Indiana Code 27-1-23-2.6. Primary and subsidiary companies
(1) a sole proprietorship;
Terms Used In Indiana Code 27-1-23-2.6
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- capital: means the aggregate amount paid in on the shares of capital stock of a corporation issued and outstanding. See Indiana Code 27-1-2-3
- capital stock: means the aggregate amount of the par value of all shares of capital stock. See Indiana Code 27-1-2-3
- Commissioner: means the insurance commissioner of this state. See Indiana Code 27-1-23-1
- Department: means the department of insurance created by IC 27-1-1-1. See Indiana Code 27-1-23-1
- Insurance: means a contract of insurance or an agreement by which one (1) party, for a consideration, promises to pay money or its equivalent or to do an act valuable to the insured upon the destruction, loss or injury of something in which the other party has a pecuniary interest, or in consideration of a price paid, adequate to the risk, becomes security to the other against loss by certain specified risks; to grant indemnity or security against loss for a consideration. See Indiana Code 27-1-2-3
- Joint tenancy: A form of property ownership in which two or more parties hold an undivided interest in the same property that was conveyed under the same instrument at the same time. A joint tenant can sell his (her) interest but not dispose of it by will. Upon the death of a joint tenant, his (her) undivided interest is distributed among the surviving joint tenants.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- member: means one who holds a contract of insurance or is insured in an insurance company other than a stock corporation. See Indiana Code 27-1-2-3
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- person: is a n individual, a corporation, a limited liability company, a partnership, an association, a joint stock company, a trust, an unincorporated organization, any similar entity or any combination of the foregoing acting in concert. See Indiana Code 27-1-23-1
- Surplus: means the total of gross paid in and contributed surplus, special surplus funds, and unassigned surplus, less treasury stock at cost. See Indiana Code 27-1-23-1
(3) a limited liability company;
(4) a partnership;
(5) an association;
(6) a joint stock company;
(7) a mutual fund;
(8) a joint venture;
(9) a trust;
(10) a joint tenancy;
(11) an unincorporated organization; or
(12) a similar entity.
(b) As used in this section, “primary company” means a domestic insurance company that beneficially owns more than fifty percent (50%) of one (1) or more subsidiary companies.
(c) As used in this section, “subsidiary company” means an entity of which more than fifty percent (50%) is beneficially owned by an insurance company.
(d) As used in this section, “total investment of the primary company” means the total of:
(1) a direct investment by a primary company in an asset; plus
(2) the primary company’s proportionate share of an investment made by a subsidiary company of the primary company.
The primary company’s proportionate share must be determined by multiplying the amount of the subsidiary company’s investment by the percentage of the primary company’s ownership interest in the subsidiary company.
(e) A primary company may, independently or in cooperation with another person, organize or acquire one (1) or more subsidiary companies.
(f) A subsidiary company of a primary company may conduct business of any kind, and the authority to conduct the business is not limited because of the status of the subsidiary company as a subsidiary company of the primary company.
(g) In addition to investments in common stock, preferred stock, debt obligations, and other securities as permitted under IC 27-1-12-2 or IC 27-1-13-3, a primary company to which this section applies may, directly or through one (1) or more subsidiary companies, also do the following:
(1) Invest in common stock, preferred stock, debt obligations, and other securities of one (1) or more subsidiary companies, amounts that in total do not exceed the lesser of ten percent (10%) of the primary company’s admitted assets or fifty percent (50%) of the primary company’s surplus as regards policyholders, if, after the investments, the primary company’s surplus as regards policyholders is reasonable in relation to the primary company’s outstanding liabilities and adequate to the primary company’s financial needs. In calculating the amount of investments permitted under this subdivision:
(A) investments, whether made directly or through one (1) or more subsidiary companies, in domestic or foreign insurance subsidiary companies and health maintenance organizations must be excluded; and
(B) to the extent that expenditures relate to an investment other than an investment described in clause (A), the following must be included:
(i) Total net money or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary company, including all organizational expenses and contributions to capital and surplus of the subsidiary company, whether or not represented by the purchase of capital stock or issuance of other securities.
