2015 Connecticut General Statutes
Title 38a - Insurance
Chapter 698 - Insurers
Section 38a-130 - (Formerly Sec. 38-39b). Acquisition and divestiture of domestic insurance companies. Required statement and notice filings. Violations.

(a)(1) No person other than the issuer shall make a tender offer for or a request or invitation for tenders of, enter into any agreement to exchange securities for, seek to acquire or acquire, in the open market or otherwise, any voting security, or solicit any proxy for the purpose of acquiring control, of a domestic insurance company or, subject to the provisions of subsection (c) of this section, any corporation controlling a domestic insurance company 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 of such domestic insurance company or corporation controlling a domestic insurance company. As used in this section, (A) “domestic insurance company” includes any person controlling a domestic insurance company unless such person is directly or through affiliates primarily engaged in business other than the business of insurance, as determined by the commissioner, and (B) “person” does not include a securities broker holding, in the usual and customary broker’s function, less than twenty per cent of the voting securities of an insurance company or of any entity that controls an insurance company.

(2) (A) (i) No person shall enter into an agreement, arrangement or understanding, whether written or oral, to merge with or otherwise acquire control of a domestic insurance company or any corporation controlling a domestic insurance company unless, at the time any form of initial offer, request or invitation is made or the agreement, arrangement or understanding is entered into, or prior to the acquisition of such securities or proxies if no offer, agreement, arrangement or understanding is involved, such person has filed with the commissioner and has sent to such insurance company a statement containing the information required by subsection (b) of this section and such offer, request, invitation, agreement, arrangement, understanding or acquisition has been approved by the commissioner in the manner hereinafter prescribed.

(ii) If any offer, request, invitation, agreement or acquisition is proposed to be made by means of a registration statement under the Securities Act of 1933 or in circumstances requiring the disclosure of similar information under the Securities Exchange Act of 1934, the person required to file the statement under subparagraph (A)(i) of this subdivision may utilize the registration statement or such documents furnishing the similar information to provide the information required by subsection (b) of this section, to the extent that the registration statement or such documents contains such information.

(B) If the acquisition will result in a change of control of an insurance company authorized to do business in this state, the person seeking to acquire control of such insurance company shall file the preacquisition notification set forth in subsection (c) of section 38a-131 with the commissioner and comply with the provisions of subsection (c) of section 38a-131.

(3) Any controlling person of a domestic insurance company seeking to divest in any manner such person’s controlling interest in such insurance company shall file with the commissioner and send to such insurance company a confidential notice of the proposed divestiture at least thirty days prior to such divestiture, except that if a statement set forth in subparagraph (A) of subdivision (2) of this subsection has been filed with the commissioner with respect to such transaction, such controlling person shall not be required to file or send such confidential notice. The notice shall remain confidential until the conclusion of the divestiture unless the commissioner determines that such confidential treatment will interfere with the enforcement of this section. The commissioner shall adopt regulations, in accordance with the provisions of chapter 54, to establish the circumstances under which a controlling person shall be required to obtain the commissioner’s prior approval of such divestiture.

(b) (1) The statement required under subparagraph (A) of subdivision (2) of subsection (a) of this section shall be made under oath or affirmation and shall contain the following information:

(A) The name and address of each person by whom or on whose behalf the merger or other acquisition of control referred to in subsection (a) of this section is to be effected, hereinafter called “acquiring party”, and (i) if such person is an individual, such individual’s principal occupation and all offices and positions held during the past five years, and any conviction of crimes other than minor traffic violations during the past ten years, or (ii) if such person is not an individual, (I) 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, (II) an informative description of the business intended to be done by such person and such person’s subsidiaries, and (III) a list of all individuals who are or who have been selected to become directors or executive officers of such person or who perform functions appropriate to such positions. Such list shall include for each such individual the information required by subparagraph (A)(i) of this subdivision;

(B) 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 including any pledge of the insurance company’s stock or the stock of any of its subsidiaries or controlling affiliates and the identity of persons furnishing such consideration, provided, where a source of such consideration 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;

(C) Fully audited financial information as to the earnings and financial condition of each acquiring party or for the preceding five fiscal years of each such acquiring party 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;

