§222. Registration, regulation, supervision and examination of holding company systems, agents, promoters and others
1. Examination. For purposes of ascertaining compliance with law, or relationships and transactions between any person as defined hereafter and any insurer or proposed insurer, the superintendent may as often as he deems advisable examine the accounts, records, documents and transactions pertaining to or affecting the insurance affairs or proposed insurance affairs, or transactions of the insurer or proposed insurer as may be in the possession of any holding company, its subsidiaries or affiliates as is necessary to ascertain the financial condition or legality of conduct of the insurer or proposed insurer. Such investigatory and examination authority shall also extend to the examination of:
A. Any business entity structured to hold the stock of an insurance company, or person holding the shares of voting stock or policyholder proxies of an insurer as voting trustee or otherwise, for the purpose of controlling the management thereof; [1975, c. 356, §1 (RPR).]
B. Any insurance agent, broker, general agent, surplus lines broker, adjuster, consultant, insurer representatives or any person holding himself out as any of the foregoing; [1975, c. 356, §1 (RPR).]
C. Any person having a contract under which he enjoys by terms or in fact the exclusive or dominant right to manage or control the insurer; [1975, c. 356, §1 (RPR).]
D. Any person in this State engaged in, or proposing to be engaged in, this State in, or holding himself out in this State as so engaging or proposing, or in this State assisting in the promotion, formation or financing of an insurer or insurance holding corporation, or corporation or other group to finance an insurer or the production of its business. [1975, c. 356, §1 (RPR).]
[ 1975, c. 356, §1 (RPR) .]
2. Definitions. As used in this section, unless the context otherwise requires, the following words shall have the following meanings.
A. Affiliate. "Affiliate" of, or a person "affiliated" with, a specific person means a person who directly or indirectly controls, or is controlled by, or is under common control with the person specified. [1975, c. 356, §1 (RPR).]
A-1. Beneficial owner. "Beneficial owner" of a voting security, voting insurance policy or guaranty capital share means any person or group of persons acting in concert who, directly or indirectly, through any contract, arrangement, proxy appointment, understanding, relationship or otherwise, has or shares:
(1) Voting power over the security, policy or guaranty capital share, including the power to vote or to direct the voting of the security, policy or share; or
(2) Investment power over the security, policy or share, including the power to dispose or to direct the disposition of the security, policy or share.
The superintendent may determine that persons are acting in concert, either on the superintendent's own initiative or upon application of an interested person, based upon evidence that actions taken by those persons, if consummated, may permit the exercise of common control, directly or indirectly, over the domestic insurer. The absence of a determination by the superintendent that persons are acting in concert shall not be construed to exempt those persons from compliance with the requirements of this section. [1989, c. 385, §1 (NEW).]
A-2. "Continuing director" means:
(1) Any member of a domestic insurer's board of directors, while that person is a member of the board of directors, who was a member of that board of directors prior to the time that any person acquires control of the domestic insurer or any person controlling the insurer; and
(2) Any successor of a continuing director, while the successor is a member of the board of directors, who is recommended or elected to succeed a continuing director by a number of continuing directors equal to a majority of continuing directors in office immediately preceding the acquisition of control. [1991, c. 37, §1 (NEW).]
B. Control
(1) 'Control,' including '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 ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is solely the result of an official position with or a corporate office held by the person. Control is presumed to exist if any person is the beneficial owner of 10% or more of the voting securities, or voting rights in the case of mutual or reciprocal insurers, or guaranty capital shares if a mutual insurer has established a guaranty fund, of any other person. A beneficial owner may rely in determining the amount of voting securities of any person outstanding upon information set forth in that person's most recent quarterly or annual report filed with the Securities and Exchange Commission pursuant to the Exchange Act unless the beneficial owner knows or has reason to believe that the information contained in the quarterly or annual report is inaccurate. Two or more domestic mutual insurance companies that have restricted their licensed territories to the State are not considered subject to this section merely because those insurance companies commonly share facilities, incurred expenses, personnel services, or otherwise utilize cost allocations based on generally accepted accounting principles including pro rata sharing of assumed risks.
(2) Notwithstanding the presumption of control contained in subparagraph (1), the superintendent, upon application of the insurance company, may determine that the insurer is not controlled by the person presumed to control it. In addition, the superintendent, after notice and an opportunity to be heard, may determine, notwithstanding the absence of the presumption in subparagraph (1), that a person does control an insurance company or companies. [1999, c. 113, §8 (AMD).]
B-1. Exchange Act. "Exchange Act" means the United States Securities Exchange Act of 1934, as amended. [1989, c. 385, §3 (NEW).]
C. Insurance holding company system. "Insurance holding company system" shall consist of 2 or more affiliated persons, one or more of whom is an insurer. [1975, c. 356, §1 (RPR).]
D. Insurer. "Insurer" shall have the same meaning given it in section 4. [1975, c. 356, §1 (RPR).]
D-1. [1993, c. 313, §7 (RP).]
D-2. "Net gains from operations" means:
(1) For life insurers, the net income or loss after dividends to policyholders and federal income taxes but before the inclusion of net realized capital gains or losses; and
(2) For nonlife insurers, the net income or loss after dividends to policyholders and federal income taxes and net realized capital gains or losses. [1993, c. 313, §8 (NEW).]
E. Person. "Person" shall mean an individual, a corporation, a corporation which, pursuant to Title 24, chapter 19, maintains and operates nonprofit hospital service plans, nonprofit medical service plans or nonprofit health care plans or any combination thereof, a partnership, an association, a joint stock company, a business trust, an unincorporated organization or any similar entity, or any combination of the foregoing acting in concert. [1975, c. 356, §1 (RPR).]
F. "Subsidiary" of a specified person means an affiliate controlled by that person directly or through one or more intermediaries. [2001, c. 72, §4 (AMD).]
G. "Surplus regarding policyholders" means admitted assets less all liabilities. [1993, c. 313, §9 (NEW).]
H. "Unassigned funds" means the undistributed and unappropriated amount of surplus remaining on the balance sheet date as the result of all operations of an insurance company from its commencement of business. [1993, c. 313, §9 (NEW).]
I. "Voting security" means any security with voting rights or any security convertible into or evidencing a right to acquire a security with voting rights. [1999, c. 113, §10 (NEW).]
[ 2001, c. 72, §4 (AMD) .]
3. Subsidiaries of insurers; investments to acquire interest. This subsection pertains to insurers and their subsidiaries and affiliates.
A. Any domestic insurer may invest in or otherwise acquire one or more subsidiaries as authorized in section 1115 or section 1157. [1987, c. 399, §1 (AMD).]
A-1. A domestic insurer shall notify the superintendent in writing within 30 days after any investment by the insurer or any of its affiliates in any one corporation if the insurer has invested in that corporation and the total investment in that corporation by the insurance holding company system exceeds 10% of the corporation's voting securities. [1991, c. 828, §4 (AMD).]
B. If an insurer ceases to control a subsidiary, it shall dispose of any investment therein made pursuant to this section within 3 years from the time of the cessation of control or within such further time as the superintendent may prescribe, unless at any time after the investment was made, the investment met the requirements for investment under any other section of this Title and the insurer has notified the superintendent thereof. [1991, c. 828, §4 (AMD).]
[ 1991, c. 828, §4 (AMD) .]
4. Tender offers.
[ 1989, c. 385, §4 (RP) .]
4-A. Tender offers. No person may make a tender offer for, or a request or invitation for tenders of, or an agreement to exchange securities for, or otherwise acquire any voting security, or any security convertible into a voting security, of a domestic insurer or of any person controlling a domestic insurer if, as a result of the consummation thereof, the person making the tender offer, request or agreement, would, directly or indirectly, acquire actual control of the insurer or controlling person, and no person may enter into an agreement to merge with or may otherwise acquire control of a domestic insurer or its controlling person, unless:
A. The person has filed with the superintendent and has sent the domestic insurer a statement containing the information required by subsection 4-B; [1989, c. 385, §5 (NEW).]
B. The offer, request, invitation, agreement or acquisition has been approved by the superintendent in the manner prescribed in subsection 7; and [1989, c. 385, §5 (NEW).]
C. Ten days have elapsed from the date of approval by the superintendent and no injunction or other court order precludes consummation of the offer, request, invitation, agreement or acquisition. [1989, c. 385, §5 (NEW).]
The superintendent, by rule or by order, may exempt from paragraphs B and C, any offer, request, invitation or agreement which is subject to regulation as a tender offer under the Exchange Act, provided that the acquisition or other transaction contemplated by the offer, request, invitation or agreement may not be consummated unless that acquisition or other transaction is approved by the superintendent in the manner prescribed in subsection 7. The superintendent, by rule or by order, may in addition exempt from paragraphs B and C any offer, request, invitation, agreement, purchase or transaction on the grounds that the interests of the State in regulating that transaction are minimal relative to the interests of other jurisdictions or are minimal relative to the impact of the transaction as a whole, provided that it does not appear likely that exempting the transaction from the application of this section will be detrimental to the interests of Maine policyholders.
[ 1989, c. 385, §5 (NEW) .]
4-B. Application for approval. Each statement required in subsection 4-A shall contain the following information as applicable:
A. The background and identity of all persons by whom or on whose behalf the purchases or the exchange, merger or other acquisition of control are to be effected; [1989, c. 385, §5 (NEW).]
B. The source and amount of the funds or other consideration which have been used or will be used in making the purchases or in effecting the exchange, merger or other acquisition of control and, if any part of these funds or other consideration has been or will be borrowed or otherwise obtained for the purpose of making the purchases or effecting the exchange, merger or other acquisition of control, a description of the transaction and the names and identities of the parties involved; [1989, c. 385, §5 (NEW).]
C. Any plans or proposals which those persons may have to liquidate the insurer, or the controlling person of the insurer, or to sell its assets or merge it with any person or make any other major change in its business or corporate structure or management; [1989, c. 385, §5 (NEW).]
D. The amount of each class of voting securities, or securities which may be converted into voting securities, of the insurer or controlling person, which are beneficially owned, and the amount of each class of voting securities, or securities which may be converted into voting securities, of that insurer or controlling person concerning which there is a right to acquire beneficial ownership, by each person and by each affiliate; [1989, c. 385, §5 (NEW).]
E. Information as to all contracts, arrangements or understandings with any person with respect to any securities of the insurer or the controlling person, 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, naming the persons with whom those contracts, arrangements or understandings have been entered into, and giving the details thereof; [1989, c. 385, §5 (NEW).]
F. A copy of all those agreements, and any amendments thereto, to exchange or otherwise acquire securities or to merge with or otherwise acquire control of the insurer or the controlling person; and [1989, c. 385, §5 (NEW).]
G. Any other information as the superintendent may by rule prescribe as necessary or appropriate in the public interest or for the protection of policyholders. [1989, c. 385, §5 (NEW).]
[ 1989, c. 385, §5 (NEW) .]
5. Tender offer material. All requests or invitations for tenders or advertisements making a tender offer or requesting or inviting tenders of such voting securities for control of a domestic insurer or its controlling person made by or on behalf of any such person shall contain any information specified in subsection 4-B as the superintendent may prescribe, and shall be filed with the superintendent at the time that material is first published or sent or given to security holders. Copies of any additional material soliciting or requesting such tender offers subsequent to the initial solicitation or request shall contain the information that the superintendent may prescribe as necessary or appropriate in the public interest or for the protection of policyholders, and shall be filed with the superintendent at the time copies of that material are first published or sent or given to security holders.
[ 1989, c. 385, §6 (AMD) .]
