2005 Nevada Revised Statutes - Chapter 692C — Holding Companies

CHAPTER 692C - HOLDING COMPANIES

GENERAL PROVISIONS

NRS 692C.010 Shorttitle.

NRS 692C.020 Definitions.

NRS 692C.025 Acquisitiondefined.

NRS 692C.030 Affiliatedefined.

NRS 692C.040 Commissionerdefined.

NRS 692C.050 Controldefined.

NRS 692C.060 Insuranceholding company system defined.

NRS 692C.070 Insurerdefined.

NRS 692C.075 Involvedinsurer defined.

NRS 692C.080 Persondefined.

NRS 692C.090 Securityholder defined.

NRS 692C.100 Subsidiarydefined.

NRS 692C.110 Votingsecurity defined.

NRS 692C.120 Rules,regulations and orders.

FORMATION AND ACQUISITION OF SUBSIDIARIES; MERGERS

NRS 692C.130 Organizationand acquisition of subsidiaries authorized.

NRS 692C.140 Authorizedinvestments in securities of subsidiaries.

NRS 692C.150 Exemptionfrom restrictions on investments.

NRS 692C.160 Determinationof qualification of investment.

NRS 692C.170 Cessationof control: Disposal of investment required; exception.

NRS 692C.180 Acquisitionor merger: Filing requirements; approval by Commissioner.

NRS 692C.190 Acquisitionor merger: Contents of statement.

NRS 692C.200 Acquisitionor merger: Use of alternative documents.

NRS 692C.210 Acquisitionor merger: Prerequisites for approval; hearing and notice; powers and duties ofCommissioner; period for infusion of capital.

NRS 692C.220 Informationto be furnished to shareholders.

NRS 692C.230 Exemptions.

NRS 692C.240 Violations.

NRS 692C.250 Jurisdictionof court; consent to service of process.

REVIEW OF ACQUISITION BY COMMISSIONER

NRS 692C.252 Applicability.

NRS 692C.254 Formof notice; waiting period.

NRS 692C.256 Orderof Commissioner relating to acquisition: Issuance; standards.

NRS 692C.258 Orderof Commissioner relating to acquisition: Hearing; written decision; effectivedate; plan to remedy conditions that caused order to be issued; applicability;penalty.

REGISTRATION

NRS 692C.260 Registrationrequired; person within insurance holding company system subject toregistration required to provide information to insurer.

NRS 692C.270 Registrationstatement: Contents.

NRS 692C.280 Registrationstatement: Exempt information.

NRS 692C.290 Registrationstatement: Amendment; report of distributions to shareholders.

NRS 692C.300 Terminationof registration.

NRS 692C.310 Consolidatedregistration.

NRS 692C.320 Registrationon behalf of affiliated insurer.

NRS 692C.330 Disclaimerof affiliation; disallowance.

NRS 692C.340 Exemptions.

NRS 692C.350 Violations;penalties.

MISCELLANEOUS PROVISIONS

NRS 692C.355 Proposalto acquire or change or continue control of insurer domiciled in State: Notice;action by Commissioner.

NRS 692C.360 Transactionswith affiliates.

NRS 692C.363 Insurerrequired to notify Commissioner of intent to enter into certain transactionswith affiliate; approval of transactions; exceptions.

NRS 692C.367 Insurerprohibited from entering into separate transactions with affiliate with intentto avoid review; review of transactions by Commissioner; insurer to notifyCommissioner of large investment in corporation.

NRS 692C.370 Adequacyof surplus.

NRS 692C.380 Extraordinarydistributions to shareholders: Definition.

NRS 692C.390 Extraordinarydistributions to shareholders: Notice; approval.

NRS 692C.400 Extraordinarydistributions to shareholders: Conditional declaration.

NRS 692C.402 Sourcesfrom which receiver appointed under order for liquidation or rehabilitation ofinsurer is authorized to recover.

NRS 692C.404 Liabilityof person who controlled insurer or affiliate at time distributions were paidor declared.

REMEDIES; PENALTIES

NRS 692C.410 Powersof Commissioner; expense of examination.

NRS 692C.420 Confidentialityof disclosed information; exception.

NRS 692C.430 Injunctiverelief.

NRS 692C.440 Prohibitedvoting of securities.

NRS 692C.450 Sequestrationof voting securities.

NRS 692C.460 Receivership.

NRS 692C.470 Suspension,revocation or refusal of license.

NRS 692C.480 Criminalproceedings and penalties.

NRS 692C.485 Penaltyfor violation of certain provisions by director or officer of insurance holdingcompany system; order of Commissioner to cease and desist; order ofCommissioner to rescind certain contracts.

NRS 692C.490 Judicialreview.

_________

GENERAL PROVISIONS

NRS 692C.010 Shorttitle. This chapter may be cited as the InsuranceHolding Company Law.

(Added to NRS by 1973, 1037)

NRS 692C.020 Definitions. As used in this chapter, unless the context otherwiserequires, the words and terms defined in NRS692C.025 to 692C.110, inclusive,have the meanings ascribed to them in those sections.

(Added to NRS by 1973, 1037; A 2003, 3322)

NRS 692C.025 Acquisitiondefined. Acquisition means any agreement,arrangement or activity, the consummation of which results in a person directlyor indirectly acquiring the control of another person. The term includes, butis not limited to:

1. The acquiring of a voting security;

2. The acquiring of any asset;

3. Bulk reinsurance; and

4. A merger.

(Added to NRS by 2003, 3318)

NRS 692C.030 Affiliatedefined. Affiliate means a person whodirectly or indirectly, through one or more intermediaries, controls or iscontrolled by or is under common control with another designated person.

(Added to NRS by 1973, 1037)

NRS 692C.040 Commissionerdefined. Commissioner means the Commissionerof Insurance, his deputies, or the Division, as appropriate.

(Added to NRS by 1973, 1037; A 1991, 1633)

NRS 692C.050 Controldefined.

1. Control means the possession, direct or indirect,of the power to direct or cause the direction of the management and policies ofa person, whether through the ownership of voting securities, by contract otherthan a commercial contract for goods or nonmanagement services or otherwise,unless the power is the result of an official position with or corporate officeheld by the person.

2. Control shall be presumed to exist if any persondirectly or indirectly owns, controls, holds with the power to vote or holdsproxies representing 10 percent or more of the voting securities of any otherperson. This presumption may be rebutted by a showing made in the mannerprovided by NRS 692C.330 that controldoes not exist in fact.

3. The Commissioner may determine, after furnishingall persons in interest notice and opportunity to be heard and making specificfindings of fact to support such determination, that control exists in fact,notwithstanding the absence of a presumption to that effect.

(Added to NRS by 1973, 1038, 1039)

NRS 692C.060 Insuranceholding company system defined. Insuranceholding company system means a combination of two or more affiliated persons,one or more of which is an insurer.

(Added to NRS by 1973, 1038)

NRS 692C.070 Insurerdefined. Insurer has the meaning ascribed inNRS 679A.100. It does not includeagencies, authorities or instrumentalities of the United States, itspossessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or any state or political subdivision of a state.

(Added to NRS by 1973, 1038)

NRS 692C.075 Involvedinsurer defined. Involved insurer includesan insurer that:

1. Acquires a person or is acquired by a person;

2. Is affiliated with an insurer that acquires aperson or is acquired by a person; or

3. Is the result of a merger.

(Added to NRS by 2003, 3318)

NRS 692C.080 Persondefined. Person includes an individual,corporation, limited-liability company, partnership, association, joint stockcompany, trust, unincorporated organization or any similar entity, or anycombination thereof acting in concert. The term does not include:

1. Any joint venture partnership that is exclusivelyengaged in owning, managing, leasing or developing any real or tangiblepersonal property; or

2. Any securities broker performing no more than theusual and customary brokers function.

(Added to NRS by 1973, 1038; A 1985, 538; 2003, 3322)

NRS 692C.090 Securityholder defined. Security holder means onewho owns any security of a designated person, including common stock, preferredstock, debt obligations, and any other security convertible into or evidencingthe right to acquire any of the foregoing.

