Source: http://www.maine.gov/pfr/insurance/hearing_decisions/03-439.htm
Timestamp: 2014-03-11 08:29:15
Document Index: 67684985

Matched Legal Cases: ['§ 222', '§ 222', '§ 222', '§ 222', '§ 222', '§ 236', '§ 11001', '§ 11004']

Document Docket No. 03-439 : Hearing Decision : Bureau of Insurance
> Administrative & Enforcement Actions > INS 03-439 : Hearing Decision
APPLICATION OF SELECTIVE INSURANCE GROUP, INC. FOR APPROVAL OF ACQUISITION OF CONTROL OF CADILLAC MOUNTAIN INSURANCE COMPANY PURSUANT TO STOCK PURCHASE AGREEMENT
Docket No. INS-03-439
Eric A. Cioppa, Deputy Superintendent of the Maine Bureau of Insurance, issues this Decision and Order in the above-captioned proceeding. Superintendent Alessandro A. Iuppa delegated all legal authority for the procedural processing and decision making with respect to this proceeding to Deputy Superintendent Cioppa by Order Delegating Authority, dated November 5, 2003.
The proceeding was instituted upon the application by Selective Insurance Group, Inc. (“Selective”), a New Jersey insurance holding company, for approval pursuant to 24-A M.R.S.A. §§ 222 and 3476, of a Stock Purchase Agreement for the acquisition of control of Cadillac Mountain Insurance Company (“Cadillac Mountain” or “the Company”), a Maine domestic insurance company, from its parent corporation Acadia Insurance Company (“Acadia”), a Maine domestic insurance company. The parties to the Stock Purchase Agreement desire to close on the proposed acquisition on December 31, 2003. Upon closing, Selective will change the name of Cadillac Mountain to Selective Insurance Company of New England.
If the proposed acquisition is approved, Selective will acquire from Acadia five hundred shares of common stock of Cadillac Mountain, which is all of the Company’s issued and outstanding shares of capital stock. Pursuant to bulk reinsurance agreement effective October 1, 2003, Acadia has assumed all of Cadillac Mountain’s liabilities and obligations arising under or in connection with all policies of insurance and contracts of reinsurance written or reinsured by the Company and assumed all other non-insurance liabilities and obligations of the Company of every nature relating to the business conducted by Cadillac Mountain prior to closing. Also at or prior to closing, Cadillac Mountain will transfer to Acadia by dividend or other distribution or return of capital certain assets of the Company, but at all times Cadillac Mountain will maintain the amount necessary to satisfy the statutory capital and surplus requirements for licensure to transact insurance business in the State of Maine.
Selective filed the Form A Statement, including Exhibits and Appendices, with the Superintendent by correspondence dated October 29, 2003.1 Thereupon, the Deputy Superintendent issued a Notice of Pending Proceeding and Hearing on November 7, 2003. In the Notice, interested persons were provided an opportunity to submit an application to intervene as a full party in the proceeding, but no one chose to do so.
On November 20, 2003 the First Discovery Request of the Deputy Superintendent was issued. Selective filed certain supplemental information, including its Business Plan and various intercompany agreements, by correspondence dated November 19, 2003. Selective’s responses to the First Discovery Request were filed by correspondence dated December 4, 2003. Acadia’s responses to the First Discovery Request were filed by correspondence dated December 1, 2003.
The public hearing was held as scheduled at 9:00 a.m. on December 16, 2003. No persons from the public attended or participated in the public hearing.
III. THE RECORD
At the hearing, the Deputy Superintendent offered and admitted the following materials into the record of the proceeding:
Hearing Officer Exhibit 1: Comprised of Selective’s Form A filing, including Exhibits and Appendices, submitted by correspondence dated October 29, 2003.
Hearing Officer Exhibit 2: Comprised of Selective’s supplemental information including the Business Plan and various intercompany agreements, submitted by correspondence dated November 19, 2003.
Hearing Officer Exhibit 3: Comprised of Selective’s responses to information requests in this proceeding, specifically responses to the First Discovery Request of the Deputy Superintendent, submitted by correspondence dated December 4, 2003.
Hearing Officer Exhibit 4: Comprised of Acadia’s responses to information requests in this proceeding, specifically responses to the First Discovery Request of the Deputy Superintendent, submitted by correspondence dated December 1, 2003.
Hearing Officer Exhibit 5: Comprised of the Bulk Reinsurance Agreement between Cadillac Mountain and Acadia, dated October 1, 2003.
