§431:6-324  Subsidiaries.  (a)  Any
domestic insurer, either by itself or in cooperation with one or more persons,
may organize or acquire one or more subsidiaries subject to the limitations of
this section.



(b)  In addition to investments in common stock,
preferred stock, debt obligations, and other securities permitted under all
other sections of this article, a domestic insurer also may do one or more of
the following:



(1)  Invest, in common stock, preferred stock, debt
obligations, and other securities of one or more subsidiaries, amounts that 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.  However, after the
investments, the insurer's surplus as regards policyholders shall 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 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)  If the insurer's total liabilities, as calculated
for  National Association of Insurance Commissioners' annual statement
purposes, are less than ten per cent of assets, invest any amount in common
stock, preferred stock, debt obligations, and other securities of one or more
subsidiaries.  However, after the investment the insurer's surplus as regards
policyholders, considering the investment as if it were a disallowed asset,
shall be reasonable in relation to the insurer's outstanding liabilities and
adequate to its financial needs;



(3)  Invest any amount in common stock, preferred
stock, debt obligations, and other securities of one or more subsidiaries;
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 article applicable to the insurer.  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 of 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 insurer's ownership of the subsidiary;



(4)  With the approval of the commissioner, invest any
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 shall be reasonable in relation to the
insurer's outstanding liabilities and adequate to its financial needs; or



(5)  Invest any amount in the common stock, preferred
stock, debt obligations, or other securities of any subsidiary exclusively
engaged in holding title to, or holding title to and managing or developing
real or personal property, if after considering as a disallowed asset so much
of the investment as is represented by subsidiary assets, which if held
directly by the insurer would be considered as a disallowed asset, the
insurer's surplus as regards policyholders shall 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 article applicable to the
investment of insurers.



(d)  Whether any investment pursuant to
subsection (b) meets the applicable requirements is to be determined
immediately after the investment is 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 date
they were made.



(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 times as the commissioner may prescribe, unless at any time after
the investment has been made, the investment has met the requirements for investment
under any other section of this article, and the insurer has notified the
commissioner thereof.



(f)  In addition to the above subsection, any
insurer acquiring or disposing of any subsidiary, must also comply with article
11 of this code. [L 1987, c 349, §6; am L 1993, c 205, §10; am L 2004, c 122,
§22]