§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. For purposes of this subsection, an extraordinary dividend or distribution is any dividend or distribution that exceeds
the greater of:
A. Ten percent of the insurer's surplus to policyholders as of December 31st of the preceding year; or [1993, c. 313, §12 (NEW).]
B. The net gain from operations for the 12-month period ending December 31st of the preceding year. [1993, c. 313, §12 (NEW).]
In addition to the provisions of paragraphs A and B, any dividend or distribution declared at any time within 5 years following
any acquisition of control of a domestic insurer or by any person controlling that insurer is an extraordinary dividend if
it has not been approved by a number of continuing directors equal to a majority of the continuing directors in office immediately
preceding that acquisition of control.
A pro rata distribution of any class of the insurer's own securities is not considered an extraordinary dividend or distribution
for purposes of this section. An insurer subject to registration under this section may pay an extraordinary dividend or
make any other extraordinary distribution to its stockholders upon the expiration of 60 days from the time the superintendent
is notified of the declaration if within that period the superintendent has not disapproved the payment or upon the superintendent's
approval of that payment within the 60-day period. Notwithstanding any other provision of law, an insurer may declare an
extraordinary dividend or distribution that is conditional upon the superintendent's approval and such a declaration does
not confer any rights to stockholders until the superintendent has approved the payment of the dividend or distribution or
the superintendent has not disapproved that payment within the 60-day period. The insurer's surplus following any dividends
or distributions to shareholders under this subsection must be reasonable in relation to the insurer's outstanding liabilities
and adequate to meet the insurer's financial needs. An extraordinary dividend or distribution that is permissible under statutory
terms and conditions in the insurer's state of domicile is deemed to meet the requirements of this section if the value of
that dividend or distribution does not materially exceed the value that would be permissible under this section.
[
1999, c. 113, §12 (AMD)
.]
11-B.All other dividends and distributions. For purposes of this subsection, unassigned funds exclude an amount equal to 50% of the net of unrealized capital gains
and unrealized capital losses reduced by that portion of the asset valuation reserve attributable to equity investments, except
that such an amount can not serve to increase unassigned funds. An insurer subject to registration under this section may
pay from its unassigned funds, dividends and distributions, other than those defined in subsection 11-A, if the insurer has
notified the superintendent within 5 days following the declaration of any dividend under this subsection and at least 10
days prior to the payment of any dividend under this subsection. A dividend or distribution otherwise limited under this
subsection may be paid by a foreign insurer to its stockholders if the insurer's domiciliary insurance regulatory authority
has given approval prior to that payment. A domestic insurer may pay a dividend or distribution to its stockholders from
other than unassigned funds, upon the expiration of 60 days from the time the superintendent is notified of the declaration,
if the superintendent has not within that period disapproved the payment or upon the superintendent's approval of that payment
within the 60-day period. An insurer's surplus following any dividends or distributions paid to shareholders under this subsection
must be reasonable in relation to the insurer's outstanding liabilities and adequate to meet the insurer's financial needs.
The superintendent shall review at least annually dividends and distributions declared or paid by an insurer under this subsection.
The superintendent shall issue an order restricting or disallowing the payment of dividends and distributions by an insurer
upon a determination by the superintendent that the insurer's surplus is not of a maintained value reasonable in relation
to the insurance company's outstanding liabilities and is inadequate to that company's financial needs or a determination
that the insurer's financial condition constitutes a condition hazardous to policyholders, claimants or the public.
[
1993, c. 313, §12 (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 of an insurer or for an injunction to prevent
a violation of this section or to reverse or hold invalid any transaction made in violation of this section;
(4) Issue such administrative orders to require compliance with this section, including the filing of evidence of compliance
and periodic reporting as to such compliance, enforceable by such revocation, suspension or refusal to issue, renew or reissue
of any such license or licenses or otherwise pursuant to the laws of this State; or
(5) Any or all of the foregoing. [1975, c. 356, §1 (NEW).]
[
2007, c. 466, Pt. D, §3 (AMD)
.]
14-A.Recovery.
