February 1, 2006, Introduced by Senator BISHOP and referred to the Committee on Banking and Financial Institutions.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 1305 (MCL 500.1305), as amended by 1992 PA 182.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1305. (1) A domestic insurer, either by itself or in
cooperation with 1 or more persons, may organize or acquire 1 or
more subsidiaries if consistent with other provisions of this act.
These subsidiaries may conduct any kind of business and their
authority to do so shall not be limited by reason of the fact that
they are subsidiaries of a domestic insurer. This provision shall
not be construed to provide authority for conduct or activities by
these subsidiaries that would otherwise be inconsistent with other
provisions of this act.
(2) If a domestic insurer acquires through a business
acquisition or a reinsurance transaction a book of business that
includes life insurance or other business written by a life
insurance company, and the book of business has a readily
determinable market value represented by the present value of the
future after-tax profits that will be earned on the book of
business in force at the date of the acquisition, the value of the
book of business acquired may be recognized as an asset in the
annual statement filed pursuant to section 438.
(3) The value of the book of business acquired as described in
subsection (2) that a domestic insurer may recognize as an asset
shall not exceed the following:
(a) Ten percent of that capital and surplus that is less than
300% of authorized control level risk based capital, plus
(b) Twenty-five percent of that capital and surplus that is
equal to or greater than 300%, but less than 400%, of authorized
control level risk based capital, plus
(c) Fifty percent of that capital and surplus that is equal to
or greater than 400%, but less than 500%, of authorized control
level risk based capital, plus
(d) Seventy-five percent of that capital and surplus that is
equal to or greater than 500% of authorized control level risk
based capital.
(4) The value of the book of business acquired as described in
subsection (2) shall be amortized to income over the period in
which the domestic insurer benefits economically, not to exceed 10
years. The value of the book of business acquired in excess of the
amount allowable under this section shall not be an admitted asset
in the annual statement filed pursuant to section 438.
(5) As used in this section, "capital and surplus" means
capital and surplus as of December 31 of the immediately preceding
year, adjusted to exclude any net positive goodwill exclusive of
any component of the goodwill relating to the existing value of the
book of business acquired, electronic data processing equipment,
operating system software, and net deferred tax assets.