2007 Minnesota Statutes

60D.17 ACQUISITION OF CONTROL OF OR MERGER WITH DOMESTIC INSURER.
    Subdivision 1. Filing requirements. No person other than the issuer shall: (1) make a
tender offer for or a request or invitation for tenders of, or enter into any agreement to exchange
securities or, seek to acquire, or acquire, in the open market or otherwise, any voting security of a
domestic insurer if, after the consummation thereof, the person would, directly or indirectly, or by
conversion or by exercise of any right to acquire, be in control of the insurer; or (2) enter into
an agreement to merge with or otherwise to acquire control of a domestic insurer or any person
controlling a domestic insurer unless, at the time the offer, request, or invitation is made or the
agreement is entered into, or before the acquisition of the securities if no offer or agreement is
involved, the person has filed with the commissioner and has sent to the insurer, a statement
containing the information required by this section and the offer, request, invitation, agreement, or
acquisition has been approved by the commissioner in the manner prescribed in this section.
For purposes of this section, a domestic insurer includes a person controlling a domestic
insurer unless the person as determined by the commissioner is either directly or through its
affiliates primarily engaged in business other than the business of insurance. However, the person
shall file a preacquisition notification with the commissioner containing the information set forth
in section 60D.18, subdivision 3, paragraph (b), 30 days before the proposed effective date of
the acquisition. Failure to file is subject to section 60D.18, subdivision 5. For the purposes of
this section, "person" does not include any securities broker holding, in the usual and customary
brokers function, less than 20 percent of the voting securities of an insurance company or of any
person that controls an insurance company.
    Subd. 2. Content of statement. The statement to be filed with the commissioner shall be
made under oath or affirmation and shall contain the following information:
(a) The name and address of each person by whom or on whose behalf the merger or other
acquisition of control referred to in subdivision 1 is to be effected, hereinafter called "acquiring
party"; and
(1) if the person is an individual, the 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
(2) if the person is not an individual, a report of the nature of its business operations during
the past five years or for a lesser period as the person and any predecessors have been in existence;
an informative description of the business intended to be done by the person and the person's
subsidiaries; and 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 must include for each individual the information required by clause (1).
(b) The source, nature, and amount of the consideration used or to be used in effecting the
merger or other acquisition of control, a description of any transaction in which funds were or
are to be obtained for this purpose, including any pledge of the insurer's stock, or the stock
of any of its subsidiaries or controlling affiliates, and the identity of persons furnishing the
consideration, provided, however, that 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.
(c) Fully audited financial information as to the earnings and financial condition of each
acquiring party for the preceding five fiscal years of each acquiring party, or for a lesser period
as the acquiring party and any predecessors have been in existence, and similar unaudited
information as of a date not earlier than 90 days before the filing of the statement.
(d) Any plans or proposals that each acquiring party may have to liquidate the insurer, to sell
its assets or merge or consolidate it with any person, or to make any other material change in its
business or corporate structure or management.
(e) The number of shares of any security referred to in subdivision 1 that each acquiring
party proposes to acquire, and the terms of the offer, request, invitation, agreement, or acquisition
referred to in subdivision 1.
(f) The amount of each class of any security referred to in subdivision 1 that is beneficially
owned or concerning which there is a right to acquire beneficial ownership by each acquiring party.
(g) A full description of any contracts, arrangements, or understandings with respect to any
security referred to in subdivision 1 in which any acquiring party is involved, including but not
limited to, transfer of any of the securities, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or
profits, or the giving or withholding of proxies. The description must identify the persons with
whom the contracts, arrangements, or understandings have been entered into.
(h) A description of the purchase of any security referred to in subdivision 1 during the 12
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 for it.
(i) A description of any recommendations to purchase any security referred to in subdivision
1 made during the 12 calendar months preceding the filing of the statement, by any acquiring
party, or by anyone based upon interviews or at the suggestion of the acquiring party.
(j) Copies 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 subdivision 1 and, if
distributed, of additional soliciting material relating to them.
(k) The term of any agreement, contract, or understanding made with or proposed to be made
with any broker-dealer as to solicitation of securities referred to in subdivision 1 for tender,
and the amount of any fees, commissions, or other compensation to be paid to broker-dealers
with regard to it.
