163 
required as security under this section in such form as 
may be prescribed by the Commissioner. 
SEC. 223. RELATIONSHIP TO STATE LAW. 
No State may prevent a State insurer from— 
(1) ceding insurance to a National Insurer or a 
federally licensed reinsurer; or 
(2) establishing an asset or reducing its liabil-
ities as a result of such reinsurance to the same ex-
tent as the State would allow such insurer if the in-
surance were ceded to another State insurer. 
Subtitle D—Acquisitions of Con-
trol; Mergers; Bulk Transfers; 
Domestication 
SEC. 231. ACQUISITION OF CONTROL OF NATIONAL INSUR-
ERS AND NATIONAL AGENCIES. 
(a) DEFINITIONS.—For purposes of this section— 
(1) the terms ‘‘National Insurer’’ and ‘‘Na-
tional Agency’’ include any person controlling a Na-
tional Insurer or National Agency; and 
(2) the term ‘‘person’’ does not include any se-
curities broker holding, in the usual and customary 
broker’s function, less than 20 percent of the voting 
securities of a National Insurer or National Agency 
or of any person which controls a National Insurer 
or National Agency. 
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(b) COMMISSIONER APPROVAL REQUIRED.— 
(1) IN GENERAL.—No person other than the 
issuer shall make a tender offer for, make a request 
or invitation for tenders of, or enter into any agree-
ment to exchange securities for, or acquire, in the 
open market or otherwise, any voting security of a 
National Insurer or National Agency if, after the 
consummation of such transaction, such person 
would, directly or indirectly (or by conversion or by 
exercise of any right to acquire) be in control of the 
National Insurer or National Agency. No person 
shall enter into an agreement to merge with or oth-
erwise acquire control of a National Insurer or Na-
tional Agency or any person controlling a National 
Insurer or National Agency unless, at the time the 
offer, request, or invitation is made or the agree-
ment is entered into, or before the acquisition of the 
securities if no offer or agreement is involved— 
(A) such person has filed with the Com-
missioner and has sent to the National Insurer 
or National Agency, a statement that complies 
with the regulations prescribed under para-
graph (3); and 
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165 
(B) the offer, request, invitation, agree-
ment, or acquisition has been approved by the 
Commissioner. 
(2) SAVINGS PROVISION.—Nothing in this sub-
section shall be construed to prohibit a person from 
making an offer, request, or invitation or entering 
into an agreement to acquire control of a National 
Insurer or National Agency, if such transaction is 
conditioned upon obtaining the approval of the Com-
missioner in accordance with paragraph (1). 
(3) FORM AND CONTENT OF STATEMENT.—The 
Commissioner shall, by regulation, prescribe the 
form and content of the statement to be filed under 
paragraph (1)(A). 
(4) APPROVAL BY COMMISSIONER.—The Com-
missioner shall approve any merger or other acquisi-
tion of control referred to in this subsection unless 
the Commissioner finds that— 
(A) after the acquisition of control, the 
National Insurer or National Agency would not 
be able to satisfy the requirements for the 
issuance of a Federal license to write the line 
or lines of insurance for which the National In-
surer or National Agency was previously li-
censed; 
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166 
(B) the financial condition of any acquir-
ing person may jeopardize the financial stability 
of the National Insurer or National Agency or 
be hazardous to the policyholders of the Na-
tional Insurer; 
(C) the plans or proposals of the acquiring 
person to liquidate the National Insurer or Na-
tional Agency, sell its assets, consolidate or 
merge it with any person, or make any other 
material change in its business or corporate 
structure or management, are unfair and un-
reasonable to policyholders of the National In-
surer and not in the public interest; 
(D) those persons who would control the 
operation of the National Insurer or National 
Agency lack the competence, experience, or in-
tegrity required to protect the interests of pol-
icyholders of the National Insurer or National 
Agency; or 
(E) the acquisition is likely to be haz-
ardous to the insurance-buying public. 
(c) HEARING.— 
(1) IN GENERAL.—The Commissioner may, in 
his sole discretion, hold a hearing on a merger or 
other acquisition of control that is subject to this 
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167 
section and for which a statement has been filed 
under subsection (b)(1)(A). 
(2) PROCEDURES.—A hearing under this sub-
section shall be subject to the procedures under sec-
tion 148, except that the Commissioner may deter-
mine the location of such hearing. 
(d) EXEMPTIONS.—The provisions of this section 
shall not apply to— 
(1) any offer, request, invitation, agreement, or 
acquisition exempted by the Commissioner for not 
having been made or entered into for the purpose, 
and not having the effect, of changing or influencing 
the control of a National Insurer or National Agen-
cy, or as otherwise not comprehended within the 
purposes of this section; or 
(2) a merger, consolidation, or acquisition sub-
ject to section 232. 
