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



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



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



(3)  Investing, reinvesting, or trading in securities
for its own account, that of its parent, any subsidiary of its parent, or any
affiliate or subsidiary;



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



(5)  Acting as a broker/dealer subject to or
registered 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 operations
of an insurance business including but not limited to actuarial, loss
prevention, safety engineering, data processing, accounting, claims, appraisal,
and collection services;



(8)  Ownership and management of assets which the
parent corporation could itself own or manage; provided that the aggregate
investment by the insurer and its subsidiaries acquired or organized pursuant
to this paragraph shall not exceed the limitations applicable to the
investments by the insurer;



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



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



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



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



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



(1)  Invest in common stock, preferred stock, debt
obligations, and other securities of one or more subsidiaries, amounts which do
not exceed the lesser of ten per cent of the insurer's assets or fifty per cent
of the insurer's surplus as regards policyholders; provided that after the
investments, the insurer's surplus as regards policyholders will be reasonable
in relation to the insurer's outstanding liabilities and adequate to its
financial needs.  In calculating the amount of the investments, investments in
domestic or foreign insurance subsidiaries shall be excluded, and there shall
be included:



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



(B)  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
subsequent to its acquisition or formation;



(2)  Invest any amount in common stock, preferred
stock, debt obligations, and other securities of one or more subsidiaries
engaged or organized to engage exclusively in the ownership and management of
assets authorized as investments for the insurer; provided that each subsidiary
agrees to limit its investments in any asset so that the investments will not
cause the amount of the total investment of the insurer to exceed any of the
investment limitations specified in paragraph (1) or in this chapter.  For the
purpose of this subsection, the total investment of the insurer shall include:



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



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



(3)  With the approval of the commissioner, invest any
greater amount in common stock, preferred stock, debt obligations, or other
securities of one or more subsidiaries; provided that after the investment, the
insurer's surplus as regards policyholders will be reasonable in relation to
the 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 to
subsection (b) shall not be subject to any of the otherwise applicable
restrictions or prohibitions contained in this code applicable to investments
of insurers.



(d)  Whether any investment pursuant to
subsection (b) meets the applicable requirements thereof is to be determined
before the investment is made, by calculating the applicable investment
limitations as though the investment had already been made, taking into account
the then outstanding principal balance on all previous investments in debt
obligations, and the value of all previous investments in equity securities as
of the day they were made, net of any return of capital invested, not including
dividends.



(e)  If an insurer ceases to control a
subsidiary, it shall dispose of any investment therein made pursuant to this
section within three years from the time of the cessation of control or within
such further time as the commissioner may prescribe, unless at any time after
the investment shall have been made, the investment shall have met the
requirements for investment under any other section of this code, and the
insurer has notified the commissioner thereof. [L 1987, c 349, pt of §8; am L
2000, c 24, §9; am L 2002, c 155, §77; am L 2003, c 212, §98]