2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 43 - International Insurers and Reinsurers (§§ 4301 — 4327) › § 4304 - International insurer holding companies

“International insurer holding company” means any legal entity organized under the laws of Puerto Rico:
(1) That holds stocks or other securities issued by an international insurer or by another international insurer holding company, and
(2) whose assets, other than such securities, consist solely of:
(a) Stock or other securities issued by insurers;
(b) securities or assets (“operational assets”) necessary for the operations of businesses incidental to the insurance business;
(c) cash, cash equivalents and investment portfolios, and
(d) other assets with an aggregate value, as shown in the financial statements of said holding company, which do not exceed five percent (5%) of the total assets of this holding company, as allowed by subsection (1) and clauses (a), (b) and (c) of this subsection.
(3) To benefit from the tax treatment granted in § 4324 of this title, an international insurer holding company shall maintain the type of assets described in subsection (2)(c) of this section, in a ratio of not more than one to one, with respect to the sum of the assets described in subsections (1), (2)(a), (2)(b) and 2(d) of this section. Provided, That the following shall be used to calculate this ratio:
(a) In the case of the stocks and other securities of the international insurer, the net equity value according to the annual report submitted to the Commissioner by the international insurer.
(b) In the case of the stocks and securities issued by other persons, the value calculated according to the generally accepted accounting principles.
(4) Should there be a surplus of assets over the ratio described in subsection (3) above, the amount necessary to comply with the ratio provided in referred subsection (3) shall be invested in the assets described in subsections (1), (2)(a) and (2)(b) of this section. The international insurer holding company shall have a term of two (2) years to make said investment, as of the date of noncompliance with such ratio.
(5) An international insurer holding company shall not control, directly or indirectly, through one or more intermediaries, any person organized under the laws of Puerto Rico, including any person engaged in businesses incidental to the insurance business and who conducts business in Puerto Rico (whether through a separate business or operating within said holding company), with the exception of international insurers, other international insurer holding companies and businesses incidental to the insurance business that provide services exclusively to international insurers to which they are related as subsidiaries or affiliates, where the term “control” shall have the meaning established in Article 6.020(15) of this Code. However, the Commissioner and the Secretary of the Treasury may jointly establish regulations and orders to allow an international insurer holding company to control, directly or indirectly, other insurers that are not international insurers, or their holding companies, including businesses incidental to the insurance business, provided that such businesses are excluded from any tax exemption granted to the international insurers and to the international insurer holding companies.
(6) An international insurer holding company shall submit a certification of any of the insurers in which the holding company maintains an interest to the Commissioner and the Secretary of the Treasury not later than the last filing date of the annual report required by § 4310 of this title. The certification shall provide the following information of the holding company: name, address, employer identification number, the value of its assets, as described in subsections (1), (2)(a), (b), (c) and (d) of this section and a statement to the effect that the company qualifies under this section as an international insurer holding company. The certification shall be sworn by the president, vice-president, treasurer, assistant treasurer or any principal officer, or by a principal partner, in the case of a partnership.
(7) If the Commissioner determines that an international insurer holding company has carried out a transaction or series of transactions the main purpose of which is to obtain assets in excess of the established limits, said entity shall not receive the tax treatment provided in § 4324 of this title.
(8) A domestic insurer duly authorized pursuant to the Code, or its holding company, that controls an international insurer or an international insurer holding company, as defined in this chapter, shall not qualify for the tax treatment granted in § 4324 of this title, with the exception of those tax exemptions related to the distributions received from an international insurer or an international insurer holding company.
History —Ins. Code, added as § 61.040 on Sept. 22, 2004, No. 399, § 1, eff. 180 days after Sept. 22, 2004.