§ 27-1-23-2 — Acquisition of domestic insurance company; statement to commissioner; hearings; notice; approval; exceptions; process

(a) No person other than the issuer shall
commence a tender offer for or a request or invitation for tenders of, or
enter into any agreement to purchase or exchange securities for, or
otherwise seek to acquire, or acquire, in the open market or otherwise,
or solicit proxies relating to, any voting security of a domestic insurer
or of any corporation controlling a domestic insurer if, after the
consummation thereof, such person would, directly or indirectly (or by
conversion or by exercise of any right to acquire), be in control of such
insurer, and no person shall enter into an agreement to acquire control
of a domestic insurer or of any corporation controlling a domestic
insurer unless, at the time any such offer, request, or invitation is
commenced or any such agreement is entered into, or any such
solicitation is begun, or prior to the acquisition of such securities if no
offer or agreement is involved:
(1) each acquiring party has filed with the commissioner and has
sent to such insurer and any such controlling corporation a
statement containing the information required by this section;
(2) the offer, request, invitation, agreement, solicitation, or
acquisition has been approved by the commissioner; and
(3) two (2) business days have elapsed following the
commissioner's determination approving the offer, request,
invitation, agreement, solicitation, or acquisition;
all in the manner prescribed in this section.
(b) Unless a statement described in subsection (a) is otherwise filed,
the following apply to an acquisition or a divestiture of a person's
controlling interest in a domestic insurer:
(1) If a controlling person of a domestic insurer seeks to divest the
person's controlling interest, the person shall:
(A) file with the commissioner a confidential notice of the
person's proposed divestiture at least thirty (30) days before the
person ceases control; and
(B) send a copy of the filing required by clause (A) to the
insurer.
(2) The commissioner shall determine whether a person:
(A) described in subdivision (1); or
(B) that seeks to acquire a controlling interest in a domestic
insurer;
is required to obtain from the commissioner approval of the
divestiture or acquisition.
(3) Information obtained by the commissioner under this
subsection is confidential until the conclusion of the divestiture
or acquisition unless the commissioner determines that
maintaining confidentiality of the information interferes with
enforcement of this section.
(c) A statement to be filed with the commissioner under this section
shall be made under oath or affirmation and shall contain the following
information:
(1) The name and address of the acquiring party.
(2) If the acquiring party is an individual, the individual's
principal occupation and all offices and positions held during the
past five (5) years, and any conviction of crimes other than minor
traffic violations during the past ten (10) years.
(3) If the acquiring party is not an individual, a report of the
nature of its business operations during the past five (5) years or
for such lesser period as the acquiring party and any predecessors
thereof shall have been in existence, including, but not limited to:
(A) information relating to the acquisition or disposition of
control by the acquiring party of any other person and any
subsequent material change in the financial condition,
management, organization, or operations of such other person;
(B) an informative description of the business intended to be
done by the acquiring party and its affiliates;
(C) any plans or proposals for the conduct of the business or
employment of the assets and surplus of the domestic insurer
and any corporation controlling such insurer;
(D) an informative description of any transaction in which the
acquiring party received, employed, or used any affiliate's
assets;
(E) an informative description of any transaction or presently
proposed transaction between the acquiring party and any of its
affiliates in which either such acquiring party or such affiliate
has a direct or indirect material interest; however, no
information need be given as to any such transaction where the
amount involved in the transaction or series of similar
transactions, including all periodic payments or installments in
the case of any lease or agreement providing for periodic
payments or installments, does not or would not exceed one
hundred thousand dollars ($100,000); and
(F) a list of all individuals who are or who have been selected
to become directors or officers of the acquiring party, or who
perform or will perform functions appropriate to such positions,
such list to include for each such individual the information
required by subdivision (2).
(4) The source, nature, and amount of the consideration to be used
in effecting the acquisition of control, a description of any
transaction wherein funds were or are to be obtained for any such
purpose (including any pledge of the insurer's stock, or the stock
of any of the insurer's subsidiaries or controlling affiliates), all
documents evidencing, supporting, referring to, or relating to any
such transaction and the identity of persons who are furnishing or
who will furnish such consideration.
(5) Fully audited financial information as to the earnings and
financial condition of the acquiring party for its preceding five (5)
fiscal years (or for such lesser period as such acquiring party and
any predecessors thereof shall have been in existence), and
similar unaudited information as of a date not earlier than ninety
(90) days prior to the filing of the statement.
(6) Any plans or proposals which the acquiring party may have to
liquidate such domestic insurer or such controlling corporation,
to sell its assets or merge or consolidate it with any person, or to
make any other material change in its investment policy, business,
corporate structure, or management.
(7) The number of shares of any security referred to in subsection
(a) which the acquiring party proposes to acquire, the terms of the
proposed offer, request, invitation, agreement, or acquisition
referred to in subsection (a), and a statement as to the method by
which the terms of the proposal were arrived at.