(D) Any plans or proposals that each acquiring party may have to liquidate such insurance company, to sell such insurance company’s assets or merge or consolidate it with any person, or to make any other material change in such insurance company’s business or corporate structure or management;

(E) The number of shares of any security referred to in subsection (a) of this section that each acquiring party proposes to acquire, the terms of the offer, request, invitation, agreement or acquisition referred to in said subsection (a), and a statement as to the method by which the fairness of the proposal was arrived at;

(F) The amount of each class of any security referred to in subsection (a) of this section that is beneficially owned or concerning which there is a right to acquire beneficial ownership by each acquiring party;

(G) A full description of any contracts, arrangements or understandings with respect to any security referred to in subsection (a) of this section in which any acquiring party is involved, including, but not limited to, transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits or the giving or withholding of proxies. Such description shall identify the persons with whom such contracts, arrangements or understandings have been entered into;

(H) A description of the purchase of any security referred to in subsection (a) of this section during the twelve calendar months preceding the filing of the statement, by any acquiring party, including the dates of purchase, names of the purchasers and consideration paid or agreed to be paid;

(I) A description of any recommendations to purchase any security referred to in subsection (a) of this section made during the twelve calendar months preceding the filing of the statement, by any acquiring party, or by anyone based upon interview or at the suggestion of such acquiring party;

(J) Copies of all tender offers for, requests, invitations for tenders of, exchange offers for and agreements to acquire or exchange any securities referred to in subsection (a) of this section and of additional soliciting material relating thereto;

(K) The term of any agreement, contract or understanding made with or proposed to be made with any broker-dealer as to solicitation of securities referred to in subsection (a) of this section for tender and the amount of any fees, commissions or other compensation to be paid to broker-dealers with regard thereto;

(L) An acknowledgment by the person filing such statement that such person shall make a good faith effort to ensure that the annual enterprise risk report required under subsection (f) of section 38a-135 is filed in a timely manner for as long as such person’s control exists;

(M) An acknowledgment by the person filing such statement that such person and all subsidiaries in the insurance holding company system within such person’s control will provide such information as the commissioner may request to evaluate enterprise risk to the insurance company; and

(N) Such additional information as the commissioner may prescribe as necessary or appropriate for the protection of policyholders of the insurance company or in the public interest.

(2) If the person required to file the statement under subparagraph (A) of subdivision (2) of subsection (a) of this section is a partnership, limited partnership, syndicate or other group, the commissioner may require that the information called for by subparagraphs (A) to (N), inclusive, of subdivision (1) of this subsection 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 or the person required to file such statement is a corporation, the commissioner may require that the information called for by subparagraphs (A) to (N), inclusive, of subdivision (1) of this subsection shall be given with respect to such corporation, each officer and director of such corporation and each person who is directly or indirectly the beneficial owner of more than ten per cent 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 insurance company pursuant 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 insurance company not later than two business days after the person learns of such change.

(c) Any person seeking to acquire control of any corporation that is not itself a domestic insurance company but that controls a domestic insurance company shall remain fully subject to all the provisions of sections 38a-129 to 38a-140, inclusive, except if such control is sought to be acquired by means of a tender offer, exchange offer or solicitation of proxies, the required approval of the commissioner need not be obtained prior to commencement of such tender offer, exchange offer or solicitation of proxies. Such person shall be required to furnish the commissioner with a statement under oath or affirmation containing the information required in subsection (b) of this section no later than the date on which the tender offer, exchange offer or solicitation of proxies commences.

(d) The following shall constitute violations of subsections (a) to (c), inclusive, of this section: (1) The failure to file any statement, amendment or other material required to be filed pursuant to subsection (a) or (b) of this section; (2) the effectuation of or any attempt to effectuate an acquisition of control of, divestiture of or merger with a domestic insurance company, other than a domestic insurance company referred to in subsection (c) of this section, unless the commissioner has given the commissioner’s approval thereto after a hearing held pursuant to section 38a-132; or (3) the effectuation of an acquisition of control of or merger with a domestic insurance company referred to in subsection (c) of this section, unless the commissioner has given the commissioner’s approval thereto after a hearing held pursuant to section 38a-132. For purposes of subdivision (3) of this subsection, the acquisition, directly or indirectly, of ten per cent or more of the voting securities of any corporation that is not itself a domestic insurance company but that controls a domestic insurance company, whether by tender offer, exchange offer or otherwise, or the voting of proxies representing ten per cent or more of the voting securities of any such corporation shall be presumed to be the effectuation of an acquisition of control of a domestic insurance company referred to in subsection (c) of this section.

