2023 New York Laws › ISC - Insurance › Article 16 - Subsidiaries of Domestic Property/casualty Insurance Companies and Certain Other Entities › 1608 - Relationships and Transactions Between Parent and Subsidiary.

§  1608. Relationships and transactions between parent and subsidiary.
(a) The  business  operations,  corporate  proceedings  and  fiscal  and
accounting  records  of  subsidiaries  organized or acquired pursuant to
this article shall be conducted  or  maintained  so  as  to  assure  the
separate  legal  and  operating identities of the parent and subsidiary,
but nothing herein shall preclude arrangements for common management  or
the  cooperative  or  joint  use  of  personnel,  property  or  services
otherwise consistent with this chapter.
(b) All transactions between the insurer and its subsidiaries shall be
fair and equitable, charges or fees  for  services  performed  shall  be
reasonable  and  all  expenses  incurred  and payments received shall be
allocated to the insurer  on  an  equitable  basis  in  conformity  with
customary insurance accounting practices consistently applied.
(c)  The  books,  accounts  and  records  of  each  party  to all such
transactions shall  be  so  maintained  as  to  clearly  and  accurately
disclose  the  nature  and  details  of the transactions, including such
accounting information as is necessary to support the reasonableness  of
the charges or fees to the respective parties.
(d)  The  superintendent  may  promulgate regulations relating to such
subsidiaries, their management and their relationships and  transactions
with their parent insurance companies and their affiliates to the extent
that  the  same  may  affect  the  operations,  management  or financial
condition of domestic insurers. Subsidiaries that are persons  within  a
holding  company system, as such terms are defined in article fifteen of
this chapter, shall be subject to the provisions of such article.
(e) The following transactions between  a  domestic  insurer  and  any
subsidiary  may  not be entered into unless the insurer has notified the
superintendent in writing of  its  intention  to  enter  into  any  such
transaction  at  least  thirty  days  prior  thereto,  or with regard to
reinsurance treaties  or  agreements  at  least  forty-five  days  prior
thereto,  or  such  shorter period as the superintendent may permit, and
the superintendent has not disapproved it within such period:
(1) sales, purchases,  exchanges,  loans,  extensions  of  credit,  or
investments  with  a  subsidy, provided the transactions are equal to or
exceed the lesser of three percent of the insurer's admitted  assets  or
twenty-five percent of surplus to policyholders at last year-end;
(2)  loans  or  extensions  of  credit  to  any  person  who  is not a
subsidiary, where the insurer makes loans or extensions of  credit  with
the  agreement  or understanding that the proceeds of such transactions,
in whole or in substantial part,  are  to  be  used  to  make  loans  or
extensions of credit to, purchase assets of, or make investments in, any
subsidiary  of  the  insurer  making  the loans or extensions of credit,
provided the transactions are equal to or exceed  the  lesser  of  three
percent  of  the  insurer's  admitted  assets  or twenty-five percent of
surplus to policyholders at last year-end;
(3) reinsurance treaties or agreements  with  a  subsidiary  that  the
insurer  has  not  otherwise  submitted to the superintendent, provided,
however, the insurer need not submit a copy of a  reinsurance  agreement
unless  requested by the superintendent where the reinsurance premium or
a change in the insurer's  liabilities,  or  the  projected  reinsurance
premium  or  a  change  in  the insurer's liabilities in any of the next
three years, is less than five  percent  of  the  insurer's  surplus  to
policyholders  at  last year-end. This shall include agreements that may
require, as consideration, the transfer of assets from an insurer  to  a
non-subsidiary,  if  an  agreement  or  understanding exists between the
insurer and non-subsidiary that  any  portion  of  the  assets  will  be
transferred to one or more subsidiaries of the insurer; and
(4)   management   agreements,   service   contracts,  tax  allocation
agreements, guarantees, and all cost-sharing arrangements.