(e) VOTING OF SECURITIES.— 
(1) PROHIBITION.—No security which is the 
subject of any agreement or arrangement regarding 
acquisition, or which is acquired or to be acquired, 
in contravention of the provisions of this section may 
be voted at any shareholder’s meeting, or may be 
counted for quorum purposes. 
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168 
(2) EFFECT ON SHARES.—Any action of share-
holders requiring the affirmative vote of a percent-
age of shares may be taken as though the securities 
described under paragraph (1) were not issued and 
outstanding. 
(3) INVALIDATION
OF
ACTION.—No action 
taken at any meeting described under paragraph (1) 
shall be invalidated by the voting of the securities, 
unless— 
(A) the action would affect control of the 
National Insurer or National Agency; or 
(B) such invalidation is ordered by a court. 
(4) ACQUISITION IN CONTRAVENTION OF THIS 
ACT.—If a National Insurer or the Commissioner 
has reason to believe that any security of the Na-
tional Insurer or National Agency has been or is 
about to be acquired in contravention of the provi-
sions of this section, the National Insurer or Na-
tional Agency or the Commissioner may apply to the 
United States district court for the judicial district 
in which the main office of the National Insurer or 
National Agency is located or the United States Dis-
trict Court for the District of Columbia— 
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169 
(A) to enjoin any offer, request, invitation, 
agreement, or acquisition made in contravention 
of this section; 
(B) to enjoin the voting of any security so 
acquired; 
(C) to void any vote of the security already 
cast at any meeting of shareholders; and 
(D) for such other equitable relief as the 
nature of the case and the interest of the Na-
tional Insurer’s policyholders, the creditors and 
shareholders of the National Insurer or Na-
tional Agency or the public may require. 
(f) SEQUESTRATION OF VOTING SECURITIES.— 
(1) IN GENERAL.—If a person has acquired or 
is proposing to acquire any voting securities in viola-
tion of this section, the National Insurer ,National 
Agency or the Commissioner may request the United 
States district court for the judicial district in which 
the main office of the National Insurer is located or 
the United States District Court for the District of 
Columbia to— 
(A) seize or sequester any voting securities 
of the National Insurer or National Agency 
owned directly or indirectly by the person; and 
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170 
(B) issue such order as may be appropriate 
to carry out the provisions of this section. 
(2) SITUS
OF
OWNERSHIP.—Notwithstanding 
any other provision of law, for the purposes of this 
section, the situs of ownership of the securities of 
National Insurers and National Agencies shall be 
deemed to be the State in which the main office of 
the National Insurer or National Agency is located. 
(g) CONFLICT WITH OTHER FEDERAL LAWS.—This 
section shall be interpreted and applied so as not to con-
flict with or supersede the provisions of any other Federal 
law or regulation governing the regulation of holding com-
panies, including financial holding companies (as defined 
in section 2(p) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1841(p)). 
(h) NO DELEGATION PERMITTED.—The Commis-
sioner may not delegate to any insurance self-regulatory 
organization any authority conferred under this section 
with respect to any merger or other acquisition of control 
of a National Insurer. 
SEC. 232. MERGERS, CONSOLIDATIONS, AND ACQUISITIONS 
OF NATIONAL INSURERS. 
(a) NATIONAL INSURER AS RESULTING INSURER.— 
(1) IN GENERAL.—Except as provided under 
subsection (e), a National Insurer may, with the ap-
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171 
proval of the Commissioner, merge, consolidate with, 
acquire all or substantially all the assets of, or as-
sume all or substantially all the liabilities of, another 
National Insurer or a State insurer in a transaction 
in which a National Insurer is the resulting insurer, 
the acquiring insurer, or the assuming insurer, re-
gardless of whether the insurers involved in the 
transaction are in stock form, mutual form, or fra-
ternal form. 
(2) MERGER, CONSOLIDATION, AND
ACQUISI-
TION PROCEDURES.—The Commissioner shall estab-
lish, by regulation, procedures for— 
(A) the merger or consolidation of a Na-
tional Insurer with another National Insurer or 
a State insurer in a transaction in which a Na-
tional Insurer is the resulting insurer; and 
(B) the acquisition or assumption by a Na-
tional Insurer of all or substantially all the as-
sets or liabilities of another National Insurer or 
a State insurer in a transaction in which the 
National Insurer is the acquiring insurer or as-
suming insurer. 
