S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 7807--A

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                              June 4, 2013
                               ___________

Introduced by M. of A. CAHILL -- (at request of the Department of Finan-
  cial Services) -- read once and referred to the Committee on Insurance
  --  reported  and  referred  to  the  Committee  on Codes -- committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

AN ACT to amend the insurance law, in relation to  enhancing  regulatory
  efficiency and efficacy

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1.  Subsection (a) of section 110 of  the  insurance  law,  as
added  by  chapter  687  of  the laws of 2003, paragraph 1 as amended by
chapter 245 of the laws of 2004, is amended to read as follows:
  (a) In order to assist in  the  performance  of  the  superintendent's
duties under this chapter, the superintendent:
  (1)  may  share  documents,  materials or other information, including
[the] confidential and privileged documents,  materials  or  information
with  other  state, federal, and international regulatory agencies, with
the National Association of Insurance Commissioners, its  affiliates  or
subsidiaries, and with state, federal, and international law enforcement
authorities,  INCLUDING  MEMBERS OF ANY SUPERVISORY COLLEGE DESCRIBED IN
SECTION THREE HUNDRED TWO OF THIS CHAPTER, provided that  the  recipient
has  the authority and agrees to maintain the confidentiality and privi-
leged status of the document, material or other  information;  provided,
however,  that  this paragraph shall not be construed as limiting access
to records pursuant to article six of the public officers law;
  (2) may receive documents, materials or information, including  other-
wise  confidential  and  privileged documents, materials or information,
from the National Association of Insurance Commissioners, its affiliates
or subsidiaries and from regulatory and  law  enforcement  officials  of
other foreign or domestic jurisdictions, INCLUDING MEMBERS OF ANY SUPER-
VISORY  COLLEGE  DESCRIBED IN SECTION THREE HUNDRED TWO OF THIS CHAPTER,

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09114-07-3
              

A. 7807--A                          2

and shall maintain as confidential or privileged any document,  material
or  information  received  with  notice  or the understanding that it is
confidential or privileged under the laws of the  jurisdiction  that  is
the source of the document, material or information; AND
  (3)  may enter into agreements governing sharing and use of documents,
materials or information consistent with this subsection.
  S 2. The insurance law is amended by adding a new section 302 to  read
as follows:
  S 302. SUPERVISORY COLLEGES. (A) THE SUPERINTENDENT MAY PARTICIPATE IN
A SUPERVISORY COLLEGE IN ORDER TO DETERMINE COMPLIANCE WITH THIS CHAPTER
WITH  RESPECT  TO  AN  INSURER THAT IS REGISTERED UNDER ARTICLE FIFTEEN,
