CHAPTER 23. REGULATION OF INSURANCE HOLDING COMPANY SYSTEMS
IC 27-1-23
Chapter 23. Regulation of Insurance Holding Company Systems
IC 27-1-23-1
Definitions
Sec. 1. As used in this chapter, the following terms shall have the
respective meanings set forth in this section, unless the context shall
otherwise require:
(a) An "acquiring party" is the specific person by whom an
acquisition of control of a domestic insurer or of any corporation
controlling a domestic insurer is to be effected, and each person who
directly, or indirectly through one (1) or more intermediaries,
controls the person specified.
(b) An "affiliate" of, or person "affiliated" with, a specific person,
is a person that directly, or indirectly through one (1) or more
intermediaries, controls, or is controlled by, or is under common
control with, the person specified.
(c) A "beneficial owner" of a voting security includes any person
who, directly or indirectly, through any contract, arrangement,
understanding, relationship, revocable or irrevocable proxy, or
otherwise has or shares:
(1) voting power including the power to vote, or to direct the
voting of, the security; or
(2) investment power which includes the power to dispose, or
to direct the disposition, of the security.
(d) "Commissioner" means the insurance commissioner of this
state.
(e) "Control" (including the terms "controlling", "controlled by",
and "under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a person, whether through the beneficial
ownership of voting securities, by contract other than a commercial
contract for goods or nonmanagement services, or otherwise, unless
the power is the result of an official position or corporate office.
Control shall be presumed to exist if any person beneficially owns
ten percent (10%) or more of the voting securities of any other
person. The commissioner may determine this presumption has been
rebutted only by a showing made in the manner provided by section
3(k) of this chapter that control does not exist in fact, after giving all
interested persons notice and an opportunity to be heard. Control
shall be presumed again to exist upon the acquisition of beneficial
ownership of each additional five percent (5%) or more of the voting
securities of the other person. The commissioner may determine,
after furnishing all persons in interest notice and opportunity to be
heard, that control exists in fact, notwithstanding the absence of a
presumption to that effect.
(f) "Department" means the department of insurance created by
IC 27-1-1-1.
(g) A "domestic insurer" is an insurer organized under the laws of
this state.
(h) "Earned surplus" means an amount equal to the unassigned
funds of an insurer as set forth in the most recent annual statement
of an insurer that is submitted to the commissioner, excluding surplus
arising from unrealized capital gains or revaluation of assets.
(i) An "insurance holding company system" consists of two (2) or
more affiliated persons, one (1) or more of which is an insurer.
(j) "Insurer" has the same meaning as set forth in IC 27-1-2-3,
except that it does not include:
(1) agencies, authorities, or instrumentalities of the United
States, its possessions and territories, the Commonwealth of
Puerto Rico, the District of Columbia, or a state or political
subdivision of a state;
(2) fraternal benefit societies; or
(3) nonprofit medical and hospital service associations.
The term includes a health maintenance organization (as defined in
IC 27-13-1-19) and a limited service health maintenance organization
(as defined in IC 27-13-1-27).
(k) A "person" is an individual, a corporation, a limited liability
company, a partnership, an association, a joint stock company, a
trust, an unincorporated organization, any similar entity or any
combination of the foregoing acting in concert, but shall not include
any securities broker performing no more than the usual and
customary broker's function.
(l) A "policyholder" of a domestic insurer includes any person
who owns an insurance policy or annuity contract issued by the
domestic insurer, any person reinsured by the domestic insurer under
a reinsurance contract or treaty between the person and the domestic
insurer, and any health maintenance organization with which the
domestic insurer has contracted to provide services or protection
against the cost of care.
(m) A "subsidiary" of a specified person is an affiliate controlled
by that person directly or indirectly through one or more
intermediaries.
(n) "Surplus" means the total of gross paid in and contributed
surplus, special surplus funds, and unassigned surplus, less treasury
stock at cost.
(o) "Voting security" includes any security convertible into or
evidencing a right to acquire a voting security.
(Formerly: Acts 1971, P.L.387, SEC.1.) As amended by Acts 1981,
P.L.244, SEC.1; P.L.26-1991, SEC.8; P.L.8-1993, SEC.416;
P.L.130-1994, SEC.28; P.L.116-1994, SEC.38; P.L.26-1994, SEC.9;
P.L.2-1995, SEC.100; P.L.203-2001, SEC.5.
IC 27-1-23-1.5
Dividend payments; notice; content
Sec. 1.5. (a) A domestic insurer that is a member of an insurance
holding company system may not pay a dividend unless the insurer
notifies the department of the dividend and the department receives
the notice from the insurer:
(1) not more than five (5) business days after the declaration of
the dividend or distribution; and
(2) at least ten (10) days before the payment of the dividend or
distribution.
(b) A notice provided by an insurer under subsection (a) must
contain information indicating that the surplus of the insurer as
regards policyholders will be:
(1) reasonable in relation to the outstanding liabilities of the
insurer; and
(2) adequate to the financial needs of the insurer;
following the payment of the dividend.
(c) After receiving a notice from an insurer under this section, the
department shall promptly consider the information set forth in the
notice under subsection (b). In the department's consideration of the
information, the department shall apply the factors set forth in
section 4(f) of this chapter.