(3) EFFECT OF MERGER OR CONSOLIDATION.— 
Upon the merger or consolidation of a National In-
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172 
surer with another National Insurer or a State in-
surer under this section— 
(A) the corporate existence of each of the 
merging or consolidating insurers shall be 
merged or consolidated into the resulting in-
surer, and the resulting insurer shall be deemed 
to be the same corporation as each insurer par-
ticipating in the merger or consolidation; 
(B) except as provided under subpara-
graph (D), the resulting insurer shall hold and 
be subject to all rights, privileges, liabilities, 
property interests, and other interests and obli-
gations that each insurer participating in the 
merger or consolidation held or was subject to 
immediately prior to the merger or consolida-
tion; 
(C) the resulting insurer shall obtain, in 
accordance with section 203, a Federal license 
for all lines of insurance that it sells, solicits, 
negotiates, or underwrites, except for those 
lines of insurance for which a National Insurer 
participating in the merger or consolidation 
held a Federal license immediately before the 
merger or consolidation; and 
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173 
(D) the resulting insurer shall not hold any 
State license to sell, solicit, negotiate, or under-
write insurance that was held by a State in-
surer participating in the merger or consolida-
tion. 
(4) SPECIAL
AUTHORITY.—The Commissioner 
may, subject to such conditions as the Commissioner 
may prescribe, permit a National Insurer resulting 
from a merger or consolidation under this section to 
retain, hold, or exercise such assets, liabilities, pow-
ers, and authorities that do not conform to the legal 
requirements applicable to National Insurers as the 
Commissioner determines appropriate. 
(b) STATE INSURER AS RESULTING INSURER.— 
(1) IN GENERAL.—Subject to applicable State 
law and such notification procedures as the Commis-
sioner may prescribe by regulation, a State insurer 
may merge with, consolidate with, acquire assets of, 
or assume liabilities of, a National Insurer in a 
transaction in which a State insurer is the resulting 
insurer. 
(2) SAVINGS PROVISION.—Nothing in this sub-
section or in a transaction under this subsection 
shall abrogate any rights, privileges, liabilities, prop-
erty interests, or other interests or obligations that 
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174 
the National Insurer held or was subject to imme-
diately before the transaction. 
(c) EFFECT OF ASSUMPTION OF LIABILITIES.—If the 
liabilities of a National Insurer are assumed by another 
National Insurer or a State insurer in accordance with 
this Act, the National Insurer shall be released from all 
such liabilities upon their assumption by the other Na-
tional Insurer or a State insurer. 
(d) NO DELEGATION PERMITTED.—The Commis-
sioner may not delegate to any insurance self-regulatory 
organization any authority conferred under this section 
with respect to any merger, consolidation, acquisition of 
assets, or assumption of liabilities involving a National In-
surer. 
(e) COORDINATION.—This section shall not apply to 
any bulk transfer (as defined in section 233(a)(2)) that 
is subject to approval of the Commissioner in accordance 
with section 233(b). 
SEC. 233. BULK TRANSFERS. 
(a) DEFINITIONS.—In this section: 
(1) BLOCK OF BUSINESS.—The term ‘‘block of 
business’’ means all those insurance policies of an 
insurer under a particular policy form. 
(2) BULK TRANSFER.—The term ‘‘bulk trans-
fer’’— 
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175 
(A) means the transfer by an insurer to 
another insurer of existing insurance policies 
constituting all or substantially all of 1 or more 
of its lines of business or blocks of business; 
and 
(B) does not include— 
(i) any sale in which the transferring 
insurer retains direct or indirect control of 
the assets supporting the transferred in-
surance policies; 
(ii) any transaction effected by an 
agreement under which the transferring in-
surer continues to remain directly liable to 
the policyholders under the insurance poli-
cies; 
(iii) the substitution of 1 insurer for 
another upon the expiration of insurance 
coverage pursuant to statutory or contrac-
tual requirements and the issuance of a 
new policy of insurance by that insurer; 
(iv) the transfer of policies of insur-
ance pursuant to merger or consolidation 
of 2 or more insurers to the extent that 
those transactions are regulated by statute; 
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176 
(v) any transaction effected by an in-
surer subject to a judicial order of receiver-
ship, liquidation, or rehabilitation; or 
(vi) any transfer of liabilities from 1 
insurer to another under a single group in-
surance policy upon the request of the 
group policyholder. 
(3) PERMITTED
NATIONAL
INSURER.—The 
term ‘‘permitted National Insurer’’ means— 
(A) a State insurer that is converting to a 
National Insurer under section 205; or 
(B) a National Insurer that is being newly 
chartered under section 201 and licensed under 
section 203. 
