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                                                      PRINTER'S NO. 4059

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 2680 Session of 2008


        INTRODUCED BY TURZAI, CAUSER, CLYMER, DALLY, FAIRCHILD,
           GINGRICH, GRELL, HARHART, HENNESSEY, HORNAMAN, McILHATTAN,
           R. MILLER, MURT, MUSTIO, PICKETT, PYLE, RAPP, ROCK, RUBLEY,
           SONNEY, STERN, R. STEVENSON, SWANGER, WATSON AND YOUNGBLOOD,
           JUNE 25, 2008

        REFERRED TO COMMITTEE ON INSURANCE, JUNE 25, 2008

                                     AN ACT

     1  Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An
     2     act relating to insurance; amending, revising, and
     3     consolidating the law providing for the incorporation of
     4     insurance companies, and the regulation, supervision, and
     5     protection of home and foreign insurance companies, Lloyds
     6     associations, reciprocal and inter-insurance exchanges, and
     7     fire insurance rating bureaus, and the regulation and
     8     supervision of insurance carried by such companies,
     9     associations, and exchanges, including insurance carried by
    10     the State Workmen's Insurance Fund; providing penalties; and
    11     repealing existing laws," further providing for effect of act
    12     on existing laws, for definitions relating to insurance
    13     holding companies, for acquisition of control of or merger
    14     with domestic insurer and for acquisitions involving insurers
    15     not otherwise covered; providing for consolidations with
    16     domestic insurers; and making a repeal.

    17     The General Assembly of the Commonwealth of Pennsylvania
    18  hereby enacts as follows:
    19     Section 1.  Section 108 of the act of May 17, 1921 (P.L.682,
    20  No.284), known as The Insurance Company Law of 1921, is amended
    21  to read:
    22     Section 108.  Effect of Act on Existing Laws.--The provisions
    23  of this act, so far as they are the same as those of existing


     1  laws, shall be construed as a continuation of such laws and not
     2  as new enactments. The repeal by this act of any provision of
     3  law shall not revive any law heretofore repealed or superseded,
     4  nor shall such repeal affect any act done, liability incurred,
     5  or any right accrued or vested, or any suit or prosecution
     6  pending or to be instituted to enforce any right or penalty or
     7  punish any offense under the authority of the repealed laws. The
     8  provisions of this act shall not limit the jurisdiction and
     9  authority of the Office of Attorney General, including, but not
    10  limited to, the jurisdiction and authority granted pursuant to
    11  the act of October 15, 1980 (P.L.950, No.164), known as the
    12  "Commonwealth Attorneys Act."
    13     Section 2.  Section 1401 introductory paragraph and the
    14  definitions of "insurer" and "person" of the act, amended
    15  December 20, 2000 (P.L.967, No.132), are amended and the section
    16  is amended by adding a definition to read:
    17     Section 1401.  Definitions.--As used in this article, and for
    18  the purposes of this article only, the following words and
    19  phrases shall have the meanings given to them in this section:
    20     * * *
    21     "Insurer."  Any health maintenance organization, preferred
    22  provider organization, company, association [or], exchange,
    23  hospital plan corporation subject to 40 Pa.C.S. Ch. 61 (relating
    24  to hospital plan corporations) or professional health services
    25  plan corporation subject to 40 Pa.C.S. Ch. 63 (relating to
    26  professional health services plan corporations) authorized by
    27  the Insurance Commissioner to transact the business of insurance
    28  in this Commonwealth except that the term shall not include:
    29     (1)  the Commonwealth or any agency or instrumentality
    30  thereof;
    20080H2680B4059                  - 2 -     