As added by P.L.130-1994, SEC.29 and P.L.116-1994, SEC.39.
IC 27-1-23-2
Acquisition of domestic insurance company; statement to
commissioner; hearings; notice; approval; exceptions; process
Sec. 2. (a) No person other than the issuer shall commence a
tender offer for or a request or invitation for tenders of, or enter into
any agreement to purchase or exchange securities for, or otherwise
seek to acquire, or acquire, in the open market or otherwise, or solicit
proxies relating to, any voting security of a domestic insurer or of
any corporation controlling a domestic insurer if, after the
consummation thereof, such person would, directly or indirectly (or
by conversion or by exercise of any right to acquire), be in control of
such insurer, and no person shall enter into an agreement to acquire
control of a domestic insurer or of any corporation controlling a
domestic insurer unless, at the time any such offer, request, or
invitation is commenced or any such agreement is entered into, or
any such solicitation is begun, or prior to the acquisition of such
securities if no offer or agreement is involved:
(1) each acquiring party has filed with the commissioner and
has sent to such insurer and any such controlling corporation a
statement containing the information required by this section;
(2) the offer, request, invitation, agreement, solicitation, or
acquisition has been approved by the commissioner; and
(3) two (2) business days have elapsed following the
commissioner's determination approving the offer, request,
invitation, agreement, solicitation, or acquisition;
all in the manner prescribed in this section.
(b) A statement to be filed with the commissioner under this
section shall be made under oath or affirmation and shall contain the
following information:
(1) The name and address of the acquiring party.
(2) If the acquiring party is an individual, his principal
occupation and all offices and positions held during the past
five (5) years, and any conviction of crimes other than minor
traffic violations during the past ten (10) years.
(3) If the acquiring party is not an individual, a report of the
nature of its business operations during the past five (5) years
or for such lesser period as the acquiring party and any
predecessors thereof shall have been in existence, including, but
not limited to:
(A) information relating to the acquisition or disposition of
control by the acquiring party of any other person and any
subsequent material change in the financial condition,
management, organization, or operations of such other
person;
(B) an informative description of the business intended to be
done by the acquiring party and its affiliates;
(C) any plans or proposals for the conduct of the business or
employment of the assets and surplus of the domestic insurer
and any corporation controlling such insurer;
(D) an informative description of any transaction in which
the acquiring party received, employed, or used any
affiliate's assets;
(E) an informative description of any transaction or
presently proposed transaction between the acquiring party
and any of its affiliates in which either such acquiring party
or such affiliate has a direct or indirect material interest;
however, no information need be given as to any such
transaction where the amount involved in the transaction or
series of similar transactions, including all periodic
payments or installments in the case of any lease or
agreement providing for periodic payments or installments,
does not or would not exceed one hundred thousand dollars
($100,000); and
(F) a list of all individuals who are or who have been
selected to become directors or officers of the acquiring
party, or who perform or will perform functions appropriate
to such positions, such list to include for each such
individual the information required by clause (2) of this
subsection.
(4) The source, nature, and amount of the consideration to be
used in effecting the acquisition of control, a description of any
transaction wherein funds were or are to be obtained for any
such purpose (including any pledge of the insurer's stock, or the
stock of any of the insurer's subsidiaries or controlling
affiliates), all documents evidencing, supporting, referring to,
or relating to any such transaction and the identity of persons
who are furnishing or who will furnish such consideration.
(5) Fully audited financial information as to the earnings and
financial condition of the acquiring party for its preceding five
(5) fiscal years (or for such lesser period as such acquiring party
and any predecessors thereof shall have been in existence), and
similar unaudited information as of a date not earlier than
ninety (90) days prior to the filing of the statement.
(6) Any plans or proposals which the acquiring party may have
to liquidate such domestic insurer or such controlling
corporation, to sell its assets or merge or consolidate it with any
person, or to make any other material change in its investment
policy, business, corporate structure, or management.
(7) The number of shares of any security referred to in
subsection (a) which the acquiring party proposes to acquire,
the terms of the proposed offer, request, invitation, agreement,
or acquisition referred to in subsection (a), and a statement as
to the method by which the terms of the proposal were arrived
at.
(8) The amount of each class of any security referred to in
subsection (a) which is beneficially owned or concerning which
there is a right to acquire beneficial ownership by the acquiring
party.
(9) A full description of any contracts, arrangements, or
understandings with respect to any security referred to in
subsection (a) in which the acquiring party proposes to be or is
involved, including but not limited to transfer of any of the
securities, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss or guarantees
of profits, division of losses or profits, or the giving or
withholding of proxies. Such description shall identify the
persons with whom such contracts, arrangements, or
understandings have been or will be entered into.
(10) A description of the purchase of any security referred to in
subsection (a) during the twelve (12) calendar months preceding
the filing of the statement by the acquiring party, including the
dates of purchase, names of the purchasers, and consideration
paid or agreed to be paid therefor.
(11) A description of any recommendations to purchase any
security referred to in subsection (a) made during the twelve
(12) calendar months preceding the filing of the statement by
the acquiring party, or by anyone, based upon interviews or at
the suggestion of such acquiring party.
(12) Copies of the proposed forms of all tender offers for,
requests or invitations for tenders of, exchange offers for, and
agreements to acquire or exchange any securities referred to in
subsection (a), and of the proposed form of additional soliciting
material relating thereto.