(4) TRANSFERRED INSURANCE POLICIES.—The 
term ‘‘transferred insurance policies’’ means the in-
surance policies that are subject to the bulk transfer. 
(5) 
TRANSFERRING
INSURER.—The 
term 
‘‘transferring insurer’’ means the insurer in privity 
of contract with the policyholders under the existing 
insurance policies that are subject to the bulk trans-
fer. 
(b) BULK TRANSFERS AUTHORIZED.—The following 
bulk transfers are authorized: 
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177 
(1) A State insurer as the transferring insurer 
and a permitted National Insurer as the assuming 
insurer. 
(2) A permitted National Insurer as the trans-
ferring insurer and a State insurer as the assuming 
insurer. 
(3) A National Insurer as the transferring in-
surer and a National Insurer as the assuming in-
surer. 
(4) A State insurer as the transferring insurer 
and a National Insurer that is not a permitted Na-
tional Insurer as the assuming insurer. 
(5) A National Insurer that is not a permitted 
National Insurer as the transferring insurer and a 
State insurer as the assuming insurer. 
(c) COMMISSIONER APPROVAL.— 
(1) IN GENERAL.—A National Insurer shall not 
effect a bulk transfer as either the transferring in-
surer or the assuming insurer as authorized under 
paragraph (1), (2), (3), or (5) of subsection (b) 
without the prior approval of the Commissioner in 
accordance with such regulations as the Commis-
sioner may prescribe. 
(2) STANDARD OF APPROVAL.—The Commis-
sioner shall approve a bulk transfer under paragraph 
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178 
(1), after notice and a hearing, unless the Commis-
sioner determines that the bulk transfer is likely to 
be hazardous to policyholders of transferred insur-
ance policies, policyholders of the transferring in-
surer, or policyholders of the assuming insurer. 
(d) POLICYHOLDER CONSENT.— 
(1) NO CONSENT REQUIRED.—Notwithstanding 
any other provision of law, a National Insurer may, 
upon the approval of the Commissioner, effect a bulk 
transfer under paragraph (1) or (2) of subsection 
(b) as either the transferring insurer or the assum-
ing insurer without obtaining policyholder consent. 
(2) BETWEEN NATIONAL INSURERS.—Notwith-
standing any other provision of law, a National In-
surer may, upon the approval of the Commissioner, 
effect a bulk transfer under subsection (b)(3) as ei-
ther the transferring insurer or the assuming in-
surer in accordance with the requirements prescribed 
by the Commissioner. Such requirements shall speci-
fy whether policyholder consent to such a bulk trans-
fer is required and, if policyholder consent is re-
quired, the form in which such consent is required 
to be given. 
(3) ADDITIONAL PROVISIONS.—In addition to 
any policyholder consent required by any other appli-
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179 
cable provision of law, the Commissioner may by 
regulation prescribe whether policyholder consent is 
required for a bulk transfer authorized under sub-
section (b)(5) and, if policyholder consent is re-
quired, the form in which such consent is required 
to be given. 
(e) RELEASE FROM LIABILITY.—Upon the comple-
tion of a bulk transfer under this section, the transferring 
insurer shall be released from its obligations under the 
transferred insurance policies. 
(f) STATE LAW.— 
(1) PROHIBITION.—Except as provided in para-
graph (2), a State may not— 
(A) require a National Insurer, a per-
mitted National Insurer, or a State insurer 
to— 
(i) obtain policyholder consent to a 
bulk transfer; or 
(ii) submit the bulk transfer to State 
review or action (including approval and 
disapproval); or 
(B) prevent or significantly interfere with 
a bulk transfer effected pursuant to this sec-
tion. 
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180 
(2) CONSTRUCTION.—Paragraph (1) shall not 
be construed to prohibit any State from— 
(A) collecting, reviewing, and taking action 
(including approval or disapproval) on applica-
tions and other documents or reports con-
cerning a proposed bulk transfer permitted 
under— 
(i) paragraph (2), (4), or (5) of sub-
section (b) to which a State insurer (other 
than a permitted National Insurer) domi-
ciled in that State is a party; or 
(ii) paragraph (4) or (5) of subsection 
(b) to which a State insurer (other than a 
permitted National Insurer), other than a 
State insurer domiciled in that State, is a 
party, if the review or action meets the 
standards set forth in paragraph (3); or 
(B) requiring policyholder consent of a 
proposed bulk transfer permitted under para-
graph (4) or (5) of subsection (b). 
(3) STANDARDS.—A review or action meets the 
standards under this paragraph if it— 
(A) is based on standards that are not 
more onerous than those imposed by the Com-
missioner; 
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