382.095.  Acquisitions where change of control of insurer, subject to order, when — contents, requirements — violations, penalties. — 1.  As used in this section, the following terms mean:

  (1)  "Acquisition", any agreement, arrangement or activity the consummation of which results in a person acquiring directly or indirectly the control of another person, and includes but is not limited to the acquisition of voting securities, the acquisition of assets, bulk reinsurance and mergers;

  (2)  "Involved insurer" includes an insurer which either acquires or is acquired, is affiliated with an acquirer or acquired or is the result of a merger.

  2.  Except as provided in this subsection, this section applies to any acquisition in which there is a change in control of an insurer authorized to do business in this state.  This section shall not apply to the following:

  (1)  A purchase of securities solely for investment purposes so long as such securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in any insurance market in this state.  If a purchase of securities results in a presumption of control under subdivision (2) of section 382.010, it is not solely for investment purposes unless the commissioner of insurance or other appropriate person of the insurer's state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist and such disclaimer action or affirmative finding is communicated by such person to the director;

  (2)  The acquisition of a person by another person when both persons are neither directly nor through affiliates primarily engaged in the business of insurance, if preacquisition notification is filed with the director in accordance with subsection 3 of this section thirty days prior to the proposed effective date of the acquisition; however, such preacquisition notification is not required for exclusion from this section if the acquisition would otherwise be excluded from this section by any other subdivision of this subsection;

  (3)  The acquisition of already affiliated persons;

  (4)  An acquisition if, as an immediate result of the acquisition:

  (a)  In no market would the combined market share of the involved insurers exceed five percent of the total market;

  (b)  There would be no increase in any market share; or

  (c)  In no market would the combined market share of the involved insurers exceed twelve percent of the total market, and the market share of the involved insurer after the acquisition would increase by two percent of the total market or less.

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For the purpose of this subdivision, a "market" means direct written insurance premium in this state for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this state;

  (5)  An acquisition for which a preacquisition notification would be required pursuant to this section due solely to the resulting effect on the ocean marine insurance line of business;

  (6)  An acquisition of an insurer whose domiciliary commissioner or other appropriate person affirmatively finds that such insurer is in failing condition; there is a lack of feasible alternative to improving such condition; the public benefits of improving such insurer's condition through the acquisition exceed the public benefits that would arise from not lessening competition; and such findings are communicated by such person to the director.

  3.  An acquisition covered by subsection 2 of this section may be subject to an order pursuant to subsection 5 of this section, unless the acquiring person files a preacquisition notification and the waiting period described in this subsection has expired.  The acquired person or acquiring person may file a preacquisition notification.  The director shall give confidential treatment to information submitted under this subsection.  The preacquisition notification shall be in such form and contain such information as prescribed by the National Association of Insurance Commissioners relating to those markets which, under subdivision (4) of subsection 2 of this section cause the acquisition not to be exempted from the provisions of this section.  The director may require such additional material and information as he or she deems necessary to determine whether the proposed acquisition, if consummated, would violate the competitive standard of subsection 4 of this section.  The required information may include an opinion of an economist as to the competitive impact of the acquisition in this state accompanied by a summary of the education and experience of such person indicating his or her ability to render an informed opinion.  The waiting period required shall begin on the date of receipt by the director of a preacquisition notification and shall end on the earlier of the thirtieth day after the date of such receipt, or termination of the waiting period by the director.  Prior to the end of the waiting period, the director on a one-time basis may require the submission of additional needed information relevant to the proposed acquisition, in which event the waiting period shall end on the earlier of the thirtieth day after receipt of such additional information by the director or termination of the waiting period by the director.

  4.  (1)  The director may enter an order under subsection 5 of this section with respect to 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 state or tend to create a monopoly therein or if the insurer fails to file adequate information in compliance with subsection 3 of this section.

