1-1                                   AN ACT
 1-2     relating to approval by the Texas Department of Insurance for
 1-3     certain holding company affiliations.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Subdivision (1), Subsection (a), Section 5,
 1-6     Article 21.49-1, Insurance Code, is amended to read as follows:
 1-7                 (1)  No person shall (i) acquire in any manner any
 1-8     voting security of a domestic insurer if such person is, or after
 1-9     such acquisition would be, directly or indirectly, in control of a
1-10     domestic insurer or (ii) otherwise acquire control of or exercise
1-11     any control over a domestic insurer, until and unless such person
1-12     has filed with the commissioner a statement containing the
1-13     information required by Subsection (b) of this section and such
1-14     acquisition of control has been approved by the commissioner in the
1-15     manner hereinafter prescribed.  The statement filed under this
1-16     Subsection (a) shall be filed not later than the 60th day before
1-17     the proposed effective date of the acquisition or change of control
1-18     and subject to public inspection at the office of the commissioner,
1-19     and a copy thereof shall be sent by the acquiring party to the
1-20     domestic insurer.
1-21           SECTION 2.  Subdivisions (1) and (2), Subsection (c), Section
1-22     5, Article 21.49-1, Insurance Code, are amended to read as follows:
1-23                 (1)  The commissioner shall approve or deny any
1-24     acquisition or change of control referred to in Subsection (a) not
1-25     later than the 60th day after the date the statement required by
 2-1     that subsection is filed.  The 60-day period may be waived by the
 2-2     person filing the statement and the domestic insurer.  On the
 2-3     request of either the person filing the statement or the domestic
 2-4     insurer, the commissioner shall hold [unless, after] a public
 2-5     hearing on a denial.  In considering whether to approve or deny,
 2-6     the commissioner shall consider whether [thereon, he finds that]:
 2-7                             (i)  immediately upon the acquisition or
 2-8     change of control the domestic insurer referred to in Subsection
 2-9     (a) would not be able to satisfy the requirements for the issuance
2-10     of a new certificate of authority or a license to write the line or
2-11     lines of insurance for which it is presently licensed;
2-12                             (ii)  the effect of such acquisition or
2-13     change of control would be substantially to lessen competition in
2-14     any line or subclassification lines of insurance in this State or
2-15     tend to create a monopoly therein;
2-16                             (iii)  the financial condition of the
2-17     acquiring party is such as might jeopardize the financial stability
2-18     of the domestic insurer, or prejudice the interest of its
2-19     policyholders;
2-20                             (iv)  the plans or proposals which the
2-21     acquiring party has to liquidate the domestic insurer, cause it to
2-22     declare dividends or make other distributions, sell any of its
2-23     assets, consolidate or merge it with any person, make any material
2-24     change in its business or corporate structure or management, or
2-25     cause the insurer to enter into material agreements, arrangements,
2-26     or transactions of any kind with any party, are unfair,
 3-1     prejudicial, hazardous, or unreasonable to policyholders of the
 3-2     insurer and not in the public interest;
 3-3                             (v)  the competence, trustworthiness,
 3-4     experience, and integrity of those persons who would control the
 3-5     operation of the domestic insurer are such that it would not be in
 3-6     the interest of policyholders of the domestic insurer and of the
 3-7     public to permit the [merger or] acquisition or change of control;
 3-8     and [or]
 3-9                             (vi)  the acquisition or change of control
3-10     [or merger] would violate any law of this State, any other state,
3-11     or the United States.
3-12                 (2)  The public hearing referred to in this subsection
3-13     [Clause (1) hereof] shall be held not later than the 60th day
3-14     [within 45 days] after the date of the denial [the statement
3-15     required by Subsection (a)  is filed], and at least 20 days' notice
3-16     thereof shall be given by the commissioner to the person filing the
3-17     statement and to the domestic insurer unless such person and the
3-18     domestic insurer waive such notice.  The person filing the
3-19     statement and the domestic insurer shall furnish notice of the
3-20     public hearing to such other persons as may be designated by the
3-21     commissioner within the time and manner specified by the
3-22     commissioner.  The acquiring party shall have the burden of
3-23     providing sufficient competent evidence for the commissioner to
3-24     make the determinations required under Subsection (c)(1).  The
3-25     commissioner shall make a determination within 60 days after the
3-26     record of such hearing is closed.  [At any time after the
 4-1     submission or resubmission to the commissioner of a statement filed
 4-2     under Subsection (a) of this section, regardless of whether the
 4-3     statement is complete and accurate, the matter may be placed on the
 4-4     commissioner's contested case docket to hear any pre-hearing
 4-5     matters and motions permitted under the Administrative Procedure
 4-6     and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
 4-7     Statutes).]
 4-8           SECTION 3.  The changes in law made by this Act to Section 5,
 4-9     Article 21.49-1, Insurance Code, do not apply to an acquisition or
4-10     change of control under that section for which a statement is filed
4-11     before the effective date of this Act.  An acquisition or change of
4-12     control for which a statement is filed before the effective date of
4-13     this Act is governed by the law in effect immediately before the
4-14     effective date of this Act, and that law is continued in effect for
4-15     that purpose.
4-16           SECTION 4.  This Act takes effect immediately if it receives
4-17     a vote of two-thirds of all the members elected to each house, as
4-18     provided by Section 39, Article III, Texas Constitution.  If this
4-19     Act does not receive the vote necessary for immediate effect, this
4-20     Act takes effect September 1, 2001.
         _______________________________     _______________________________
             President of the Senate              Speaker of the House
               I hereby certify that S.B. No. 605 passed the Senate on
         March 15, 2001, by the following vote:  Yeas 30, Nays 0, one
         present, not voting.
                                             _______________________________
                                                 Secretary of the Senate
               I hereby certify that S.B. No. 605 passed the House on
         May 8, 2001, by the following vote:  Yeas 147, Nays 0, two present,
         not voting.
                                             _______________________________
                                                Chief Clerk of the House
         Approved:
         _______________________________
                      Date
         _______________________________
                    Governor