1-1 AN ACT
1-2 relating to approval by the Texas Department of Insurance for
1-3 certain holding company affiliations.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subdivision (1), Subsection (a), Section 5,
1-6 Article 21.49-1, Insurance Code, is amended to read as follows:
1-7 (1) No person shall (i) acquire in any manner any
1-8 voting security of a domestic insurer if such person is, or after
1-9 such acquisition would be, directly or indirectly, in control of a
1-10 domestic insurer or (ii) otherwise acquire control of or exercise
1-11 any control over a domestic insurer, until and unless such person
1-12 has filed with the commissioner a statement containing the
1-13 information required by Subsection (b) of this section and such
1-14 acquisition of control has been approved by the commissioner in the
1-15 manner hereinafter prescribed. The statement filed under this
1-16 Subsection (a) shall be filed not later than the 60th day before
1-17 the proposed effective date of the acquisition or change of control
1-18 and subject to public inspection at the office of the commissioner,
1-19 and a copy thereof shall be sent by the acquiring party to the
1-20 domestic insurer.
1-21 SECTION 2. Subdivisions (1) and (2), Subsection (c), Section
1-22 5, Article 21.49-1, Insurance Code, are amended to read as follows:
1-23 (1) The commissioner shall approve or deny any
1-24 acquisition or change of control referred to in Subsection (a) not
1-25 later than the 60th day after the date the statement required by
2-1 that subsection is filed. The 60-day period may be waived by the
2-2 person filing the statement and the domestic insurer. On the
2-3 request of either the person filing the statement or the domestic
2-4 insurer, the commissioner shall hold [unless, after] a public
2-5 hearing on a denial. In considering whether to approve or deny,
2-6 the commissioner shall consider whether [thereon, he finds that]:
2-7 (i) immediately upon the acquisition or
2-8 change of control the domestic insurer referred to in Subsection
2-9 (a) would not be able to satisfy the requirements for the issuance
2-10 of a new certificate of authority or a license to write the line or
2-11 lines of insurance for which it is presently licensed;
2-12 (ii) the effect of such acquisition or
2-13 change of control would be substantially to lessen competition in
2-14 any line or subclassification lines of insurance in this State or
2-15 tend to create a monopoly therein;
2-16 (iii) the financial condition of the
2-17 acquiring party is such as might jeopardize the financial stability
2-18 of the domestic insurer, or prejudice the interest of its
2-19 policyholders;
2-20 (iv) the plans or proposals which the
2-21 acquiring party has to liquidate the domestic insurer, cause it to
2-22 declare dividends or make other distributions, sell any of its
2-23 assets, consolidate or merge it with any person, make any material
2-24 change in its business or corporate structure or management, or
2-25 cause the insurer to enter into material agreements, arrangements,
2-26 or transactions of any kind with any party, are unfair,
3-1 prejudicial, hazardous, or unreasonable to policyholders of the
3-2 insurer and not in the public interest;
3-3 (v) the competence, trustworthiness,
3-4 experience, and integrity of those persons who would control the
3-5 operation of the domestic insurer are such that it would not be in
3-6 the interest of policyholders of the domestic insurer and of the
3-7 public to permit the [merger or] acquisition or change of control;
3-8 and [or]
3-9 (vi) the acquisition or change of control
3-10 [or merger] would violate any law of this State, any other state,
3-11 or the United States.
3-12 (2) The public hearing referred to in this subsection
3-13 [Clause (1) hereof] shall be held not later than the 60th day
3-14 [within 45 days] after the date of the denial [the statement
3-15 required by Subsection (a) is filed], and at least 20 days' notice
3-16 thereof shall be given by the commissioner to the person filing the
3-17 statement and to the domestic insurer unless such person and the
3-18 domestic insurer waive such notice. The person filing the
3-19 statement and the domestic insurer shall furnish notice of the
3-20 public hearing to such other persons as may be designated by the
3-21 commissioner within the time and manner specified by the
3-22 commissioner. The acquiring party shall have the burden of
3-23 providing sufficient competent evidence for the commissioner to
3-24 make the determinations required under Subsection (c)(1). The
3-25 commissioner shall make a determination within 60 days after the
3-26 record of such hearing is closed. [At any time after the
4-1 submission or resubmission to the commissioner of a statement filed
4-2 under Subsection (a) of this section, regardless of whether the
4-3 statement is complete and accurate, the matter may be placed on the
4-4 commissioner's contested case docket to hear any pre-hearing
4-5 matters and motions permitted under the Administrative Procedure
4-6 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
4-7 Statutes).]
4-8 SECTION 3. The changes in law made by this Act to Section 5,
4-9 Article 21.49-1, Insurance Code, do not apply to an acquisition or
4-10 change of control under that section for which a statement is filed
4-11 before the effective date of this Act. An acquisition or change of
4-12 control for which a statement is filed before the effective date of
4-13 this Act is governed by the law in effect immediately before the
4-14 effective date of this Act, and that law is continued in effect for
4-15 that purpose.
4-16 SECTION 4. This Act takes effect immediately if it receives
4-17 a vote of two-thirds of all the members elected to each house, as
4-18 provided by Section 39, Article III, Texas Constitution. If this
4-19 Act does not receive the vote necessary for immediate effect, this
4-20 Act takes effect September 1, 2001.
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 605 passed the Senate on
March 15, 2001, by the following vote: Yeas 30, Nays 0, one
present, not voting.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 605 passed the House on
May 8, 2001, by the following vote: Yeas 147, Nays 0, two present,
not voting.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor