Missouri Statute | Act | Code |Business And Financial Institutions| US Code - US Statute

As used in sections 382.010 to 382.300, the following words and
terms have the meanings indicated unless the context clearly requires
otherwise:

(1) An "affiliate" of, or person "affiliated" with, a specific person, is
a person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the
person specified;

(2) The term "control", including the terms "controlling", "controlled
by" and "under common control with", means the possession, direct or
indirect, of the power to direct or cause the direction of the management
and policies of a person, whether through the ownership of voting
securities, by contract other than a commercial contract for goods or
nonmanagement services, or otherwise, unless the power is the result of
an official position with or corporate office held by the person. Control
shall be presumed to exist if any person, directly or indirectly, owns,
controls, holds with power to vote, or holds proxies representing, ten
percent or more of the voting securities of any other person. This
presumption may be rebutted by a showing made in the manner provided by
section 382.170 that control does not exist in fact. The director may
determine, after furnishing all persons in interest notice and
opportunity to be heard and making specific findings of fact to support
such determination, that control exists in fact, notwithstanding the
absence of a presumption to that effect;

(3) The term "director" means the director of insurance, his deputies, or
the department of insurance, as appropriate;

(4) An "insurance holding company system" consists of two or more
affiliated persons, one or more of which is an insurer;

(5) The term "insurer" means an insurance company as defined in section
375.012, RSMo, including a reciprocal or interinsurance exchange, and
which is qualified and licensed by the department of insurance of
Missouri to transact the business of insurance in this state; but it
shall not include any company organized and doing business under chapters
377, 378 or 380, RSMo;

(6) A "person" is an individual, corporation, partnership, association,
joint stock company, business trust, unincorporated organization, or any
similar entity, or any combination of the foregoing acting in concert,
but is not any securities broker performing no more than the usual and
customary broker's function;

(7) A "securityholder" of a specified person is one who owns any security
of that person, including common stock, preferred stock, debt
obligations, and any other security convertible into or evidencing the
right to acquire any of the foregoing;

(8) A "subsidiary" of a specified person is an affiliate controlled by
that person directly, or indirectly through one or more intermediaries;

(9) The term "voting security" includes any security convertible into or
evidencing a right to acquire a voting security. (L. 1971 S.B. 101 § 1)

1. Any domestic insurer, either by itself or in cooperation with
one or more persons, may invest in, otherwise acquire or operate one or
more subsidiaries engaged or registered to engage in one or more of the
following businesses:

(1) Any kind of insurance business authorized by the laws of the state of
Missouri;

(2) Investing, reinvesting or trading in securities for its own account,
that of its parent, any subsidiary of its parent, or any affiliate or
subsidiary;

(3) Rendering other services including, but not limited to, actuarial,
loss prevention, safety engineering, marketing, data processing,
accounting, claims, appraisal and collection services, if such services
relate to the operations of the insurance business of the insurer;
provided, however, that such services shall not include services of
salvage of motor vehicles, the mechanical, body or other repair of motor
vehicles and the towing or retrieval of motor vehicles;

(4) Ownership and management of the kinds of assets which the parent
corporation could itself own or manage;

(5) Acting as administrative agent for a governmental instrumentality
which is performing an insurance function;

(6) Financing of insurance premiums;

(7) Any other business activity determined by the director to be
reasonably ancillary to the insurance business of the insurer;

(8) Owning a corporation or corporations engaged in or organized to
engage exclusively in one or more of the businesses specified in this
section;

(9) Acting as an insurance broker or as an insurance agent for its parent
or for any of its parent's insurer subsidiaries;

(10) Management of any investment company subject to or registered
pursuant to the federal Investment Company Act of 1940, as amended,
including related sales and services;

(11) Acting as a broker-dealer subject to or registered pursuant to the
federal Securities Exchange Act of 1934, as amended; and

(12) Rendering investment advice to governments, government agencies,
corporations or other organizations or groups.

2. In addition, a domestic insurance company may, if it maintains books
and records which separately account for such business, engage directly
in any business referred to in subdivisions (3), (4), (5), (6) and (7) of
subsection 1 of this section, either to the extent necessarily or
properly incidental to the insurance business the insurer is authorized
to do in this state or to the extent approved by the director and subject
to any limitations the director may prescribe for the protection of the
interests of the policyholders of the insurer after taking into account
the effect of such business on the insurer's existing insurance business
and its surplus, the proposed allocation of the estimated costs of such
business and the risks inherent in such business as well as the relative
advantages to the insurer and its policyholders of conducting such
business directly instead of through a subsidiary. Nothing in sections
382.010 to 382.300 shall be deemed to limit the powers of a domestic
insurance company existing prior to September 28, 1971.

3. In addition to investments in common stock, preferred stock, debt
obligations and other securities permitted domestic insurers, a domestic
insurer may also do one or more of the following:

(1) Invest in common stock, preferred stock, debt obligations, and other
securities of one or more subsidiaries, amounts which do not exceed the
lesser of five percent of such insurer's assets or fifty percent of such
insurer's surplus as regards policyholders, if after such investments the
insurer's surplus as regards policyholders will be reasonable in relation
to the insurer's outstanding liabilities and adequate to its financial
needs. In calculating the amount of such investment, investments in
domestic or foreign insurance subsidiaries shall be excluded, and there
shall be included:

(a) Total net moneys or other consideration expended and obligations
assumed in the acquisition or formation of a subsidiary, including all
organizational expenses and contributions to capital and surplus of such
subsidiary whether or not represented by the purchase of capital stock or
issuance of other securities; and

(b) All amounts expended in acquiring additional common stock, preferred
stock, debt obligations, and other securities and all contributions to
the capital or surplus of a subsidiary subsequent to its acquisition or
formation;

(2) With the approval of the director, invest any greater amount in
common stock, preferred stock, debt obligations, or other securities of
one or more subsidiaries, if after such investment the insurer's surplus
as regards policyholders will be reasonable in relation to the insurer's
outstanding liabilities and adequate to its financial needs;

(3) Invest any amount in common stock, preferred stock, debt obligations
and other securities of one or more subsidiaries engaged or organized to
engage exclusively in the ownership and management of assets authorized
as investments for the insurer, provided that each such subsidiary agrees
to limit its investments in any asset so that such investments will not
cause the amount of the total investment of the insurer to exceed any of
the investment limitations specified in subdivision (1) of this
subsection or in other insurance laws applicable to the insurer. For the
purpose of this subdivision, the total investment of the insurer shall
include:

(a) Any direct investment by the insurer in an asset; and

(b) The insurer's proportionate share of any investment in an asset by
any subsidiary of the insurer, which shall be calculated by multiplying
the amount of the subsidiary's investment by the percentage of the
ownership of such subsidiary.

4. Investments in common stock, preferred stock, debt obligations or
other securities made pursuant to subsection 3 of this section shall be
made as provided by the statutes of this state.

