Section 27-29-2 Subsidiaries and affiliates of domestic insurers.
Section 27-29-2
Subsidiaries and affiliates of domestic insurers.
(a) Authorization. Any domestic insurer, either by itself or in cooperation with one or more persons, may organize or acquire one or more subsidiaries or affiliates in accordance with the provisions contained in this section. Such subsidiaries or affiliates may conduct any kind of business, or businesses, permitted by the Constitution and the laws of this state, and their authority to do so shall not be limited by reason of the fact that they are subsidiaries or affiliates of a domestic insurer.
(b) Additional investment authority. In addition to investments in common stock, preferred stock, debt obligations, and other securities permitted under all other sections of this title, a domestic insurer may also:
(1) Invest, in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries or affiliates, including, without limitation, domestic or foreign insurance subsidiaries or affiliates, amounts which do not exceed the lesser of 10 percent of such insurer's assets or 50 percent of the total of the insurer's capital and surplus as shown in the latest annual report of the insurer filed pursuant to subsection (a) of Section 27-3-26, less the minimum capital and surplus required of said insurer for authority to transact insurance by Sections 27-3-7 and 27-3-8, provided that after such investments, the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs. In calculating the amount of such investments, investments in domestic and foreign insurance subsidiaries shall be excluded, and there shall be included:
a. Total net moneys or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary or affiliate, including all organizational expenses and contributions to capital and surplus of such subsidiary or affiliate, whether or not represented by the purchase of capital stock or issuance of other securities; and
b. All amounts expended in acquiring additional common stock, debt obligations, and other securities and all contributions to the capital or surplus of a subsidiary or affiliate subsequent to its acquisition or formation;
(2) Invest any amount in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries engaged or organized to engage exclusively in the ownership and management of assets authorized as investments for the insurer provided that each such subsidiary agrees to limit its investments in any asset so that such investments will not cause the amount of the total investment of the insurer to exceed any of the investment limitations specified in subdivision (1) of this subsection or in Sections 27-41-15 through 27-41-18 and 27-41-35. For the purpose of this subdivision, "the total investment of the insurer" shall include:
a. Any direct investment by the insurer in an asset; and
b. The insurer's proportionate share of any investment in an asset by any subsidiary or affiliate of the insurer, which shall be calculated by multiplying the amount of the subsidiary's investment by the percentage of the insurer's ownership of such subsidiary or affiliate;
(3) With the approval of the commissioner, invest any amount in common stock, preferred stock, debt obligations, or other securities of one or more subsidiaries or affiliates, provided that after such investment the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs.
(c) Exemption from investment restrictions. Investments in common stock, preferred stock, debt obligations, or other securities of subsidiaries or affiliates made pursuant to subsection (b) of this section shall not be subject to any of the otherwise applicable restrictions or prohibitions contained in this title applicable to such investments of insurers.
(d) Qualification of investment; when determined. Whether any investment pursuant to subsection (b) of this section meets the applicable requirements thereof is to be determined immediately after such investment is made, taking into account the then outstanding principal balance on all previous investments in debt obligations and the value of all previous investments in equity securities as of the date they were made.
(e) Cessation of control. If an insurer ceases to control a subsidiary, it shall dispose of any investment therein made pursuant to this section within three years from the time of the cessation of control or within such further time as the commissioner may prescribe, unless at any time after such investment shall have been made such investment shall have met the requirements for investment under any other section of this title, and the insurer has notified the commissioner.
(Acts 1973, No. 1042, p. 1636, §3; Acts 1980, No. 80-199, p. 276; Acts 1981, No. 81-314, p. 446; Acts 1994, No. 94-634, p. 1178, §2.)