|(a) Filing Requirements. Filing and other regulatory
requirements for acquisitions, changes of control, or divestitures
and certain other matters as specified in the Act, §823.153 and
§823.154, are governed by the Act, §823.153 and §823.154.
For purposes of this subsection, a domestic insurer as defined in
the Act, §823.153, includes any person controlling a domestic
insurer, including a commercially domiciled insurer, unless the person
is, either directly or through its affiliates, primarily engaged in
business other than the business of insurance. A change or substitution
of an attorney-in-fact of a Lloyds' or reciprocal or interinsurance
exchange is subject to the Act, §823.154. A failure to file complete
and accurate information in all material respects is grounds for a
denial by the commissioner under the Act, §823.157.
(b) Form and content of statement. The statement required
by subsection (a) of this section (elsewhere referred to as acquisition
or divestiture statement) must be made in accord with §7.209
of this title (relating to Form A), the acquisition or divestiture
statement, §7.209(a) - (n) and §7.209(o), respectively.
The acquiring party must provide additional financial information
in form or substance as required by the commissioner which is material
to the finding required by the Act, §823.157. Any financial information
required under the Act, §823.203, may be waived by the commissioner
if the information is not deemed material. No statement required by
subsection (a) of this section will be deemed filed with the commissioner
until the date all material required and sufficient to constitute
a full statement has been provided.
(c) Partnerships and corporate filings. If the person
required to file the acquisition statement is a partnership, limited
partnership, syndicate, or other group, the commissioner may require
that the information called for by §7.209 of this title be given
with respect to each partner of the partnership or limited partnership,
each member of the syndicate or group, and each person who controls
the partner or member. If any partner, member, or person is a corporation
or if the person required to file the statement referred to in subsection
(a) of this section is a corporation, the commissioner may require
that the information called for by §7.209 be given with respect
to the corporation and by each executive officer and director of the
corporation, and each person who is directly or indirectly the beneficial
owner of more than 10 percent of the outstanding voting securities
of the corporation.
(d) Amendment. If any material change occurs in the
facts set forth in the acquisition or divestiture statement filed
with the commissioner, an amendment setting forth the change, together
with copies of all documents and other material relevant to the change,
must be filed with the commissioner and sent to the domestic insurer
within two business days after the person learns of the change.
(e) Acquisition or divestiture of a domestic insurer
as defined in subsection (a) of this section.
(1) If the person being acquired or divested is a domestic
insurer solely because of the provisions of subsection (a) of this
section, the name of the domestic insurer on the cover page should
be indicated as follows: "ABC Insurance Company, a subsidiary of XYZ
(2) Where a domestic insurer as defined in subsection
(a) of this section is being acquired or divested, references to "the
insurer" contained in §7.209 of this title refer to both the
domestic subsidiary insurer and the person being acquired or divested.
(f) Approval or denial by commissioner; hearings. All
mergers, acquisitions, changes of control, or divestitures and other
matters specified in the Act, §823.154, and mergers contemplated
by Insurance Code §441.006, are subject to the Act, §823.157.
The acquiring or divesting party has the burden of providing sufficient
competent evidence for the commissioner to make the determinations
required under the Act, §823.157.
(g) Notices; payment of expenses.
(1) Notices, payments of expenses, and other matters
specified in the Act, §823.156, must comport with that subsection.
(2) All provisions of Insurance Code Chapter 823, and
this subchapter relating to the timely mailing of a copy of the acquisition
or divestiture statement, and relating to the timely mailing of a
copy of a notice of hearing before the commissioner to an insurer,
may be waived by the written unanimous consent of the insurer and
the person or persons filing such acquisition or divestiture statement.
The written waiver must acknowledge receipt of a copy of the acquisition
or divestiture statement.
(h) Exemptions. The provisions of this section do not
apply to transactions and other matters exempted under the Act, §823.164.
A restructuring within an insurance holding company system which results
in a direct or indirect change in control of a domestic insurer is
subject to the Act, §823.164(h)(1). An acquisition of a voting
security of a domestic insurer specified in the Act, §823.164(f)(1)
and (2), must be disclosed by amendment to the registration statement
as provided in §7.203(f) of this title (relating to Registration
of Insurers). An acquisition of a voting security of a domestic insurer
by a security holder controlling, directly and indirectly, 50 percent
of the then issued and outstanding voting securities of the domestic
insurer, is subject to the Act, §823.164(g). An acquisition of
a voting security of an insurer domiciled in this state which is not
subject to the Act, §823.154, by virtue of the Act, §823.153,
is subject to the Act, §823.164(h)(2).
(i) Retention of control. For certain matters relating
to retention of control and certain violations of the Act, see the
(j) Duty of insurer. Authorized insurers must notify
the commissioner of control of, or of actions to acquire control of,
an insurer as required by the Act, §823.161.
(k) Preliminary filings. Any acquisition or divestiture
statement may be preliminarily filed with the commissioner to obtain
a preliminary review by the commissioner. It must be clearly marked
or designated as a preliminary filing. The preliminary filing must
not invoke the requirements of this subchapter or Insurance Code Chapter
823, requiring that notice be given to the affected insurer involved.
