Holding Company System Regulatory Act
PL 93-388 (H.R.7218), enacted 08/24/1974

752 
PUBLIC LAW 93-388-AUG. 24, 1974 
[88 STAT. 
Public Law 93-388 
August 24, 1974 
^ ^ ACT 
[H. R. 7218] 
To improve the laws relating to the regulation of insurance companies in the 
District of Columbia. 
Be it enacted hy the Senate and House of Representatives 
of the 
Holding Com- 
United States of America in Congress assembled. That this Act may 
uiTtory^AcT ^^^ be cited as the "Holding Company System Regulatory Act". 
D.c. Code 35- 
SEC. 2, DEFIXITIONS.—As used in this Act, unless the context other-
1901 note. 
. 
. 
D.C. Code 35- 
^'^^e requires— 
1901. 
(a) "affiliate" (an "affiliate" of, or person '"affiliated" with a 
specific person), means a person that directly, or indirectly 
through one or more intermediaries, controls, or is controlled by 
or is under common control with, the person specified; 
(b) "commissioner" means the Commissioner of the District of 
Columbia or his designated agent; 
(c) "control" (including the terms "controlling", "controlled 
by" and "under common control with") means the possession, 
direct or indirect, of the power to direct or cause the direction of 
the management and policies of a person, whether through the 
ownership of voting securities, by contract other than a commer-
cial contract for goods or nonihanagement services, or otherwise, 
unless the i^ower is the result of an official position with or cor-
porate office held by the person. Control shall be presumed to exist 
if any person, directly or indirectly, owns, controls, holds with the 
power to vote, or holds proxies representing 10 per centum or 
more of the voting securities of any other person; 
(d) "District" means the District of Columbia; 
(e) "insurance holding company system" consists of two or 
more affiliated persons, one or more of which is an insurer; 
(f) "insurer" includes any company defined by section 2, chap-
ter I, of the Life Insurance Act (D.C. Code, sec. 35-302) and by 
section 3, chapter I, of the F'ire and Casualty Act (D.C. Code, sec. 
35-1303), authorized to do the business of insurance in the Dis-
trict, except that it shall not include agencies, authorities, or 
instrumentalities of the United States, its possessions and terri-
tories, the Commonwealth of Puerto Rico, the District of Colum-
bia, or a State or political subdivision of a State ; 
(g) "person" is an individual, a corporation, a partnership, an 
association, a joint stock company, a trust, an unincorporated 
organization, any similar entity, or any combination of the fore-
going acting in concert, but shall not include any securities broker 
performing no more than the usual and customary broker's 
function ; 
(h) "securityholder" of a specified person is one who owns any 
security of such person, including common stock, preferred stock, 
debt obligations, and any other security convertible into or evi-
dencing the right to acquire any of the foregoing; 
(i) "subsidiary" of a specified person is an affiliate controlled 
by such person clirectly, or indirectly through one or more inter-
mediaries; and 
(j) "voting security" includes any security convertible into or 
evidencing a right to acquii-e a voting security. 
88 STAT. ] 
PUBLIC LAW 93-388-AUG. 24, 1974 
753 
SUBSIDIARIES OF 
INSURERS 
SEC. 3. (a) AUTHORIZATION.—Any domestic insurer, either by itself 
or in cooperation with one or more persons, may, subject to the limita-
tion stated in subsection (b) of this section, organize or acquire one or 
more subsidiaries. Such subsidiaries may conduct any kind of business 
or businesses and their authority to do so shall not be limited by reason 
of the fact that they are subsidiaries of a domestic insurer. 
(b) LrMiTED ADDITIONAL INVESTMENT AUTHORITY.— (1) The total 
amount which a domestic insurer may invest in the common stock, pre-
ferred stock, debt obligations, and other securities of the subsidiaries 
referred to in subsection (a) of this section shall not exceed the lesser 
of (A) 5 per centum of such insurer's assets, or (B) in the case of a 
capital stock company, 50 per centum of the excess of its capital, sur-
plus, and contingency reserves over the then required statutory mini-
mum capital and surplus, or, in the case of a mutual company, 50 per 
centum of the excess of its surplus and contingency reserves over the 
then required statutory minimum surplus. 
(2) In calculating the amount of such investments, there shall be 
included (A) total net moneys or other consideration expended and 
obligations assumed in the acquisition or formation of a subsidiary, 
including all organizational expenses and contributions to capital 
and surplus of such subsidiary, whether or not represented by the 
purchase of capital stock or issuance of other securities, and (B) all 
amounts expended in acquiring additional common stock, preferred 
stock, debt obligations, and other securities, and all contributions to 
the capital or surplus of a subsidiary subsequent to its acquisition or 
formation. 
