S T A T E O F N E W Y O R K ________________________________________________________________________ 4329 2013-2014 Regular Sessions I N S E N A T E March 21, 2013 ___________ Introduced by Sen. SEWARD -- (at request of the Department of Financial Services) -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance AN ACT to amend the insurance law, in relation to enhancing regulatory efficiency and efficacy THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: 1 Section 1. The insurance law is amended by adding a new section 302 to 2 read as follows: 3 S 302. SUPERVISORY COLLEGES. (A) THE SUPERINTENDENT MAY PARTICIPATE IN 4 A SUPERVISORY COLLEGE IN ORDER TO DETERMINE COMPLIANCE WITH THIS CHAPTER 5 WITH RESPECT TO AN INSURER THAT IS REGISTERED UNDER ARTICLE FIFTEEN, 6 SIXTEEN, OR SEVENTEEN OF THIS CHAPTER AND HAS INTERNATIONAL OPERATIONS. 7 THE POWERS OF THE SUPERINTENDENT WITH RESPECT TO SUPERVISORY COLLEGES 8 INCLUDE: 9 (1) INITIATING THE ESTABLISHMENT OF A SUPERVISORY COLLEGE; 10 (2) CLARIFYING THE MEMBERSHIP AND PARTICIPATION OF OTHER SUPERVISORS 11 IN THE SUPERVISORY COLLEGE; 12 (3) CLARIFYING THE FUNCTIONS OF THE SUPERVISORY COLLEGE AND THE ROLE 13 OF OTHER REGULATORS, INCLUDING THE ESTABLISHMENT OF A GROUP-WIDE SUPER- 14 VISOR; 15 (4) COORDINATING THE ONGOING ACTIVITIES OF THE SUPERVISORY COLLEGE, 16 INCLUDING PLANNING MEETINGS, SUPERVISORY ACTIVITIES, AND PROCESSES FOR 17 INFORMATION SHARING; AND 18 (5) ESTABLISHING A CRISIS MANAGEMENT PLAN. 19 (B) EACH INSURER REGISTERED UNDER ARTICLE FIFTEEN, SIXTEEN, OR SEVEN- 20 TEEN OF THIS CHAPTER SHALL BE LIABLE FOR AND SHALL PAY THE REASONABLE 21 EXPENSES OF THE SUPERINTENDENT'S PARTICIPATION IN A SUPERVISORY COLLEGE, 22 INCLUDING REASONABLE TRAVEL EXPENSES. A SUPERVISORY COLLEGE MAY BE 23 CONVENED AS EITHER A TEMPORARY OR PERMANENT FORUM FOR THE COMMUNICATION 24 AND COOPERATION BETWEEN THE REGULATORS CHARGED WITH THE SUPERVISION OF EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD09114-04-3 S. 4329 2 1 THE INSURER OR ITS PARENT, AFFILIATES, OR SUBSIDIARIES. THE SUPERINTEN- 2 DENT MAY ESTABLISH A REGULAR ASSESSMENT TO THE INSURER FOR THE PAYMENT 3 OF THESE EXPENSES. 4 (C) IN ORDER TO ASSESS THE BUSINESS STRATEGY, FINANCIAL POSITION, 5 LEGAL AND REGULATORY POSITION, RISK EXPOSURE, RISK MANAGEMENT AND GOVER- 6 NANCE PROCESSES, AND AS PART OF THE EXAMINATION OF INDIVIDUAL INSURERS, 7 THE SUPERINTENDENT MAY PARTICIPATE IN A SUPERVISORY COLLEGE WITH OTHER 8 REGULATORS CHARGED WITH SUPERVISION OF THE INSURER OR ITS PARENT, AFFIL- 9 IATES, OR SUBSIDIARIES, INCLUDING OTHER STATE, FEDERAL, AND INTERNA- 10 TIONAL REGULATORY AGENCIES. THE SUPERINTENDENT MAY ENTER INTO AGREEMENTS 11 PURSUANT TO SECTION ONE HUNDRED TEN OF THIS CHAPTER PROVIDING THE BASIS 12 FOR COOPERATION BETWEEN THE SUPERINTENDENT AND OTHER REGULATORY AGENCIES 13 AND FOR THE ACTIVITIES OF THE SUPERVISORY COLLEGE. NOTHING IN THIS 14 SECTION SHALL DELEGATE TO THE SUPERVISORY COLLEGE THE SUPERINTENDENT'S 15 AUTHORITY TO REGULATE OR SUPERVISE THE INSURER OR ITS PARENT, AFFIL- 16 IATES, OR SUBSIDIARIES WITHIN THE SUPERINTENDENT'S JURISDICTION. 