§431:11-104  Acquisition of control ormerger with domestic insurer.  (a)  No person other than the issuer shallmake a tender offer or a request or invitation for tenders, or enter into anyagreement to exchange securities, or seek to acquire, or acquire, in the openmarket or otherwise, any voting security of a domestic insurer if, after theconsummation thereof, the person, directly or indirectly (by conversion or byexercise of any right to acquire), would be in control of the insurer, and noperson shall enter into an agreement to merge with or otherwise to acquirecontrol of a domestic insurer or any person controlling a domestic insurerunless, at the time any offer, request, or invitation is made or any agreementis entered into, or prior to the acquisition of the securities if no offer oragreement is involved, the person has filed with the commissioner and has sentto the insurer, and the insurer has sent to its shareholders, a statementcontaining the information required by subsection (b) and the offer, request,invitation, agreement, or acquisition has been approved by the commissioner inthe manner hereinafter prescribed.

For purposes of this section, a domesticinsurer includes any person controlling a domestic insurer unless thecommissioner determines that the person, directly or through its affiliates, isprimarily engaged in business other than the business of insurance.  Such aperson shall file a preacquisition notification with the commissionercontaining the information set forth in section 431:11-104.3(b) thirty daysprior to the proposed effective date of the acquisition.  Failure to file issubject to section 431:11-104.5(f).  This section does not apply to anysecurities broker holding, in the usual and customary broker's function, lessthan twenty per cent of the voting securities of an insurance company or of anyperson who controls an insurance company.

(b)  The statement to be filed with thecommissioner hereunder shall be made under oath or affirmation and shallcontain the following information:

(1)  The name and address of each person by whom or onwhose behalf the merger or other acquisition of control referred to insubsection (a) is to be effected (hereinafter called "acquiringparty"), and

(A)  If the person is an individual, theprincipal occupation and all offices and positions held by the individualduring the past five years, and any conviction of crimes other than minortraffic violations during the past ten years; or

(B)  If the person is not an individual, areport of the nature of its business operations during the past five years orfor such lesser period as the person and any predecessors thereof shall havebeen in existence; an informative description of the business intended to bedone by the person and the person's subsidiaries; and a list of all individualswho are or who have been selected to become directors or executive officers ofsuch person, or who perform or will perform functions appropriate to thepositions.  The list shall include for each individual the information requiredby [subparagraph](A);

(2)  The source, nature, and amount of theconsideration used or to be used in effecting the merger or other acquisitionof control, a description of any transaction wherein funds were or are to beobtained for any purpose (including any pledge of the insurer's stock, or thestock of any of its subsidiaries or controlling affiliates), and the identityof persons furnishing the consideration; provided that where a source of theconsideration is a loan made in the lender's ordinary course of business, theidentity of the lender shall remain confidential, if the person filing thestatement requests confidentiality;

(3)  Fully audited financial information as to theearnings and financial condition of each acquiring party for the preceding fivefiscal years (or for the lesser period as the acquiring party and anypredecessors thereof shall have been in existence), and similar unauditedinformation as of a date not earlier than ninety days prior to the filing ofthe statement;

(4)  Any plans or proposals which each acquiring partymay have to liquidate the insurer, to sell its assets or merge or consolidateit with any person, or to make any other material change in its business orcorporate structure or management;

(5)  The number of shares of any security referred toin subsection (a) which each acquiring party proposes to acquire, and the termsof the offer, request, invitation, agreement, or acquisition referred to insubsection (a), and a statement as to the method by which the fairness of theproposal was arrived at;

(6)  The amount of each class of any security referredto in subsection (a) which is beneficially owned or concerning which there is aright to acquire beneficial ownership by each acquiring party;

(7)  A full description of any contracts,arrangements, or understandings with respect to any security referred to insubsection (a) in which any acquiring party is involved, including but notlimited to transfer of any of the securities, joint ventures, loan or optionarrangements, puts or calls, guarantees of loans, guarantees against loss orguarantees of profits, division of losses or profits, or the giving orwithholding of proxies.  The description shall identify the persons with whomthe contracts, arrangements, or understandings have been entered into;

(8)  A description of the purchase of any securityreferred to in subsection (a) during the twelve calendar months preceding thefiling of the statement, by any acquiring party, including the dates of purchase,names of the purchasers, and considerations paid or agreed to be paidtherefore;

(9)  A description of any recommendations to purchaseany security referred to in subsection (a) made during the twelve calendarmonths preceding the filing of the statement, by any acquiring party, or byanyone based upon interviews or at the suggestion of such acquiring party;

(10)  Copies of all tender offers, requests, orinvitation for tenders, or exchange offers for, and agreements to acquire orexchange any securities referred to in subsection (a), and (if distributed) ofadditional soliciting material relating thereto;

(11)  The term of any agreement, contract, orunderstanding made with or proposed to be made with any broker/dealer as tosolicitation of securities referred to in subsection (a) for tender, and theamount of any fees, commissions or other compensation to be paid tobroker/dealers with regard thereto; and

(12)  Any additional information as the commissionermay by rule or regulation prescribe as necessary or appropriate for theprotection of policyholders of the insurer or in the public interest.