(c) 
EXEMPTIONS FROM INVESTMENT RESTRICTIONS.—The invest-
ments permitted under this section shall be in addition to the invest-
ments in common stock, preferred stock, debt obligations, and other 
securities permitted under sections 35 and 41 of chapter III of 
the Life Insurance Act (D.C. Code, sees. 35-535 and 35-541) and 
section 18, chapter II, of the Fire and Casualty Act (D.C. Code, sec. 
35-1321), and the investments under this section shall not be subject 
to any of the otherwise applicable restrictions or prohibitions con-
tained in the aforesaid sections of law applicable to such investments 
of insurers. 
(d) QUALIFICATIONS or INVESTMENT : W H E N DETERMINED.—Whether 
any investment pursuant to this section meets the applicable require-
ments thereof is to be determined immediately after such investment 
is made, taking into account the then outstanding principal balance 
of all previous investments and debt obligations and the value of 
all previous investments in equity securities as of the date of the new 
investment. 
(e) CESSATION OF CONTROL.—If an insurer ceases to control a sub-
sidiary, it shall dispose of any investment therein made pursuant to 
this section within three years from the time of the cessation of control 
or within such further time as the Commissioner may prescribe, unless 
at any time after such investment was made, such investment meets 
the requirements for investment under sections 35 and 41, chapter III, 
of the Life Insurance Act (D.C. Code, sees. 35-535 and 35-541) and 
section 18, chapter II, of the Fire and Casualty Act (D.C. Code, sec. 
35-1521), and the insurer has notified the Commissioner thereof. 
ACQUISITION OF CONTROL OF OR MERGER WITH DOMESTIC INSURER 
SEC. 4. (a) FILING REQUIREMENTS.—No person other than the issuer 
shall make a tender offer for or a request or invitation for tenders of, 
D.C. 
Code 
35-
1902. 
D.C. 
Code 35-
1903. 
754 
PUBLIC LAW 93-388-AUG. 24, 1974 
[88 STAT. 
or enter into any agreement to exchange securities for, seek to acquire, 
or acquire, in the open market or otherwise, any voting secui'ity of 
a domestic insurer if. after the consummation thereof, such person 
would directly or indirectly (or by conversion or by exercise of any 
right to acquire) be in control ot such insurer, and no person shall 
enter into an agreement to merge with or otherwise to ac(i[uire control 
of a domestic insurer, unless, at the time any such offer, request, or 
invitation is made or any such agreement is entered into, or prior to 
the acquisition of such securities if no offer or agreement is involved, 
such person has filed with the Commissioner and has sent to such 
insurer, and such insurer has sent to its shareholders, a statement con-
taining the information required by this section and such offer, request, 
invitation, agreement, or acquisition has been approved by the Com-
missioner in the manner hereinafter prescribed. For purposes of this 
section a domestic insurer shall include any other person controlling 
a domestic insurer unless such other person is either directly or through 
its affiliates primarily engaged in business other than the business of 
insurance. 
(b) CONTENT OF STATEMENT.-—The statement to be filed with the 
Commissioner hereunder shall be made under oath or affirmation and 
shall contain the following information: 
(1) The name and address of each person by whom or on whose 
behalf the merger or other acquisition of control referred to in sub-
section (a) is to be effected (hereinafter called "acquiring party"), 
and 
(A) If such person is an individual, his principal occupation 
and all offices and positions held during the past five years, and 
any conviction of crimes other than minor traffic violations dur-
ing the past ten years; 
(B) If such person is not an individual, a report of the nature 
of its business operations during the past five years or for such 
lesser period as such person and any predecessors thereof shall 
have been in existence; an informative description of the busi-
ness intended to be done by such person and such person's sub-
sidiaries ; and a list of all individuals who are or who have been 
selected to become directors or executive officers of such person, 
or who perform or will perform functions appropriate to such 
positions. Such list shall include for each such individual the 
information required by subparagraph (A) of this subsection. 
(2) The source, nature, and amount of the consideration used or 
to be used in effecting the merger or other acquisition of control, a 
description of any transaction wherein funds were or are to be 
obtained for any such purpose, and the identity of persons furnishing 
such consideration: Provided, That where a source of such consider-
ation is a loan made in the lender's ordinary course of business, the 
identity of the lender shall remain confidential, if the person filing 
such statement so requests. 
(3) Fully audited financial information as to the earnings and 
financial condition of each acquiring party for the preceding five 
fiscal years of each such acquiring party (or for such lesser period 
as such acquiring party and any predecessors thereof shall have been 
in existence), and similar unaudited information as of a date not 
earlier than ninety days prior to the filing of the statement. 
(4) Any plans or proposals which each acquiring party may have to 
liquidate such insurer, to sell its assets or merge or consolidate it with 
any person, or to make any other material change in its business or 
corporate structure or management. 
(5) The number of shares of any security referred to in subsection 
(a) which each acquiring party proposes to acquire, and the terms of 
Financial in-
formation. 
