20-481.07. Approval and issues; notice; hearings

A. The director shall approve any merger or other acquisition of control described in section 20-481.02 unless the director finds that:

1. The merger or other acquisition of control:

(a) Is contrary to law.

(b) Is inequitable to the shareholders of any domestic insurer involved.

(c) Would substantially reduce the security of and service to be rendered to policyholders of the domestic insurer in this state or elsewhere.

2. After the change of control the domestic insurer would not be able to satisfy the requirements for the reissuance of a certificate of authority to write the line or lines of insurance for which it is presently licensed.

3. The effect of the merger or other acquisition of control would substantially lessen competition in insurance in this state or tend to create a monopoly. In applying the competitive standard in this paragraph:

(a) The informational requirements of section 20-481.25, subsection C and the standards of section 20-481.25, subsection D apply.

(b) The merger or other acquisition shall not be disapproved if the director finds that any of the situations meeting the criteria provided by section 20-481.25 exist.

(c) The director may condition the approval of the merger or other acquisition on the removal of the basis of disapproval within a specified period of time.

4. The financial condition of any acquiring party might jeopardize the financial stability of the insurer or prejudice the interest of its policyholders.

5. The plans or proposals that the acquiring party has to liquidate the insurer, sell its assets or consolidate or merge it with any person, or to make any other material change in its business or corporate structure or management, are unfair and unreasonable to policyholders of the insurer and are not in the public interest.

6. The competence, experience and integrity of those persons who would control the operation of the insurer are such that it would not be in the interest of policyholders of the insurer and of the public to permit the merger or other acquisition of control.

7. The acquisition is likely to be hazardous or prejudicial to the insurance buying public.

B. The director may conduct a hearing as prescribed in section 20-161 for any transaction requiring the director's approval pursuant to section 20-481.02.

C. The person filing the statement required by section 20-481.02 shall give at least ten days' written notice of the hearing to the insurer and to any other persons designated by the director. The insurer shall give the written notice to its security holders.

D. If the director does not give notice of a hearing pursuant to subsection B of this section, the person filing the statement shall give written notice of the filing on a form prescribed by the director to the insurer and to any other persons designated by the director. The insurer shall give the written notice to its security holders. The person filing the statement, the insurer, any designated recipient of the written notice of the filing and any person whose interests may be affected by the filing have ten days from the date of the written notice to request that the director hold a hearing on the filing pursuant to this section. The request shall specify the grounds for the hearing and the interests that would be affected by the filing.

E. If the director finds that the request is made in good faith, that the interests of the person requesting the hearing would be affected by the filing if the grounds are established and that the grounds otherwise justify holding a hearing, the director shall grant the request for a hearing and issue a notice of hearing to all persons entitled to the notice pursuant to subsection C of this section.

F. If a hearing is scheduled, the person filing the statement, the insurer, any person to whom written notice of hearing was sent and any other person whose interests may be affected shall have the right to present evidence, examine and cross-examine the witnesses and offer oral and written arguments at the hearing.

G. If the proposed acquisition of control will require the approval of other states in addition to this state, the director may hold a public hearing on a consolidated basis for the purpose of receiving public comment on a proposed agency action on request of the person filing the statement referred to in section 20-481.02. The person shall file the statement referred to in section 20-481.02 with the national association of insurance commissioners within five days after making the request for a public hearing. The director may opt out of a consolidated hearing and shall provide notice to the applicant of the opt out within ten days after receiving the statement referred to in section 20-481.02. A hearing held by the director and conducted on a consolidated basis must be public and held in the United States.

H. In connection with a change of control of a domestic insurer, the director shall make a determination that the person acquiring control of the insurer is required to maintain or restore the capital of the insurer to the level required by the laws and rules of this state within sixty days after the date of notification of the change in control that is submitted pursuant to section 20-481.03.

I. The director may retain at the acquiring person's expense attorneys, actuaries, accountants and other experts not part of the director's staff as may be reasonably necessary to assist the director in reviewing the proposed acquisition of control.

J. All statements, amendments or other material filed pursuant thereto, and all notices of public hearing held pursuant to this section, shall be mailed by the insurer to its shareholders within five business days after the insurer has received the statements, amendments, other material or notices. The person making the filing shall pay the expenses of mailing. As security for the payment of the expenses, the person shall file with the director an acceptable bond or other deposit in an amount to be determined by the director.