     1     (2)  agencies, authorities or instrumentalities of the United
     2  States, its possessions and territories, the Commonwealth of
     3  Puerto Rico, the District of Columbia or a state or political
     4  subdivision;
     5     (3)  fraternal benefit societies; or
     6     (4)  nonprofit medical and hospital service associations.
     7     * * *
     8     "Person."  An individual, an insurer, a corporation, a
     9  partnership, a limited liability company, an association, a
    10  joint stock company, a trust, an unincorporated organization,
    11  any similar entity or any combination of the foregoing acting in
    12  concert. The term shall not include any joint venture
    13  partnership exclusively engaged in owning, managing, leasing or
    14  developing real or tangible personal property.
    15     * * *
    16     "Shareholder."  A record holder or record owner of shares of
    17  an insurer.
    18     (1)  The term shall include all of the following:
    19     (i)  A member of an insurer that is a domestic nonstock
    20  corporation under 15 Pa.C.S. Ch. 21 (relating to nonstock
    21  corporations) or a prior statute.
    22     (ii)  A member, as defined in 15 Pa.C.S. § 5103 (relating to
    23  definitions), of an insurer that is a domestic nonprofit
    24  corporation under 15 Pa.C.S. Ch. 51 (relating to general
    25  provisions) or a prior statute.
    26     (iii)  A subscriber of an insurer that is a domestic
    27  reciprocal exchange under Article X or a prior statute.
    28     (2)  The term shall not include any subscriber, insured or
    29  customer of:
    30     (i)  a hospital plan corporation subject to 40 Pa.C.S. Ch. 61
    20080H2680B4059                  - 3 -     

     1  (relating to hospital plan corporations); or
     2     (ii)  a professional health services plan corporation subject
     3  to 40 Pa.C.S. Ch. 63 (relating to professional health services
     4  plan corporations).
     5     * * *
     6     Section 3.  Section 1402 of the act, amended or added
     7  December 18, 1992 (P.L.1519, No.178) and December 21, 1998
     8  (P.L.1108, No.150), is amended to read:
     9     Section 1402.  Acquisition of Control of or Merger or
    10  Consolidation with Domestic Insurer.--(a)  (1)  No person other
    11  than the issuer shall make a tender offer for or a request or
    12  invitation for tenders of, or enter into any agreement to
    13  exchange securities or seek to acquire or acquire in the open
    14  market or otherwise, any voting security of a domestic insurer
    15  if, after the consummation thereof, such person would directly
    16  or indirectly or by conversion or by exercise of any right to
    17  acquire, be in control of such insurer, and no person shall
    18  enter into an agreement to merge or consolidate with or
    19  otherwise to acquire control of a domestic insurer or any person
    20  controlling a domestic insurer unless, at the time any such
    21  offer, request or invitation is made or any such agreement is
    22  entered into or prior to the acquisition of such securities if
    23  no offer or agreement is involved, such person has filed with
    24  the department and has sent to such insurer a statement
    25  containing the information required by this section and such
    26  offer, request, invitation, agreement or acquisition has been
    27  approved by the department in the manner hereinafter prescribed.
    28     (2)  For purposes of this section, a "domestic insurer" shall
    29  include any person controlling a domestic insurer unless such
    30  person as determined by the department is either directly or
    20080H2680B4059                  - 4 -     

     1  through its affiliates primarily engaged in business other than
     2  the business of insurance. Such person shall, however, file a
     3  preacquisition notification with the department containing the
     4  information set forth in section 1403(c)(2) thirty (30) days
     5  prior to the proposed effective date of the acquisition. Failure
     6  to file is subject to section 1403(e)(3). For purposes of this
     7  section, "person" shall not include any securities broker
     8  holding, in the usual and customary manner, less than twenty per
     9  centum (20%) of the voting securities of an insurance company or
    10  of any person which controls an insurance company.
    11     (b)  The statement to be filed with the department under this
    12  section shall be made under oath or affirmation and shall
    13  contain the following information:
    14     (1)  The name and address of each person by whom or on whose
    15  behalf the merger, consolidation or other acquisition of control
    16  referred to in subsection (a) is to be effected, hereinafter
    17  called "acquiring party," and
    18     (i)  if such person is an individual, his principal
    19  occupation and all offices and positions held during the past
    20  five (5) years, and any conviction of crimes other than minor
    21  traffic violations during the past ten (10) years; or
    22     (ii)  if such person is not an individual, a report of the
    23  nature of its business operations during the past five (5) years
    24  or for such lesser period as the person and any predecessors
    25  thereof shall have been in existence; an informative description
    26  of the business intended to be done by the person and the
    27  person's subsidiaries; and a list of all individuals who are or
    28  who have been selected to become directors or executive officers
    29  of the person, or who perform or will perform functions
    30  appropriate to those positions. This list shall include for each
    20080H2680B4059                  - 5 -     