5. Whether any investment pursuant to subsections 3 and 4 of this section
meets the applicable requirements thereof is to be determined immediately
after such investment is made, taking into account the then outstanding
principal balance on all previous investments in debt obligations, and
the value of all previous investments in equity securities as of the date
they are made. (L. 1971 S.B. 101 §§ 2, 3, 4, A.L. 1987 S.B. 337, A.L.
1992 H.B. 1574)

CROSS REFERENCES: Bi-state development agency, bonds of, investment in
authorized, RSMo 70.377 Multinational banks, securities and obligations
of, investment in, when, RSMo 409.950 Savings accounts in insured savings
and loan associations, investment in authorized, RSMo 369.194

If an insurer ceases to control a subsidiary, it shall dispose
of any investment therein made pursuant to sections 382.010 to 382.300
within three years from the time of the cessation of control or within
such further time as the director may prescribe, unless at any time after
the investment has been made, the investment meets the requirements for
investment under any other investment law applicable to the insurer, and
the insurer has notified the director thereof. (L. 1971 S.B. 101 § 5)

No person other than the issuer shall commence a tender offer
for or a request or invitation for tenders of, or enter into any
agreement to exchange securities for, seek to acquire, or acquire, in the
open market or otherwise, any voting security of a domestic insurer if,
after the consummation thereof, he would, directly or indirectly, or by
conversion or by exercise of any right to acquire, be in control of the
insurer, and no person shall enter into an agreement to merge with or
otherwise to acquire control of a domestic insurer unless, at the time
the offer, request, or invitation is commenced or the agreement is
entered into, or prior to the acquisition of the securities if no offer
or agreement is involved, he has filed with the director and has sent to
the insurer a statement containing the information required by section
382.050 and the offer, request, invitation, agreement or acquisition has
been approved by the director in the manner prescribed by sections
382.010 to 382.300. For purposes of this section, a domestic insurer
shall include any person controlling a domestic insurer unless such
person, as determined by the director, is either directly or through its
affiliates primarily engaged in business other than the business of
insurance; however, such person shall file a preacquisition notification
with the director containing the information set forth in section 382.095
thirty days prior to the proposed effective date of the acquisition. Any
person who fails to file the preacquisition notification required by this
section shall be subject to the penalties provided in subsection 5 of
section 382.095. For the purposes of sections 382.040, 382.050, 382.060,
382.070, 382.080 and 382.090, "person" shall not include any securities
broker holding, in the usual and customary broker's function, less than
twenty percent of the voting securities of an insurance company or of any
person which controls an insurance company. (L. 1971 S.B. 101 § 6, A.L.
1983 H.B. 633 merged with S.B. 333, A.L. 1992 H.B. 1574)

(1982) The Missouri Insurance Holding Companies Act is inapplicable to a
corporation attempting to acquire control of a company controlling a
domestic Missouri insurer since the target company was not engaged
"primarily in the business of insurance". National City Lines, Inc. v.
LLC Cop. (8th Cir.), 687 F.2d 1122.

1. The statement to be filed with the director shall be made
under oath or affirmation and shall contain the following information:

(1) The name and address of each person hereinafter called "acquiring
party" by whom or on whose behalf the merger or other acquisition of
control referred to in section 382.040 is to be effected, and

(a) If that person is an individual, his 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;
and

(b) If that person is not an individual, a report of the nature of its
business operations during the past five years or for such lesser period
as that person and any predecessors thereof have been in existence;

(c) An informative description of the business intended to be done by
that person and its subsidiaries; and

(d) A list of all individuals who are or who have been selected to become
directors or executive officers of such person, or who perform or will
perform functions appropriate to such positions. The list shall include
for each such individual the information required by paragraph (a) of
subdivision (1) of subsection 1 of this section;

(2) The source, nature and amount of the consideration 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 insurer's stock or the stock of any
subsidiaries or controlling affiliates, and the identity of persons
furnishing such consideration, but, where a source of the 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 the
statement so requests;

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

(4) Any plans or proposals which each acquiring party may have to
liquidate the insurer, to sell its assets, to merge or consolidate it
with any person, or to make any other material change in its business or
corporate structure or management;

(5) The number of shares of any security referred to in section 382.040
which each acquiring party proposes to acquire;

(6) The terms of the proposed offer, request, invitation, agreement, or
acquisition referred to in section 382.040, and a statement as to the
method by which the fairness of the proposal was arrived at;

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

(8) A full description of any contracts, arrangements or understandings
with respect to any security referred to in section 382.040 in which any
acquiring party proposes to be or 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 or will be
entered into;

(9) A description of the purchase of any security referred to in section
382.040 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 therefor;

(10) A description of any recommendations to purchase any security
referred to in section 382.040 made during the twelve calendar months
preceding the filing of the statement by any acquiring party, or by
anyone based upon interviews or at the suggestion of such acquiring party;

(11) Copies of the form of all tender offers for, requests or invitations
for tenders of, exchange offers for, and agreements to acquire or
exchange any securities referred to in section 382.040, and of the form
of additional soliciting material, if distributed, relating thereto;

(12) The terms 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 section 382.040 for tender, and the amount of
any fees, commissions or other compensation to be paid to broker-dealers
with regard thereto; and

(13) Such additional information as the director may by rule or
regulation prescribe as necessary or appropriate for the protection of
policyholders of the insurer or in the public interest.

2. If the person required to file the statement referred to in section
382.040 is a partnership, limited partnership, syndicate or other group,
the director may require that the information called for by subdivisions
(1) to (13) of subsection 1 of this section 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 is a corporation or the
person required to file the statement referred to in section 382.040 is a
corporation, the director may require that the information called for by
subdivisions (1) to (13) of subsection 1 of this section shall be given
with respect to the corporation, each officer and director of the
corporation, and each person who is directly or indirectly the beneficial
owner of more than ten percent of the outstanding voting securities of
the corporation.

3. If any material change occurs in the facts set forth in the statement
filed with the director and sent to the insurer pursuant to this section,
an amendment setting forth the change, together with copies of all
documents and other material relevant to the change, shall be filed with
the director and shall be sent to the insurer within two business days
after the person learns of the change.

4. If any offer, request, invitation, agreement or acquisition referred
to in section 382.040 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, or under a state law requiring similar registration or
disclosure, the person required to file the statement referred to in
section 382.040 may utilize such documents in furnishing the information
called for by that statement. (L. 1971 S.B. 101 § 7, A.L. 1983 H.B. 633
merged with S.B. 333, A.L. 1992 H.B. 1574)

1. The director shall hold a public hearing on the proposed
merger or other acquisition of control referred to in section 382.040 and
shall thereafter approve such merger or acquisition of control unless he
finds by a preponderance of the evidence that:

(1) After the change of control the domestic insurer referred to in
section 382.040 would not be able to satisfy the requirements for the
issuance of a license to write the line or lines of insurance for which
it is presently licensed;

(2) The effect of the merger or other acquisition of control would be
substantially to lessen competition in insurance in this state or tend to
create a monopoly therein. In applying the competitive standard in this
subdivision:

(a) The informational requirements of subsection 3 of section 382.095 and
the standards of subsection 4 of section 382.095 shall apply;

(b) The merger or other acquisition of control shall not be disapproved
if the director finds that any of the situations meeting the criteria
provided by subsection 4 of section 382.095 exist; and

(c) The director may condition the approval of the merger or other
acquisition on the removal of the basis of disapproval within a specified
period of time;

(3) The financial condition of any acquiring party is such as might
jeopardize the financial stability of the insurer, or prejudice the
interest of its policyholders;

(4) The plans or proposals which the acquiring party has to liquidate the
insurer, to sell its assets or to consolidate or merge it with any
person, or to make any other material change in its business or corporate
structure or management are unfair and unreasonable to policyholders of
the insurer and contrary to the public interest;

(5) The competence, experience or integrity of those persons who would
control the operation of the insurer are such that it would be contrary
to the interest of policyholders of the insurer and of the public to
permit the merger or other acquisition of control; or

(6) The acquisition is likely to be hazardous or prejudicial to the
insurance buying public.

2. Any disapproval made by the director shall be in writing and shall
contain specific findings of fact supporting it.

3. The public hearing referred to above in this section shall be held
within thirty days after the statement required by section 382.040 is
filed, and at least twenty days' notice thereof shall be given by the
director to the person filing the statement. Not less than seven days'
notice of the public hearing shall be given by the person filing the
statement to the insurer and to such other persons and in such manner as
may be designated by the director. The director shall make a
determination within thirty days after the conclusion of the hearing. At
the hearing, the person filing the statement, the insurer, any person to
whom notice of hearing was sent, and any other person whose interests may
be affected thereby shall have the right to present evidence, examine and
cross-examine witnesses, and offer oral and written arguments and in
connection therewith may conduct discovery proceedings in the same manner
as is presently allowed in the circuit courts of this state. All
discovery proceedings shall be concluded not later than three days prior
to the commencement of the public hearing.