(Added to NRS by 1973, 1038)

NRS 692C.100 Subsidiarydefined. Subsidiary means an affiliate of adesignated person who is controlled by such person directly or indirectlythrough one or more intermediaries.

(Added to NRS by 1973, 1038)

NRS 692C.110 Votingsecurity defined. Voting security includesany security convertible into or evidencing a right to acquire a votingsecurity.

(Added to NRS by 1973, 1038)

NRS 692C.120 Rules,regulations and orders. The Commissioner may,pursuant to NRS 679B.130, issue suchrules, regulations and orders as shall be necessary to carry out the provisionsof this chapter.

(Added to NRS by 1973, 1048)

FORMATION AND ACQUISITION OF SUBSIDIARIES; MERGERS

NRS 692C.130 Organizationand acquisition of subsidiaries authorized. Anydomestic insurer, either by itself or in cooperation with one or more persons,may organize or acquire one or more subsidiaries. Such subsidiaries may conductany kind of business or businesses and their authority to do so shall not belimited by reason of the fact that they are subsidiaries of a domestic insurer.

(Added to NRS by 1973, 1038)

NRS 692C.140 Authorizedinvestments in securities of subsidiaries. Inaddition to making investments in common stock, preferred stock, debtobligations and other securities permitted under chapter682A of NRS, a domestic insurer may invest:

1. In common stock, preferred stock, debt obligationsand other securities of one or more subsidiaries, amounts which do not exceedthe lesser of 10 percent of the insurers assets or 50 percent of its surplusas regards policyholders, if the insurers surplus as regards policyholdersremains at a reasonable level in relation to the insurers outstandingliabilities and adequate to its financial needs. In calculating the amount ofsuch investments, the following must be included:

(a) Total money or other consideration expended andobligations assumed in the acquisition or formation of a subsidiary, includingall organizational expenses and contributions to capital and surplus of thesubsidiary whether or not represented by the purchase of capital stock orissuance of other securities; and

(b) All amounts expended in acquiring additional commonstock, preferred stock, debt obligations and other securities and allcontributions to the capital or surplus of a subsidiary after its acquisitionor formation.

2. Any amount in common stock, preferred stock, debtobligations and other securities of one or more subsidiaries, if eachsubsidiary agrees to limit its investments in any asset so that thoseinvestments will not cause the amount of the total investment of the insurer toexceed any of the investment limitations specified in subsection 1 or in chapter 682A of NRS. For the purpose of thissubsection, total investment of the insurer includes any direct investment bythe insurer in an asset and the insurers proportionate share of any investmentin an asset by any subsidiary of the insurer, which must be calculated bymultiplying the amount of the subsidiarys investment by the percentage of theinsurers ownership of the subsidiary.

3. Any amount in common stock, preferred stock, debtobligations or other securities of one or more subsidiaries, with the approvalof the Commissioner, if the insurers surplus as regards policyholders remainsat a reasonable level in relation to the insurers outstanding liabilities andadequate to its financial needs.

(Added to NRS by 1973, 1038; A 2001, 2229; 2003, 3322)

NRS 692C.150 Exemptionfrom restrictions on investments. Investmentsin common stock, preferred stock, debt obligations or other securities ofsubsidiaries made pursuant to NRS 692C.140shall not be subject to any of the otherwise applicable restrictions orprohibitions contained in this chapter which are applicable to suchinvestments.

(Added to NRS by 1973, 1039)

NRS 692C.160 Determinationof qualification of investment. Whether or notany investment made pursuant to NRS692C.140 meets the applicable requirements thereof is to be determinedimmediately after such investment is made, taking into account the thenoutstanding principal balance on all previous investments in debt obligations,and the value of all previous investments in equity securities as of the datethey were made.

(Added to NRS by 1973, 1039)

NRS 692C.170 Cessationof control: Disposal of investment required; exception. If an insurer ceases to control a subsidiary, it shalldispose of any investment therein made pursuant to NRS 692C.140 within 3 years from the timeof the cessation of control or within such further time as the Commissioner mayprescribe, unless any such investment shall have met the requirements forinvestment under any other section of this chapter, and the insurer hasnotified the Commissioner thereof.

(Added to NRS by 1973, 1040)

NRS 692C.180 Acquisitionor merger: Filing requirements; approval by Commissioner.

1. No person other than the issuer may make a tenderfor or a request or invitation for tenders of, or enter into any agreement toexchange securities for, seek to acquire or acquire in the open market orotherwise, any voting security of a domestic insurer if, after the consummationthereof, he would directly or indirectly, or by conversion or by exercise ofany right to acquire, be in control of the insurer, nor may any person enterinto an agreement to merge with or otherwise acquire control of a domesticinsurer, unless, at the time any such offer, request or invitation is made orany such agreement is entered into, or before the acquisition of thosesecurities if no offer or agreement is involved, he has filed with theCommissioner and has sent to the insurer, and the insurer has sent to itsshareholders, a statement containing the information required by NRS 692C.180 to 692C.250, inclusive, and the offer, request,invitation, agreement or acquisition has been approved by the Commissioner inthe manner prescribed in this chapter.

2. For purposes of this section, a domestic insurerincludes any other person controlling a domestic insurer unless the otherperson is directly or through his affiliates primarily engaged in a businessother than the business of insurance. If a person is directly or through hisaffiliates primarily engaged in a business other than the business ofinsurance, he shall, at least 60 days before the proposed effective date of theacquisition, file a notice of intent to acquire with the Commissioner settingforth the information required by NRS692C.254.

(Added to NRS by 1973, 1040; A 2001, 2230; 2003, 3323)

NRS 692C.190 Acquisitionor merger: Contents of statement. The statementto be filed with the Commissioner hereunder shall be made under oath or affirmationand shall contain the following:

1. The name and address of each person (hereinaftercalled the acquiring party) by whom or on whose behalf the merger or otheracquisition of control referred to in NRS692C.180 is to be effected and, if such person is:

(a) An individual, his principal occupation and alloffices and positions held by him during the past 5 years, and any convictionof crimes other than for minor traffic violations during the past 10 years.

(b) Not an individual, a report of the nature of itsbusiness operations during the past 5 years or for such lesser period as suchperson and any predecessors thereof shall have been in existence, together withan informative description of the business intended to be done by such personand such persons subsidiaries, and a list of all individuals who are or whohave been selected to become directors or executive officers of such person orwho perform or will perform functions appropriate to such positions. Such listshall include for each such individual the information required by paragraph(a) of this subsection.

2. The source, nature and amount of the considerationused or to be used in effecting the merger or other acquisition of control, adescription of any transaction wherein funds were or are to be obtained for anysuch purpose, and the identity of persons furnishing such consideration, butwhere a source of such consideration is a loan made in the lenders ordinarycourse of business, the identity of the lender shall remain confidential, ifthe person filing such statement so requests.

3. Fully audited financial information as to theearnings and financial condition of each acquiring party for the preceding 5fiscal years of each such acquiring party (or for such lesser period as suchacquiring party and any predecessors thereof shall have been in existence), andsimilar unaudited information as of a date not earlier than 90 days prior tothe filing of the statement.

4. Any plans or proposals which each acquiring partymay have to liquidate such insurer, to sell its assets or merge or consolidateit with any person, or to make any other material change in its business orcorporate structure or management.

5. The number of shares of any security referred to inNRS 692C.180 which each acquiringparty proposes to acquire, and the terms of the offer, request, invitation,agreement or acquisition referred to in NRS692C.180 and a statement as to the method by which the fairness of theproposal was determined.

6. The amount of each class of any security referredto in NRS 692C.180 which isbeneficially owned or concerning which there is a right to acquire beneficialownership by each acquiring party.

7. A full description of any contracts, arrangementsor understandings with respect to any security referred to in NRS 692C.180 in which any acquiring partyis involved, including but not limited to transfer of any of the securities,joint ventures, loan or option arrangements, puts or calls, guarantees ofloans, guarantees against loss or guarantees of profits, division of losses orprofits or the giving or withholding of proxies. Such description shallidentify the persons with whom such contracts, arrangements or understandingshave been made.

