NMSA 1978, § 59A-37-1 Short title
59A-37-1. Short title
Chapter 59A, Article 37 NMSA 1978 may be cited as the "Insurance Holding Company Law".
Laws 1984, ch. 127, § 616; 2014, ch. 59, § 28.
Insurance Holding Companies
NMSA 1978 ch. 59A, art. 37
in effectNMSA 1978, § 59A-37-2 Definitions
59A-37-2. Definitions
As used in the Insurance Holding Company Law:
A. "acquire" means to come into possession or control of, and "acquisition" means any agreement, arrangement or activity the consummation of which results in a person acquiring directly or indirectly the control of another person and includes the acquisition of voting securities or assets, bulk reinsurance and mergers;
B. "affiliate" means a person that directly or indirectly is controlled by, is under common control with or controls another person;
C. "association" means the national association of insurance commissioners;
D. "commissioner" means an insurance regulation department of another state or the chief regulator or the regulator's deputy of another state;
E. "control" means the possession of the power to direct or cause the direction of the management and policies of a person, whether directly or indirectly, through the ownership of voting securities, through licensing or franchise agreements, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by an individual. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote or holds proxies representing ten or more percent of the voting securities of any other person. This presumption may be rebutted by a showing, in the manner provided by Section 59A-37-19 NMSA 1978, that control does not in fact exist. The superintendent may determine, after furnishing all persons in interest notice and an opportunity to be heard, that control exists in fact, notwithstanding the absence of a presumption to that effect; provided that the determination is based on specific findings of fact in its support;
F. "enterprise risk" means an activity, a circumstance, an event or a series of events involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its whole insurance holding company system and includes a situation that would cause a company action level event as defined in Section 59A-5A-4 NMSA 1978 or would cause the insurer to be in a hazardous financial condition as defined in Section 59A-41-24 NMSA 1978;
G. "group-wide supervisor" means the regulatory official authorized to conduct and coordinate group-wide supervision activities who is determined or acknowledged by the superintendent to have sufficient significant contacts with the internationally active insurance group as described in the National Association of Insurance Commissioners Model Laws, Regulations, Guidelines and Other Resources 440-1;
H. "health maintenance organization" means a person that undertakes to provide or arrange for the delivery of basic health care services to enrollees on a prepaid basis; provided that "prepaid basis" may include the payment of copayments and deductibles by enrollees;
I. "insurance holding company" is a person that controls an insurer; "insurance holding company system" means a combination of two or more affiliated persons, at least one of which is an insurer;
J. "insurer" means a person that undertakes, under contract, to indemnify a person against loss, damage or liability arising from an unknown or contingent future event. The term does not include agencies, authorities or instrumentalities of the United States, its possessions or territories, the commonwealth of Puerto Rico, the District of Columbia, a state or any of its political subdivisions or a fraternal benefit society;
K. "internationally active insurance group" means an insurance holding company system that includes an insurer registered pursuant to Section 59A-37-12 NMSA 1978 that:
(1) writes premiums in at least three counties;
(2) produces gross premiums written outside of the United States of at least ten percent of the insurance holding company system's gross written premiums; and
(3) has total assets of at least fifty billion dollars ($50,000,000,000) based on a three-year rolling average or has total gross written premiums of at least ten billion dollars ($10,000,000,000);
L. "large life insurance company" means a person, as defined by the association, that contracts with a policy owner to guarantee to pay a sum of money to one or more named beneficiaries when an insured person dies;
M. "liquidity stress test framework" means the publication adopted or amended by the association that includes the scope criteria for a specific data year and the liquidity stress test instructions and reporting templates for a specific data year;
N. "person" means an individual, corporation, association, partnership, joint stock company, trust, unincorporated organization or any similar entity or combination of entities;
O. "scope criteria" means the designated exposure bases and minimum magnitudes for a specified data year as detailed by the association used to establish a preliminary list of insurers scoped into the liquidity stress test framework for a data year;
P. "securityholder" means the owner of any security of a person, including common stock, preferred stock, debt obligations and any other security convertible into or evidencing the right to acquire any of the foregoing;
Q. "subsidiary" means an affiliate of a person controlled by the person either directly or indirectly through one or more intermediaries; and
R. "voting security" means a certificate evidencing the ownership or indebtedness of a person, to which is attached a right to vote on the management or policymaking of that person and includes any security convertible into or evidencing a right to acquire such a voting security.
