§431:11-103  Subsidiaries of insurers.  (a) Any domestic insurer, either by itself or in cooperation with one or morepersons, may organize or acquire one or more subsidiaries engaged in thefollowing kinds of business:

(1)  Any kind of insurance business authorized by thejurisdiction in which it is incorporated;

(2)  Acting as an insurance producer for its parent orfor any of its parent's insurer subsidiaries;

(3)  Investing, reinvesting, or trading in securitiesfor its own account, that of its parent, any subsidiary of its parent, or anyaffiliate or subsidiary;

(4)  Management of any investment company subject toor registered pursuant to the Investment Company Act of 1940, as amended,including related sales and services;

(5)  Acting as a broker/dealer subject to orregistered pursuant to the Securities Exchange Act of 1934, as amended;

(6)  Rendering investment advice to governments,government agencies, corporations, or other organizations or groups;

(7)  Rendering other services related to the operationsof an insurance business including but not limited to actuarial, lossprevention, safety engineering, data processing, accounting, claims, appraisal,and collection services;

(8)  Ownership and management of assets which theparent corporation could itself own or manage; provided that the aggregateinvestment by the insurer and its subsidiaries acquired or organized pursuantto this paragraph shall not exceed the limitations applicable to theinvestments by the insurer;

(9)  Acting as administrative agent for a governmentalinstrumentality which is performing an insurance function;

(10)  Financing of insurance premiums, producers, andother forms of consumer financing;

(11)  Any other business activity determined by thecommissioner to be reasonably ancillary to an insurance business; and

(12)  Owning a corporation or corporations engaged ororganized to engage exclusively in one or more of the businesses specified inthis section.

(b)  In addition to investments in commonstock, preferred stock, debt obligations, and other securities permitted inthis chapter, a domestic insurer may also:

(1)  Invest in common stock, preferred stock, debtobligations, and other securities of one or more subsidiaries, amounts which donot exceed the lesser of ten per cent of the insurer's assets or fifty per centof the insurer's surplus as regards policyholders; provided that after theinvestments, the insurer's surplus as regards policyholders will be reasonablein relation to the insurer's outstanding liabilities and adequate to itsfinancial needs.  In calculating the amount of the investments, investments indomestic or foreign insurance subsidiaries shall be excluded, and there shallbe included:

(A)  Total net moneys or other considerationexpended and obligations assumed in the acquisition or formation of asubsidiary, including all organizational expenses and contributions to capitaland surplus of the subsidiary whether or not represented by the purchase ofcapital stock or issuance of other securities, and

(B)  All amounts expended in acquiringadditional common stock, preferred stock, debt obligations, and othersecurities and all contributions to the capital or surplus of a subsidiarysubsequent to its acquisition or formation;

(2)  Invest any amount in common stock, preferredstock, debt obligations, and other securities of one or more subsidiariesengaged or organized to engage exclusively in the ownership and management ofassets authorized as investments for the insurer; provided that each subsidiaryagrees to limit its investments in any asset so that the investments will notcause the amount of the total investment of the insurer to exceed any of theinvestment limitations specified in paragraph (1) or in this chapter.  For thepurpose of this subsection, the total investment of the insurer shall include:

(A)  Any direct investment by the insurer in anasset; and

(B)  The insurer's proportionate share of anyinvestment in an asset by any subsidiary of the insurer, which shall becalculated by multiplying the amount of the subsidiary's investment by thepercentage of the ownership of the subsidiary; and

(3)  With the approval of the commissioner, invest anygreater amount in common stock, preferred stock, debt obligations, or othersecurities of one or more subsidiaries; provided that after the investment, theinsurer's surplus as regards policyholders will be reasonable in relation tothe insurer's outstanding liabilities and adequate to its financial needs.

(c)  Investments in common stock, preferred stock,debt obligations, or other securities of subsidiaries made pursuant tosubsection (b) shall not be subject to any of the otherwise applicablerestrictions or prohibitions contained in this code applicable to investmentsof insurers.

(d)  Whether any investment pursuant tosubsection (b) meets the applicable requirements thereof is to be determinedbefore the investment is made, by calculating the applicable investmentlimitations as though the investment had already been made, taking into accountthe then outstanding principal balance on all previous investments in debtobligations, and the value of all previous investments in equity securities asof the day they were made, net of any return of capital invested, not includingdividends.

(e)  If an insurer ceases to control asubsidiary, it shall dispose of any investment therein made pursuant to thissection within three years from the time of the cessation of control or withinsuch further time as the commissioner may prescribe, unless at any time afterthe investment shall have been made, the investment shall have met therequirements for investment under any other section of this code, and theinsurer has notified the commissioner thereof. [L 1987, c 349, pt of §8; am L2000, c 24, §9; am L 2002, c 155, §77; am L 2003, c 212, §98]