8. A description of the purchase of any securityreferred to in NRS 692C.180 during the12 calendar months preceding the filing of the statement by any acquiringparty, including the dates of purchase, names of the purchasers andconsideration paid or agreed to be paid therefor.

9. A description of any recommendations to purchaseany security referred to in NRS 692C.180made during the 12 calendar months preceding the filing of the statement by anyacquiring party, or by anyone based upon interviews with or at the suggestionof such acquiring party.

10. Copies of all tenders, offers for, requests orinvitations for tenders of, exchange offers for, and agreements to acquire orexchange any securities referred to in subsection 1, and, if distributed,additional soliciting material relating thereto.

11. The terms of any agreement, contract orunderstanding made with any broker-dealer, as to solicitation of securitiesreferred to in NRS 692C.180, fortender, and the amount of any fees, commissions or other compensation to bepaid to broker-dealers with regard thereto.

12. Such additional information as the Commissionermay by rule or regulation prescribe as necessary or appropriate for theprotection of policy holders and security holders of the insurer or for theprotection of the public interest.

If theperson required to file the statement referred to in this section is a partnership,limited partnership, syndicate or other group, the Commissioner may requirethat the information required by subsections 1 to 12, inclusive, of thissection, be given with respect to each partner of such partnership or limitedpartnership, each member of such syndicate or group, and each person whocontrols such partner or member. If any such partner, member or person is acorporation or the person required to file the statement referred to in NRS 692C.180 is a corporation, the Commissionermay require that the information required by subsections 1 to 12, inclusive, ofthis section, be given with respect to such corporation, each officer anddirector of such corporation, and each person who is directly or indirectly thebeneficial owner of more than 10 percent of the outstanding voting securitiesof such corporation. If any material change occurs in the facts set forth in thestatement filed with the Commissioner and sent to such insurer pursuant to thissection, an amendment setting forth such change, together with copies of alldocuments and other material relevant to such change, shall be filed with theCommissioner and sent to such insurer within 2 business days after the personlearns of such change. Such insurer shall send each such amendment to itsshareholders.

(Added to NRS by 1973, 1040)

NRS 692C.200 Acquisitionor merger: Use of alternative documents. Ifany offer, request, invitation, agreement or acquisition referred to in NRS 692C.180 is proposed to be made bymeans of a registration statement under the Securities Act of 1933, 15 U.S.C. 77a to 77aa, inclusive, or in circumstances requiring the disclosure ofsimilar information under the Securities Exchange Act of 1934, 15 U.S.C. 77bet seq., or under any state law requiring similar registration or disclosure,the person required to file the statement referred to in NRS 692C.180 may utilize such documentsin furnishing the information called for by that statement.

(Added to NRS by 1973, 1042)

NRS 692C.210 Acquisitionor merger: Prerequisites for approval; hearing and notice; powers and duties ofCommissioner; period for infusion of capital.

1. Except as otherwise provided in subsection 5, theCommissioner shall approve any merger or other acquisition of control referredto in NRS 692C.180 unless, after apublic hearing thereon, he finds that:

(a) After the change of control, the domestic insurerspecified in NRS 692C.180 would not beable to satisfy the requirements for the issuance of a license to write theline or lines of insurance for which it is presently licensed;

(b) The effect of the merger or other acquisition ofcontrol would be substantially to lessen competition in insurance in this stateor tend to create a monopoly;

(c) The financial condition of any acquiring party mayjeopardize the financial stability of the insurer, or prejudice the interest ofits policyholders or the interests of any remaining security holders who areunaffiliated with the acquiring party;

(d) The terms of the offer, request, invitation,agreement or acquisition referred to in NRS692C.180 are unfair and unreasonable to the security holders of the insurer;

(e) The plans or proposals which the acquiring partyhas to liquidate the insurer, sell its assets or consolidate or merge it withany person, or to make any other material change in its business or corporatestructure or management, are unfair and unreasonable to policyholders of theinsurer and not in the public interest;

(f) The competence, experience and integrity of thosepersons who would control the operation of the insurer are such that it wouldnot be in the interest of policyholders of the insurer and of the public topermit the merger or other acquisition of control; or

(g) If approved, the merger or acquisition of controlwould likely be harmful or prejudicial to the members of the public whopurchase insurance.

2. The public hearing specified in subsection 1 mustbe held within 30 days after the statement required by NRS 692C.180 has been filed, and at least20 days notice thereof must be given by the Commissioner to the person filingthe statement. Not less than 7 days notice of the public hearing must be givenby the person filing the statement to the insurer and to any other persondesignated by the Commissioner. The insurer shall give such notice to itssecurity holders. The Commissioner shall make a determination within 30 daysafter the conclusion of the hearing. If he determines that an infusion ofcapital to restore capital in connection with the change in control isrequired, the requirement must be met within 60 days after notification isgiven of the determination. At the hearing, the person filing the statement,the insurer, any person to whom notice of hearing was sent and any other personwhose interests may be affected thereby may present evidence, examine andcross-examine witnesses, and offer oral and written arguments and, inconnection therewith, may conduct discovery proceedings in the same manner asis presently allowed in the district court of this state. All discoveryproceedings must be concluded not later than 3 days before the commencement ofthe public hearing.

3. The Commissioner may retain at the acquiring partysexpense attorneys, actuaries, accountants and other experts not otherwise apart of his staff as may be reasonably necessary to assist him in reviewing theproposed acquisition of control.

4. The period for review by the Commissioner must notexceed the 60 days allowed between the filing of the notice of intent toacquire required pursuant to subsection 2 of NRS 692C.180 and the date of the proposedacquisition if the proposed affiliation or change of control involves afinancial institution, or an affiliate of a financial institution, and aninsured.

5. When making a determination pursuant to paragraph(b) of subsection 1, the Commissioner:

(a) Shall require the submission of the informationspecified in subsection 2 of NRS 692C.254;

(b) Shall not disapprove the merger or acquisition ofcontrol if he finds that any of the circumstances specified in subsection 3 of NRS 692C.256 exist; and

(c) May condition his approval of the merger oracquisition of control in the manner provided in subsection 4 of NRS 692C.258.

6. If, in connection with a change of control of adomestic insurer, the Commissioner determines that the person who is acquiringcontrol of the domestic insurer must maintain or restore the capital of thedomestic insurer in an amount that is required by the laws and regulations ofthis state, the Commissioner shall make the determination not later than 60days after the notice of intent to acquire required pursuant to subsection 2 ofNRS 692C.180 is filed with theCommissioner.

(Added to NRS by 1973, 1042; A 1985, 1070; 1995,1775; 2001, 2230;2003, 3323)

NRS 692C.220 Informationto be furnished to shareholders. All statements,amendments or other material filed pursuant to NRS 692C.180 and 692C.190 and all notices of public hearingsheld pursuant to NRS 692C.210 shall bemailed by the insurer to its shareholders within 5 business days after theinsurer has received such statements, amendments, other material or notices.The expenses of mailing shall be borne by the person making the filing. Assecurity for the payment of such expenses, such person shall file with theCommissioner an acceptable bond or other deposit in an amount to be determinedby the Commissioner.

(Added to NRS by 1973, 1043)

NRS 692C.230 Exemptions. The provisions of NRS692C.180 to 692C.250, inclusive,do not apply to:

1. A transaction which is subject to the provisions ofNRS 693A.290 to 693A.370, inclusive, dealing with themerger or consolidation of two or more insurers.

2. Any offer, request, invitation, agreement oracquisition which the Commissioner by order exempts therefrom as not havingbeen made or entered into for the purpose and not having the effect of changingor influencing the control of a domestic insurer, or as otherwise notcomprehended within the purposes of NRS692C.180 to 692C.250, inclusive.

