N.Y. ISC Law § 1608 — New York Code / Act ISC / Article 16 / Section 1608
Relationships and transactions between parent and subsidiary
Status: in_force

§ 1608. Relationships and transactions between parent and subsidiary.\n(a) The business operations, corporate proceedings and fiscal and\naccounting records of subsidiaries organized or acquired pursuant to\nthis article shall be conducted or maintained so as to assure the\nseparate legal and operating identities of the parent and subsidiary,\nbut nothing herein shall preclude arrangements for common management or\nthe cooperative or joint use of personnel, property or services\notherwise consistent with this chapter.\n  (b) All transactions between the insurer and its subsidiaries shall be\nfair and equitable, charges or fees for services performed shall be\nreasonable and all expenses incurred and payments received shall be\nallocated to the insurer on an equitable basis in conformity with\ncustomary insurance accounting practices consistently applied.\n  (c) The books, accounts and records of each party to all such\ntransactions shall be so maintained as to clearly and accurately\ndisclose the nature and details of the transactions, including such\naccounting information as is necessary to support the reasonableness of\nthe charges or fees to the respective parties.\n  (d) The superintendent may promulgate regulations relating to such\nsubsidiaries, their management and their relationships and transactions\nwith their parent insurance companies and their affiliates to the extent\nthat the same may affect the operations, management or financial\ncondition of domestic insurers. Subsidiaries that are persons within a\nholding company system, as such terms are defined in article fifteen of\nthis chapter, shall be subject to the provisions of such article.\n  (e) The following transactions between a domestic insurer and any\nsubsidiary may not be entered into unless the insurer has notified the\nsuperintendent in writing of its intention to enter into any such\ntransaction at least thirty days prior thereto, or with regard to\nreinsurance treaties or agreements at least forty-five days prior\nthereto, or such shorter period as the superintendent may permit, and\nthe superintendent has not disapproved it within such period:\n  (1) sales, purchases, exchanges, loans, extensions of credit, or\ninvestments with a subsidy, provided the transactions are equal to or\nexceed the lesser of three percent of the insurer's admitted assets or\ntwenty-five percent of surplus to policyholders at last year-end;\n  (2) loans or extensions of credit to any person who is not a\nsubsidiary, where the insurer makes loans or extensions of credit with\nthe agreement or understanding that the proceeds of such transactions,\nin whole or in substantial part, are to be used to make loans or\nextensions of credit to, purchase assets of, or make investments in, any\nsubsidiary of the insurer making the loans or extensions of credit,\nprovided the transactions are equal to or exceed the lesser of three\npercent of the insurer's admitted assets or twenty-five percent of\nsurplus to policyholders at last year-end;\n  (3) reinsurance treaties or agreements with a subsidiary that the\ninsurer has not otherwise submitted to the superintendent, provided,\nhowever, the insurer need not submit a copy of a reinsurance agreement\nunless requested by the superintendent where the reinsurance premium or\na change in the insurer's liabilities, or the projected reinsurance\npremium or a change in the insurer's liabilities in any of the next\nthree years, is less than five percent of the insurer's surplus to\npolicyholders at last year-end. This shall include agreements that may\nrequire, as consideration, the transfer of assets from an insurer to a\nnon-subsidiary, if an agreement or understanding exists between the\ninsurer and non-subsidiary that any portion of the assets will be\ntransferred to one or more subsidiaries of the insurer; and\n  (4) management agreements, service contracts, tax allocation\nagreements, guarantees, and all cost-sharing arrangements.\n