(1) A domestic insurer, either by itself or
in cooperation with one or more persons, may organize or acquire one or more
subsidiaries engaged in the following kinds of business:
(a) Any kind of insurance business authorized by the jurisdiction in which it is
incorporated;
(b) Acting as an insurance broker or insurance agent for its parent or for any
of its parent's insurer subsidiaries;
(c) Investing, reinvesting, or trading in securities for its own account or that
of its parent, a subsidiary of its parent, or an affiliate or subsidiary;
(d) Management of an investment company subject to or registered pursuant
to the federal Investment Company Act of 1940, 15 U.S.C. sec. 80a-1 et seq., as
amended, including related sales and services;
(e) Acting as a broker-dealer subject to or registered pursuant to the federal
Securities Exchange Act of 1934, 15 U.S.C. sec. 78a et seq., as amended;
(f) Rendering investment advice to governments, government agencies,
corporations, or other organizations or groups;
(g) Rendering other services related to the operations of an insurance
business, such as actuarial, loss prevention, safety engineering, data processing,
accounting, claims, appraisal, and collection services;
(h) Ownership and management of assets that the parent corporation could
itself own or manage;
(i) Acting as administrative agent for a governmental instrumentality that is
performing an insurance function;
(j) Financing of insurance premiums, agents, and other forms of consumer
financing;
(k) Any other business activity determined by the commissioner to be
reasonably ancillary to an insurance business;
(l) Owning a corporation or corporations engaged or organized to engage
exclusively in one or more of the businesses specified in this section; and
(m) Any other kind of business that, in the opinion of the commissioner,
would be in the best interest of the insurer and would not be detrimental to the
policyholders or the public.
(2) In addition to investments in common stock, preferred stock, debt
obligations, and other securities permitted under other provisions of this title, a
domestic insurer may also:
(a) Invest, in common stock, preferred stock, debt obligations, and other
securities of one or more subsidiaries, amounts that do not exceed the lesser of ten
percent of the insurer's assets or fifty percent of the insurer's surplus as regards
policyholders if, after such investments, the insurer's surplus as regards
policyholders will be reasonable in relation to the insurer's outstanding liabilities
and adequate to meet its financial needs. In calculating the amount of the
investments, the commissioner shall exclude investments in domestic or foreign
insurance subsidiaries and shall include:
(I) Total net moneys or other consideration expended and obligations
assumed in the acquisition or formation of a subsidiary, including all organizational
expenses and contributions to capital and surplus of the subsidiary whether or not
represented by the purchase of capital stock or issuance of other securities;
(II) All amounts expended in acquiring additional common stock, preferred
stock, debt obligations, and other securities; and
(III) All contributions to the capital or surplus of a subsidiary after its
acquisition or formation.
(b) Invest any amount in common stock, preferred stock, debt obligations,
and other securities of one or more subsidiaries engaged or organized to engage
exclusively in the ownership and management of assets authorized as investments
for the insurer if each subsidiary agrees to limit its investments in any asset so that
the investments will not cause the amount of the total investment of the insurer to
exceed any of the investment limitations specified in paragraph (a) of this
subsection (2) or in sections 10-3-213 to 10-3-242 applicable to the insurer. For the
purpose of this paragraph (b), the total investment of the insurer includes:
(I) Any direct investment by the insurer in an asset; and
(II) The insurer's proportionate share of any investment in an asset by a
subsidiary of the insurer, which shall be calculated by multiplying the amount of the
subsidiary's investment by the percentage of the ownership of the subsidiary; and
(c) With the approval of the commissioner, invest any greater amount in
common stock, preferred stock, debt obligations, or other securities of one or more
subsidiaries if, after the investment, the insurer's surplus as regards policyholders
will be reasonable in relation to the insurer's outstanding liabilities and adequate to
its financial needs.
(3) Investments in common stock, preferred stock, debt obligations, or other
securities of subsidiaries made in accordance with subsection (2) of this section are
admitted assets of a domestic insurer, and such investments are not subject to any
of the otherwise-applicable restrictions or limitations applicable to the investments
of insurers.
(4) Any provision of this title to the contrary notwithstanding, any investment
by a domestic insurer in the common stock, preferred stock, debt obligations, or
other securities of one or more insurance companies that are wholly owned
subsidiaries of the domestic insurer are admitted assets of the domestic insurer,
subject to the following provisions:
(a) If the authorized lines of business of the investing company and any such
wholly owned subsidiary corporation together do not constitute the lines of
business of a multiple-line company, the common stock, preferred stock, debt
obligations, and other securities of the subsidiary corporation are not at any time an
admitted asset of the investing company unless at such time the two companies
have, without taking the common stock, preferred stock, debt obligations, and other
securities into account as an asset of the investing company, a combined capital or
guaranty fund and a combined surplus that are at least equal, respectively, to the
sum of the minimum capital or minimum guaranty fund required by law for the
authorized line of business of each of the two companies and the sum of the
minimum surplus required by law for the authorized line of business of each of the
two companies; except that this paragraph (a) does not apply to an investing
company that is a fraternal benefit society.
(b) If the authorized lines of business of the investing company and any such
wholly owned subsidiary corporation together constitute the lines of business of a
multiple-line company, the common stock, preferred stock, debt obligations, and
other securities of the wholly owned subsidiary corporation are not at any time an
admitted asset of the investing company unless at such time the two companies
have, without taking the stock into account as an asset of the investing company, a
combined capital or guaranty fund and a combined surplus that are at least equal,
respectively, to the minimum capital or guaranty fund and the minimum surplus
required by law for the multiple-line company.
(c) If the authorized lines of business of any two insurance companies that
are members of a chain of corporations directly or indirectly owned by a common
parent corporation together constitute the lines of business of a multiple-line
company, the common stock, preferred stock, debt obligations, and other securities
of either of the two insurance companies are at any time an admitted asset of any
insurance company, including the common parent corporation, that is a member of
such chain of corporations, unless at such time the two insurance companies have a
combined capital or guaranty fund and a combined surplus that are at least equal,
respectively, to the minimum capital or guaranty fund and the minimum surplus
required by law for such a multiple-line company.
(5) Whether any investment made pursuant to subsection (2) of this section
meets the applicable requirements of that subsection (2) is to be determined before
the investment is made, by calculating the applicable investment limitations as
though the investment had already been made, taking into account the then-outstanding principal balance on all previous investments in debt obligations, and
the value of all previous investments in equity securities as of the day they were
made, net of any return of capital invested, not including dividends.
(6) If an insurer ceases to control a subsidiary, it shall dispose of any
investment made in the subsidiary pursuant to this section within three years after
the time of the cessation of control or within such further time as the commissioner
may prescribe, unless at any time after the investment has been made, the
investment meets the requirements for investment under any other section of this
title and the insurer has so notified the commissioner.
(7) Nothing in this part 8 prohibits a domestic insurer that, with the prior
approval of the commissioner, organized or acquired a subsidiary from continuing to
hold the insurer's investments in the subsidiary or from making further investments
in the subsidiary consistent with subsection (2) of this section, if the subsidiary
engages only in the kind of business that was represented to the commissioner as a
basis for such approval.