17 S 2. Section 1503 of the insurance law is amended to read as follows: 18 S 1503. Registration. [(a)] Every person who becomes a controlled 19 insurer shall, within thirty days thereafter register with the super- 20 intendent and [such] SHALL AMEND THE registration [shall be amended] 21 within thirty days following any change in the identity of its holding 22 company OR ANY OTHER MATERIAL CHANGE TO THE INFORMATION PROVIDED IN THE 23 REGISTRATION. THE REGISTRATION SHALL BE IN SUCH FORM AND SHALL CONTAIN 24 SUCH MATTERS AS THE SUPERINTENDENT PRESCRIBES. The superintendent may 25 grant reasonable extensions of the time to register. 26 [(b) Every registrant shall furnish the superintendent with the 27 following information concerning its holding company: 28 (1) a copy of its charter or articles of incorporation and by-laws; 29 (2) the identities of its principal shareholders, officers, directors 30 and controlled persons; and 31 (3) information as to its capital structure and financial condition, 32 and a description of its principal business activities.] 33 S 3. Subsection (d) of section 1505 of the insurance law is amended to 34 read as follows: 35 (d) The following transactions between a domestic controlled insurer 36 and any person in its holding company system may not be entered into 37 unless the insurer has notified the superintendent in writing of its 38 intention to enter into any such transaction at least thirty days prior 39 thereto, OR WITH REGARD TO REINSURANCE TREATIES OR AGREEMENTS AT LEAST 40 SIXTY DAYS PRIOR THERETO, or such shorter period as [he] THE SUPERINTEN- 41 DENT may permit, and [he] THE SUPERINTENDENT has not disapproved it 42 within such period: 43 (1) sales, purchases, exchanges, loans or extensions of credit, or 44 investments[,] involving [more than one-half of one percent but] less 45 than five percent of the insurer's admitted assets at last year-end, 46 PROVIDED THE TRANSACTIONS ARE EQUAL TO OR EXCEED: 47 (A) THE LESSER OF THREE PERCENT OF THE INSURER'S ADMITTED ASSETS OR 48 TWENTY-FIVE PERCENT OF CAPITAL AND SURPLUS AT LAST YEAR-END, WITH REGARD 49 TO AN ACCIDENT AND HEALTH INSURANCE COMPANY OR A CORPORATION SUBJECT TO 50 ARTICLE FORTY-THREE OF THIS CHAPTER; 51 (B) THREE PERCENT OF THE INSURER'S ADMITTED ASSETS AT LAST YEAR-END, 52 WITH REGARD TO A LIFE INSURANCE COMPANY; OR 53 (C) THE LESSER OF THREE PERCENT OF THE INSURER'S ADMITTED ASSETS OR 54 TWENTY-FIVE PERCENT OF SURPLUS TO POLICYHOLDERS AT LAST YEAR-END, WITH 55 REGARD TO AN INSURER OTHER THAN AS SPECIFIED IN SUBPARAGRAPHS (A) AND 56 (B) OF THIS PARAGRAPH; S. 4329 3 1 (2) reinsurance treaties or agreements; 2 (3) rendering of services on a regular or systematic basis; or 3 (4) any material transaction, specified by regulation, [which] THAT 4 the superintendent determines may adversely affect the interests of the 5 insurer's policyholders or shareholders. 6 Nothing herein contained shall be deemed to authorize or permit any 7 transaction [which] THAT, in the case of a non-controlled insurer, would 8 be otherwise contrary to law. 9 S 4. Section 1506 of the insurance law is amended by adding a new 10 subsection (f) to read as follows: 11 (F) ANY HOLDING COMPANY SEEKING TO DIVEST ITS CONTROLLING INTEREST IN 12 A DOMESTIC INSURER, IN ANY MANNER, SHALL FILE WITH THE SUPERINTENDENT, 13 WITH A COPY TO THE INSURER, NOTICE OF ITS PROPOSED DIVESTITURE AT LEAST 14 THIRTY DAYS PRIOR TO THE CESSATION OF CONTROL. 