6. Information as to tender offeror. If the person required to file the statement referred to in subsection 4-A is a partnership, limited partnership, syndicate or other group, the superintendent may require that the information called for by subsection 4-A must 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 the person required to file the statement referred to in subsection 4-A is a corporation, the superintendent may require that the information called for thereby must be given with respect to such corporation and each officer and director thereof and each person who is directly or indirectly the beneficial owner of more than 10% of the outstanding securities of such corporation.
[ 2007, c. 466, Pt. D, §1 (AMD) .]
7. Approval, disapproval of proposed acquisition.
A. The superintendent shall hold a hearing in accordance with the procedures set forth in the Maine Administrative Procedure Act, Title 5, chapter 375, subchapter IV, within 30 days after the statement required by subsection 4-A has been filed with the superintendent. The superintendent shall make a determination within 30 days after the conclusion of that hearing. The superintendent shall approve any purchase, exchange, merger or other acquisition of control referred to in subsection 4-A unless the superintendent finds that:
(1) After the change of control, the domestic insurer could not satisfy the requirements for the issuance of a certificate of authority according to requirements in force at the time of the issuance, or last renewal or continuation of its certificate of authority to do the insurance business which it intends to transact in this State;
(2) The effect of the purchases, exchanges, merger of a controlling person of the insurer, or other acquisitions of control may be substantially to lessen competition in insurance in this State or tend to create a monopoly therein; or would violate the laws of this State or of the United States relating to monopolies or restraints of trade;
(3) The financial condition of an acquiring person is such as would jeopardize the financial stability of the insurer or prejudice the interest of its policyholders;
(4) The plans or proposals which the acquiring person has to liquidate the insurer, to sell its assets or to merge it with any person, or to make any other major change in its business or corporate structure or management, are unfair or prejudicial to policyholders;
(5) The competence, experience and integrity of those persons who would control the operation of the insurer indicate that it would not be in the interest of policyholders or the public to permit them to do so;
(6) Any merger of a domestic insurer does not comply with section 3474; or
(7) The acquisition of control would 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. [1989, c. 385, §7 (AMD); 1989, c. 611, §§1, 4 (AMD).]
B. Subparagraphs (3) to (7) do not apply to any change of control if and to the extent that the superintendent, by rule or by order, exempts the same from the provisions of those subparagraphs as not comprehended within the purpose of this subsection. [1989, c. 385, §8 (AMD).]
C. Merger, consolidation or bulk reinsurance as to a domestic insurer shall be effectuated only pursuant to the applicable provisions of chapter 47, subchapter IV, sections 3875, 4108 and 4109, as related to organization and powers of insurers. [1975, c. 356, §1 (NEW).]
D. Violation
(1) Failure to file the statement required under subsection 4-A constitutes a violation of this chapter.
(2) Effectuation of or any attempt to effectuate an acquisition of, control of or merger with a domestic insurer within 30 days of the filing of the statement required by subsection 4-A, prior to the superintendent's decision if a hearing is held or after disapproval of such acquisition of control or merger by the superintendent constitutes a violation of this chapter. [2007, c. 466, Pt. D, §2 (AMD).]
[ 2007, c. 466, Pt. D, §2 (AMD) .]
8. Registration of holding company system insurers.
A. Every insurer that is authorized to do business in this State and that is a member of an insurance holding company system shall register with the superintendent, except that these requirements do not apply to a foreign insurer domiciled in a jurisdiction that in the opinion of the superintendent has adopted by statute or regulation disclosure statements and standards substantially similar to those contained in this chapter. An insurer domiciled in a jurisdiction that has not adopted by statute or regulation disclosure requirements and standards substantially similar to those contained in this section may be treated as a domestic insurer for purposes of this section. Each insurer that is subject to registration under this subsection shall register within 15 days after it becomes subject to registration, and annually thereafter by May 1st, unless the superintendent, for good cause shown, extends the time for registration and then an insurer must file within that extended time. Nothing in this section may be construed to prohibit the superintendent from requesting any authorized insurer that is a member of a holding company system and not subject to registration under this section for a copy of the registration statement or other information filed by such insurer with the insurance regulatory authority of its state of domicile. Upon request of the insurer or of the insurance regulatory authority of another jurisdiction in which the insurer is authorized to transact insurance, the superintendent at the insurer's expense shall furnish a copy of the registration statement or other information filed by a domestic insurer with the superintendent pursuant to this chapter; [1999, c. 113, §11 (AMD).]
B. Every insurer subject to registration shall file a registration statement on a form provided by the superintendent, which must contain current information about:
(1) The capital structure, general financial condition, ownership and management of the insurer and of any person controlling the insurer;
(2) The following transactions currently outstanding between the insurer and its affiliates:
(a) Loans and other investments, and purchases, sales or exchanges of securities of the affiliate by the insurer or of the insurer by its affiliates;
(b) Purchases, sales or exchanges of assets;
(c) Transactions not in the ordinary course of business;
(d) Guarantees or undertakings for the benefit of an affiliate that result in an actual contingent exposure of the insurer's assets to liability, other than insurance contracts entered into in the ordinary course of the insurer's business;
(e) All management and service contracts and all cost-sharing arrangements, other than cost allocation arrangements based upon generally accepted accounting principles;
(f) Reinsurance agreements; and
(3) Other matters concerning transactions between the insurer and any affiliate as may be required by the superintendent; [2001, c. 72, §5 (AMD).]
C. No information need be disclosed on the registration statement filed pursuant to this subsection if such information is not material to the purposes of this chapter. Unless the superintendent by rule, regulation or order provides otherwise, sales, purchases, exchanges, loans or extensions of credit or investments, involving 1/2 of 1% or less of an insurer's admitted assets as of December 31st immediately preceding shall not be deemed material for purposes of this section; [1975, c. 356, §1 (NEW).]
D. Each registered insurer shall keep current the information required to be disclosed in its registration statement by reporting on forms provided by the superintendent all material changes or additions on or before the 15th day of the month following that in which it learns of each such change or addition; [1975, c. 356, §1 (NEW).]
E. The superintendent shall terminate the registration of any insurer which demonstrates that it is no longer a member of an insurance holding company system; [1975, c. 356, §1 (NEW).]
F. Two or more affiliated insurers subject to registration hereunder may file a consolidated registration statement or consolidated reports amending their respective consolidated statements or their individual registration statements so long as such consolidated filings correctly reflect the condition of and transactions between such persons; [1975, c. 356, §1 (NEW).]
G. The superintendent may allow or require any insurer, which is authorized to do business in this State and which is part of an insurance holding company system, to register on behalf of any affiliated insurer which is required to register under paragraph A and to file all information and material required to be filed under this section; [1975, c. 356, §1 (NEW).]
H. This section shall not apply to any insurer, information or transaction if and to the extent that the superintendent by rule, regulation or order shall exempt the same from the provisions of this section as not comprehended within the purposes thereof; [1975, c. 356, §1 (NEW).]
I. Any person may file with the superintendent a disclaimer of affiliation with any authorized insurer or such a disclaimer may be filed by the insurer or any member of an insurance holding company system. The disclaimer shall fully disclose all material relationships and bases for affiliation between such person and the insurer as well as the bases for disclaiming such affiliation. After a disclaimer has been filed, the insurer shall be relieved of any duty to register or report under this section which may arise out of the insurer's relationship with such person unless and until the superintendent disallows the disclaimer. The superintendent shall disallow a disclaimer only after a hearing thereon with notice to all parties in interest, and after making specific findings of fact to support such disallowance. [1975, c. 356, §1 (NEW).]
[ 2001, c. 72, §5 (AMD) .]
9. Transactions with affiliates; standards. Transactions by insurers subject to registration with their affiliates that occur after the effective date of this chapter are subject to the following standards.
A. The terms, including any charges or fees for services performed, must be fair and reasonable. [1991, c. 828, §5 (AMD).]
B. The books, accounts and records of each party must be so maintained as to disclose clearly and accurately the nature and details of the transaction, including all accounting information necessary to support the reasonableness of any charges or fees. [1991, c. 828, §5 (AMD).]
C. The insurer's surplus to policyholders following any dividends or distributions to stockholder affiliates must be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs. [1991, c. 548, Pt. B, §3 (AMD).]
D. Expenses incurred and payment received must be allocated to the insurer in conformity with customary insurance accounting practices consistently applied. [1991, c. 828, §5 (NEW).]
E. A domestic insurer must notify the superintendent in writing at least 30 days in advance, unless the superintendent authorizes a shorter period, before entering into any of the following kinds of transactions with any member of its holding company system:
(1) Sales, purchases, exchanges, loans or extensions of credit, guarantees or investments that are equal to or exceed:
(a) With respect to nonlife insurers, the lesser of 3% of the insurer's admitted assets as of December 31st of the preceeding year or 25% of surplus to policyholders;
(b) With respect to life insurers, 3% of the insurer's admitted assets as of December 31st of the preceding year; or
(c) With respect to nonprofit hospital and medical service organizations and their 100% controlled affiliates that operate as monoline health insurers or health maintenance organizations, the lesser of 5% of the entity's admitted assets as of December 31st of the preceding year or 25% of surplus to policyholders;
(2) Loans or extensions of credit to any person who is not an affiliate, if the insurer makes the loan or extension of credit with the agreement or understanding that the proceeds in whole or in substantial part, are to be used to make loans or extensions of credit to, purchase assets of or make investments in any affiliate of the insurer if the loan, extension of credit, purchase or investment is equal to or exceeds:
(a) With respect to nonlife insurers, the lesser of 3% of the insurer's admitted assets as of December 31st of the preceding year or 25% of surplus to policyholders;
(b) With respect to life insurers, 3% of the insurer's admitted assets as of December 31st of the preceding year; or
(c) With respect to nonprofit hospital and medical service organizations and their 100% controlled affiliates that operate as monoline health insurers or health maintenance organizations, the lesser of 5% of the entity's admitted assets as of December 31st of the preceding year or 25% of surplus to policyholders;
(3) Reinsurance agreements or modifications to the agreements in which the reinsurance premium or a change in the insurer's liabilities equals or exceeds 5% of the insurer's surplus to policyholders, as of December 31st of the preceding year, including those agreements that may require as consideration the transfer of assets from an insurer to a nonaffiliate if an agreement or understanding exists between the insurer and nonaffiliate that any portion of the assets will be transferred to one or more affiliates of the insurer;
(4) Management agreements, cost-sharing arrangements and service contracts that:
(a) Delegate authority to effectuate reinsurance;
(b) Provide for delegated corporate governance;
(c) Provide for servicing of claims liabilities; or
(d) In any other way contribute an element of expense that is material when related to operations of the insurer;
(5) Any transactions that are part of a plan or series of like transactions with persons within the holding company system if the purpose of those separate transactions is to avoid the statutory threshold amount and thus avoid the review that would occur otherwise. If the superintendent determines that those separate transactions were entered into over any 12-month period for such a purpose, the superintendent may exercise authority under this subsection; and
(6) Any other material transactions specified by rule that the superintendent has determined may adversely affect the interests of the insurer's policyholders.
The superintendent shall disapprove any such transaction if it violates the standards of this section or other applicable law or adversely affects the interests of policyholders. The superintendent's failure to make a determination on a proposed transaction within 30 days after it has been submitted for review has the effect of an approval, unless the superintendent has issued a notice of adjudicatory hearing on the proposal in accordance with section 230. [1991, c. 828, §5 (NEW).]
Any violation of this subsection, in addition to the penalties contained in subsection 14, renders the transactions voidable at the initiative of the superintendent or otherwise under applicable law. The superintendent's approval of a transaction in accordance with this section, whether actual or by acquiescence, may not override any applicable law and does not operate to authorize any transaction that would be contrary to law if it involved an insurer not a member of the same holding company system.