(13) The terms of any agreement, contract, or understanding
made or proposed to be made with any broker-dealer as to
solicitation of securities referred to in subsection (a) for tender,
and the amount of any fees, commissions, or other
compensation paid or to be paid to broker-dealers with regard
thereto.
(14) A full description of any existing or proposed contracts,
arrangements, or understandings between the acquiring party
and any present or former director, officer, or employee of the
domestic insurer or of any corporation controlling such insurer.
Such description shall identify the persons with whom such
contracts, arrangements, or understandings have been or will be
entered into.
(15) Copies of all studies, analyses, and reports which were
prepared by or for the acquiring party or any affiliate of the
acquiring party for the purpose of evaluating or analyzing the
proposed acquisition of control with respect to market shares,
competition, competitors, markets, and potential for growth or
expansion into product or geographic markets.
(16) If the acquiring party or any affiliate of the acquiring party
is an insurer:
(A) the amount of any premiums, deposits, or annuity
considerations received by the insurer during each of the last
five (5) fiscal years (calculated on an accrual basis) for each
line of insurance business conducted in any section of this
state, and copies of annual statements for each of the last
five (5) fiscal years filed by any such insurer with the
insurance regulatory authority of its domiciliary jurisdiction;
(B) a full and complete description of any direct or indirect
reinsurance relationship between the acquiring party or any
affiliate of the acquiring party and the domestic insurer or
any affiliate of the domestic insurer, together with copies of
any treaties or contracts relating to that relationship; and
(C) such additional information as the commissioner may by
rule or order prescribe as necessary or appropriate to enable
him to make the determination required by subsection (e)(2).
(17) Such additional information as the commissioner may by
rule or order prescribe as necessary or appropriate for the
protection of policyholders or in the public interest.
If any material change occurs in the facts set forth in a statement
filed with the commissioner and sent to the insurer and any
controlling corporation under this section, an amendment made under
oath or affirmation setting forth the change, together with copies of
all documents and other material relevant to the change, shall be filed
with the commissioner and sent to the insurer and any controlling
corporation within two (2) business days after any acquiring party
learns of this change.
(c) If any acquiring party is a partnership, limited partnership,
syndicate, or other group, the commissioner may require that the
information called for by subdivisions (1) through (17) of subsection
(b) shall be given with respect to each partner of such partnership or
limited partnership, each member of such syndicate or group, and
each person who controls such partner or member. If any such
partner, member, person, or acquiring party is a corporation, the
commissioner may require that the information called for by
subdivisions (1) through (17) shall be given with respect to all
individuals who are or have been selected to become directors or
officers of any such corporation or who perform or will perform
functions appropriate to these positions.
(d) If the proposed acquisition of control referred to in subsection
(a) requires the filing of a registration statement under the federal
Securities Act of 1933 (15 U.S.C. 77a-15 U.S.C. 77aa) or requires
the disclosure of similar information under the federal Securities
Exchange Act of 1934 (15 U.S.C. 78a-15 U.S.C. 78kk) or under a
state law requiring similar registration or disclosure, an acquiring
party may utilize such documents in furnishing the information
called for by the statement.
(e) The commissioner shall hold a public hearing on the proposed
acquisition of control referred to in subsection (a) and shall thereafter
approve such acquisition of control only if he finds, by a
preponderance of the evidence, that:
(1) the acquisition of control would not tend to affect adversely
the contractual obligations of the domestic insurer or its ability
and tendency to render service in the future to its policyholders
and the public;
(2) the effect of the acquisition of control would not be
substantially to lessen competition in any line of insurance
business in any section of this state or tend to create a
monopoly therein;
(3) the financial condition of any acquiring party is not such as
might jeopardize the financial stability of the domestic insurer
or of any corporation controlling such insurer, or prejudice the
interest of its policyholders;
(4) the plans or proposals which any acquiring party has to
liquidate the domestic insurer or any such controlling
corporation, sell its assets or consolidate or merge it with any
person, or to make any other material change in its investment
policy, business, corporate structure, or management are fair
and reasonable to policyholders of the domestic insurer and in
the public interest; and
(5) the competence, experience, and integrity of those persons
who would control the operation of the domestic insurer are
such that the acquisition of control would not tend to affect
adversely the general capacity or intention of the domestic
insurer to transact the business of insurance in a safe and
prudent manner.
(f) For the purposes of the commissioner's application of the
competitive standard set forth in subsection (e)(2) to a proposed
acquisition:
(1) the acquiring person must file a pre-acquisition notification
that meets the requirements set forth in section 2.5(e) of this
chapter;
(2) the commissioner shall apply the provisions of section
2.5(h) of this chapter; and
(3) the commissioner may not disapprove the acquisition based
upon the application of subsection (e)(2) if the commissioner
finds that either of the conditions set forth in section 2.5(i) of
this chapter applies to the proposed acquisition.
