H.B. 422                                                        VETOES

(i) The informational requirements under § 494A(c)(1) of this subtitle
and the standards set forth in § 494A(d)(2) of this subtitle 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 §
494A(d)(3) of this subtitle 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.

496.

(b) For purposes of this subtitle, in determining whether an insurer's assets and surplus
as regards policyholders are reasonable in relation to the insurer's outstanding liabilities and
adequate to its financial needs, the following factors, among others, shall be considered:

(1)      The size of the insurer as measured by its assets, capital and surplus,
reserves, premium writings, insurance in force and other appropriate criteria;

(2)      The extent to which the insurer's business is diversified among the several
lines of insurance;

(3)      The number and size of risks insured in each line of business;

(4)      The extent of the geographical dispersion of the insurer's insured risks;

(5)      The nature and extent of reinsurance of the insurer's risks;

(6)      The quality, diversification, and liquidity of the insurer's investment
portfolio;

(7)      The recent past and projected future trends in the size of the insurer's surplus
as regards policyholders;                                                                 

(8)      The surplus as regards policyholders maintained by other, comparable
insurers;

(9)      The [financial position of the insurer in the light ] QUALITY AND
LIQUIDITY of investments in and other transactions with affiliated persons;

(10)     THE ADEQUACY OF THE RESERVES OF THE INSURER; AND

(11)     THE QUALITY OF THE EARNINGS OF THE INSURER AND THE EXTENT TO
WHICH THE REPORTED EARNINGS INCLUDE EXTRAORDINARY ITEMS.

(B-1) THE COMMISSIONER MAY DISCOUNT AN INVESTMENT OR TREAT AN
INVESTMENT UNDER SUBSECTION (B)(9) OF THIS SECTION AS A NONADMITTED ASSET
FOR PURPOSES OF DETERMINING THE ADEQUACY OF SURPLUS REGARDING
POLICYHOLDERS WHENEVER THE INVESTMENT SO WARRANTS.

497.

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