N.Y. Insurance Law § 1505: Transactions within a holding company system affecting controlled insurers

§ 1505. Transactions within a holding company system affecting

controlled insurers. (a) Transactions within a holding company system to

which a controlled insurer is a party shall be subject to the following:

(1) the terms shall be fair and equitable;

(2) charges or fees for services performed shall be reasonable; and

(3) expenses incurred and payments received shall be allocated to the

insurer on an equitable basis in conformity with customary insurance

accounting practices consistently applied.

(b) The books, accounts and records of each party to all such

transactions shall be so maintained as to clearly and accurately

disclose the nature and details of the transactions including such

accounting information as is necessary to support the reasonableness of

the charges or fees to the respective parties.

(c) The superintendent's prior approval shall be required for the

following transactions between a domestic controlled insurer and any

person in its holding company system: sales, purchases, exchanges, loans

or extensions of credit, or investments, involving five percent or more

of the insurer's admitted assets at last year-end.

(d) The following transactions between a domestic controlled insurer

and any person in its holding company system may not be entered into

unless the insurer has notified the superintendent in writing of its

intention to enter into any such transaction at least thirty days prior

thereto, or with regard to reinsurance treaties or agreements at least

forty-five days prior thereto, or such shorter period as the

superintendent may permit, and the superintendent has not disapproved it

within such period:

(1) sales, purchases, exchanges, loans or extensions of credit, or

investments involving less than five percent of the insurer's admitted

assets at last year-end, provided the transactions are equal to or

exceed:

(A) the lesser of three percent of the insurer's admitted assets or

twenty-five percent of capital and surplus at last year-end, with regard

to an accident and health insurance company or a corporation subject to

article forty-three of this chapter;

(B) three percent of the insurer's admitted assets at last year-end,

with regard to a life insurance company; or

(C) the lesser of three percent of the insurer's admitted assets or

twenty-five percent of surplus to policyholders at last year-end, with

regard to an insurer other than as specified in subparagraphs (A) and

(B) of this paragraph;

(2) reinsurance treaties or agreements;

(3) rendering of services on a regular or systematic basis; or

(4) any material transaction, specified by regulation, that the

superintendent determines may adversely affect the interests of the

insurer's policyholders or shareholders.

Nothing herein contained shall be deemed to authorize or permit any

transaction that, in the case of a non-controlled insurer, would be

otherwise contrary to law.

(e) The superintendent, in reviewing transactions pursuant to

subsections (c) and (d) hereof, shall consider whether they comply with

the standards set forth in subsections (a) and (b) hereof and whether

they may adversely affect the interests of policyholders.

(f) This section shall not apply to transactions subject to article

sixteen or article seventeen or section one thousand four hundred eight

or any sections of this chapter which impose notice or approval

requirements greater than those in this section.