Current through Register Vol. 41, No. 3, September 23, 2024
A. An acquisition covered by §
38.2-1323B of the Act may be subject to orders pursuant to § 38.2-1323B
and C of the Code of Virginia unless the acquiring party files a
pre-acquisition notification or an acquisition statement in the format
prescribed by Form E of this chapter. The person being acquired may file the
statement.
1. The commission may enter an
order suspending the license of an insurer involved in an acquisition if there
is substantial evidence that the effect of the acquisition may be substantially
to lessen competition in any line of insurance in this Commonwealth or tend to
create a monopoly therein, and is detrimental to policyholders or the public in
general.
2. An order suspending the
license may also be entered if the insurer fails to file adequate information
sufficient to rebut a reasonable belief that the merger or acquisition causes
or tends to cause a substantial lessening of competition in any line of
insurance, and also is detrimental to policyholders or the public.
3. In determining whether competition may be
detrimental, the commission shall consider, among other things, whether
applicable competitive standards promulgated by the NAIC have or may be
violated as a consequence of the acquisition. The standards may include any
indicators of competition identified or enumerated by the NAIC in any model
laws or portions of practice and procedure or instructional manuals developed
to provide guidance in regulatory oversight of holding company systems, mergers
and acquisitions, or competitive practices within the marketplace. The
standards include the definitions, guidelines or standards embodied in any
model holding company act or model holding company regulation adopted by the
NAIC. In addition, the commission may request and consider the opinion of an
economist as to the competitive impact of the acquisition whenever
pre-acquisition notification is submitted pursuant to § 38.2-1323B of the
Act.
4. An order suspending the
license shall not be entered under § 38.2-1323B of the Act unless the
involved insurer has received 10 days' notice and an opportunity to be heard.
The notice of hearing shall be accompanied by a request for information as
required by § 38.2-1324 of the Act; it may include also a request for an
opinion of an economist as to the competitive impact of the acquisition.
a. Requested information shall be filed as an
acquisition statement in the format of Form E of this chapter.
b. If the commission determines that the
acquisition or merger causes or tends to cause a substantial lessening of
competition in any line of insurance, the commission may request the insurer to
furnish the additional information required by § 38.2-1324, in order to
rebut the reasonable belief that the lessening of competition is detrimental to
policyholders or the public in general.
5. An order suspending the license shall not
be entered under § 38.2-1323B of the Code of Virginia and this section if:
a. The acquisition will yield substantial
economies of scale or economies in resource utilization that cannot be feasibly
achieved in any other way, and the public benefits which would arise from the
economies exceed the public benefits which would arise from not lessening
competition; or
b. The acquisition
will substantially increase the availability of insurance, and the public
benefits of the increase exceed the public benefits which would arise from not
lessening competition.
6. The commission's order suspending the
license entered under this section shall not become final earlier than 21 days
after it is issued, during which time the involved insurer may submit a plan to
remedy the anticompetitive impact of the acquisition within a reasonable time.
Based upon the plan or other information, the commission shall specify the
conditions, if any, under the time period during which the aspects of the
acquisition causing a violation of the applicable competitive standards
announced by the commission would be remedied and the order vacated or
modified.
B. Any hearing
held pursuant to the provisions of this section shall begin, unless waived by
the insurer, within 40 days of the date of receipt by the commission of all
material required by § 38.2-1323 of the Act.
C. For the purposes of this section and
§ 38.2-1323B of the Act, "acquisition" means any agreement, arrangement or
activity the consummation of which results in a person acquiring directly or
indirectly control of another person, and includes but is not limited to the
acquisition of voting securities, the acquisition of assets, bulk reinsurance,
and mergers.
