878

LAWS OF MARYLAND

Ch. 199

the acquisition or formation of a subsidiary and, in the case of
the formation of a subsidiary, all organizational 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.]

[(6)] (5) If the insurer's total liabilities, as
calculated for NAIC annual statement purposes, are less than [ten
(10)] 10 percent of assets, invest any amount in preferred stock
and debt obligations of one or more subsidiaries, provided that
after such investment the insurer's surplus as regards
policyholders, considering such investment as if it were a
disallowed asset, will be reasonable in relation to the insurer's
outstanding liabilities and adequate to its financial needs.

494.

(a) Until all the requirements of this section have been
complied with, no person OTHER THAN THE ISSUER 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 insurance holding company
which controls one or more domestic insurers if, as a result of
the consummation thereof, such person would, directly 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
insurers[, unless].

(1) (I) FOR THE PURPOSE OF THIS SECTION, "DOMESTIC
INSURER" SHALL INCLUDE ANY PERSON CONTROLLING A DOMESTIC INSURER
UNLESS SUCH PERSON AS DETERMINED BY THE COMMISSIONER IS EITHER
DIRECTLY OR THROUGH ITS AFFILIATES PRIMARILY ENGAGED IN BUSINESS
OTHER THAN THE BUSINESS OF INSURANCE.

(II)  FOR THE PURPOSE 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 WHICH
CONTROLS AN INSURANCE COMPANY.

(III)  A DOMESTIC INSURER OR ANY PERSON
CONTROLLING A DOMESTIC INSURER, WHETHER ENGAGED IN THE BUSINESS
OF INSURANCE OR NOT, SHALL FILE A PRE-ACQUISITION NOTIFICATION
WITH THE COMMISSIONER CONTAINING THE INFORMATION SET FORTH IN §
494A(C)(1) 30 DAYS BEFORE THE PROPOSED EFFECTIVE DATE OF THE
ACQUISITION.

(IV)  FAILURE TO FILE THE INFORMATION REQUIRED
UNDER SUBPARAGRAPH (III) OF THIS PARAGRAPH IS SUBJECT TO THE
PENALTIES PROVIDED UNDER § 494A(E)(3) § 494A(E).