88 STAT.] 
PUBLIC LAW 93-388-AUG. 24, 1974 
755 
the offer, request, invitation, agreement, or acquisition referred to in 
subsection (a), and a statement as to the method by Avhich the fairness 
of the proposal was arrived at. 
(6) The amount of each class of any security referred to in subsec-
tion (a) which is beneficially owned or concerning which there is a 
right to acquire beneficial ownership by each acquiring party. 
(7) A full description of any contracts, arrangements, or under-
standings with respect to any security referred to in subsection (a) in 
which any acquiring party is involved, including but not limited to 
transfer of any of the securities, joint ventures, loan or option arrange-
ments, puts or calls, guarantees of loans, guarantees against loss or 
guarantees of profits, division of losses or profits, or the giving or with-
holding of proxies. Such description shall identify the persons with 
whom such contracts, arrangements, or understandings have been 
entered into. 
(8) A description of the purchase of any security referred to in 
subsection (a) during the twelve calendar months preceding the filing 
of the statement, by any acquiring party, including the dates of pur-
chase, names of the purchasers, and consideration paid or agreed to be 
paid therefor. 
(9) A description of any recommendations to purchase any security 
referred to in subsection (a) made during the twelve calendar months 
preceding the filing of the statement, by any acquiring party, or by 
anyone based upon interviews or at the suggestion of such acquiring 
party. 
(10) Copies of all tender ofiers for, requests or invitations for 
tenders of exchange offers for, and agreements to acquire or exchange 
any securities referred to in subsection (a), and (if distribtited) of 
additional soliciting material relating thereto. 
(11) The terms of any agreement, contract, or understanding made 
with any broker-dealer as to solicitation of securities referred to in 
subsection (a) for tender, and the amount of any fees, commissions, or 
other compensation to be paid to broker-dealers with regard thereto. 
(12) Such additional information as the Commissioner may by rule 
or regulation prescribe as necessary or appropriate for the protection 
of policyholders and securityholders of the insurer or in the public 
interest. If the person required to file the statement referred to in sub-
section (a) is a partnership, limited partnership, syndicate, or other 
group, the Commissioner may require that the information called for 
by paragraphs (1) through (12) shall be given with respect to each 
partner of such partnership or limited partnership, each member of 
such syndicate or group, and each person who controls such partner 
or member. If any such partner, member, or person is a corporation 
or the person required to file the statement referred to in subsection 
(a) is a corporation, the Commissioner may require that the informa-
tion called for by paragraphs (1) through (12) shall be given with 
respect to such corporation, each officer and director of such corpora-
tion, and each pei-son who is directly or indirectly the beneficial owner 
of more than 10 per centum of the outstanding voting securities of such 
corporation. If any material change occurs in the facts set forth in the 
statement filed with the Commissioner and sent to such insurer pur-
suant to this section, an amendment setting forth such change, together 
with copies of all documents and other material relevant to such 
change, shall be filed with the Commissioner and sent to such insurer 
within two business days after the person learns of such change. Such 
insurer shall send such amendment to its shareholdei-s. 
(c) ALTERNATIVE FILING MATERIALS.—If any offer, request, invi-
tation, agreement, or acquisition referred to in subsection (a) is pro-
posed to be made by means of a registration statement under the 
Contracts. 
Security pur-
chases. 
Agreement with 
broker-dealer. 
Additional in-
formation. 
756 
PUBLIC LAW 93-388-AUG. 24, 1974 
[88 STAT. 
1
5 use vsa! 
Securities Act of 1933 or in circumstances requiring the disclosure 
of similar information under the Securities Exchange Act of 1934, 
or under a State law requiring similar registration or disclosure, the 
person required to file the statement referred to in subsection (a) may 
utilize such documents in furnishing the information called for by 
that statement. 
(d) 
APPROVAL BY COMMISSIONER; HEARINGS.— 
(1) The Commissioner shall approve any merger or other 
acquisition of control referred to in subsection (a) unless, after 
a public hearing thereon, he finds that: 
(A) After the change of control the domestic insurer 
referred to in subsection (a) would not be able to satisfy the 
requirements for the issuance of a license to write the line 
or lines of insurance for which it is presently licensed; 
(B) The effect of the merger or other acquisition of con-
trol would be substantially to lessen competition in insurance 
in the District or tend to create a monopoly therein; 
(C) The financial condition of any acquiring party is such 
as might jeopardize the financial stability of the insurer, or 
prejudice the interest of its policyholders or the interests of 
any remaining security holders who are unaffiliated with such 
acquiring party; 
(D) The terms of the offer, request, invitation, agreement, 
or acquisition referred to in subsection (a) are unfair and 
unreasonable to the securityholders of the insurer; 
(E) The plans or proposals which the acquiring party has 
to liquidate the insurer, sell its assets or consolidate or mer^e 
it with any person, or to make any other material change in 
its business or corporate structure or management, are unfair 
and unreasonable to policyholders of the insurer and not 
in the public interest; or 
(F) The competence, experience, and integrity of those 
persons who would control the operation of the insurer are 
such that it would not be in the interest of policyholders of 
the insurer or of the public to permit the merger or other 
acquisition of control. 
