Opinion ID: 415638
Heading Depth: 3
Heading Rank: 2

Heading: The Standard Acquisition

Text: 10 OIC, as Security's holding company, initiated efforts to acquire Standard during summer and autumn of 1971. The Standard acquisition was effected in generally the same manner as the Southern transaction. OIC offered to purchase the outstanding Standard shares on October 12, 1971. The following week, on October 19, 1971, OIC's directors resolved to acquire the Standard shares, to borrow the funds necessary to finance the purchase, and to liquidate Standard and reinsure its outstanding policies following the acquisition. By October 25, 1971, OIC had acquired the Standard shares and became Standard's sole shareholder. OIC immediately resolved to liquidate Standard, to appoint Ourso as liquidator, and to reinsure Standard's policies with Security. 11 Security and OIC entered into a contingent payment agreement on October 26, 1971, under which Security was bound to pay OIC $2.5 million in consideration for OIC's consent to a reinsurance agreement between Security and Standard. This agreement provided for monthly payments of $36,500, to be paid out of premiums received on Standard's reinsured policies. Security and Standard then executed a reinsurance agreement on November 3, 1971. The reinsurance agreement required Security to assume Standard's policy liabilities as of October 25, 1971, provided that Standard transferred to Security assets sufficient to reserve the reinsured policies fully. 12 On December 31, 1971, Standard's assets and liabilities were transferred onto OIC's books. OIC immediately liquidated Standard's net worth and surplus to discharge part of the debt incurred in connection with the Standard acquisition. The remaining assets and liabilities of Standard were transferred from OIC to Security the same day. Premiums from Standard's reinsured business began to appear on Security's books in February 1972. 13 On April 24, 1972, Standard filed its life insurance company income tax return for the 1971 taxable year. This return, captioned Final Return, was the last federal income tax return filed by Standard. The Louisiana Commissioner of Insurance issued its official certificate of dissolution for Standard on May 8, 1972.