15 S 5. Section 1603 of the insurance law is amended to read as follows: 16 S 1603. Notice of intent to acquire OR DIVEST. (a) [No acquisition of 17 a majority of any corporation's outstanding common shares shall be made 18 pursuant to this article] A DOMESTIC INSURER SHALL NOT ACQUIRE CONTROL 19 OF ANY OTHER DOMESTIC INSURER, WHETHER BY PURCHASE OF ITS SECURITIES OR 20 OTHERWISE, unless: 21 (1) a notice of intention of such proposed acquisition shall have been 22 filed with the superintendent not less than ninety days, or such shorter 23 period as may be permitted by the superintendent, in advance of such 24 proposed acquisition[, nor shall any such acquisition be made if the 25 superintendent at any time prior thereto finds]; AND 26 (2) THE INSURER RECEIVES THE SUPERINTENDENT'S PRIOR APPROVAL. 27 (B) THE SUPERINTENDENT SHALL DISAPPROVE SUCH ACQUISITION IF THE SUPER- 28 INTENDENT DETERMINES that the proposed acquisition is contrary to law or 29 determines that such proposed acquisition would be contrary to the best 30 interests of the parent insurer's policyholders or of the people of this 31 state. Only the following factors shall be considered in making the 32 foregoing determination: 33 (1) the availability of the funds or assets required for such acquisi- 34 tion; 35 (2) the fairness of any exchange of shares, assets, cash or other 36 consideration for the shares or assets to be received; 37 (3) the impact of the new operation on the parent insurer's surplus 38 and existing insurance business and the risks inherent in the parent 39 insurer's investment portfolio and operations; 40 (4) the fairness and adequacy of the financing proposed for the 41 subsidiary; 42 (5) the likelihood of undue concentration of economic power; 43 (6) whether the effect of the acquisition may be substantially to 44 lessen competition in any line of commerce in insurance or to tend to 45 create a monopoly therein; and 46 (7) whether the acquisition might result in an excessive proliferation 47 of subsidiaries [which] THAT would tend to unduly dilute management 48 effectiveness or weaken financial strength, or otherwise be contrary to 49 the best interests of the parent insurer's policyholders or of the 50 people of this state. 51 [(b)] (C) At any time after an acquisition the superintendent may 52 order its disposition if [he] THE SUPERINTENDENT finds, after notice and 53 an opportunity to be heard, that its continued retention is hazardous or 54 prejudicial to the interests of the parent insurer's policyholders. 55 (D) ANY DOMESTIC INSURER SEEKING TO DIVEST ITS CONTROLLING INTEREST IN 56 ANOTHER DOMESTIC INSURER, IN ANY MANNER, SHALL FILE WITH THE SUPERINTEN- S. 4329 4 1 DENT, WITH A COPY TO THE INSURER, NOTICE OF ITS PROPOSED DIVESTITURE AT 2 LEAST THIRTY DAYS PRIOR TO THE CESSATION OF CONTROL. 3 [(c)] (E) The contents of each notice of intention of a proposed 4 acquisition OR DIVESTITURE filed hereunder and information pertaining 5 thereto shall be kept confidential, shall not be subject to subpoena and 6 shall not be made public unless after notice and opportunity to be heard 7 the superintendent determines that the interests of policyholders, 8 shareholders or the public will be served by publication. 