Sen. William R. Haine
Filed: 3/22/2012
 
 


 




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1
AMENDMENT TO SENATE BILL 2877 




2 AMENDMENT NO. ______. Amend Senate Bill 2877, AS AMENDED, 
3as follows:

4in Section 5, Sec. 131.20a, by replacing paragraph (1)(a) with 
5the following:

6 "(1) (a) The following transactions involving between a 
7domestic
company and any person in its insurance holding 
8company system, including amendments or modifications of 
9affiliate agreements previously filed pursuant to this 
10Section, which are subject to any materiality standards 
11contained in this Section, may not be entered
into unless the 
12company has notified the Director in writing of its
intention 
13to enter into such transaction at least 30 days prior thereto, 
14or
such shorter period as the Director may permit, and the 
15Director has not
disapproved it within such period. The notice 
16for amendments or modifications shall include the reasons for 
17the change and the financial impact on the domestic company. 
 
 
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1Informal notice shall be reported, within 30 days after a 
2termination of a previously filed agreement, to the Director 
3for determination of the type of filing required, if any:


4  (i) Sales, purchases, exchanges of assets, loans or 
5 extensions of credit,
guarantees, investments, or any 
6 other transaction, except dividends, (A) that involves the

7 transfer of assets from or liabilities to a company (A) 
8 equal to or exceeding the
lesser of 3% of the
company's 
9 admitted assets or 25% of its surplus as regards

10 policyholders as
of the 31st day of December next preceding 
11 or (B) that is proposed when the
domestic
company is not 
12 eligible to declare and pay a dividend or other 
13 distribution
pursuant to the provisions of Section 27.


14  (ii) Loans or extensions of credit to any person that 
15 is not an
affiliate (A) that involve the lesser of 3% of 
16 the company's
admitted assets
or 25% of the company's 
17 surplus, each as of the 31st day of December next

18 preceding, made with the agreement or understanding that 
19 the proceeds of
such transactions, in whole or in 
20 substantial part, are to be used to make
loans or 
21 extensions of credit to, to purchase assets of, or to make

22 investments in, any affiliate of the company making such 
23 loans or extensions of
credit or (B) that are proposed when 
24 the domestic company is not eligible to
declare and
pay a 
25 dividend or other distribution pursuant to the provisions 
26 of
Section 27.


 
 
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1  (iii) Reinsurance agreements or modifications thereto, 
2 including all reinsurance pooling agreements, reinsurance 
3 agreements in which the reinsurance premium or a change in 
4 the company's liabilities, or the projected reinsurance 
5 premium or a change in the company's liabilities in any of 
6 the next 3 years, equals or exceeds 5% of the company's 
7 surplus as regards policyholders, as of the 31st day of 
8 December next preceding, including those
agreements that 
9 may require as consideration the transfer of assets from a 
10 company an
insurer to a nonaffiliate, if an agreement or 
11 understanding exists between the company
insurer and 
12 nonaffiliate that any portion of those assets will be 
13 transferred
to one or more affiliates of the company 
14 insurer.


15  (iv) All management agreements, service contracts, 
16 other than agency contracts, tax allocation agreements, 
17 all reinsurance allocation agreements related to 
18 reinsurance agreements required to be filed under this 
19 Section, and all cost-sharing
arrangements, and any other 
20 contracts providing for the rendering of services
on a 
21 regular systematic basis.


22  (v) Direct or indirect acquisitions or investments in a 
23 person that controls the company, or in an affiliate of the 
24 company, in an amount which, together with its present 
25 holdings in such investments, exceeds 2.5% of the company's 
26 surplus as regards policyholders. Direct or indirect 
 
 
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1 acquisitions or investments in subsidiaries acquired 
2 pursuant to Section 131.2 of this Article (or authorized 
3 under any other Section of this Code), or in non-subsidiary 
4 insurance affiliates that are subject to the provisions of 
5 this Article, are exempt from this requirement.
6  (vi) Any series of the previously described 
7 transactions that are
substantially similar to each other, 
8 that take place within any 180 day period,
and that in 
9 total are equal to or exceed the lesser of 3% of the 
10 domestic company's
insurer's
admitted assets or 25% of its 
11 policyholders surplus, as of the 31st day of the
December 
12 next preceding.


13  (vii) (vi) Any other material transaction that the

14 Director by rule determines
might render the company's 
15 surplus as regards policyholders
unreasonable in
relation 
16 to the company's outstanding liabilities and inadequate to 
17 its
financial needs or may otherwise adversely affect the 
18 interests of the
company's policyholders or shareholders.

19 Nothing herein contained shall be deemed to authorize or 
20permit any
transactions that, in the case of a company an 
21insurer not a member of the same holding
company system, would 
22be otherwise contrary to law.".