A. If an order for liquidation or rehabilitation of a domestic insurer has been entered, the receiver appointed under that
order has the right to recover on behalf of the insurer:
(1) From any parent corporation or holding company or person or affiliate who otherwise controlled the insurer, the amount
of any distributions other than distributions of shares of the same class of stock paid by the insurer on its capital stock;
or
(2) Any payment in the form of a bonus, termination settlement or extraordinary lump-sum salary adjustment made by the insurer
or by any subsidiary of that insurer to a director, officer or employee when the distribution or payment pursuant to this
subparagraph or subparagraph (1) is made at any time during the one year preceding the petition for liquidation, conservation
or rehabilitation, subject to the limitations of paragraphs B, C and D. [1993, c. 313, §13 (NEW).]
B. Such a distribution is not recoverable if the parent corporation or affiliate shows that when paid the distribution was
lawful and reasonable and that the insurer did not know and could not reasonably have known that the distribution could adversely
affect the ability of the insurer to fulfill its contractual obligations. [1993, c. 313, §13 (NEW).]
C. Any person who was a parent corporation or holding company or a person who otherwise controlled the insurer or affiliate
at the time distributions were paid is liable up to the amount of distributions or payments under paragraph A that the person
received. Any person who otherwise controlled the insurer at the time the distributions were declared is liable up to the
amount of the distributions the person would have received if that person had been paid immediately. If 2 or more persons
are liable for the same distributions, those persons are jointly and severally liable. [1993, c. 313, §13 (NEW).]
D. The maximum amount recoverable under this subsection is the amount needed in excess of all other available assets of the
impaired or insolvent insurer to pay the contractual obligations of the impaired or insolvent insurer and to reimburse any
guaranty funds. [1993, c. 313, §13 (NEW).]
E. To the extent that any person liable under paragraph C is insolvent or fails to pay claims due pursuant to paragraph C,
its parent corporation or holding company or person who otherwise controlled it at the time the distribution was paid, is
jointly and severally liable for any resulting deficiency in the amount recovered from the parent corporation or holding company
or person who otherwise controlled it. [1993, c. 313, §13 (NEW).]
[
1993, c. 313, §13 (NEW)
.]
15.Additional powers. The powers, remedies, procedures and penalties provided in this section shall be in addition to, and not in limitation of,
any other powers, remedies, procedures and penalties otherwise provided by law.
[
1975, c. 356, §1 (NEW)
.]
16.Separability of provisions. If any provision of this section or the application thereof to any person or circumstance is held invalid, the invalidity
shall not affect other provisions or applications of this section which can be given effect without the invalid provision
or application, and for this purpose the provisions of this section are separable.
[
1975, c. 356, §1 (NEW)
.]
17.Jurisdiction of courts; service of process. Any person obtaining or attempting to obtain control of a domestic insurer is subject to the jurisdiction of the courts
of this State and to service of process in the manner provided in this Title. Unless a valid appointment of an agent for
service of process is on file with the superintendent pursuant to another provision of this Title, the person is deemed to
have appointed the superintendent as agent for service of process, and service may be made in the same manner as provided
in section 2105.
[
1999, c. 113, §14 (AMD)
.]
18.Rules. The superintendent may, upon notice and opportunity for all interested persons to be heard, adopt reasonable rules as necessary
to carry out and effectuate provisions of this section.
[
1999, c. 113, §14 (AMD)
.]
19.Supplemental to existing provisions. This section, as to holding company systems, supplements in particular those provisions contained in sections 407, subsection
2; 410, subsection 1, paragraph B; 413; 425; 1115; 1136; 3414; 3474; 3475; 3476; 3483; 3875 and 4407; and the provisions of
this section shall be deemed to supersede or modify any such provisions or any other provisions of the Maine Insurance Code,
as it may be amended, only to the extent inconsistent therewith.
[
1975, c. 356, §1 (NEW)
.]
SECTION HISTORY
1969, c. 132, §1 (NEW).
1973, c. 585, §12 (AMD).
1975, c. 356, §1 (RPR).
1977, c. 694, §388 (AMD).
1983, c. 394, §§1,2 (AMD).
1987, c. 399, §1 (AMD).
1989, c. 385, §§1-9 (AMD).
1989, c. 611, §§1,4 (AMD).
1991, c. 37, §§1,2 (AMD).
1991, c. 548, §B3 (AMD).
1991, c. 828, §§3-6 (AMD).
1993, c. 313, §§7-13 (AMD).
1999, c. 113, §§8-14 (AMD).
2001, c. 72, §§4,5 (AMD).
2007, c. 466, Pt. D, §§1-3 (AMD).
Data for this page extracted on 11/09/2009 11:20:25.