Effective 28 Aug 2015

382.195. Prohibited transactions, exceptions. — 1. The following transactions involving a domestic insurer and any person in its holding company system, including amendments or modifications of affiliate agreements previously filed under this section that are subject to any materiality standards contained in subdivisions (1) to (7) of this subsection, shall not be entered into unless the insurer has notified the director in writing of its intention to enter into such transaction at least thirty days prior thereto, or such shorter period as the director may permit, and the director has not disapproved it within such period:

(1) Sales, purchases, exchanges, loans, extensions of credit, or investments if such transactions are equal to or exceed, with respect to nonlife insurers, the lesser of three percent of the insurer's admitted assets or twenty-five percent of surplus as regards policyholders, or with respect to life insurers, three percent of the insurer's admitted assets, each as of the thirty-first day of December of the preceding year;

(2) Loans or extensions of credit to any person who is not an affiliate, where the insurer makes such loans or extensions of credit with agreement or understanding that the proceeds of such transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase assets of, or to make investments in, any affiliate of the insurer making such loans or extensions of credit provided such transactions are equal to or exceed, with respect to nonlife insurers, the lesser of three percent of the insurer's admitted assets or twenty-five percent of surplus as regards policyholders, or with respect to life insurers, three percent of the insurer's admitted assets; each as of the thirty-first day of December of the preceding year;

(3) Reinsurance agreements or modifications thereto, including:

(a) All reinsurance pooling agreements;

(b) Agreements in which the reinsurance premium or a change in the insurer's liabilities, or the projected reinsurance premium or a change in the insurer's liabilities in any of the next three years equals or exceeds five percent of the insurer's surplus as regards policyholders, as of the thirty-first day of December of the preceding year, including those agreements which may require as consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement or understanding exists between the insurer and nonaffiliate that any portion of such assets will be transferred to one or more affiliates of the insurer;

(4) All management agreements, tax allocation agreements, service contracts, and all cost-sharing arrangements;

(5) Guarantees when made by a domestic insurer; provided, however, that a guarantee which is quantifiable as to amount is not subject to the notice requirements of this subdivision unless it exceeds the lesser of one-half of one percent of the insurer's admitted assets or ten percent of surplus as regards policyholders as of the thirty-first day of December next preceding. Further, all guarantees which are not quantifiable as to amount are subject to the notice requirements of this subdivision;

(6) Direct or indirect acquisitions or investments in a person that controls the insurer or in an affiliate of the insurer in an amount which, together with its present holding in such investments, exceeds two and one-half percent of the insurer's surplus to policyholders. Direct or indirect acquisitions or investments in subsidiaries acquired under section 382.020 or authorized under any other provision of this chapter or in nonsubsidiary insurance affiliates that are subject to the provisions of this chapter are exempt from such requirement; and

(7) Any material transactions, specified by regulation, which the director determines may adversely affect the interests of the insurer's policyholders.

­­The notice for amendments or modifications shall include the reasons for the change and the financial impact on the domestic insurer.

2. The provisions of subsection 1 of this section shall not be deemed to authorize or permit any transactions which, in the case of an insurer not a member of the same holding company system, would be otherwise contrary to law.

3. A domestic insurer shall not enter into transactions which are part of a plan or series of like transactions with persons within the insurance holding company system if the purpose of those separate transactions is to avoid the statutory threshold amount and thus avoid the review that would occur otherwise. If the director determines that such separate transactions were entered into over any twelve-month period for such purpose, the director may exercise his or her authority under section 382.265.

4. In reviewing transactions under subsection 1 of this section, the director shall consider whether the transactions comply with the standards set forth in section 382.190 and whether they may adversely affect the interest of policyholders.

5. The director shall be notified within thirty days of any investment of the domestic insurer in any one corporation if the total investment in the corporation by the insurance holding company system exceeds ten percent of the corporation's voting securities.

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(L. 1992 H.B. 1574, A.L. 2015 H.B. 50)