9 S 6. The insurance law is amended by adding a new section 1604 to read 10 as follows: 11 S 1604. REGISTRATION. AN AUTHORIZED DOMESTIC INSURER SHALL REGISTER 12 WITH THE SUPERINTENDENT WITHIN THIRTY DAYS OF BECOMING SUBJECT TO REGIS- 13 TRATION AND SHALL AMEND THE REGISTRATION WITHIN THIRTY DAYS FOLLOWING 14 ANY MATERIAL CHANGE TO THE INFORMATION PROVIDED IN THE REGISTRATION. THE 15 REGISTRATION SHALL BE IN SUCH FORM AND SHALL CONTAIN SUCH MATTERS AS THE 16 SUPERINTENDENT PRESCRIBES. THE SUPERINTENDENT MAY GRANT REASONABLE 17 EXTENSIONS OF THE TIME TO REGISTER. 18 S 7. Section 1608 of the insurance law is amended by adding a new 19 subsection (e) to read as follows: 20 (E) THE FOLLOWING TRANSACTIONS BETWEEN A DOMESTIC INSURER AND ANY 21 SUBSIDIARY MAY NOT BE ENTERED INTO UNLESS THE INSURER HAS NOTIFIED THE 22 SUPERINTENDENT IN WRITING OF ITS INTENTION TO ENTER INTO ANY SUCH TRANS- 23 ACTION AT LEAST THIRTY DAYS PRIOR THERETO, OR WITH REGARD TO REINSURANCE 24 TREATIES OR AGREEMENTS AT LEAST SIXTY DAYS PRIOR THERETO, OR SUCH SHORT- 25 ER PERIOD AS THE SUPERINTENDENT MAY PERMIT, AND THE SUPERINTENDENT HAS 26 NOT DISAPPROVED IT WITHIN SUCH PERIOD: 27 (1) SALES, PURCHASES, EXCHANGES, LOANS, EXTENSIONS OF CREDIT, OR 28 INVESTMENTS WITH A SUBSIDY, PROVIDED THE TRANSACTIONS ARE EQUAL TO OR 29 EXCEED THE LESSER OF THREE PERCENT OF THE INSURER'S ADMITTED ASSETS OR 30 TWENTY-FIVE PERCENT OF SURPLUS TO POLICYHOLDERS AT LAST YEAR-END; 31 (2) LOANS OR EXTENSIONS OF CREDIT TO ANY PERSON WHO IS NOT A SUBSID- 32 IARY, WHERE THE INSURER MAKES LOANS OR EXTENSIONS OF CREDIT WITH THE 33 AGREEMENT OR UNDERSTANDING THAT THE PROCEEDS OF SUCH TRANSACTIONS, IN 34 WHOLE OR IN SUBSTANTIAL PART, ARE TO BE USED TO MAKE LOANS OR EXTENSIONS 35 OF CREDIT TO, PURCHASE ASSETS OF, OR MAKE INVESTMENTS IN, ANY SUBSIDIARY 36 OF THE INSURER MAKING THE LOANS OR EXTENSIONS OF CREDIT, PROVIDED THE 37 TRANSACTIONS ARE EQUAL TO OR EXCEED THE LESSER OF THREE PERCENT OF THE 38 INSURER'S ADMITTED ASSETS OR TWENTY-FIVE PERCENT OF SURPLUS TO POLICY- 39 HOLDERS AT LAST YEAR-END; 40 (3) REINSURANCE TREATIES OR AGREEMENTS WITH A SUBSIDIARY THAT THE 41 INSURER HAS NOT OTHERWISE SUBMITTED TO THE SUPERINTENDENT, PROVIDED, 42 HOWEVER, THE INSURER NEED NOT SUBMIT A COPY OF A REINSURANCE AGREEMENT 43 UNLESS REQUESTED BY THE SUPERINTENDENT WHERE THE REINSURANCE PREMIUM OR 44 A CHANGE IN THE INSURER'S LIABILITIES, OR THE PROJECTED REINSURANCE 45 PREMIUM OR A CHANGE IN THE INSURER'S LIABILITIES IN ANY OF THE NEXT 46 THREE YEARS, IS LESS THAN FIVE PERCENT OF THE INSURER'S SURPLUS TO POLI- 47 CYHOLDERS AT LAST YEAR-END. THIS SHALL INCLUDE AGREEMENTS THAT MAY 48 REQUIRE, AS CONSIDERATION, THE TRANSFER OF ASSETS FROM AN INSURER TO A 49 NON-SUBSIDIARY, IF AN AGREEMENT OR UNDERSTANDING EXISTS BETWEEN THE 50 INSURER AND NON-SUBSIDIARY THAT ANY PORTION OF THE ASSETS WILL BE TRANS- 51 FERRED TO ONE OR MORE SUBSIDIARIES OF THE INSURER; AND 52 (4) MANAGEMENT AGREEMENTS, SERVICE CONTRACTS, TAX ALLOCATION AGREE- 53 MENTS, GUARANTEES, AND ALL COST-SHARING ARRANGEMENTS. 54 S 8. Intentionally omitted. 55 S 9. Section 1702 of the insurance law, as amended by chapter 526 of 56 the laws of 1987, is amended to read as follows: S. 4329 5 1 S 1702. Meaning of "subsidiary" and "parent corporation"; certain 2 types of subsidiaries defined. As used in this article[, "subsidiary" 3 (i)]: (A) "SUBSIDIARY" means subsidiaries of the types described in 4 subsection (b) of section one thousand seven hundred four of this arti- 5 cle and subsidiaries acquired or held under this article, section one 6 thousand four hundred five or section four thousand two hundred forty of 7 this chapter, but [(ii) does] SHALL not include a subsidiary acquired or 8 held under section one thousand four hundred four of this chapter or a 9 subsidiary acquired or held by an insurer authorized to make investments 10 by subsection (c) of section one thousand four hundred three of this 11 chapter[; and "parent corporation"]. 