Section 1601. Authority to invest in subsidiaries; businesses of subsidiaries. 1602. Minimum ownership of subsidiaries` shares. 1603. Notice of intent to acquire. 1605. When corporation is deemed a subsidiary. 1606. Valuation of shares of subsidiary. 1607. Subsidiary`s name not to mislead. 1608. Relationships and transactions between parent and subsidiary. 1609. Prohibitions on investments of subsidiaries. 1610. Authority to conduct certain business directly instead of through subsidiary. 1611. Aggregate limitations. 1612. Regulations. S 1601. Authority to invest in subsidiaries; businesses of subsidiaries. (a) (1) A domestic insurer authorized to make investments by subsection (c) of section one thousand four hundred three of this chapter may, subject to section one thousand two hundred eighteen of this chapter invest in, or otherwise acquire, subsidiaries engaged or organized to engage in any business lawful under the laws of the jurisdiction in which such subsidiaries are organized. (2) Notwithstanding the provisions of paragraph one of this subsection, no assessment corporation, as defined in subsection (b) of section six thousand six hundred two of this chapter, shall invest in or otherwise acquire, directly or indirectly, an insurance company if such investment or acquisition results in the control of such insurance company by the assessment corporation. (b) Except as prohibited by paragraph two of subsection (a) of this section, subsidiaries engaged or organized to engage exclusively in owning or investing in insurers, directly or indirectly, are subject to the limitations set forth in sections one thousand two hundred eighteen and one thousand four hundred eight of this chapter. S 1602. Minimum ownership of subsidiaries` shares. A domestic insurer shall own not less than fifty-one percent of the issued and outstanding voting shares of each of its subsidiaries. S 1603. Notice of intent to acquire. (a) No acquisition of a majority of any corporation`s outstanding common shares shall be made pursuant to this article unless a notice of intention of such proposed acquisition shall have been filed with the superintendent not less than ninety days, or such shorter period as may be permitted by the superintendent, in advance of such proposed acquisition, nor shall any such acquisition be made if the superintendent at any time prior thereto finds that the proposed acquisition is contrary to law or determines that such proposed acquisition would be contrary to the best interests of the parent insurer`s policyholders or of the people of this state. Only the following factors shall be considered in making the foregoing determination: (1) the availability of the funds or assets required for such acquisition; (2) the fairness of any exchange of shares, assets, cash or other consideration for the shares or assets to be received; (3) the impact of the new operation on the parent insurer`s surplus and existing insurance business and the risks inherent in the parent insurer`s investment portfolio and operations; (4) the fairness and adequacy of the financing proposed for the subsidiary; (5) the likelihood of undue concentration of economic power; (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 might result in an excessive proliferation of subsidiaries which would tend to unduly dilute management effectiveness or weaken financial strength, or otherwise be contrary to the best interests of the parent insurer`s policyholders or of the people of this state. (b) At any time after an acquisition the superintendent may order its disposition if he finds, after notice and an opportunity to be heard, that its continued retention is hazardous or prejudicial to the interests of the parent insurer`s policyholders. (c) The contents of each notice of intention of a proposed acquisition filed hereunder and information pertaining thereto shall be kept confidential, shall not be subject to subpoena and shall not be made public unless after notice and opportunity to be heard the superintendent determines that the interests of policyholders, shareholders or the public will be served by publication. S 1605. When corporation is deemed a subsidiary. (a) For the purposes of this article: (1) any corporation a majority of whose outstanding voting shares is owned or controlled by another corporation shall be deemed the latter`s subsidiary, and (2) any corporation whose voting shares are held by a domestic insurance company pursuant to section one thousand six hundred two, one thousand six hundred three or one thousand six hundred four of this article shall be deemed the subsidiary of the insurer, provided that for purposes of section one thousand six hundred six of this article, a corporation shall be deemed the insurer`s subsidiary only so long as the insurer owns a majority of the total voting shares or retains direct or indirect control of such subsidiary. (b) For purposes of this article "voting shares" means shares of any class having voting power for the election of the corporation`s directors except shares having such power only by reason of the happening of a contingency. S 1606. Valuation of shares of subsidiary. In determining the financial condition of a domestic insurance company, all shares of its subsidiaries held pursuant to this article shall be valued in accordance with subsections (c), (f) and (g) of section one thousand four hundred fourteen of this chapter.