(l) Additional information the commissioner may by rule prescribe as necessary or
appropriate for the protection of policyholders of the insurer or in the public interest.
If the person required to file the statement referred to in subdivision 1 is a partnership,
limited partnership, syndicate, or other group, the commissioner may require that the information
called for by paragraphs (a) to (l) must be given with respect to each partner of the partnership or
limited partnership, each member of the syndicate or group, and each person who controls the
partner or member. If a partner, member, or person is a corporation, or the person required to file
the statement referred to in subdivision 1 is a corporation the commissioner may require that the
information called for by paragraphs (a) to (l) 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.
If any material change occurs in the facts set forth in the statement filed with the
commissioner 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, must
be filed with the commissioner and sent to the insurer within two business days after the person
learns of the change.
    Subd. 3. Alternative filing materials. If any offer, request, invitation, agreement, or
acquisition referred to in subdivision 1 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 subdivision 1 may
utilize these documents in furnishing the information called for by that statement.
    Subd. 4. Approval by commissioner; hearings. (a) The commissioner shall approve any
merger or other acquisition of control referred to in subdivision 1 unless, after a public hearing,
the commissioner finds that:
(1) after the change of control, the domestic insurer referred to in subdivision 1 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, unless the domestic insurer is in rehabilitation or
other court-ordered supervision and the acquiring party commits to a plan that would enable the
domestic insurer to satisfy the requirements for the issuance of a license within a reasonable
amount of time;
(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:
(i) the informational requirements of section 60D.18, subdivision 3, paragraph (b), and the
standards of section 60D.18, subdivision 4, paragraph (c), shall apply;
(ii) the merger or other acquisition shall not be disapproved if the commissioner finds that
any of the situations meeting the criteria provided by section 60D.18, subdivision 4, paragraph
(c), exist; and
(iii) the commissioner 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 that the acquiring party has to liquidate the insurer, sell its assets,
or 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 not in the public interest;
(5) the competence, experience, and integrity of those persons who would control the
operation of the insurer are such that it would not be in 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.
(b) The public hearing referred to in paragraph (a) must be held 30 days after the statement
required by subdivision 1 is filed, and at least 20 days' notice of it shall be given by the
commissioner 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 other persons
designated by the commissioner. The commissioner shall make a determination within 30 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 interest may be
affected by it may present evidence, examine and cross-examine witnesses, and offer oral and
written arguments and may conduct discovery proceedings in the same manner as is presently
allowed in the district courts of this state. All discovery proceedings must be concluded not later
than three days before the start of the public hearing.
(c) The commissioner may retain at the acquiring person's expense any attorneys, actuaries,
accountants, and other experts not otherwise a part of the commissioner's staff as may be
reasonably necessary to assist the commissioner in reviewing the proposed acquisition of control.
    Subd. 5. Exemptions. This section does not apply to:
(1) Any transaction that is subject to section 60A.16, dealing with the merger or consolidation
of two or more insurers.
(2) Any offer, request, invitation, agreement, or acquisition that the commissioner by order
exempts from this section as (i) 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 (ii) as otherwise
not comprehended within the purposes of this section.
    Subd. 6. Violations. The following are violations of this section:
(1) the failure to file any statement, amendment, or other material required to be filed
pursuant to subdivision 1 or 2; or
(2) the effectuation or any attempt to effectuate an acquisition of control of, or merger with,
a domestic insurer unless the commissioner has approved it.
    Subd. 7. Jurisdiction, consent to service of process. The courts of this state have
jurisdiction over every person not resident, domiciled, or authorized to do business in this state
who files a statement with the commissioner under this section, and overall actions involving
the person arising out of violations of this section, and the person is deemed to have performed
acts equivalent to and constituting an appointment by the person of the commissioner to be the
person's true and lawful attorney upon whom may be served all lawful process in any action, suit,
or proceeding arising out of violations of this section. Copies of all lawful process shall be served
on the commissioner and transmitted by registered or certified mail by the commissioner to
the person at the person's last known address.
History: 1991 c 325 art 14 s 4; 1992 c 540 art 2 s 12; 1992 c 564 art 1 s 28