4. The director may retain at the acquiring party's expense any
attorneys, actuaries, accountants and other experts not otherwise a part
of the director's staff as may be reasonably necessary to assist the
director in reviewing the proposed acquisition of control. (L. 1971 S.B.
101 § 8, A.L. 1983 H.B. 633 merged with S.B. 333, A.L. 1992 H.B. 1574)

The provisions of sections 382.040, 382.050 and 382.060 shall
not apply to:

(1) Any transaction which is subject to the provisions of section 375.355
or 375.861, RSMo; or

(2) Any offer, request, invitation, agreement or acquisition which the
director by order shall exempt therefrom as not having been made or
entered into for the purpose and not having the effect of changing or
influencing the control of a domestic insurer, or as otherwise not
comprehended within the purposes of sections 382.010 to 382.300. (L. 1971
S.B. 101 § 9, A.L. 1983 H.B. 633 merged with S.B. 333, A.L. 1992 H.B.
1574, A.L. 1993 H.B. 709)

The following shall be violations of sections 382.010 to 382.300:

(1) The failure to file any statement, amendment, or other material
required to be filed pursuant to section 382.040 or 382.050; or

(2) The effectuation or any attempt to effectuate an acquisition of
control of, or merger with, a domestic insurer covered by sections
382.010 to 382.300, within the thirty-day period referred to in section
382.060, without approval by the director or after disapproval by the
director. (L. 1971 S.B. 101 § 10)

The courts of this state are hereby vested with jurisdiction
over every person not resident, domiciled, or authorized to do business
in this state who files a statement with the director under sections
382.010 to 382.300, and over all actions involving such person arising
out of violations of sections 382.010 to 382.300, and each such person
shall be deemed to have performed acts equivalent to and constituting an
appointment by him of the director to be his true and lawful attorney
upon whom may be served all lawful process in any action, suit or
proceeding arising out of violations of sections 382.010 to 382.300.
Copies of all such lawful process shall be served on the director and
transmitted by registered or certified mail by the director to such
person at his last known address. (L. 1971 S.B. 101 § 11)

1. As used in this section, the following terms mean:

(1) "Acquisition", any agreement, arrangement or activity the
consummation of which results in a person acquiring directly or
indirectly the control of another person, and includes but is not limited
to the acquisition of voting securities, the acquisition of assets, bulk
reinsurance and mergers;

(2) "Involved insurer" includes an insurer which either acquires or is
acquired, is affiliated with an acquirer or acquired or is the result of
a merger.

2. Except as provided in this subsection, this section applies to any
acquisition in which there is a change in control of an insurer
authorized to do business in this state. This section shall not apply to
the following as provided in section 382.060:

(1) An acquisition subject to approval or disapproval by the director;

(2) A purchase of securities solely for investment purposes so long as
such securities are not used by voting or otherwise to cause or attempt
to cause the substantial lessening of competition in any insurance market
in this state. If a purchase of securities results in a presumption of
control under subdivision (2) of section 382.010, it is not solely for
investment purposes unless the commissioner of insurance or other
appropriate person of the insurer's state of domicile accepts a
disclaimer of control or affirmatively finds that control does not exist
and such disclaimer action or affirmative finding is communicated by such
person to the director;

(3) The acquisition of a person by another person when both persons are
neither directly nor through affiliates primarily engaged in the business
of insurance, if preacquisition notification is filed with the director
in accordance with subsection 3 of this section thirty days prior to the
proposed effective date of the acquisition; however, such preacquisition
notification is not required for exclusion from this section if the
acquisition would otherwise be excluded from this section by any other
subdivision of this subsection;

(4) The acquisition of already affiliated persons;

(5) An acquisition if, as an immediate result of the acquisition:

(a) In no market would the combined market share of the involved insurers
exceed five percent of the total market;

(b) There would be no increase in any market share; or

(c) In no market would the combined market share of the involved insurers
exceed twelve percent of the total market, and the market share of the
involved insurer after the acquisition would increase by two percent of
the total market or less.

For the purpose of this subdivision, a "market" means direct written
insurance premium in this state for a line of business as contained in
the annual statement required to be filed by insurers licensed to do
business in this state;

(6) An acquisition for which a preacquisition notification would be
required pursuant to this section due solely to the resulting effect on
the ocean marine insurance line of business;

(7) An acquisition of an insurer whose domiciliary commissioner or other
appropriate person affirmatively finds that such insurer is in failing
condition; there is a lack of feasible alternative to improving such
condition; the public benefits of improving such insurer's condition
through the acquisition exceed the public benefits that would arise from
not lessening competition; and such findings are communicated by such
person to the director.

3. An acquisition covered by subdivisions (1) to (7) of subsection 2 of
this section may be subject to an order pursuant to subsection 5 of this
section, unless the acquiring person files a preacquisition notification
and the waiting period described in this subsection has expired. The
acquired person or acquiring person may file a preacquisition
notification. The director shall give confidential treatment to
information submitted under this subsection. The preacquisition
notification shall be in such form and contain such information as
prescribed by the National Association of Insurance Commissioners
relating to those markets which, under subdivision (5) of subsection 2 of
this section cause the acquisition not to be exempted from the provisions
of this section. The director may require such additional material and
information as he deems necessary to determine whether the proposed
acquisition, if consummated, would violate the competitive standard of
subsection 4 of this section. The required information may include an
opinion of an economist as to the competitive impact of the acquisition
in this state accompanied by a summary of the education and experience of
such person indicating his ability to render an informed opinion. The
waiting period required shall begin on the date of receipt by* the
director of a preacquisition notification and shall end on the earlier of
the thirtieth day after the date of such receipt, or termination of the
waiting period by the director. Prior to the end of the waiting period,
the director on a one-time basis may require the submission of additional
needed information relevant to the proposed acquisition, in which event
the waiting period shall end on the earlier of the thirtieth day after
receipt of such additional information by the director or termination of
the waiting period by the director.

4. (1) The director may enter an order under subsection 5 of this section
with respect to an acquisition if there is substantial evidence that the
effect of the acquisition may be substantially to lessen competition in
any line of insurance in this state or tend to create a monopoly therein
or if the insurer fails to file adequate information in compliance with
subsection 3 of this section.

(2) In determining whether a proposed acquisition would violate the
competitive standard of subdivision (1) of this subsection, the director
shall consider the following:

(a) Any acquisition covered under subsection 2 of this section involving
two or more insurers competing in the same market is prima facie evidence
of violation of the competitive standards:

a. If the market is highly concentrated and the involved insurers possess
the following share of the market:

Insurer A Insurer B

4% 4% or more

10% 2% or more

15% 1% or more; or

b. If the market is not highly concentrated and the involved insurers
possess the following share of the market:

Insurer A Insurer B

5% 5% or more

10% 4% or more

15% 3% or more

19% 1% or more

A highly concentrated market is one in which the share of the four
largest insurers is seventy-five percent or more of the market.
Percentages not shown in the tables are to be interpolated
proportionately to the percentages that are shown. If more than two
insurers are involved, exceeding the total of the two columns in the
table is prima facie evidence of violation of the competitive standard in
subdivision (1) of this subsection. For the purpose of this subdivision,
the insurer with the largest share of the market shall be deemed to be
insurer A;

(b) There is a significant trend toward increased concentration when the
aggregate market share of any grouping of the largest insurers in the
market, from the two largest to the eight largest, has increased by seven
percent or more of the market over a period of time extending from any
base year five to ten years prior to the acquisition up to the time of
the acquisition. Any acquisition or merger covered under subsection 2 of
this section involving two or more insurers competing in the same market
is prima facie evidence of violation of the competitive standard in
subdivision (1) of this subsection if:

a. There is a significant trend toward increased concentration in the
market;

b. One of the insurers involved is one of the insurers in a grouping of
such large insurers showing the requisite seven percent or more increase
in the market share; and

c. Another involved insurer's market is two percent or more.