(g) The public hearing referred to in subsection (e) shall be held
within sixty (60) days after all statements required by subsection (a)
are filed, or within such longer period after the statements are filed
as the commissioner determines upon a showing of good cause
therefor, in the city of Indianapolis at such place, date, and time as
the commissioner shall specify. At least thirty (30) days written
notice of the hearing shall be given by the commissioner to each
acquiring party, the domestic insurer, any corporation controlling
such insurer, and to other persons as the commissioner may
designate. In the event that an amendment to any such statement is
filed, the hearing shall be postponed for a further period not to
exceed sixty (60) days after the filing of such amendment, or for such
longer period after the amendment is filed as the commissioner
determines upon a showing of good cause therefor.
(h) The commissioner shall give notice of the hearing by
publication in a newspaper of general circulation in the city of
Indianapolis, and in the city wherein is located the principal office of
the domestic insurer, and in such other city or cities as he may deem
appropriate. Any policyholder of the domestic insurer who makes a
written request to the commissioner is entitled to a copy of all
statements, amendments, or other material filed with the
commissioner by any acquiring party.
(i) The commissioner may retain at the acquiring party's expense
any attorneys, actuaries, accountants, and other experts not otherwise
a part of the commissioner's staff as may be reasonably necessary to
assist the commissioner in reviewing the proposed acquisition of
control. All hearing expenses, including transcript costs, expenses of
publication and of preparing and mailing material to policyholders,
shall be borne equally by each acquiring party. As security for the
payment of such expenses, each acquiring party shall file with the
commissioner an acceptable bond or other deposit in an amount to be
determined by the commissioner.
(j) At such hearing, each acquiring party, the domestic insurer,
any corporation controlling such insurer, policyholders of the
domestic insurer, and any other person whose interests may be
affected by the proposed acquisition of control shall have the right
to appear and become party to the proceeding. Each such person
shall have the right to present evidence, examine and cross-examine
witnesses, and offer oral and written arguments and in connection
therewith shall be entitled to conduct discovery proceedings in the
same manner as provided in the Indiana Rules of Trial Procedure.
The commissioner may employ any sanction or power granted courts
in the Indiana Rules of Trial Procedure, excluding the power of
contempt, to enforce his discovery rulings or orders. The
commissioner shall make a determination within thirty (30) days
after the conclusion of such hearing and shall immediately upon
making that determination notify all persons who appeared and
became parties to the proceeding of that determination. To permit an
aggrieved party to perfect an appeal under IC 27-1-23-12, no offer,
request, invitation, agreement, or acquisition referred to in subsection
(a) may be commenced, entered into, or consummated until two (2)
business days have elapsed following the commissioner's
determination approving an acquisition of control.
(k) Except as otherwise provided in this section, the hearing and
the determination made therein shall be subject to IC 4-21.5-3.
(l) The provisions of this section shall not apply to the following:
(1) Any merger, consolidation, or plan of exchange to be
consummated with the approval of the commissioner under the
laws of this state.
(2) Any transaction to be undertaken under a statutory
procedure for the purchase of dissenting shareholder's stock.
(3) Any transaction to be undertaken under a judicially
approved reorganization.
(4) Any offer, request, invitation, agreement, solicitation, or
acquisition respecting any security of a domestic insurer or of
any corporation controlling such insurer if any acquiring party,
immediately prior to such offer, request, invitation, agreement,
solicitation, or acquisition being commenced, entered into,
begun, or consummated, beneficially owns more than fifty
percent (50%) of all the outstanding voting securities of such
domestic insurer or corporation controlling such insurer.
(5) Any solicitation of proxies respecting any security of a
domestic insurer or of any corporation controlling a domestic
insurer that is undertaken by the management or the board of
directors of the issuer of the security for purposes other than
effecting, directly or indirectly, a transaction that would
otherwise be subject to the requirements of this section.
(6) Any offer, request, invitation, agreement, solicitation, or
acquisition respecting a security of a non-insurance corporation
controlling one (1) or more domestic insurers if all of the
following conditions are met:
(A) the offer, request, invitation, agreement, solicitation, or
acquisition has been approved by the insurance regulatory
authority of any state or territory of the United States of
America other than Indiana, and the insurance regulatory
authority of the state or territory has been accredited by the
National Association of Insurance Commissioners;
(B) the domestic insurer or insurers meet all of the following
conditions, determined in accordance with generally
accepted accounting principles:
(i) the investments in and advances to the domestic insurer
or insurers by the controlling non-insurance corporation
and its other subsidiaries equal less than ten percent (10%)
of the total assets of the controlling non-insurance
corporation and all of its subsidiaries consolidated as of
the end of the most recently completed fiscal year;
(ii) the proportionate share of the controlling
non-insurance corporation and its other subsidiaries in the
total assets (after intercompany eliminations) of the
domestic insurer or insurers equals less than ten percent
(10%) of the total assets of the controlling non-insurance
corporation and all of its subsidiaries consolidated as of
the end of the most recently completed fiscal year; and
(iii) the equity of the controlling non-insurance
corporation and its other subsidiaries in the income from
continuing operations before income taxes, extraordinary
items, and the cumulative effect of a change in accounting
principle of the domestic insurer or insurers is less than
ten percent (10%) of the income of that corporation and all
of its subsidiaries consolidated for the end of the most
recently completed fiscal year; and
(C) the commissioner has not determined that the application
of this section to the offer, request, invitation, agreement,
solicitation, or acquisition is necessary or appropriate for the
protection of policyholders of the domestic insurer or
insurers.