(Added to NRS by 1973, 1043; A 1995, 1776)

NRS 692C.240 Violations. The following shall be violations of NRS 692C.180 to 692C.250, inclusive:

1. The failure to file any statement, amendment orother material required to be filed pursuant to NRS 692C.180 or 692C.190; or

2. The effectuation or any attempt to effectuate anacquisition of control of, or merger with, a domestic insurer unless theCommissioner has given his approval thereto.

(Added to NRS by 1973, 1044)

NRS 692C.250 Jurisdictionof court; consent to service of process.

1. The courts of this state are hereby vested withjurisdiction over every person not resident, domiciled or authorized to dobusiness in this state who files a statement with the Commissioner under NRS 692C.180 to 692C.250, inclusive, and over all actionsinvolving such person arising out of violations of such sections.

2. Each such person shall be deemed to have performedacts equivalent to and constituting an appointment by such a person of theCommissioner to be his true and lawful attorney upon whom may be served alllawful process in any action, suit or proceeding arising out of violations of NRS 692C.180 to 692C.250, inclusive. Copies of all suchlawful process shall be served on the Commissioner and transmitted byregistered or certified mail by the Commissioner to such person at his lastknown address.

(Added to NRS by 1973, 1044)

REVIEW OF ACQUISITION BY COMMISSIONER

NRS 692C.252 Applicability. The provisions of this chapter apply to any acquisition inwhich a change in control of an insurer who is authorized to do business inthis state occurs, except:

1. An acquisition that is subject to approval ordisapproval by the Commissioner pursuant to NRS692C.180 to 692C.250, inclusive.

2. A purchase of securities solely for investmentpurposes if the securities are not used for voting or not otherwise used tocause or attempt to cause a substantial lessening of competition in anyinsurance market in this state, except that, if a purchase of securitiescreates a presumption of control of the insurer pursuant to subsection 2 of NRS 692C.050, the purchase is not solelyfor investment purposes unless the commissioner of insurance of the insurersstate of domicile:

(a) Accepts a disclaimer of control or affirmativelyfinds that control does not exist; and

(b) Submits the accepted disclaimer or a statementsetting forth the affirmative finding to the Commissioner.

3. An acquisition of a person by another person if:

(a) Each of those persons is not directly or through anaffiliate primarily engaged in the business of insurance; and

(b) At least 30 days before the effective date of theacquisition, a notice is filed with the Commissioner in accordance with NRS 692C.254, if required.

4. An acquisition by a person of an affiliate of thatperson.

5. An acquisition that does not immediately cause:

(a) The combined market share of the involved insurers toexceed 5 percent of the total market;

(b) An increase in any market share; or

(c) For any market:

(1) The combined market share of the involvedinsurers to exceed 12 percent of the total market; and

(2) The market share to increase by more than 2 percentof the total market.

As used inthis subsection, market means direct written premiums in this state for aline of authority set forth in the annual statement required to be filed byinsurers authorized to do business in this state.

6. An acquisition for which, solely because of theeffect of the acquisition on ocean marine insurance, a notification is requiredpursuant to this section.

7. An acquisition of an insurer whose domiciliarycommissioner of insurance:

(a) Determines that:

(1) The insurer is in a failing condition;

(2) A feasible alternative for improving thatcondition does not exist; and

(3) The public benefit received from improvingthat condition through the acquisition of the insurer outweighs the publicbenefit received from increasing competition; and

(b) Submits his determination made pursuant toparagraph (a) to the Commissioner.

(Added to NRS by 2003, 3318)

NRS 692C.254 Formof notice; waiting period.

1. An acquisition to which the provisions of NRS 692C.252 apply is subject to an orderissued pursuant to NRS 692C.258unless:

(a) The acquiring person files a notice of acquisitionpursuant to this section; and

(b) The waiting period specified in subsection 4 hasexpired.

2. The Commissioner shall prescribe the form of thenotice required pursuant to subsection 1. A notice of acquisition filedpursuant to this section must include:

(a) The information required by the NationalAssociation of Insurance Commissioners relating to any market that, pursuant tosubsection 5 of NRS 692C.252, causesthe acquisition not to be exempted from the provisions of this section; and

(b) Any other material or information required by theCommissioner to determine whether or not the proposed acquisition, ifconsummated, would violate the provisions of NRS 692C.256.

3. The information required pursuant to subsection 2may include the opinion of an economist relating to the competitive effect ofthe acquisition on the business of insurance in this state if the opinion isaccompanied by a summary of the education and experience of the economist and astatement indicating his ability to provide an informed opinion.

4. Except as otherwise provided in subsection 5, thewaiting period for an acquisition required pursuant to subsection 1 begins onthe date the Commissioner receives the notice filed pursuant to subsection 1and ends on the expiration of 30 days after that date or on the expiration of ashorter period prescribed by the Commissioner, whichever is earlier.

5. Before the expiration of the waiting periodspecified in subsection 4, the Commissioner may, not more than once, require aperson to submit additional information relating to the proposed acquisition.If the Commissioner requires the submission of additional information, thewaiting period for the acquisition ends upon the expiration of 30 days afterthe Commissioner receives the additional information or upon the expiration ofa shorter period prescribed by the Commissioner, whichever is earlier.

(Added to NRS by 2003, 3319)

NRS 692C.256 Orderof Commissioner relating to acquisition: Issuance; standards.

1. The Commissioner may issue an order pursuant to NRS 692C.258 relating to an acquisitionif:

(a) The effect of the acquisition may substantiallylessen competition in any line of insurance in this state or tend to create amonopoly; or

(b) The acquiring person fails to file sufficientmaterials or information pursuant to NRS692C.254.

2. In determining whether to issue an order pursuantto subsection 1, the Commissioner shall consider the standards set forth in theHorizontal Merger Guidelines issued by the United States Department of Justiceand the Federal Trade Commission and in effect at the time the Commissionerreceives the notice required pursuant to NRS692C.254.

3. The Commissioner shall not issue an order specifiedin subsection 1:

(a) If:

(1) The acquisition creates substantialeconomies of scale or economies in the use of resources that may not be createdin any other manner; and

(2) The public benefit received from thoseeconomies exceeds the public benefit received from not lessening competition;or

(b) If:

(1) The acquisition substantially increases theavailability of insurance; and

(2) The public benefit received by that increaseexceeds the public benefit received from not lessening competition.

4. The public benefits set forth in subparagraph 2 ofparagraphs (a) and (b) of subsection 3 may be considered together, asapplicable, in assessing whether the public benefits received from theacquisition exceed any benefit to competition that would arise fromdisapproving the acquisition.

5. The Commissioner has the burden of establishing aviolation of the competitive standard set forth in subsection 1.

(Added to NRS by 2003, 3319)

NRS 692C.258 Orderof Commissioner relating to acquisition: Hearing; written decision; effectivedate; plan to remedy conditions that caused order to be issued; applicability;penalty.

1. Except as otherwise provided in this section, ifthe Commissioner determines that an acquisition may substantially lessencompetition in any line of insurance in this state or tends to create amonopoly, he may issue an order:

(a) Requiring an involved insurer to cease and desistfrom doing business in this state relating to that line of insurance; or

(b) Denying the application of an acquired or acquiringinsurer for a license or authority to do business in this state.

2. The Commissioner shall not issue an order pursuantto subsection 1 unless:

(a) He conducts a hearing concerning the acquisition inaccordance with NRS 679B.310 to 679B.370, inclusive;

(b) A notice of the hearing is issued before theexpiration of the waiting period for the acquisition specified in NRS 692C.254, but not less than 15 daysbefore the hearing; and

(c) The hearing is conducted and the order is issuednot later than 60 days after the expiration of the waiting period.

3. Each order issued pursuant to subsection 1 mustinclude a written decision of the Commissioner setting forth his findings offact and conclusions of law relating to the acquisition.

4. An order issued pursuant to this section does notbecome final until 30 days after it is issued, during which time the involvedinsurer may submit to the Commissioner a plan to remedy, within a reasonableperiod, the anticompetitive effect of the acquisition. As soon as practicableafter receiving the plan, the Commissioner shall, based upon the plan and anyinformation included in the plan, issue a written determination setting forth:

(a) The conditions or actions, if any, required to:

(1) Eliminate the anticompetitive effect of theacquisition; and

(2) Vacate or modify the order; and

(b) The period in which the conditions or actionsspecified in paragraph (a) must be performed.