[ 1991, c. 828, §5 (AMD) .]
10. Insurer's surplus; adequacy factors. For the purposes of this chapter, in determining whether an insurer's surplus to policyholders is reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs, the following factors, among others, may be considered:
A. The size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria; [1975, c. 356, §1 (NEW).]
B. The extent to which the insurer's business is diversified among the several lines of insurance; [1975, c. 356, §1 (NEW).]
C. The number and size of the risks insured in each line of business; [1975, c. 356, §1 (NEW).]
D. The extent of the geographical dispersion of the insurer's insured risks; [1975, c. 356, §1 (NEW).]
E. The nature and extent of the insurer's reinsurance program; [1975, c. 356, §1 (NEW).]
F. The quality, diversification and liquidity of the insurer's investment portfolio; [1975, c. 356, §1 (NEW).]
G. The recent past and projected future trend in the size of the insurer's surplus as regards policyholders; [1993, c. 313, §10 (AMD).]
H. The quality and liquidity of investments in subsidiaries or affiliates. The department may discount any such investment or treat any investment as a nonadmitted asset for purposes of determining the adequacy of surplus as regards policyholders whenever the investment so warrants; [1993, c. 313, §10 (AMD).]
I. The adequacy of the insurer's reserves; [1993, c. 313, §10 (AMD).]
J. The surplus as regards policyholders maintained by other comparable insurers in respect of the factors set out in this subsection; and [1993, c. 313, §10 (AMD).]
K. The quality of the company's earnings and the extent to which the reported earnings include extraordinary items. [1993, c. 313, §10 (NEW).]
[ 1993, c. 313, §10 (AMD) .]
11. Dividends and distributions.
[ 1993, c. 313, §11 (RP) .]
11-A. Extraordinary dividends.
[ 2009, c. 511, Pt. A, §3 (RP) .]
11-B. All other dividends and distributions.
[ 2009, c. 511, Pt. A, §4 (RP) .]
11-C. Dividends and distributions. The superintendent shall review all dividends and distributions declared or paid by any insurer registered under subsection 8 at least annually.
A. An insurer shall notify the superintendent within 5 days after the declaration of any dividend or distribution. If the dividend or distribution is not disapproved pursuant to paragraph B and is not an extraordinary dividend as defined in paragraph C, the insurer may pay the dividend or distribution once the superintendent has approved the payment or 10 days have elapsed after the superintendent’s receipt of notice. [2009, c. 511, Pt. A, §5 (NEW).]
B. The superintendent shall issue an order restricting or disallowing the payment of dividends and distributions if the superintendent determines that the insurer’s surplus would not be reasonable in relation to the insurance company’s outstanding liabilities, that the insurer’s surplus would be inadequate to that company’s financial needs or that the insurer’s financial condition would constitute a condition hazardous to policyholders, claimants or the public. [2009, c. 511, Pt. A, §5 (NEW).]
C. An extraordinary dividend may not be paid until affirmatively approved by the superintendent or until at least 60 days after the superintendent has received a request to pay an extraordinary dividend.
(1) For purposes of this subsection, "extraordinary dividend" means any dividend or distribution, other than a pro rata distribution of a class of the insurer’s own securities, that:
(a) Exceeds 10% of the insurer's surplus to policyholders as of December 31st of the preceding year or the net gain from operations for the preceding calendar year, whichever is greater;
(b) Is declared within 5 years after any acquisition of control of a domestic insurer or of any person controlling that insurer, unless it has been approved by a number of continuing directors equal to a majority of the directors in office immediately preceding that acquisition of control; or
(c) Is not paid entirely from unassigned funds. For purposes of this division, 50% of the net of unrealized capital gains and unrealized capital losses, reduced, but not to less than zero, by that portion of the asset valuation reserve attributable to equity investments, must be excluded from the calculation of unassigned funds.
(2) An insurer may declare an extraordinary dividend on a conditional basis, subject to the superintendent’s approval. A declaration pursuant to this subparagraph does not confer any rights upon stockholders until the superintendent has approved the payment or the 60-day review period has elapsed. [2009, c. 511, Pt. A, §5 (NEW).]
[ 2009, c. 511, Pt. A, §5 (NEW) .]
12. Verification of information.
A. Subject to the limitations contained in this subsection and in addition to the powers which the superintendent has under chapter 3 relating to the examination of insurers, the superintendent shall also have the power to order any insurer registered under this chapter to produce such records, books or papers in the possession of the insurer or affiliates as shall be necessary to verify the information required to be contained in the insurer's registration statement and any additional information pertinent to transactions between the insurer and affiliates. Such books, records, papers and information shall be examined in the manner prescribed in chapter 3 relating to the time, place and expense of examination, except that expenses incurred by the superintendent in examining affiliated companies not defined as "insurer", shall be borne by the person examined subject to the limitations of section 228, subsection 1. No credit shall be taken for any equity value of an affiliated company which inures to a parent insurer and comprises a portion of that insurer's admitted assets; [1975, c. 356, §1 (NEW).]
B. The purposes of the examination shall be to verify the registration statement and any addition or amendment thereto made or required pursuant to this chapter. [1975, c. 356, §1 (NEW).]
C. A member of an insurer's holding company system shall comply fully and accurately with a request by the insurer to provide it with information necessary to respond to an examination request by the superintendent pursuant to this section. [1999, c. 113, §13 (NEW).]
[ 1999, c. 113, §13 (AMD) .]
13. Confidential communications. Any registration statement, tender offer, or request or invitation for tenders, advertisement making a tender offer or requesting or inviting tenders of voting securities, option to purchase, agreement to merge or consolidate, or contract to manage filed pursuant to this section including any duly authenticated copy thereof in the possession of any person subject to this section shall be a confidential communication, shall not be subject to a subpoena and shall not be made public by the superintendent without prior written consent of the insurer, unless the superintendent determines that the interests of policyholders or the public will be served by the publication thereof, in which event the superintendent may make a public record or publish all or any part thereof in such manner as the superintendent may deem appropriate. The distribution of reports on examination referred to in section 227 shall not be regarded as confidential communications and shall be excepted from the confidential requirements of this subsection.
[ 1989, c. 385, §9 (AMD) .]
14. Penalties.
A. Any person who willfully violates any of the provisions of this section, or the rules and regulations promulgated by the superintendent under authority thereof, or any person who willfully, in a filing pursuant to subsection 4-A or a registration pursuant to subsection 8, paragraph B, makes any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, must upon conviction be fined not more than $1,000 or imprisoned not more than 3 years, or both; [2007, c. 466, Pt. D, §3 (AMD).]
B. Any person who is found, after notice and opportunity to be heard, to have willfully violated any of the provisions of this section or any rule or regulations promulgated by the superintendent under the authority thereof, shall, in addition to any other penalty provided by law, forfeit to this State the sum of $50 for a first violation and an additional sum of $25 for each day such violation shall continue; [1975, c. 356, §1 (NEW).]
C. In addition to other remedies and penalties provided in this section or otherwise available under the laws of this State, any violation of this section is hereby declared to be an unfair method of competition or an unfair or deceptive act and practice in the business of insurance subject to the provisions of chapter 23 and in addition, the superintendent may, after notice and hearing:
(1) Refuse to issue, refuse to renew or reissue, revoke or suspend for a period not exceeding one year any license or certificate of authority issued or to be issued to any person found to have violated any of the provisions of this section;
(2) After notice and hearing impose by order and administrative forfeiture upon such person, enforceable by such revocation, suspension or refusal to issue, renew or reissue of any such license or licenses or otherwise pursuant to the law of this State, in an amount not to exceed $100 for each such violation and for each day's continuance thereof;
(3) Proceed in a court of competent jurisdiction within or without this State against such person, if an insurer, upon the applicable grounds provided for the rehabilitation, conservatorship or liquidation o
§222. Registration, regulation, supervision and examination of holding company systems, agents, promoters and others
1. Examination. For purposes of ascertaining compliance with law, or relationships and transactions between any person as defined hereafter and any insurer or proposed insurer, the superintendent may as often as he deems advisable examine the accounts, records, documents and transactions pertaining to or affecting the insurance affairs or proposed insurance affairs, or transactions of the insurer or proposed insurer as may be in the possession of any holding company, its subsidiaries or affiliates as is necessary to ascertain the financial condition or legality of conduct of the insurer or proposed insurer. Such investigatory and examination authority shall also extend to the examination of:
A. Any business entity structured to hold the stock of an insurance company, or person holding the shares of voting stock or policyholder proxies of an insurer as voting trustee or otherwise, for the purpose of controlling the management thereof; [1975, c. 356, §1 (RPR).]
B. Any insurance agent, broker, general agent, surplus lines broker, adjuster, consultant, insurer representatives or any person holding himself out as any of the foregoing; [1975, c. 356, §1 (RPR).]
C. Any person having a contract under which he enjoys by terms or in fact the exclusive or dominant right to manage or control the insurer; [1975, c. 356, §1 (RPR).]
D. Any person in this State engaged in, or proposing to be engaged in, this State in, or holding himself out in this State as so engaging or proposing, or in this State assisting in the promotion, formation or financing of an insurer or insurance holding corporation, or corporation or other group to finance an insurer or the production of its business. [1975, c. 356, §1 (RPR).]
[ 1975, c. 356, §1 (RPR) .]
2. Definitions. As used in this section, unless the context otherwise requires, the following words shall have the following meanings.
A. Affiliate. "Affiliate" of, or a person "affiliated" with, a specific person means a person who directly or indirectly controls, or is controlled by, or is under common control with the person specified. [1975, c. 356, §1 (RPR).]
A-1. Beneficial owner. "Beneficial owner" of a voting security, voting insurance policy or guaranty capital share means any person or group of persons acting in concert who, directly or indirectly, through any contract, arrangement, proxy appointment, understanding, relationship or otherwise, has or shares:
(1) Voting power over the security, policy or guaranty capital share, including the power to vote or to direct the voting of the security, policy or share; or
(2) Investment power over the security, policy or share, including the power to dispose or to direct the disposition of the security, policy or share.
The superintendent may determine that persons are acting in concert, either on the superintendent's own initiative or upon application of an interested person, based upon evidence that actions taken by those persons, if consummated, may permit the exercise of common control, directly or indirectly, over the domestic insurer. The absence of a determination by the superintendent that persons are acting in concert shall not be construed to exempt those persons from compliance with the requirements of this section. [1989, c. 385, §1 (NEW).]
A-2. "Continuing director" means:
(1) Any member of a domestic insurer's board of directors, while that person is a member of the board of directors, who was a member of that board of directors prior to the time that any person acquires control of the domestic insurer or any person controlling the insurer; and
(2) Any successor of a continuing director, while the successor is a member of the board of directors, who is recommended or elected to succeed a continuing director by a number of continuing directors equal to a majority of continuing directors in office immediately preceding the acquisition of control. [1991, c. 37, §1 (NEW).]
B. Control
(1) 'Control,' including '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 ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is solely the result of an official position with or a corporate office held by the person. Control is presumed to exist if any person is the beneficial owner of 10% or more of the voting securities, or voting rights in the case of mutual or reciprocal insurers, or guaranty capital shares if a mutual insurer has established a guaranty fund, of any other person. A beneficial owner may rely in determining the amount of voting securities of any person outstanding upon information set forth in that person's most recent quarterly or annual report filed with the Securities and Exchange Commission pursuant to the Exchange Act unless the beneficial owner knows or has reason to believe that the information contained in the quarterly or annual report is inaccurate. Two or more domestic mutual insurance companies that have restricted their licensed territories to the State are not considered subject to this section merely because those insurance companies commonly share facilities, incurred expenses, personnel services, or otherwise utilize cost allocations based on generally accepted accounting principles including pro rata sharing of assumed risks.
