Source: http://www.dfs.ny.gov/insurance/ogco2002/rg021130.htm
Timestamp: 2017-09-21 15:51:14
Document Index: 145347213

Matched Legal Cases: ['§ 1202', '§ 1202', '§ 1202', '§ 1202', '§ 1202', '§ 1202', '§ 1202', '§ 1202']

N.Y. Ins. Law § 1202 "Independent Director"
The Office of General Counsel issued the following informal opinion on November 27, 2002, representing the position of the New York State Insurance Department.
Re: N.Y. Ins. Law § 1202 "Independent Director"
Does a retired corporate officer, who is also a director of the company for which he had been employed, qualify as an "independent director" under N.Y. Ins. Law § 1202 (McKinney 2000)?
Whether a retired corporate officer, who is also a director of the company for which he had been employed, qualifies as an "independent director" under N.Y. Ins. Law § 1202 depends upon whether such person maintains continuing connections with the company, which would render it unlikely that the director could function in an independent manner.
The inquiry was submitted by the General Counsel for an authorized life insurer in New York. A corporate officer, who is also a director of such insurer, is retiring at the end of this year. The General Counsel stated that 100% of the stock of such company is held by another life insurer, which is itself a 100% subsidiary of a holding corporation. It was further stated that none of the stock of any of the companies in the group is listed on any stock exchange, and that no company stock is publicly held. The General Counsel inquired as to whether the corporate officer would qualify as an "independent director" by virtue of his retirement from the insurance company for which he is acting as a director.
N.Y. Ins. Law § 1202(b)(1) (McKinney 2000) states in relevant part:
Subject to item (v) of subparagraph (B) of paragraph five of subsection (a) of section one thousand two hundred one of this article, not less than one-third of the directors of a domestic stock life insurance company and not less than one-third of the members of each committee of the board of directors of any domestic life insurance company shall be persons who are not officers or employees of such company or of any entity controlling, controlled by, or under common control with such company and who are not beneficial owners of a controlling interest in the voting stock of such company or any such entity[.]
This section requires that not less than one-third of the directors of a domestic stock life insurance company, and not less than one-third of the members of each committee of the board of directors of any domestic life insurance company, be "independent directors."
In the memorandum in support of the 1983 Governors Bill for the former Section 48-b (now § 1202(b)), the Department noted that the election of non-management directors was intended to bring "strength and objectivity to the boards of New York life insurance companies and better enable those boards to monitor management."
In a prior opinion, the Department determined that a retired officer of a holding company and its insurer subsidiaries, who was receiving a pension and payments from a profit sharing plan, an annual fee of $10,000 for serving as a non-director member of the Finance Committee of the Board of Directors of the holding company, and owned less than 10,000 shares of the common stock of the holding company, was unlikely to be able to function in an independent manner, and that he was a de facto officer or employee of the insurer, and may have not been considered an "independent director" within the context of N.Y. Ins. Law § 1202.
Thus, whether the corporate officer, of whom inquiry was made, will qualify as an "independent director" under N.Y. Ins. Law § 1202 after he retires depends upon whether he maintains continuing connections with the company that would render it unlikely that he could function in an independent manner.
For further information you may contact Senior Attorney Sally Geisel at the New York City Office.