     1  individual the information required by subparagraph (i).
     2     (2)  The source, nature and amount of the consideration used
     3  or to be used in effecting the merger, consolidation or other
     4  acquisition of control, a description of any transaction wherein
     5  funds were or are to be obtained for any such purpose, including
     6  any pledge of the insurer's stock or the stock of any of its
     7  subsidiaries or controlling affiliates, and the identity of
     8  persons furnishing such consideration, provided, however, that
     9  where a source of such consideration is a loan made in the
    10  lender's ordinary course of business, the identity of the lender
    11  shall remain confidential if the person filing such statement so
    12  requests.
    13     (3)  Fully audited financial information as to the earnings
    14  and financial condition of each acquiring party for the
    15  preceding five (5) fiscal years of each such acquiring party, or
    16  for such lesser period as such acquiring party and any
    17  predecessors thereof shall have been in existence, and similar
    18  unaudited information as of a date not earlier than ninety (90)
    19  days prior to the filing of the statement.
    20     (4)  Any plans or proposals which each acquiring party may
    21  have to liquidate such insurer, to sell its assets or merge or
    22  consolidate it with any person or to make any other material
    23  change in its business or corporate structure or management.
    24     (5)  The number of shares of any security referred to in
    25  subsection (a) which each acquiring party proposes to acquire,
    26  and the terms of the offer, request, invitation, agreement or
    27  acquisition referred to in subsection (a), and a statement as to
    28  the method by which the fairness of the proposal was arrived.
    29     (6)  The amount of each class of any security referred to in
    30  subsection (a) which is beneficially owned or concerning which
    20080H2680B4059                  - 6 -     

     1  there is a right to acquire beneficial ownership by each
     2  acquiring party.
     3     (7)  A full description of any contracts, arrangements or
     4  understandings with respect to any security referred to in
     5  subsection (a) in which any acquiring party is involved,
     6  including, but not limited to, transfer of any of the
     7  securities, joint ventures, loan or option arrangements, puts or
     8  calls, guarantees of loans, guarantees against loss or
     9  guarantees of profits, division of losses or profits, or the
    10  giving or withholding of proxies. Such description shall
    11  identify the persons with whom such contracts, arrangements or
    12  understandings have been entered into.
    13     (8)  A description of the purchase of any security referred
    14  to in subsection (a) during the twelve calendar months preceding
    15  the filing of the statement, by any acquiring party, including
    16  the dates of purchase, names of the purchasers and consideration
    17  paid or agreed to be paid therefor.
    18     (9)  A description of any recommendations to purchase any
    19  security referred to in subsection (a) made during the twelve
    20  calendar months preceding the filing of the statement, by any
    21  acquiring party, or by anyone based upon interviews or at the
    22  suggestion of such acquiring party.
    23     (10)  Copies of all tender offers for, requests or
    24  invitations for tenders of, exchange offers for and agreements
    25  to acquire or exchange any securities referred to in subsection
    26  (a) and, if distributed, of additional soliciting material
    27  relating thereto.
    28     (11)  The term of any agreement, contract or understanding
    29  made with or proposed to be made with any broker-dealer as to
    30  solicitation of securities referred to in subsection (a) for
    20080H2680B4059                  - 7 -     