(2) The public hearing referred to in paragraph (1) shall be 
held within thirty days after the statement required by subsec-
tion (a) is filed, and at least twenty days' notice thereof shall be 
given by the Commissioner to the person filing the statement. Not 
less than seven days' notice of such public hearing shall be given 
by the person filing the statement to the insurer and to such other 
person as may be designated by the Commissioner. The insurer 
shall give such notice to its securityholders. The commissioner 
shall make a determination within thirty days after the conclu-
sion of such hearing. At such hearing, the person filing the state-
ment, the insurer, any person to whom notice of hearing was sent, 
and any other person whose interests may be affected thereby shall 
have the right to present evidence, examine and cross-examine 
witnesses, and offer oral and written arguments, and in connection 
therewith shall be entitled to conduct discovery proceedings in 
the same manner as is presently allowed in the Superior Court of 
the District of Columbia. All discovery proceedings shall be con-
cluded not later than three days prior to the commencement of the 
public hearing. 
(e) MAILINGS TO SHAREHOLDERS; PAYMENT OF EXPENSES.—All state-
ments, amendments, or other material filed pursuant to subsection (a) 
or (b), and all notices of public hearings held pursuant to subsection 
(d), shall be mailed by the insurer to its shareholders within five busi-
Notice. 
88 STAT. ] 
PUBLIC LAW 93-388-AUG. 24, 1974 
757 
ness days after the insurer has received such statements, amendments, 
other material, or notices. The expenses of mailing shall be borne 
by the person making the filing. As security for the paj^ment of 
such expenses, such person shall file with the Commissioner an 
acceptable bond or other deposit in an amount to be determined by 
the Commissioner, 
(f) EXEMPTIONS.—The provisions of this section shall not apply 
to— 
(1) any offers, requests, invitations, agreements, or acquisitions 
by the person referred to in subsection (a) of any voting security 
referred to in subsection (a) which, immediately prior to the 
consummation of such offer, request, invitation, agreement, or 
acquisition, was not issued and outstanding; 
(2) any offer, request, invitation, agreement, or acquisition if, 
under the terms thereof, the consummation of the transaction con-
templated thereunder would result in the ownership by security 
holders of the domestic insurer of stock processing at least 80 per 
centum of the total combined voting power of all classes of stock 
of the acquiring party entitled to vote, or at least 80 per centum 
of the total combined voting power of all classes of stock of the 
person in control of the acquiring party entitled to vote; and 
(3) any offer, request, invitation, agreement, or acquisition 
which the Commissioner by order shall exempt therefrom as (A) 
not having been made or entered into for the purpose and not 
having the effect of changing or influencing the control of a 
domestic insurer, or (B) as otherwise not comprehended within 
the purposes of this section. 
(g) VIOLATIONS.—The following shall be violations of this section: 
(1) The failure to file any statement, amendment, or other 
material required to be filed pursuant to subsection (a) or (b); or 
(2) The effectuation or any attempt to effectuate an acquisition 
of control of, or merger with, a domestic insurer unless the Com-
missioner has given his approval thereto. 
(h) 
JURISDICTION; CONSENT TO SERVICE OF PROCESS.—The Superior 
Court of the District of Columbia is hereby vested with jurisdiction 
over every person not resident, domiciled, or authorized to do business 
in the District who files a statement with the Commissioner under this 
section, and over all actions involving such person arising out of 
violations of this section, and each such person shall be deemed to have 
performed acts equivalent to and constituting an appointment by such 
a person of the Commissioner to be his true and lawful attorney upon 
whom may be served all lawful process in any action, suit, or proceed-
ing arising out of violations of this section. Copies of all such lawful 
process shall be served on the Commissioner and transmitted by 
registered or certified mail by the Commissioner to such person at his 
last known address. 
REGISTRATION or INSURERS 
SEC. 5. (a) REGISTRATION,—Every insurer which is authorized to do 
^•^- <
^
°
^
« ^^• 
business in the District and which is a member of an insurance hold- '^°'*' 
ing company system shall register with the Commissioner, except a 
foreign insurer subject to disclosure requirements and standards 
adopted by statute or regulation in the jurisdiction of its domicile 
which are substantially similar to those contained in this Act. Any 
insurer which is subject to registration under this section shall regis-
ter within sixty days after the effective date of this Act or fifteen days 
after it becomes subject to registration, whichever is later, unless the 
Commissioner for good cause shown extends the time for registration. 