(7) Any acquisition of stock of a former mutual by a parent
company, as those terms are defined in IC 27-15-1, that occurs
in connection with the conversion of a mutual insurance
company to a stock insurance company under IC 27-15,
provided that no person acquires control of the parent company.
(m) The courts of this state are hereby vested with jurisdiction
over every acquiring party not resident, domiciled, or authorized to
do business in this state, and over all actions involving each such
acquiring party arising out of violations of this section, and each such
acquiring party shall be deemed to have performed acts equivalent to
and constituting an appointment by the acquiring party of the
commissioner to be his true and lawful attorney upon whom may be
served all lawful process in any action, suit, or proceeding arising out
of violations of this section. Copies of all such lawful process shall
be served on the commissioner and transmitted by registered or
certified mail by the commissioner to such acquiring party at his last
known address.
(Formerly: Acts 1971, P.L.387, SEC.1.) As amended by Acts 1979,
P.L.252, SEC.1; Acts 1981, P.L.244, SEC.2; P.L.2-1987, SEC.38;
P.L.26-1991, SEC.9; P.L.130-1994, SEC.30; P.L.116-1994, SEC.40;
P.L.94-1999, SEC.2.
IC 27-1-23-2.5
Acquisitions in which there is a change in control of an insurer;
preacquisition notification; waiting period; competitive standards;
violations; order; penalties
Sec. 2.5. (a) The following definitions apply throughout this
section:
(1) "Acquisition" means any agreement, arrangement, or
activity the consummation of which results in a person
acquiring directly or indirectly the control of another person.
The term includes the acquisition of voting securities, and the
acquisition of assets, assumption reinsurance, and mergers.
(2) "Involved insurer" includes an insurer that:
(A) acquires;
(B) is acquired;
(C) is affiliated with an acquirer;
(D) is affiliated with an acquired; or
(E) is the result of a merger.
(b) Except as provided in subsection (c), this section applies to
any acquisition in which there is a change in control of an insurer
authorized to do business in Indiana.
(c) This section does not apply to the following:
(1) An acquisition subject to approval or disapproval by the
commissioner under section 2 of this chapter.
(2) A purchase of securities solely for investment purposes, so
long as those securities are not used by voting or otherwise to
cause or attempt to cause the substantial lessening of
competition in any insurance market in this state. If a purchase
of securities results in a presumption of control under section
1(e) of this chapter, it is not solely for investment purposes
unless the commissioner of the insurer's state of domicile
accepts a disclaimer of control or affirmatively finds that
control does not exist and this disclaimer action or affirmative
finding is communicated by the domiciliary commissioner to
the commissioner of Indiana.
(3) The acquisition of a person by another person when both
persons are neither directly nor through affiliates primarily
engaged in the business of insurance, if a pre-acquisition
notification is filed with the commissioner in accordance with
subsection (d) at least thirty (30) days before the proposed
effective date of the acquisition. However, a pre-acquisition
notification is not required for an exclusion from this section if
the acquisition would otherwise be excluded from this section
by any other subdivision of this subsection.
(4) The acquisition of persons already affiliated with the
acquirer.
(5) An acquisition if, as an immediate result of the acquisition:
(A) in no market would the combined market share of the
involved insurers exceed five percent (5%) of the total
market;
(B) there would be no increase in any market share; or
(C) in no market would the combined market share of the
involved insurers:
(i) exceed twelve percent (12%) of the total market; or
(ii) increase by more than two percent (2%) of the total
market.
(6) An acquisition for which a pre-acquisition notification
would be required under this section due solely to the resulting
effect on the ocean marine insurance line of business.
(7) An acquisition of an insurer, if:
(A) the domiciliary commissioner of the insurer
affirmatively finds that:
(i) the insurer is in failing condition;
(ii) there is a lack of feasible alternatives to improving that
condition; and
(iii) the public benefits of improving the insurer's
condition through the acquisition exceed the public
benefits that would arise from not lessening competition;
and
(B) those findings are communicated by the domiciliary
commissioner to the commissioner of Indiana.
For the purposes of this subsection, a "market" means the total direct
written insurance premium of all insurers providing insurance in
Indiana for a particular line of business, as reported in the annual
statements required to be filed by insurers licensed to do business in
Indiana.
(d) An order pursuant to subsection (j) may be entered with
respect to an acquisition to which this section applies unless the
acquiring person files a pre-acquisition notification with respect to
the acquisition and the waiting period referred to in subsection (f)
has expired. An acquired person may also file a pre-acquisition
notification with respect to an acquisition. Information in
pre-acquisition notifications filed under this section is confidential
and protected from disclosure under section 6 of this chapter.
(e) A pre-acquisition notification filed under this section must be
in the form and must contain the information prescribed by the
National Association of Insurance Commissioners with respect to
markets that meet the description set forth in subsection (c)(5),
causing an acquisition not to be exempted from the provisions of this
section. The commissioner may require additional material and
information that the commissioner considers necessary to determine
whether the proposed acquisition, if consummated, would violate the
competitive standard set forth in subsection (g). The required
information may include an opinion of an economist as to the
competitive impact of the acquisition in Indiana, accompanied by a
summary of the education and experience of the economist,
indicating the economist's ability to render an informed opinion.
