CHAPTER 23. REGULATION OF INSURANCE HOLDING COMPANY SYSTEMS - Indiana Statutes

IC 27-1-23
     Chapter 23. Regulation of Insurance Holding Company Systems

IC 27-1-23-1
Definitions
     Sec. 1. As used in this chapter, the following terms shall have the respective meanings set forth in this section, unless the context shall otherwise require:
    (a) An "acquiring party" is the specific person by whom an acquisition of control of a domestic insurer or of any corporation controlling a domestic insurer is to be effected, and each person who directly, or indirectly through one (1) or more intermediaries, controls the person specified.
    (b) An "affiliate" of, or person "affiliated" with, a specific person, is a person that directly, or indirectly through one (1) or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.
    (c) A "beneficial owner" of a voting security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, revocable or irrevocable proxy, or otherwise has or shares:
        (1) voting power including the power to vote, or to direct the voting of, the security; or
        (2) investment power which includes the power to dispose, or to direct the disposition, of the security.
    (d) "Commissioner" means the insurance commissioner of this state.
    (e) "Control" (including the terms "controlling", "controlled by", and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the beneficial ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position or corporate office. Control shall be presumed to exist if any person beneficially owns ten percent (10%) or more of the voting securities of any other person. The commissioner may determine this presumption has been rebutted only by a showing made in the manner provided by section 3(k) of this chapter that control does not exist in fact, after giving all interested persons notice and an opportunity to be heard. Control shall be presumed again to exist upon the acquisition of beneficial ownership of each additional five percent (5%) or more of the voting securities of the other person. The commissioner may determine, after furnishing all persons in interest notice and opportunity to be heard, that control exists in fact, notwithstanding the absence of a presumption to that effect.
    (f) "Department" means the department of insurance created by IC 27-1-1-1.
    (g) A "domestic insurer" is an insurer organized under the laws of this state.     (h) "Earned surplus" means an amount equal to the unassigned funds of an insurer as set forth in the most recent annual statement of an insurer that is submitted to the commissioner, excluding surplus arising from unrealized capital gains or revaluation of assets.
    (i) An "insurance holding company system" consists of two (2) or more affiliated persons, one (1) or more of which is an insurer.
    (j) "Insurer" has the same meaning as set forth in IC 27-1-2-3, except that it does not include:
        (1) agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state;
        (2) fraternal benefit societies; or
        (3) nonprofit medical and hospital service associations.
The term includes a health maintenance organization (as defined in IC 27-13-1-19) and a limited service health maintenance organization (as defined in IC 27-13-1-27).
    (k) A "person" is an individual, a corporation, a limited liability company, a partnership, an association, a joint stock company, a trust, an unincorporated organization, any similar entity or any combination of the foregoing acting in concert, but shall not include any securities broker performing no more than the usual and customary broker's function.
    (l) A "policyholder" of a domestic insurer includes any person who owns an insurance policy or annuity contract issued by the domestic insurer, any person reinsured by the domestic insurer under a reinsurance contract or treaty between the person and the domestic insurer, and any health maintenance organization with which the domestic insurer has contracted to provide services or protection against the cost of care.
    (m) A "subsidiary" of a specified person is an affiliate controlled by that person directly or indirectly through one or more intermediaries.
    (n) "Surplus" means the total of gross paid in and contributed surplus, special surplus funds, and unassigned surplus, less treasury stock at cost.
    (o) "Voting security" includes any security convertible into or evidencing a right to acquire a voting security.
(Formerly: Acts 1971, P.L.387, SEC.1.) As amended by Acts 1981, P.L.244, SEC.1; P.L.26-1991, SEC.8; P.L.8-1993, SEC.416; P.L.130-1994, SEC.28; P.L.116-1994, SEC.38; P.L.26-1994, SEC.9; P.L.2-1995, SEC.100; P.L.203-2001, SEC.5.