38-194 O - 76 - 51 Pt. 1 
758 
PUBLIC LAW 93-388-AUG. 24, 1974 
[88 STAT. 
and then within such extended time. The Commissioner may require 
any authorized insurer which is a member of a holding company system 
which is not subject to registration under this section to furnish a copy 
of the registration statement or other information filed by such insur-
ance company with the insurance regulatory authority of its domicili-
ary jurisdiction. 
(b) INFORMATION AND FORM REQUIRED.—Every insurer subject to 
registration shall file a registration statement on a form provided by 
the Commissioner, which shall contain current information about— 
(1) the capital structure, general financial condition, owner-
ship, and management of the insurer and any person controlling 
the insurer; 
(2) the identity of every member of the insurance holding 
company system; 
(3) the following agreements in force, relationships subsisting, 
and tr-ansactions currently outstanding between such insuriM- and 
its affiliates; 
(A) 
loans, other investments, or purchases, sales or 
exchanges or securities of the affiliates by the insurer or of 
the insurer by its affiliates; 
(B) purchases, sales, or exchanges of assets; 
(C) transactions not in the ordinary course of business; 
(D) guarantees or undertakings for the benefit of an 
affiliate which result in an actual contingent exposure of the 
insurer's assets to liability, other than insurance contracts 
entered into in the ordinary course of the insurer's business; 
(E) all management and service contracts and all cost-
sharing arrangements, other than cost allocation arrange-
ments based upon generally accepted accounting principles; 
and 
(F) reinsurance agreements covering all or substantially 
all of one or more lines of insurance of the ceding company. 
(4) other matters concerning transactions between registered 
insurers and any affiliates as may be included from time to time in 
any registration forms adopted or approved by the Commissioner. 
(c) MATERIALITY.—No information need be disclosed on the regis-
tration statement filed pursuant to subsection (b) if such information 
is not material for the purposes of this section. Unless the Commis-
sioner by rule, regulation, or order provides otherwise, sales, 
purchases, exchanges, loans, or extensions of credit, or investments, 
involving one-half of 1 per centum or less of an insurer's admitted 
assets as of the thirty-first day of December next preceding shall not 
be deemed material for purposes of this section. 
(d) AMENDMENTS TO REGISTRATION STATEMENTS.—Each registered 
insurer shall keep current the information required to be disclosed 
in its registration statement by reporting all material changes or addi-
tions on amendment forms provided by the Commissioner within 
fifteen days after the end of the month in which it learns of each such 
change or addition: Provided^ That subject to subsection (c) of section 
6, each registered insurer shall so report all dividends and other dis-
tributions to shareholders within two business days following the 
declaration thereof. 
(e) TERMINATION OF REGISTRATION.—The Commissioner shall ter-
minate the registration of any insurer which demonstrates that it no 
lon.o-er is a member of an insurance holding company system. 
(f) 
CONSOLIDATED FILING.—The Commissioner may require or 
allow two or more affiliated insurers subject to registration hereunder 
to file a consolidated registration statement or consolidated reports 
88 STAT. ] 
PUBLIC LAW 93-388-AUG. 24, 1974 
759 
amending their consolidated registration statement or their individual 
registration statements. 
(g) ALTERNATIVE REGISTRATION.—The Commissioner may allow an 
insurer which is authorized to do business in the District and which 
is part of an insurance holding company system to register on behalf 
of any affiliated insurer which is required to register under subsection 
(a) and to file all information and material required to be filed under 
this section. 
(h) EXEMPTIONS.—The provisions of this section shall not apply to 
any insurer, information, or transaction if and to the extent that the 
Commissioner by rule, regulation, or order shall exempt the same 
from the provisions of this section. 
(i) DISCLAIMER.—The presumption of control as defined by section 
2(c), may be rebutted by a showing made in the manner herein 
provided that control does not exist in fact. The Commissioner may 
determine, after furnishing all persons in interest notice and an oppor-
tunity to be heard and making specific findings of fact to support such 
determination, that control exists in fact, notwithstanding the absence 
of a presumption to that effect. Any person may file with the Commis-
sioner a disclaimer of affiliation with any authorized insurer or such a 
disclaimer may be filed by such insurer or any member of an insurance 
holding company system. The disclaimer shall fully disclose all mate-
rial relationships and bases for affiliation between such person and 
such insurer as well as the basis for disclaiming such affiliation. After 
a disclaimer has been filed, the insurer shall be relieved of any dut}' 
to register or report under this section which may arise out of the 
insurer's relationship with such person unless and until the Commis-
sioner disallows the disclaimer. The Commissioner shall disallow such 
a disclaimer only after furnishing all parties in interest with notice 
and opportunity to be heard and after making specific findings of fact 
to support such disallowance. 