(f) The waiting period required with respect to a proposed
acquisition begins on the day when the commissioner receives a
pre-acquisition notification and ends:
(1) on the thirtieth day after the day the commissioner receives
the notification; or
(2) upon the commissioner's termination of the waiting period,
if earlier.
Before the end of the waiting period, the commissioner, on a
one-time basis, may require the submission of additional needed
information relevant to the proposed acquisition. If the commissioner
requests additional information under this subsection, the waiting
period ends on the earlier of the thirtieth day after receipt of the
additional information by the commissioner or the termination of the
waiting period by the commissioner.
(g) The commissioner may enter an order under subsection (j)
with respect to an acquisition if:
(1) there is substantial evidence that the effect of the acquisition
may be substantially to lessen competition in any line of
insurance in Indiana or to tend to create a monopoly in any line
of insurance in Indiana; or
(2) the insurer fails to file adequate information in compliance
with subsections (d) and (e).
(h) In determining whether a proposed acquisition to which this
section applies would violate the competitive standard set forth in
subsection (g), the commissioner shall consider the following:
(1) An acquisition to which this section applies that involves
two (2) or more insurers competing in the same market is prima
facie evidence of a violation of the competitive standard:
(A) If the market is highly concentrated and the involved
insurers possess the following shares of the market:
(i) Insurer A a share of four percent (4%) and insurer B a
share of 4% or more.
(ii) Insurer A a share of ten percent (10%) and insurer B a
share of two percent (2%) or more.
(iii) Insurer A a share of fifteen percent (15%) and insurer
B a share of one percent (1%) or more.
(B) If the market is not highly concentrated and the involved
insurers possess the following shares of the market:
(i) Insurer A a share of five percent (5%) and insurer B a
share of five percent (5%) or more.
(ii) Insurer A a share of ten percent (10%) and insurer B a
share of four percent (4%) or more.
(iii) Insurer A a share of fifteen percent (15%) and insurer
B a share of three percent (3%) or more.
(iv) Insurer A a share of nineteen percent (19%) and
insurer B a share of one percent (1%) or more.
For the purposes of this subdivision, a highly concentrated
market is a market in which the share of the four (4) largest
insurers is seventy-five percent (75%) or more of the market.
Percentages not referred to in this subdivision must be
interpolated proportionately to the percentages that are referred
to in this subdivision. If more than two (2) insurers are involved
in a proposed acquisition, exceeding the total of the two (2)
figures set forth for insurer A and insurer B in an item set forth
in this subdivision is prima facie evidence of violation of the
competitive standard set forth in subsection (g). For the purpose
of this subdivision, the insurer with the largest share of the
market shall be considered to be insurer A.
(2) There is a significant trend toward increased concentration
when the aggregate market share of any grouping of the largest
insurers in the market, from the two (2) largest to the eight (8)
largest, has increased by seven percent (7%) or more of the
market over a period of time extending from any base year five
(5) to ten (10) years before the acquisition up to the time of the
acquisition. Any acquisition or merger to which this section
applies involving two (2) or more insurers competing in the
same market is prima facie evidence of violation of the
competitive standard set forth in subsection (g) if:
(A) there is a significant trend toward increased
concentration in the market;
(B) one (1) of the insurers involved is one (1) of the insurers
in a grouping of those large insurers showing the requisite
increase in the market share; and
(C) the market share of another involved insurer is two
percent (2%) or more.
(3) For the purposes of this subsection:
(A) The term "insurer" includes any company or group of
companies under common management, ownership, or
control.
(B) The term "market" means the relevant product and
geographical markets. In determining the relevant product
and geographical markets with respect to an acquisition, the
commissioner shall give due consideration to, among other
things, the definitions or guidelines, if any, promulgated by
the National Association of Insurance Commissioners, and
to information, if any, submitted by parties to the
acquisition. In the absence of sufficient information to the
contrary, the relevant product market is assumed to be the
direct written insurance premium for a line of business that
is used in the annual statement required to be filed by
insurers doing business in Indiana, and the relevant
geographical market is assumed to be Indiana.
(C) The burden of showing prima facie evidence of a
violation of the competitive standard rests upon the
commissioner.
(4) Even though an acquisition is not prima facie violative of
the competitive standard under subdivisions (1) and (2), the
commissioner may establish the requisite anticompetitive effect
based upon other substantial evidence. Even though an
acquisition is prima facie violative of the competitive standard
under subdivisions (1) and (2), a party may establish the
absence of the requisite anticompetitive effect based upon other
substantial evidence. Relevant factors in making a
determination under this subdivision include, but are not limited
to, the following:
(A) Market shares.
(B) Volatility of ranking of market leaders.
(C) Number of competitors.
(D) Concentration and trend of concentration in the industry.
(E) Ease of entry into and exit from the market.
(i) An order may not be entered under subsection (j) if:
(1) the acquisition will yield substantial economies of scale or
economies in resource utilization that cannot be feasibly
achieved in any other way, and the public benefits that would
arise from those economies exceed the public benefits that
would arise from not lessening competition; or
(2) the acquisition will substantially increase the availability of
insurance, and the public benefits of that increase exceed the
public benefits that would arise from not lessening competition.
