147 
insurer or national agency or its subsidiaries or af-
filiates; 
(16) to make donations and otherwise devote its 
resources for the public welfare or for charitable, sci-
entific, educational, humanitarian, philanthropic, or 
religious purposes; 
(17) to serve as a promoter, partner, member, 
associate, or manager of any business entity; 
(18) to provide loss control, advice, exposure 
identification, and reduction strategies, and rec-
ommend and expedite risk financing alternatives; 
(19) to engage in any other lawful activity that 
is necessary or convenient to further its activities 
and affairs; and 
(20) to exercise the powers granted by this Act 
in any State and in any foreign jurisdiction. 
(b) EFFECT ON STATE LAW.—No State may, by stat-
ute, regulation, order, interpretation, or otherwise, prevent 
or restrict a national insurer or national agency from exer-
cising any power conferred by this section or by any regu-
lation authorized by this section. 
(c) SUBSIDIARIES.— 
(1) NATIONAL INSURERS.— 
(A) AUTHORIZATION.— 
VerDate Aug 31 2005 
00:23 Jul 28, 2007
Jkt 059200
PO 00000
Frm 00147
Fmt 6652
Sfmt 6201
E:\BILLS\H3200.IH
H3200
bajohnson on PROD1PC69 with BILLS
148 
(i) IN GENERAL.—A national insurer 
may establish, invest in, or otherwise ac-
quire 1 or more subsidiaries engaged or or-
ganized to engage in any business lawful 
under the laws of the jurisdictions in which 
the subsidiaries are organized. 
(ii) RESTRICTION.—Without the prior 
written approval of the Commissioner, not 
more than 20 percent of the national in-
surer’s assets may be invested in any 1 
subsidiary described in clause (i) and not 
more than 40 percent of a national insur-
er’s assets may be invested in 2 or more 
subsidiaries engaged in such other activi-
ties. 
(B) CALCULATION.—In calculating the 
amount invested by a national insurer in a sub-
sidiary under subparagraph (A), there shall be 
included only the following: 
(i) Total net monies or other consider-
ation expended and obligations assumed by 
the national insurer in the acquisition or 
formation of the subsidiary, including all 
organizational expenses and contributions 
to capital and surplus of the subsidiary 
VerDate Aug 31 2005 
00:23 Jul 28, 2007
Jkt 059200
PO 00000
Frm 00148
Fmt 6652
Sfmt 6201
E:\BILLS\H3200.IH
H3200
bajohnson on PROD1PC69 with BILLS
149 
whether or not represented by the pur-
chase of capital stock or issuance of other 
securities. 
(ii) All amounts expended by the na-
tional insurer in acquiring additional com-
mon stock, preferred stock, debt obliga-
tions, and other securities of the sub-
sidiary. 
(iii) All contributions by the national 
insurer to the capital or surplus of the sub-
sidiary subsequent to its acquisition or for-
mation. 
(C) 
QUALIFICATION
OF
INVESTMENT; 
WHEN DETERMINED.—Whether any investment 
made pursuant to subparagraph (A) meets the 
applicable requirements of such subparagraph 
shall be determined before the investment is 
made by calculating the applicable investment 
limitations as though the investment had al-
ready been made, taking into account the then 
outstanding principal balance on all previous in-
vestments in debt obligations, and the value of 
all previous investments in equity securities as 
of the day they were made, net of any return 
of capital invested, not including dividends. 
VerDate Aug 31 2005 
00:23 Jul 28, 2007
Jkt 059200
PO 00000
Frm 00149
Fmt 6652
Sfmt 6201
E:\BILLS\H3200.IH
H3200
bajohnson on PROD1PC69 with BILLS
150 
(D) EXCEPTION.—The limitations provided 
for in subparagraph (A) shall not apply to in-
vestments by a national insurer in— 
(i) any subsidiary engaged primarily 
in the sale, solicitation, negotiation, and 
underwriting of any line of insurance that 
the national insurer is authorized to sell, 
solicit, negotiate, and underwrite; or 
(ii) any subsidiary whose sole business 
function is to own assets (including other 
subsidiaries) that the national insurer 
itself is authorized to own. 
(E) NOTICE.—A national insurer shall no-
tify the Commissioner, in writing, not later 
than 20 calendar days after establishing, invest-
ing in, or acquiring a subsidiary, unless the 
transaction requires the prior written approval 
of the Commissioner under subparagraph (A). 
(2) NATIONAL AGENCIES.— 
(A) AUTHORIZATION.—A national agency 
may establish, invest in, or otherwise acquire 1 
or more subsidiaries engaged or organized to 
engage in any business activity that is lawful 
for a national agency under this Act. 
VerDate Aug 31 2005 
00:23 Jul 28, 2007
Jkt 059200
PO 00000
Frm 00150
Fmt 6652
Sfmt 6201
E:\BILLS\H3200.IH
H3200
bajohnson on PROD1PC69 with BILLS
151 
(B) NOTICE.—A national agency shall no-
tify the Commissioner, in writing, not later 
than 30 calendar days after establishing, invest-
ing in, or acquiring a subsidiary. 
(d) DIVIDENDS
AND DISTRIBUTIONS
TO SHARE-
HOLDERS.— 
(1) SHAREHOLDER DIVIDENDS AND DISTRIBU-
TIONS PERMITTED.—A national insurer may declare 
and pay dividends or make other distributions in 
cash, bonds, or property on its outstanding shares, 
unless— 
(A) the national insurer is insolvent or 
would be made insolvent by such payment; or 
(B) the declaration, payment, or distribu-
tion would be contrary to any restrictions con-
tained in the charter of the national insurer. 
(2) SOURCE OF SHAREHOLDER DIVIDENDS AND 
DISTRIBUTIONS.—A national insurer may only de-
clare and pay dividends or make other distributions 
out of surplus if the assets of the national insurer 
after such declaration, payment, or distribution is 
not less than the amount of its capital. 
(3) OTHER
PROVISIONS.—Shareholder divi-
dends and distributions made pursuant to this sub-
section shall be subject to— 
VerDate Aug 31 2005 
00:23 Jul 28, 2007
Jkt 059200
PO 00000
Frm 00151
Fmt 6652
Sfmt 6201
E:\BILLS\H3200.IH
H3200
bajohnson on PROD1PC69 with BILLS
152 
(A) the standards set forth in section 
1403(a)(1)(E); and 
(B) the notice requirements of section 
1403(b). 
SEC. 1209. SEPARATE ACCOUNTS OF NATIONAL LIFE IN-
SURER. 
(a) OWNERSHIP.—Any amount allocated by a na-
tional life insurer to a separate account shall be owned 
by the national life insurer, the assets therein shall be the 
property of the national life insurer, and no national life 
insurer by reason of such account shall be or hold itself 
out to be a trustee. 
(b) LIABILITIES.—Assets allocated by a national life 
insurer to a separate account shall not be chargeable with 
liabilities arising out of any other business of the national 
life insurer to the extent so provided in the applicable 
agreements. 
(c) SECURITY INTERESTS PERMITTED.—A national 
life insurer may allow for a security interest to attach to 
assets allocated to a separate account if the security inter-
est is in favor of a creditor of the separate account and 
otherwise allowed under applicable law. 
SEC. 1210. PROTECTED CELLS. 
(a) ESTABLISHMENT.—A national insurer may, in 
connection with an insurance securitization, establish 1 or 
VerDate Aug 31 2005 
00:23 Jul 28, 2007
Jkt 059200
PO 00000
Frm 00152
Fmt 6652
Sfmt 6201
E:\BILLS\H3200.IH
H3200
bajohnson on PROD1PC69 with BILLS