(2) Notwithstanding the presumption of control contained in subparagraph (1), the superintendent, upon application of the insurance company, may determine that the insurer is not controlled by the person presumed to control it. In addition, the superintendent, after notice and an opportunity to be heard, may determine, notwithstanding the absence of the presumption in subparagraph (1), that a person does control an insurance company or companies. [1999, c. 113, §8 (AMD).]
B-1. Exchange Act. "Exchange Act" means the United States Securities Exchange Act of 1934, as amended. [1989, c. 385, §3 (NEW).]
C. Insurance holding company system. "Insurance holding company system" shall consist of 2 or more affiliated persons, one or more of whom is an insurer. [1975, c. 356, §1 (RPR).]
D. Insurer. "Insurer" shall have the same meaning given it in section 4. [1975, c. 356, §1 (RPR).]
D-1. [1993, c. 313, §7 (RP).]
D-2. "Net gains from operations" means:
(1) For life insurers, the net income or loss after dividends to policyholders and federal income taxes but before the inclusion of net realized capital gains or losses; and
(2) For nonlife insurers, the net income or loss after dividends to policyholders and federal income taxes and net realized capital gains or losses. [1993, c. 313, §8 (NEW).]
E. Person. "Person" shall mean an individual, a corporation, a corporation which, pursuant to Title 24, chapter 19, maintains and operates nonprofit hospital service plans, nonprofit medical service plans or nonprofit health care plans or any combination thereof, a partnership, an association, a joint stock company, a business trust, an unincorporated organization or any similar entity, or any combination of the foregoing acting in concert. [1975, c. 356, §1 (RPR).]
F. "Subsidiary" of a specified person means an affiliate controlled by that person directly or through one or more intermediaries. [2001, c. 72, §4 (AMD).]
G. "Surplus regarding policyholders" means admitted assets less all liabilities. [1993, c. 313, §9 (NEW).]
H. "Unassigned funds" means the undistributed and unappropriated amount of surplus remaining on the balance sheet date as the result of all operations of an insurance company from its commencement of business. [1993, c. 313, §9 (NEW).]
I. "Voting security" means any security with voting rights or any security convertible into or evidencing a right to acquire a security with voting rights. [1999, c. 113, §10 (NEW).]
[ 2001, c. 72, §4 (AMD) .]
3. Subsidiaries of insurers; investments to acquire interest. This subsection pertains to insurers and their subsidiaries and affiliates.
A. Any domestic insurer may invest in or otherwise acquire one or more subsidiaries as authorized in section 1115 or section 1157. [1987, c. 399, §1 (AMD).]
A-1. A domestic insurer shall notify the superintendent in writing within 30 days after any investment by the insurer or any of its affiliates in any one corporation if the insurer has invested in that corporation and the total investment in that corporation by the insurance holding company system exceeds 10% of the corporation's voting securities. [1991, c. 828, §4 (AMD).]
B. If an insurer ceases to control a subsidiary, it shall dispose of any investment therein made pursuant to this section within 3 years from the time of the cessation of control or within such further time as the superintendent may prescribe, unless at any time after the investment was made, the investment met the requirements for investment under any other section of this Title and the insurer has notified the superintendent thereof. [1991, c. 828, §4 (AMD).]
[ 1991, c. 828, §4 (AMD) .]
4. Tender offers.
[ 1989, c. 385, §4 (RP) .]
4-A. Tender offers. No person may make a tender offer for, or a request or invitation for tenders of, or an agreement to exchange securities for, or otherwise acquire any voting security, or any security convertible into a voting security, of a domestic insurer or of any person controlling a domestic insurer if, as a result of the consummation thereof, the person making the tender offer, request or agreement, would, directly or indirectly, acquire actual control of the insurer or controlling person, and no person may enter into an agreement to merge with or may otherwise acquire control of a domestic insurer or its controlling person, unless:
A. The person has filed with the superintendent and has sent the domestic insurer a statement containing the information required by subsection 4-B; [1989, c. 385, §5 (NEW).]
B. The offer, request, invitation, agreement or acquisition has been approved by the superintendent in the manner prescribed in subsection 7; and [1989, c. 385, §5 (NEW).]
C. Ten days have elapsed from the date of approval by the superintendent and no injunction or other court order precludes consummation of the offer, request, invitation, agreement or acquisition. [1989, c. 385, §5 (NEW).]
The superintendent, by rule or by order, may exempt from paragraphs B and C, any offer, request, invitation or agreement which is subject to regulation as a tender offer under the Exchange Act, provided that the acquisition or other transaction contemplated by the offer, request, invitation or agreement may not be consummated unless that acquisition or other transaction is approved by the superintendent in the manner prescribed in subsection 7. The superintendent, by rule or by order, may in addition exempt from paragraphs B and C any offer, request, invitation, agreement, purchase or transaction on the grounds that the interests of the State in regulating that transaction are minimal relative to the interests of other jurisdictions or are minimal relative to the impact of the transaction as a whole, provided that it does not appear likely that exempting the transaction from the application of this section will be detrimental to the interests of Maine policyholders.
[ 1989, c. 385, §5 (NEW) .]
4-B. Application for approval. Each statement required in subsection 4-A shall contain the following information as applicable:
A. The background and identity of all persons by whom or on whose behalf the purchases or the exchange, merger or other acquisition of control are to be effected; [1989, c. 385, §5 (NEW).]
B. The source and amount of the funds or other consideration which have been used or will be used in making the purchases or in effecting the exchange, merger or other acquisition of control and, if any part of these funds or other consideration has been or will be borrowed or otherwise obtained for the purpose of making the purchases or effecting the exchange, merger or other acquisition of control, a description of the transaction and the names and identities of the parties involved; [1989, c. 385, §5 (NEW).]
C. Any plans or proposals which those persons may have to liquidate the insurer, or the controlling person of the insurer, or to sell its assets or merge it with any person or make any other major change in its business or corporate structure or management; [1989, c. 385, §5 (NEW).]
D. The amount of each class of voting securities, or securities which may be converted into voting securities, of the insurer or controlling person, which are beneficially owned, and the amount of each class of voting securities, or securities which may be converted into voting securities, of that insurer or controlling person concerning which there is a right to acquire beneficial ownership, by each person and by each affiliate; [1989, c. 385, §5 (NEW).]
E. Information as to all contracts, arrangements or understandings with any person with respect to any securities of the insurer or the controlling person, 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, naming the persons with whom those contracts, arrangements or understandings have been entered into, and giving the details thereof; [1989, c. 385, §5 (NEW).]
F. A copy of all those agreements, and any amendments thereto, to exchange or otherwise acquire securities or to merge with or otherwise acquire control of the insurer or the controlling person; and [1989, c. 385, §5 (NEW).]
G. Any other information as the superintendent may by rule prescribe as necessary or appropriate in the public interest or for the protection of policyholders. [1989, c. 385, §5 (NEW).]
[ 1989, c. 385, §5 (NEW) .]
5. Tender offer material. All requests or invitations for tenders or advertisements making a tender offer or requesting or inviting tenders of such voting securities for control of a domestic insurer or its controlling person made by or on behalf of any such person shall contain any information specified in subsection 4-B as the superintendent may prescribe, and shall be filed with the superintendent at the time that material is first published or sent or given to security holders. Copies of any additional material soliciting or requesting such tender offers subsequent to the initial solicitation or request shall contain the information that the superintendent may prescribe as necessary or appropriate in the public interest or for the protection of policyholders, and shall be filed with the superintendent at the time copies of that material are first published or sent or given to security holders.
[ 1989, c. 385, §6 (AMD) .]
6. Information as to tender offeror. If the person required to file the statement referred to in subsection 4-A is a partnership, limited partnership, syndicate or other group, the superintendent may require that the information called for by subsection 4-A must 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 the person required to file the statement referred to in subsection 4-A is a corporation, the superintendent may require that the information called for thereby must be given with respect to such corporation and each officer and director thereof and each person who is directly or indirectly the beneficial owner of more than 10% of the outstanding securities of such corporation.
[ 2007, c. 466, Pt. D, §1 (AMD) .]
7. Approval, disapproval of proposed acquisition.
A. The superintendent shall hold a hearing in accordance with the procedures set forth in the Maine Administrative Procedure Act, Title 5, chapter 375, subchapter IV, within 30 days after the statement required by subsection 4-A has been filed with the superintendent. The superintendent shall make a determination within 30 days after the conclusion of that hearing. The superintendent shall approve any purchase, exchange, merger or other acquisition of control referred to in subsection 4-A unless the superintendent finds that:
(1) After the change of control, the domestic insurer could not satisfy the requirements for the issuance of a certificate of authority according to requirements in force at the time of the issuance, or last renewal or continuation of its certificate of authority to do the insurance business which it intends to transact in this State;
(2) The effect of the purchases, exchanges, merger of a controlling person of the insurer, or other acquisitions of control may be substantially to lessen competition in insurance in this State or tend to create a monopoly therein; or would violate the laws of this State or of the United States relating to monopolies or restraints of trade;
(3) The financial condition of an acquiring person is such as would jeopardize the financial stability of the insurer or prejudice the interest of its policyholders;
(4) The plans or proposals which the acquiring person has to liquidate the insurer, to sell its assets or to merge it with any person, or to make any other major change in its business or corporate structure or management, are unfair or prejudicial to policyholders;
(5) The competence, experience and integrity of those persons who would control the operation of the insurer indicate that it would not be in the interest of policyholders or the public to permit them to do so;
(6) Any merger of a domestic insurer does not comply with section 3474; or
(7) The acquisition of control would 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. [1989, c. 385, §7 (AMD); 1989, c. 611, §§1, 4 (AMD).]
B. Subparagraphs (3) to (7) do not apply to any change of control if and to the extent that the superintendent, by rule or by order, exempts the same from the provisions of those subparagraphs as not comprehended within the purpose of this subsection. [1989, c. 385, §8 (AMD).]
C. Merger, consolidation or bulk reinsurance as to a domestic insurer shall be effectuated only pursuant to the applicable provisions of chapter 47, subchapter IV, sections 3875, 4108 and 4109, as related to organization and powers of insurers. [1975, c. 356, §1 (NEW).]
D. Violation
(1) Failure to file the statement required under subsection 4-A constitutes a violation of this chapter.
(2) Effectuation of or any attempt to effectuate an acquisition of, control of or merger with a domestic insurer within 30 days of the filing of the statement required by subsection 4-A, prior to the superintendent's decision if a hearing is held or after disapproval of such acquisition of control or merger by the superintendent constitutes a violation of this chapter. [2007, c. 466, Pt. D, §2 (AMD).]
[ 2007, c. 466, Pt. D, §2 (AMD) .]
8. Registration of holding company system insurers.
A. Every insurer that is authorized to do business in this State and that is a member of an insurance holding company system shall register with the superintendent, except that these requirements do not apply to a foreign insurer domiciled in a jurisdiction that in the opinion of the superintendent has adopted by statute or regulation disclosure statements and standards substantially similar to those contained in this chapter. An insurer domiciled in a jurisdiction that has not adopted by statute or regulation disclosure requirements and standards substantially similar to those contained in this section may be treated as a domestic insurer for purposes of this section. Each insurer that is subject to registration under this subsection shall register within 15 days after it becomes subject to registration, and annually thereafter by May 1st, unless the superintendent, for good cause shown, extends the time for registration and then an insurer must file within that extended time. Nothing in this section may be construed to prohibit the superintendent from requesting any authorized insurer that is a member of a holding company system and not subject to registration under this section for a copy of the registration statement or other information filed by such insurer with the insurance regulatory authority of its state of domicile. Upon request of the insurer or of the insurance regulatory authority of another jurisdiction in which the insurer is authorized to transact insurance, the superintendent at the insurer's expense shall furnish a copy of the registration statement or other information filed by a domestic insurer with the superintendent pursuant to this chapter; [1999, c. 113, §11 (AMD).]