12 (B) "PARENT CORPORATION" means a parent corporation of a type 13 described in subsection (a), (b) or (c) of section one thousand seven 14 hundred one of this article[; "holding company operating subsidiary"]. 15 (C) "HOLDING COMPANY OPERATING SUBSIDIARY" means a subsidiary (other 16 than a separate account subsidiary) engaged or organized to engage in 17 either or both of the following activities [(i)](1) the ownership and 18 management of other subsidiaries, and [(ii)](2) the raising of capital 19 (debt or equity) [which] THAT could be loaned to, or invested in, other 20 subsidiaries or loaned to the parent corporation, provided that any such 21 subsidiary may in addition engage in the ownership and management of 22 assets authorized as investments for the parent corporation[; "invest- 23 ment subsidiary"]. 24 (D) "INVESTMENT SUBSIDIARY" means a subsidiary (other than a separate 25 account subsidiary) engaged or organized to engage exclusively in the 26 ownership and management of assets (other than equity securities of 27 subsidiaries) authorized as investments for the parent corporation and 28 of other investment subsidiaries[; and "separate account subsidiary"]. 29 (E) "SEPARATE ACCOUNT SUBSIDIARY" means a subsidiary acquired or held 30 under section four thousand two hundred forty of this chapter. 31 S 10. Section 1710 of the insurance law, as amended by chapter 805 of 32 the laws of 1984, is amended to read as follows: 33 S 1710. [Superintendent's] DIVESTITURE OF CONTROL; SUPERINTENDENT'S 34 power to order disposition of subsidiaries. 35 (A) ANY PARENT CORPORATION SEEKING TO DIVEST ITS CONTROLLING INTEREST 36 IN A DOMESTIC INSURER, IN ANY MANNER, SHALL FILE WITH THE SUPERINTEN- 37 DENT, WITH A COPY TO THE INSURER, NOTICE OF ITS PROPOSED DIVESTITURE AT 38 LEAST THIRTY DAYS PRIOR TO THE CESSATION OF CONTROL. 39 (B) In addition to the powers granted to the superintendent elsewhere 40 in this chapter (including, without limitation, [sections] SECTION one 41 hundred nine [and three hundred twenty-seven] of this chapter AND 42 SECTION THREE HUNDRED NINE OF THE FINANCIAL SERVICES LAW), the super- 43 intendent may, at any time, order a parent corporation to dispose of any 44 subsidiary, if the superintendent finds, after notice and an opportunity 45 to be heard, either: 46 [(i)](1) that its acquisition or continued retention is or was not 47 permitted by the provisions of this article; or 48 [(ii)](2) except in the case of a subsidiary then exempted by the 49 provisions of subsection (a) or (b) of section one thousand seven 50 hundred four of this article, that its continued retention is materially 51 adverse to the interests of the parent corporation's policyholders or 52 subscribers. 