Article 68p. 68

COMMERCIAL LAWS NEGOTIABLE INSTRUMENTS, CORPORATION, INSURANCE, TRANSPORTATION, BANKING

SECTION 298. Transactions within a holding company

system to which a controlled insurer is a party shall be

subject to the following:

(a) The terms shall be fair and equitable;

(b) Charges or fees for services performed shall be

reasonable;

(c) Expenses incurred and payments received shall be

allocated

to

the

insurer

on

an

equitable

basis

in

conformity

with

customary

insurance

accounting

practices consistently applied.

The books, accounts and records of each party to all

such transactions shall be maintained as to clearly and

accurately

disclose

the

nature

and

details

of

the

transactions including such accounting information as is

necessary to support the reasonableness of the charges

or fees to the respective parties.

SECTION

299.

The

prior

written approval of the

Commissioner

shall

be

required

for

the

following

transactions between a controlled insurer and any person

in

its

holding

company

system:

sales,

purchases,

exchanges, loans or extensions of credit, or investments,

involving five percent (5%) or more of the insurer's

admitted assets as of the thirty-first day of December

next preceding.

SECTION 300. The following transactions between a

controlled insurer and any person in its holding company

system may not be entered into unless the insurer has

notified the Commissioner in writing of its intention to

enter into any such transaction at least thirty (30) days

prior thereto, or such shorter period as he may permit,

and he has not disapproved it within such period:

(a) Sales, purchases, exchanges, loans or extensions of

credit, or investments, involving more than one-half of

one percent (1/2%) but less than five percent (5%) of the

insurer's admitted assets as of the thirty-first day of

December next preceding;

(b) Reinsurance treaties or agreements;

(c) Rendering of services on a regular or systematic

basis; or

(d) Any material transaction, specified by regulation,

which

the

Commissioner

determines

may

adversely

affect

the

interest

of

the

insurer's

policyholders

or

stockholders or of the public.

Nothing

herein

contained

shall

be

deemed

to

authorize or permit any transaction which, in the case of a

non-controlled insurer, would be otherwise contrary to

law.

SECTION

301.

The

Commissioner,

in

reviewing

transactions pursuant to Sections 299 and 300, shall

consider

whether

the

transactions

comply with the

standard set forth in Section 298 and whether they may

adversely affect the interests of policyholders. This section

shall not apply to transactions subject to other sections of

this Code which impose notice or approval requirements

greater than those prescribed by this title.

SECTION 302. (a) No person, other than an authorized

insurer, shall acquire control of any domestic insurer,

whether by purchase of its securities or otherwise, except:

(1) After twenty (20) days written notice to its insurer

or such shorter period as the Commissioner may permit,

of its intention to acquire control; and

(2)

With

the

prior

written

approval

of

the

Commissioner.

(b)

The

Commissioner

shall

disapprove

the

acquisition

of

control

of

a

domestic

insurer

if

he

determines, after notice and an opportunity to be heard,

that such action is reasonably necessary to protect the

interest of the people of this country. The following shall

be the only factors to be considered by him in reaching

the foregoing determination.

(1) The financial condition of the acquiring person and

the insurer;

(2) The trustworthiness of the acquiring person or any

of its officers or directors;

(3) A plan for the proper and effective conduct of the

insurer's operations;

(4)

The

source

of

the

funds

or

assets

for

the

acquisition;

(5) The fairness of any exchange of stock, assets, cash

or other consideration for the stock or assets to be

received;

(6) Whether the effect of the acquisition may be

substantially

to

lessen

competition

in

any

line

of

commerce in insurance or to tend to create a monopoly

therein; and

(7) Whether the acquisition is likely to be hazardous

or

prejudicial

to

the

insurer's

policyholders

or

stockholders.

(c) The following conditions affecting any controlled

insurer,

regardless

of

when

such

control

has

been

acquired, are violations of this title:

(1) The controlling person or any of its officers or

directors have demonstrated untrustworthiness; and

(2)

The

effect

of

retention

of

control

may

be

substantially

to

lessen

competition

in

any

line

of

commerce in insurance in this country or to tend to

create

a

monopoly

therein.

If,

after

notice

and

an

opportunity to be heard, the Commissioner determines

that any of the foregoing violations exists, he shall reduce

his findings to writing and shall issue an order based

thereon and cause the same to be served upon the

insurer and upon all persons affected thereby directing

any person found to be in violation thereof to take

appropriate action to cure such violation. Upon the failure

of any such person to comply with such order, Section

306 shall become applicable.

(d) The Commissioner may require the submission of

such information as he deems necessary to determine

whether any acquisition or retention of control complies

with this title and may require, as a condition of approval

of such acquisition or retention of control, that all or any

portion of such information be disclosed to the insurer's

stockholders.

(e) Unless subject to registration under Section 294 or

unless acquisition of its control is subject to paragraphs

(a) and (b) hereof, every authorized insurer shall notify the

Commissioner in writing of the identity of any person

whom the insurer then knows or has reason to believe

controls or has taken any action, other than preliminary

negotiations or discussion, to acquire control of the

insurer.

SECTION 303. (a) Notwithstanding the control of an

authorized

insurer

by

any

person,

the

officers

and

directors of the insurer shall not thereby be relieved of

any obligation or liability to which they would otherwise

be subject by law, and the insurer shall be managed so as

to assure its separate operating identity consistent with

this title.

(b)

Nothing

herein

shall preclude an authorized

insurer from having or sharing a common management

or cooperative or joint use of personnel, property or

services

with

one

or

more

other

persons

under

arrangements meeting the standards of Section 298.

SECTION 304. To the extent that any information or

material is set forth in forms or other matter on file with

any government agency or in a registration form filed

with the Commissioner by another person within the

same holding company system, the controlled insurer

may

comply

with

the

registration

or

reporting

requirements of this title by referring in its registration

from or report to such other filed matter and attaching a

copy thereof certified by the insurer as a true and

complete copy, to such registration form or report or, if

such other filed matter is on file with the Commissioner,

incorporating such matter by reference.

© Compiled by RGL

68 of 211