Indiana Code
Chapter 7. General Corporate Powers and Responsibilities of Insurance Companies
27-1-7-19. Mutual or Stock Companies; Borrowing for Surplus Funds

Sec. 19. (a) A mutual or stock company organized under this article may borrow or assume a liability for the repayment of a sum of money to provide itself with surplus funds with the prior approval of the department. The rate of interest on any loan or advance may not exceed the following:
(1) The corporate base rate in effect on the first business day of the month in which the loan document is executed, as reported by the bank or branch with the greatest amount of assets in Indiana, plus three percent (3%) per annum.
(2) A variable rate determined by a formula that:
(A) is specified in the loan document;
(B) is based on objective data or information that is reasonably related to commercial lending rates;
(C) provides an initial rate that is not more than the corporate base rate in effect on the first business day of the month in which the loan document is executed, as reported by the bank or branch with the greatest amount of assets in Indiana, plus two percent (2%) per annum; and
(D) is approved by the department as reasonable and appropriate in relation to the company's financial condition.
The company shall elect and state in the written agreement whether the interest rate is to be fixed or floating for the term of the agreement. The agreement shall be submitted to and approved by the department before the agreement's execution.
(b) The loan or advance, with interest at a rate not exceeding the maximum rate of interest as defined in subsection (a), shall be repaid only out of the surplus of the company. Repayment of principal or payment of interest may be made only when approved by the department whenever in its judgment the financial condition of the company shall warrant. However, the department may not withhold approval if:
(1) the company has and submits to the department satisfactory evidence that a surplus that is equal to or greater than the surplus existing immediately after the issuance of the loan or advance will exist after the repayment; and
(2) the surplus that will exist immediately after repayment of principal or payment of interest is:
(A) reasonable in relation to the company's outstanding liabilities; and
(B) adequate to the company's financial needs;
in light of the factors set forth in IC 27-1-23-4(f).
(c) A loan or advance made under this section, or interest accruing on the loan or advance, may not form a part of the legal liabilities of the company until authorized for payment by the department. However, until a loan or an advance is repaid, all statements published by the company or filed with the department must show the amount of the loan or advance then remaining unpaid, including any accrued and unpaid interest charges.
Formerly: Acts 1935, c.162, s.97. As amended by P.L.138-1984, SEC.1; P.L.253-1985, SEC.1; P.L.184-1996, SEC.1; P.L.111-2000, SEC.1.

Structure Indiana Code

Indiana Code

Title 27. Insurance

Article 1. Department of Insurance

Chapter 7. General Corporate Powers and Responsibilities of Insurance Companies

27-1-7-1. "Corporation" Defined

27-1-7-2. Capacity and Authority to Act; General Rights, Privileges, and Powers; Excluded Powers

27-1-7-3. Principal Office; Change of Location

27-1-7-4. Shares of Stock; Classes; Sale for Less Than Par; Shareholders' Liability; Preemptive Rights

27-1-7-5. Stock Certificate; Contents; Transferability

27-1-7-6. Bylaws

27-1-7-7. Meetings of Shareholders, Members, or Policyholders; Location; Annual Meeting; Special Meetings; Notice; Quorum; Actions Taken Without Meeting

27-1-7-8. Voting Rights of Shareholders; Shares That Cannot Be Voted; Voting by Particular Shareholders; Proxy Votes

27-1-7-9. Voting Rights of Policyholders and Members; Proxy Votes

27-1-7-9.5. Shareholders' Derivative Proceedings; Procedure

27-1-7-10. Board of Directors; General Provisions; Management of Business; Executive Committee; Removal of Directors

27-1-7-11. Citizenship and Residence Qualifications of Directors

27-1-7-12. Directors; Attendance Record and Report; Record of Communications; Annual Examination and Report of Condition

27-1-7-12.5. Directors; Good Faith Discharge of Duties; Liability; Conflict of Interest; Authorization of Unlawful Payments to Shareholders

27-1-7-13. Officers; Secretary; Duties; Resignation; Removal; Contract Rights

27-1-7-14. Bonding Officers Having Access to Money or Securities; Blanket Bond

27-1-7-15. Loans to or Borrowing by Directors or Officers; Offense; Exceptions

27-1-7-16. Books and Records to Be Kept at Principal Office

27-1-7-17. Restrictions on Dividend Payments

27-1-7-18. Repealed

27-1-7-19. Mutual or Stock Companies; Borrowing for Surplus Funds

27-1-7-20. Authority of Corporations, Boards, and Associations to Insure With Mutual Insurance Company

27-1-7-21. Mutual Companies; Statement of Maximum Premium in Policy; Limitation of Liability for Single Risk; Reinsurance Requirements

27-1-7-22. Vouchers for Disbursements

27-1-7-23. Annual or Other Required Statements; Material False Statement