     1  tender and the amount of any fees, commissions or other
     2  compensation to be paid to broker-dealers with regard thereto.
     3     (12)  Such additional information as the department may by
     4  rule or regulation prescribe as necessary or appropriate for the
     5  protection of policyholders of the insurer or in the public
     6  interest.
     7     (c)  If the person required to file the statement referred to
     8  in subsection (a) is a partnership, limited partnership,
     9  syndicate or other group, the department may require that the
    10  information called for by subsection (b)(1) through (12) shall
    11  be given with respect to each partner of such partnership or
    12  limited partnership, each member of such syndicate or group and
    13  each person who controls such partner or member. If any such
    14  partner, member or person is a corporation or the person
    15  required to file the statement referred to in subsection (a) is
    16  a corporation, the department may require that the information
    17  called for by subsection (b)(1) through (12) shall be given with
    18  respect to such corporation, each officer and director of such
    19  corporation and each person who is directly or indirectly the
    20  beneficial owner of more than ten per centum (10%) of the
    21  outstanding voting securities of such corporation.
    22     (d)  If any material change occurs in the facts set forth in
    23  the statement filed with the department and sent to such insurer
    24  pursuant to this section, an amendment setting forth such
    25  change, together with copies of all documents and other material
    26  relevant to such change, shall be filed with the department and
    27  sent to such insurer within two (2) business days after the
    28  person learns of such change.
    29     (e)  If any offer, request, invitation, agreement or
    30  acquisition referred to in subsection (a) is proposed to be made
    20080H2680B4059                  - 8 -     

     1  by means of a registration statement under the Securities Act of
     2  1933 (48 Stat. 74, 15 U.S.C. § 77a et seq.), or in circumstances
     3  requiring the disclosure of similar information under the
     4  Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. § 78a
     5  et seq.), or under a State law requiring similar registration or
     6  disclosure, the person required to file the statement referred
     7  to in subsection (a) may utilize such documents in furnishing
     8  the information called for by that statement.
     9     (f)  (1)  The department shall approve any merger,
    10  consolidation or other acquisition of control referred to in
    11  subsection (a) unless it finds any of the following:
    12     (i)  After the change of control, the domestic insurer
    13  referred to in subsection (a) would not be able to satisfy the
    14  requirements for the issuance of a license to write the line or
    15  lines of insurance for which it is presently licensed.
    16     (ii)  The effect of the merger, consolidation or other
    17  acquisition of control would be to substantially lessen
    18  competition in insurance in this Commonwealth or tend to create
    19  a monopoly therein. In applying the competitive standard in this
    20  subparagraph:
    21     (A)  the informational requirements of section 1403(c)(2) and
    22  the standards of section 1403(d)(2) shall apply;
    23     (B)  the merger, consolidation or other acquisition shall not
    24  be disapproved if the department finds that any of the
    25  situations meeting the criteria provided by section 1403(d)(3)
    26  exist; and
    27     (C)  the department may condition the approval of the merger,
    28  consolidation or other acquisition on the removal of the basis
    29  of disapproval within a specified period of time.
    30     (iii)  The financial condition of any acquiring party is such
    20080H2680B4059                  - 9 -     

     1  as might jeopardize the financial stability of the insurer or
     2  prejudice the interest of its policyholders.
     3     (iv)  The plans or proposals which the acquiring party has to
     4  liquidate the insurer, sell its assets or consolidate or merge
     5  it with any person, or to make any other material change in its
     6  business or corporate structure or management, are unfair and
     7  unreasonable to policyholders of the insurer and not in the
     8  public interest.
     9     (v)  The competence, experience and integrity of those
    10  persons who would control the operation of the insurer are such
    11  that it would not be in the interest of policyholders of the
    12  insurer and of the public to permit the merger, consolidation or
    13  other acquisition of control.
    14     (vi)  The [acquisition] merger, consolidation or other
    15  acquisition of control is likely to be hazardous or prejudicial
    16  to the insurance buying public.
    17     (vii)  The merger, consolidation or other acquisition of
    18  control is not in compliance with the laws of this Commonwealth,
    19  including Article VIII-A.
    20     (2)  If the merger, consolidation or other acquisition of
    21  control is approved, the department shall so notify the person
    22  filing the statement and the insurer [whose stock] that is
    23  proposed to be acquired, and such a determination is hereafter
    24  referred to as an approving determination. Notice shall also be
    25  given by the department of any determination which is not an
    26  approving determination. If an approving determination is made
    27  by the department and not otherwise, the proposed offer and
    28  acquisition may thereafter be made and consummated on the terms
    29  and conditions and in the manner described in the statement and
    30  subject to such conditions as may be prescribed by the
    20080H2680B4059                 - 10 -     