(ii) All amounts expended in acquiring additional common stock, preferred stock, debt obligations, and other securities and all contributions to the capital or surplus of a subsidiary company subsequent to the subsidiary company’s acquisition or formation.
(2) Notwithstanding subdivision (1), invest an amount in common stock, preferred stock, debt obligations, and other securities of one (1) or more subsidiary companies engaged or organized to engage exclusively in the ownership and management of assets authorized as investments for the primary company, if the subsidiary company agrees to limit the subsidiary company’s investment in an asset so that, when combined with the investments of the primary company, the total investment of the primary company will not exceed the investment limitations described in subdivision (1) or in any applicable provision of IC 27-1-12-2 or IC 27-1-13-3.
(3) Notwithstanding subdivision (1), with the prior approval of the commissioner, invest a greater amount in common stock, preferred stock, debt obligations, or other securities of one (1) or more subsidiary companies, if, after the investment, the primary company’s surplus as regards policyholders is reasonable in relation to the primary company’s outstanding liabilities and adequate to the primary company’s financial needs.
(h) Investments that are made under this section in common stock, preferred stock, debt obligations, or other securities of a subsidiary company are not subject to restrictions or prohibitions under IC 27-1-12-2 or IC 27-1-13-3 that otherwise apply to investments of primary companies.
(i) Before a primary company to which this section applies makes an investment described in subsection (g), a primary company shall make a determination regarding whether the proposed investment meets the applicable requirements by determining the applicable investment limitations as though the investment has been made, considering:
(1) the currently outstanding principal balance on previous investments in debt obligations; and
(2) the value of previous investments in equity securities as of the day that the investments in equity securities were made;
net of any return of capital invested.
(j) If a primary company ceases to control a subsidiary company, the primary company shall dispose of any investment in the subsidiary company made under this section not more than:
(1) three (3) years from the time of the cessation of control; or
(2) the period determined appropriate by the commissioner;
unless the investment meets the requirements for investment under any applicable provision of IC 27-1-12-2 or IC 27-1-13-3 and the primary company has notified the commissioner that the investment meets the requirements.
(k) A primary company, at the time of establishing a subsidiary company, must possess:
(1) assets of not less than twenty-five million dollars ($25,000,000); or
(2) not less than three million five hundred thousand dollars ($3,500,000) of:
(A) combined capital and surplus in the case of a stock company; and
(B) surplus in the case of a mutual company.
(l) The department has the power to:
(1) conduct periodic examinations of a subsidiary company;
(2) require reports that reflect the effect of the condition and operation of a subsidiary company on the financial condition of a primary company; and
(3) make additional examinations or require other reports with respect to a subsidiary company that are necessary to carry out the purposes of this section.
A noninsurance subsidiary company shall annually furnish the department financial statements that are prepared under generally accepted accounting principles and certified by an independent certified public accountant and the department may rely on the statements. If a subsidiary company conducts the business of the subsidiary company in a manner that clearly tends to impair the capital or surplus fund of the primary company, or otherwise makes the operation of the primary company financially unsafe, the department may act under IC 27-1-3-19 with respect to the primary company.
(m) A primary company and a subsidiary company shall, in all respects, stand before the law as separate and distinct companies and neither company is liable to the creditors, policyholders, or stockholders of the other company, acts or omissions of an officer, director, stockholder, or member of either company notwithstanding.
(n) The board of directors and officers of a primary company and a subsidiary company may be identical. However, the affairs of each company shall be carried on separate and distinct from the other company.
(o) A foreign subsidiary company shall be treated in the same manner as other foreign companies, except that the treatment may be withheld or suspended with respect to a subsidiary company that is domiciled in a state that does not treat a:
(1) primary company; or
(2) subsidiary company;
that is domiciled in Indiana in a manner equal to a foreign or domestic company doing business in the other state.
(p) Interests in a subsidiary company that are owned by a primary company must be registered in the name of the primary company except for shares that are required under Indiana law to be registered in the name of another person.
As added by P.L.126-2001, SEC.3.