  (2)  In determining whether a proposed acquisition would violate the competitive standard of subdivision (1) of this subsection, the director shall consider the following:

  (a)  Any acquisition covered under subsection 2 of this section involving two or more insurers competing in the same market is prima facie evidence of violation of the competitive standards:

  a.  If the market is highly concentrated and the involved insurers possess the following share of the market:

  b.  If the market is not highly concentrated and the involved insurers possess the following share of the market:

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A highly concentrated market is one in which the share of the four largest insurers is seventy-five percent or more of the market.  Percentages not shown in the tables are to be interpolated proportionately to the percentages that are shown.  If more than two insurers are involved, exceeding the total of the two columns in the table is prima facie evidence of violation of the competitive standard in subdivision (1) of this subsection.  For the purpose of this subdivision, the insurer with the largest share of the market shall be deemed to be insurer A;

  (b)  There is a significant trend toward increased concentration when the aggregate market share of any grouping of the largest insurers in the market, from the two largest to the eight largest, has increased by seven percent or more of the market over a period of time extending from any base year five to ten years prior to the acquisition up to the time of the acquisition.  Any acquisition or merger covered under subsection 2 of this section involving two or more insurers competing in the same market is prima facie evidence of violation of the competitive standard in subdivision (1) of this subsection if:

  a.  There is a significant trend toward increased concentration in the market;

  b.  One of the insurers involved is one of the insurers in a grouping of such large insurers showing the requisite seven percent or more increase in the market share; and

  c.  Another involved insurer's market is two percent or more.

  (3)  For the purposes of subdivision (2) of this subsection:

  (a)  The term "insurer" includes any company or group of companies under common management, ownership or control;

  (b)  The term "market" means the relevant product and geographical markets.  In determining the relevant product and geographical markets, the director shall give due consideration to, among other things, the definitions or guidelines, if any, promulgated by the National Association of Insurance Commissioners and to information, if any, submitted by parties to the acquisition.  In the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premium for a line of business, such line being that used in the annual statement required to be filed by insurers doing business in this state, and the relevant geographical market is assumed to be this state;

  (c)  The burden of showing prima facie evidence of violation of the competitive standard rests upon the director.

  (4)  Even though an acquisition is not prima facie violative of the competitive standard under subdivision (2) of this subsection, the director may establish that the requisite anticompetitive effect exists based upon other substantial evidence.  Even though an acquisition is prima facie violative of the competitive standard under subdivision (2) of this subsection, a party may establish the absence of the requisite anticompetitive effect, based upon other substantial evidence.  Relevant factors in making a determination under this subdivision include, but are not limited to, the following:  market shares, volatility of ranking of market leaders, number of competitors, concentration, trend of concentration in the industry, and ease of entry and exit into the market.

  (5)  An order shall not be entered under subsection 5 of this section if:

  (a)  The acquisition will yield substantial economies of scale or economies in resource use that cannot be feasibly achieved in any other way, and the public benefits which would arise from such 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 such increase exceed the public benefits which would arise from not lessening competition.

  5.  If an acquisition violates the standards of this section, the director may enter an order:

  (1)  Requiring an involved insurer to cease and desist from doing business in this state with respect to the line or lines of insurance involved in the violation; or

  (2)  Denying the application of an acquired or acquiring insurer for a license to do business in this state.

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Such an order shall not be entered unless there is a hearing, notice of such hearing is issued prior to the end of the waiting period and not less than fifteen days prior to the hearing, and the hearing is concluded and the order is issued no later than sixty days after the end of the waiting period.  Every order shall be accompanied by a written decision of the director setting forth his or her findings of fact and conclusions of law.  An order entered under this subsection shall not become final earlier than thirty days after it is issued, during which time any involved insurer may submit a plan to remedy the anticompetitive impact of the acquisition within a reasonable time.  Based upon such plan or other information, the director shall specify the conditions, if any, under the time period during which the aspects of the acquisition causing a violation of the standards of this section would be remedied and the order vacated or modified.  An order issued pursuant to this subsection shall not apply if the acquisition is not consummated.

  6.  Any person who violates a cease and desist order of the director under subsection 5 of this section, and while such order is in effect, may, after notice and hearing and upon order of the director, be subject at the discretion of the director to any one or more of the following:

  (1)  A monetary penalty of not more than ten thousand dollars for every day of violation; or

  (2)  Suspension or revocation of such person's license.

  7.  Any insurer or other person who fails to make any filing required by this section and who also fails to demonstrate a good faith effort to comply with any such filing requirement shall be subject to a fine of not more than fifty thousand dollars.

  8.  Sections 382.260 and 382.280 do not apply to acquisitions covered by subsection 2 of this section.