B. Every insurer subject to registration shall file a registration statement on a form provided by the superintendent, which must contain current information about:
(1) The capital structure, general financial condition, ownership and management of the insurer and of any person controlling the insurer;
(2) The following transactions currently outstanding between the insurer and its affiliates:
(a) Loans and other investments, and purchases, sales or exchanges of securities of the affiliate by the insurer or of the insurer by its affiliates;
(b) Purchases, sales or exchanges of assets;
(c) Transactions not in the ordinary course of business;
(d) Guarantees or undertakings for the benefit of an affiliate that result in an actual contingent exposure of the insurer's assets to liability, other than insurance contracts entered into in the ordinary course of the insurer's business;
(e) All management and service contracts and all cost-sharing arrangements, other than cost allocation arrangements based upon generally accepted accounting principles;
(f) Reinsurance agreements; and
(3) Other matters concerning transactions between the insurer and any affiliate as may be required by the superintendent; [2001, c. 72, §5 (AMD).]
C. No information need be disclosed on the registration statement filed pursuant to this subsection if such information is not material to the purposes of this chapter. Unless the superintendent by rule, regulation or order provides otherwise, sales, purchases, exchanges, loans or extensions of credit or investments, involving 1/2 of 1% or less of an insurer's admitted assets as of December 31st immediately preceding shall not be deemed material for purposes of this section; [1975, c. 356, §1 (NEW).]
D. Each registered insurer shall keep current the information required to be disclosed in its registration statement by reporting on forms provided by the superintendent all material changes or additions on or before the 15th day of the month following that in which it learns of each such change or addition; [1975, c. 356, §1 (NEW).]
E. The superintendent shall terminate the registration of any insurer which demonstrates that it is no longer a member of an insurance holding company system; [1975, c. 356, §1 (NEW).]
F. Two or more affiliated insurers subject to registration hereunder may file a consolidated registration statement or consolidated reports amending their respective consolidated statements or their individual registration statements so long as such consolidated filings correctly reflect the condition of and transactions between such persons; [1975, c. 356, §1 (NEW).]
G. The superintendent may allow or require any insurer, which is authorized to do business in this State and which is part of an insurance holding company system, to register on behalf of any affiliated insurer which is required to register under paragraph A and to file all information and material required to be filed under this section; [1975, c. 356, §1 (NEW).]
H. This section shall not apply to any insurer, information or transaction if and to the extent that the superintendent by rule, regulation or order shall exempt the same from the provisions of this section as not comprehended within the purposes thereof; [1975, c. 356, §1 (NEW).]
I. Any person may file with the superintendent a disclaimer of affiliation with any authorized insurer or such a disclaimer may be filed by the insurer or any member of an insurance holding company system. The disclaimer shall fully disclose all material relationships and bases for affiliation between such person and the insurer as well as the bases for disclaiming such affiliation. After a disclaimer has been filed, the insurer shall be relieved of any duty to register or report under this section which may arise out of the insurer's relationship with such person unless and until the superintendent disallows the disclaimer. The superintendent shall disallow a disclaimer only after a hearing thereon with notice to all parties in interest, and after making specific findings of fact to support such disallowance. [1975, c. 356, §1 (NEW).]
[ 2001, c. 72, §5 (AMD) .]
9. Transactions with affiliates; standards. Transactions by insurers subject to registration with their affiliates that occur after the effective date of this chapter are subject to the following standards.
A. The terms, including any charges or fees for services performed, must be fair and reasonable. [1991, c. 828, §5 (AMD).]
B. The books, accounts and records of each party must be so maintained as to disclose clearly and accurately the nature and details of the transaction, including all accounting information necessary to support the reasonableness of any charges or fees. [1991, c. 828, §5 (AMD).]
C. The insurer's surplus to policyholders following any dividends or distributions to stockholder affiliates must be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs. [1991, c. 548, Pt. B, §3 (AMD).]
D. Expenses incurred and payment received must be allocated to the insurer in conformity with customary insurance accounting practices consistently applied. [1991, c. 828, §5 (NEW).]
E. A domestic insurer must notify the superintendent in writing at least 30 days in advance, unless the superintendent authorizes a shorter period, before entering into any of the following kinds of transactions with any member of its holding company system:
(1) Sales, purchases, exchanges, loans or extensions of credit, guarantees or investments that are equal to or exceed:
(a) With respect to nonlife insurers, the lesser of 3% of the insurer's admitted assets as of December 31st of the preceeding year or 25% of surplus to policyholders;
(b) With respect to life insurers, 3% of the insurer's admitted assets as of December 31st of the preceding year; or
(c) With respect to nonprofit hospital and medical service organizations and their 100% controlled affiliates that operate as monoline health insurers or health maintenance organizations, the lesser of 5% of the entity's admitted assets as of December 31st of the preceding year or 25% of surplus to policyholders;
(2) Loans or extensions of credit to any person who is not an affiliate, if the insurer makes the loan or extension of credit with the agreement or understanding that the proceeds in whole or in substantial part, are to be used to make loans or extensions of credit to, purchase assets of or make investments in any affiliate of the insurer if the loan, extension of credit, purchase or investment is equal to or exceeds:
(a) With respect to nonlife insurers, the lesser of 3% of the insurer's admitted assets as of December 31st of the preceding year or 25% of surplus to policyholders;
(b) With respect to life insurers, 3% of the insurer's admitted assets as of December 31st of the preceding year; or
(c) With respect to nonprofit hospital and medical service organizations and their 100% controlled affiliates that operate as monoline health insurers or health maintenance organizations, the lesser of 5% of the entity's admitted assets as of December 31st of the preceding year or 25% of surplus to policyholders;
(3) Reinsurance agreements or modifications to the agreements in which the reinsurance premium or a change in the insurer's liabilities equals or exceeds 5% of the insurer's surplus to policyholders, as of December 31st of the preceding year, including those agreements that may require as consideration the transfer of assets from an insurer to a nonaffiliate if an agreement or understanding exists between the insurer and nonaffiliate that any portion of the assets will be transferred to one or more affiliates of the insurer;
(4) Management agreements, cost-sharing arrangements and service contracts that:
(a) Delegate authority to effectuate reinsurance;
(b) Provide for delegated corporate governance;
(c) Provide for servicing of claims liabilities; or
(d) In any other way contribute an element of expense that is material when related to operations of the insurer;
(5) Any transactions that are part of a plan or series of like transactions with persons within the holding company system if the purpose of those separate transactions is to avoid the statutory threshold amount and thus avoid the review that would occur otherwise. If the superintendent determines that those separate transactions were entered into over any 12-month period for such a purpose, the superintendent may exercise authority under this subsection; and
(6) Any other material transactions specified by rule that the superintendent has determined may adversely affect the interests of the insurer's policyholders.
The superintendent shall disapprove any such transaction if it violates the standards of this section or other applicable law or adversely affects the interests of policyholders. The superintendent's failure to make a determination on a proposed transaction within 30 days after it has been submitted for review has the effect of an approval, unless the superintendent has issued a notice of adjudicatory hearing on the proposal in accordance with section 230. [1991, c. 828, §5 (NEW).]
Any violation of this subsection, in addition to the penalties contained in subsection 14, renders the transactions voidable at the initiative of the superintendent or otherwise under applicable law. The superintendent's approval of a transaction in accordance with this section, whether actual or by acquiescence, may not override any applicable law and does not operate to authorize any transaction that would be contrary to law if it involved an insurer not a member of the same holding company system.
[ 1991, c. 828, §5 (AMD) .]
10. Insurer's surplus; adequacy factors. For the purposes of this chapter, in determining whether an insurer's surplus to policyholders is reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs, the following factors, among others, may be considered:
A. The size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria; [1975, c. 356, §1 (NEW).]
B. The extent to which the insurer's business is diversified among the several lines of insurance; [1975, c. 356, §1 (NEW).]
C. The number and size of the risks insured in each line of business; [1975, c. 356, §1 (NEW).]
D. The extent of the geographical dispersion of the insurer's insured risks; [1975, c. 356, §1 (NEW).]
E. The nature and extent of the insurer's reinsurance program; [1975, c. 356, §1 (NEW).]
F. The quality, diversification and liquidity of the insurer's investment portfolio; [1975, c. 356, §1 (NEW).]
G. The recent past and projected future trend in the size of the insurer's surplus as regards policyholders; [1993, c. 313, §10 (AMD).]
H. The quality and liquidity of investments in subsidiaries or affiliates. The department may discount any such investment or treat any investment as a nonadmitted asset for purposes of determining the adequacy of surplus as regards policyholders whenever the investment so warrants; [1993, c. 313, §10 (AMD).]
I. The adequacy of the insurer's reserves; [1993, c. 313, §10 (AMD).]
J. The surplus as regards policyholders maintained by other comparable insurers in respect of the factors set out in this subsection; and [1993, c. 313, §10 (AMD).]
K. The quality of the company's earnings and the extent to which the reported earnings include extraordinary items. [1993, c. 313, §10 (NEW).]
[ 1993, c. 313, §10 (AMD) .]
11. Dividends and distributions.
[ 1993, c. 313, §11 (RP) .]
11-A. Extraordinary dividends.
[ 2009, c. 511, Pt. A, §3 (RP) .]
11-B. All other dividends and distributions.
[ 2009, c. 511, Pt. A, §4 (RP) .]
11-C. Dividends and distributions. The superintendent shall review all dividends and distributions declared or paid by any insurer registered under subsection 8 at least annually.
A. An insurer shall notify the superintendent within 5 days after the declaration of any dividend or distribution. If the dividend or distribution is not disapproved pursuant to paragraph B and is not an extraordinary dividend as defined in paragraph C, the insurer may pay the dividend or distribution once the superintendent has approved the payment or 10 days have elapsed after the superintendent’s receipt of notice. [2009, c. 511, Pt. A, §5 (NEW).]
B. The superintendent shall issue an order restricting or disallowing the payment of dividends and distributions if the superintendent determines that the insurer’s surplus would not be reasonable in relation to the insurance company’s outstanding liabilities, that the insurer’s surplus would be inadequate to that company’s financial needs or that the insurer’s financial condition would constitute a condition hazardous to policyholders, claimants or the public. [2009, c. 511, Pt. A, §5 (NEW).]
C. An extraordinary dividend may not be paid until affirmatively approved by the superintendent or until at least 60 days after the superintendent has received a request to pay an extraordinary dividend.
(1) For purposes of this subsection, "extraordinary dividend" means any dividend or distribution, other than a pro rata distribution of a class of the insurer’s own securities, that:
(a) Exceeds 10% of the insurer's surplus to policyholders as of December 31st of the preceding year or the net gain from operations for the preceding calendar year, whichever is greater;
(b) Is declared within 5 years after any acquisition of control of a domestic insurer or of any person controlling that insurer, unless it has been approved by a number of continuing directors equal to a majority of the directors in office immediately preceding that acquisition of control; or
(c) Is not paid entirely from unassigned funds. For purposes of this division, 50% of the net of unrealized capital gains and unrealized capital losses, reduced, but not to less than zero, by that portion of the asset valuation reserve attributable to equity investments, must be excluded from the calculation of unassigned funds.