SIXTEEN, OR SEVENTEEN OF THIS CHAPTER AND HAS INTERNATIONAL  OPERATIONS.
THE  POWERS  OF  THE SUPERINTENDENT WITH RESPECT TO SUPERVISORY COLLEGES
INCLUDE:
  (1) INITIATING THE ESTABLISHMENT OF A SUPERVISORY COLLEGE;
  (2) CLARIFYING THE MEMBERSHIP AND PARTICIPATION OF  OTHER  SUPERVISORS
IN THE SUPERVISORY COLLEGE;
  (3)  CLARIFYING  THE FUNCTIONS OF THE SUPERVISORY COLLEGE AND THE ROLE
OF OTHER REGULATORS, INCLUDING THE ESTABLISHMENT OF A GROUP-WIDE  SUPER-
VISOR;
  (4)  COORDINATING  THE  ONGOING ACTIVITIES OF THE SUPERVISORY COLLEGE,
INCLUDING PLANNING MEETINGS, SUPERVISORY ACTIVITIES, AND  PROCESSES  FOR
INFORMATION SHARING; AND
  (5) ESTABLISHING A CRISIS MANAGEMENT PLAN.
  (B)  EACH INSURER REGISTERED UNDER ARTICLE FIFTEEN, SIXTEEN, OR SEVEN-
TEEN OF THIS CHAPTER THAT IS SUBJECT TO A SUPERVISORY COLLEGE  SHALL  BE
LIABLE FOR AND SHALL PAY THE REASONABLE EXPENSES OF THE SUPERINTENDENT'S
PARTICIPATION  IN  A  SUPERVISORY  COLLEGE,  INCLUDING REASONABLE TRAVEL
EXPENSES. A SUPERVISORY COLLEGE MAY BE CONVENED AS EITHER A TEMPORARY OR
PERMANENT FORUM FOR THE COMMUNICATION AND COOPERATION BETWEEN THE  REGU-
LATORS CHARGED WITH THE SUPERVISION OF THE INSURER OR ITS PARENT, AFFIL-
IATES,  OR  SUBSIDIARIES.  THE  SUPERINTENDENT  MAY  ESTABLISH A REGULAR
ASSESSMENT TO THE INSURER FOR THE PAYMENT OF THESE EXPENSES.
  (C) IN ORDER TO ASSESS  THE  BUSINESS  STRATEGY,  FINANCIAL  POSITION,
LEGAL AND REGULATORY POSITION, RISK EXPOSURE, RISK MANAGEMENT AND GOVER-
NANCE  PROCESSES, AND AS PART OF THE EXAMINATION OF INDIVIDUAL INSURERS,
THE SUPERINTENDENT MAY PARTICIPATE IN A SUPERVISORY COLLEGE  WITH  OTHER
REGULATORS CHARGED WITH SUPERVISION OF THE INSURER OR ITS PARENT, AFFIL-
IATES,  OR  SUBSIDIARIES,  INCLUDING  OTHER STATE, FEDERAL, AND INTERNA-
TIONAL REGULATORY AGENCIES. THE SUPERINTENDENT MAY ENTER INTO AGREEMENTS
PURSUANT TO SECTION ONE HUNDRED TEN OF THIS CHAPTER PROVIDING THE  BASIS
FOR COOPERATION BETWEEN THE SUPERINTENDENT AND OTHER REGULATORY AGENCIES
AND  FOR  THE  ACTIVITIES  OF THE SUPERVISORY COLLEGE.   NOTHING IN THIS
SECTION SHALL DELEGATE TO THE SUPERVISORY COLLEGE  THE  SUPERINTENDENT'S
AUTHORITY  TO  REGULATE  OR  SUPERVISE THE INSURER OR ITS PARENT, AFFIL-
IATES, OR SUBSIDIARIES WITHIN THE SUPERINTENDENT'S JURISDICTION.
  S 3. Subsection (a) of section 1501 of the insurance law is amended by
adding a new paragraph 7 to read as follows:
  (7) "ENTERPRISE RISK" MEANS  ANY  ACTIVITY,  CIRCUMSTANCE,  EVENT,  OR
SERIES OF EVENTS INVOLVING THE HOLDING COMPANY SYSTEM THAT, IF NOT REME-
DIED  PROMPTLY,  IS  LIKELY  TO  HAVE A MATERIAL ADVERSE EFFECT UPON THE
FINANCIAL CONDITION OR LIQUIDITY OF THE INSURER OR ITS  HOLDING  COMPANY
SYSTEM,  INCLUDING  ANYTHING  THAT  WOULD CAUSE THE INSURER'S RISK-BASED
CAPITAL TO FALL INTO COMPANY ACTION LEVEL AS SET FORTH  IN  SECTION  ONE
THOUSAND  THREE HUNDRED TWENTY-TWO OR ONE THOUSAND THREE HUNDRED TWENTY-
FOUR OF THIS CHAPTER, OR THAT WOULD CAUSE FURTHER TRANSACTION  OF  BUSI-