Laws 1984, ch. 127, § 617; 1993, ch. 320, § 71; 1996, ch. 73, § 1; 1997, ch. 248, § 1; 1999, ch. 289, § 30; 2014, ch. 59, § 29; 2025, ch. 108, § 1.
NMSA 1978, § 59A-37-3 Subsidiaries of insurers
59A-37-3. Subsidiaries of insurers
A. Any domestic insurer, either by itself or in cooperation with one or more persons, may organize or acquire one or more subsidiaries. A subsidiary may conduct any kind of business. Its authority to conduct one or more businesses shall not be limited by its status as a subsidiary of a domestic insurer.
B. In addition to investments in common stock, preferred stock, debt obligations and other securities permitted pursuant to the Insurance Holding Company Law, a domestic insurer may also invest:
(1) in common stock, preferred stock, debt obligations and other securities of one or more subsidiaries, amounts that do not exceed the lesser of ten percent of the insurer's assets or fifty percent of the insurer's surplus as regards policyholders; provided that after the investments, the insurer's surplus as regards policyholders shall be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs. In calculating the amount of the investments, investments in domestic or foreign insurance subsidiaries and health maintenance organizations shall be excluded, and there shall be included:
(a) total net money or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary, including all organizational expenses and contributions to capital and surplus of the subsidiary whether or not represented by the purchase of capital stock or issuance of other securities; and
(b) all amounts expended in acquiring additional common stock, preferred stock, debt obligations and other securities and all contributions to the capital or surplus of a subsidiary subsequent to its acquisition or formation;
(2) any amount in common stock, preferred stock, debt obligations and other securities of one or more subsidiaries engaged or organized to engage exclusively in the ownership and management of assets authorized as investments for the insurer; provided that each subsidiary agrees to limit its investments in any asset so that the investments will not cause the amount of the total investment of the insurer to exceed any of the investment limitations specified in Paragraph (1) of this subsection or in Chapter 59A, Article 9 NMSA 1978 applicable to the insurer. For the purpose of this paragraph, "the total investment of the insurer" includes:
(a) any direct investment by the insurer in an asset; and
(b) the insurer's proportionate share of any investment in an asset by any subsidiary of the insurer, which shall be calculated by multiplying the amount of the subsidiary's investment by the percentage of the ownership of the subsidiary; or
(3) with the approval of the superintendent, any greater amount in common stock, preferred stock, debt obligations or other securities of one or more subsidiaries; provided that after the investment, the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs.
C. Investments in common stock, preferred stock, debt obligations or other securities of subsidiaries made pursuant to Subsection B of this section shall not be subject to any of the otherwise applicable restrictions or prohibitions contained in the Insurance Code applicable to the investments of the insurer.
D. Whether any investment pursuant to Subsection B of this section meets the applicable requirements of that subsection shall be determined before the investment is made by calculating the applicable investment limitations as though the investment had already been made, taking into account the then outstanding principal balance on all previous investments in debt obligations and the value of all previous investments in equity securities as of the day they were made, net of any return of capital invested and not including dividends.
E. If an insurer ceases to control a subsidiary, it shall dispose of any investment made in it pursuant to this section within three years from the time of the cessation of control or within such further time as the superintendent may prescribe, unless at any time after the investment is made, the investment meets the requirements for investment under any other section of the Insurance Code and the insurer has so notified the superintendent.
1978 Comp., § 59A-37-3, enacted by Laws 1993, ch. 320, § 72; 2001, ch. 90, § 2; 2014, ch. 59, § 30.
NMSA 1978, § 59A-37-4 Acquisition of control of or merger with domestic insurer
59A-37-4. Acquisition of control of or merger with domestic insurer
A. No person other than the issuer shall make a tender offer for or a request or invitation for tenders of, or enter into an agreement to exchange securities for, acquire, seek to acquire, in the open market or otherwise, a voting security of a domestic insurer if, after the consummation of it, the person would, directly or indirectly or by conversion or by exercise of any right to acquire, be in control of the insurer, and no person shall enter into an agreement to merge with or otherwise to acquire control of a domestic insurer unless, at the time any such offer, request or invitation is made or an agreement is entered into, or prior to the acquisition of the securities if no offer or agreement is involved, the person has filed with the superintendent and has sent to the insurer, and the insurer has sent to its shareholders, a statement containing the information required by Section 59A-37-5 NMSA 1978 and the offer, request, invitation, agreement or acquisition has been approved by the superintendent in the manner hereinafter prescribed.