IC 27-1-23-1.5
Dividend payments; notice; content
     Sec. 1.5. (a) A domestic insurer that is a member of an insurance holding company system may not pay a dividend unless the insurer notifies the department of the dividend and the department receives the notice from the insurer:
        (1) not more than five (5) business days after the declaration of

the dividend or distribution; and
        (2) at least ten (10) days before the payment of the dividend or distribution.
    (b) A notice provided by an insurer under subsection (a) must contain information indicating that the surplus of the insurer as regards policyholders will be:
        (1) reasonable in relation to the outstanding liabilities of the insurer; and
        (2) adequate to the financial needs of the insurer;
following the payment of the dividend.
    (c) After receiving a notice from an insurer under this section, the department shall promptly consider the information set forth in the notice under subsection (b). In the department's consideration of the information, the department shall apply the factors set forth in section 4(f) of this chapter.
As added by P.L.130-1994, SEC.29 and P.L.116-1994, SEC.39.

IC 27-1-23-2
Acquisition of domestic insurance company; statement to commissioner; hearings; notice; approval; exceptions; process
     Sec. 2. (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) 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, his 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 clause (2) of this subsection.
        (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 him to make the determination required by subsection (e)(2).
        (17) 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.
    (c) If any acquiring party is a partnership, limited partnership, syndicate, or other group, the commissioner may require that the information called for by subdivisions (1) through (17) of subsection (b) 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 subdivisions (1) through (17) 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.
    (d) 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.
    (e) 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 he 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.
    (f) For the purposes of the commissioner's application of the competitive standard set forth in subsection (e)(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 (e)(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.
    (g) The public hearing referred to in subsection (e) 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.
    (h) 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 he 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.
    (i) 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.
    (j) 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 his 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.
    (k) Except as otherwise provided in this section, the hearing and the determination made therein shall be subject to IC 4-21.5-3.
    (l) The provisions of this section shall not apply to the following:
        (1) Any merger, consolidation, or plan of exchange to be consummated with the approval of the commissioner under the laws of this state.
        (2) Any transaction to be undertaken under a statutory procedure for the purchase of dissenting shareholder's stock.
        (3) Any transaction to be undertaken under a judicially approved reorganization.
        (4) 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.
        (5) 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.
        (6) 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.
        (7) 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.
    (m) 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 his 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 his 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.