     1  department as hereinafter provided. An approving determination
     2  by the department shall be deemed to extend to offers or
     3  acquisitions made pursuant thereto within one year following the
     4  date of determination. The department may, as a condition of its
     5  approving determination, require the inclusion in any offer of
     6  provisions requiring the offer to remain open a specified
     7  minimum length of time, permitting withdrawal of shares
     8  deposited prior to the time the offeror becomes bound to
     9  consummate the acquisition and requiring pro rata acceptance of
    10  any shares deposited pursuant to the offer. The department shall
    11  hold a hearing before making the determination required by this
    12  subsection if, within ten (10) days following the filing with
    13  the department of the statement, written request for the holding
    14  of such hearing is made either by the person proposing to make
    15  the acquisition, by the insurer [whose stock] that is proposed
    16  to be acquired or, if [such] the issuer of stock proposed to be
    17  acquired is not an insurer, by the [insurance company] insurer
    18  controlled by such issuer. Otherwise, the department shall
    19  determine in its discretion whether such a hearing shall be
    20  held. Thirty (30) days' notice of any such hearing shall be
    21  given to the person proposing to make the acquisition, to the
    22  issuer whose stock is proposed to be acquired and, if such
    23  issuer is not an insurer, to the insurance company controlled by
    24  such issuer. Notice of any such hearing shall also be given to
    25  such other persons, if any, as the department may determine.
    26     (3)  The department may retain at the acquiring person's
    27  expense any attorneys, actuaries, accountants and other experts
    28  not otherwise a part of the department's staff as may be
    29  reasonably necessary to assist the department in reviewing the
    30  proposed acquisition of control.
    20080H2680B4059                 - 11 -     

     1     (g)  The provisions of this section shall not apply to any
     2  offer, request, invitation, agreement or acquisition which the
     3  department by order shall exempt therefrom as:
     4     (1)  not having been made or entered into for the purpose and
     5  not having the effect of changing or influencing the control of
     6  a domestic insurer; or
     7     (2)  as otherwise not comprehended within the purposes of
     8  this section.
     9     (h)  The following shall constitute a violation of this
    10  section:
    11     (1)  the failure to file any statement, amendment or other
    12  material required to be filed pursuant to subsection (a) or (b);
    13     (2)  the effectuation or any attempt to effectuate an
    14  acquisition of control of or merger or consolidation with a
    15  domestic insurer unless the department has given its approval
    16  thereto; or
    17     (3)  a violation of section 819-A.
    18     (i)  (1)  The department shall, within seventy-two (72) hours
    19  of receiving a statement filed under this section, provide
    20  notification of receipt of the statement to the Office of
    21  Attorney General, the chair of the Banking and Insurance
    22  Committee of the Senate and the chair of the Insurance Committee
    23  of the House of Representatives.
    24     (2)  The Office of Attorney General, the Banking and
    25  Insurance Committee of the Senate and the Insurance Committee of
    26  the House of Representatives may submit written comments and
    27  recommendations on the statement to the department within the
    28  period of time allotted by the department for public comment on
    29  the filing.
    30     Section 4.  Section 1403(a), (b) and (d), added December 18,
    20080H2680B4059                 - 12 -     