(3) For the purposes of subdivision (2) of this subsection:

(a) The term "insurer" includes any company or group of companies under
common management, ownership or control;

(b) The term "market" means the relevant product and geographical
markets. In determining the relevant product and geographical markets,
the director shall give due consideration to, among other things, the
definitions or guidelines, if any, promulgated by the National
Association of Insurance Commissioners and to information, if any,
submitted by parties to the acquisition. In the absence of sufficient
information to the contrary, the relevant product market is assumed to be
the direct written insurance premium for a line of business, such line
being that used in the annual statement required to be filed by insurers
doing business in this state, and the relevant geographical market is
assumed to be this state;

(c) The burden of showing prima facie evidence of violation of the
competitive standard rests upon the director.

(4) Even though an acquisition is not prima facie violative of the
competitive standard under subdivision (2) of this subsection, the
director may establish that the requisite anticompetitive effect exists
based upon other substantial evidence. Even though an acquisition is
prima facie violative of the competitive standard under subdivision (2)
of this subsection, a party may establish the absence of the requisite
anticompetitive effect, based upon other substantial evidence. Relevant
factors in making a determination under this subdivision include, but are
not limited to, the following: market shares, volatility of ranking of
market leaders, number of competitors, concentration, trend of
concentration in the industry, and ease of entry and exit into the market.

(5) An order may not be entered under subsection 5 of this section if:

(a) The acquisition will yield substantial economies of scale or
economies in resource use that cannot be feasibly achieved in any other
way, and the public benefits which would arise from such economies exceed
the public benefits which would arise from not lessening competition; or

(b) The acquisition will substantially increase the availability of
insurance, and the public benefits of such increase exceed the public
benefits which would arise from not lessening competition.

5. If an acquisition violates the standards of this section, the director
may enter an order:

(1) Requiring an involved insurer to cease and desist from doing business
in this state with respect to the line or lines of insurance involved in
the violation; or

(2) Denying the application of an acquired or acquiring insurer for a
license to do business in this state.

Such an order shall not be entered unless there is a hearing, notice of
such hearing is issued prior to the end of the waiting period and not
less than fifteen days prior to the hearing, and the hearing is concluded
and the order is issued no later than sixty days after the end of the
waiting period. Every order shall be accompanied by a written decision of
the director setting forth his findings of fact and conclusions of law.
An order entered under this subsection shall not become final earlier
than thirty days after it is issued, during which time any involved
insurer may submit a plan to remedy the anticompetitive impact of the
acquisition within a reasonable time. Based upon such plan or other
information, the director shall specify the conditions, if any, under the
time period during which the aspects of the acquisition causing a
violation of the standards of this section would be remedied and the
order vacated or modified. An order issued pursuant to this subsection
shall not apply if the acquisition is not consummated.

6. Any person who violates a cease and desist order of the director under
subsection 5 of this section, and while such order is in effect, may,
after notice and hearing and upon order of the director, be subject at
the discretion of the director to any one or more of the following:

(1) A monetary penalty of not more than ten thousand dollars for every
day of violation; or

(2) Suspension or revocation of such person's license.

7. Any insurer or other person who fails to make any filing required by
this section and who also fails to demonstrate a good faith effort to
comply with any such filing requirement shall be subject to a fine of not
more than fifty thousand dollars.

8. Sections 382.260 and 382.280 do not apply to acquisitions covered by
subsection 2 of this section. (L. 1991 H.B. 385, et al., A.L. 1992 H.B.
1574)

*Word "of" appears in original rolls.

Every insurer which is authorized to do business in this state
and which is a member of an insurance holding company system, except a
foreign insurer subject to disclosure requirements and standards adopted
by statute or regulation in the jurisdiction of its domicile which are
substantially similar to those contained in sections 382.010 to 382.300,
shall register with the director. Every insurer which is subject to
registration under sections 382.010 to 382.300 shall register within
sixty days after September 28, 1971, or fifteen days after it becomes
subject to registration, whichever is later, and annually thereafter by
March first of each year for the previous calendar year, unless the
director for good cause shown extends the time for registration, and then
within such extended time. The director may require any authorized
insurer which is a member of a holding company system which is not
subject to registration under this section to furnish a copy of the
registration statement, the summary specified in subsection 2 of section
382.110, or other information filed by it with the insurance regulatory
authority of its state of domicile. (L. 1971 S.B. 101 § 12, A.L. 1992
H.B. 1574)

1. Every insurer subject to registration shall file a
registration statement on a form provided by the director containing
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 insurance holding company system;

(3) The following agreements in force, relationships subsisting, and
transactions currently outstanding between the insurer and its affiliates:

(a) Loans, other investments, or purchases, sales or exchanges of
securities of the affiliates by the insurer or of the insurer by its
affiliates;

(b) Purchases, sales, or exchanges of assets;

(c) Transactions not in the ordinary course of business;

(d) Guarantees or undertakings for the benefit of an affiliate which
result in an actual contingent exposure of the insurer's assets to
liability, other than insurance contracts entered into in the ordinary
course of the insurer's business;

(e) All management and service contracts and all cost-sharing
arrangements; and

(f) Reinsurance agreements;

(g) Dividends and other distributions to shareholders; and

(h) Consolidated tax allocation agreements;

(4) Any pledge of the insurer's stock, including stock of any subsidiary
or controlling affiliate, for a loan made to any member of the insurance
holding company system; and

(5) Other matters concerning transactions between registered insurers and
any affiliates as may be included from time to time in any registration
forms adopted or approved by the director.

2. All registration statements shall contain a summary outlining all
items in the current registration statement representing changes from the
prior registration statement.

3. No information need be disclosed on the registration statement filed
pursuant to subsection 1 of this section if such information is not
material for the purposes of that subsection. Unless the director by
rule, regulation or order provides otherwise, sales, purchases,
exchanges, loans or extensions of credit, or investments, involving
one-half of one percent or less of an insurer's admitted assets as of the
thirty-first day of December next preceding shall not be deemed material
for purposes of subsection 1 of this section.

4. Any person within an insurance holding company system subject to
registration shall be required to provide complete and accurate
information to an insurer, where such information is reasonably necessary
to enable the insurer to comply with the provisions of sections 382.010
to 382.300. (L. 1971 S.B. 101 §§ 13, 14, A.L. 1992 H.B. 1574)

Each registered insurer shall keep current the information
required to be disclosed in its registration statement by reporting all
material changes or additions on amendment forms provided by the director
within fifteen days after the end of the month in which it learns of each
such change or addition, but, subject to section 382.210, each registered
insurer shall so report all dividends and other distributions to
shareholders promptly on the declaration thereof. No life or title
insurer subject to registration under section 382.100 shall pay any
dividend unless it has reported the dividend to the director:

(1) Within five days of its being declared; and

(2) At least ten days before it is paid. (L. 1971 S.B. 101 § 15, A.L.
1993 H.B. 709)

The director shall terminate the registration of any insurer
which demonstrates that it no longer is a member of an insurance holding
company system. (L. 1971 S.B. 101 § 16)

The director may require or allow two or more affiliated
insurers subject to registration under the provisions of sections 382.010
to 382.300 to file a consolidated registration statement or consolidated
reports amending their consolidated registration statement or their
individual registration statements. (L. 1971 S.B. 101 § 17)

The director may allow an insurer which is authorized to do
business in this state and which is part of an insurance holding company
system to register on behalf of any affiliated insurer which is required
to register under section 382.100 and to file all information and
material required to be filed under section 382.110. (L. 1971 S.B. 101 §
18)

The provisions of sections 382.100 and 382.110 shall not apply
to any insurer, information or transaction if and to the extent that the
director by rule, regulation, or order shall exempt the same from such
provisions. (L. 1971 S.B. 101 § 19)