53 S 11. Section 1712 of the insurance law is amended to read as follows: 54 S 1712. Relationships and transactions between parent corporation and 55 subsidiary. (A) The business operations, corporate proceedings and 56 fiscal and accounting records of subsidiaries shall be conducted or S. 4329 6 1 maintained so as to assure the separate legal and operating identities 2 of the parent corporation and subsidiary, but nothing herein shall 3 preclude arrangements for common management or the cooperative or joint 4 use of personnel, property, or services, otherwise consistent with this 5 chapter. All transactions between the parent corporation and its subsid- 6 iaries shall be fair and equitable, charges or fees for services 7 performed shall be reasonable and all expenses incurred and payments 8 received shall be allocated to the parent corporation on an equitable 9 basis in conformity with customary insurance accounting practices 10 consistently applied. The books, accounts and records of each party to 11 all such transactions shall be so maintained as to disclose clearly and 12 accurately the nature and details of the transactions, including such 13 accounting information as is necessary to support the reasonableness of 14 the charges or fees to the respective parties. 15 (B) THE FOLLOWING TRANSACTIONS BETWEEN A PARENT CORPORATION AND ANY 16 SUBSIDIARY MAY NOT BE ENTERED INTO UNLESS THE PARENT CORPORATION HAS 17 NOTIFIED THE SUPERINTENDENT IN WRITING OF ITS INTENTION TO ENTER INTO 18 ANY SUCH TRANSACTION AT LEAST THIRTY DAYS PRIOR THERETO, OR WITH REGARD 19 TO REINSURANCE TREATIES OR AGREEMENTS AT LEAST SIXTY DAYS PRIOR THERETO, 20 OR SUCH SHORTER PERIOD AS THE SUPERINTENDENT MAY PERMIT, AND THE SUPER- 21 INTENDENT HAS NOT DISAPPROVED IT WITHIN SUCH PERIOD: 22 (1) SALES, PURCHASES, EXCHANGES, LOANS, EXTENSIONS OF CREDIT, OR 23 INVESTMENTS WITH A SUBSIDY, PROVIDED THE TRANSACTIONS ARE EQUAL TO OR 24 EXCEED: 25 (A) THREE PERCENT OF THE PARENT CORPORATION'S ADMITTED ASSETS AT LAST 26 YEAR-END, WITH REGARD TO A DOMESTIC LIFE INSURANCE COMPANY; OR 27 (B) THE LESSER OF THREE PERCENT OF THE PARENT CORPORATION'S ADMITTED 28 ASSETS OR TWENTY-FIVE PERCENT OF CAPITAL AND SURPLUS AT LAST YEAR-END, 29 WITH REGARD TO A DOMESTIC CORPORATION SUBJECT TO ARTICLE FORTY-THREE OF 30 THIS CHAPTER; OR 31 (2) LOANS OR EXTENSIONS OF CREDIT TO ANY PERSON WHO IS NOT A SUBSID- 32 IARY, WHERE THE PARENT CORPORATION MAKES LOANS OR EXTENSIONS OF CREDIT 33 WITH THE AGREEMENT OR UNDERSTANDING THAT THE PROCEEDS OF SUCH TRANS- 34 ACTIONS, IN WHOLE OR IN SUBSTANTIAL PART, ARE TO BE USED TO MAKE LOANS 35 OR EXTENSIONS OF CREDIT TO, PURCHASE ASSETS OF, OR MAKE INVESTMENTS IN, 36 ANY SUBSIDIARY OF THE PARENT CORPORATION MAKING THE LOANS OR EXTENSIONS 37 OF CREDIT, PROVIDED THE TRANSACTIONS ARE EQUAL TO OR EXCEED: 38 (A) THREE PERCENT OF THE PARENT CORPORATION'S ADMITTED ASSETS AT LAST 39 YEAR-END, WITH REGARD TO A DOMESTIC LIFE INSURANCE COMPANY; OR 40 (B) THE LESSER OF THREE PERCENT OF THE PARENT CORPORATION'S ADMITTED 41 ASSETS OR TWENTY-FIVE PERCENT OF CAPITAL AND SURPLUS AT LAST YEAR-END, 42 WITH REGARD TO A DOMESTIC CORPORATION SUBJECT TO ARTICLE FORTY-THREE OF 43 THIS CHAPTER; OR 44 (3) REINSURANCE TREATIES OR AGREEMENTS WITH A SUBSIDIARY THAT THE 45 PARENT CORPORATION HAS NOT OTHERWISE SUBMITTED TO THE SUPERINTENDENT. 