     1  1992 (P.L.1519, No.178), are amended to read:
     2     Section 1403.  Acquisitions Involving Insurers not Otherwise
     3  Covered.--(a)  As used in this section the following words and
     4  phrases shall have the meanings given to them in this
     5  subsection:
     6     "Acquisition."  Any agreement, arrangement or activity the
     7  consummation of which results in a person acquiring, directly or
     8  indirectly, the control of another person and includes, but is
     9  not limited to, the acquisition of voting securities, the
    10  acquisition of assets, bulk reinsurance [and], mergers and
    11  consolidations.
    12     "Involved insurer."  Includes an insurer which either
    13  acquires or is acquired, is affiliated with an acquirer or
    14  acquired or is the result of a merger or consolidation.
    15     (b)  (1)  Except as exempted in paragraph (2), this section
    16  applies to any acquisition in which there is a change in control
    17  of an insurer authorized to do business in this Commonwealth.
    18     (2)  This section shall not apply to any of the following:
    19     (i)  An acquisition subject to approval or disapproval by the
    20  department pursuant to section 1402.
    21     (ii)  A purchase of securities solely for investment purposes
    22  so long as such securities are not used by voting or otherwise
    23  to cause or attempt to cause the substantial lessening of
    24  competition in any insurance market in this Commonwealth. If a
    25  purchase of securities results in a presumption of control as
    26  described in the definition of "control" in section [1301] 1401,
    27  it is not solely for investment purposes unless the insurance
    28  department of the insurer's state of domicile accepts a
    29  disclaimer of control or affirmatively finds that control does
    30  not exist and such disclaimer action or affirmative finding is
    20080H2680B4059                 - 13 -     

     1  communicated by the domiciliary insurance department to the
     2  Insurance Department of the Commonwealth.
     3     (iii)  The acquisition of a person by another person when
     4  both persons are neither directly nor through affiliates
     5  primarily engaged in the business of insurance, if
     6  preacquisition notification is filed with the department in
     7  accordance with subsection (c)(2) thirty (30) days prior to the
     8  proposed effective date of the acquisition. However, such
     9  preacquisition notification is not required for exclusion from
    10  this section if the acquisition would otherwise be excluded from
    11  this section by this paragraph.
    12     (iv)  The acquisition of already affiliated persons.
    13     (v)  An acquisition if, as an immediate result of the
    14  acquisition:
    15     (A)  in no market would the combined market share of the
    16  involved insurers exceed five per centum (5%) of the total
    17  market;
    18     (B)  there would be no increase in any market share; or
    19     (C)  in no market would:
    20     (I)  the combined market share of the involved insurers
    21  exceeds twelve per centum (12%) of the total market; and
    22     (II)  the market share increases by more than two per centum
    23  (2%) of the total market.
    24  For the purpose of this subparagraph, a market means direct
    25  written insurance premium in this Commonwealth for a line of
    26  business as contained in the annual statement required to be
    27  filed by insurers licensed to do business in this Commonwealth.
    28     (vi)  An acquisition for which a preacquisition notification
    29  would be required pursuant to this section due solely to the
    30  resulting effect on the ocean marine insurance line of business.
    20080H2680B4059                 - 14 -     

     1     (vii)  An acquisition of an insurer whose domiciliary
     2  insurance department affirmatively finds that such insurer is in
     3  failing condition; there is a lack of feasible alternative to
     4  improving such condition; the public benefits of improving such
     5  insurer's condition through the acquisition exceed the public
     6  benefits that would arise from not lessening competition; and
     7  such findings are communicated by the domiciliary insurance
     8  department to the Insurance Department of the Commonwealth.
     9     (3)  Sections 1409(b) and (c) and 1411 shall not apply to
    10  acquisitions provided for in this subsection.
    11     * * *
    12     (d)  (1)  The department may enter an order under subsection
    13  (e)(1) with respect to an acquisition if there is substantial
    14  evidence that the effect of the acquisition may be substantially
    15  to lessen competition in any line of insurance in this
    16  Commonwealth or tend to create a monopoly therein or if the
    17  insurer fails to file adequate information in compliance with
    18  subsection (c).
    19     (2)  In determining whether a proposed acquisition would
    20  violate the competitive standard of paragraph (1), the
    21  department shall consider the following:
    22     (i)  Any acquisition covered under subsection (b) involving
    23  two or more insurers competing in the same market is prima facie
    24  evidence of violation of the competitive standards as follows:
    25     (A)  if the market is highly concentrated and the involved
    26  insurers possess the following shares of the market:
    27               Insurer A           Insurer B
    28                    4%               4% or more
    29                   10%               2% or more
    30                   15%               1% or more; or
    20080H2680B4059                 - 15 -     

