894

LAWS OF MARYLAND

Ch. 199

(3)  REINSURANCE AGREEMENTS OR MODIFICATIONS THERETO,
IN WHICH, AS OF THE DECEMBER 31 NEXT PRECEDING, THE REINSURANCE
PREMIUM OR A CHANGE IN THE INSURER'S LIABILITIES EQUALS OR
EXCEEDS 5 PERCENT OF THE INSURER'S SURPLUS AS REGARDS
POLICYHOLDERS, AS OF THE 31ST DAY OF DECEMBER NEXT PRECEDING,
INCLUDING THOSE AGREEMENTS WHICH MAY REQUIRE AS CONSIDERATION THE
TRANSFER OF ASSETS FROM AN INSURER TO A NONAFFILIATE IF AN
AGREEMENT OR UNDERSTANDING EXISTS BETWEEN THE INSURER AND
NONAFFILIATE THAT ANY PORTION OF SUCH ASSETS WILL BE TRANSFERRED
TO ONE OR MORE AFFILIATES OF THE INSURER;

(4)  MANAGEMENT AGREEMENTS, SERVICE CONTRACTS, AND ALL
COST-SHARING ARRANGEMENTS; AND

(5)  ANY MATERIAL TRANSACTIONS, SPECIFIED BY
REGULATION, WHICH THE COMMISSIONER DETERMINES MAY ADVERSELY
AFFECT THE INTERESTS OF THE INSURER'S POLICYHOLDERS.

(D)  (1) A DOMESTIC INSURER MAY NOT ENTER INTO TRANSACTIONS,
WHICH ARE PART OF A PLAN OR SERIES OF LIKE TRANSACTIONS WITH
PERSONS WITHIN THE HOLDING COMPANY SYSTEM, IF THE PURPOSE OF
THOSE SEPARATE TRANSACTIONS IS TO AVOID THE STATUTORY THRESHOLD
AMOUNT AND THUS AVOID THE REVIEW THAT WOULD OCCUR OTHERWISE.

(2) IF THE COMMISSIONER DETERMINES THAT SUCH SEPARATE
TRANSACTIONS WERE ENTERED INTO DURING ANY 12-MONTH PERIOD FOR
SUCH PURPOSE, HE MAY EXERCISE HIS AUTHORITY UNDER § 500 OF THIS
ARTICLE.

(E)  THE COMMISSIONER, IN REVIEWING TRANSACTIONS UNDER
SUBSECTION (C) OF THIS SECTION, SHALL CONSIDER:

(1)  WHETHER THE TRANSACTIONS COMPLY WITH THE
STANDARDS SET FORTH IN SUBSECTION (A) OF THIS SECTION; AND

(2)  WHETHER THE TRANSACTIONS MAY ADVERSELY AFFECT THE
INTERESTS OF POLICYHOLDERS.

(F)  THE COMMISSIONER SHALL BE NOTIFIED WITHIN 30 DAYS OF
ANY INVESTMENT OF A DOMESTIC INSURER IN ANY ONE CORPORATION IF
THE TOTAL INVESTMENT IN SUCH CORPORATION BY THE INSURANCE HOLDING
COMPANY SYSTEM EXCEEDS 10 PERCENT OF THE CORPORATION'S VOTING
SECURITIES.

(G)  NOTHING IN THIS SECTION SHALL BE DEEMED TO AUTHORIZE OR
PERMIT ANY TRANSACTIONS WHICH, IN THE CASE OF AN INSURER, NOT A
MEMBER OF THE SAME HOLDING COMPANY SYSTEM, WOULD BE OTHERWISE
CONTRARY TO LAW.

497.

(b) For the purpose of this section, extraordinary dividend
or distribution includes any dividend or distribution of cash or
other property, BUT NOT INCLUDING PRO RATA DISTRIBUTIONS OF ANY
CLASS OF THE INSURER'S OWN SECURITIES, whose fair market value