A. 7807--A                          3

NESS  TO BE HAZARDOUS TO THE INSURER'S POLICYHOLDERS OR CREDITORS OR THE
PUBLIC.
  S 4. Section 1503 of the insurance law is amended to read as follows:
  S 1503. Registration. (a) Every person who becomes a controlled insur-
er shall, within thirty days thereafter register with the superintendent
and [such] SHALL AMEND THE registration [shall be amended] within thirty
days  following any change in the identity of its holding company OR ANY
OTHER MATERIAL CHANGE TO THE INFORMATION PROVIDED IN  THE  REGISTRATION.
THE REGISTRATION SHALL BE IN SUCH FORM AND SHALL CONTAIN SUCH MATTERS AS
THE  SUPERINTENDENT  PRESCRIBES. The superintendent may grant reasonable
extensions of the time to register.
  (b) [Every  registrant  shall  furnish  the  superintendent  with  the
following information concerning its holding company:
  (1) a copy of its charter or articles of incorporation and by-laws;
  (2) the  identities of its principal shareholders, officers, directors
and controlled persons; and
  (3) information as to its capital structure and  financial  condition,
and  a  description  of  its  principal  business activities.] A HOLDING
COMPANY THAT DIRECTLY OR INDIRECTLY CONTROLS AN INSURER  SHALL  ADOPT  A
FORMAL  ENTERPRISE RISK MANAGEMENT FUNCTION AND SHALL FILE AN ENTERPRISE
RISK REPORT WITH THE SUPERINTENDENT BY APRIL THIRTIETH OF EACH YEAR. THE
REPORT SHALL, TO THE BEST OF THE HOLDING COMPANY'S KNOWLEDGE AND BELIEF,
IDENTIFY THE MATERIAL RISKS WITHIN THE HOLDING COMPANY SYSTEM THAT COULD
POSE ENTERPRISE RISK TO THE INSURER.
  S 5. Section 1504 of the insurance law is amended to read as follows:
  S 1504. Reporting; examination; publication. (a) (1) Every  controlled
insurer  shall  file with the superintendent such reports or material as
[he] THE SUPERINTENDENT may direct for the purpose of disclosing  infor-
mation  concerning  the operations of persons within the holding company
system [which] THAT may materially affect the operations, management  or
financial condition of the insurer.
  (2)  TO DETERMINE COMPLIANCE WITH THIS ARTICLE, THE SUPERINTENDENT MAY
ORDER ANY CONTROLLED INSURER TO PRODUCE INFORMATION NOT IN THE INSURER'S
POSSESSION IF THE INSURER CAN OBTAIN ACCESS TO THE INFORMATION  PURSUANT
TO CONTRACTUAL RELATIONSHIPS, STATUTORY OBLIGATIONS, OR OTHER METHOD. IN
THE  EVENT  THE  INSURER  CANNOT OBTAIN THE INFORMATION REQUESTED BY THE
SUPERINTENDENT, THE INSURER SHALL PROVIDE THE SUPERINTENDENT A  DETAILED
EXPLANATION OF THE REASON THAT THE INSURER CANNOT OBTAIN THE INFORMATION
AND  THE  IDENTITY  OF THE HOLDER OF INFORMATION. WHENEVER IT APPEARS TO
THE SUPERINTENDENT THAT THE DETAILED EXPLANATION IS  WITHOUT  MERIT,  IN
ADDITION TO ANY OTHER PENALTY PROVIDED BY LAW, THE SUPERINTENDENT, AFTER
NOTICE  AND  AN  OPPORTUNITY TO BE HEARD, MAY LEVY A PENALTY AGAINST THE
INSURER NOT TO EXCEED FIVE HUNDRED DOLLARS PER DAY FOR EACH  DAY  BEYOND
THE DATE SPECIFIED BY THE SUPERINTENDENT FOR RESPONSE.
  (b) Every holding company and every controlled person within a holding
company  system  shall  be subject to examination by order of the super-
intendent if [he] THE SUPERINTENDENT has cause to believe that the oper-
ations of such persons may materially affect the operations,  management
or  financial  condition  of  any  controlled insurer within the system,
INCLUDING BY POSING ENTERPRISE RISK TO THE INSURER, and  that  [he]  THE
SUPERINTENDENT  is  unable  to  obtain  relevant  information  from such
controlled insurer. The grounds relied upon by  the  superintendent  for
such  examination  shall  be stated in [his] THE SUPERINTENDENT'S order.
Such examination shall be confined to matters specified  in  the  order.
The  cost of such examination shall be assessed against the person exam-

A. 7807--A                          4

ined and no portion thereof shall thereafter be reimbursed to it direct-
ly or indirectly by the controlled insurer.
  (c)  The  superintendent  shall  keep the contents of each report made
pursuant to this article and  any  information  obtained  in  connection
therewith  confidential  and  shall not make the same public without the
prior written consent of the controlled insurer  to  which  it  pertains
unless  the  superintendent after notice and an opportunity to be heard,
shall determine that the interests of policyholders, shareholders or the
public will be served by the  publication  thereof.  In  any  action  or
proceeding  by  the  superintendent  against  the person examined or any
other person within the same holding company system  a  report  of  such
examination published by [him] THE SUPERINTENDENT shall be admissible as
evidence of the facts stated therein.
  S 6. Subsection (d) of section 1505 of the insurance law is amended to
read as follows:
  (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 [he] THE SUPER-
INTENDENT may permit, and [he] THE SUPERINTENDENT has not disapproved it
within such period:
  (1) sales, purchases, exchanges, loans or  extensions  of  credit,  or
investments[,]  involving  [more  than one-half of one percent but] 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, [which] 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 [which] THAT, in the case of a non-controlled insurer, would
be otherwise contrary to law.
  S 7. Subsection (a) of section 1506 of the insurance law is amended to
read as follows:
  (a) No person, other than an authorized insurer, shall acquire control
of any domestic insurer, whether by purchase of its securities or other-
wise, unless:
  (1) it gives twenty [days'] DAYS written notice  to  the  insurer,  or
such  shorter  period  of  notice  as the superintendent permits, of its
intention to acquire control, PROVIDED THAT THE NOTICE SHALL INCLUDE  AN
AGREEMENT  BY THE PERSON SEEKING TO ACQUIRE CONTROL THAT THE PERSON WILL
PROVIDE THE ANNUAL REPORT SPECIFIED IN SECTION ONE THOUSAND FIVE HUNDRED
THREE OF THIS ARTICLE FOR SO LONG AS CONTROL EXISTS; and

