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On June 3, 1997, Commercial Union Insurance Company ("CU") filed with the Maine Bureau of Insurance a Form A Statement regarding the proposed acquisition of control of York Insurance Company of Maine ("York"). The change in control results from the purchase by CU tof the common stock of York Holding Company ("York Holding"); York Holding is the parent holding company of York.
The Superintendent appointed an Advocacy Panel composed of four (4) Bureau staff members. The Advocacy Panel acted as a separate party in this matter, and met with representatives of CU and York to review the Form A statement and financial and other information. A proposed business plan for York (to be renamed "Commercial Union York Insurance Company") was filed with a letter to the Superintendent asking for confidential treatment. Also filed were a proposed reinsurance agreement, a proposed investment management agreement and other materials.
After due notice by publication, the public hearing was held in this matter on Thursday, July 24, 1997, at 10:00 a.m. in the Androscoggin Room at the offices of the Maine Department of Professional and Financial Regulation, 124 Northern Avenue, Gardiner, Maine. No one petitioned to intervene prior to or at the public hearing.
The purpose of the hearing, as more fully described in the Notice of Hearing, was to take evidence relevant to the determination of whether CUs application to acquire control of York satisfied all applicable requirements concerning change in control of a domestic insurer. The Maine Insurance Code and rules promulgated thereunder set forth procedural requirements and substantive criteria governing such an application to acquire control. (See 24-A M.R.S.A.§§222 and 3476; Bureau of Insurance Rules, Chapter 180).
At or as part of the hearing, CU and York provided pre-filed testimony, and three (3) witnesses testified in support of the Form A Statement: Gregory T. St. Angelo, Jr., Resident Vice President of the Northern New England Region Office of CU, Charles R. Fitzpatrick, Senior Vice President and Chief Financial Officer of CU, and Michael J. McSally, President and Chief Executive Officer of York. There were no other witnesses.
The testimony and supporting materials addressed whether CUs application to acquire control of York satisfied the statutory requirement concerning change of control of a domestic insurer, including:
1. Whether, after the change of control, York would continue to satisfy the requirements for maintenance of its Certificate of Authority;
2. Whether the change in control may substantially lessen competition or violate the laws of the State of Maine or of the United States pertaining to monopolies or restraints of trade;
3. Whether after the change in control the financial condition of CU would jeopardize the financial stability of York or prejudice the interests of its policyholders;
4. Whether CU had plans to liquidate York, sell its assets, merge it with any person or make any other major changes in its business, structure or management which would be unfair or prejudicial to policyholders;
5. Whether the competence, experience and integrity of those persons who would control the operation of Yorks policyholders or the public;
6. Whether CUs acquisition of control of York would tend to affect adversely the contractual obligations of York or Yorks ability and tendency to render service in the future to its policyholders and the public;
7. Whether the proposed change of name would result in the use of a name which is the same as or deceptively similar to that of another insurer to authorized, or which tends to deceive or mislead as to the type of organization of the insurer; and
8. Whether the proposed change of name would result in the use of a name which is the same as or deceptively similar to that of a foreign insurer not so authorized if such foreign insurer has within the next preceding 12 months signified its intention to secure an incorporation in the State under such name, or to do business as a foreign insurer in this State under such name, by filing notice of such intention with the Superintendentl.
CU will purchase 173,192.238 shares of York Holdings Voting Common Stock, being 100% of the issued and outstanding shares. The purchase price will be $32,500,000 in cash or approximately $187.65 per share. CU intends to combine the management and staff of York and the management and staff of CUs Northern New England Region to operate the proposed Commercial Union York Insurance Company. There was testimony that approximately 85% of the business currently written in the CU companies (Commercial Union Insurance Company, American Employers Insurance Company, The Employers Fire Insurance Company, The Northern Assurance Company of America and American Central Insurance Company) would eventually be written in the acquired company. CU requests approval, as part of this proceeding, to be permitted to amend Yorks Maine License as stated in an application for a Certificate of Authority dated July 24, 1997. The business remaining in the other CU companies licensed in the State would be managed by the staff of the acquired company. The agents of CU would be appointed to the renamed acquired company. CU testified that it had no intention to liquidate York, sell its assets, merge it with any person or make any other major changes in its business, structure or management which would be unfair or prejudicial to policyholders.
Testimony and other supporting materials filed by CU indicated that it intended to 100% reinsure the business of York, and immediately upon consummation of the transaction to contribute $15 million to York to increase its capital. CU also intends at the time of the transaction to liquidate York Holding in York and, thus, make York a direct subsidiary of CU. The company will be renamed "Commercial Union York Insurance Company." York will continue to satisfy the rquirements for maintenance of its Certificate of Authority.
There is no evidence that the change of control will lessen competition, prejudice the rights of policyholders, or not be in the best interest of Yorks policyholders or shareholders, or the public.
Based upon the Bureaus review of all submitted documents, the testimony and applicable statutes, it is hereby ordered that:
1. The Form A Statement is approved contingent upon the filing by CU of evidence of the making of the $15 million capital infusion. The Maine Bureau of Insurance approves the acquisition of York Insurance by CU. Upon this determination, CU may purchase all of the issued and outstanding share of capital stock of York Holding.
2. CU may liquidate York Holding into York and thus make York a direct subsidiary of CU.
3. The Maine License of York shall be amended to add health, farmowners multiple peril, products liability, fidelity, surety, boiler and machinery, credit, earthquake and Workers Compensation to its authorized lines of insurance.
4. Pursuant to 24-A M.R.S.A. §222(4-A)(C), this transaction may not be consummated until ten days have elapsed from the date of this Order.
5. The reinsurance agreement to be executed by Commercial Union York Insurance Company and Commercial Union Insurance Company shall conform to the June 27, 1997 draft submitted to the Bureau in this matter. Notwithstanding anything to the contrary in the agreement, no material modification or termination of the agreement shall be effective without the prior approval of the Superintendent.
6. Commercial Union York Insurance Company shall pay its actual expense of examination pursuant to 24-A M.R.S.A. §228(1) and shall not opt purusant to §228(3) as a domestic insurer to make an annual payment related to its total admitted assets in lieu of paying actual examination expenses.
7. The name of York shall be changed to "Commercial Union York Insurance Company" contingent upon the filing of the following reservation of the name.
NOTICE OF APPEAL RIGHTS
Any party to this proceeding may seek judicial review of this Final Decision and Order, pursuant to 5 M.R.S.A. 1§11001-11008 (1979 & Supp. 1985) and 24-A M.R.S.A. §236 (Supp. 1985), by filing a petition for review in the Maine Superior Court within 30 days after such partys receipt of notice of this Final Decision and Order.
Any other person who is aggrieved by this Final Decision and Order may attempt to obtain judicial review, to the extent such review is permitted by law, pursuant to the statutory provisions cited in the immediately preceding sentence, by filing a petition for review in the Maine Superior Court within 40 days from the date of this Final Decision and Order.
Last Updated: August 22, 2012
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