502
Opinion of the Court
ests of an insurance company's shareholders, it did not fall within the scope of the McCarran-Ferguson Act. Ibid. The Arizona statute, however, also required the Director, before granting approval, to make sure that the proposed merger "would not 'substantially reduce the security of and service to be rendered to policyholders.' " Id., at 462. The Court observed that this section of the statute "clearly relates to the 'business of insurance.' " Ibid. But because the "paramount federal interest in protecting shareholders [was] perfectly compatible with the paramount state interest in protecting policyholders," id., at 463, the Arizona statute did not preclude application of the federal securities laws.
In the present case, on the other hand, there is a direct conflict between the federal priority statute and Ohio law. Under the terms of the McCarran-Ferguson Act, 15 U. S. C. § 1012(b), therefore, federal law must yield to the extent the Ohio statute furthers the interests of policyholders.
Minimizing the analysis of National Securities, petitioners invoke Royal Drug and Pireno in support of their argument that the liquidation of an insolvent insurance company is not part of the "business of insurance" exempt from pre-emption under the McCarran-Ferguson Act. Those cases identified the three criteria, noted above, that are relevant in determining what activities constitute the "business of insurance." See Pireno, 458 U. S., at 129. Petitioners argue that the Ohio priority statute satisfies none of these criteria. According to petitioners, the Ohio statute merely determines the order in which creditors' claims will be paid, and has nothing to do with the transfer of risk from insured to insurer. Petitioners also contend that the Ohio statute is not an integral part of the policy relationship between insurer and insured and is not limited to entities within the insurance industry because it addresses only the relationship between policy-holders and other creditors of the defunct corporation.
To be sure, the Ohio statute does not directly regulate the "business of insurance" by prescribing the terms of the
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