46 THIS SHALL INCLUDE AGREEMENTS THAT MAY REQUIRE, AS CONSIDERATION, THE 47 TRANSFER OF ASSETS FROM A PARENT CORPORATION TO A NON-SUBSIDIARY, IF AN 48 AGREEMENT OR UNDERSTANDING EXISTS BETWEEN THE PARENT CORPORATION AND 49 NON-SUBSIDIARY THAT ANY PORTION OF THE ASSETS WILL BE TRANSFERRED TO ONE 50 OR MORE SUBSIDIARIES OF THE PARENT CORPORATION; AND 51 (4) MANAGEMENT AGREEMENTS, SERVICE CONTRACTS, TAX ALLOCATION AGREE- 52 MENTS, GUARANTEES, AND ALL COST-SHARING ARRANGEMENTS. 53 S 12. The insurance law is amended by adding a new section 1717 to 54 read as follows: 55 S 1717. REGISTRATION. A PARENT CORPORATION SHALL REGISTER WITH THE 56 SUPERINTENDENT WITHIN THIRTY DAYS OF BECOMING SUBJECT TO REGISTRATION S. 4329 7 1 AND SHALL AMEND THE REGISTRATION WITHIN THIRTY DAYS FOLLOWING ANY MATE- 2 RIAL CHANGE TO THE INFORMATION PROVIDED IN THE REGISTRATION. THE REGIS- 3 TRATION SHALL BE IN SUCH FORM AND SHALL CONTAIN SUCH MATTERS AS THE 4 SUPERINTENDENT PRESCRIBES. THE SUPERINTENDENT MAY GRANT REASONABLE 5 EXTENSIONS OF THE TIME TO REGISTER. 6 S 13. Subsection (d) of section 1110 of the insurance law, as amended 7 by chapter 431 of the laws of 2000, is amended to read as follows: 8 (d) No such corporation or association shall make or issue in this 9 state any annuity contract before obtaining a permit issued in accord- 10 ance with the provisions of this section except that if its requisite 11 reserve on its outstanding annuity agreements computed in accordance 12 with section four thousand two hundred seventeen of this chapter does 13 not exceed the amount of [five hundred thousand] ONE MILLION dollars, it 14 may make gift annuity agreements in this state and shall be exempted 15 from securing a permit provided it maintains the reserve required by 16 section four thousand two hundred seventeen of this chapter and a 17 surplus of at least twenty-five per centum of such reserve. If the 18 superintendent finds, after notice and hearing, that any such corpo- 19 ration or association, having such a permit, has failed to comply with 20 the requirements of this section, [he] THE SUPERINTENDENT may revoke or 21 suspend such permit or order it to cease making new annuity contracts 22 until it complies. The superintendent may, in [his] THE SUPERINTENDENT'S 23 discretion, either dispense with the requirement of annual statements by 24 such corporations or associations or accept a sworn statement by two or 25 more of its principal officers, in such form as will satisfy the super- 26 intendent that the requirements of this section are being complied with. 27 S 14. Section 1110 of the insurance law is amended by adding a new 28 subsection (f) to read as follows: 29 (F) THE SUPERINTENDENT MAY, IN THE SUPERINTENDENT'S DISCRETION, EXAM- 30 INE ANY SUCH CORPORATION OR ASSOCIATION THAT IS EXEMPT FROM OBTAINING A 31 PERMIT PURSUANT TO SUBSECTION (D) OF THIS SECTION. 32 S 15. Paragraph 1 of subsection (a) of section 307 of the insurance 33 law is amended to read as follows: 34 (1) Every insurer and every fraternal benefit society [which] THAT is 35 authorized to do an insurance business in this state, and every pension 36 fund, retirement system or state fund [which] THAT is required, by any 37 law of this state, to report to the superintendent or is subject to 38 [his] THE SUPERINTENDENT'S examination, shall file in the office of the 39 superintendent, annually on or before the first day of March, a state- 40 ment, to be known as its annual statement, executed in duplicate, veri- 41 fied by the oath of at least two of its