IC 27-1-23-2.5
Acquisitions in which there is a change in control of an insurer; preacquisition notification; waiting period; competitive standards; violations; order; penalties
     Sec. 2.5. (a) The following definitions apply throughout this section:
        (1) "Acquisition" means any agreement, arrangement, or activity the consummation of which results in a person acquiring directly or indirectly the control of another person. The term includes the acquisition of voting securities, and the acquisition of assets, assumption reinsurance, and mergers.
        (2) "Involved insurer" includes an insurer that:
            (A) acquires;
            (B) is acquired;             (C) is affiliated with an acquirer;
            (D) is affiliated with an acquired; or
            (E) is the result of a merger.
    (b) Except as provided in subsection (c), this section applies to any acquisition in which there is a change in control of an insurer authorized to do business in Indiana.
    (c) This section does not apply to the following:
        (1) An acquisition subject to approval or disapproval by the commissioner under section 2 of this chapter.
        (2) A purchase of securities solely for investment purposes, so long as those securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in any insurance market in this state. If a purchase of securities results in a presumption of control under section 1(e) of this chapter, it is not solely for investment purposes unless the commissioner of the insurer's state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist and this disclaimer action or affirmative finding is communicated by the domiciliary commissioner to the commissioner of Indiana.
        (3) The acquisition of a person by another person when both persons are neither directly nor through affiliates primarily engaged in the business of insurance, if a pre-acquisition notification is filed with the commissioner in accordance with subsection (d) at least thirty (30) days before the proposed effective date of the acquisition. However, a pre-acquisition notification is not required for an exclusion from this section if the acquisition would otherwise be excluded from this section by any other subdivision of this subsection.
        (4) The acquisition of persons already affiliated with the acquirer.
        (5) An acquisition if, as an immediate result of the acquisition:
            (A) in no market would the combined market share of the involved insurers exceed five percent (5%) of the total market;
            (B) there would be no increase in any market share; or
            (C) in no market would the combined market share of the involved insurers:
                (i) exceed twelve percent (12%) of the total market; or
                (ii) increase by more than two percent (2%) of the total market.
        (6) An acquisition for which a pre-acquisition notification would be required under this section due solely to the resulting effect on the ocean marine insurance line of business.
        (7) An acquisition of an insurer, if:
            (A) the domiciliary commissioner of the insurer affirmatively finds that:
                (i) the insurer is in failing condition;
                (ii) there is a lack of feasible alternatives to improving that condition; and                 (iii) the public benefits of improving the insurer's condition through the acquisition exceed the public benefits that would arise from not lessening competition; and
            (B) those findings are communicated by the domiciliary commissioner to the commissioner of Indiana.
For the purposes of this subsection, a "market" means the total direct written insurance premium of all insurers providing insurance in Indiana for a particular line of business, as reported in the annual statements required to be filed by insurers licensed to do business in Indiana.
    (d) An order pursuant to subsection (j) may be entered with respect to an acquisition to which this section applies unless the acquiring person files a pre-acquisition notification with respect to the acquisition and the waiting period referred to in subsection (f) has expired. An acquired person may also file a pre-acquisition notification with respect to an acquisition. Information in pre-acquisition notifications filed under this section is confidential and protected from disclosure under section 6 of this chapter.
    (e) A pre-acquisition notification filed under this section must be in the form and must contain the information prescribed by the National Association of Insurance Commissioners with respect to markets that meet the description set forth in subsection (c)(5), causing an acquisition not to be exempted from the provisions of this section. The commissioner may require additional material and information that the commissioner considers necessary to determine whether the proposed acquisition, if consummated, would violate the competitive standard set forth in subsection (g). The required information may include an opinion of an economist as to the competitive impact of the acquisition in Indiana, accompanied by a summary of the education and experience of the economist, indicating the economist's ability to render an informed opinion.
    (f) The waiting period required with respect to a proposed acquisition begins on the day when the commissioner receives a pre-acquisition notification and ends:
        (1) on the thirtieth day after the day the commissioner receives the notification; or
        (2) upon the commissioner's termination of the waiting period, if earlier.
Before the end of the waiting period, the commissioner, on a one-time basis, may require the submission of additional needed information relevant to the proposed acquisition. If the commissioner requests additional information under this subsection, the waiting period ends on the earlier of the thirtieth day after receipt of the additional information by the commissioner or the termination of the waiting period by the commissioner.
    (g) The commissioner may enter an order under subsection (j) with respect to an acquisition if:
        (1) there is substantial evidence that the effect of the acquisition may be substantially to lessen competition in any line of