In addition to the foregoing, Selective’s witness, Dale A. Thatcher, Executive Vice President, Chief Financial Officer and Treasurer, provided oral testimony as part of the record. On behalf of Acadia and Cadillac, Charles A. Hamblen, Vice President of Finance and Treasurer for both Companies, provided oral testimony for the record. IV. STANDARD OF REVIEW
As identified in the Notice of Pending Proceeding and Hearing, the legal standard of review for consideration of the pending application include the following under 24-A M.R.S.A. §§ 222(7)(A) and 3476(2): (1) whether, after the proposed acquisition, Cadillac Mountain (to be renamed Selective Insurance Company of New England) could satisfy the requirements for the issuance of a certificate of authority according to requirements in force at the time of the issuance, or last renewal or continuation of its certificate of authority to do the insurance business which it intends to transact in the State of Maine; (2) whether the effect of the proposed acquisition may be substantially or materially to lessen competition in insurance or the insurance business in the State of Maine or elsewhere as to the kinds of insurance involved, or would materially tend to create a monopoly as to such business therein, or would violate the laws of the State of Maine or of the United States relating to monopolies or restraints of trade;
(3) whether the financial condition of Selective is such as would jeopardize the financial stability of Cadillac Mountain or prejudice the interest of its policyholders;
(4) whether Selective’s proposed acquisition or proposals to make any major change in the business or corporate structure or management of Cadillac Mountain are unfair or prejudicial to policyholders;
(5) whether the competence, experience, and integrity of Selective’s directors and officers indicate that it would not be in the interest of policyholders or the public to permit them to control the operation of Cadillac Mountain; and whether Selective’s directors and officers are qualified by character, experience, and financial responsibility to control and operate Cadillac Mountain, or cause it to be operated in a lawful and proper manner; (6) whether the proposed acquisition would tend to affect adversely the contractual obligations of Cadillac Mountain or its ability and tendency to render service in the future to its policyholders and the public; and (7) whether the interests of Cadillac Mountain or its stockholders would be impaired through the proposed acquisition.
In addition to the legal standards of review under 24-A M.R.S.A. §§ 222(7)(A) and 3476(2) as identified in items (1) through (7) above, the Deputy Superintendent, in his discretion, may consider such other relevant issues identified by parties or otherwise. No other issues were presented for consideration.
Based on the testimonial and documentary evidence presented at the hearing, and upon a review of the record of this proceeding, the Deputy Superintendent finds that no issues of material concern exist with respect to Selective’s abilities to satisfy the legal standards for approval set forth in 24-A M.R.S.A. §§ 222(7)(A) and 3476(2), summarized as follows:
(1) No evidence was presented to the contrary, and the Deputy Superintendent finds, that Cadillac Mountain (to be renamed Selective Insurance Company of New England) can satisfy the requirements for the issuance of a certificate of authority according to requirements in force at the time of the issuance, or last renewal or continuation of its certificate of authority to do the insurance business which it intends to transact in the State of Maine. (2) No evidence was presented that demonstrates, and the Deputy Superintendent does not find, that any aspect of the proposed acquisition will substantially or materially lessen competition in insurance or the insurance business in the State of Maine or elsewhere as to the kinds of insurance involved, or would materially tend to create a monopoly as to such business therein, or would violate the laws of the State of Maine or of the United States relating to monopolies or restraints of trade. (3) No evidence was presented that demonstrates, and the Deputy Superintendent does not find, that any aspect of the proposed acquisition would jeopardize the financial stability of Cadillac Mountain or prejudice the interest of its policyholders.
(4) No evidence was presented that demonstrates, and the Deputy Superintendent does not find, that Selective’s proposed acquisition or proposals to make any other major change in the business or corporate structure or management of Cadillac Mountain are unfair or prejudicial to policyholders.
(5) No evidence was presented to the contrary, and the Deputy Superintendent finds, that the competence, experience, and integrity of Selective’s directors and officers indicate that it would be in the interest of policyholders or the public to permit them to control the operation of Cadillac Mountain; and that Selective’s directors and officers are qualified by character, experience, and financial responsibility to control and operate Cadillac Mountain, or cause it to be operated, in a lawful and proper manner. (6) No evidence was presented that demonstrates, and the Deputy Superintendent does not find, that the proposed acquisition would tend to affect adversely the contractual obligations of Cadillac Mountain or its ability and tendency to render service in the future to its policyholders and the public. (7) No evidence was presented that demonstrates, and the Deputy Superintendent does not find, that the interests of Cadillac Mountain or its stockholders would be impaired through the proposed acquisition.
For all of the foregoing reasons, the Deputy Superintendent concludes that Selective has met the legal standards for approval set forth in 24-A M.R.S.A. §§ 222(7)(A) and 3476(2).
The application of Selective Insurance Group, Inc. to acquire control of Cadillac Mountain Insurance Company from its parent corporation, Acadia Insurance Company, is APPROVED, subject to the following conditions:
Selective shall file with the Superintendent the name and address of Cadillac Mountain / Selective Insurance Company of New England’s statutory home office located in the State of Maine (including the name and address of its agent for service of process located in the State of Maine).
If the Superintendent or his designee(s) find it necessary for any reason to travel out-of-state for purposes of examining the books and records of Cadillac Mountain / Selective Insurance Company of New England or for any other valid regulatory purpose, Cadillac Mountain / Selective Insurance Company of New England or its parent company, Selective, shall bear all reasonable costs related thereto.
VII. NOTICE OF APPEAL RIGHTS This Decision and Order is a final agency action of the Superintendent of Insurance within the meaning of the Maine Administrative Procedure Act. It may be appealed to the Superior Court in the manner provided by 24-A M.R.S.A. § 236, 5 M.R.S.A. § 11001, et seq. and M.R. Civ. P. 80C. Any party to the proceeding may initiate an appeal within thirty days after receiving this notice. Any aggrieved non-party whose interests are substantially and directly affected by this Decision and Order may initiate an appeal within forty days of the issuance of this decision. There is no automatic stay pending appeal; application for stay may be made in the manner provided in 5 M.R.S.A. § 11004.
1 In its October 29th correspondence, Selective requested confidentiality for the Stock Purchase Agreement entered into between Acadia and Selective, and for the information contained in Item 4 of the Form A Statement. At the public hearing on December 16, 2003, Selective withdrew its request for confidentiality. Accordingly, the entire record of this proceeding is public.