The preliminary filing will have no legal effect and does not constitute
compliance with Insurance Code Chapter 823, and this subchapter. The
commissioner is not bound by the preliminary review nor deemed to
have in any manner approved the filing.
(l) Violations. The following are violations of this
(1) the failure to file any statement, amendment, or
other material required to be filed under this section; or
(2) the effectuation of, or any attempt to effectuate,
an acquisition, change of control of, divestiture, or merger with,
a domestic insurer unless the commissioner has approved it.
(m) Additional violations. Each director or officer
of an insurance company subject to these sections, or of an insurance
holding company system subject to these sections, who knowingly and
willfully violates, participates in, or assents to or who knowingly
and willfully permits any of the officers, agents, or employees of
the insurer or holding company system to engage in transactions or
make investments that have not been properly reported or submitted
under these sections or that knowingly and willfully violate these
sections, is subject to administrative penalty under Insurance Code
(n) Additional sanctions. An entity that holds a certificate
of authority granted by the department or the commissioner and that
violates the Insurance Code is subject to the sanctions authorized
under Insurance Code §§82.001-82.056.
(o) Producer-controlled property and casualty insurer.
(1) For purposes of this section, a controlling producer,
as defined in §7.202(a)(8) of this title (relating to Definitions),
is subject to the filing requirements of the Act, in addition to the
(A) No acquisition of an insurer by a controlling producer
in another state may be approved by the commissioner under the Act,
§823.157, unless the acquiring party demonstrates, to the satisfaction
of the commissioner, compliance with the requirements contained in
subparagraph (B) of this paragraph.
(B) Approval of the acquisition of an insurer by a
controlling producer in another state may not be approved unless the
following requirements are met.
(i) Required contract provisions. A controlled insurer
must not accept business from a controlling producer and a controlling
producer must not place business with a controlled insurer unless
there is a written contract between the controlling producer and the
controlled insurer specifying the responsibilities of each party,
which contract has been approved by the board of directors of the
controlled insurer and which contains the following:
(I) a provision that the controlled insurer may terminate
the contract for cause, upon written notice to the controlling producer.
The controlled insurer must suspend the authority of the controlling
producer to write business during the pendency of any dispute regarding
the cause for the termination;
(II) a provision that the controlling producer render
accounts to the controlled insurer detailing all material transactions,
including information necessary to support all commissions, charges,
and other fees received by, or owing to, the controlling producer;
(III) a provision that the controlling producer remit
all funds due under the terms of the contract to the controlled insurer
on at least a monthly basis. The due date must be fixed so that the
premiums or installments collected are remitted no later than 90 days
after the effective date of any policy placed with the controlled
insurer under this contract;
(IV) a provision that all funds collected for the controlled
insurer's account must be held by the controlling producer in a fiduciary
capacity, in one or more appropriately identified bank accounts in
banks that are members of the Federal Reserve System;
(V) a provision that the controlling producer maintain
separately identifiable records of business written for the controlled
(VI) a provision that the contract not be assigned
in whole or in part by the controlling producer;
(VII) a provision that the controlled insurer provide
the controlling producer with its underwriting standards, rules, procedures,
manuals setting forth the rates to be charged, and the conditions
for the acceptance or rejection of risks. The controlling producer
must adhere to the standards, rules, procedures, rates, and conditions.
The standards, rules, procedures, rates, and conditions must be the
same as those applicable to comparable business placed with the controlled
insurer by a producer other than the controlling producer;
(VIII) a provision establishing the rate and terms
of the controlling producer's commissions, charges, or other fees
and the purposes for those charges or fees. The rates of the commissions,
charges, and other fees must be no greater than those applicable to
comparable business placed with the controlled insurer by producers
other than controlling producers. For purposes of this subclause and
subclause (VII) of this clause, examples of "comparable business"
include the same lines of insurance, same kinds of insurance, same
kinds of risks, similar policy limits, and similar quality of business;
(IX) a provision that, if the contract provides that
the controlling producer, on insurance business placed with the insurer,
is to be compensated contingent upon the insurer's profits on that
business, the compensation must not be determined and paid until at
least five years after the premiums on liability insurance are earned
and at least one year after the premiums are earned on any other insurance.
No commissions may be paid until the adequacy of the controlled insurer's
reserves on remaining claims has been independently verified;
(X) a provision limiting the controlling producer's
writings in relation to the controlled insurer's surplus and total
writings. The controlled insurer may establish a different limit for
each line or subline of business. The controlled insurer must notify
the controlling producer when the applicable limit is approached and
must not accept business from the controlling producer if the limit
is reached. The controlling producer must not place business with
the controlled insurer if it has been notified by the controlled insurer
that the limit has been reached; and
(XI) a provision that the controlling producer may
negotiate but must not bind reinsurance on behalf of the controlled
insurer on business the controlling producer places with the controlled
insurer, except that the controlling producer may bind facultative
reinsurance contracts pursuant to obligatory facultative agreements
if the contract with the controlled insurer contains underwriting
guidelines including, for both reinsurance assumed and ceded, a list
of reinsurers with which the automatic agreements are in effect, the
coverages and amounts or percentages that may be reinsured, and commission