Any person may file with the director a disclaimer of
affiliation with any authorized insurer or the disclaimer may be filed by
the insurer or any member of an insurance holding company system. The
disclaimer shall fully disclose all material relationships and bases for
affiliation between such person and such insurer as well as the basis for
disclaiming such affiliation. After a disclaimer has been filed, the
insurer shall be relieved of any duty to register or report under section
382.110 which may arise out of the insurer's relationship with such
person unless and until the director disallows the disclaimer. The
director shall disallow the disclaimer only after furnishing all parties
in interest with notice and opportunity to be heard and after making
specific findings of fact to support the disallowance. (L. 1971 S.B. 101
§ 20)

The failure to file a registration statement or any amendment
thereto within the time specified for the filing is a violation of
sections 382.010 to 382.300. (L. 1971 S.B. 101 § 21)

Material transactions by registered insurers with their
affiliates are subject to the following standards:

(1) The terms shall be fair and reasonable;

(2) Charges or fees for services shall be reasonable;

(3) Expenses incurred and payment received shall be allocated to the
insurer in conformity with customary insurance accounting practices
consistently applied;

(4) The books, accounts and records of each party shall be maintained so
as to clearly and accurately disclose the precise nature and details of
the transactions; and

(5) The insurer's surplus as regards policyholders following any
dividends or distributions to shareholder affiliates shall be reasonable
in relation to the insurer's outstanding liabilities and adequate to its
financial needs. (L. 1971 S.B. 101 § 22, A.L. 1992 H.B. 1574)

1. The following transactions involving a domestic insurer and
any person in its holding company system may not be entered into unless
the insurer has notified the director in writing of its intention to
enter into such transaction at least thirty days prior thereto, or such
shorter period as the director may permit, and the director has not
disapproved it within such period:

(1) Sales, purchases, exchanges, loans or extensions of credit,
guarantees, or investments if such transactions are equal to or exceed,
with respect to nonlife insurers, the lesser of three percent of the
insurer's admitted assets or twenty-five percent of surplus as regards
policyholders, or with respect to life insurers, three percent of the
insurer's admitted assets, each as of the thirty-first day of December of
the preceding year;

(2) Loans or extensions of credit to any person who is not an affiliate,
where the insurer makes such loans or extensions of credit with agreement
or understanding that the proceeds of such transactions, in whole or in
substantial part, are to be used to make loans or extensions of credit
to, to purchase assets of, or to make investments in, any affiliate of
the insurer making such loans or extensions of credit provided such
transactions are equal to or exceed, with respect to nonlife insurers,
the lesser of three percent of the insurer's admitted assets or
twenty-five percent of surplus as regards policyholders, or with respect
to life insurers, three percent of the insurer's admitted assets; each as
of the thirty-first day of December of the preceding year;

(3) Reinsurance agreements or modifications thereto in which the
reinsurance premium or a change in the insurer's liabilities equals or
exceeds five percent of the insurer's surplus as regards policyholders,
as of the thirty-first day of December of the preceding year, including
those agreements which may require as consideration the transfer of
assets from an insurer to a nonaffiliate, if an agreement or
understanding exists between the insurer and nonaffiliate that any
portion of such assets will be transferred to one or more affiliates of
the insurer;

(4) All management agreements, service contracts and all cost-sharing
arrangements; and

(5) Any material transactions, specified by regulation, which the
director determines may adversely affect the interests of the insurer's
policyholders. The provisions of this section shall not be deemed to
authorize or permit any transactions which, in the case of an insurer not
a member of the same holding company system, would be otherwise contrary
to law.

2. A domestic insurer may not enter into transactions which are part of a
plan or series of like transactions with persons within the holding
company system if the purpose of those separate transactions is to avoid
the statutory threshold amount and thus avoid the review that would occur
otherwise. If the director determines that such separate transactions
were entered into over any twelve-month period for such purpose, he may
exercise his authority under section 382.265. (L. 1992 H.B. 1574)

For the purposes of sections 382.010 to 382.300 in determining
whether an insurer's surplus as regards policyholders is reasonable in
relation to the insurer's outstanding liabilities and adequate to its
financial needs, the following factors, among others, shall be considered:

(1) The size of the insurer as measured by its assets, capital and
surplus, reserves, premium writings, insurance in force and other
appropriate criteria;

(2) The extent to which the insurer's business is diversified among the
several lines of insurance;

(3) The number and size of risks insured in each line of business;

(4) The extent of the geographical dispersion of the insurer's insured
risks;

(5) The nature and extent of the insurer's reinsurance program;

(6) The quality, diversification and liquidity of the insurer's
investment portfolio;

(7) The recent past and projected future trend in the size of the
insurer's investment portfolio;

(8) The surplus as regards policyholders maintained by other comparable
insurers;

(9) The adequacy of the insurer's reserves; and

(10) The quality and liquidity of investments in subsidiaries made
pursuant to sections 382.010 to 382.300. The director may treat any such
investment as a disallowed asset for purposes of determining the adequacy
of surplus as regards policyholders whenever in his judgment such
investment so warrants. (L. 1971 S.B. 101 § 23, A.L. 1992 H.B. 1574)

1. No insurer subject to registration under section 382.100
shall pay any extraordinary dividend or make any other extraordinary
distribution to its shareholders until thirty days after the director has
received notice of the declaration thereof and has not within such period
disapproved such payment, or the director has approved the payment within
such thirty-day period. For purposes of this section, net income excludes
net realized capital gains to the extent that realized capital gains
exceed realized capital losses, and an extraordinary dividend or
distribution includes any dividend or distribution of cash or other
property, whose fair market value together with that of dividends or
distributions made within the period of twelve consecutive months ending
on the date on which the proposed dividends are scheduled for payment or
distribution:

(1) For life, title, and property and casualty insurance companies, such
amount exceeds the greater of ten percent of the insurer's surplus as
regards policyholders as of the thirty-first day of December next
preceding, or the net gain from operations of the insurer, if the insurer
is a life insurer, or the net investment income, if the insurer is a
title insurer, or the net income, if the insurer is a property and
casualty insurer, for the twelve-month period ending the thirty-first day
of December next preceding, but shall not include pro rata distributions
of any class of the insurer's own securities;

(2) For all other insurers, such amount exceeds the lesser of ten percent
of the insurer's surplus as regards policyholders as of the thirty-first
day of December next preceding, or the net investment income for the
twelve-month period ending the thirty-first day of December next
preceding, but shall not include pro rata distributions of any class of
the insurer's own securities.

2. A life, title, or property and casualty insurer subject to
registration under section 382.100 may only pay a shareholder dividend
from earned surplus. With the prior approval of the director, a dividend
may be declared from other than earned surplus.

3. No life, title, or property and casualty insurer subject to
registration under section 382.100 shall pay any extraordinary dividend
unless, after the transaction is completed, the company's surplus as
regards policyholders is reasonable in relation to the company's
outstanding liabilities and adequate to its financial needs. In making
this determination, the director shall use the factors found in section
382.200 and may consider:

(1) The quality of the company's earnings and the extent to which the
reported earnings include extraordinary items; or

(2) The recent past and projected future trend in the company's surplus
as regards policyholders.

4. Notwithstanding any other provision of law, an insurer may declare an
extraordinary dividend or distribution which is conditional upon the
director's approval thereof, and the declaration shall confer no rights
upon shareholders until the director has approved the payment of the
dividend or distribution, or the director has not disapproved the payment
within the thirty-day period referred to above. (L. 1971 S.B. 101 § 24,
A.L. 1992 H.B. 1574, A.L. 1993 H.B. 709, A.L. 2004 H.B. 1198 merged with
S.B. 1078)

1. Subject to the limitation contained in this section and in
addition to all the other powers with which the director is vested by law
relating to the examination of insurers, the director may order any
insurer registered under the provisions of sections 382.010 to 382.300 to
produce such records, books, or other information papers in the
possession of the insurer or its affiliates as shall be necessary to
ascertain the financial condition or legality of conduct of the insurer.
In the event the insurer fails to comply with the order, the director may
examine such affiliates to obtain such information.

