60D.16 SUBSIDIARIES OF INSURERS.
Subdivision 1. Authorization.
A domestic insurer, either by itself or in cooperation with
one or more persons, may organize or acquire one or more subsidiaries engaged in the following
kinds of business:
(1) any kind of insurance business authorized by the jurisdiction in which it is incorporated;
(2) acting as an insurance broker or as an insurance agent for its parent or for any of its
parent's insurer subsidiaries;
(3) investing, reinvesting, or trading in securities for its own account, that of its parent, any
subsidiary of its parent, or any affiliate or subsidiary;
(4) management of any investment company subject to or registered pursuant to the
Investment Company Act of 1940, as amended, including related sales and services;
(5) acting as a broker-dealer subject to or registered pursuant to the Securities Exchange
Act of 1934, as amended;
(6) rendering investment advice to governments, government agencies, corporations, or
other organizations or groups;
(7) rendering other services related to the operations of an insurance business including, but
not limited to, actuarial, loss prevention, safety engineering, data processing, accounting, claims,
appraisal, and collection services;
(8) ownership and management of assets that the parent corporation could itself own or
(9) acting as administrative agent for a governmental instrumentality which is performing an
(10) financing of insurance premiums, agents, and other forms of consumer financing;
(11) any other business activity determined by the commissioner to be reasonably ancillary
to an insurance business; and
(12) owning a corporation or corporations engaged or organized to engage exclusively in one
or more of the businesses specified in this section.
Subd. 2. Additional investment authority.
In addition to investments in common stock,
preferred stock, debt obligations, and other securities otherwise permitted, a domestic insurer
(a) Invest, in common stock, preferred stock, debt obligations, and other securities of
one or more subsidiaries, amounts that do not exceed the lesser of ten percent of the insurer's
assets or 50 percent of the insurer's surplus as regards policyholders, provided that after the
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
these investments, investments in domestic or foreign insurance subsidiaries must be excluded,
and there must be included:
(1) total net money 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 the subsidiary whether or not represented by the purchase of capital stock
or issuance of other securities; and
(2) 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.
(b) 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 the
subsidiary agrees to limit its investments in any asset so that the investments will not cause the
amount of the total investment of the insurer to exceed any of the investment limitations specified
in paragraph (a) or other statutes applicable to the insurer. For the purpose of this paragraph,
"the total investment of the insurer" includes:
(1) any direct investment by the insurer in an asset; and
(2) the insurer's proportionate share of any investment in an asset by any subsidiary of the
insurer, which must be calculated by multiplying the amount of the subsidiary's investment by the
percentage of the ownership of the subsidiary.
(c) With the approval of the commissioner, invest any greater amount in common stock,
preferred stock, debt obligations, or other securities of one or more subsidiaries, if after the
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.
Subd. 3. Exemption from investment restrictions.
Investments in common stock, preferred
stock, debt obligations, or other securities of subsidiaries made pursuant to subdivision 2 are
not subject to any of the otherwise applicable restrictions or prohibitions applicable to these
investments of insurers.
Subd. 4. Qualification of investment; when determined.
Whether any investment pursuant
to subdivision 2 meets the applicable requirements is to be determined before the investment is
made, by calculating the applicable investment limitations as though the investment had already
been 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 day
they were made, net of any return of capital invested, not including dividends.
Subd. 5. Cessation of control.
If an insurer ceases to control a subsidiary, it shall dispose of
any investment in it made pursuant to this section within three years from the time of the cessation
of control or within any further time the commissioner prescribes, unless at any time after the
investment has been made, the investment meets the requirements for investment under any other
provision of law, and the insurer has notified the commissioner of this fact.
History: 1991 c 325 art 14 s 3