(j) If an acquisition violates the standards set forth in this section,
the commissioner may enter an order:
(1) requiring an involved insurer to cease and desist from doing
business in Indiana with respect to the line or lines of insurance
involved in the violation; or
(2) denying the application of an acquired or acquiring insurer
for a license to do business in Indiana.
(k) An order may not be entered under subsection (j) unless:
(1) there is a hearing;
(2) notice of the hearing is issued before the end of the waiting
period and not less than fifteen (15) days before the hearing;
and
(3) the hearing is concluded and the order is issued not more
than sixty (60) days after the end of the waiting period.
Every order shall be accompanied by a written decision of the
commissioner setting forth the commissioner's findings of fact and
conclusions of law.
(l) An order entered under subsection (j) shall not become final
less than thirty (30) days after it is issued, during which time the
involved insurer may submit a plan to remedy the anticompetitive
impact of the acquisition within a reasonable time. Based upon that
plan or other information, the commissioner shall specify the
conditions, if any, under which the aspects of the acquisition causing
a violation of the standards of this section would be remedied and the
order vacated or modified, and the time period within which those
aspects would have to remedied.
(m) An order entered under subsection (j) does not apply if the
acquisition to which the order applies is not consummated.
(n) A person who violates a cease and desist order issued by the
commissioner under subsection (j) while that order is in effect may,
after notice and hearing under IC 4-21.5 and upon order of the
commissioner, be subject at the discretion of the commissioner to
any one (1) or more of the following:
(1) A civil penalty of not more than ten thousand dollars
($10,000) for each day of violation.
(2) The suspension or revocation of the person's license.
(3) Both a monetary penalty under subdivision (1) and the
suspension or revocation or the person's license under
subdivision (2).
(o) An insurer or other person who fails to make any filing
required by this section and also fails to demonstrate a good faith
effort to comply with that filing requirement is subject to a civil
penalty of not more than fifty thousand dollars ($50,000).
(p) Sections 8(b), 8(c), and 10 of this chapter do not apply to an
acquisition to which this section applies.
As added by P.L.26-1991, SEC.10.
IC 27-1-23-2.6
Primary and subsidiary companies
Sec. 2.6. (a) As used in this section, "entity" means:
(1) a sole proprietorship;
(2) a corporation;
(3) a limited liability company;
(4) a partnership;
(5) an association;
(6) a joint stock company;
(7) a mutual fund;
(8) a joint venture;
(9) a trust;
(10) a joint tenancy;
(11) an unincorporated organization; or
(12) a similar entity.
(b) As used in this section, "primary company" means a domestic
insurance company that beneficially owns more than fifty percent
(50%) of one (1) or more subsidiary companies.
(c) As used in this section, "subsidiary company" means an entity
of which more than fifty percent (50%) is beneficially owned by an
insurance company.
(d) As used in this section, "total investment of the primary
company" means the total of:
(1) a direct investment by a primary company in an asset; plus
(2) the primary company's proportionate share of an investment
made by a subsidiary company of the primary company.
The primary company's proportionate share must be determined by
multiplying the amount of the subsidiary company's investment by
the percentage of the primary company's ownership interest in the
subsidiary company.
(e) A primary company may, independently or in cooperation with
another person, organize or acquire one (1) or more subsidiary
companies.
(f) A subsidiary company of a primary company may conduct
business of any kind, and the authority to conduct the business is not
limited because of the status of the subsidiary company as a
subsidiary company of the primary company.
(g) In addition to investments in common stock, preferred stock,
debt obligations, and other securities as permitted under IC 27-1-12-2
or IC 27-1-13-3, a primary company to which this section applies
may, directly or through one (1) or more subsidiary companies, also
do the following:
(1) Invest in common stock, preferred stock, debt obligations,
and other securities of one (1) or more subsidiary companies,
amounts that in total do not exceed the lesser of ten percent
(10%) of the primary company's admitted assets or fifty percent
(50%) of the primary company's surplus as regards
policyholders, if, after the investments, the primary company's
surplus as regards policyholders is reasonable in relation to the
primary company's outstanding liabilities and adequate to the
primary company's financial needs. In calculating the amount of
investments permitted under this subdivision:
(A) investments, whether made directly or through one (1)
or more subsidiary companies, in domestic or foreign
insurance subsidiary companies and health maintenance
organizations must be excluded; and
(B) to the extent that expenditures relate to an investment
other than an investment described in clause (A), the
following must be included:
(i) Total net money or other consideration expended and
obligations assumed in the acquisition or formation of a
subsidiary company, including all organizational expenses
and contributions to capital and surplus of the subsidiary
company, whether or not represented by the purchase of
capital stock or issuance of other securities.
(ii) All amounts expended in acquiring additional common
stock, preferred stock, debt obligations, and other
securities and all contributions to the capital or surplus of
a subsidiary company subsequent to the subsidiary
company's acquisition or formation.
(2) Notwithstanding subdivision (1), invest an amount in
common stock, preferred stock, debt obligations, and other
securities of one (1) or more subsidiary companies engaged or
organized to engage exclusively in the ownership and
management of assets authorized as investments for the primary
company, if the subsidiary company agrees to limit the
subsidiary company's investment in an asset so that, when
combined with the investments of the primary company, the
total investment of the primary company will not exceed the
investment limitations described in subdivision (1) or in any
applicable provision of IC 27-1-12-2 or IC 27-1-13-3.