2. The director may retain at the registered insurer's expense such
attorneys, actuaries, accountants and other experts not otherwise a part
of the director's staff as shall be reasonably necessary to assist in the
conduct of the examination under this section. Any persons so retained
shall be under the direction and control of the director and shall act in
a purely advisory capacity.

3. Each registered insurer producing for examination records, books and
papers pursuant to this section shall be liable for and shall pay the
expense of such examination in accordance with the provisions of section
374.220, RSMo. (L. 1971 S.B. 101 § 25, A.L. 1992 H.B. 1574)

All information, documents and copies thereof obtained by or
disclosed to the director or any other person in the course of an
examination or investigation made pursuant to section 382.220 and all
information reported pursuant to section 382.100 shall be given
confidential treatment and shall not be subject to subpoena and shall not
be made public by the director, the National Association of Insurance
Commissioners, or any other person, except to the chief insurance
regulatory official of other states, without the prior written consent of
the insurer to which it pertains unless the director, after giving the
insurer and its affiliates who would be affected thereby, notice and
opportunity to be heard, determines that the interests of policyholders,
shareholders or the public will be served by the publication thereof, in
which event he may publish all or any part thereof in such manner as he
may deem appropriate. (L. 1971 S.B. 101 § 26, A.L. 1992 H.B. 1574)

The director may, upon notice and opportunity for all interested
persons to be heard, issue such rules, regulations, and orders as are
necessary to carry out the provisions of sections 382.010 to 382.300. (L.
1971 S.B. 101 § 27)

Whenever it appears to the director that any insurer or any
director, officer, employee or agent thereof has committed or has
threatened to commit a violation of sections 382.010 to 382.300 or of any
rule, regulation, or order issued by the director pursuant to sections
382.010 to 382.300, the director may apply to the circuit court for the
county in which the principal office of the insurer is located or to the
circuit court for Cole County for an order enjoining the insurer or the
director, officer, employee or agent thereof from violating or continuing
to violate sections 382.010 to 382.300 or any such rule, regulation or
order, and for such other equitable relief as the nature of the case and
the interests of the insurer's policyholders, creditors, shareholders, or
the public may require. (L. 1971 S.B. 101 § 28)

1. No security which is the subject of any agreement or
arrangement regarding acquisition, or which is acquired or to be
acquired, in contravention of the provisions of sections 382.010 to
382.300 or of any rule, regulation or order issued by the director
pursuant to sections 382.010 to 382.300 may be voted at any shareholders'
meeting, or may be counted for quorum purposes, and any action of
shareholders requiring the affirmative vote of a percentage of shares may
be taken as though such securities were not issued and outstanding; but
no action taken at any such meeting shall be invalidated by the voting of
such securities, unless the action would materially affect control of the
insurer or unless the courts of this state have so ordered. If an insurer
or the director has reason to believe that any security of the insurer
has been or is about to be acquired in contravention of the provisions of
sections 382.010 to 382.300 or of any rule, regulation or order issued by
the director pursuant to sections 382.010 to 382.300, the insurer or the
director may apply to the circuit court for Cole County or to the circuit
court for the county in which the insurer has its principal place of
business to enjoin any offer, request, invitation, agreement or
acquisition made in contravention of sections 382.010 to 382.300, or any
rule, regulation, or order issued by the director under the provisions of
sections 382.010 to 382.300, to enjoin the voting of any security so
acquired, to void any vote of such security already cast at any meeting
of shareholders, and for such other equitable relief as the nature of the
case and the interests of the insurer's policyholders, creditors and
shareholders or the public may require.

2. In any case where a person has acquired or is proposing to acquire any
voting securities in violation of sections 382.010 to 382.300 or any
rule, regulation or order issued by the director pursuant to sections
382.010 to 382.300, the circuit court for Cole County or the circuit
court for the county in which the insurer has its principal place of
business may on such notice as the court deems appropriate upon the
application of the insurer or the director, seize or sequester any voting
securities of the insurer owned directly or indirectly by such person,
and may issue such orders with respect thereto as may be appropriate to
effectuate the provisions of sections 382.010 to 382.300.

3. Notwithstanding any other provisions of law, for the purposes of
sections 382.010 to 382.300 the situs of the ownership of the securities
of domestic insurers shall be deemed to be in this state. (L. 1971 S.B.
101 § 29, A.L. 1983 H.B. 633 merged with S.B. 333)

1. Any insurer failing, without just cause, to file any
registration statement as required in this section shall be required,
after notice and hearing, to pay an administrative penalty of five
hundred dollars for each day's delay, to be recovered by the director,
and the penalty so recovered shall be paid to the state treasurer for
deposit to the general revenue fund of this state. The maximum penalty
under this section is fifty thousand dollars. The director may reduce the
penalty if the insurer demonstrates to the director that the imposition
of the penalty would constitute a financial hardship to the insurer.

2. Every director or officer of an insurance holding company system who
knowingly violates, participates in, or assents to, or who knowingly
shall permit any of the officers or agents of the insurer to engage in
transactions or make investments which have not been properly reported or
submitted pursuant to section 382.100, 382.195, or 382.210, or which
violate this section, shall pay, in their individual capacity, an
administrative penalty of not more than one hundred dollars per
violation, after notice and hearing before the director. In determining
the amount of the administrative penalty, the director shall take into
account the appropriateness of the forfeiture with respect to the gravity
of the violation, the history of previous violations, and such other
matters as justice may require.

3. Whenever it appears to the director that any insurer subject to
sections 382.010 to 382.300 or any director, officer, employee or agent
thereof has engaged in any transaction or entered into a contract which
is subject to section 382.190, 382.195, 382.200 or 382.210 and which
would not have been approved had such approval been requested, the
director may order the insurer to cease and desist immediately any
further activity under that transaction or contract. After notice and
hearing the director may also order the insurer to void any such
contracts and restore the status quo if such action is in the best
interest of the policyholders, creditors or the public. (L. 1992 H.B.
1574)

Whenever it appears to the director that any insurer or any
director, officer, employee or agent thereof has committed a willful
violation of sections 382.010 to 382.300, the director may cause criminal
proceedings to be instituted in the circuit court for the county in which
the principal office of the insurer is located or if such insurer has no
such office in the state, then by the attorney general against such
insurer or the responsible director, officer, employee or agent thereof.
Any insurer which is convicted of willfully violating sections 382.010 to
382.300 may be fined not more than ten thousand dollars. Any individual
who is convicted of willfully violating sections 382.010 to 382.300 may
be fined not more than three thousand dollars, or if such willful
violation involves the deliberate perpetration of a fraud upon the
director, he may be imprisoned for not more than two years or by both
such fine and imprisonment. (L. 1971 S.B. 101 § 30)

Any officer, director, or employee of an insurance holding
company system who knowingly subscribes to or makes or causes to be made
any false statements or false reports or false filings with the intent to
deceive the director in the performance of his duties under this chapter,
upon conviction thereof, shall be guilty of a class D felony. Any fines
imposed shall be paid by the officer, director, or employee in his
individual capacity. (L. 1992 H.B. 1574)

Whenever it appears to the director that any person has
committed a violation of sections 382.010 to 382.300 which so impairs the
financial condition of a domestic insurer as to threaten insolvency or
make the further transaction of business by it hazardous to its
policyholders, creditors, shareholders or the public, then the director
may proceed as provided by law to take possession of the property of such
domestic insurer and to conduct the business thereof. (L. 1971 S.B. 101 §
31)

1. If an order for liquidation or rehabilitation of a domestic
insurer has been entered, the receiver appointed under such order shall
have a right to recover on behalf of the insurer, from any parent
corporation or holding company or person or affiliate who otherwise
controlled the insurer, the amount of distributions, other than
distributions of shares of the same class of stock, paid by the insurer
on its capital stock, or any payment in the form of a bonus, termination
settlement or extraordinary lump sum salary adjustment made by the
insurer or its subsidiary to a director, officer or employee, where the
distribution or payment is made at any time during the one year preceding
the petition for liquidation, conservation or rehabilitation, as the case
may be, subject to the limitations of subsections 2, 3, and 4 of this
section.