B. For the purposes of Sections 59A-37-4 through 59A-37-10 NMSA 1978, the superintendent shall identify the circumstances in which a person seeking to divest or acquire an interest of control of a domestic insurer is required to obtain the superintendent's approval for the transaction. A person who controls a domestic insurer and seeks to divest its interest of control of the domestic insurer shall, at least thirty days prior to the cessation of control, file with the superintendent confidential notice of the proposed divestiture and give a copy of that notice to the insurer. Information contained in the notice shall remain confidential until the conclusion of the transaction if the superintendent has not determined that treating the information as confidential will interfere with the provisions of this section. This subsection does not apply to a statement filed pursuant to Subsection A of this section.
C. For a transaction subject to Sections 59A-37-4 through 59A-37-10 NMSA 1978, the acquiring person shall file with the superintendent a pre-acquisition notice, which shall contain the information set forth in Paragraph (1) of Subsection C of 59A-37-29 NMSA 1978. The superintendent may subject a person who fails to file the notice required by this subsection to a fine of not more than fifty thousand dollars ($50,000).
D. For the purposes of this section and Sections 59A-37-5 through 59A-37-10 NMSA 1978:
(1) "domestic insurer" includes any other person controlling a domestic insurer unless the other person, as determined by the superintendent, is either directly or through its affiliates primarily engaged in business other than the business of insurance; and
(2) "person" shall not include any securities broker holding, while in the performance of the broker's usual and customary broker's function, less than twenty percent of the voting securities of an insurer, or of any person that controls an insurer.
Laws 1984, ch. 127, § 619; 1993, ch. 320, § 73; 2014, ch. 59, § 31.
NMSA 1978, § 59A-37-5 Contents of statement
59A-37-5. Contents of statement
A. The statement to be filed with the superintendent under Section 59A-37-4 NMSA 1978 shall be made under oath or affirmation and shall contain the following information:
(1) the name and address of each person, hereinafter called "acquiring party", by whom or on whose behalf the merger or other acquisition of control referred to in Section 59A-37-4 NMSA 1978 is to be effected and:
(a) if the acquiring party is an individual, the individual's principal occupation and all offices and positions held by the individual during the past five years and any conviction of crime other than minor traffic violations during the past ten years; or
(b) if the acquiring party is not an individual, a report of the nature of its business operations during the past five years or for such lesser period as it and any of its predecessors shall have been in existence; an informative description of the business intended to be done by it and its subsidiaries; and a list of all individuals who are or who have been selected to become its directors or executive officers or who perform or will perform functions appropriate to such positions. The list shall include for each individual the information required by Subparagraph (a) of this paragraph;
(2) the source, nature and amount of the consideration used or to be used in effecting the merger or other acquisition of control, a description of any transaction where funds were or are to be obtained for any such purpose, including any pledge of the insurer's stock or the stock of any of its subsidiaries or controlling affiliates and the identity of persons furnishing such consideration. However, where a source of such consideration is a loan made in the lender's ordinary course of business, the identity of the lender shall remain confidential if the person filing the statement so requests;
(3) fully audited financial information as to the earnings and financial condition of each acquiring party for the preceding five fiscal years of each acquiring party, or for such lesser period that the acquiring party and any of its predecessors shall have been in existence if less than five years, and similar unaudited information as of a date not earlier than ninety days prior to the date of the filing of the statement;
(4) any plans or proposals that each acquiring party may have to liquidate the insurer, to sell its assets or merge or consolidate it with any other person, or to make any other material change in its business or corporate structure or management;
