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California Insurance Code Section 1215.2

Legal Research Home > California Laws > Insurance Code > California Insurance Code Section 1215.2

1215.2.  (a) No person shall make a tender offer for, or a request
or invitation for tenders of, or enter into an agreement to exchange
securities for or acquire in the open market, any voting security, or
any security convertible into a voting security, of a domestic
insurer or of any other person controlling a domestic insurer, if the
other person is not substantially engaged either directly or through
its affiliates in any businesses other than that of insurance, if,
as a result of the consummation thereof, the person would, directly
or indirectly, acquire control of the insurer, and no person shall
enter into an agreement to merge with or otherwise to acquire control
of a domestic insurer, unless, at the time copies of the offer,
purchase, request, or invitation are first published, sent, or given
to security holders or the agreement or transaction is entered into,
as the case may be, the person has filed with the commissioner, and
has sent to the insurer, a statement containing the following
information, and any additional information as the commissioner may
by rule or regulation prescribe as necessary or appropriate in the
public interest or for the protection of policyholders or
shareholders:
   (1) 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.
   (2) The source and amount of the funds or other consideration used
or to be used in making the purchases or in effecting the exchange,
merger, or other acquisition of control, and, if any part of the
funds or other consideration has been or is to 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 of the parties thereto.
However, where a source of funds is a loan made in the lender's
ordinary course of business, if the person filing the statement so
requests, the name of the lender shall not be made available to the
public.
   (3) Any plans or proposals which those persons may have to
liquidate the insurer, to sell its assets or merge it with any
person, or to make any other major change in its business or
corporate structure or management.
   (4) The amount of each class of voting securities or securities
which may be converted into voting securities of the insurer or the
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 the insurer or the controlling person
concerning which there is a right to acquire beneficial ownership, by
each person and by each affiliate of each person, together with the
name and address of each affiliate.
   (5) Information as to any 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 the
contracts, arrangements, or understandings have been entered into,
and giving the details thereof.
   All requests or invitations for tenders or advertisements making a
tender offer or requesting or inviting tenders of the voting
securities of the insurer or the controlling person made by or on
behalf of the person, and a copy of the agreement to exchange or
otherwise acquire securities or to merge with or otherwise to acquire
control of the insurer, shall be filed with the commissioner and
sent to the insurer as a part of the statement and shall contain the
information contained in the statement as the commissioner may by
rule or regulation prescribe. Copies of any additional material
soliciting or requesting the tender offers subsequent to the initial
solicitation or request, and copies of any amendment to the
agreement, shall contain the information as the commissioner may by
rule or regulation prescribe as necessary or appropriate in the
public interest or for the protection of policyholders or
shareholders, and shall be filed with the commissioner and sent to
the insurer not later than the time copies of the material are first
published or sent or given to security holders or the amendment is
entered into.
   (b) If the person required to file the statement referred to in
subdivision (a) is a partnership, limited partnership, syndicate, or
other group, the commissioner may require that the information called
for by paragraphs (1) to (5), inclusive, of subdivision (a) shall be
given with respect to: (1) each partner of the partnership or
limited partnership, (2) each member of the syndicate or group, and
(3) each person who controls the partner or member. If a person
referred to in paragraph (1), (2), or (3) of this subdivision is a
corporation or the person required to file the statement referred to
in subdivision (a) is a corporation, the commissioner may require
that the information called for by paragraphs (1) to (5), inclusive,
of subdivision (a) shall be given with respect to the corporation and
each officer and director of the corporation and each person who is
directly or indirectly the beneficial owner of more than 10 percent
of the outstanding voting securities of the corporation.
   (c) If any tender offer, request, or invitation for tenders, or
agreement to exchange or otherwise acquire securities or to merge or
otherwise acquire control referred to in subdivision (a), is proposed
to be made by means of a registration statement under the federal
Securities Act of 1933, or in circumstances requiring the disclosure
of similar information under the federal Securities Exchange Act of
1934, or under a state law requiring similar registration or