(2) An insurer may declare an extraordinary dividend on a conditional basis, subject to the superintendent’s approval. A declaration pursuant to this subparagraph does not confer any rights upon stockholders until the superintendent has approved the payment or the 60-day review period has elapsed. [2009, c. 511, Pt. A, §5 (NEW).]
[ 2009, c. 511, Pt. A, §5 (NEW) .]
12. Verification of information.
A. Subject to the limitations contained in this subsection and in addition to the powers which the superintendent has under chapter 3 relating to the examination of insurers, the superintendent shall also have the power to order any insurer registered under this chapter to produce such records, books or papers in the possession of the insurer or affiliates as shall be necessary to verify the information required to be contained in the insurer's registration statement and any additional information pertinent to transactions between the insurer and affiliates. Such books, records, papers and information shall be examined in the manner prescribed in chapter 3 relating to the time, place and expense of examination, except that expenses incurred by the superintendent in examining affiliated companies not defined as "insurer", shall be borne by the person examined subject to the limitations of section 228, subsection 1. No credit shall be taken for any equity value of an affiliated company which inures to a parent insurer and comprises a portion of that insurer's admitted assets; [1975, c. 356, §1 (NEW).]
B. The purposes of the examination shall be to verify the registration statement and any addition or amendment thereto made or required pursuant to this chapter. [1975, c. 356, §1 (NEW).]
C. A member of an insurer's holding company system shall comply fully and accurately with a request by the insurer to provide it with information necessary to respond to an examination request by the superintendent pursuant to this section. [1999, c. 113, §13 (NEW).]
[ 1999, c. 113, §13 (AMD) .]
13. Confidential communications. Any registration statement, tender offer, or request or invitation for tenders, advertisement making a tender offer or requesting or inviting tenders of voting securities, option to purchase, agreement to merge or consolidate, or contract to manage filed pursuant to this section including any duly authenticated copy thereof in the possession of any person subject to this section shall be a confidential communication, shall not be subject to a subpoena and shall not be made public by the superintendent without prior written consent of the insurer, unless the superintendent determines that the interests of policyholders or the public will be served by the publication thereof, in which event the superintendent may make a public record or publish all or any part thereof in such manner as the superintendent may deem appropriate. The distribution of reports on examination referred to in section 227 shall not be regarded as confidential communications and shall be excepted from the confidential requirements of this subsection.
[ 1989, c. 385, §9 (AMD) .]
14. Penalties.
A. Any person who willfully violates any of the provisions of this section, or the rules and regulations promulgated by the superintendent under authority thereof, or any person who willfully, in a filing pursuant to subsection 4-A or a registration pursuant to subsection 8, paragraph B, makes any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, must upon conviction be fined not more than $1,000 or imprisoned not more than 3 years, or both; [2007, c. 466, Pt. D, §3 (AMD).]
B. Any person who is found, after notice and opportunity to be heard, to have willfully violated any of the provisions of this section or any rule or regulations promulgated by the superintendent under the authority thereof, shall, in addition to any other penalty provided by law, forfeit to this State the sum of $50 for a first violation and an additional sum of $25 for each day such violation shall continue; [1975, c. 356, §1 (NEW).]
C. In addition to other remedies and penalties provided in this section or otherwise available under the laws of this State, any violation of this section is hereby declared to be an unfair method of competition or an unfair or deceptive act and practice in the business of insurance subject to the provisions of chapter 23 and in addition, the superintendent may, after notice and hearing:
(1) Refuse to issue, refuse to renew or reissue, revoke or suspend for a period not exceeding one year any license or certificate of authority issued or to be issued to any person found to have violated any of the provisions of this section;
(2) After notice and hearing impose by order and administrative forfeiture upon such person, enforceable by such revocation, suspension or refusal to issue, renew or reissue of any such license or licenses or otherwise pursuant to the law of this State, in an amount not to exceed $100 for each such violation and for each day's continuance thereof;
(3) Proceed in a court of competent jurisdiction within or without this State against such person, if an insurer, upon the applicable grounds provided for the rehabilitation, conservatorship or liquidation o
§222. Registration, regulation, supervision and examination of holding company systems, agents, promoters and others
1. Examination. For purposes of ascertaining compliance with law, or relationships and transactions between any person as defined hereafter and any insurer or proposed insurer, the superintendent may as often as he deems advisable examine the accounts, records, documents and transactions pertaining to or affecting the insurance affairs or proposed insurance affairs, or transactions of the insurer or proposed insurer as may be in the possession of any holding company, its subsidiaries or affiliates as is necessary to ascertain the financial condition or legality of conduct of the insurer or proposed insurer. Such investigatory and examination authority shall also extend to the examination of:
A. Any business entity structured to hold the stock of an insurance company, or person holding the shares of voting stock or policyholder proxies of an insurer as voting trustee or otherwise, for the purpose of controlling the management thereof; [1975, c. 356, §1 (RPR).]
B. Any insurance agent, broker, general agent, surplus lines broker, adjuster, consultant, insurer representatives or any person holding himself out as any of the foregoing; [1975, c. 356, §1 (RPR).]
C. Any person having a contract under which he enjoys by terms or in fact the exclusive or dominant right to manage or control the insurer; [1975, c. 356, §1 (RPR).]
D. Any person in this State engaged in, or proposing to be engaged in, this State in, or holding himself out in this State as so engaging or proposing, or in this State assisting in the promotion, formation or financing of an insurer or insurance holding corporation, or corporation or other group to finance an insurer or the production of its business. [1975, c. 356, §1 (RPR).]
[ 1975, c. 356, §1 (RPR) .]
2. Definitions. As used in this section, unless the context otherwise requires, the following words shall have the following meanings.
A. Affiliate. "Affiliate" of, or a person "affiliated" with, a specific person means a person who directly or indirectly controls, or is controlled by, or is under common control with the person specified. [1975, c. 356, §1 (RPR).]
A-1. Beneficial owner. "Beneficial owner" of a voting security, voting insurance policy or guaranty capital share means any person or group of persons acting in concert who, directly or indirectly, through any contract, arrangement, proxy appointment, understanding, relationship or otherwise, has or shares:
(1) Voting power over the security, policy or guaranty capital share, including the power to vote or to direct the voting of the security, policy or share; or
(2) Investment power over the security, policy or share, including the power to dispose or to direct the disposition of the security, policy or share.
The superintendent may determine that persons are acting in concert, either on the superintendent's own initiative or upon application of an interested person, based upon evidence that actions taken by those persons, if consummated, may permit the exercise of common control, directly or indirectly, over the domestic insurer. The absence of a determination by the superintendent that persons are acting in concert shall not be construed to exempt those persons from compliance with the requirements of this section. [1989, c. 385, §1 (NEW).]
A-2. "Continuing director" means:
(1) Any member of a domestic insurer's board of directors, while that person is a member of the board of directors, who was a member of that board of directors prior to the time that any person acquires control of the domestic insurer or any person controlling the insurer; and
(2) Any successor of a continuing director, while the successor is a member of the board of directors, who is recommended or elected to succeed a continuing director by a number of continuing directors equal to a majority of continuing directors in office immediately preceding the acquisition of control. [1991, c. 37, §1 (NEW).]
B. Control
(1) 'Control,' including '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 ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is solely the result of an official position with or a corporate office held by the person. Control is presumed to exist if any person is the beneficial owner of 10% or more of the voting securities, or voting rights in the case of mutual or reciprocal insurers, or guaranty capital shares if a mutual insurer has established a guaranty fund, of any other person. A beneficial owner may rely in determining the amount of voting securities of any person outstanding upon information set forth in that person's most recent quarterly or annual report filed with the Securities and Exchange Commission pursuant to the Exchange Act unless the beneficial owner knows or has reason to believe that the information contained in the quarterly or annual report is inaccurate. Two or more domestic mutual insurance companies that have restricted their licensed territories to the State are not considered subject to this section merely because those insurance companies commonly share facilities, incurred expenses, personnel services, or otherwise utilize cost allocations based on generally accepted accounting principles including pro rata sharing of assumed risks.
(2) Notwithstanding the presumption of control contained in subparagraph (1), the superintendent, upon application of the insurance company, may determine that the insurer is not controlled by the person presumed to control it. In addition, the superintendent, after notice and an opportunity to be heard, may determine, notwithstanding the absence of the presumption in subparagraph (1), that a person does control an insurance company or companies. [1999, c. 113, §8 (AMD).]
B-1. Exchange Act. "Exchange Act" means the United States Securities Exchange Act of 1934, as amended. [1989, c. 385, §3 (NEW).]
C. Insurance holding company system. "Insurance holding company system" shall consist of 2 or more affiliated persons, one or more of whom is an insurer. [1975, c. 356, §1 (RPR).]
D. Insurer. "Insurer" shall have the same meaning given it in section 4. [1975, c. 356, §1 (RPR).]
D-1. [1993, c. 313, §7 (RP).]
D-2. "Net gains from operations" means:
(1) For life insurers, the net income or loss after dividends to policyholders and federal income taxes but before the inclusion of net realized capital gains or losses; and
(2) For nonlife insurers, the net income or loss after dividends to policyholders and federal income taxes and net realized capital gains or losses. [1993, c. 313, §8 (NEW).]
E. Person. "Person" shall mean an individual, a corporation, a corporation which, pursuant to Title 24, chapter 19, maintains and operates nonprofit hospital service plans, nonprofit medical service plans or nonprofit health care plans or any combination thereof, a partnership, an association, a joint stock company, a business trust, an unincorporated organization or any similar entity, or any combination of the foregoing acting in concert. [1975, c. 356, §1 (RPR).]
F. "Subsidiary" of a specified person means an affiliate controlled by that person directly or through one or more intermediaries. [2001, c. 72, §4 (AMD).]
G. "Surplus regarding policyholders" means admitted assets less all liabilities. [1993, c. 313, §9 (NEW).]
H. "Unassigned funds" means the undistributed and unappropriated amount of surplus remaining on the balance sheet date as the result of all operations of an insurance company from its commencement of business. [1993, c. 313, §9 (NEW).]
I. "Voting security" means any security with voting rights or any security convertible into or evidencing a right to acquire a security with voting rights. [1999, c. 113, §10 (NEW).]
[ 2001, c. 72, §4 (AMD) .]
3. Subsidiaries of insurers; investments to acquire interest. This subsection pertains to insurers and their subsidiaries and affiliates.
A. Any domestic insurer may invest in or otherwise acquire one or more subsidiaries as authorized in section 1115 or section 1157. [1987, c. 399, §1 (AMD).]
A-1. A domestic insurer shall notify the superintendent in writing within 30 days after any investment by the insurer or any of its affiliates in any one corporation if the insurer has invested in that corporation and the total investment in that corporation by the insurance holding company system exceeds 10% of the corporation's voting securities. [1991, c. 828, §4 (AMD).]
B. If an insurer ceases to control a subsidiary, it shall dispose of any investment therein made pursuant to this section within 3 years from the time of the cessation of control or within such further time as the superintendent may prescribe, unless at any time after the investment was made, the investment met the requirements for investment under any other section of this Title and the insurer has notified the superintendent thereof. [1991, c. 828, §4 (AMD).]
[ 1991, c. 828, §4 (AMD) .]
4. Tender offers.
[ 1989, c. 385, §4 (RP) .]
4-A. Tender offers. No person may make a tender offer for, or a request or invitation for tenders of, or an agreement to exchange securities for, or otherwise acquire any voting security, or any security convertible into a voting security, of a domestic insurer or of any person controlling a domestic insurer if, as a result of the consummation thereof, the person making the tender offer, request or agreement, would, directly or indirectly, acquire actual control of the insurer or controlling person, and no person may enter into an agreement to merge with or may otherwise acquire control of a domestic insurer or its controlling person, unless:
A. The person has filed with the superintendent and has sent the domestic insurer a statement containing the information required by subsection 4-B; [1989, c. 385, §5 (NEW).]
