2009 Iowa Code
Title 13 - Commerce
Subtitle 1 - Insurance and Related Regulation
CHAPTER 515 - INSURANCE OTHER THAN LIFE
515.20 - GUARANTY CAPITAL.

        515.20  GUARANTY CAPITAL.
         A mutual company organized under this chapter may establish and
      maintain guaranty capital of at least fifty thousand dollars made up
      of multiples of ten thousand dollars, divided into shares of not less
      than fifty dollars each, to be invested as provided for the
      investment of insurance capital and funds by section 515.35.
      Guaranty shareholders shall be members of the corporation, and
      provision may be made for representation of the shareholders of the
      guaranty capital on the board of directors of the corporation.  The
      representation shall not exceed one-third of the membership of the
      board.  Guaranty shareholders in a mutual company are subject to the
      same regulations of law relative to their right to vote as apply to
      its policyholders.  The guaranty capital shall be applied to the
      payment of the legal obligations of the corporation only when the
      corporation has exhausted its assets in excess of the unearned
      premium reserve and other liabilities.  If the guaranty capital is
      thus impaired, the directors may restore the whole, or any part of
      the capital, by assessment on the corporation's policyholders as
      provided for in section 515.18.  By a legal vote of the policyholders
      of the corporation at any regular or special meeting of the
      policyholders of the corporation, the guaranty capital may be fully
      retired or may be reduced to an amount of not less than fifty
      thousand dollars, if the net surplus of the corporation together with
      the remaining guaranty capital is equal to or exceeds the amount of
      minimum assets required by this chapter for such companies, and if
      the commissioner of insurance consents to the action.  Due notice of
      the proposed action on the part of the corporation shall be included
      in the notice given to policyholders and shareholders of any annual
      or special meeting and notice of the meeting shall also be given in
      accordance with the corporation's articles of incorporation.  A
      company with guaranty capital, which has ceased to do business, shall
      not distribute among its shareholders or policyholders any part of
      its assets, or guaranty capital, until it has fully performed, or
      legally canceled, all of its policy obligations.  Shareholders of the
      guaranty capital are entitled to interest on the par value of their
      shares at a rate to be fixed by the board of directors and approved
      by the commissioner, cumulative, payable semiannually, and payable
      only out of the surplus earnings of the company.  However, the
      surplus account of the company shall not be reduced by the payment of
      the interest below the figure maintained at the time the guaranty
      capital was established.  In addition, the interest payment shall not
      be made unless the surplus assets remaining after the payment of the
      interest at least equal the amount required by the statutes of Iowa
      to permit the corporation to continue in business.  In the event of
      the dissolution and liquidation of a corporation having guaranty
      capital under this section, the shareholders of the capital are
      entitled, after the payment of all valid obligations of the company,
      to receive the par value of their respective shares, together with
      any unpaid interest on their shares, before there may be any
      distribution of the assets of the corporation among its
      policyholders.  These provisions are in addition to and independent
      of the provisions contained in section 515.19.  

         Section History: Early Form

         [C35, § 8912-f1; C39, § 8912.1; C46, 50, 54, 58, 62, 66, 71,
      73, 75, 77, 79, 81, § 515.20] 

         Section History: Recent Form

         86 Acts, ch 1038, § 1; 87 Acts, ch 115, §64
         Referred to in § 515.12, 515G.1