(j) VIOLATIONS.—The failure to file a registration statement or any 
amendment thereto required by this section within the time specified 
for such filing shall be a violation of this section. 
STANDARDS 
SEC. 6. (a) TRANSACTIONS W I T H AFFILIATES.—Material transactions 
by registered insurers with their affiliates shall be subject to the follow-
ing standards : 
(1) the terms shall be fair and reasonable; 
(2) the books, accounts, and records of each party shall be so 
maintained as to clearly and accurately disclose the precise nature 
and details of the transactions; and 
(3) the insurer's surplus as regards policyholders following any 
dividends or distributions to shareholder affiliates shall be reason-
able in relation to the insurer's outstanding liabilities and ade-
quate to its financial needs. 
(b) ADEQUACY OF SURPLUS.—For the purposes of this section in 
determining whether an insurer's surplus as regards policyholders is 
reasonable m relation to the insurer's outstanding liabilities and ade-
quate to its financial needs, the following factors, among others, shall 
be considered: 
(1) the size of the insurer as measured by its assets, capital and 
surplus, reserves, premium writings, insurance in force, and other 
appropriate criteria: 
(2) the extent to which the insurer's business is diversified 
among the several lines of insurance; 
(8) the number and size of risks insured in each line of business ; 
D.C. Code 35-
1905. 
760 
PUBLIC LAW 93-388-AUG. 24, 1974 
[88 STAT. 
(4) the extent of the geographical dispersion of the insurer's 
insured risks; 
(5) the nature and extent of the insurer's reinsurance program; 
(6) the quality, diversification, and liquidity of the insurer's 
investment portfolio; 
(7) the recent past and projected future trend in the size of the 
insurer's surplus as regards policyholders; 
(8) the surphis as regards policyholders maintained by other 
comparable insurers; 
(9) the adequacy of the insurer's reserves; and 
(10) the quality and liquidity of investments in subsidiaries 
made pursuant to section 3. The Commissioner may treat any such 
investment as a disallowed asset for purposes of determining the 
adequacy of surplus as regards policyholders whenever in his 
judgment such investment so warrants. 
(c) DIVIDENDS AND OTHER DISTRIBUTIONS.— (1) No insurer subject 
to registration under section 5 shall pay any extraordinary dividend 
or make any other extraordinary distribution to its shareholders until 
(A) thirty days after the Commissioner has received notice of the 
declaration thereof and has not within such period disapproved such 
payment, or (B) the Commissioner shall have approved such payment 
within such thirty-day period. 
(2) For purposes of this section, an extraordinary dividend or dis-
tribution includes any dividend or distribution of cash or other prop-
erty, whose fair market value together with that of other dividends or 
distributions made within the preceeding twelve months exceeds the 
greater of (A) 10 per centum of such insurer's surplus as regards 
policyholder's as of the thirty-first day of December next preced-
ing or (B) the net gain from operations of such insurer, if such insurer 
is a life insurer, or the net investment income, if such insurer is not a 
life insurer, for the twelve-month period ending the thirty-first day 
of December next preceding, but shall not include pro rata distribu-
tions of any class of the insurer's own securities. 
(3) Notwithstanding any other provision of law, an insurer may 
declare an extraordinary dividend or distribution which is conditional 
upon the Commissioner's approval thereof, and such a declaration shall 
confer no rights upon shareholders until (A) the Commissioner has 
approved the payment of such dividend or distribution or (B) the 
Commissioner has not disapproved such payment within the thirty-
day period referred to above. 
EXAMINATION 
D.c. Code 35- 
^^^, Y. (a) POWER OF (COMMISSIONER.—Subject to the limitation con-
^^°^- 
tained in this section and in addition to the powers which the Com-
missioner has under the insurance laws of the District relating to the 
examination of insurers, the Commissioner shall also have the power 
to order any insurer registered under section 5 to produce such rec-
ords, books, papers, or other information in the possession of the 
insurer or its affiliates as shall be necessary to ascertain the financial 
condition or legality of conduct of such insurer. In the event such 
insurer fails to comply with such order, the Commissioner shall have 
the power to examine such affiliates to obtain such information. 
(b) PURPOSE AND LIMITATION OF EXAMINATION.—The Commissioner 
shall exercise his power under subsection (a) only if the examination 
of the insurer under and as is provided for by the insurance laws of 
the District is inadequate or the interests of the policyholders of such 
insurer may be adversely affected. 
(c) USE OF CONSULTANTS.—The Commissioner may retain at the 
1908. 
88 STAT. ] 
PUBLIC LAW 93-388-AUG. 24, 1974 
761 
registered insurer's expense such attorneys, actuaries, accountants, and 
other experts not otherwise a part of the Commissioner's staff as shall 
be reasonably necessary to assist in the conduct of the examination 
under subsection (a). Any persons so retained shall be under the 
direction and control of the Commissioner and shall act in a purely 
advisory capacity. 
