The Office of General Counsel issued the following informal opinion on May 10, 2000 representing the position of the New York State Insurance Department.
Form A filing under Article 15
When an authorized insurer domiciled in any state seeks to acquire control of a domestic insurer, must the acquiring insurer obtain the prior approval of the Superintendent and complete a Form A, in accordance with N.Y. Ins. Law § 1506 (McKinney 1985) and N.Y. Comp. Codes R. & Regs. tit. 11 § 80-1.6 (1995) (Regulation 52)?
Yes, if the acquiring insurer is a controlled insurer, then the Superintendent's prior approval must be obtained and a Form A must be completed by the holding company that controls the acquiring insurer.
A non-New York domiciled property/casualty insurer, authorized in New York to do an insurance business, seeks to purchase all of the issued common stock of a New York domestic insurer. The acquiring insurer is itself a controlled insurer.
N.Y. Ins. Law § 1501(a)(3) (McKinney 1985) defines a holding company to mean " any person who directly or indirectly controls any authorized insurer." N.Y. Ins. Law § 1502 (McKinney 1985) provides that an authorized insurer, or its subsidiary, shall not be deemed to be a holding company.
N.Y. Ins. Law § 1501(a)(4) (McKinney 1985) defines a controlled insurer to mean " an authorized insurer, controlled directly or indirectly by a holding company."
N.Y. Ins. Law § 1501(a)(6) (McKinney 1985) defines a holding company system to mean " a holding company together with its controlled insurers and controlled persons."
N.Y. Ins. Law § 1506(a) (McKinney 1985) provides that "[n]o person, other than an authorized insurer, shall acquire control of any domestic insurer, whether by purchase of its securities or otherwise, unless (2) it receives the superintendent's prior approval."
N.Y. Comp. Codes R. & Regs. tit. 11 § 80-1.6 (1995) further provides that "[a]ny person, other than an authorized insurer, seeking to acquire direct or indirect control of a domestic insurer, shall furnish to the superintendent, in triplicate, the following information pursuant to Insurance Law, section 1506 " [Form A].
Section 1506(a) contains an exception from the notice and prior approval requirements of Section 1506 when an authorized insurer acquires a domestic insurer. If the acquiring insurer is not controlled, then the exception would apply inasmuch as there is no other person that would be acquiring control of the insurer. Under that set of circumstances, the Superintendent's approval would not be required and Form A would not have to be completed.
However, Article 15 looks through the layers of control in a holding company system to determine who is in ultimate control of the holding company system. Where an authorized insurer, which is itself controlled, seeks to acquire a domestic insurer, it is the holding company of the authorized insurer that is actually acquiring control over the domestic insurer since under Article 15 it is irrelevant whether control is exercised directly or indirectly. Further, pursuant to Section 1506, Regulation 52 requires the filing of Form A, whenever any person other than an authorized insurer seeks to acquire control of a domestic insurer either directly or indirectly. Hence, the holding company must comply with both Section 1506 and Regulation 52.
For further information, contact Supervising Attorney Paul A. Zuckerman at the Departments New York Office.