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

George E. Pataki
Governor

Gregory V. Serio
Superintendent

The Office of General Counsel issued the following opinion on February 19, 2004, representing the position of the New York State Insurance Department.

RE: Issuance of Unsecured Debt by a Holding Company - Approval Requirement

Question:

Must a holding company [as defined in N.Y. Ins. Law § 1501(a)(3)] obtain the prior approval of, or provide notice to, the New York State Insurance Department if the holding company wishes to issue unsecured debt?

Conclusion:

No, a holding company need not obtain the prior approval of, or provide notice to, the New York State Insurance Department if the holding company wishes to issue unsecured debt.

Facts:

The inquiry was general in nature and provided no specific facts other than that the debt issuance would not involve the pledging of any of the stock or assets of the controlled insurer.

Analysis:

N.Y. Ins. Law § 1501(a)(3) (McKinney 2000) defines a holding company as any person who directly or indirectly controls an authorized insurer. Article 15 of the New York Insurance Law (N.Y. Ins. Law §§ 1501-1510) and Regulation 52 [N.Y. Comp. Codes R. & Regs., tit. 11, §80-1 et seq. (1996)] set forth the laws and regulations governing holding companies, controlled insurers, and the conduct of transactions within a holding company system (the holding company and its controlled insurers).

The holding company rules are primarily concerned with the conduct of transactions within a holding company system. The transaction described appears to be limited to an issuance of debt by the holding company alone, which issuance will have no impact upon, or involve in any way, the controlled insurers within that holding company system or the assets of said controlled insurers. Nothing in the above-cited rules requires that the Department must approve, or be notified of, an issuance of unsecured debt by a corporation that happens to be a holding company. Accordingly, the transaction described does not require any notice to, or approval by, the Department.

For further information you may contact Supervising Attorney Michael Campanelli at the New York City Office.