insurance in Indiana or to tend to create a monopoly in any line of insurance in Indiana; or
        (2) the insurer fails to file adequate information in compliance with subsections (d) and (e).
    (h) In determining whether a proposed acquisition to which this section applies would violate the competitive standard set forth in subsection (g), the commissioner shall consider the following:
        (1) An acquisition to which this section applies that involves two (2) or more insurers competing in the same market is prima facie evidence of a violation of the competitive standard:
            (A) If the market is highly concentrated and the involved insurers possess the following shares of the market:
                (i) Insurer A a share of four percent (4%) and insurer B a share of 4% or more.
                (ii) Insurer A a share of ten percent (10%) and insurer B a share of two percent (2%) or more.
                (iii) Insurer A a share of fifteen percent (15%) and insurer B a share of one percent (1%) or more.
            (B) If the market is not highly concentrated and the involved insurers possess the following shares of the market:
                (i) Insurer A a share of five percent (5%) and insurer B a share of five percent (5%) or more.
                (ii) Insurer A a share of ten percent (10%) and insurer B a share of four percent (4%) or more.
                (iii) Insurer A a share of fifteen percent (15%) and insurer B a share of three percent (3%) or more.
                (iv) Insurer A a share of nineteen percent (19%) and insurer B a share of one percent (1%) or more.
        For the purposes of this subdivision, a highly concentrated market is a market in which the share of the four (4) largest insurers is seventy-five percent (75%) or more of the market. Percentages not referred to in this subdivision must be interpolated proportionately to the percentages that are referred to in this subdivision. If more than two (2) insurers are involved in a proposed acquisition, exceeding the total of the two (2) figures set forth for insurer A and insurer B in an item set forth in this subdivision is prima facie evidence of violation of the competitive standard set forth in subsection (g). For the purpose of this subdivision, the insurer with the largest share of the market shall be considered to be insurer A.
        (2) There is a significant trend toward increased concentration when the aggregate market share of any grouping of the largest insurers in the market, from the two (2) largest to the eight (8) largest, has increased by seven percent (7%) or more of the market over a period of time extending from any base year five (5) to ten (10) years before the acquisition up to the time of the acquisition. Any acquisition or merger to which this section applies involving two (2) or more insurers competing in the same market is prima facie evidence of violation of the competitive standard set forth in subsection (g) if:             (A) there is a significant trend toward increased concentration in the market;
            (B) one (1) of the insurers involved is one (1) of the insurers in a grouping of those large insurers showing the requisite increase in the market share; and
            (C) the market share of another involved insurer is two percent (2%) or more.
        (3) For the purposes of this subsection:
            (A) The term "insurer" includes any company or group of companies under common management, ownership, or control.
            (B) The term "market" means the relevant product and geographical markets. In determining the relevant product and geographical markets with respect to an acquisition, the commissioner shall give due consideration to, among other things, the definitions or guidelines, if any, promulgated by the National Association of Insurance Commissioners, and to information, if any, submitted by parties to the acquisition. In the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premium for a line of business that is used in the annual statement required to be filed by insurers doing business in Indiana, and the relevant geographical market is assumed to be Indiana.
            (C) The burden of showing prima facie evidence of a violation of the competitive standard rests upon the commissioner.
        (4) Even though an acquisition is not prima facie violative of the competitive standard under subdivisions (1) and (2), the commissioner may establish the requisite anticompetitive effect based upon other substantial evidence. Even though an acquisition is prima facie violative of the competitive standard under subdivisions (1) and (2), a party may establish the absence of the requisite anticompetitive effect based upon other substantial evidence. Relevant factors in making a determination under this subdivision include, but are not limited to, the following:
            (A) Market shares.
            (B) Volatility of ranking of market leaders.
            (C) Number of competitors.
            (D) Concentration and trend of concentration in the industry.
            (E) Ease of entry into and exit from the market.
    (i) An order may not be entered under subsection (j) if:
        (1) the acquisition will yield substantial economies of scale or economies in resource utilization that cannot be feasibly achieved in any other way, and the public benefits that would arise from those economies exceed the public benefits that would arise from not lessening competition; or
        (2) the acquisition will substantially increase the availability of insurance, and the public benefits of that increase exceed the

public benefits that would arise from not lessening competition.
    (j) If an acquisition violates the standards set forth in this section, the commissioner may enter an order:
        (1) requiring an involved insurer to cease and desist from doing business in Indiana with respect to the line or lines of insurance involved in the violation; or
        (2) denying the application of an acquired or acquiring insurer for a license to do business in Indiana.
    (k) An order may not be entered under subsection (j) unless:
        (1) there is a hearing;
        (2) notice of the hearing is issued before the end of the waiting period and not less than fifteen (15) days before the hearing; and
        (3) the hearing is concluded and the order is issued not more than sixty (60) days after the end of the waiting period.
Every order shall be accompanied by a written decision of the commissioner setting forth the commissioner's findings of fact and conclusions of law.
    (l) An order entered under subsection (j) shall not become final less than thirty (30) days after it is issued, during which time the involved insurer may submit a plan to remedy the anticompetitive impact of the acquisition within a reasonable time. Based upon that plan or other information, the commissioner shall specify the conditions, if any, under which the aspects of the acquisition causing a violation of the standards of this section would be remedied and the order vacated or modified, and the time period within which those aspects would have to remedied.
    (m) An order entered under subsection (j) does not apply if the acquisition to which the order applies is not consummated.
    (n) A person who violates a cease and desist order issued by the commissioner under subsection (j) while that order is in effect may, after notice and hearing under IC 4-21.5 and upon order of the commissioner, be subject at the discretion of the commissioner to any one (1) or more of the following:
        (1) A civil penalty of not more than ten thousand dollars ($10,000) for each day of violation.
        (2) The suspension or revocation of the person's license.
        (3) Both a monetary penalty under subdivision (1) and the suspension or revocation or the person's license under subdivision (2).
    (o) An insurer or other person who fails to make any filing required by this section and also fails to demonstrate a good faith effort to comply with that filing requirement is subject to a civil penalty of not more than fifty thousand dollars ($50,000).
    (p) Sections 8(b), 8(c), and 10 of this chapter do not apply to an acquisition to which this section applies.
As added by P.L.26-1991, SEC.10.

