8 V.S.A. § 3682
2021 Vermont Statutes|Title 8 - Banking and Insurance|Chapter 101 - Insurance Companies Generally|§ 3682. Subsidiaries of insurers

§ 3682. Subsidiaries of insurers|(a) Any domestic insurer, either by itself or in cooperation with one or more persons, may organize or acquire one or more subsidiaries engaged in the following kinds of business:  (1) any kind of insurance business authorized by the jurisdiction in which it is incorporated; (2) acting as an insurance broker or as an insurance agent for its parent or for any of its parent's insurer subsidiaries; (3) investing, reinvesting or trading in securities for its own account, that of its parent, any subsidiary of its parent, or any affiliate or subsidiary; (4) management of any investment company subject to or registered pursuant to the Investment Company Act of 1940, as amended, including related sales and services. (5) acting as a broker-dealer subject to or registered pursuant to the Securities Exchange Act of 1934, as amended; (6) rendering investment advice to government agencies, corporations, or other organizations or groups; (7) rendering other services related to the operations of an insurance business including actuarial, loss prevention, safety engineering, data processing, accounting, claims, appraisal, and collection services; (8) ownership and management of assets which the parent corporation could itself own or manage; (9) acting as administrative agent for a governmental instrumentality which is performing an insurance function; (10) financing of insurance premiums, agents, and other forms of consumer financing; (11) any other business activity determined by the Commissioner to be reasonably ancillary to an insurance business; and (12) owning a corporation or corporations engaged or organized to engage exclusively in one or more of the businesses specified in this section.   (b) In addition to investments in common stock, preferred stock, debt obligations, and other securities permitted under all other sections of this title, a domestic insurer may also:  (1) Invest, in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries, amounts which do not exceed the lesser of five percent of such insurer's assets or 50 percent of such insurer's surplus as regards policyholders, provided that after such investments the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs. In calculating the amount of such investments, investments made under subsection (a) of this section shall be excluded for all insurers, except to the extent provided in subsection (f) of this section, and there shall be included:  (A) total net monies 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.  (2) If the insurer's total liabilities, as calculated for National Association of Insurance Commissioners annual statement purposes, are less than 10 percent of assets, invest any amount in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries, provided that after such investment the insurer's surplus as regards policyholders, considering such investment as if it were a disallowed asset, will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs. (3) Invest any amount in common stock, preferred stock, debt obligations and other securities of one or more subsidiaries provided that each such subsidiary agrees to limit its investments in any asset so that such investments will not cause the amount of the total investment of the insurer to exceed any of the investment limitations specified in subdivision (1) of this subsection or in sections 3681 through 3692 of this title applicable to the insurer. For the purpose of this subdivision, "the total investment of the insurer" shall include:  (A) any direct investment by the insurer in an asset and (B) the insurer's proportionate share of any investment in an asset by any subsidiary of the insurer, which shall be calculated by multiplying the amount of the subsidiary's investment by the percentage of the insurer's ownership of such subsidiary.  (4) With the approval of the Commissioner, invest any amount in common stock, preferred stock, debt obligations, or other securities of one or more subsidiaries, provided that after such investment the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs. (5) Invest any amount in the common stock, preferred stock, debt obligations, or other securities of any subsidiary exclusively engaged in holding title to and managing or developing real or personal property, if after considering as a disallowed asset so much of the investment as is represented by subsidiary assets which if held directly by the insurer would be considered as a disallowed asset, the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs, and if following such investment all voting securities of such subsidiary would be owned by the insurer.   (c) Investments in common stock, preferred stock, debt obligations or other securities of subsidiaries made pursuant to subsection (b) of this section shall not be subject to any of the otherwise applicable restrictions or prohibitions contained in this chapter applicable to such investments of insurers.(d) Whether any investment pursuant to subsection (b) of this section meets the applicable requirements thereof is to be determined immediately after such investment is made, taking into account the then outstanding principal balance on all previous investments in debt obligations, and the value of all previous investments in equity securities as of the date they were made.(e) If an insurer ceases to control a subsidiary, 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 shall have been made, such investment shall have met the requirements for investment under any other section of this title, and the insurer has notified the Commissioner thereof.(f) Nothing in this section shall modify or negate any contractual obligation undertaken by a mutual insurance holding company reorganizing under chapter 101, subchapter 3A of this title. (Added 1971, No. 72, § 2; amended 1999, No. 84 (Adj. Sess.), § 9, eff. April 19, 2000.)