(d) EXPENSES.—Each registered insurer producing for examination 
records, books, and papers pursuant to subsection (a) shall be liable 
for and shall pay the expense of such examination in accordance with 
the provisions of section 19, chapter II, of the Life Insurance Act 
(D.C. Code, sec. 35-418) and section 10, chapter II, of the Fire and 
Casualty Act (D.C. Code, sec. 35-1313), pertaining to examination 
expense. 
SEC. 8. CONFIDENTIAL TREATMENT.—All information, documents, 
D.C. code 35-
and copies thereof obtained by or disclosed to the Commissioner or ^^°^* 
any other person in the course of an examination or investigation made 
pursuant to section 7 and all information reported pursuant to section 
5, shall be given confidential treatment and shall not be subject to 
subpena and shall not be made public by the Commissioner or any 
other person, except to insurance departments of other States, without 
the prior written consent of the insurer to which it pertains unless 
the Commissioner, after giving the insurer and its affiliates w^ho would 
be affected thereby, notice and opportunity to be heard, determines 
that the interests of policyholders, shareholders, or the public will be 
served by the publication thereof, in which eA^ent he may publish all 
or any part thereof in such manner as he may deem appropriate. 
SEC. 9. RULES AND REGULATIONS.—The Commissioner may, upon ^ ^^-J^- '^°'^^ ^s-
notice and opportunity of all interested persons to be heard, issue such 
rules, regulations, and orders as shall be necessary to carry out the 
provisions of this Act, 
INJUNCTIONS; PROHIBITIONS AGAINST VOTING SECURITIES; 
SEQUESTRATION OF VOTING SECURITIES 
SEC. 10. (a) INJUNCTIONS.—Whenever it appears to the Commis- ^^Q'^' '^°'^^ ^^' 
sioner that any insurer or any director, officer, employee or agent 
thereof has committed or is about to commit a violation of this Act 
or of any rule, regulation, or order issued by the Commissioner here-
under, the Commissioner may apply to the Superior Court of the 
District of Columbia for an order enjoining such insurer of such 
director, officer, employee, or agent thereof from violating or con-
tinuing to violate this Act or any such rule, regulation, or order, and 
for such other equitable relief as the failure of the case and the inter-
ests of the insurer's policyholders, creditors, shareholders, or the 
public may require. 
(b) VOTING OF SECURITIES ; W H E N PROHIBITED.—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 provi-
sions of this Act or of any rule, regulation, or order issued by the 
Commissioner hereunder may be voted at any shareholders' meeting, 
or may be counted for quorum purposes, and any action of sharehold-
ers requiring the affirmative vote of a percentage of shares may be 
taken as though such securities were not issued and outstanding; but 
no action taken at any such meeting shall be invalidated by the voting 
of such securities, unless the action would materially affect control of 
the insurer or unless the Superior Court of the District of Columbia 
has so ordered. If an insurer or the Commissioner has reason to believe 
that any security of the insurer has been or is about to be acquired in 
contravention of the provisions of this Act or of any rule, regulation, 
762 
PUBLIC LAW 93-388-AUG. 24, 1974 
[88 STAT. 
or order issued by the Commissioner hereunder the insurer or the 
Commissioner may apply to the Superior Court of the District of 
Columbia to enjoin any offer, request, invitation, agreement, or acqui-
sition made in contravention of section 4 of any rule, regulation, or 
order issued by the Commissioner thereunder to enjoin the voting of 
any security so acquired, to void any vote of such security already cast 
at any meeting of shareholders, and for such other equitable relief as 
the nature of the case and the interests of the insurer's policyholders, 
creditors, shareholders, or the public may require. 
(c) SEQUESTRATION or VOTING SECURITIES.—In any case where a per-
son has or is proposing to acquire any voting securities in violation of 
this Act or any rule, regulation, or order issued by the Commissioner 
hereunder, the Superior Court of the District of Columbia may, on 
such notice as the court deems appropriate, upon the application of 
the insurer or the Commissioner seize or sequester any voting securi-
ties of the insurer owned directly or indirectly by such person, and 
issue such orders with respect thereto as may be appropriate to effec-
tuate the provisions of this Act. Notwithstanding any other provisions 
of law, for the purposes of this Act the situs of the ownership of the 
securities of domestic insurers shall be deemed to be in the District. 
19^0^" ^"'^^ ^^' 
^^^- ^^' CRIMINAL PROCEEDINGS.—Whenever it appears to the Com-
missioner that any insurer or any director, officer, employee, or agent 
thereof has committed a willful violation of this Act, the Commis-
sioner may cause criminal proceedinsfs to be instituted in the District 
against such insurer or the responsible director, officer, employee, or 
Penalty. 
agcut thereof. Any insurer which willfully violates this Act may 
be fined not more than $1,000. Any individual who willfully violates 
this Act may be fined not more than $1,000 or, if such willful viola-
tion involves the deliberate perpetration of a fraud upon the Com-
missioner, imprisoned not more than two years or both. 