B. The offer, request, invitation, agreement or acquisition has been approved by the superintendent in the manner prescribed in subsection 7; and [1989, c. 385, §5 (NEW).]
C. Ten days have elapsed from the date of approval by the superintendent and no injunction or other court order precludes consummation of the offer, request, invitation, agreement or acquisition. [1989, c. 385, §5 (NEW).]
The superintendent, by rule or by order, may exempt from paragraphs B and C, any offer, request, invitation or agreement which is subject to regulation as a tender offer under the Exchange Act, provided that the acquisition or other transaction contemplated by the offer, request, invitation or agreement may not be consummated unless that acquisition or other transaction is approved by the superintendent in the manner prescribed in subsection 7. The superintendent, by rule or by order, may in addition exempt from paragraphs B and C any offer, request, invitation, agreement, purchase or transaction on the grounds that the interests of the State in regulating that transaction are minimal relative to the interests of other jurisdictions or are minimal relative to the impact of the transaction as a whole, provided that it does not appear likely that exempting the transaction from the application of this section will be detrimental to the interests of Maine policyholders.
[ 1989, c. 385, §5 (NEW) .]
4-B. Application for approval. Each statement required in subsection 4-A shall contain the following information as applicable:
A. The background and identity of all persons by whom or on whose behalf the purchases or the exchange, merger or other acquisition of control are to be effected; [1989, c. 385, §5 (NEW).]
B. The source and amount of the funds or other consideration which have been used or will be used in making the purchases or in effecting the exchange, merger or other acquisition of control and, if any part of these funds or other consideration has been or will be borrowed or otherwise obtained for the purpose of making the purchases or effecting the exchange, merger or other acquisition of control, a description of the transaction and the names and identities of the parties involved; [1989, c. 385, §5 (NEW).]
C. Any plans or proposals which those persons may have to liquidate the insurer, or the controlling person of the insurer, or to sell its assets or merge it with any person or make any other major change in its business or corporate structure or management; [1989, c. 385, §5 (NEW).]
D. The amount of each class of voting securities, or securities which may be converted into voting securities, of the insurer or controlling person, which are beneficially owned, and the amount of each class of voting securities, or securities which may be converted into voting securities, of that insurer or controlling person concerning which there is a right to acquire beneficial ownership, by each person and by each affiliate; [1989, c. 385, §5 (NEW).]
E. Information as to all contracts, arrangements or understandings with any person with respect to any securities of the insurer or the controlling person, 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, naming the persons with whom those contracts, arrangements or understandings have been entered into, and giving the details thereof; [1989, c. 385, §5 (NEW).]
F. A copy of all those agreements, and any amendments thereto, to exchange or otherwise acquire securities or to merge with or otherwise acquire control of the insurer or the controlling person; and [1989, c. 385, §5 (NEW).]
G. Any other information as the superintendent may by rule prescribe as necessary or appropriate in the public interest or for the protection of policyholders. [1989, c. 385, §5 (NEW).]
[ 1989, c. 385, §5 (NEW) .]
5. Tender offer material. All requests or invitations for tenders or advertisements making a tender offer or requesting or inviting tenders of such voting securities for control of a domestic insurer or its controlling person made by or on behalf of any such person shall contain any information specified in subsection 4-B as the superintendent may prescribe, and shall be filed with the superintendent at the time that material is first published or sent or given to security holders. Copies of any additional material soliciting or requesting such tender offers subsequent to the initial solicitation or request shall contain the information that the superintendent may prescribe as necessary or appropriate in the public interest or for the protection of policyholders, and shall be filed with the superintendent at the time copies of that material are first published or sent or given to security holders.
[ 1989, c. 385, §6 (AMD) .]
6. Information as to tender offeror. If the person required to file the statement referred to in subsection 4-A is a partnership, limited partnership, syndicate or other group, the superintendent may require that the information called for by subsection 4-A must 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 the person required to file the statement referred to in subsection 4-A is a corporation, the superintendent may require that the information called for thereby must be given with respect to such corporation and each officer and director thereof and each person who is directly or indirectly the beneficial owner of more than 10% of the outstanding securities of such corporation.
[ 2007, c. 466, Pt. D, §1 (AMD) .]
7. Approval, disapproval of proposed acquisition.
A. The superintendent shall hold a hearing in accordance with the procedures set forth in the Maine Administrative Procedure Act, Title 5, chapter 375, subchapter IV, within 30 days after the statement required by subsection 4-A has been filed with the superintendent. The superintendent shall make a determination within 30 days after the conclusion of that hearing. The superintendent shall approve any purchase, exchange, merger or other acquisition of control referred to in subsection 4-A unless the superintendent finds that:
(1) After the change of control, the domestic insurer could not satisfy the requirements for the issuance of a certificate of authority according to requirements in force at the time of the issuance, or last renewal or continuation of its certificate of authority to do the insurance business which it intends to transact in this State;
(2) The effect of the purchases, exchanges, merger of a controlling person of the insurer, or other acquisitions of control may be substantially to lessen competition in insurance in this State or tend to create a monopoly therein; or would violate the laws of this State or of the United States relating to monopolies or restraints of trade;
(3) The financial condition of an acquiring person is such as would jeopardize the financial stability of the insurer or prejudice the interest of its policyholders;
(4) The plans or proposals which the acquiring person has to liquidate the insurer, to sell its assets or to merge it with any person, or to make any other major change in its business or corporate structure or management, are unfair or prejudicial to policyholders;
(5) The competence, experience and integrity of those persons who would control the operation of the insurer indicate that it would not be in the interest of policyholders or the public to permit them to do so;
(6) Any merger of a domestic insurer does not comply with section 3474; or
(7) The acquisition of control would 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. [1989, c. 385, §7 (AMD); 1989, c. 611, §§1, 4 (AMD).]
B. Subparagraphs (3) to (7) do not apply to any change of control if and to the extent that the superintendent, by rule or by order, exempts the same from the provisions of those subparagraphs as not comprehended within the purpose of this subsection. [1989, c. 385, §8 (AMD).]
C. Merger, consolidation or bulk reinsurance as to a domestic insurer shall be effectuated only pursuant to the applicable provisions of chapter 47, subchapter IV, sections 3875, 4108 and 4109, as related to organization and powers of insurers. [1975, c. 356, §1 (NEW).]
D. Violation
(1) Failure to file the statement required under subsection 4-A constitutes a violation of this chapter.
(2) Effectuation of or any attempt to effectuate an acquisition of, control of or merger with a domestic insurer within 30 days of the filing of the statement required by subsection 4-A, prior to the superintendent's decision if a hearing is held or after disapproval of such acquisition of control or merger by the superintendent constitutes a violation of this chapter. [2007, c. 466, Pt. D, §2 (AMD).]
[ 2007, c. 466, Pt. D, §2 (AMD) .]
8. Registration of holding company system insurers.
A. Every insurer that is authorized to do business in this State and that is a member of an insurance holding company system shall register with the superintendent, except that these requirements do not apply to a foreign insurer domiciled in a jurisdiction that in the opinion of the superintendent has adopted by statute or regulation disclosure statements and standards substantially similar to those contained in this chapter. An insurer domiciled in a jurisdiction that has not adopted by statute or regulation disclosure requirements and standards substantially similar to those contained in this section may be treated as a domestic insurer for purposes of this section. Each insurer that is subject to registration under this subsection shall register within 15 days after it becomes subject to registration, and annually thereafter by May 1st, unless the superintendent, for good cause shown, extends the time for registration and then an insurer must file within that extended time. Nothing in this section may be construed to prohibit the superintendent from requesting any authorized insurer that is a member of a holding company system and not subject to registration under this section for a copy of the registration statement or other information filed by such insurer with the insurance regulatory authority of its state of domicile. Upon request of the insurer or of the insurance regulatory authority of another jurisdiction in which the insurer is authorized to transact insurance, the superintendent at the insurer's expense shall furnish a copy of the registration statement or other information filed by a domestic insurer with the superintendent pursuant to this chapter; [1999, c. 113, §11 (AMD).]
B. Every insurer subject to registration shall file a registration statement on a form provided by the superintendent, which must contain current information about:
(1) The capital structure, general financial condition, ownership and management of the insurer and of any person controlling the insurer;
(2) The following transactions currently outstanding between the insurer and its affiliates:
(a) Loans and other investments, and purchases, sales or exchanges of securities of the affiliate by the insurer or of the insurer by its affiliates;
(b) Purchases, sales or exchanges of assets;
(c) Transactions not in the ordinary course of business;
(d) Guarantees or undertakings for the benefit of an affiliate that result in an actual contingent exposure of the insurer's assets to liability, other than insurance contracts entered into in the ordinary course of the insurer's business;
(e) All management and service contracts and all cost-sharing arrangements, other than cost allocation arrangements based upon generally accepted accounting principles;
(f) Reinsurance agreements; and
(3) Other matters concerning transactions between the insurer and any affiliate as may be required by the superintendent; [2001, c. 72, §5 (AMD).]
C. No information need be disclosed on the registration statement filed pursuant to this subsection if such information is not material to the purposes of this chapter. Unless the superintendent by rule, regulation or order provides otherwise, sales, purchases, exchanges, loans or extensions of credit or investments, involving 1/2 of 1% or less of an insurer's admitted assets as of December 31st immediately preceding shall not be deemed material for purposes of this section; [1975, c. 356, §1 (NEW).]
D. Each registered insurer shall keep current the information required to be disclosed in its registration statement by reporting on forms provided by the superintendent all material changes or additions on or before the 15th day of the month following that in which it learns of each such change or addition; [1975, c. 356, §1 (NEW).]
E. The superintendent shall terminate the registration of any insurer which demonstrates that it is no longer a member of an insurance holding company system; [1975, c. 356, §1 (NEW).]
F. Two or more affiliated insurers subject to registration hereunder may file a consolidated registration statement or consolidated reports amending their respective consolidated statements or their individual registration statements so long as such consolidated filings correctly reflect the condition of and transactions between such persons; [1975, c. 356, §1 (NEW).]
G. The superintendent may allow or require any insurer, which is authorized to do business in this State and which is part of an insurance holding company system, to register on behalf of any affiliated insurer which is required to register under paragraph A and to file all information and material required to be filed under this section; [1975, c. 356, §1 (NEW).]
H. This section shall not apply to any insurer, information or transaction if and to the extent that the superintendent by rule, regulation or order shall exempt the same from the provisions of this section as not comprehended within the purposes thereof; [1975, c. 356, §1 (NEW).]
I. Any person may file with the superintendent a disclaimer of affiliation with any authorized insurer or such a disclaimer may be filed by the insurer or any member of an insurance holding company system. The disclaimer shall fully disclose all material relationships and bases for affiliation between such person and the insurer as well as the bases for disclaiming such affiliation. After a disclaimer has been filed, the insurer shall be relieved of any duty to register or report under this section which may arise out of the insurer's relationship with such person unless and until the superintendent disallows the disclaimer. The superintendent shall disallow a disclaimer only after a hearing thereon with notice to all parties in interest, and after making specific findings of fact to support such disallowance. [1975, c. 356, §1 (NEW).]
[ 2001, c. 72, §5 (AMD) .]
9. Transactions with affiliates; standards. Transactions by insurers subject to registration with their affiliates that occur after the effective date of this chapter are subject to the following standards.
A. The terms, including any charges or fees for services performed, must be fair and reasonable. [1991, c. 828, §5 (AMD).]
