Holding Company System Regulatory Act

Holding Company System Regulatory Act - Provides that in the District of Columbia any domestic insurer, either by itself or in cooperation with one or more persons, may organize to acquire one or more subsidiaries. Provides that such subsidiaries may conduct any kind of business and their authority to do so shall not be limited by reason of the fact that they are subsidiaries of a domestic insurer.

Provides that the total amount which a domestic insurer may invest in the common stock, preferred stock, debt obligations, and other securities of such subsidiaries shall not exceed the lesser of: (1) five percent of such insurer's assets; or (2) in the case of a capital stock company, fifty percent of the excess of its capital, surplus, and contingency reserves over the then required statutory minimum capital and surplus, or in the case of a mutual company, fifty percent of the excess of its surplus and contingency reserves over the then required statutory minimum surplus.

Provides that no person other than the issuer shall make a tender offer for or a request or invitation for tender 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 such person would directly or indirectly be in control of such insurer. Provides that no person shall enter into an agreement to merge with or otherwise acquire control of a domestic insurer, unless, at the time any such offer, request, or invitation is made or any such agreement is entered into, or prior to the acquisition of such securities if no offer or agreement is involved, such person has filed with the Commissioner of the District of Columbia and has sent to such insurer, and such insurer has sent to its shareholders, a statement containing the information required by this section and such offer, request, invitation, agreement, or acquisition has been approved by the Commissioner.

Prescribes the information that must be submitted to the Commissioner as the basis of such approval.

Provides that the Commissioner shall approve any merger or other acquisition of control unless, after a public hearing thereon, he finds that: (1) after the change of control the domestic insurer 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 substantially lessen competition in insurance in the District or tend to create a monopoly therein; (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 or the interests of any remaining securityholders who are unaffiliated with such acquiring party; (4) the terms of the offer, request, invitation, agreement, or acquisition are unfair and unreasonable to the securityholders of the insurer; (5) the plans or proposals which 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; or (6) 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 or of the public to permit the merger or other acquisition of control.

Vests jurisdiction with the Superior Court of the District of Columbia over every person not resident, domiciled, or authorized to do business in the District who files a statement with the Commissioner under this Act, and over all actions involving violations of this Act.

Provides that every insurer which is authorized to do business in the District and which is a member of an insurance holding company system shall register with the Commissioner.

Provides that every insurer subject to such registration shall file a registration statement.

Provides that the above provision of registration shall not apply to any insurer, information, or transaction if and to the extent that the Commissioner by rule, regulation, or order shall exempt the same therefrom.

Provides that material transactions by registered insurers with their affiliates shall be subject to the following standards: (1) the terms shall be fair and reasonable; (2) the books, accounts, and records of each party shall be so maintained as to clearly and accurately disclose the precise nature and details of the transactions; and (3) the insurer's surplus as regards policy holders following any dividends or distributions to to shareholder affiliates shall be reasonalbe in relation to the insurer's outstanding liabilities and adequate to its financial needs.

Authorizes the Commissioner to make a condidential examination of the records, books, papers, or other information in the possession of a registered insurer or its affiliates to ascertain the financial condition or legality of the conduct of such insurer.

Authorizes the Commissioner to obtain an injunction in the Superior Court of the District of Columbia against violations of this Act.

Provides that any individual who willfully violates this Act may be fined not more than $1,000 or, if such willful violation involves the deliberate perpetration of a fraud upon the Commissioner, imprisoned not more than two years, or both.

Authorizes the revocation, suspension, or non-renewal of an insurer's license by the Commissioner whenever it appears to the Commissioner that any person has committed a violation of this Act which makes the continued operation of an insurer contrary to the interests of policyholders or the public.