(5) the number of shares of any security that each acquiring party proposes to acquire, the terms of the offer, request, invitation, agreement or acquisition and a statement as to the method by which the fairness of the proposal was determined;
(6) the amount of each class of any security referred to in Section 59A-37-4 NMSA 1978 that is beneficially owned or concerning which there is a right to acquire beneficial ownership by each acquiring party;
(7) a full description of any contracts, arrangements or understandings with respect to any security referred to in Section 59A-37-4 NMSA 1978 in which any acquiring party is involved, including but not limited to transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits or the giving or withholding of proxies. The description shall identify the persons with whom the contracts, arrangements or understandings have been entered into;
(8) a description of the purchase of any security referred to in Section 59A-37-4 NMSA 1978 during the twelve calendar months preceding the filing of the statement by any acquiring party, including the dates of purchase, names of the purchasers and consideration paid or agreed to be paid;
(9) a description of any recommendations to purchase any security referred to in Section 59A-37-4 NMSA 1978 made during the twelve calendar months preceding the filing of the statement by any acquiring party or by anyone based upon interviews or at the suggestion of any acquiring party;
(10) copies of all tender offers for, requests or invitations for tenders of exchange offers for and agreements to acquire or exchange any securities referred to in Section 59A-37-4 NMSA 1978 and, if distributed, of additional soliciting material relating thereto;
(11) the terms of any agreement, contract or understanding made with or proposed to be made with any broker-dealer as to solicitation of securities referred to in Section 59A-37-4 NMSA 1978 for tender and the amount of any fees, commissions or other compensation to be paid to broker-dealers with regard thereto;
(12) an agreement by the person required to file the statement that the person will provide, for as long as the person has control, an annual report pursuant to Section 59A-37-30 NMSA 1978;
(13) acknowledgment by the person required to file the statement that the person and all subsidiaries within the person's control in the insurance holding company system will provide information to the superintendent upon request and as necessary to evaluate the enterprise risk to the insurer; and
(14) such additional information as the superintendent may by rule or regulation prescribe as necessary or appropriate for the protection of policyholders and securityholders of the insurer or in the public interest.
B. If the person required to file the statement referred to in Section 59A-37-4 NMSA 1978 is a partnership, limited partnership, syndicate or other group, the superintendent may require that the information called for by Subsection A of this section shall be given with respect to each partner of the partnership or limited partnership, each member of the syndicate or group and each person who controls the partner or member. If any partner, member or person is a corporation or the person required to file the statement referred to in Section 59A-37-4 NMSA 1978 is a corporation, the superintendent may require that the information called for by Subsection A of this section shall be given with respect to the corporation, each officer and director of the corporation and each person who is directly or indirectly the beneficial owner of more than ten percent of the outstanding voting securities of the corporation.
C. If any material change occurs in the facts set forth in the statement filed with the superintendent and sent to the insurer pursuant to Section 59A-37-4 NMSA 1978, an amendment setting forth the change, together with copies of all documents and other material relevant to the change, shall be filed with the superintendent and sent to the insurer within two business days after the person learns of the change, and the insurer shall send the amendment to its shareholders without delay.
D. If any offer, request, invitation, agreement or acquisition referred to in Section 59A-37-4 NMSA 1978 is proposed to be made by means of a registration statement under the federal Securities Act of 1933, as amended, or in circumstances requiring the disclosure of similar information under the federal Securities Exchange Act of 1934, as amended, or under a state law requiring similar registration or disclosure, the person required to file the statement referred to in Section 59A-37-4 NMSA 1978 may utilize such documents in furnishing the information called for by that statement.
Laws 1984, ch. 127, § 620; 1993, ch. 320, § 74; 2014, ch. 59, § 32.