disclosure, the person required to file the statement referred to in
subdivision (a) may file that registration statement with the
commissioner as full satisfaction of the requirement in subdivision
(a).
   (d) The purchases, exchanges, mergers, or other acquisitions of
control referred to in subdivision (a) may not be made until the
commissioner approves the purchases, exchanges, mergers, or other
acquisitions of control. The commissioner shall approve or disapprove
the transaction on or before the latter of 60 days after the
statement required by subdivision (a) has been filed with the
commissioner or, if a hearing is held pursuant to subdivision (f), 30
days after the close of the hearing held pursuant to subdivision
(f). The commissioner may disapprove the transaction if the
commissioner finds any of the following:
   (1) After the change of control the domestic insurer referred to
in subdivision (a) could not satisfy the requirements for the
issuance of a license to write the line or lines of insurance for
which it is presently licensed.
   (2) The purchases, exchanges, mergers, or other acquisitions of
control would substantially lessen competition in insurance in this
state or create a monopoly therein.
   (3) The financial condition of an acquiring person might
jeopardize the financial stability of the insurer, or prejudice the
interests 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 not fair and reasonable 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.
   (e) The commissioner shall require the payment of two thousand
three hundred sixty dollars ($2,360) as a fee for filing an
application under this section, the amount to accompany the
application.
   (f) (1) The commissioner may hold a public hearing after the
statement required by subdivision (a) is filed. If a hearing is held,
at least 20 days' notice shall be given by the commissioner to the
person filing the statement. Not less than seven days' notice of the
public hearing shall be given by the person filing the statement to
the insurer and to such other persons as may be designated by the
commissioner. At the hearing, the person filing the statement, the
insurer, any person to whom notice of hearing was sent, and any other
person whose interest may be affected, shall have the right to
present evidence, examine and cross-examine witnesses, and offer oral
and written arguments, and in connection therewith shall be entitled
to conduct proceedings in the same manner as is presently allowed
under the Administrative Procedure Act (Chapter 5 (commencing with
Section 11500) of Part 1 of Division 3 of Title 2 of the Government
Code). All discovery proceedings shall be concluded not later than
three days prior to the commencement of the public hearing.
   (2) If the proposed acquisition of control will require the
approval of more than one commissioner, the public hearing referred
to in paragraph (1) may be held on a consolidated basis upon request
of the person filing the statement referred to in subdivision (a).
The person shall file the statement referred to in subdivision (a)
with the National Association of Insurance Commissioners (NAIC)
within five days of making the request for a public hearing. A
commissioner may opt out of a consolidated hearing, and shall provide
notice to the applicant of the opt-out within 10 days of the receipt
of the statement referred to in subdivision (a). A hearing conducted
on a consolidated basis shall be public and shall be held within the
United States before the commissioners of the states in which the
insurers are domiciled. The commissioners shall hear and receive
evidence. Any commissioner may attend the hearing, in person or by
telecommunication.
   (g) This section shall not apply to any offer for or request or
invitation for tenders of any voting securities, or any agreement to
exchange securities for or otherwise acquire control, if the insurer
whose shares are to be acquired remains a direct or indirect
subsidiary of the same ultimate controlling company person within the
insurer's insurance holding company system, neither the acquiring
person nor any affiliate acquires or incurs any debt, guarantee, or
other liability related to the transaction, and no shares are
purchased by or sold to a person who is not an affiliated person in
that insurance holding company system, or if, and to the extent that,
the commissioner, by rule or regulation or by order, exempts the
offer, request, invitation, or agreement from the provisions of this
section as not comprehended within the purposes thereof.
   (h) For purposes of this section, any controlling person of a
domestic insurer seeking to divest its controlling interest in the
domestic insurer, in any manner, shall file with the commissioner,
with a copy to the insurer, confidential notice of its proposed
divestiture at least 30 days prior to the cessation of control. The
commissioner shall determine those instances in which the party or
parties seeking to divest a controlling interest in an insurer shall
be required to file for and obtain approval of the transaction. The
information shall remain confidential until the conclusion of the
transaction unless the commissioner, in his or her discretion,
determines that confidential treatment will interfere with
enforcement of this article. If the statement referred to in
subdivision (a) of Section 1215.2 is otherwise filed, this
subdivision shall not apply.

Last modified: February 22, 2013