Each group shall be operated by a board of trustees that shall consist of not less than five persons whom the members of a group elect for stated terms of office. At least two-thirds of the trustees shall be employees, officers or directors of members of the group. The group’s administrator or service company, or any owner, officer or employee of, or any other person affiliated with, the administrator or service company shall not serve on the board of trustees of the group. All trustees shall be residents of this state or officers of corporations authorized to do business in this state. The board of trustees of each group shall ensure that all claims are paid promptly and take all necessary precautions to safeguard the assets of the group, including all of the following:

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A. the board of trustees shall:

(1)     maintain responsibility for all money collected or disbursed from the group and segregate all money into a claims fund account and an administrative fund account. At least seventy percent of the net premium shall be placed into a designated depository, to be called the “claims fund account”, for the sole purpose of paying claims, allocated claims expenses, reinsurance or excess insurance and special fund contributions, including second-injury and other loss-related funds; provided that income taxes may be paid from the actuarially determined surplus portion of the claims fund account at the discretion of the board of trustees. The remaining net premium shall be placed into a designated depository, to be called the “administrative fund account”, for the payment of taxes, general regulatory fees and assessments and administrative costs. The director may approve an administrative fund account of more than thirty percent and a claims fund account of less than seventy percent only if the group shows to the director’s satisfaction that:

(a) more than thirty percent is needed for an effective safety and loss-control program; or

percent;

(b) the group’s aggregate excess insurance attaches at less than seventy (2)     maintain minutes of its meetings and make the minutes available to the director;

(3)     designate an administrator to carry out the policies established by the board of trustees and to provide day-to-day management of the group and delineate in the written minutes of its meetings the areas of authority it delegates to the administrator; and

(4)     retain an independent certified public accountant to prepare the statement of financial condition required by Subsection A of Section 52-6-12 N.M. Stat. Ann.; and

B. the board of trustees shall not:

(1)     extend credit to individual members for payment of a premium except pursuant to payment plans approved by the director; or

(2)     borrow any money from the group or in the name of the group except in the ordinary course of business, without first advising the director of the nature and purpose of the loan and obtaining prior approval from the director.