NMSA 1978, § 59A-37-6 Approval by superintendent; review
59A-37-6. Approval by superintendent; review
A. The superintendent shall approve any merger or other acquisition of control referred to in Section 59A-37-4 NMSA 1978 unless, after a public hearing on it, the superintendent finds that:
(1) after the change of control, the domestic insurer would not be able to satisfy the requirements for the issuance of a certificate of authority to write the line or lines of insurance for which it is presently authorized;
(2) the effect of the merger or other acquisition of control would be substantially to lessen competition in insurance in New Mexico or tend to create a monopoly in insurance. In applying this paragraph:
(a) the informational requirements of Paragraph (1) of Subsection C of Section 59A-37-29 NMSA 1978 and the standards of Paragraph (1) of Subsection D of Section 59A-37-29 NMSA 1978 apply;
(b) the superintendent shall approve the merger or acquisition if the superintendent finds that any of the situations meeting the criteria provided in Paragraph (2) of Subsection D of Section 59A-37-29 NMSA 1978 exists; and
(c) the superintendent may condition the approval of the merger or acquisition on the removal, to take place within a specified period of time, of the circumstances that formed the basis for disapproval;
(3) the financial condition of any acquiring party is such as might jeopardize the financial stability of the insurer or prejudice the interests of its policyholders or the interests of any remaining security holders who are unaffiliated with the acquiring party;
(4) the plans or proposals that the acquiring party has to liquidate the insurer, sell its assets or consolidate or merge it with any other person, or to make any other material change in its business or corporate structure or management, are unfair and unreasonable to policyholders of the insurer and not in the public interest;
(5) the competence, experience and integrity of those persons who would control the operation of the insurer are such that it would not be in the interest of policyholders of the insurer and of the public to permit the merger or other acquisition of control;
(6) the applicable provisions of Chapter 59A, Article 34 NMSA 1978 would be violated; or
(7) the acquisition is likely to be hazardous or prejudicial to the insurance-buying public.
B. The superintendent may retain at the acquiring party's expense any attorneys, actuaries, accountants and other experts not otherwise a part of the superintendent's staff that are reasonably necessary to assist the superintendent to review the proposed acquisition of control.
C. The superintendent shall ensure, by imposition of conditions, if necessary, that New Mexico charitable assets are protected and preserved for the benefit of the people of New Mexico.
D. The public hearing held pursuant to Subsection A of this section shall be held within thirty days after the statement required by Section 59A-37-4 NMSA 1978 is filed, and the superintendent shall notify the person filing the statement at least twenty days before the hearing. The person filing the statement shall notify the insurer, and other persons whom the superintendent designates, no fewer than seven days before the hearing. The superintendent shall make a determination within the sixty days before the effective date of the proposed transaction. At the hearing, the person filing the statement, the insurer, a person to whom notice of hearing was sent and any other person whose interests may be affected shall be entitled to present evidence, examine and cross-examine witnesses, offer oral and written arguments and conduct discovery proceedings according to the Rules of Civil Procedure for the District Courts [Rule 1-001 NMRA et seq.]. All discovery proceedings shall conclude no later than three days before the public hearing.
E. If the proposed acquisition of control requires the approval of one or more insurance supervisory officials in other states, and if requested by the person filing the statement required by Section 59A-37-4 NMSA 1978, the public hearing held pursuant to Subsection A of this section may be conducted as a consolidated hearing. Within five days of a person's request for a consolidated hearing, that person shall file the statement referred to in Section 59A-37-4 NMSA 1978 with the national association of insurance commissioners. If the superintendent or an insurance supervisory official of another state elects not to participate in a consolidated hearing, then within ten days of receipt of the statement required by Section 59A-37-4 NMSA 1978, the superintendent or insurance supervisory official shall provide notice to the applicant of that person's election not to participate. A consolidated hearing shall be public and held within the United States before the insurance supervisory officials of the states in which the insurers are domiciled. Participating insurance supervisory officials shall hear and receive evidence. The superintendent may attend the hearing in person or by telecommunication.
F. For the change of control of a domestic insurer, a determination by the superintendent that the person acquiring control of the insurer must maintain or restore the capital of the insurer to the level required by the laws and rules of New Mexico shall be made no later than sixty days after the date of notice of the change of control submitted pursuant to Subsection A of Section 59A-37-4 NMSA 1978.
Laws 1984, ch. 127, § 621; 1993, ch. 320, § 75; 1999, ch. 133, § 1; 2014, ch. 59, § 33.