A. 7807--A                          5

  (2) it receives the superintendent's prior approval.
  S  8.  Section  1506  of  the insurance law is amended by adding a new
subsection (f) to read as follows:
  (F) ANY HOLDING COMPANY SEEKING TO DIVEST ITS CONTROLLING INTEREST  IN
A  DOMESTIC  INSURER, IN ANY MANNER, SHALL FILE WITH THE SUPERINTENDENT,
WITH A COPY TO THE INSURER, NOTICE OF ITS PROPOSED DIVESTITURE AT  LEAST
THIRTY DAYS PRIOR TO THE CESSATION OF CONTROL.
  S  9.  Section  1510  of  the insurance law is amended by adding a new
subsection (d) to read as follows:
  (D) WHENEVER IT APPEARS TO THE  SUPERINTENDENT  THAT  ANY  PERSON  HAS
COMMITTED  A  VIOLATION OF SECTION ONE THOUSAND FIVE HUNDRED SIX OF THIS
ARTICLE THAT PREVENTS THE FULL  UNDERSTANDING  OF  THE  ENTERPRISE  RISK
POSED  TO  THE  INSURER BY THE HOLDING COMPANY SYSTEM, THE VIOLATION MAY
SERVE AS AN INDEPENDENT BASIS FOR  DISAPPROVING  DIVIDENDS  OR  DISTRIB-
UTIONS OR AS GROUNDS FOR REHABILITATION OR LIQUIDATION PURSUANT TO ARTI-
CLE SEVENTY-FOUR OF THIS CHAPTER.
  S 10. Section 1603 of the insurance law is amended to read as follows:
  S 1603. Notice of intent to acquire OR DIVEST.  (a) [No acquisition of
a  majority of any corporation's outstanding common shares shall be made
pursuant to this article] A DOMESTIC INSURER SHALL NOT  ACQUIRE  CONTROL
OF  ANY OTHER DOMESTIC INSURER, WHETHER BY PURCHASE OF ITS SECURITIES OR
OTHERWISE, unless:
  (1) a notice of intention of such proposed acquisition shall have been
filed with the superintendent not less than ninety days, or such shorter
period as may be permitted by the superintendent,  in  advance  of  such
proposed  acquisition[,  nor  shall  any such acquisition be made if the
superintendent at any time prior thereto finds]; AND
  (2) THE INSURER RECEIVES THE SUPERINTENDENT'S PRIOR APPROVAL.
  (B) THE SUPERINTENDENT SHALL DISAPPROVE SUCH ACQUISITION IF THE SUPER-
INTENDENT DETERMINES that the proposed acquisition is contrary to law or
determines that such proposed acquisition would be contrary to the  best
interests of the parent insurer's policyholders or of the people of this
state.  Only  the  following  factors  shall be considered in making the
foregoing determination:
  (1) the availability of the funds or assets required for such acquisi-
tion;
  (2) the fairness of any exchange of  shares,  assets,  cash  or  other
consideration for the shares or assets to be received;
  (3)  the  impact  of the new operation on the parent insurer's surplus
and existing insurance business and the risks  inherent  in  the  parent
insurer's investment portfolio and operations;
  (4)  the  fairness  and  adequacy  of  the  financing proposed for the
subsidiary;
  (5) the likelihood of undue concentration of economic power;
  (6) whether the effect of the  acquisition  may  be  substantially  to
lessen  competition  in  any line of commerce in insurance or to tend to
create a monopoly therein; and
  (7) whether the acquisition might result in an excessive proliferation
of subsidiaries [which] THAT would  tend  to  unduly  dilute  management
effectiveness  or weaken financial strength, or otherwise be contrary to
the best interests of the  parent  insurer's  policyholders  or  of  the
people of this state.
  [(b)]  (C)  At  any  time  after an acquisition the superintendent may
order its disposition if [he] THE SUPERINTENDENT finds, after notice and
an opportunity to be heard, that its continued retention is hazardous or
prejudicial to the interests of the parent insurer's policyholders.

