a. 90.

620.05 620.05 Protection against currency fluctuations. Any insurer doing business that requires it to make payment in different currencies shall have investments in securities in each of such currencies in an amount that independently of all other investments meets the requirements of chs. 600 to 646 as applied separately to the insurer’s obligations in each currency. The commissioner may by order exempt an insurer, or by rule a class of insurers, from this requirement if the obligations in other currencies are small enough that no significant problem for solidity would be created by substantial fluctuations in relative currency values.

620.05 History History: 1977 c. 339; 1979 c. 89.

620.12 620.12 Disposal of prohibited assets.

620.12(1) (1) Investments becoming illegal. The commissioner shall allow a reasonable time not longer than 10 years for disposal of any investment legally held on April 30, 1972, or of any investment legal when made but subsequently becoming illegal.

620.12(2) (2) Hardship cases. A reasonable time shall be allowed for disposal of assets if the investment was made by mistake or if forced sale of the asset would be contrary to the interests of insureds, creditors or the public of this state.

620.12 History History: 1971 c. 260.

620.21 620.21 Effect of investment restrictions.

620.21(1) (1) General. Assets may be counted toward satisfaction of the compulsory surplus requirement or the security surplus standard only so far as they are invested in compliance with this chapter and applicable rules promulgated by the commissioner.