5. An order issued pursuant to subsection 1 does notapply to an acquisition that is not consummated.

6. A person who violates a cease and desist orderissued pursuant to this section during any period in which the order is ineffect is subject, at the discretion of the Commissioner, to:

(a) The imposition of a civil penalty of not more than$10,000 per day for each day the violation continues;

(b) The suspension or revocation of the personslicense or certificate of authority; or

(c) Both the imposition of a civil penalty pursuant toparagraph (a) and the suspension or revocation of the persons license orcertificate of authority pursuant to paragraph (b).

7. In addition to any fine imposed pursuant to NRS 692C.480, any insurer or other personwho fails to make any filing required by NRS692C.252 to 692C.258, inclusive,and who fails to make a good faith effort to comply with any such requirementis subject to a fine of not more than $50,000.

8. The provisions of NRS 692C.430, 692C.440 and 692C.460 do not apply to an acquisitionto which the provisions of NRS 692C.252apply.

(Added to NRS by 2003, 3320)

REGISTRATION

NRS 692C.260 Registrationrequired; person within insurance holding company system subject toregistration required to provide information to insurer.

1. Every insurer which is authorized to do business inthis state and which is a member of an insurance holding company system shallregister with the Commissioner, except a foreign insurer subject to disclosurerequirements and standards adopted by a statute or regulation in thejurisdiction of its domicile which are substantially similar to those containedin NRS 692C.260 to 692C.350, inclusive.

2. Any insurer which is subject to registration under NRS 692C.260 to 692C.350, inclusive, shall register notlater than September 1, 1973, or 15 days after it becomes subject toregistration, whichever is later, unless the Commissioner for good cause shownextends the time for registration. The Commissioner may require any authorizedinsurer which is a member of a holding company system which is not subject toregistration under this section to furnish a copy of the registration statementor other information filed by the insurance company with the insurance regulatoryauthority of domiciliary jurisdiction.

3. Any person within an insurance holding companysystem subject to registration shall, upon request by an insurer, providecomplete and accurate information to the insurer if the information isreasonably necessary to enable the insurer to comply with the provisions ofthis section.

(Added to NRS by 1973, 1044; A 2003, 3325)

NRS 692C.270 Registrationstatement: Contents. Every insurer subject toregistration shall file a registration statement on a form provided by theCommissioner, which must contain current information about:

1. The capital structure, general financial condition,ownership and management of the insurer and any person controlling the insurer.

2. The identity of every member of the insuranceholding company system.

3. The following agreements in force, relationshipssubsisting and transactions currently outstanding between the insurer and itsaffiliates:

(a) Loans, other investments or purchases, sales orexchanges of securities of the affiliates by the insurer or of the insurer byits affiliates.

(b) Purchases, sales or exchanges of assets.

(c) Transactions not in the ordinary course ofbusiness.

(d) Guarantees or undertakings for the benefit of anaffiliate which result in an actual contingent exposure of the insurers assetsto liability, other than insurance contracts entered into in the ordinarycourse of the insurers business.

(e) All management and service contracts and allcost-sharing arrangements, other than cost allocation arrangements based upongenerally accepted accounting principles.

(f) Reinsurance agreements covering all orsubstantially all of one or more lines of insurance of the ceding company.

(g) Any dividend or other distribution made to ashareholder.

(h) Any consolidated agreement to allocate taxes.

4. Any pledge of the insurers stock, including thestock of any subsidiary or controlling affiliate of the insurer, for a loanmade to any member of the insurance holding company system.

5. Any other matters concerning transactions betweenregistered insurers and any affiliates as may be included from time to time inany registration forms adopted or approved by the Commissioner.

(Added to NRS by 1973, 1044; A 2003, 3325)

NRS 692C.280 Registrationstatement: Exempt information. No informationneed be disclosed on the registration statement filed pursuant to NRS 692C.270 if such information is notmaterial for the purposes of NRS 692C.260to 692C.350, inclusive. Unless theCommissioner by rule, regulation or order provides otherwise, sales, purchases,exchanges, loans or extensions of credit, or investments involving one-half of1 percent or less of an insurers admitted assets as of the 31st day of Decembernext preceding, shall not be deemed material for purposes of NRS 692C.260 to 692C.350, inclusive.

(Added to NRS by 1973, 1045)

NRS 692C.290 Registrationstatement: Amendment; report of distributions to shareholders. Each registered insurer shall keep current the informationrequired to be disclosed in its registration statement by reporting allmaterial changes or additions on forms provided by the Commissioner within 15days after the end of the month in which it learns of each such change oraddition, and not less often than annually, except that, subject to theprovisions of NRS 692C.390, eachregistered insurer shall report all dividends and other distributions toshareholders within 5 business days following the declaration and 10 daysbefore payment.

(Added to NRS by 1973, 1045; A 1995, 1776)

NRS 692C.300 Terminationof registration. The Commissioner shall terminatethe registration of any insurer which demonstrates that it no longer is a memberof an insurance holding company system.

(Added to NRS by 1973, 1045)

NRS 692C.310 Consolidatedregistration. The Commissioner may require orallow two or more affiliated insurers subject to registration hereunder to filea consolidated registration statement or consolidated reports amending theirconsolidated registration statement or their individual registrationstatements.

(Added to NRS by 1973, 1045)

NRS 692C.320 Registrationon behalf of affiliated insurer. The Commissionermay allow an insurer which is authorized to do business in this state and whichis part of an insurance holding company system to register on behalf of anyaffiliated insurer which is required to register under NRS 692C.260, and to file all informationand material required to be filed under NRS692C.260 to 692C.350, inclusive.

(Added to NRS by 1973, 1045)

NRS 692C.330 Disclaimerof affiliation; disallowance.

1. Any person may file with the Commissioner:

(a) A disclaimer of affiliation with any authorizedinsurer specified in the disclaimer; or

(b) A request for a termination of registration on thebasis that the person does not, or will not after taking an action specified inthe request for termination, control another person specified in the request.

2. A disclaimer of affiliation or request for atermination of registration specified in subsection 1 may be filed by theauthorized insurer or any member of an insurance holding company system. Adisclaimer of affiliation or request for a termination of registration filedpursuant to subsection 1 must include:

(a) A statement indicating the number of authorized,issued and outstanding voting securities of the person specified in thedisclaimer of affiliation or request for a termination of registration;

(b) A statement indicating the number and percentage ofshares of the person specified in the disclaimer of affiliation or request fora termination of registration that are owned or beneficially owned by theperson disclaiming control, and the number of those shares for which the persondisclaiming control has a direct or indirect right to acquire;

(c) A statement setting forth all materialrelationships and bases for affiliation between the person specified in thedisclaimer of affiliation or request for a termination of registration and theperson and any affiliate of the person who is disclaiming control of the personspecified in the disclaimer of affiliation or request for a termination ofregistration; and

(d) An explanation of why the person who is disclaimingcontrol does not control the person specified in the disclaimer of affiliationor request for a termination of registration.

3. A request for a termination of registration filedpursuant to subsection 1 shall be deemed granted upon filing unless theCommissioner, within 30 days after receipt of the request for a termination ofregistration, notifies the person, authorized insurer or member of an insuranceholding company system that the request is denied.

4. After a disclaimer of affiliation has been filed,the insurer is relieved of any duty to register or report under NRS 692C.260 to 692C.350, inclusive, which may arise outof the insurers relationship with the person unless the Commissioner disallowsthe disclaimer. The Commissioner may disallow the disclaimer only after furnishingall parties in interest with a notice and opportunity to be heard and aftermaking specific findings of fact to support the disallowance.

(Added to NRS by 1973, 1046; A 2003, 3326)

NRS 692C.340 Exemptions. The provisions of NRS692C.260 to 692C.350, inclusive,shall not apply to any insurer, information or transaction if and to the extentthat the Commissioner by rule, regulation or order shall exempt the same fromthe provisions of NRS 692C.260 to 692C.350, inclusive.

