(1) Before issuing a certificate of authority, the director shall require that the health maintenance organization have an initial net worth of one million five hundred thousand dollars and maintain the minimum net worth required under this section.

(2) Except as provided in subsection (3) of this section, a health maintenance organization shall maintain a minimum net worth equal to the greater of:

(a) One million dollars; or

(b) Two percent of annual premium revenue as reported on the most recent annual financial statement filed with the director on the first one hundred fifty million dollars of premium revenue and one percent of annual premium revenue on the premium revenue in excess of one hundred fifty million dollars.

(3) A health maintenance organization licensed under prior law before July 10, 1990, shall maintain a minimum net worth of:

(a) Twenty-five percent of the amount required by subsection (2) of this section by December 31, 1990;

(b) Fifty percent of the amount required by subsection (2) of this section by December 31, 1991;

(c) Seventy-five percent of the amount required by subsection (2) of this section by December 31, 1992; and

(d) One hundred percent of the amount required by subsection (2) of this section by December 31, 1993.

(4) In determining net worth, no debt shall be considered fully subordinated unless the subordination clause is in a form acceptable to the director. Any interest obligation relating to the repayment of any subordinated debt shall be similarly subordinated. The interest expenses relating to the repayment of any fully subordinated debt shall be considered covered expenses. Any debt incurred by a note meeting the requirements of this subsection and otherwise acceptable to the director shall not be considered a liability and shall be recorded as equity.