IC 27-1-23-2.6
Primary and subsidiary companies      Sec. 2.6. (a) As used in this section, "entity" means:
        (1) a sole proprietorship;
        (2) a corporation;
        (3) a limited liability company;
        (4) a partnership;
        (5) an association;
        (6) a joint stock company;
        (7) a mutual fund;
        (8) a joint venture;
        (9) a trust;
        (10) a joint tenancy;
        (11) an unincorporated organization; or
        (12) a similar entity.
    (b) As used in this section, "primary company" means a domestic insurance company that beneficially owns more than fifty percent (50%) of one (1) or more subsidiary companies.
    (c) As used in this section, "subsidiary company" means an entity of which more than fifty percent (50%) is beneficially owned by an insurance company.
    (d) As used in this section, "total investment of the primary company" means the total of:
        (1) a direct investment by a primary company in an asset; plus
        (2) the primary company's proportionate share of an investment made by a subsidiary company of the primary company.
The primary company's proportionate share must be determined by multiplying the amount of the subsidiary company's investment by the percentage of the primary company's ownership interest in the subsidiary company.
    (e) A primary company may, independently or in cooperation with another person, organize or acquire one (1) or more subsidiary companies.
    (f) A subsidiary company of a primary company may conduct business of any kind, and the authority to conduct the business is not limited because of the status of the subsidiary company as a subsidiary company of the primary company.
    (g) In addition to investments in common stock, preferred stock, debt obligations, and other securities as permitted under IC 27-1-12-2 or IC 27-1-13-3, a primary company to which this section applies may, directly or through one (1) or more subsidiary companies, also do the following:
        (1) Invest in common stock, preferred stock, debt obligations, and other securities of one (1) or more subsidiary companies, amounts that in total do not exceed the lesser of ten percent (10%) of the primary company's admitted assets or fifty percent (50%) of the primary company's surplus as regards policyholders, if, after the investments, the primary company's surplus as regards policyholders is reasonable in relation to the primary company's outstanding liabilities and adequate to the primary company's financial needs. In calculating the amount of investments permitted under this subdivision:             (A) investments, whether made directly or through one (1) or more subsidiary companies, in domestic or foreign insurance subsidiary companies and health maintenance organizations must be excluded; and
            (B) to the extent that expenditures relate to an investment other than an investment described in clause (A), the following must be included:
                (i) Total net money or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary company, including all organizational expenses and contributions to capital and surplus of the subsidiary company, whether or not represented by the purchase of capital stock or issuance of other securities.
                (ii) All amounts expended in acquiring additional common stock, preferred stock, debt obligations, and other securities and all contributions to the capital or surplus of a subsidiary company subsequent to the subsidiary company's acquisition or formation.
        (2) Notwithstanding subdivision (1), invest an amount in common stock, preferred stock, debt obligations, and other securities of one (1) or more subsidiary companies engaged or organized to engage exclusively in the ownership and management of assets authorized as investments for the primary company, if the subsidiary company agrees to limit the subsidiary company's investment in an asset so that, when combined with the investments of the primary company, the total investment of the primary company will not exceed the investment limitations described in subdivision (1) or in any applicable provision of IC 27-1-12-2 or IC 27-1-13-3.
        (3) Notwithstanding subdivision (1), with the prior approval of the commissioner, invest a greater amount in common stock, preferred stock, debt obligations, or other securities of one (1) or more subsidiary companies, if, after the investment, the primary company's surplus as regards policyholders is reasonable in relation to the primary company's outstanding liabilities and adequate to the primary company's financial needs.
    (h) Investments that are made under this section in common stock, preferred stock, debt obligations, or other securities of a subsidiary company are not subject to restrictions or prohibitions under IC 27-1-12-2 or IC 27-1-13-3 that otherwise apply to investments of primary companies.
    (i) Before a primary company to which this section applies makes an investment described in subsection (g), a primary company shall make a determination regarding whether the proposed investment meets the applicable requirements by determining the applicable investment limitations as though the investment has been made, considering:
        (1) the currently outstanding principal balance on previous investments in debt obligations; and         (2) the value of previous investments in equity securities as of the day that the investments in equity securities were made;
net of any return of capital invested.
    (j) If a primary company ceases to control a subsidiary company, the primary company shall dispose of any investment in the subsidiary company made under this section not more than:
        (1) three (3) years from the time of the cessation of control; or
        (2) the period determined appropriate by the commissioner;
unless the investment meets the requirements for investment under any applicable provision of IC 27-1-12-2 or IC 27-1-13-3 and the primary company has notified the commissioner that the investment meets the requirements.
    (k) A primary company, at the time of establishing a subsidiary company, must possess:
        (1) assets of not less than twenty-five million dollars ($25,000,000); or
        (2) not less than three million five hundred thousand dollars ($3,500,000) of:
            (A) combined capital and surplus in the case of a stock company; and
            (B) surplus in the case of a mutual company.
    (l) The department has the power to:
        (1) conduct periodic examinations of a subsidiary company;
        (2) require reports that reflect the effect of the condition and operation of a subsidiary company on the financial condition of a primary company; and
        (3) make additional examinations or require other reports with respect to a subsidiary company that are necessary to carry out the purposes of this section.
A noninsurance subsidiary company shall annually furnish the department financial statements that are prepared under generally accepted accounting principles and certified by an independent certified public accountant and the department may rely on the statements. If a subsidiary company conducts the business of the subsidiary company in a manner that clearly tends to impair the capital or surplus fund of the primary company, or otherwise makes the operation of the primary company financially unsafe, the department may act under IC 27-1-3-19 with respect to the primary company.
    (m) A primary company and a subsidiary company shall, in all respects, stand before the law as separate and distinct companies and neither company is liable to the creditors, policyholders, or stockholders of the other company, acts or omissions of an officer, director, stockholder, or member of either company notwithstanding.
    (n) The board of directors and officers of a primary company and a subsidiary company may be identical. However, the affairs of each company shall be carried on separate and distinct from the other company.
    (o) A foreign subsidiary company shall be treated in the same manner as other foreign companies, except that the treatment may be