S 1607. Subsidiary`s name not to mislead. The name of any corporation which is a subsidiary of a domestic insurance company shall not be such as to mislead or deceive the public. S 1608. Relationships and transactions between parent and subsidiary. (a) The business operations, corporate proceedings and fiscal and accounting records of subsidiaries organized or acquired pursuant to this article shall be conducted or maintained so as to assure the separate legal and operating identities of the parent and subsidiary, but nothing herein shall preclude arrangements for common management or the cooperative or joint use of personnel, property or services otherwise consistent with this chapter. (b) All transactions between the insurer and its subsidiaries shall be fair and equitable, charges or fees for services performed shall be reasonable and all expenses incurred and payments received shall be allocated to the insurer on an equitable basis in conformity with customary insurance accounting practices consistently applied. (c) The books, accounts and records of each party to all such transactions shall be so 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. (d) The superintendent may promulgate regulations relating to such subsidiaries, their management and their relationships and transactions with their parent insurance companies and their affiliates to the extent that the same may affect the operations, management or financial condition of domestic insurers. Subsidiaries that are persons within a holding company system, as such terms are defined in article fifteen of this chapter, shall be subject to the provisions of such article. S 1609. Prohibitions on investments of subsidiaries. No subsidiary acquired by a domestic insurance company pursuant to this article shall make any investment prohibited by subsection (a) of section one thousand four hundred seven of this chapter except that an alien subsidiary may make investments in excess of the limitations described in paragraph seven of such subsection if found by the superintendent to be reasonably necessary to protect the interests of the parent corporation or those of its alien subsidiary and not prejudicial to the interests of the people of this state. S 1610. Authority to conduct certain business directly instead of through subsidiary. (a) A domestic insurance company subject to this article may, provided that it maintains books and records which separately account for such business, engage directly in any business referred to in paragraphs one, two and three of this subsection to the extent any such business is necessarily or properly incidental to the insurance business the insurer is authorized to do in this state: (1) rendering investment advice; (2) rendering services related to the functions involved in the operation of an insurance business including actuarial, loss prevention, safety engineering, data processing, accounting, claims, appraisals, collections and soliciting and engaging in the business of representing self-insurers pursuant to section fifty of the workers` compensation law; and (3) acting as administrative agent for a government instrumentality which is performing an insurance function or is responsible for a health or welfare program. (b) A domestic insurance company subject to this article may, provided that it maintains books and records which separately account for such business, engage directly in any other business activity reasonably ancillary to an insurance business to the extent any such business is approved by the superintendent and subject to any limitations he may prescribe to protect the interests of the policyholders of the insurer after taking into account: (1) the effect of such business on the insurer`s existing insurance business and its surplus, (2) the proposed allocation of the estimated cost of such business, (3) the risks inherent in such business, and (4) the relative advantages to the insurer and its policyholders of conducting such business directly instead of through a subsidiary. S 1611. Aggregate limitations. (a) The aggregate investment by the insurer and its subsidiaries in assets which are owned, managed or acquired pursuant to this article shall not exceed the limitations of this chapter otherwise applicable to such investments if held directly by the insurer. (b) The aggregate amount of the insurer`s investment in subsidiaries shall not exceed fifteen percent of the insurer`s invested assets, as defined in subsection (a) of section one thousand four hundred one of this chapter and as shown by its last statement on file with the superintendent, but excluded from this limitation shall be any investment in a subsidiary which is an insurance company and any investment in a subsidiary of the type described in paragraph nine of subsection (a) of section one thousand four hundred four or subparagraph (B) of paragraph four of subsection (a) of section one thousand four hundred seven of this chapter. S 1612. Regulations. In addition to the powers expressly given by this article, the superintendent shall have the power to promulgate, from time to time, such regulations, not inconsistent with this chapter, as may be appropriate to carry out this article and, insofar as applicable to this article, other provisions of this chapter.