§ 1712 — Relationships and transactions between parent corporation and subsidiary

New York § 1712

• Jurisdiction: New York
• Law ISC: Insurance
• Art. 17: Subsidiaries of Domestic Life Insurance Companies and Certain Other Entities

Text

§ 1712. Relationships and transactions between parent corporation and\nsubsidiary. (a) The business operations, corporate proceedings and\nfiscal and accounting records of subsidiaries shall be conducted or\nmaintained so as to assure the separate legal and operating identities\nof the parent corporation and subsidiary, but nothing herein shall\npreclude arrangements for common management or the cooperative or joint\nuse of personnel, property, or services, otherwise consistent with this\nchapter. All transactions between the parent corporation and its\nsubsidiaries shall be fair and equitable, charges or fees for services\nperformed shall be reasonable and all expenses incurred and payments\nreceived shall be allocated to the parent corporation on an equitable\nbasis in conformity with customary insurance accounting practices\nconsistently applied. The books, accounts and records of each party to\nall such transactions shall be so maintained as to disclose clearly and\naccurately the nature and details of the transactions, including such\naccounting information as is necessary to support the reasonableness of\nthe charges or fees to the respective parties.\n (b) The following transactions between a parent corporation and any\nsubsidiary may not be entered into unless the parent corporation has\nnotified the superintendent in writing of its intention to enter into\nany such transaction at least thirty days prior thereto, or with regard\nto reinsurance treaties or agreements at least forty-five days prior\nthereto, or such shorter period as the superintendent may permit, and\nthe superintendent has not disapproved it within such period:\n (1) sales, purchases, exchanges, loans, extensions of credit, or\ninvestments with a subsidiary, provided the transactions are equal to or\nexceed:\n (A) three percent of the parent corporation's admitted assets at last\nyear-end, with regard to a domestic life insurance company; or\n (B) the lesser of three percent of the parent corporation's admitted\nassets or twenty-five percent of capital and surplus at last year-end,\nwith regard to a domestic corporation subject to article forty-three of\nthis chapter; or\n (2) loans or extensions of credit to any person who is not a\nsubsidiary, where the parent corporation makes loans or extensions of\ncredit with the agreement or understanding that the proceeds of such\ntransactions, in whole or in substantial part, are to be used to make\nloans or extensions of credit to, purchase assets of, or make\ninvestments in, any subsidiary of the parent corporation making the\nloans or extensions of credit, provided the transactions are equal to or\nexceed:\n (A) three percent of the parent corporation's admitted assets at last\nyear-end, with regard to a domestic life insurance company; or\n (B) the lesser of three percent of the parent corporation's admitted\nassets or twenty-five percent of capital and surplus at last year-end,\nwith regard to a domestic corporation subject to article forty-three of\nthis chapter; or\n (3) reinsurance treaties or agreements with a subsidiary that the\nparent corporation has not otherwise submitted to the superintendent.\nThis shall include agreements that may require, as consideration, the\ntransfer of assets from a parent corporation to a non-subsidiary, if an\nagreement or understanding exists between the parent corporation and\nnon-subsidiary that any portion of the assets will be transferred to one\nor more subsidiaries of the parent corporation; and\n (4) management agreements, service contracts, tax allocation\nagreements, guarantees, and all cost-sharing arrangements.\n