2. No such distribution shall be recoverable if the parent or affiliate
shows that when paid such distribution was lawful and reasonable, and
that the insurer did not know and could not have reasonably known that
such distribution might adversely affect the ability of the insurer to
fulfill its contractual obligations.

3. Any person who was a parent corporation or holding company or a person
who otherwise controlled the insurer or affiliate at the time such
distributions were paid shall be liable up to the amount of distributions
or payments under subsection 1 of this section such person received. Any
person who otherwise controlled the insurer at the time such
distributions were declared shall be liable up to the amount of
distributions he would have received if they had been paid immediately.
If two or more persons are liable with respect to the same distributions,
they shall be jointly and severally liable.

4. The maximum amount recoverable under this subsection shall be the
amount needed in excess of all other available assets of the impaired or
insolvent insurer to pay the contractual obligations of the impaired or
insolvent insurer and to reimburse any guaranty funds.

5. To the extent that any person liable under subsection 3 of this
section is insolvent or otherwise fails to pay claims due from it
pursuant to such subsection, its parent corporation or holding company or
person who otherwise controlled it at the time the distribution was paid
shall be jointly and severally liable for any resulting deficiency in the
amount recovered from such parent corporation or holding company or
person who otherwise controlled it. (L. 1992 H.B. 1574)

Whenever it appears to the director that any person has
committed a violation of sections 382.010 to 382.300 which makes the
continued operation of an insurer contrary to the interests of
policyholders or the public, the director may, after giving notice and an
opportunity to be heard, determine to suspend, revoke or refuse to renew
such insurer's license or authority to do business in this state for such
period as he finds is required for the protection of policyholders or the
public. Any such determination shall be accompanied by specific findings
of fact and conclusions of law. (L. 1971 S.B. 101 § 32)

1. Any person aggrieved by any act, determination, rule,
regulation, order or any other action of the director pursuant to
sections 382.010 to 382.300 may appeal therefrom to the circuit court for
Cole County. The court shall conduct its review without a jury and by
trial de novo, but if all parties, including the director, so stipulate,
the review shall be confined to the record. Portions of the records may
be introduced by stipulation into evidence in a trial de novo as to those
parties so stipulating.

2. The filing of an appeal pursuant to this section shall stay the
application of any rule, regulation, order or other action of the
director to the appealing party unless the court, after giving such party
notice and an opportunity to be heard, determines that such a stay would
be detrimental to the interests of policyholders, shareholders, creditors
or the public.

3. Any person aggrieved by any failure of the director to act or make a
determination required by sections 382.010 to 382.300 may petition the
circuit court for Cole County for a writ in the nature of a mandamus or a
peremptory mandamus directing the director to act or make the
determination forthwith. (L. 1971 S.B. 101 § 33)

1. The language and terms used in this section shall be
interpreted subject to the definitions contained in section 382.010,
unless otherwise indicated. The terms "insolvent", "insolvency" and
"receiver" shall be interpreted subject to the definitions contained in
section 375.1152, RSMo.

2. No person who controls any insurer shall transfer, convey or dispose
of such insurer or of all or a substantial portion of his other assets
without notifying the director prior to such disposition of his intention
to dispose of such insurer or such assets and until the insurer has been
examined pursuant to this section and the director approves such
transfer, conveyance or disposal. Upon such notification, the director
shall cause an examination to be made of the insurer and its affiliates
to ascertain the financial condition of the insurer. The director shall
review the records, books and other papers of the insurer and shall
consider, at minimum, the factors contained in section 382.200, when
determining the financial condition of the insurer. The director may
petition any court of competent jurisdiction to enjoin any activity of
any person or the insurer or its affiliates which impedes or interferes
with the authority of the director to conduct the examination required by
this subsection, prior to the transfer, conveyance or disposition of the
assets. As used in this subsection, the term "substantial" shall refer to
a transfer, conveyance or disposition of any assets of the person, after
which the person will own assets of a total value which equals or is less
than the total value of the assets of the insurer and the insurer's
subsidiaries prior to the time of the intended transfer, conveyance or
disposition.

3. A transfer, conveyance or disposal of an insurer or of assets which is
made in derogation of subsection 2 of this section is voidable, at the
election of the director, by an action brought in any court of competent
jurisdiction or the circuit court of Cole County within five years of the
date that the transaction was completed. Any person who receives any
assets of the insurer as a result of such transfer, conveyance or
disposal shall be personally liable to any receiver for the value of the
assets received and the costs of recovering such assets.

4. No insurer subject to registration pursuant to section 382.100, or any
person who controls any insurer, shall pay any dividend in cash, in
property, or in shares of stock of the person, the insurer, or any other
affiliate of the person or insurer, at any time that the insurer or any
subsidiary of the insurer which is authorized to do an insurance business
in this or any other state, is insolvent. Any person who receives a
dividend paid in violation of this subsection shall be personally liable
to any receiver appointed pursuant to this section and sections 375.1150
to 375.1246, RSMo, and sections 374.216 and 374.217, RSMo, with respect
to the insurer, for benefit of the receivership, and to the insurer, for
the full amount of the dividend unlawfully paid to that person, with
interest thereon from the time that the dividend was unlawfully paid. If
a dividend is distributed to the shareholders of a corporation which in
turn had received a dividend from the insurer, the persons who received a
dividend from the corporation shall be liable in the place and stead of
the corporation. Any action pursuant to this subsection may be brought at
any time within ten years of the payment of the dividend. (L. 1991 H.B.
385, et al. § 110)

As used in sections 382.400 to 382.410, the following terms mean:

(1) "Accredited state", a state in which the insurance department or
regulatory agency has qualified as meeting the minimum financial
regulatory standards promulgated and established from time to time by the
National Association of Insurance Commissioners;

(2) "Broker", an insurance broker or brokers as defined in section
375.012, RSMo;

(3) "Control" or "controlled" has the meaning prescribed by section
382.010;

(4) "Controlled insurer", a licensed insurer which is controlled,
directly or indirectly, by a broker;

(5) "Controlling broker", a broker who, directly or indirectly, controls
an insurer;

(6) "Licensed insurer" or "insurer", any person, firm, association or
corporation duly licensed to transact a property or casualty insurance
business in this state. The following are not licensed insurers for the
purposes of sections 382.400 to 382.410:

(a) All risk retention groups as defined in the federal Superfund
Amendments Reauthorization Act of 1986, as amended, and the federal Risk
Retention Act, 15 U.S.C. section 3901, et seq., as amended, and sections
375.1080 to 375.1105, RSMo;

(b) All residual market pools and joint underwriting authorities or
associations; and

(c) All captive insurers. For the purposes of sections 382.400 to
382.410, "captive insurers" are insurance companies owned by another
organization whose exclusive purpose is to insure risks of the parent
organization and affiliated companies or, in the case of groups and
associations, insurance organizations owned by the insureds whose
exclusive purpose is to insure risks to member organizations and group
members and their affiliates. (L. 1992 H.B. 1574 § 7)

Effective 1-1-93

Sections 382.400 to 382.410 shall apply to licensed insurers
either domiciled in this state or domiciled in a state that is not an
accredited state having in effect laws substantially similar to the
provisions of sections 382.400 to 382.410. All provisions of this
chapter, to the extent they are not superseded by sections 382.400 to
382.410, shall continue to apply to all parties within holding company
systems subject to sections 382.400 to 382.410. (L. 1992 H.B. 1574 § 8)

Effective 1-1-93

1. (1) The provisions of this section shall apply if in any
calendar year the aggregate amount of gross written premium on business
placed with a controlled insurer by controlling broker is equal to or
greater than five percent of the admitted assets of the controlled
insurer, as reported in the controlled insurer's quarterly statement
filed as of September thirtieth of the prior year.