A. 7807--A                          6

  (D) ANY DOMESTIC INSURER SEEKING TO DIVEST ITS CONTROLLING INTEREST IN
ANOTHER DOMESTIC INSURER, IN ANY MANNER, SHALL FILE WITH THE SUPERINTEN-
DENT, WITH A COPY TO THE INSURER, NOTICE OF ITS PROPOSED DIVESTITURE  AT
LEAST THIRTY DAYS PRIOR TO THE CESSATION OF CONTROL.
  [(c)]  (E)  The  contents  of  each  notice of intention of a proposed
acquisition OR DIVESTITURE filed hereunder  and  information  pertaining
thereto shall be kept confidential, shall not be subject to subpoena and
shall not be made public unless after notice and opportunity to be heard
the  superintendent  determines  that  the  interests  of policyholders,
shareholders or the public will be served by publication.
  S 11. The insurance law is amended by adding a  new  section  1604  to
read as follows:
  S  1604. REGISTRATION. (A) AN AUTHORIZED DOMESTIC INSURER SHALL REGIS-
TER WITH THE SUPERINTENDENT WITHIN THIRTY DAYS OF  BECOMING  SUBJECT  TO
REGISTRATION AND SHALL AMEND THE REGISTRATION WITHIN THIRTY DAYS FOLLOW-
ING ANY MATERIAL CHANGE TO THE INFORMATION PROVIDED IN THE REGISTRATION.
THE REGISTRATION SHALL BE IN SUCH FORM AND SHALL CONTAIN SUCH MATTERS AS
THE  SUPERINTENDENT  PRESCRIBES. THE SUPERINTENDENT MAY GRANT REASONABLE
EXTENSIONS OF THE TIME TO REGISTER.
  (B)(1) AN AUTHORIZED DOMESTIC INSURER, OTHER THAN A  DOMESTIC  INSURER
REQUIRED  TO  REGISTER  AS  A CONTROLLED INSURER PURSUANT TO SECTION ONE
THOUSAND FIVE HUNDRED THREE OF THIS CHAPTER, SHALL ADOPT A FORMAL ENTER-
PRISE RISK MANAGEMENT FUNCTION AND SHALL FILE AN ENTERPRISE RISK  REPORT
WITH  THE  SUPERINTENDENT  BY  APRIL  THIRTIETH OF EACH YEAR. THE REPORT
SHALL, TO THE BEST OF THE INSURER'S KNOWLEDGE AND BELIEF,  IDENTIFY  THE
MATERIAL  RISKS WITHIN ANY SUBSIDIARY THAT COULD POSE ENTERPRISE RISK TO
THE INSURER.
  (2) FOR THE PURPOSES OF THIS  ARTICLE,  "ENTERPRISE  RISK"  MEANS  ANY
ACTIVITY, CIRCUMSTANCE, EVENT, OR SERIES OF EVENTS INVOLVING ONE OR MORE
SUBSIDIARIES  OF AN INSURER THAT, IF NOT REMEDIED PROMPTLY, IS LIKELY TO
HAVE A MATERIAL ADVERSE EFFECT UPON THE FINANCIAL CONDITION OR LIQUIDITY
OF THE INSURER, INCLUDING ANYTHING THAT WOULD CAUSE THE INSURER'S  RISK-
BASED  CAPITAL TO FALL INTO COMPANY ACTION LEVEL AS SET FORTH IN SECTION
ONE THOUSAND THREE HUNDRED TWENTY-FOUR OF THIS CHAPTER,  OR  THAT  WOULD
CAUSE  FURTHER  TRANSACTION OF BUSINESS TO BE HAZARDOUS TO THE INSURER'S
POLICYHOLDERS OR CREDITORS OR THE PUBLIC.
  S 12. Section 1608 of the insurance law is amended  by  adding  a  new
subsection (e) to read as follows:
  (E)  THE  FOLLOWING  TRANSACTIONS  BETWEEN  A DOMESTIC INSURER AND ANY
SUBSIDIARY MAY NOT BE ENTERED INTO UNLESS THE INSURER HAS  NOTIFIED  THE
SUPERINTENDENT IN WRITING OF ITS INTENTION TO ENTER INTO ANY SUCH TRANS-
ACTION 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 SUBSIDY, PROVIDED THE TRANSACTIONS ARE  EQUAL  TO  OR
EXCEED  THE  LESSER OF THREE PERCENT OF THE INSURER'S ADMITTED ASSETS OR
TWENTY-FIVE PERCENT OF SURPLUS TO POLICYHOLDERS AT LAST YEAR-END;
  (2) LOANS OR EXTENSIONS OF CREDIT TO ANY PERSON WHO IS NOT  A  SUBSID-
IARY,  WHERE  THE  INSURER  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  INSURER  MAKING THE LOANS OR EXTENSIONS OF CREDIT, PROVIDED THE
TRANSACTIONS ARE EQUAL TO OR EXCEED THE LESSER OF THREE PERCENT  OF  THE