(8) The amount of each class of any security referred to in
subsection (a) which is beneficially owned or concerning which
there is a right to acquire beneficial ownership by the acquiring
party.
(9) A full description of any contracts, arrangements, or
understandings with respect to any security referred to in
subsection (a) in which the acquiring party proposes to be or is
involved, including but not limited to transfer of any of the
securities, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss or guarantees
of profits, division of losses or profits, or the giving or
withholding of proxies. Such description shall identify the persons
with whom such contracts, arrangements, or understandings have
been or will be entered into.
(10) A description of the purchase of any security referred to in
subsection (a) during the twelve (12) calendar months preceding
the filing of the statement by the acquiring party, including the
dates of purchase, names of the purchasers, and consideration
paid or agreed to be paid therefor.
(11) A description of any recommendations to purchase any
security referred to in subsection (a) made during the twelve (12)
calendar months preceding the filing of the statement by the
acquiring party, or by anyone, based upon interviews or at the
suggestion of such acquiring party.
(12) Copies of the proposed forms of all tender offers for, requests
or invitations for tenders of, exchange offers for, and agreements
to acquire or exchange any securities referred to in subsection (a),
and of the proposed form of additional soliciting material relating
thereto.
(13) The terms of any agreement, contract, or understanding made
or proposed to be made with any broker-dealer as to solicitation
of securities referred to in subsection (a) for tender, and the
amount of any fees, commissions, or other compensation paid or
to be paid to broker-dealers with regard thereto.
(14) A full description of any existing or proposed contracts,
arrangements, or understandings between the acquiring party and
any present or former director, officer, or employee of the
domestic insurer or of any corporation controlling such insurer.
Such description shall identify the persons with whom such
contracts, arrangements, or understandings have been or will be
entered into.
(15) Copies of all studies, analyses, and reports which were
prepared by or for the acquiring party or any affiliate of the
acquiring party for the purpose of evaluating or analyzing the
proposed acquisition of control with respect to market shares,
competition, competitors, markets, and potential for growth or
expansion into product or geographic markets.
(16) If the acquiring party or any affiliate of the acquiring party is
an insurer:
(A) the amount of any premiums, deposits, or annuity
considerations received by the insurer during each of the last
five (5) fiscal years (calculated on an accrual basis) for each
line of insurance business conducted in any section of this state,
and copies of annual statements for each of the last five (5)
fiscal years filed by any such insurer with the insurance
regulatory authority of its domiciliary jurisdiction;
(B) a full and complete description of any direct or indirect
reinsurance relationship between the acquiring party or any
affiliate of the acquiring party and the domestic insurer or any
affiliate of the domestic insurer, together with copies of any
treaties or contracts relating to that relationship; and
(C) such additional information as the commissioner may by
rule or order prescribe as necessary or appropriate to enable the
commissioner to make the determination required by subsection
(f)(2).
(17) An agreement that a person required to obtain the
commissioner's approval of a statement described in subsection
(a) will file an annual enterprise risk report described in section
3(l) of this chapter as long as the person continues to hold a
controlling interest in the domestic insurer.
(18) An acknowledgment that:
(A) a person described in subdivision (17); and
(B) any subsidiary in the insurance holding company system
that is within the person's control;
will, upon the commissioner's request, provide to the
commissioner information that the commissioner considers
necessary to evaluate enterprise risk to the domestic insurer.
(19) Such additional information as the commissioner may by rule
or order prescribe as necessary or appropriate for the protection
of policyholders or in the public interest.
If any material change occurs in the facts set forth in a statement filed
with the commissioner and sent to the insurer and any controlling
corporation under this section, an amendment made under oath or
affirmation setting forth the change, together with copies of all
documents and other material relevant to the change, shall be filed with
the commissioner and sent to the insurer and any controlling
corporation within two (2) business days after any acquiring party
learns of this change.
(d) If any acquiring party is a partnership, limited partnership,
syndicate, or other group, the commissioner may require that the
information called for by subsection (c)(1) through (c)(19) shall be
given with respect to each partner of such partnership or limited
partnership, each member of such syndicate or group, and each person
who controls such partner or member. If any such partner, member,
person, or acquiring party is a corporation, the commissioner may
require that the information called for by subsection (c)(1) through
(c)(19) shall be given with respect to all individuals who are or have
been selected to become directors or officers of any such corporation
or who perform or will perform functions appropriate to these
positions.
(e) If the proposed acquisition of control referred to in subsection
(a) requires the filing of a registration statement under the federal
Securities Act of 1933 (15 U.S.C. 77a-15 U.S.C. 77aa) or requires the
disclosure of similar information under the federal Securities Exchange
Act of 1934 (15 U.S.C. 78a-15 U.S.C. 78kk) or under a state law
requiring similar registration or disclosure, an acquiring party may
utilize such documents in furnishing the information called for by the
statement.