(Added to NRS by 1973, 1046)

NRS 692C.350 Violations;penalties.

1. The failure to file a registration statement or anyamendment thereto required by NRS 692C.260to 692C.350, inclusive, within thetime specified for the filing is a violation of NRS 692C.260 to 692C.350, inclusive.

2. Except as otherwise provided in subsection 3, if aninsurer fails, without just cause, to file a registration statement requiredpursuant to NRS 692C.270, the insurershall, after receiving notice and a hearing, pay a civil penalty of $100 foreach day the insurer fails to file the registration statement. The civilpenalty may be recovered in a civil action brought by the Commissioner. Anycivil penalty paid pursuant to this subsection must be deposited in the StateGeneral Fund.

3. The maximum civil penalty that may be imposedpursuant to subsection 2 is $20,000. The Commissioner may reduce the amount ofthe civil penalty if the insurer demonstrates to the satisfaction of theCommissioner that the payment of the civil penalty would impose a financialhardship on the insurer.

4. Any officer, director or employee of an insuranceholding company system who willfully and knowingly subscribes to or makes orcauses to be made any false statement, false report or false filing with theintent to deceive the Commissioner in the performance of his duties pursuant toNRS 692C.260 to 692C.350, inclusive, is guilty of acategory D felony and shall be punished as provided in NRS 193.130. The officer, director oremployee is personally liable for any fine imposed against him pursuant to thatsection.

(Added to NRS by 1973, 1046; A 2003, 3327)

MISCELLANEOUS PROVISIONS

NRS 692C.355 Proposalto acquire or change or continue control of insurer domiciled in State: Notice;action by Commissioner. An insurer, financialholding company, depositary institution or affiliate of any of them whichproposes an acquisition or change or continuation of control of an insurerdomiciled in this state shall give notice to the Commissioner of the proposedaction no later than 60 days before the proposed action is to become effective.During this period, the Commissioner may collect, review and act uponapplications and other documents or reports relating to the proposed actionunder his authority conferred by this title.

(Added to NRS by 2001, 2228)

NRS 692C.360 Transactionswith affiliates. Material transactions by registeredinsurers with their affiliates are subject to all of the following standards:

1. The terms must be fair and reasonable.

2. Charges or fees for services performed must bereasonable.

3. Expenses incurred and payment received must beallocated to the insurer in conformity with customary accounting practicesconcerning insurance consistently applied.

4. The books, accounts and records of each party mustbe so maintained as to disclose clearly and accurately the precise nature anddetails of the transactions.

5. The insurers surplus as regards policyholdersfollowing any dividends or distributions to shareholder affiliates must bereasonable in relation to the insurers outstanding liabilities and adequate toits financial needs.

(Added to NRS by 1973, 1046; A 1995, 1776)

NRS 692C.363 Insurerrequired to notify Commissioner of intent to enter into certain transactionswith affiliate; approval of transactions; exceptions.

1. A domestic insurer shall not enter into any of thefollowing transactions with an affiliate unless the insurer has notified theCommissioner in writing of its intention to enter into the transaction at least60 days previously, or such shorter period as the Commissioner may permit, andthe Commissioner has not disapproved it within that period:

(a) A sale, purchase, exchange, loan or extension ofcredit, guaranty or investment if the transaction equals at least:

(1) With respect to an insurer other than a lifeinsurer, the lesser of 3 percent of the insurers admitted assets or 25 percentof surplus as regards policyholders; or

(2) With respect to a life insurer, 3 percent ofthe insurers admitted assets,

computed asof December 31 next preceding the transaction.

(b) A loan or extension of credit to any person who isnot an affiliate, if the insurer makes the loan or extension of credit with theagreement or understanding that the proceeds of the transaction, in whole or insubstantial part, are to be used to make loans or extensions of credit to, topurchase assets of, or to make investments in, any affiliate of the insurer ifthe transaction equals at least:

(1) With respect to insurers other than lifeinsurers, the lesser of 3 percent of the insurers admitted assets or 25percent of surplus as regards policyholders; or

(2) With respect to life insurers, 3 percent ofthe insurers admitted assets,

computed asof December 31 next preceding the transaction.

(c) An agreement for reinsurance or a modificationthereto in which the premium for reinsurance or a change in the insurersliabilities equals at least 5 percent of the insurers surplus as regardspolicyholders as of December 31 next preceding the transaction, including anagreement which requires as consideration the transfer of assets from aninsurer to a nonaffiliate, if an agreement or understanding exists between theinsurer and nonaffiliate that any portion of those assets will be transferredto an affiliate of the insurer.

(d) An agreement for management, contract for service,guarantee or arrangement to share costs.

(e) A guaranty made by a domestic insurer, except thata guaranty that is quantifiable as to amount is not subject to the provisionsof this subsection unless the guaranty exceeds the lesser of one-half of 1percent of the admitted assets of the domestic insurer or 10 percent of its surplusas regards policyholders as of December 31 next preceding the guaranty.

(f) Except as otherwise provided in subsection 3, adirect or indirect acquisition of or investment in a person who controls thedomestic insurer or an affiliate of the domestic insurer in an amount that,when added to its present holdings, exceeds 2.5 percent of the domesticinsurers surplus to policyholders.

(g) A material transaction, specified by regulation,which the Commissioner determines may adversely affect the interest of theinsurers policyholders.

2. This section does not authorize or permit anytransaction which, in the case of an insurer not an affiliate, would becontrary to law.

3. The provisions of paragraph (f) of subsection 1 donot apply to a direct or indirect acquisition of or investment in:

(a) A subsidiary acquired in accordance with thissection or NRS 692C.140; or

(b) A nonsubsidiary insurance affiliate that is subjectto the provisions of this chapter.

(Added to NRS by 1995, 1773; A 2001, 2231; 2003, 3327)

NRS 692C.367 Insurerprohibited from entering into separate transactions with affiliate with intentto avoid review; review of transactions by Commissioner; insurer to notifyCommissioner of large investment in corporation.

1. A domestic insurer may not intentionally enter intotransactions which are part of a plan or series of like transactions withaffiliates if the purpose of those separate transactions is to avoid thethreshold provided in NRS 692C.363 andthus avoid the review that would otherwise occur. If the Commissionerdetermines that such separate transactions were entered into over any 12-monthperiod for that purpose, he may exercise his authority pursuant to NRS 692C.410 to 692C.490, inclusive.

2. The Commissioner, in reviewing transactionspursuant to this section and NRS 692C.363,shall consider whether the transactions comply with the standards set forth in NRS 692C.360 and 692C.370 and whether the transactions mayadversely affect the interests of policyholders.

3. A domestic insurer shall notify the Commissionerwithin 30 days after it makes an investment in any corporation if the totalinvestment in that corporation by it and its affiliates exceeds 10 percent ofthe corporations voting securities.

(Added to NRS by 1995, 1774)

NRS 692C.370 Adequacyof surplus. For the purposes of this chapter,in determining whether or not an insurers surplus as regards policyholders isreasonable in relation to the insurers outstanding liabilities and adequate toits financial needs, the following factors among others must be considered:

1. The size of the insurer as measured by its assets,capital and surplus, reserves, premium writings, insurance in force and otherappropriate criteria.

2. The extent to which the insurers business isdiversified among the several lines of insurance.

3. The number and size of risks insured in each lineof business.

4. The extent of the geographical dispersion of theinsurers insured risks.

5. The nature and extent of the insurers reinsuranceprogram.

6. The quality, diversification and liquidity of theinsurers investment portfolio.

7. The recent past and projected future trend in thesize of the insurers surplus as regards policyholders.

8. The surplus as regards policyholders maintained byother comparable insurers.

9. The adequacy of the insurers reserves.

10. The quality and liquidity of investments insubsidiaries made pursuant to NRS 692C.180to 692C.250, inclusive. TheCommissioner may treat any such investment as a disallowed asset for purposesof determining the adequacy of surplus as regards policyholders whenever in hisjudgment such investment so warrants.