A. 7807--A                          7

INSURER'S  ADMITTED  ASSETS OR TWENTY-FIVE PERCENT OF SURPLUS TO POLICY-
HOLDERS AT LAST YEAR-END;
  (3)  REINSURANCE  TREATIES  OR  AGREEMENTS  WITH A SUBSIDIARY THAT THE
INSURER HAS NOT OTHERWISE SUBMITTED  TO  THE  SUPERINTENDENT,  PROVIDED,
HOWEVER,  THE  INSURER NEED NOT SUBMIT A COPY OF A REINSURANCE AGREEMENT
UNLESS REQUESTED BY THE SUPERINTENDENT WHERE THE REINSURANCE PREMIUM  OR
A  CHANGE  IN  THE  INSURER'S  LIABILITIES, OR THE PROJECTED REINSURANCE
PREMIUM OR A CHANGE IN THE INSURER'S LIABILITIES  IN  ANY  OF  THE  NEXT
THREE YEARS, IS LESS THAN FIVE PERCENT OF THE INSURER'S SURPLUS TO POLI-
CYHOLDERS  AT  LAST  YEAR-END.  THIS  SHALL  INCLUDE AGREEMENTS THAT MAY
REQUIRE, AS CONSIDERATION, THE TRANSFER OF ASSETS FROM AN INSURER  TO  A
NON-SUBSIDIARY,  IF  AN  AGREEMENT  OR  UNDERSTANDING EXISTS BETWEEN THE
INSURER AND NON-SUBSIDIARY THAT ANY PORTION OF THE ASSETS WILL BE TRANS-
FERRED TO ONE OR MORE SUBSIDIARIES OF THE INSURER; AND
  (4) MANAGEMENT AGREEMENTS, SERVICE CONTRACTS,  TAX  ALLOCATION  AGREE-
MENTS, GUARANTEES, AND ALL COST-SHARING ARRANGEMENTS.
  S  13. Section 1702 of the insurance law, as amended by chapter 526 of
the laws of 1987, is amended to read as follows:
  S 1702.  Meaning  of  "subsidiary"  [and],  "parent  corporation"  AND
"ENTERPRISE  RISK";  certain  types  of subsidiaries defined. As used in
this article[, "subsidiary" (i)]: (A) "SUBSIDIARY" means subsidiaries of
the types described in subsection (b)  of  section  one  thousand  seven
hundred  four  of  this  article and subsidiaries acquired or held under
this article, section one thousand four hundred  five  or  section  four
thousand  two  hundred  forty of this chapter, but [(ii) does] SHALL not
include a subsidiary acquired or held under section  one  thousand  four
hundred  four  of  this  chapter  or a subsidiary acquired or held by an
insurer authorized to make investments by subsection (c) of section  one
thousand four hundred three of this chapter[; and "parent corporation"].
  (B)  "PARENT  CORPORATION"  means  a  parent  corporation  of  a  type
described in subsection (a), (b) or (c) of section  one  thousand  seven
hundred one of this article[; "holding company operating subsidiary"].
  (C)  "HOLDING  COMPANY OPERATING SUBSIDIARY" means a subsidiary (other
than a separate account subsidiary) engaged or organized  to  engage  in
either  or  both  of the following activities [(i)](1) the ownership and
management of other subsidiaries, and [(ii)](2) the raising  of  capital
(debt  or equity) [which] THAT could be loaned to, or invested in, other
subsidiaries or loaned to the parent corporation, provided that any such
subsidiary may in addition engage in the  ownership  and  management  of
assets  authorized  as investments for the parent corporation[; "invest-
ment subsidiary"].
  (D) "INVESTMENT SUBSIDIARY" means a subsidiary (other than a  separate
account  subsidiary)  engaged  or organized to engage exclusively in the
ownership and management of assets  (other  than  equity  securities  of
subsidiaries)  authorized  as investments for the parent corporation and
of other investment subsidiaries[; and "separate account subsidiary"].
  (E) "SEPARATE ACCOUNT SUBSIDIARY" means a subsidiary acquired or  held
under section four thousand two hundred forty of this chapter.
  (F)  "ENTERPRISE  RISK"  MEANS  ANY  ACTIVITY, CIRCUMSTANCE, EVENT, OR
SERIES OF EVENTS INVOLVING ONE OR MORE SUBSIDIARIES OF A  PARENT  CORPO-
RATION  THAT,  IF  NOT  REMEDIED  PROMPTLY, IS LIKELY TO HAVE A MATERIAL
ADVERSE EFFECT UPON THE FINANCIAL CONDITION OR LIQUIDITY OF  THE  PARENT
CORPORATION,  INCLUDING  ANYTHING  THAT  WOULD  CAUSE  THE PARENT CORPO-
RATION'S RISK-BASED CAPITAL TO FALL INTO COMPANY  ACTION  LEVEL  AS  SET
FORTH  IN SECTION ONE THOUSAND THREE HUNDRED TWENTY-TWO OF THIS CHAPTER,