B. The books, accounts and records of each party must be so maintained as to disclose clearly and accurately the nature and details of the transaction, including all accounting information necessary to support the reasonableness of any charges or fees. [1991, c. 828, §5 (AMD).]
C. The insurer's surplus to policyholders following any dividends or distributions to stockholder affiliates must be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs. [1991, c. 548, Pt. B, §3 (AMD).]
D. Expenses incurred and payment received must be allocated to the insurer in conformity with customary insurance accounting practices consistently applied. [1991, c. 828, §5 (NEW).]
E. A domestic insurer must notify the superintendent in writing at least 30 days in advance, unless the superintendent authorizes a shorter period, before entering into any of the following kinds of transactions with any member of its holding company system:
(1) Sales, purchases, exchanges, loans or extensions of credit, guarantees or investments that are equal to or exceed:
(a) With respect to nonlife insurers, the lesser of 3% of the insurer's admitted assets as of December 31st of the preceeding year or 25% of surplus to policyholders;
(b) With respect to life insurers, 3% of the insurer's admitted assets as of December 31st of the preceding year; or
(c) With respect to nonprofit hospital and medical service organizations and their 100% controlled affiliates that operate as monoline health insurers or health maintenance organizations, the lesser of 5% of the entity's admitted assets as of December 31st of the preceding year or 25% of surplus to policyholders;
(2) Loans or extensions of credit to any person who is not an affiliate, if the insurer makes the loan or extension of credit with the agreement or understanding that the proceeds in whole or in substantial part, are to be used to make loans or extensions of credit to, purchase assets of or make investments in any affiliate of the insurer if the loan, extension of credit, purchase or investment is equal to or exceeds:
(a) With respect to nonlife insurers, the lesser of 3% of the insurer's admitted assets as of December 31st of the preceding year or 25% of surplus to policyholders;
(b) With respect to life insurers, 3% of the insurer's admitted assets as of December 31st of the preceding year; or
(c) With respect to nonprofit hospital and medical service organizations and their 100% controlled affiliates that operate as monoline health insurers or health maintenance organizations, the lesser of 5% of the entity's admitted assets as of December 31st of the preceding year or 25% of surplus to policyholders;
(3) Reinsurance agreements or modifications to the agreements in which the reinsurance premium or a change in the insurer's liabilities equals or exceeds 5% of the insurer's surplus to policyholders, as of December 31st of the preceding year, including those agreements that may require as consideration the transfer of assets from an insurer to a nonaffiliate if an agreement or understanding exists between the insurer and nonaffiliate that any portion of the assets will be transferred to one or more affiliates of the insurer;
(4) Management agreements, cost-sharing arrangements and service contracts that:
(a) Delegate authority to effectuate reinsurance;
(b) Provide for delegated corporate governance;
(c) Provide for servicing of claims liabilities; or
(d) In any other way contribute an element of expense that is material when related to operations of the insurer;
(5) Any transactions that are part of a plan or series of like transactions with persons within the holding company system if the purpose of those separate transactions is to avoid the statutory threshold amount and thus avoid the review that would occur otherwise. If the superintendent determines that those separate transactions were entered into over any 12-month period for such a purpose, the superintendent may exercise authority under this subsection; and
(6) Any other material transactions specified by rule that the superintendent has determined may adversely affect the interests of the insurer's policyholders.
The superintendent shall disapprove any such transaction if it violates the standards of this section or other applicable law or adversely affects the interests of policyholders. The superintendent's failure to make a determination on a proposed transaction within 30 days after it has been submitted for review has the effect of an approval, unless the superintendent has issued a notice of adjudicatory hearing on the proposal in accordance with section 230. [1991, c. 828, §5 (NEW).]
Any violation of this subsection, in addition to the penalties contained in subsection 14, renders the transactions voidable at the initiative of the superintendent or otherwise under applicable law. The superintendent's approval of a transaction in accordance with this section, whether actual or by acquiescence, may not override any applicable law and does not operate to authorize any transaction that would be contrary to law if it involved an insurer not a member of the same holding company system.
[ 1991, c. 828, §5 (AMD) .]
10. Insurer's surplus; adequacy factors. For the purposes of this chapter, in determining whether an insurer's surplus to policyholders is reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs, the following factors, among others, may be considered:
A. The size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria; [1975, c. 356, §1 (NEW).]
B. The extent to which the insurer's business is diversified among the several lines of insurance; [1975, c. 356, §1 (NEW).]
C. The number and size of the risks insured in each line of business; [1975, c. 356, §1 (NEW).]
D. The extent of the geographical dispersion of the insurer's insured risks; [1975, c. 356, §1 (NEW).]
E. The nature and extent of the insurer's reinsurance program; [1975, c. 356, §1 (NEW).]
F. The quality, diversification and liquidity of the insurer's investment portfolio; [1975, c. 356, §1 (NEW).]
G. The recent past and projected future trend in the size of the insurer's surplus as regards policyholders; [1993, c. 313, §10 (AMD).]
H. The quality and liquidity of investments in subsidiaries or affiliates. The department may discount any such investment or treat any investment as a nonadmitted asset for purposes of determining the adequacy of surplus as regards policyholders whenever the investment so warrants; [1993, c. 313, §10 (AMD).]
I. The adequacy of the insurer's reserves; [1993, c. 313, §10 (AMD).]
J. The surplus as regards policyholders maintained by other comparable insurers in respect of the factors set out in this subsection; and [1993, c. 313, §10 (AMD).]
K. The quality of the company's earnings and the extent to which the reported earnings include extraordinary items. [1993, c. 313, §10 (NEW).]
[ 1993, c. 313, §10 (AMD) .]
11. Dividends and distributions.
[ 1993, c. 313, §11 (RP) .]
11-A. Extraordinary dividends.
[ 2009, c. 511, Pt. A, §3 (RP) .]
11-B. All other dividends and distributions.
[ 2009, c. 511, Pt. A, §4 (RP) .]
11-C. Dividends and distributions. The superintendent shall review all dividends and distributions declared or paid by any insurer registered under subsection 8 at least annually.
A. An insurer shall notify the superintendent within 5 days after the declaration of any dividend or distribution. If the dividend or distribution is not disapproved pursuant to paragraph B and is not an extraordinary dividend as defined in paragraph C, the insurer may pay the dividend or distribution once the superintendent has approved the payment or 10 days have elapsed after the superintendent’s receipt of notice. [2009, c. 511, Pt. A, §5 (NEW).]
B. The superintendent shall issue an order restricting or disallowing the payment of dividends and distributions if the superintendent determines that the insurer’s surplus would not be reasonable in relation to the insurance company’s outstanding liabilities, that the insurer’s surplus would be inadequate to that company’s financial needs or that the insurer’s financial condition would constitute a condition hazardous to policyholders, claimants or the public. [2009, c. 511, Pt. A, §5 (NEW).]
C. An extraordinary dividend may not be paid until affirmatively approved by the superintendent or until at least 60 days after the superintendent has received a request to pay an extraordinary dividend.
(1) For purposes of this subsection, "extraordinary dividend" means any dividend or distribution, other than a pro rata distribution of a class of the insurer’s own securities, that:
(a) Exceeds 10% of the insurer's surplus to policyholders as of December 31st of the preceding year or the net gain from operations for the preceding calendar year, whichever is greater;
(b) Is declared within 5 years after any acquisition of control of a domestic insurer or of any person controlling that insurer, unless it has been approved by a number of continuing directors equal to a majority of the directors in office immediately preceding that acquisition of control; or
(c) Is not paid entirely from unassigned funds. For purposes of this division, 50% of the net of unrealized capital gains and unrealized capital losses, reduced, but not to less than zero, by that portion of the asset valuation reserve attributable to equity investments, must be excluded from the calculation of unassigned funds.
(2) An insurer may declare an extraordinary dividend on a conditional basis, subject to the superintendent’s approval. A declaration pursuant to this subparagraph does not confer any rights upon stockholders until the superintendent has approved the payment or the 60-day review period has elapsed. [2009, c. 511, Pt. A, §5 (NEW).]
[ 2009, c. 511, Pt. A, §5 (NEW) .]
12. Verification of information.
A. Subject to the limitations contained in this subsection and in addition to the powers which the superintendent has under chapter 3 relating to the examination of insurers, the superintendent shall also have the power to order any insurer registered under this chapter to produce such records, books or papers in the possession of the insurer or affiliates as shall be necessary to verify the information required to be contained in the insurer's registration statement and any additional information pertinent to transactions between the insurer and affiliates. Such books, records, papers and information shall be examined in the manner prescribed in chapter 3 relating to the time, place and expense of examination, except that expenses incurred by the superintendent in examining affiliated companies not defined as "insurer", shall be borne by the person examined subject to the limitations of section 228, subsection 1. No credit shall be taken for any equity value of an affiliated company which inures to a parent insurer and comprises a portion of that insurer's admitted assets; [1975, c. 356, §1 (NEW).]
B. The purposes of the examination shall be to verify the registration statement and any addition or amendment thereto made or required pursuant to this chapter. [1975, c. 356, §1 (NEW).]
C. A member of an insurer's holding company system shall comply fully and accurately with a request by the insurer to provide it with information necessary to respond to an examination request by the superintendent pursuant to this section. [1999, c. 113, §13 (NEW).]
[ 1999, c. 113, §13 (AMD) .]
13. Confidential communications. Any registration statement, tender offer, or request or invitation for tenders, advertisement making a tender offer or requesting or inviting tenders of voting securities, option to purchase, agreement to merge or consolidate, or contract to manage filed pursuant to this section including any duly authenticated copy thereof in the possession of any person subject to this section shall be a confidential communication, shall not be subject to a subpoena and shall not be made public by the superintendent without prior written consent of the insurer, unless the superintendent determines that the interests of policyholders or the public will be served by the publication thereof, in which event the superintendent may make a public record or publish all or any part thereof in such manner as the superintendent may deem appropriate. The distribution of reports on examination referred to in section 227 shall not be regarded as confidential communications and shall be excepted from the confidential requirements of this subsection.
[ 1989, c. 385, §9 (AMD) .]
14. Penalties.
A. Any person who willfully violates any of the provisions of this section, or the rules and regulations promulgated by the superintendent under authority thereof, or any person who willfully, in a filing pursuant to subsection 4-A or a registration pursuant to subsection 8, paragraph B, makes any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, must upon conviction be fined not more than $1,000 or imprisoned not more than 3 years, or both; [2007, c. 466, Pt. D, §3 (AMD).]
B. Any person who is found, after notice and opportunity to be heard, to have willfully violated any of the provisions of this section or any rule or regulations promulgated by the superintendent under the authority thereof, shall, in addition to any other penalty provided by law, forfeit to this State the sum of $50 for a first violation and an additional sum of $25 for each day such violation shall continue; [1975, c. 356, §1 (NEW).]
C. In addition to other remedies and penalties provided in this section or otherwise available under the laws of this State, any violation of this section is hereby declared to be an unfair method of competition or an unfair or deceptive act and practice in the business of insurance subject to the provisions of chapter 23 and in addition, the superintendent may, after notice and hearing:
(1) Refuse to issue, refuse to renew or reissue, revoke or suspend for a period not exceeding one year any license or certificate of authority issued or to be issued to any person found to have violated any of the provisions of this section;
(2) After notice and hearing impose by order and administrative forfeiture upon such person, enforceable by such revocation, suspension or refusal to issue, renew or reissue of any such license or licenses or otherwise pursuant to the law of this State, in an amount not to exceed $100 for each such violation and for each day's continuance thereof;
(3) Proceed in a court of competent jurisdiction within or without this State against such person, if an insurer, upon the applicable grounds provided for the rehabilitation, conservatorship or liquidation o