(3) Notwithstanding subdivision (1), with the prior approval of
the commissioner, invest a greater amount in common stock,
preferred stock, debt obligations, or other securities of one (1)
or more subsidiary companies, if, after the investment, the
primary company's surplus as regards policyholders is
reasonable in relation to the primary company's outstanding
liabilities and adequate to the primary company's financial
needs.
(h) Investments that are made under this section in common stock,
preferred stock, debt obligations, or other securities of a subsidiary
company are not subject to restrictions or prohibitions under
IC 27-1-12-2 or IC 27-1-13-3 that otherwise apply to investments of
primary companies.
(i) Before a primary company to which this section applies makes
an investment described in subsection (g), a primary company shall
make a determination regarding whether the proposed investment
meets the applicable requirements by determining the applicable
investment limitations as though the investment has been made,
considering:
(1) the currently outstanding principal balance on previous
investments in debt obligations; and
(2) the value of previous investments in equity securities as of
the day that the investments in equity securities were made;
net of any return of capital invested.
(j) If a primary company ceases to control a subsidiary company,
the primary company shall dispose of any investment in the
subsidiary company made under this section not more than:
(1) three (3) years from the time of the cessation of control; or
(2) the period determined appropriate by the commissioner;
unless the investment meets the requirements for investment under
any applicable provision of IC 27-1-12-2 or IC 27-1-13-3 and the
primary company has notified the commissioner that the investment
meets the requirements.
(k) A primary company, at the time of establishing a subsidiary
company, must possess:
(1) assets of not less than twenty-five million dollars
($25,000,000); or
(2) not less than three million five hundred thousand dollars
($3,500,000) of:
(A) combined capital and surplus in the case of a stock
company; and
(B) surplus in the case of a mutual company.
(l) The department has the power to:
(1) conduct periodic examinations of a subsidiary company;
(2) require reports that reflect the effect of the condition and
operation of a subsidiary company on the financial condition of
a primary company; and
(3) make additional examinations or require other reports with
respect to a subsidiary company that are necessary to carry out
the purposes of this section.
A noninsurance subsidiary company shall annually furnish the
department financial statements that are prepared under generally
accepted accounting principles and certified by an independent
certified public accountant and the department may rely on the
statements. If a subsidiary company conducts the business of the
subsidiary company in a manner that clearly tends to impair the
capital or surplus fund of the primary company, or otherwise makes
the operation of the primary company financially unsafe, the
department may act under IC 27-1-3-19 with respect to the primary
company.
(m) A primary company and a subsidiary company shall, in all
respects, stand before the law as separate and distinct companies and
neither company is liable to the creditors, policyholders, or
stockholders of the other company, acts or omissions of an officer,
director, stockholder, or member of either company notwithstanding.
(n) The board of directors and officers of a primary company and
a subsidiary company may be identical. However, the affairs of each
company shall be carried on separate and distinct from the other
company.
(o) A foreign subsidiary company shall be treated in the same
manner as other foreign companies, except that the treatment may be
withheld or suspended with respect to a subsidiary company that is
domiciled in a state that does not treat a:
(1) primary company; or
(2) subsidiary company;
that is domiciled in Indiana in a manner equal to a foreign or
domestic company doing business in the other state.
(p) Interests in a subsidiary company that are owned by a primary
company must be registered in the name of the primary company
except for shares that are required under Indiana law to be registered
in the name of another person.
As added by P.L.126-2001, SEC.3.
IC 27-1-23-3
Registration statement; amendments; termination; disclaimer of
affiliation
Sec. 3. (a) Every insurer which is authorized to do business in this
state and which is a member of an insurance holding company
system shall register with the commissioner, except a foreign insurer
subject to disclosure requirements and standards adopted by statute
or regulation in the jurisdiction of its domicile which are
substantially similar to those contained in:
(1) this section;
(2) section 4(a) and 4(c) of this chapter; and
(3) section 4(b) of this chapter or a provision such as the
following:
Each registered insurer shall keep current the information
required to be disclosed in its registration statement by
reporting all material changes or additions within fifteen
days after the end of the month in which it learns of each
such change or addition.
Any insurer which is subject to registration under this section shall
register within fifteen (15) days after it becomes subject to
registration, and annually thereafter by March 15 of each year for the
previous calendar year, unless the commissioner for good cause
shown extends the time for registration, and then within such
extended time. The commissioner may require any authorized insurer
which is a member of an insurance holding company system but not
subject to registration under this section to furnish a copy of the
registration statement or other information filed by such insurer with
the insurance regulatory authority of its domiciliary jurisdiction.
(b) Every insurer subject to registration shall file a registration
statement on a form prescribed by the commissioner, which shall
contain current information about:
(1) the capital structure, general financial condition, ownership
and management of the insurer and any person controlling the
insurer;
(2) the identity of every member of the insurance holding
company system;
(3) the following agreements in force, relationships subsisting,
and transactions that are currently outstanding or that have
occurred during the last calendar year between such insurer and
its affiliates:
(i) loans, other investments, or purchases, sales or exchanges
of securities of the affiliates by the insurer or of the insurer
by its affiliates;
(ii) purchases, sales, or exchanges of assets;
&n