A. 7807--A                          8

OR THAT WOULD CAUSE FURTHER TRANSACTION OF BUSINESS TO BE  HAZARDOUS  TO
THE INSURER'S POLICYHOLDERS OR CREDITORS OR THE PUBLIC.
  S  14. Section 1710 of the insurance law, as amended by chapter 805 of
the laws of 1984, is amended to read as follows:
  S 1710. [Superintendent's] DIVESTITURE  OF  CONTROL;  SUPERINTENDENT'S
power to order disposition of subsidiaries.
  (A)  ANY PARENT CORPORATION SEEKING TO DIVEST ITS CONTROLLING INTEREST
IN A DOMESTIC INSURER, IN ANY MANNER, SHALL FILE  WITH  THE  SUPERINTEN-
DENT,  WITH A COPY TO THE INSURER, NOTICE OF ITS PROPOSED DIVESTITURE AT
LEAST THIRTY DAYS PRIOR TO THE CESSATION OF CONTROL.
  (B) In addition to the powers granted to the superintendent  elsewhere
in  this  chapter (including, without limitation, [sections] SECTION one
hundred nine [and  three  hundred  twenty-seven]  of  this  chapter  AND
SECTION  THREE  HUNDRED  NINE OF THE FINANCIAL SERVICES LAW), the super-
intendent may, at any time, order a parent corporation to dispose of any
subsidiary, if the superintendent finds, after notice and an opportunity
to be heard, either:
  [(i)](1) that its acquisition or continued retention  is  or  was  not
permitted by the provisions of this article; or
  [(ii)](2)  except  in  the  case  of a subsidiary then exempted by the
provisions of subsection (a)  or  (b)  of  section  one  thousand  seven
hundred four of this article, that its continued retention is materially
adverse  to  the  interests of the parent corporation's policyholders or
subscribers.
  S 15. Section 1712 of the insurance law is amended to read as follows:
  S 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 subsid-
iaries  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 SUBSIDY, 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,

A. 7807--A                          9

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 SUBSID-
IARY, WHERE THE PARENT CORPORATION MAKES LOANS OR EXTENSIONS  OF  CREDIT
WITH  THE  AGREEMENT  OR  UNDERSTANDING THAT THE PROCEEDS OF SUCH TRANS-
ACTIONS, 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  AGREE-
MENTS, GUARANTEES, AND ALL COST-SHARING ARRANGEMENTS.
  S  16.  The  insurance  law is amended by adding a new section 1717 to
read as follows:
  S 1717. REGISTRATION. (A) A PARENT CORPORATION SHALL REGISTER WITH THE
SUPERINTENDENT WITHIN THIRTY DAYS OF BECOMING  SUBJECT  TO  REGISTRATION
AND  SHALL AMEND THE REGISTRATION WITHIN THIRTY DAYS FOLLOWING ANY MATE-
RIAL CHANGE TO THE INFORMATION PROVIDED IN THE REGISTRATION. THE  REGIS-
TRATION  SHALL  BE  IN  SUCH  FORM AND SHALL CONTAIN SUCH MATTERS AS THE
SUPERINTENDENT  PRESCRIBES.  THE  SUPERINTENDENT  MAY  GRANT  REASONABLE
EXTENSIONS OF THE TIME TO REGISTER.
  (B)  A PARENT CORPORATION, OTHER THAN A PARENT CORPORATION REQUIRED TO
REGISTER AS A CONTROLLED INSURER PURSUANT TO SECTION ONE  THOUSAND  FIVE
HUNDRED  THREE  OF  THIS  CHAPTER,  SHALL ADOPT A FORMAL ENTERPRISE RISK
MANAGEMENT FUNCTION AND SHALL FILE AN ENTERPRISE RISK  REPORT  WITH  THE
SUPERINTENDENT BY APRIL THIRTIETH OF EACH YEAR. THE REPORT SHALL, TO THE
BEST  OF  THE  PARENT  CORPORATION'S  KNOWLEDGE AND BELIEF, IDENTIFY THE
MATERIAL RISKS WITHIN ANY SUBSIDIARY THAT COULD POSE ENTERPRISE RISK  TO
THE PARENT CORPORATION.
  S  17. Subsection (d) of section 1110 of the insurance law, as amended
by chapter 431 of the laws of 2000, is amended to read as follows:
  (d) No such corporation or association shall make  or  issue  in  this
state  any  annuity contract before obtaining a permit issued in accord-
ance with the provisions of this section except that  if  its  requisite
reserve  on  its  outstanding  annuity agreements computed in accordance
with section four thousand two hundred seventeen of  this  chapter  does
not exceed the amount of [five hundred thousand] ONE MILLION dollars, it
may  make  gift  annuity  agreements in this state and shall be exempted
from securing a permit provided it maintains  the  reserve  required  by
section  four  thousand  two  hundred  seventeen  of  this chapter and a
surplus of at least twenty-five per  centum  of  such  reserve.  If  the
superintendent  finds,  after  notice  and hearing, that any such corpo-
ration or association, having such a permit, has failed to  comply  with
the  requirements of this section, [he] THE SUPERINTENDENT may revoke or