(2) Notwithstanding the provisions of subdivision (1) of this subsection,
the provisions of this section shall not apply if:

(a) The controlling broker:

a. Places insurance only with the controlled insurer, or only with the
controlled insurer and a number of members of the controlled insurer's
holding company system, or the controlled insurer's parent, affiliate or
subsidiary and receives no compensation based upon the amount of premiums
written in connection with such insurance; and

b. Accepts insurance placements only from nonaffiliated subproducers, and
not directly from insureds; and

(b) The controlled insurer, except for insurance business written through
a residual market facility such as the joint underwriting association
prescribed by section 303.200, RSMo, accepts insurance business only from
a controlling broker, a broker controlled by the controlled insurer, or a
broker that is a subsidiary of the controlled insurer.

2. A controlled insurer shall not accept business from a controlling
broker and a controlling broker shall not place business with a
controlled insurer unless there is a written contract between the
controlling broker and the insurer specifying the responsibilities of
each party, which contract has been approved by the board of directors of
the insurer and contains the following minimum provisions:

(1) The controlled insurer may terminate the contract for cause, upon
written notice to the controlling broker. The controlled insurer shall
suspend the authority of the controlling broker to write business during
the pendency of any dispute regarding the cause for the termination;

(2) The controlling broker shall render accounts to the controlled
insurer detailing all material transactions, including information
necessary to support all commissions, charges and other fees received by,
or owing to, the controlling broker;

(3) The controlling broker shall remit all funds due under the terms of
the contract to the controlled insurer on at least a monthly basis. The
due date shall be fixed so that premiums or installments thereof
collected shall be remitted no later than ninety days after the effective
date of any policy placed with the controlled insurer under the contract;

(4) All funds collected for the controlled insurer's account shall be
held by the controlling broker in a fiduciary capacity, in one or more
appropriately identified bank accounts in banks that are members of the
Federal Reserve System, in accordance with the provisions of applicable
insurance law; however, funds of a controlling broker not required to be
licensed in this state shall be maintained in compliance with the
requirements of the controlling broker's domiciliary jurisdiction;

(5) The controlling broker shall maintain separately identifiable records
of business written for the controlled insurer;

(6) The contract shall not be assigned in whole or in part by the
controlling broker;

(7) The controlled insurer shall provide the controlling broker with its
underwriting standards, rules and procedures, manuals setting forth the
rates to be charged, and the conditions for the acceptance or rejection
of risks. The controlling broker shall adhere to the standards, rules,
procedures, rates and conditions. The standards, rules, procedures, rates
and conditions shall be the same as those applicable to comparable
business placed with the controlled insurer by a broker other than the
controlling broker;

(8) The rates and terms of the controlling broker's commissions, charges
or other fees and the purposes for those charges or fees. The rates of
the commissions, charges and other fees shall be no greater than those
applicable to comparable business placed with the controlled insurer by
brokers other than controlling brokers. For purposes of this subdivision
and subdivision (7) of this subsection, examples of comparable business
includes the same lines of insurance, same kinds of insurance, same kinds
of risks, similar policy limits, and similar quality of business;

(9) If the contract provides that the controlling broker, on insurance
business placed with the insurer, is to be compensated contingent upon
the insurer's profits on that business, then such compensation shall not
be determined and paid until at least five years after the premiums on
liability insurance are earned and at least one year after the premiums
are earned on any other insurance. In no event shall the commissions be
paid until the adequacy of the controlled insurer's reserves on remaining
claims has been independently verified pursuant to subsection 1 of this
section;

(10) A limit on the controlling broker's writings in relation to the
controlled insurer's surplus and total writings. The insurer may
establish a different limit for each line or subline of business. The
controlled insurer shall notify the controlling broker when the
applicable limit is approached and shall not accept business from the
controlling broker if the limit is reached. The controlling broker shall
not place business with the controlled insurer if it has been notified by
the controlled insurer that the limit has been reached; and

(11) The controlling broker may negotiate but shall not bind reinsurance
on behalf of the controlled insurer, except that the controlling broker
may bind facultative reinsurance contracts pursuant to obligatory
facultative agreements if the contract with the controlled insurer
contains underwriting guidelines including, but both reinsurance assumed
and ceded, a list of reinsurers with which such automatic agreements are
in effect, the coverages and amounts or percentages that may be reinsured
and commission schedules.

3. Every controlled insurer shall have an audit committee of the board of
directors composed of independent directors. The audit committee shall
annually meet with management, the insurer's independent certified public
accountants, and an independent casualty actuary or other independent
loss reserve specialist acceptable to the director to review the adequacy
of the insurer's loss reserves.

4. (1) In addition to any other required loss reserve certification, the
controlled insurer shall annually, on April first of each year, file with
the director an opinion of an independent casualty actuary, or such other
independent loss reserve specialist acceptable to the director, reporting
loss ratios for each line of business written and attesting to the
adequacy of loss reserves established for losses incurred and outstanding
as of year-end, including incurred but not reported, on business placed
by the broker; and

(2) The controlled insurer shall annually report to the director the
amount of commissions paid to the broker, the percentage such amount
represents of the net premiums written and comparable amounts and
percentage paid to noncontrolling brokers for placements of the same
kinds of insurance. (L. 1992 H.B. 1574 § 9)

Effective 1-1-93

The broker, prior to the effective date of the policy, shall
deliver written notice to the prospective insured disclosing the
relationship between the broker and the controlled insurer, except that
if the business is placed through a subproducer who is not a controlling
broker, the controlling broker shall retain in his records a signed
commitment from the subproducer that the subproducer is aware of the
relationship between the insurer and the broker and that the subproducer
has or will notify the insured. (L. 1992 H.B. 1574 § 10)

Effective 1-1-93

1. (1) If the director believes that the controlling broker or
any other person has not materially complied with sections 382.400 to
382.410, or any regulation or order promulgated hereunder, after notice
and opportunity to be heard, the director may order the controlling
broker to cease placing business with the controlled insurer; and

(2) If it was found that because of such material noncompliance that the
controlled insurer or any policyholder thereof has suffered any loss or
damage, the director may maintain a civil action or intervene in an
action brought by or on behalf of the insurer or policyholder for
recovery of compensatory damages for the benefit of the insurer or
policyholder or other appropriate relief.

2. If an order of liquidation or rehabilitation of the controlled insurer
has been entered pursuant to sections 375.1150 to 375.1246, RSMo, and the
receiver appointed under that order believes that the controlling broker
or any other person has not materially complied with sections 382.400 to
382.410, or any regulation or order promulgated hereunder, and the
insurer suffered any loss or damage therefrom, the receiver may maintain
a civil action for recovery of damages or other appropriate sanctions for
the benefit of the insurer.

3. Nothing contained in this section shall affect the right of the
director to impose any other penalties provided for by law.

4. Nothing contained in this section is intended to or shall in any
manner alter or affect the rights of policyholders, claimants, creditors
or other third parties. (L. 1992 H.B. 1574 § 11)

Effective 1-1-93

Sections 382.400 to 382.410 shall take effect on January 1,
1993. Controlled insurers and controlling brokers who are not in
compliance with section 382.405 on January 1, 1993, shall have sixty days
to come into compliance and shall comply with section 382.407 beginning
with all policies written or renewed on or after March 1, 1993. (L. 1992
H.B. 1574 § 12)

Effective 1-1-93

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