11. The quality of the insurers earnings and theextent to which the reported earnings of the insurer include extraordinaryitems. As used in this subsection, the term extraordinary item means anonrecurring occurrence or event.

(Added to NRS by 1973, 1046; A 1995, 1777)

NRS 692C.380 Extraordinarydistributions to shareholders: Definition. Forpurposes of NRS 692C.360 to 692C.400, inclusive, an extraordinarydividend or distribution includes any dividend or distribution of cash or otherproperty, whose fair market value together with that of other dividends ordistributions made within the preceding 12 months exceeds the greater of:

1. Ten percent of the insurers surplus as regardspolicyholders as of December 31 next preceding the dividend or distribution; or

2. The net gain from operations of the insurer, if theinsurer is a life insurer, or the net income, not including realized capitalgains if the insurer is not a life insurer, for the 12-month period endingDecember 31 next preceding the dividend or distribution,

but does notinclude pro rata distributions of any class of the insurers own securities.

(Added to NRS by 1973, 1047; A 1995, 1777; 2003, 325)

NRS 692C.390 Extraordinarydistributions to shareholders: Notice; approval.

1. An insurer subject to registration under NRS 692C.260 to 692C.350, inclusive, shall not pay anyextraordinary dividend or make any other extraordinary distribution to itsshareholders until:

(a) Thirty days after the Commissioner has receivednotice of the declaration thereof and has not within that period disapprovedthe payment; or

(b) The Commissioner approves the payment within the30-day period.

2. A request for approval of an extraordinary dividendor any other extraordinary distribution pursuant to subsection 1 must include:

(a) A statement indicating the amount of the proposeddividend or distribution;

(b) The date established for the payment of theproposed dividend or distribution;

(c) A statement indicating whether the proposeddividend or distribution is to be paid in the form of cash or property and, ifit is to be paid in the form of property, a description of the property, itscost and its fair market value together with an explanation setting forth thebasis for determining its fair market value;

(d) A copy of a work paper or other document settingforth the calculations used to determine that the proposed dividend ordistribution is extraordinary, including:

(1) The amount, date and form of payment of eachregular dividend or distribution paid by the insurer, other than anydistribution of a security of the insurer, within the 12 consecutive monthsimmediately preceding the date established for the payment of the proposeddividend or distribution;

(2) The amount of surplus, if any, as regardspolicyholders, including total capital and surplus, as of December 31 nextpreceding;

(3) If the insurer is a life insurer, the amountof any net gains obtained from the operations of the insurer for the 12-monthperiod ending December 31 next preceding;

(4) If the insurer is not a life insurer, theamount of net income of the insurer less any realized capital gains for the12-month period ending on the December 31 of the year next preceding and thetwo consecutive 12-month periods immediately preceding that period; and

(5) If the insurer is not a life insurer, theamount of each dividend paid by the insurer to shareholders, other than adistribution of any securities of the insurer, during the preceding 2 calendaryears;

(e) A balance sheet and statement of income for theperiod beginning on the date of the last annual statement filed by the insurerwith the Commissioner and ending on the last day of the month immediatelypreceding the month in which the insurer files the request for approval; and

(f) A brief statement setting forth:

(1) The effect of the proposed dividend ordistribution upon the insurers surplus;

(2) The reasonableness of the insurers surplusin relation to the insurers outstanding liabilities; and

(3) The adequacy of the insurers surplus inrelation to the insurers financial requirements.

3. Each insurer specified in subsection 1 that pays anextraordinary dividend or makes any other extraordinary distribution to itsshareholders shall, within 15 days after declaring the dividend or making thedistribution, report that fact to the Commissioner. The report must include theinformation specified in paragraph (d) of subsection 2.

(Added to NRS by 1973, 1047; A 2003, 3328)

NRS 692C.400 Extraordinarydistributions to shareholders: Conditional declaration. Notwithstanding any other provision of law, an insurer maydeclare an extraordinary dividend or distribution which is conditional upon theCommissioners approval thereof, and such a declaration shall confer no rightsupon shareholders until:

1. The Commissioner has approved the payment of suchdividend or distribution; or

2. The Commissioner has not disapproved such paymentwithin the 30-day period referred to in NRS692C.390.

(Added to NRS by 1973, 1047)

NRS 692C.402 Sourcesfrom which receiver appointed under order for liquidation or rehabilitation ofinsurer is authorized to recover.

1. If an order for liquidation or rehabilitation of adomestic insurer has been entered, the receiver appointed under the order mayrecover on behalf of the insurer:

(a) From any parent corporation or holding company, orperson or affiliate who otherwise controlled the insurer, the amount ofdistributions, other than distributions of shares of the same class of stock,paid by the insurer on its capital stock; or

(b) Any payment in the form of a bonus, settlement ontermination, or extraordinary adjustment of salary in a lump sum made by theinsurer or a subsidiary to a director, officer or employee,

if thedistribution or payment is made at any time during the year preceding thepetition for liquidation, conservation or rehabilitation, as the case may be,subject to the limitations of subsection 2 and of NRS 692C.404.

2. Such a distribution is not recoverable if theparent or affiliate shows that, when paid, the distribution was lawful andreasonable, and that the insurer did not know and could not reasonably haveknown that the distribution might adversely affect its ability to fulfill itscontractual obligations.

(Added to NRS by 1995, 1774)

NRS 692C.404 Liabilityof person who controlled insurer or affiliate at time distributions were paidor declared.

1. A person who was a parent corporation or holdingcompany, or a person who otherwise controlled the insurer or affiliate, at thetime the distributions were paid is liable up to the amount of distributions orpayments he received. Any person who otherwise controlled the insurer at thetime the distributions were declared is liable up to the amount ofdistributions he would have received if they had been paid immediately. If twoor more persons are liable with respect to the same distributions, they arejointly and severally liable.

2. The maximum amount recoverable under this sectionand NRS 692C.402 is the amount neededin excess of all other available assets of the impaired or insolvent insurer topay the contractual obligations of the impaired or insolvent insurer and toreimburse any guaranty funds.

3. To the extent that any person liable under thissection is insolvent or otherwise fails to pay claims due from it pursuant tothis section, its parent corporation or holding company, or person whootherwise controlled it, at the time the distribution was paid is jointly andseverally liable for any resulting deficiency in the amount recovered from theparent corporation or holding company, or person who otherwise controlled theinsurer.

(Added to NRS by 1995, 1774)

REMEDIES; PENALTIES

NRS 692C.410 Powersof Commissioner; expense of examination.

1. Subject to the limitation contained in this sectionand in addition to the powers which the Commissioner has under NRS 679B.230 to 679B.287, inclusive, relating to theexamination of insurers, the Commissioner may order any insurer registeredunder NRS 692C.260 to 692C.350, inclusive, to produce suchrecords, books or other information papers in its possession or in thepossession of its affiliates as may be necessary to ascertain the financialcondition or legality of conduct of such insurer. In the event such insurerfails to comply with such order, the Commissioner may examine such affiliatesto obtain such information.

2. The Commissioner shall exercise his power undersubsection 1 only if the examination of the insurer under NRS 679B.230 to 679B.287, inclusive, is inadequate or theinterests of the policyholders of such insurer may be adversely affected.

3. The Commissioner may retain at the registeredinsurers expense such attorneys, actuaries, accountants and other experts nototherwise a part of the Commissioners staff as may be reasonably necessary toassist in the conduct of the examination under subsection 1. Any persons soretained shall be under the direction and control of the Commissioner and shallact in a purely advisory capacity.

4. Each registered insurer producing for examinationrecords, books and papers pursuant to subsection 1 shall be liable for andshall pay the expense of such examination in accordance with NRS 679B.290.

(Added to NRS by 1973, 1047)

NRS 692C.420 Confidentialityof disclosed information; exception.