NMSA 1978, § 59A-37-7 Mailings to shareholders; expenses
59A-37-7. Mailings to shareholders; expenses
All statements, amendments or other material filed pursuant to Section 619 or 620 [59A-37-4 or 59A-37-5 NMSA 1978] of this article, and all notices of public hearings held pursuant to Section 621 [59A-37-6 NMSA 1978] of this article shall be mailed by the insurer to its shareholders within five (5) days after the insurer has received such statements, amendments, other material or notices. The expenses of mailing shall be borne by the person making the filing. As security for the payment of the expenses, the person shall file with the superintendent an acceptable bond or other deposit in an amount to be determined by the superintendent.
Laws 1984, ch. 127, § 622.
NMSA 1978, § 59A-37-8 Exemptions
59A-37-8. Exemptions
Sections 619 through 621 [59A-37-4 to 59A-37-6 NMSA 1978] of this article shall not apply to:
A. any transaction which is subject to the provisions of Sections 582 and 585 [59A-34-36 and 59A-34-39 NMSA 1978] of the Insurance Code dealing with the merger, consolidation or conversion of insurers; or
B. any offer, request, invitation, agreement or acquisition which the superintendent by order shall exempt therefrom as:
(1) not having been made or entered into for the purpose and not having the effect of changing or influencing the control of a domestic insurer; or
(2) as otherwise not comprehended within the purpose of Sections 619 through 621 of this article.
Laws 1984, ch. 127, § 623.
NMSA 1978, § 59A-37-9 Violations
59A-37-9. Violations
A. The following acts shall be violations of Sections 59A-37-4 through 59A-37-6 NMSA 1978:
(1) the failure to file any statement, amendment or other material required to be filed pursuant to Section 59A-37-4 or 59A-37-5 NMSA 1978; or
(2) the effectuation or any attempt to effectuate an acquisition of control of a domestic insurer unless the superintendent has given approval to it.
B. The failure to timely file a registration statement, a summary of the registration statement or an enterprise risk filing required by Sections 59A-37-11 through 59A-37-19.2 NMSA 1978 and Section 59A-37-30 NMSA 1978 is a violation of Sections 59A-37-11 through 59A-37-19.2 NMSA 1978 and Section 59A-37-30 NMSA 1978.
Laws 1984, ch. 127, § 624; 2014, ch. 59, § 34.
NMSA 1978, § 59A-37-10 Jurisdiction; consent to service of process
59A-37-10. Jurisdiction; consent to service of process
The courts of this state are hereby vested with jurisdiction over any person not resident, domiciled or authorized to do business in this state, who files a statement with the superintendent under Sections 619 through 622 [59A-37-4 to 59A-37-7 NMSA 1978] of this article, and over all actions involving such person arising out of violations of such sections, and each such person shall be deemed to have performed acts equivalent to and constituting an appointment by such person of the superintendent to be his true and lawful attorney upon whom may be served all lawful process in any action, suit or proceeding arising out of a violation of such sections. Copies of all such lawful process shall be served on the superintendent and transmitted by registered or certified mail by the superintendent to such person at his address last of record with the superintendent. Service of process fee shall be paid at time of service on the superintendent in amount specified in Section 101 [59A-6-1 NMSA 1978] (fee schedule) of the Insurance Code.
Laws 1984, ch. 127, § 625.
NMSA 1978, § 59A-37-11 Registration of insurer member of holding company system
59A-37-11. Registration of insurer member of holding company system
A. Every insurer which is authorized to do business in this state and which is a member of an insurance holding company system shall register with the superintendent, except a foreign insurer subject to disclosure requirements and standards adopted by statute or regulation in the jurisdiction of its domicile which are substantially similar to those contained in:
(1) Sections 59A-37-11 through 59A-37-19.2 NMSA 1978;
(2) Subsection A of [Section] 59A-37-20 NMSA 1978;
(3) Sections 59A-37-21 and 59A-37-22 NMSA 1978; and
(4) either:
(a) Subsection B of Section 59A-37-20 NMSA 1978; or
(b) a provision requiring each registered insurer to keep current the information required to be disclosed in its registration statement by reporting all material changes or additions within fifteen days after the end of the month in which it learns of each change or addition.