withheld or suspended with respect to a subsidiary company that is domiciled in a state that does not treat a:
        (1) primary company; or
        (2) subsidiary company;
that is domiciled in Indiana in a manner equal to a foreign or domestic company doing business in the other state.
    (p) Interests in a subsidiary company that are owned by a primary company must be registered in the name of the primary company except for shares that are required under Indiana law to be registered in the name of another person.
As added by P.L.126-2001, SEC.3.

IC 27-1-23-3
Registration statement; amendments; termination; disclaimer of affiliation
     Sec. 3. (a) Every insurer which is authorized to do business in this state and which is a member of an insurance holding company system shall register with the commissioner, except a foreign insurer subject to disclosure requirements and standards adopted by statute or regulation in the jurisdiction of its domicile which are substantially similar to those contained in:
        (1) this section;
        (2) section 4(a) and 4(c) of this chapter; and
        (3) section 4(b) of this chapter or a provision such as the following:
                Each registered insurer shall keep current the information required to be disclosed in its registration statement by reporting all material changes or additions within fifteen days after the end of the month in which it learns of each such change or addition.
Any insurer which is subject to registration under this section shall register within fifteen (15) days after it becomes subject to registration, and annually thereafter by March 15 of each year for the previous calendar year, unless the commissioner for good cause shown extends the time for registration, and then within such extended time. The commissioner may require any authorized insurer which is a member of an insurance holding company system but not subject to registration under this section to furnish a copy of the registration statement or other information filed by such insurer with the insurance regulatory authority of its domiciliary jurisdiction.
    (b) Every insurer subject to registration shall file a registration statement on a form prescribed by the commissioner, which shall contain current information about:
        (1) the capital structure, general financial condition, ownership and management of the insurer and any person controlling the insurer;
        (2) the identity of every member of the insurance holding company system;
        (3) the following agreements in force, relationships subsisting, and transactions that are currently outstanding or that have

occurred during the last calendar year between such insurer and its affiliates:
            (i) loans, other investments, or purchases, sales or exchanges of securities of the affiliates by the insurer or of the insurer by its affiliates;
            (ii) purchases, sales, or exchanges of assets;
          &n