(e) The courts of this state hereby are vested with jurisdiction over every person not resident, domiciled or authorized to do business in this state who files a statement with the commissioner under subsection (a) of this section and over all actions involving such persons arising out of violations of this section. Each such person shall be deemed to have performed acts equivalent to and constituting an appointment by such person of the commissioner to be such person’s true and lawful attorney upon whom may be served all lawful process in any action, suit or proceeding arising out of violations of this section. Copies of all such lawful process shall be served on the commissioner in accordance with section 38a-26.

(1969, P.A. 444, S. 2; P.A. 84-185, S. 2; P.A. 85-16, S. 2, 6; P.A. 92-112, S. 14, 35; P.A. 93-239, S. 12, 22; P.A. 12-103, S. 2; P.A. 13-134, S. 5; P.A. 14-235, S. 14; P.A. 15-144, S. 7.)

History: P.A. 84-185 amended Subsec. (a) to include the control of proxies of a domestic insurance company and the control of any corporation controlling such a company within the limitations and requirements of the section; P.A. 85-16 added Subsec. (c) re acquisition of control of corporation which controls a domestic insurance company; Sec. 38-39b transferred to Sec. 38a-130 in 1991; P.A. 92-112 amended Subsec. (a) to provide that no entity may control a domestic insurance company without the approval of the commissioner, making technical corrections for statutory consistency, amended Subsec. (b) deleting the prior minimum provisions of the statement made under oath and added twelve new Subdivs. outlining new criteria, deleted the previous Subsec. (c)(1) and relettered and renumbered the previous Subsec. (c)(2), made technical changes re nondomestic insurance companies which control domestic insurers, deleted the requirement of the commissioner’s approval, deleted language from the former Subsec. (c)(3) and created new Subsec. (c)(2) re public hearings given to review any acquisition of control and applicable exemptions, added new Subsec. (d) re minimum provisions of what constitutes a violation of this section and added new Subsec. (e) empowering the courts of this state with jurisdiction over persons not resident, domiciled or authorized to do business in this state who file a statement with the commissioner; P.A. 93-239 deleted Subsec. (c)(2) re public hearings given to review any acquisition of control and applicable exemptions and deleted obsolete references in Subsec. (d); P.A. 12-103 amended Subsec. (a) to designate provision re prohibitions on person other than the issuer as Subdiv. (1) and amend same by adding Subparas. (A) and (B) re “domestic insurance company” inclusion and “person” exclusion, designate provision re person to file information statement as Subdiv. (2)(A)(i), add Subdiv. (2)(A)(ii) permitting person required to file information statement to use registration statement under Securities Act of 1933 or Securities Exchange Act of 1934, add Subdiv. (2)(B) requiring filing of preacquisition notification and add Subdiv. (3) re filing requirements for divestiture, amended Subsec. (b) to designate provisions re required statement as new Subdiv. (1) and amend same by redesignating existing Subdivs. (1) to (12) as Subparas. (A) to (K) and (N), adding Subpara. (L) re acknowledgment of good faith effort to file annual enterprise risk report and adding Subpara. (M) re acknowledgment to provide information to commissioner, and to designate provisions re information requirement for group as new Subdiv. (2), amended Subsec. (d) to add provision re effectuation of divestiture as violation, and made technical and conforming changes; P.A. 13-134 made a technical change in Subsec. (b)(1)(M); P.A. 14-235 made a technical change in Subsec. (a)(3); P.A. 15-144 amended Subsec. (a)(2)(A)(i) to add references to arrangement or understanding and “, whether written or oral,”, effective July 1, 2015.