B. Any insurer which is subject to registration under this section shall register within fifteen days after it becomes subject to registration, and annually thereafter by the fifteenth day of April each year, unless the superintendent for good cause shown extends the time for registration, and then within such extended time. The superintendent may require any authorized insurer which is a member of a holding company system and which is not subject to registration under this section to furnish a copy of the registration statement or other information filed by such insurer with the insurance regulatory authority of its domiciliary jurisdiction.
Laws 1984, ch. 127, § 626; 1993, ch. 320, § 76.
NMSA 1978, § 59A-37-12 Registration; information; form
59A-37-12. Registration; information; form
Every insurer subject to registration shall file a registration statement on a form and in a format prescribed by the national association of insurance commissioners, which shall include:
A. information about the current capital structure, general financing condition, ownership and management of the insurer and any person controlling the insurer;
B. the identity of every current member of the insurance holding company system;
C. the following agreements in force, relationships subsisting and transactions currently outstanding between such insurer and its affiliates:
(1) loans, other investments or purchases, sales or exchanges of securities of the affiliates by the insurer or of the insurer by its affiliates;
(2) purchases, sales or exchanges of assets;
(3) transactions not in the ordinary course of business;
(4) guarantees or undertakings for the benefit of an affiliate that result in an actual contingent exposure of the insurer's assets to liability, other than insurance contracts entered into in the ordinary course of the insurer's business;
(5) all management and service contracts and all cost-sharing arrangements;
(6) reinsurance agreements;
(7) dividends and other distributions to shareholders; and
(8) consolidated tax allocation agreements;
D. information about any existing pledge of the insurer's stock, including stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system;
E. if requested by the superintendent, financial statements of or within an insurance holding company system and its affiliates. Financial statements may include existing annual audited financial statements filed with the federal securities and exchange commission pursuant to the federal Securities Act of 1933, as amended, or the federal Securities Exchange Act of 1934, as amended. An insurer may satisfy the requirement to file financial statements pursuant to this subsection by providing the superintendent with the most recent parent corporation financial statements that have been filed with the securities and exchange commission;
F. other matters concerning transactions between registered insurers and any affiliates as may be included from time to time in any registration forms adopted or approved by the superintendent;
G. statements that the insurer's board of directors oversees corporate governance and internal controls and that the insurer's officers or senior management have approved, implemented and continue to maintain and monitor corporate governance and internal control procedures; and
H. other information required by a rule that was promulgated by the superintendent.
Laws 1984, ch. 127, § 627; 1993, ch. 320, § 77; 2014, ch. 59, § 35.
NMSA 1978, § 59A-37-13 Materiality
59A-37-13. Materiality
No information need be disclosed on the registration statement filed pursuant to Sections 59A-37-4 and 59A-37-5 NMSA 1978 if such information is not material for the purposes of Sections 59A-37-1 through 59A-37-19 NMSA 1978. Unless the superintendent by rule, regulation or order provides otherwise, sales, purchases, exchanges, loans or extensions of credit, investments or guarantees involving one-half of one percent or less of an insurer's admitted assets as of the most recent December 31 shall not be deemed material for the purposes of such section.
Laws 1984, ch. 127, § 628; 2014, ch. 59, § 36.
NMSA 1978, § 59A-37-14 Summary of registration
59A-37-14. Summary of registration
All registration statements shall contain a summary outlining all items in the current registration statement representing changes from the prior registration statement.
1978 Comp., § 59A-37-14, enacted by Laws 1993, ch. 320, § 78.
NMSA 1978, § 59A-37-15 Termination of registration
59A-37-15. Termination of registration
The superintendent shall terminate the registration of any insurer which demonstrates that it no longer is a member of an insurance holding company system.
Laws 1984, ch. 127, § 630.
NMSA 1978, § 59A-37-16 Consolidated filing
59A-37-16. Consolidated filing
The superintendent may require or allow two or more affiliated insurers subject to registration to file a consolidated registration statement.
Laws 1984, ch. 127, § 631; 1993, ch. 320, § 79.
NMSA 1978, § 59A-37-17 Alternative registration
59A-37-17. Alternative registration
The superintendent may allow an insurer which is authorized to do business in this state and which is part of an insurance holding company system to register on behalf of any affiliated insurer which is required to register under Section 626 [59A-37-11 NMSA 1978] of this article, and to file all information and material required to be filed under Sections 626 through 634 [59A-37-11 to 59A-37-19 NMSA 1978] of this article.
