On April 19, 2022, the New York Department of Financial Services (“NY DFS”) issued Insurance Circular Letter No. 5 (2022) (the “Letter”). The Letter, entitled “Acquisitions of Control and Disclaimers of Control”, was addressed to all New York domiciled insurers and other interested parties. The purpose of the Letter is to remind insurance industry participants of the requirements outlined under New York Insurance Code (“NY Ins. Code”) § 1506, which requires NY DFS approval in connection with a change of control of an insurer.
Under NY Ins. Code § 1501, “control” is defined as “the possession direct or indirect of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract…or otherwise; but no person shall be deemed to control another person solely by reason of his being an officer or director of such person…control shall be presumed to exist if any person directly or indirectly owns, controls or holds with the power to vote ten percent or more of the voting securities of any other person.” NY Ins. Code § 1501(a)(2). Under NY Ins. Code § 1506, no person “other than an authorized insurer, shall acquire control of any domestic insurer, whether by purchase of its securities or otherwise, unless: it receives the superintendent’s prior approval.” NY Ins. Code § 1506(a)(2).