principal officers, showing its 42 condition at last year-end or, in the case of a pension fund or retire- 43 ment system, on such date in the year next preceding as the superinten- 44 dent may approve. Such statement shall be in such form and shall contain 45 such matters as the superintendent shall prescribe. THE SUPERINTENDENT 46 MAY ACCEPT AN ELECTRONIC FILING OF A FOREIGN INSURER'S ANNUAL STATEMENT 47 THAT DOES NOT CONTAIN THE SIGNATURES OR VERIFICATION OF THE OFFICERS 48 PROVIDED THAT THE FOREIGN INSURER HAS FILED, IN ITS STATE OF DOMICILE, 49 AN ANNUAL STATEMENT VERIFIED BY THE OATH OF AT LEAST TWO OF ITS PRINCI- 50 PAL OFFICERS. IN SUCH A SITUATION, THE OFFICERS OF THE FOREIGN INSURER 51 SHALL BE DEEMED TO HAVE GIVEN THEIR OATH IN THIS STATE. 52 S 16. Subsection (b) of section 7428 of the insurance law is amended 53 to read as follows: 54 (b) If the amount of any such REAL OR PERSONAL PROPERTY OWNED BY, OR 55 debt or claim owed by or to, such insurer does not exceed twenty-five 56 [hundred] THOUSAND dollars, THEN the superintendent may SELL OR DISPOSE S. 4329 8 1 OF ALL OR ANY PART OF THE REAL OR PERSONAL PROPERTY, OR compromise or 2 compound the [same] DEBT OR CLAIM, upon such terms as [he] THE SUPER- 3 INTENDENT may deem for the best interests of such insurer without 4 obtaining the approval of the court. 5 S 17. Subsection (g) of section 7602 of the insurance law, as amended 6 by chapter 578 of the laws of 1990, is amended to read as follows: 7 (g) "Allowed claim" means a claim [which] THAT has been allowed by the 8 [court] SUPERINTENDENT in a proceeding under article seventy-four of 9 this chapter OR, IF SUCH CLAIM EXCEEDS TWENTY-FIVE THOUSAND DOLLARS, HAS 10 BEEN ALLOWED BY THE COURT IN A PROCEEDING UNDER ARTICLE SEVENTY-FOUR OF 11 THIS CHAPTER, and which is based upon: 12 (1) a policy insuring property or risks located or resident in this 13 state, or 14 (2) a policy issued in this state to a resident of this state insuring 15 property or risks, located or resident outside this state but within the 16 United States, its possessions and territories, and Canada, provided 17 that, with respect to policies covered under this paragraph: 18 (A) irrespective of the amount of claim [which] THAT has been allowed, 19 no person shall recover any amount from this fund until such person has 20 exhausted all rights of recovery from any security fund, guaranty asso- 21 ciation, or the equivalent in the jurisdiction where such property or 22 risks are located or resident; and, thereafter, such person's recovery 23 from this fund, when combined with amounts recovered or recoverable from 24 any other security fund, guaranty association, or the equivalent in such 25 jurisdiction, shall not exceed the maximum limit available to a quali- 26 fied claimant for a recovery solely from such other security fund, guar- 27 anty association, or the equivalent; and 28 (B) the aggregate limit for all claims arising out of any one policy, 29 excluding claims with respect to property or risks located or resident 30 in this state, shall not exceed the lesser of the aggregate limit of the 31 policy or five million dollars. 32 S 18. This act shall take effect immediately, except that sections 33 two, six and twelve of this act shall take effect on the ninetieth day 34 after this act shall have become a law.