1. All information, documents and copies thereofobtained by or disclosed to the Commissioner or any other person in the courseof an examination or investigation made pursuant to NRS 692C.410, and all informationreported pursuant to NRS 692C.260 to 692C.350, inclusive, must be given confidentialtreatment and is not subject to subpoena and must not be made public by theCommissioner or any other person, except to insurance departments of otherstates, without the prior written consent of the insurer to which it pertainsunless the Commissioner, after giving the insurer and its affiliates who wouldbe affected thereby notice and an opportunity to be heard, determines that theinterests of policyholders, shareholders or the public will be served by thepublication thereof, in which event he may publish all or any part thereof inany manner as he may deem appropriate.

2. TheCommissioner or any person who receives any documents, materials or otherinformation while acting under the authority of the Commissioner must not bepermitted or required to testify in a private civil action concerning anyinformation, document or copy thereof specified in subsection 1.

3. The Commissioner may share or receive anyinformation, document or copy thereof specified in subsection 1 in accordancewith NRS 679B.122. The sharing orreceipt of the information, document or copy pursuant to this subsection doesnot waive any applicable privilege or claim of confidentiality in theinformation, document or copy.

(Added to NRS by 1973, 1048; A 2003, 3329)

NRS 692C.430 Injunctiverelief. Whenever it appears to theCommissioner that any insurer or any director, officer, employee or agentthereof has committed or is about to commit a violation of this chapter or ofany rule, regulation, or order issued by the Commissioner hereunder, theCommissioner may apply to the district court for the county in which theprincipal office of the insurer is located or if such insurer has no suchoffice in this state, then to the First Judicial District Court in and forCarson City for an order enjoining such insurer or such director, officer, employeeor agent thereof from violating or continuing to violate this chapter or anysuch rule, regulation or order, and for such other equitable relief as thenature of the case and the interests of the insurers policyholders, creditorsand shareholders or the public may require.

(Added to NRS by 1973, 1048)

NRS 692C.440 Prohibitedvoting of securities.

1. No security which is the subject of any agreementor arrangement regarding acquisition, or which is acquired or to be acquired,in contravention of the provisions of this chapter or of any rule, regulationor order issued by the Commissioner hereunder may be voted at any shareholdersmeeting, or may be counted for quorum purposes, and any action of shareholdersrequiring the affirmative vote of a percentage of shares may be taken as thoughsuch securities were not issued and outstanding, but no action taken at anysuch meeting shall be invalidated by the voting of such securities, unless theaction would materially affect control of the insurer or unless the courts ofthis state have so ordered.

2. If an insurer or the Commissioner has reason tobelieve that any security of the insurer has been or is about to be acquired incontravention of the provisions of this chapter or of any rule, regulation ororder issued by the Commissioner hereunder the insurer or the Commissioner mayapply to the First Judicial District Court in and for Carson City or to thedistrict court for the county in which the insurer has its principal place ofbusiness to enjoin any offer, request, invitation, agreement, or acquisitionmade in contravention of NRS 692C.180to 692C.250, inclusive, or any rule,regulation or order issued by the Commissioner thereunder to enjoin the votingof any security so acquired, to void any vote of such security already cast atany meeting of shareholders, and for such other equitable relief as the natureof the case and the interests of the insurers policyholders, creditors andshareholders or the public may require.

(Added to NRS by 1973, 1048)

NRS 692C.450 Sequestrationof voting securities. In any case where aperson has acquired or is proposing to acquire any voting securities inviolation of this chapter or any rule, regulation or order issued by theCommissioner hereunder, the First Judicial District Court in and for CarsonCity or the district court of the county in which the insurer has its principalplace of business may, on such notice as the court deems appropriate, upon theapplication of the insurer or the Commissioner seize or sequester any votingsecurities of the insurer owned directly or indirectly by such person, andissue such orders with respect thereto as may be appropriate to effectuate theprovisions of this chapter. Notwithstanding any other provisions of law, forthe purposes of this chapter, the situs of the ownership of the securities ofdomestic insurers shall be deemed to be in this state.

(Added to NRS by 1973, 1049)

NRS 692C.460 Receivership. Whenever it appears to the Commissioner that any personhas committed a violation of this chapter, which so impairs the financialcondition of a domestic insurer as to threaten insolvency or make the furthertransaction of business by it hazardous to its policyholders, creditors,shareholders or the public, the Commissioner may proceed as provided in chapter 696B of NRS to take possession of theproperty of such domestic insurer and to conduct the business thereof.

(Added to NRS by 1973, 1049)

NRS 692C.470 Suspension,revocation or refusal of license. Whenever itappears to the Commissioner that any person has committed a violation of thischapter which makes the continued operation of an insurer contrary to theinterests of policyholders or the public, the Commissioner may, after givingnotice and an opportunity to be heard, determine to suspend, revoke or refuseto renew such insurers license or authority to do business in this state forsuch period as he finds is required for the protection of policyholders or thepublic. Any such determination shall be accompanied by specific findings offact and conclusions of law.

(Added to NRS by 1973, 1049)

NRS 692C.480 Criminalproceedings and penalties.

1. Whenever it appears to the Commissioner that anyinsurer or any director, officer, employee or agent thereof has committed awillful violation of this chapter, the Commissioner may cause criminalproceedings to be instituted in the county in which the principal office of theinsurer is located or if the insurer does not have such an office in the statethen in Carson City against that insurer or the responsible director, officer,employee or agent thereof.

2. An insurer which willfully violates this chaptershall be punished by a fine of not more than $20,000.

3. A natural person who willfully violates thischapter is guilty of a category D felony and shall be punished as provided in NRS 193.130.

(Added to NRS by 1973, 1049; A 1979, 1492; 1995,1319)

NRS 692C.485 Penaltyfor violation of certain provisions by director or officer of insurance holdingcompany system; order of Commissioner to cease and desist; order ofCommissioner to rescind certain contracts.

1. A director or officer of an insurance holdingcompany system who knowingly violates, or knowingly participates in or assentsto a violation of, NRS 692C.350, 692C.360, 692C.363 or 692C.390, or who knowingly permits anyofficer or agent of the insurance holding company to engage in a transaction inviolation of NRS 692C.360 or 692C.363 or to pay a dividend or make anextraordinary distribution in violation of NRS692C.390 shall pay, after receiving notice and a hearing before theCommissioner, a fine of not more than $10,000 for each violation. In determiningthe amount of the fine, the Commissioner shall consider the appropriateness ofthe fine in relation to:

(a) The gravity of the violation;

(b) The history of any previous violations committed bythe director or officer; and

(c) Any other matters as justice may require.

2. Whenever it appears to the Commissioner that aninsurer or any director, officer, employee or agent of the insurer has engagedin a transaction or entered into a contract to which the provisions of NRS 692C.363 apply and for which theinsurer has not obtained the Commissioners approval, the Commissioner mayorder the insurer to cease and desist immediately from engaging in any furtheractivity relating to the transaction or contract. In addition to issuing suchan order, the Commissioner may order the insurer to rescind the contract andreturn each party to the contract to the position he was in before theexecution of the contract if the issuing of the order is in the best interestof:

(a) The policyholders or creditors of the insurer; or

(b) The members of the general public.

(Added to NRS by 2003, 3321)

NRS 692C.490 Judicialreview.

1. Any person aggrieved by any act, determination,regulation, order or any other action of the Commissioner pursuant to thischapter may petition for review thereof in the district court in and for CarsonCity. The court shall conduct its review without a jury and by trial de novo,except that if all parties including the Commissioner so stipulate, the reviewshall be confined to the record. Portions of the record may be introduced bystipulation into evidence in a trial de novo as to those parties sostipulating.

2. The filing of an appeal pursuant to this sectionshall stay the application of any such regulation, order or other action of theCommissioner to the appealing party unless the court, after giving such partynotice and an opportunity to be heard, determines that such a stay would bedetrimental to the interests of policyholders, shareholders, creditors or thepublic.

3. Any person aggrieved by any failure of theCommissioner to act or make a determination required by this chapter, maypetition the district court in and for Carson City for a writ of mandamusdirecting the Commissioner to act or make such determination forthwith.

(Added to NRS by 1973, 1050; A 1977, 100)

 

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