If the person required to file the statementreferred to in subsection (a) is a partnership, limited partnership, or othergroup, the commissioner may require that the information called for by items(1) through (12) shall be given with respect to each partner of the partnershipor limited partnership, each member of the group, and each person who controlssuch partner or member.  If any partner, member, or person is a corporation orthe person required to file the statement referred to in subsection (a) is acorporation, the commissioner may require that the information called for byitems (1) through (12) shall be given with respect to the corporation, each officerand director of the corporation, and each person who is directly or indirectlythe beneficial owner of more than ten per cent of the outstanding votingsecurities of the corporation.

If any material change occurs in the facts setforth in the statement filed with the commissioner and sent to the insurerpursuant to this section, an amendment setting forth the change, together withcopies of all documents and other material relevant to the change, shall befiled with the commissioner and sent to the insurer within two business daysafter the person learns of the change.  The insurer shall send the amendment toits shareholders.

(c)  If any offer, request, invitation,agreement or acquisition referred to in subsection (a) is proposed to be madeby means of a registration statement under the Securities Act of 1933 or incircumstances requiring the disclosure of similar information under theSecurities Exchange Act of 1934, or under a state law requiring similarregistration or disclosure, the person required to file the statement referredto in subsection (a) may utilize the documents in furnishing the informationcalled for by that statement.

(d) (1)  The commissioner shall approve any merger orother acquisition of control referred to in subsection (a) unless, after apublic hearing thereon, the commissioner finds that:

(A)  After the change of control, the domesticinsurer referred to in subsection (a) would not be able to satisfy therequirements for the issuance of a license to write the line or lines ofinsurance for which it is presently licensed;

(B)  The effect of the merger or otheracquisition of control would be substantially to lessen competition ininsurance in this State or tend to create a monopoly therein;

(C)  The financial condition of any acquiringparty might jeopardize the financial stability of the insurer, or prejudice theinterest of its policyholders;

(D)  The plans or proposals which the acquiringparty has to liquidate the insurer, sell its assets or consolidate or merge itwith any person, or to make any other material change in its business orcorporate structure or management, are unfair and unreasonable to policyholdersof the insurer and not in the public interest;

(E)  The competence, experience, and integrityof those persons who would control the operation of the insurer would not be inthe interest of policyholders of the insurer and not in the public interest; or

(F)  The acquisition is likely to be hazardousor prejudicial to the insurance buying public.

(2)  The public hearing referred to in paragraph (1)shall commence within sixty days after the statement required by subsection (a)is filed, except that the hearing may commence within such additional time asagreed to by the commissioner, the acquiring party and the person to beacquired, and at least twenty days notice of the scheduled public hearing shallbe given by the commissioner to the person filing the statement.  Not less thanseven days notice of the public hearing shall be given by the person filing thestatement to the insurer and to any other persons as may be designated by thecommissioner.  The insurer shall give notice to its security holders.  Thecommissioner shall make a determination within thirty days after the conclusionof the hearing.  At the hearing, the person filing the statement, the insurer,any person to whom notice of hearing was sent, and any other person whoseinterest may be affected thereby shall have the right to present evidence,examine and cross-examine witnesses, and offer oral and written arguments andin connection therewith shall be entitled to conduct discovery proceedings inthe same manner as is presently allowed in chapter 91.  All discoveryproceedings shall be concluded not later than three days prior to the commencementof the public hearing.

(3)  The commissioner may retain at the acquiringperson's expense any attorneys, actuaries, accountants, and other experts nototherwise a part of the commissioner's staff as may be reasonably necessary toassist the commissioner in reviewing the proposed acquisition of control.

(e)  All statements, amendments, or othermaterial filed pursuant to subsections (a) or (b), and all notices of publichearings held pursuant to subsection (d), shall be mailed by the insurer to itsshareholders within five business days after the insurer has received thestatements, amendments, other material, or notices.  The expenses of mailingshall be borne by the person making the filing.  As security for the payment ofthe expenses, the person shall file with the commissioner an acceptable bond orother deposit in an amount to be determined by the commissioner.

(f)  The provisions of this section shall notapply to:

(1)  Any transaction which is subject to theprovisions of article 4, dealing with the merger or consolidation of two ormore insurers; or

(2)  Any offer, request, invitation, agreement, oracquisition which the commissioner by order shall exempt therefrom as:

(A)  Not having been made or entered into forthe purpose of, and not having the effect of, changing or influencing thecontrol of a domestic insurer; or

(B)  Not otherwise comprehended within thepurposes of this section.

(g)  The following shall be violations of thisarticle:

(1)  The failure to file any statement, amendment, orother material required to be filed pursuant to subsections (a) or (b); or

(2)  The effectuation or any attempt to effectuate anacquisition of, control of, or merger with, a domestic insurer unless approvalis given by the commissioner.

(h)  The courts of this State are hereby vestedwith jurisdiction over every person not resident, domiciled or authorized to dobusiness in this State who files a statement with the commissioner under thissection, and overall actions involving the person arising out of violations ofthis article.  Each person shall be deemed to have performed acts equivalent toand constituting an appointment by the person of the commissioner to be theperson's true and lawful attorney upon whom may be served all lawful process inany action, suit, or proceeding arising out of violations of this article. Copies of all lawful process shall be served on the commissioner andtransmitted by registered or certified mail by the commissioner to the personat the person's last known address. [L 1987, c 349, pt of §8; am L 1989, c 195,§38 and c 207, §14; am L 1993, c 321, §14; am L 1997, c 233, §5]