(f) The commissioner shall hold a public hearing on the proposed
acquisition of control referred to in subsection (a) and shall thereafter
approve such acquisition of control only if the commissioner finds, by
a preponderance of the evidence, that:
(1) the acquisition of control would not tend to affect adversely
the contractual obligations of the domestic insurer or its ability
and tendency to render service in the future to its policyholders
and the public;
(2) the effect of the acquisition of control would not be
substantially to lessen competition in any line of insurance
business in any section of this state or tend to create a monopoly
therein;
(3) the financial condition of any acquiring party is not such as
might jeopardize the financial stability of the domestic insurer or
of any corporation controlling such insurer, or prejudice the
interest of its policyholders;
(4) the plans or proposals which any acquiring party has to
liquidate the domestic insurer or any such controlling corporation,
sell its assets or consolidate or merge it with any person, or to
make any other material change in its investment policy, business,
corporate structure, or management are fair and reasonable to
policyholders of the domestic insurer and in the public interest;
and
(5) the competence, experience, and integrity of those persons
who would control the operation of the domestic insurer are such
that the acquisition of control would not tend to affect adversely
the general capacity or intention of the domestic insurer to
transact the business of insurance in a safe and prudent manner.
(g) For the purposes of the commissioner's application of the
competitive standard set forth in subsection (f)(2) to a proposed
acquisition:
(1) the acquiring person must file a pre-acquisition notification
that meets the requirements set forth in section 2.5(e) of this
chapter;
(2) the commissioner shall apply the provisions of section 2.5(h)
of this chapter; and
(3) the commissioner may not disapprove the acquisition based
upon the application of subsection (f)(2) if the commissioner
finds that either of the conditions set forth in section 2.5(i) of this
chapter applies to the proposed acquisition.
(h) The public hearing referred to in subsection (f) shall be held
within sixty (60) days after all statements required by subsection (a) are
filed, or within such longer period after the statements are filed as the
commissioner determines upon a showing of good cause therefor, in
the city of Indianapolis at such place, date, and time as the
commissioner shall specify. At least thirty (30) days written notice of
the hearing shall be given by the commissioner to each acquiring party,
the domestic insurer, any corporation controlling such insurer, and to
other persons as the commissioner may designate. In the event that an
amendment to any such statement is filed, the hearing shall be
postponed for a further period not to exceed sixty (60) days after the
filing of such amendment, or for such longer period after the
amendment is filed as the commissioner determines upon a showing of
good cause therefor. If the proposed acquisition of control requires the
approval of the commissioners of more than one (1) state, the public
hearing may be held on a consolidated basis upon the request of the
person that files the statement described in subsection (a). The person
shall file the statement with the NAIC not more than five (5) days after
the person makes the request for a public hearing. The commissioner
of a state may opt out of a consolidated hearing by notifying the person
not more than ten (10) days after receiving the statement described in
subsection (a). A hearing conducted on a consolidated basis must be
public and held in the United States before the commissioners of the
domiciliary states of the insurers. The commissioners shall hear and
receive evidence and may attend in person or by telecommunication.
(i) The commissioner shall give notice of the hearing by publication
in a newspaper of general circulation in the city of Indianapolis, and in
the city wherein is located the principal office of the domestic insurer,
and in such other city or cities as the commissioner may deem
appropriate. Any policyholder of the domestic insurer who makes a
written request to the commissioner is entitled to a copy of all
statements, amendments, or other material filed with the commissioner
by any acquiring party.
(j) The commissioner may retain at the acquiring party's expense
any attorneys, actuaries, accountants, and other experts not otherwise
a part of the commissioner's staff as may be reasonably necessary to
assist the commissioner in reviewing the proposed acquisition of
control. All hearing expenses, including transcript costs, expenses of
publication and of preparing and mailing material to policyholders,
shall be borne equally by each acquiring party. As security for the
payment of such expenses, each acquiring party shall file with the
commissioner an acceptable bond or other deposit in an amount to be
determined by the commissioner.
(k) At such hearing, each acquiring party, the domestic insurer, any
corporation controlling such insurer, policyholders of the domestic
insurer, and any other person whose interests may be affected by the
proposed acquisition of control shall have the right to appear and
become party to the proceeding. Each such person shall have the right
to present evidence, examine and cross-examine witnesses, and offer
oral and written arguments and in connection therewith shall be
entitled to conduct discovery proceedings in the same manner as
provided in the Indiana Rules of Trial Procedure. The commissioner
may employ any sanction or power granted courts in the Indiana Rules
of Trial Procedure, excluding the power of contempt, to enforce the
commissioner's discovery rulings or orders. The commissioner shall
make a determination within thirty (30) days after the conclusion of
such hearing and shall immediately upon making that determination
notify all persons who appeared and became parties to the proceeding
of that determination. To permit an aggrieved party to perfect an appeal
under IC 27-1-23-12, no offer, request, invitation, agreement, or
acquisition referred to in subsection (a) may be commenced, entered
into, or consummated until two (2) business days have elapsed
following the commissioner's determination approving an acquisition
of control.