     1     (B)  if the market is not highly concentrated and the
     2  involved insurers possess the following shares of the market:
     3               Insurer A           Insurer B
     4                    5%               5% or more
     5                   10%               4% or more
     6                   15%               3% or more
     7                   19%               1% or more.
     8  A highly concentrated market is one in which the share of the
     9  four largest insurers is seventy-five per centum (75%) or more
    10  of the market. Percentages not shown in the tables are
    11  interpolated proportionately to the percentages that are shown.
    12  If more than two insurers are involved, exceeding the total of
    13  the two columns in the table is prima facie evidence of
    14  violation of the competitive standard in paragraph (1). For the
    15  purpose of this subparagraph, the insurer with the largest share
    16  of the market shall be deemed to be insurer A.
    17     (ii)  There is a significant trend toward increased
    18  concentration when the aggregate market share of any grouping of
    19  the largest insurers in the market, from the two largest to the
    20  eight largest, has increased by seven per centum (7%) or more of
    21  the market over a period of time extending from any base year
    22  five (5) to ten (10) years prior to the acquisition up to the
    23  time of the acquisition. Any acquisition [or merger] covered
    24  under subsection (b) involving two or more insurers competing in
    25  the same market is prima facie evidence of violation of the
    26  competitive standard in paragraph (1) if:
    27     (A)  there is a significant trend toward increased
    28  concentration in the market;
    29     (B)  one of the insurers involved is one of the insurers in a
    30  grouping of such large insurers showing the requisite increase
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     1  in the market share; and
     2     (C)  another involved insurer's market is two per centum (2%)
     3  or more.
     4     (iii)  For the purposes of this paragraph:
     5     (A)  The term "insurer" includes any company or group of
     6  companies under common management, ownership or control.
     7     (B)  The term "market" means the relevant product and
     8  geographical markets. In determining the relevant product and
     9  geographical markets, the department shall give due
    10  consideration to, among other things, the definitions or
    11  guidelines, if any, promulgated by the NAIC and to information,
    12  if any, submitted by parties to the acquisition. In the absence
    13  of sufficient information to the contrary, the relevant product
    14  market is assumed to be the direct written insurance premium for
    15  a line of business, such line being that used in the annual
    16  statement required to be filed by insurers doing business in
    17  this Commonwealth and the relevant geographical market is
    18  assumed to be this Commonwealth.
    19     (C)  The burden of showing prima facie evidence of violation
    20  of the competitive standard rests upon the commissioner.
    21     (iv)  Even though an acquisition is not prima facie violative
    22  of the competitive standard under subparagraphs (i) and (ii),
    23  the department may establish the requisite anticompetitive
    24  effect based upon other substantial evidence. Even though an
    25  acquisition is prima facie violative of the competitive standard
    26  under subparagraphs (i) and (ii), a party may establish the
    27  absence of the requisite anticompetitive effect based upon other
    28  substantial evidence. Relevant factors in making a determination
    29  under this paragraph include, but are not limited to, the
    30  following: market shares, volatility of ranking of market
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     1  leaders, number of competitors, concentration, trend of
     2  concentration in the industry and ease of entry and exit into
     3  the market.
     4     (3)  An order may not be entered under subsection (e)(1) if:
     5     (i)  the acquisition will yield substantial economies of
     6  scale or economies in resource utilization that cannot be
     7  feasibly achieved in any other way, and the public benefits
     8  which would arise from such economies exceed the public benefits
     9  which would arise from not lessening competition; or
    10     (ii)  the acquisition will substantially increase the
    11  availability of insurance, and the public benefits of such
    12  increase exceed the public benefits which would arise from not
    13  lessening competition.
    14     * * *
    15     Section 5.  The act of December 19, 1990 (P.L.834, No.198),
    16  known as the GAA Amendments Act of 1990, is repealed insofar as
    17  it is inconsistent with this act.
    18     Section 6.  This act shall not apply to any merger,
    19  consolidation or other acquisition of control made, completed or
    20  consummated prior to the effective date of this act and, if
    21  required, following the issuance of an approving determination.
    22     Section 7.  This act shall take effect immediately.






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