1-1 By: Sibley S.B. No. 605
1-2 (In the Senate - Filed February 8, 2001; February 12, 2001,
1-3 read first time and referred to Committee on Business and Commerce;
1-4 March 1, 2001, reported favorably by the following vote: Yeas 6,
1-5 Nays 0; March 1, 2001, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to approval by the Texas Department of Insurance for
1-9 certain holding company affiliations.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Subdivision (1), Subsection (a), Section 5,
1-12 Article 21.49-1, Insurance Code, is amended to read as follows:
1-13 (1) No person shall (i) acquire in any manner any
1-14 voting security of a domestic insurer if such person is, or after
1-15 such acquisition would be, directly or indirectly, in control of a
1-16 domestic insurer or (ii) otherwise acquire control of or exercise
1-17 any control over a domestic insurer, until and unless such person
1-18 has filed with the commissioner a statement containing the
1-19 information required by Subsection (b) of this section and such
1-20 acquisition of control has been approved by the commissioner in the
1-21 manner hereinafter prescribed. The statement filed under this
1-22 Subsection (a) shall be filed not later than the 60th day before
1-23 the proposed effective date of the acquisition or change of control
1-24 and subject to public inspection at the office of the commissioner,
1-25 and a copy thereof shall be sent by the acquiring party to the
1-26 domestic insurer.
1-27 SECTION 2. Subdivisions (1) and (2), Subsection (c), Section
1-28 5, Article 21.49-1, Insurance Code, are amended to read as follows:
1-29 (1) The commissioner shall approve or deny any
1-30 acquisition or change of control referred to in Subsection (a) not
1-31 later than the 60th day after the date the statement required by
1-32 that subsection is filed. The 60-day period may be waived by the
1-33 person filing the statement and the domestic insurer. On the
1-34 request of either the person filing the statement or the domestic
1-35 insurer, the commissioner shall hold [unless, after] a public
1-36 hearing on a denial. In considering whether to approve or deny,
1-37 the commissioner shall consider whether [thereon, he finds that]:
1-38 (i) immediately upon the acquisition or
1-39 change of control the domestic insurer referred to in Subsection
1-40 (a) would not be able to satisfy the requirements for the issuance
1-41 of a new certificate of authority or a license to write the line or
1-42 lines of insurance for which it is presently licensed;
1-43 (ii) the effect of such acquisition or
1-44 change of control would be substantially to lessen competition in
1-45 any line or subclassification lines of insurance in this State or
1-46 tend to create a monopoly therein;
1-47 (iii) the financial condition of the
1-48 acquiring party is such as might jeopardize the financial stability
1-49 of the domestic insurer, or prejudice the interest of its
1-50 policyholders;
1-51 (iv) the plans or proposals which the
1-52 acquiring party has to liquidate the domestic insurer, cause it to
1-53 declare dividends or make other distributions, sell any of its
1-54 assets, consolidate or merge it with any person, make any material
1-55 change in its business or corporate structure or management, or
1-56 cause the insurer to enter into material agreements, arrangements,
1-57 or transactions of any kind with any party, are unfair,
1-58 prejudicial, hazardous, or unreasonable to policyholders of the
1-59 insurer and not in the public interest;
1-60 (v) the competence, trustworthiness,
1-61 experience, and integrity of those persons who would control the
1-62 operation of the domestic insurer are such that it would not be in
1-63 the interest of policyholders of the domestic insurer and of the
1-64 public to permit the [merger or] acquisition or change of control;
2-1 and [or]
2-2 (vi) the acquisition or change of control
2-3 [or merger] would violate any law of this State, any other state,
2-4 or the United States.
2-5 (2) The public hearing referred to in this subsection
2-6 [Clause (1) hereof] shall be held not later than the 60th day
2-7 [within 45 days] after the date of the denial [the statement
2-8 required by Subsection (a) is filed], and at least 20 days' notice
2-9 thereof shall be given by the commissioner to the person filing the
2-10 statement and to the domestic insurer unless such person and the
2-11 domestic insurer waive such notice. The person filing the
2-12 statement and the domestic insurer shall furnish notice of the
2-13 public hearing to such other persons as may be designated by the
2-14 commissioner within the time and manner specified by the
2-15 commissioner. The acquiring party shall have the burden of
2-16 providing sufficient competent evidence for the commissioner to
2-17 make the determinations required under Subsection (c)(1). The
2-18 commissioner shall make a determination within 60 days after the
2-19 record of such hearing is closed. [At any time after the
2-20 submission or resubmission to the commissioner of a statement filed
2-21 under Subsection (a) of this section, regardless of whether the
2-22 statement is complete and accurate, the matter may be placed on the
2-23 commissioner's contested case docket to hear any pre-hearing
2-24 matters and motions permitted under the Administrative Procedure
2-25 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
2-26 Statutes).]
2-27 SECTION 3. The changes in law made by this Act to Section 5,
2-28 Article 21.49-1, Insurance Code, do not apply to an acquisition or
2-29 change of control under that section for which a statement is filed
2-30 before the effective date of this Act. An acquisition or change of
2-31 control for which a statement is filed before the effective date of
2-32 this Act is governed by the law in effect immediately before the
2-33 effective date of this Act, and that law is continued in effect for
2-34 that purpose.
2-35 SECTION 4. This Act takes effect immediately if it receives
2-36 a vote of two-thirds of all the members elected to each house, as
2-37 provided by Section 39, Article III, Texas Constitution. If this
2-38 Act does not receive the vote necessary for immediate effect, this
2-39 Act takes effect September 1, 2001.
2-40 * * * * *