(l) If the commissioner determines that a person acquiring control
of a domestic insurer is required to maintain or restore the capital of the
insurer to the level required by Indiana law, the person shall, not later
than sixty (60) days after the closing date of the acquisition, file with
the commissioner evidence that the capital has been maintained or
restored to that level.
(m) Except as otherwise provided in this section, the hearing and the
determination made therein shall be subject to IC 4-21.5-3.
(n) The provisions of this section shall not apply to the following:
(1) Any transaction to be undertaken under a statutory procedure
for the purchase of dissenting shareholder's stock.
(2) Any transaction to be undertaken under a judicially approved
reorganization.
(3) Any offer, request, invitation, agreement, solicitation, or
acquisition respecting any security of a domestic insurer or of any
corporation controlling such insurer if any acquiring party,
immediately prior to such offer, request, invitation, agreement,
solicitation, or acquisition being commenced, entered into, begun,
or consummated, beneficially owns more than fifty percent (50%)
of all the outstanding voting securities of such domestic insurer
or corporation controlling such insurer.
(4) Any solicitation of proxies respecting any security of a
domestic insurer or of any corporation controlling a domestic
insurer that is undertaken by the management or the board of
directors of the issuer of the security for purposes other than
effecting, directly or indirectly, a transaction that would otherwise
be subject to the requirements of this section.
(5) Any offer, request, invitation, agreement, solicitation, or
acquisition respecting a security of a non-insurance corporation
controlling one (1) or more domestic insurers if all of the
following conditions are met:
(A) the offer, request, invitation, agreement, solicitation, or
acquisition has been approved by the insurance regulatory
authority of any state or territory of the United States of
America other than Indiana, and the insurance regulatory
authority of the state or territory has been accredited by the
National Association of Insurance Commissioners;
(B) the domestic insurer or insurers meet all of the following
conditions, determined in accordance with generally accepted
accounting principles:
(i) the investments in and advances to the domestic insurer or
insurers by the controlling non-insurance corporation and its
other subsidiaries equal less than ten percent (10%) of the
total assets of the controlling non-insurance corporation and
all of its subsidiaries consolidated as of the end of the most
recently completed fiscal year;
(ii) the proportionate share of the controlling non-insurance
corporation and its other subsidiaries in the total assets (after
intercompany eliminations) of the domestic insurer or
insurers equals less than ten percent (10%) of the total assets
of the controlling non-insurance corporation and all of its
subsidiaries consolidated as of the end of the most recently
completed fiscal year; and
(iii) the equity of the controlling non-insurance corporation
and its other subsidiaries in the income from continuing
operations before income taxes, extraordinary items, and the
cumulative effect of a change in accounting principle of the
domestic insurer or insurers is less than ten percent (10%) of
the income of that corporation and all of its subsidiaries
consolidated for the end of the most recently completed fiscal
year; and
(C) the commissioner has not determined that the application
of this section to the offer, request, invitation, agreement,
solicitation, or acquisition is necessary or appropriate for the
protection of policyholders of the domestic insurer or insurers.
(6) Any acquisition of stock of a former mutual by a parent
company, as those terms are defined in IC 27-15-1, that occurs in
connection with the conversion of a mutual insurance company to
a stock insurance company under IC 27-15, provided that no
person acquires control of the parent company.
(o) The courts of this state are hereby vested with jurisdiction over
every acquiring party not resident, domiciled, or authorized to do
business in this state, and over all actions involving each such
acquiring party arising out of violations of this section, and each such
acquiring party shall be deemed to have performed acts equivalent to
and constituting an appointment by the acquiring party of the
commissioner to be the acquiring party's true and lawful attorney upon
whom may be served all lawful process in any action, suit, or
proceeding arising out of violations of this section. Copies of all such
lawful process shall be served on the commissioner and transmitted by
registered or certified mail by the commissioner to such acquiring party
at the acquiring party's last known address.
Formerly: Acts 1971, P.L.387, SEC.1. As amended by Acts
1979, P.L.252, SEC.1; Acts 1981, P.L.244, SEC.2; P.L.2-1987,
SEC.38; P.L.26-1991, SEC.9; P.L.130-1994, SEC.30; P.L.116-1994,
SEC.40; P.L.94-1999, SEC.2; P.L.81-2012, SEC.13.