SEC. 12. RECEIVERSHIP.—Whenever it appears to the Commissioner 
that any person has committed a violation of this Act which so impairs 
the financial condition of a domestic insurer as to threaten insol-
vency or make the further transaction of business by it hazardous 
to its policyholders, creditors, shareholders, or the public, the Com-
missioner may proceed as provided under the insurance laws of the 
District to take possession of the property of such domestic insurer 
and to conduct the business thereof. 
D.C. Code 35- 
gj,^, l^ 
REVOCATION, SUSPENSION, OR N O N - R E N E W A L OF I N S U R E R ' S 
LICENSE.—Whenever it appears to the Commissioner that any person 
has committed a violation of this Act Avhich ma]\es the continued oper-
ation of an insurer contrary to the interests of policyholders or the 
public, the Commissioner may, after giving notice and an oppor-
tunity to be heard, suspend, revoke, or refuse to renew such insurer's 
license or authority to do business in the District for such period as 
he finds is required for the protection of policyholders or the public. 
Any such determination shall be accompanied by specific findings of 
fact and conclusions of law. 
SEC. 14. JUDICIAL REVIEW; MANDAMUS.—(a) Any person aggrieved 
by any act, determination, rule, regulation, or order or any other 
action of the Commissioner pursuant to this Act may appeal there-
from to the District of Columbia Court of Appeals, in accordance 
with the District of Columbia Administrative Procedure Act. 
(b) Any person aggrieved by any failure of the Commissioner to 
act or make a determination required by this Act may petition the 
Superior Court of the District of Columbia for a writ in the nature 
of a mandamus or a peremptory mandamus directing the Commis-
sioner to act or make such determination forthwith. 
D.C. Code 35 
1911. 
1912 
L . C 
1913. 
D.C 
Code 
Code 
1501 note. 
3 5 -
1-
88 STAT. ] 
PUBLIC LAW 93-390-AUG. 27, 1974 
763 
D.C. Code 35-
1914. 
SEC. 15. CONFLICT W I T H OTHER LAWS.—^AU laws and parts of laws 
of the District inconsistent with this Act are hereby superseded with 
respect to matters covered by this Act. 
SEC. 16. SEPARABILITY OF PROVISIONS.—If any provision of this Act 
D.C. code as-
or the application thereof to any person or circumstance is held ^ ^^' 
invalid, the invalidity shall not affect other provisions or applications 
of this Act which can be given effect without the invalid provision or 
application, and for this purpose the provisions of this Act are 
separable. 
SEC. 17. EFFECTIVE DATE.—This Act shall take effect thirty d:.ys 
^•'^' ^"'^^ ^s-
after the date of its enactment. 
^^° ^ "°*^' 
Approved August 24, 1974. 
Public Law 93-389 
AN ACT 
August 24, 1974 
To extend for three years the District of Columbia Medical and Dental 
[H. R. iiios] 
Manpower Act of 1970. 
District of Co-
lumbia Medical 
and Dental Man-
Be it enacted by the /Senate and House of Representatives 
of the 
United /States of America in Congress a^sembled^ That (a) section 
303 (c) of the District of Columbia Medical and Dental Manpower Act 
of 1970 (D.C. Code, sec. 31-922(c)) is amended to read as follows: P^wer Act o
f 
"(c) There are authorized to be appropriated such sums as may be ^^^°' extension. 
necessary for the fiscal years ending June 30,1975, and June 30,1976, 
to make grants under this section.". 
(b) Section 303(b) of such Act is amended by striking out "section 
772 of the Public Health Service Act (42 U.S.C. 295f-2)" and insert-
ing in lieu thereof "section 773 of the Public Health Service Act". 
^2 use 295f-3. 
Approved August 24, 1974. 
Public Law 93-390 
AN ACT 
August 27. 1974 
To amend the title of the Foreign Assistance Act of 1961 concerning the Overseas 
[s. 2957] 
Private Investment Corporation to extend the authority for the Corporation, 
to authorize the Corporation to issue reinsurance, to terminate certain activities 
of the Corporation, and for other purposes. 
Overseas Pri-
vate Investment 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That this Act may 
be cited as the "Overseas Private Investment Corporation Amendments corporation 
Act of 1974". 
Amendments Act 
SEC. 2. Title IV of chapter 2 of part I of the Foreign Assistance Act ° 22^us'c 2191 
of 1961 (22 U.S.C. 2191-2200a) is amended as follows: 
n°te. 
(1) In section 231— 
22 use 2191. 
(A) in the first sentence, strike out "progress" and insert in lieu 
thereof "development";