New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on November 7, 2001, representing the position of the New York State Insurance Department.

Re: Acquisition of Control of a Registered Controlled Domestic Insurer

Questions Presented:

1.Is the Superintendent’s prior approval pursuant to N. Y. Ins. Law § 1506 (a)(2) (McKinney 2000) necessary in the case where an existing parent of a registered controlled domestic insurer intends to set up an intermediate holding company between itself and the controlled insurer and there is no change of control regarding the ultimate parent?

2. If not, does the Department require notification of same?

Conclusions:

1. No. Prior notice to and approval by the Superintendent is not required in the event of a creation of an intermediate holding company since such change does not alter the indirect controlling influence of the ultimate parent over a domestic insurer within the meaning of N. Y. Ins. Article 15 (McKinney 2000).

2. No. However, changes involving other controlling persons outside the holding company system of the existing parent in situations where such parent does not have 100% control over the controlled domestic insurer may require notice and prior approval.

Facts:

A specific fact pattern was not provided.

Analysis:

N. Y. Ins. Law § 1506 (a)(2) (McKinney 2000) states: "No 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. Ins. Law § 1501 (a)(2) (McKinney 2000) defines "control" and related forms of that word to mean "the possession direct or indirect of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract. . . or otherwise. . . " Imposition of an intermediate holding company between the existing parent and controlled domestic insurer would not generally result in a change of control requiring the Superintendent’s prior approval where the ultimate parent retained 100% control over the domestic insurer.

Anyone seeking guidance based upon a specific fact pattern concerning the possibility that prior approval requirements of N. Y. Ins. Law § 1506(a) (McKinney 2000) may apply may submit advance notice to the appropriate bureau at the Department, applying for a determination of no change in control pursuant to N. Y. Ins. Law § 1501(c) (McKinney 2000).

For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.