N.Y. Insurance Law § 1712: Relationships and transactions between parent corporation and subsidiary

§ 1712. Relationships and transactions between parent corporation and

subsidiary. (a) The business operations, corporate proceedings and

fiscal and accounting records of subsidiaries shall be conducted or

maintained so as to assure the separate legal and operating identities

of the parent corporation and subsidiary, but nothing herein shall

preclude arrangements for common management or the cooperative or joint

use of personnel, property, or services, otherwise consistent with this

chapter. All transactions between the parent corporation and its

subsidiaries shall be fair and equitable, charges or fees for services

performed shall be reasonable and all expenses incurred and payments

received shall be allocated to the parent corporation on an equitable

basis in conformity with customary insurance accounting practices

consistently applied. The books, accounts and records of each party to

all such transactions shall be so maintained as to disclose clearly and

accurately 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.

(b) The following transactions between a parent corporation and any

subsidiary may not be entered into unless the parent corporation 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, extensions of credit, or

investments with a subsidiary, provided the transactions are equal to or

exceed:

(A) three percent of the parent corporation's admitted assets at last

year-end, with regard to a domestic life insurance company; or

(B) the lesser of three percent of the parent corporation's admitted

assets or twenty-five percent of capital and surplus at last year-end,

with regard to a domestic corporation subject to article forty-three of

this chapter; or

(2) loans or extensions of credit to any person who is not a

subsidiary, where the parent corporation makes loans or extensions of

credit with the agreement or understanding that the proceeds of such

transactions, 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 subsidiary of the parent corporation making the

loans or extensions of credit, provided the transactions are equal to or

exceed:

(A) three percent of the parent corporation's admitted assets at last

year-end, with regard to a domestic life insurance company; or

(B) the lesser of three percent of the parent corporation's admitted

assets or twenty-five percent of capital and surplus at last year-end,

with regard to a domestic corporation subject to article forty-three of

this chapter; or

(3) reinsurance treaties or agreements with a subsidiary that the

parent corporation has not otherwise submitted to the superintendent.

This shall include agreements that may require, as consideration, the

transfer of assets from a parent corporation to a non-subsidiary, if an

agreement or understanding exists between the parent corporation and

non-subsidiary that any portion of the assets will be transferred to one

or more subsidiaries of the parent corporation; and

(4) management agreements, service contracts, tax allocation

agreements, guarantees, and all cost-sharing arrangements.