MARVIN MANDEL, Governor                        607

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. FOR PUR-
POSES OF THIS CLAUSE, "ACTUAL COST" SHALL MEAN
TOTAL NET MONIES OR OTHER CONSIDERATION EX-
PENDED AND OBLIGATIONS ASSUMED IN THE ACQUISI-
TION OR FORMATION OF A SUBSIDIARY AND, IN THE CASE
OF THE FORMATION OF A SUBSIDIARY, ALL ORGANIZA-
TIONAL EXPENSES AND CONTRIBUTION TO CAPITAL
AND SURPLUS OF SUCH SUBSIDIARY WHETHER OR NOT
REPRESENTED BY THE PURCHASE OF CAPITAL STOCK OR
ISSUANCE OF OTHER SECURITIES. IF THE INSURER'S
TOTAL LIABILITIES, AS CALCULATED FOR NAIC ANNUAL
STATEMENT PURPOSES, ARE LESS THAN TEN (10) PER-
CENT OF ASSETS, INVEST ANY AMOUNT IN PREFERRED
STOCK AND DEBT OBLIGATIONS OF ONE OR MORE SUB-
SIDIARIES, PROVIDED THAT AFTER SUCH INVESTMENT
THE INSURER'S SURPLUS AS REGARDS POLICYHOLDERS,
CONSIDERING SUCH INVESTMENT AS IF IT WERE A DIS-
ALLOWED ASSET, WILL BE REASONABLE IN RELATION
TO THE INSURER'S OUTSTANDING LIABILITIES AND ADE-
QUATE TO ITS FINANCIAL NEEDS.

(c) If an insurer ceases to control a subsidiary, it shall dispose
of any investment therein made pursuant to this Section within
three (3) years from the time of the cessation of control or within
such further time as the Commissioner may prescribe, unless at any
time after such investment shall have been made, such investment
shall have met the requirements for investment under other sections
of this Article, and the insurer has notified the Commissioner
thereof.

(a) Until all the requirements of this section have been com-
plied with, no person shall make a tender offer for or a request or
invitation for tenders of, or enter into an agreement to exchange
securities for or otherwise acquire, any voting security or security
convertible into voting security of a domestic insurer or an insur-
ance holding company which controls one or more domestic insurers
if, as a result of the consummation thereof, such person would, di-
rectly or indirectly, acquire control of such insurer or insurance
holding company, and no person shall enter into an agreement to
merge with or otherwise to acquire control of a domestic insurer or
insurance holding company which controls one or more domestic in-
surers, unless

(1) such person has filed with the Commissioner and has at the
same time sent to such insurer or insurance holding company a
statement containing such of the following information, and such
additional information, as the Commissioner may by rule or regula-
tion prescribe as necessary or appropriate in the public interest or
for the protection of policyholders PROVIDED, HOWEVER, THAT
THE COMPANY TO BE ACQUIRED SHALL BE PROVIDED
WITH SUCH INFORMATION BY THE COMMISSIONER ON
THE DATE THE ATTEMPT TO ACQUIRE IS MADE PUBLIC:

494.