A. 7807--A                         10

suspend such permit or order it to cease making  new  annuity  contracts
until it complies. The superintendent may, in [his] THE SUPERINTENDENT'S
discretion, either dispense with the requirement of annual statements by
such  corporations or associations or accept a sworn statement by two or
more of its principal officers, in such form as will satisfy the  super-
intendent that the requirements of this section are being complied with.
  S  18.  Section  1110  of the insurance law is amended by adding a new
subsection (f) to read as follows:
  (F) THE SUPERINTENDENT MAY, IN THE SUPERINTENDENT'S DISCRETION,  EXAM-
INE  ANY SUCH CORPORATION OR ASSOCIATION THAT IS EXEMPT FROM OBTAINING A
PERMIT PURSUANT TO SUBSECTION (D) OF THIS SECTION.
  S 19. Paragraph 1 of subsection (a) of section 307  of  the  insurance
law is amended to read as follows:
  (1)  Every insurer and every fraternal benefit society [which] THAT is
authorized to do an insurance business in this state, and every  pension
fund,  retirement  system or state fund [which] THAT is required, by any
law of this state, to report to the  superintendent  or  is  subject  to
[his]  THE SUPERINTENDENT'S examination, shall file in the office of the
superintendent, annually on or before the first day of March,  a  state-
ment,  to be known as its annual statement, executed in duplicate, veri-
fied by the oath of at least two of its principal officers, showing  its
condition  at last year-end or, in the case of a pension fund or retire-
ment system, on such date in the year next preceding as the  superinten-
dent may approve. Such statement shall be in such form and shall contain
such  matters as the superintendent shall prescribe.  THE SUPERINTENDENT
MAY ACCEPT AN ELECTRONIC FILING OF A FOREIGN INSURER'S ANNUAL  STATEMENT
THAT  DOES  NOT  CONTAIN  THE SIGNATURES OR VERIFICATION OF THE OFFICERS
PROVIDED THAT THE FOREIGN INSURER HAS FILED, IN ITS STATE  OF  DOMICILE,
AN  ANNUAL STATEMENT VERIFIED BY THE OATH OF AT LEAST TWO OF ITS PRINCI-
PAL OFFICERS. IN SUCH A SITUATION, THE OFFICERS OF THE  FOREIGN  INSURER
SHALL BE DEEMED TO HAVE GIVEN THEIR OATH IN THIS STATE.
  S  20.  Subsection (b) of section 7428 of the insurance law is amended
to read as follows:
  (b) If the amount of any such REAL OR PERSONAL PROPERTY OWNED  BY,  OR
debt  or  claim  owed by or to, such insurer does not exceed twenty-five
[hundred] THOUSAND dollars, THEN the superintendent may SELL OR  DISPOSE
OF  ALL  OR  ANY PART OF THE REAL OR PERSONAL PROPERTY, OR compromise or
compound the [same] DEBT OR CLAIM, upon such terms as  [he]  THE  SUPER-
INTENDENT  may  deem  for  the  best  interests  of such insurer without
obtaining the approval of the court.
  S 21. Subsection (g) of section 7602 of the insurance law, as  amended
by chapter 578 of the laws of 1990, is amended to read as follows:
  (g) "Allowed claim" means a claim [which] THAT has been allowed by the
[court]  SUPERINTENDENT  in  a  proceeding under article seventy-four of
this chapter OR, IF SUCH CLAIM EXCEEDS TWENTY-FIVE THOUSAND DOLLARS, HAS
BEEN ALLOWED BY THE COURT IN A PROCEEDING UNDER ARTICLE SEVENTY-FOUR  OF
THIS CHAPTER, and which is based upon:
  (1)  a  policy  insuring property or risks located or resident in this
state, or
  (2) a policy issued in this state to a resident of this state insuring
property or risks, located or resident outside this state but within the
United States, its possessions and  territories,  and  Canada,  provided
that, with respect to policies covered under this paragraph:
  (A) irrespective of the amount of claim [which] THAT has been allowed,
no  person shall recover any amount from this fund until such person has
exhausted all rights of recovery from any security fund, guaranty  asso-

A. 7807--A                         11

ciation,  or  the  equivalent in the jurisdiction where such property or
risks are located or resident; and, thereafter, such  person's  recovery
from this fund, when combined with amounts recovered or recoverable from
any other security fund, guaranty association, or the equivalent in such
jurisdiction,  shall  not exceed the maximum limit available to a quali-
fied claimant for a recovery solely from such other security fund, guar-
anty association, or the equivalent; and
  (B) the aggregate limit for all claims arising out of any one  policy,
excluding  claims  with respect to property or risks located or resident
in this state, shall not exceed the lesser of the aggregate limit of the
policy or five million dollars.
  S 22. This act shall take effect immediately, except that:
  (1) sections four, eleven, and sixteen of this act shall  take  effect
on the ninetieth day after this act shall have become a law; and
  (2)  the amendments to subsection (d) of section 1505 of the insurance
law made by section six of this act, the amendments to section  1608  of
the  insurance law made by section twelve of this act and the amendments
to section 1712 of the insurance law made by section fifteen of this act
shall apply only to transactions entered into on or after the  effective
date of this act.