Laws 1984, ch. 127, § 632.
NMSA 1978, § 59A-37-18 Registration exemptions
59A-37-18. Registration exemptions
Sections 59A-37-11 through 59A-37-19.2 NMSA 1978 shall not apply to any insurer, information or transaction if and to the extent that the superintendent by rule, regulation or order shall exempt the same from the provisions of such sections.
Laws 1984, ch. 127, § 633; 1993, ch. 320, § 80.
NMSA 1978, § 59A-37-19 Disclaimer
59A-37-19. Disclaimer
Any person may file with the superintendent a disclaimer of affiliation with any authorized insurer or a disclaimer may be filed by the authorized insurer or any member of an insurance holding company system. The disclaimer shall fully disclose all material relationships and bases for affiliation between the person and the insurer as well as the basis for disclaiming an affiliation. After a disclaimer has been filed, the insurer shall be relieved of any duty to register or report that may arise out of the insurer's relationship with the person unless and until the superintendent, within thirty days after the receipt of a complete disclaimer, disallows the disclaimer. The superintendent shall disallow such a disclaimer only after furnishing all parties in interest with notice and opportunity to be heard and after making specific findings of fact to support the disallowance.
Laws 1984, ch. 127, § 634; 2014, ch. 59, § 37.
NMSA 1978, § 59A-37-19.1 Reporting of dividends to shareholders
59A-37-19.1. Reporting of dividends to shareholders
Subject to the provisions of Section 59A-37-22 NMSA 1978, each registered insurer shall report to the superintendent all dividends and other distributions to shareholders within fifteen business days following the declaration thereof.
1978 Comp., § 59A-37-19.1, enacted by Laws 1993, ch. 320, § 81.
NMSA 1978, § 59A-37-19.2 Information of insurers
59A-37-19.2. Information of insurers
Any person within an insurance holding company system subject to registration shall be required to provide complete and accurate information to an insurer, where such information is reasonably necessary to enable the insurer to comply with the provisions of Chapter 59A, Article 37 NMSA 1978.
1978 Comp., § 59A-37-19.2, enacted by Laws 1993, ch. 320, § 82.
NMSA 1978, § 59A-37-20 Transactions with affiliates
59A-37-20. Transactions with affiliates
A. Transactions within a holding company system to which an insurer subject to registration is a party shall be subject to the following standards:
(1) the terms shall be fair and reasonable;
(2) agreements for cost-sharing services and management shall include the provisions required by rule promulgated by the superintendent;
(3) charges or fees for services performed shall be reasonable;
(4) expenses incurred and payment received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied;
(5) the books, accounts and records of each party to all such transactions shall be so maintained as to clearly and accurately disclose the nature and details of the transactions, including such accounting information as is necessary to support the reasonableness of the charges or fees to the respective parties; and
(6) the insurer's surplus as regards policyholders following any dividends or distributions to shareholder affiliates shall be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs.
B. The following transactions involving a domestic insurer and any person in its holding company system, including amendments and modifications of affiliate agreements previously filed pursuant to this section that are subject to the materiality standards of this subsection, may not be entered into unless the insurer has notified the superintendent in writing of its intention to enter into such transactions at least thirty days prior thereto, or such shorter period as the superintendent may permit, and the superintendent has not disapproved it within that period:
(1) sales, purchases, exchanges, loans or extensions of credit, guarantees or investments, provided the transactions are equal to or exceed:
(a) with respect to nonlife insurers, the lesser of three percent of the insurer's admitted assets or twenty-five percent of surplus as regards policyholders as of the most recent December 31; or
(b) with respect to life insurers, three percent of the insurer's admitted assets as of the most recent December 31;
(2) loans or extensions of credit to any person who is not an affiliate, where the insurer makes loans or extensions of credit with the agreement or understanding that the proceeds of the transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase assets of, or to make investments in, any affiliate of the insurer making the loans or extensions of credit, provided the transactions are equal to or exceed:
(a) with respect to nonlife insurers, the lesser of three percent of the insurer's admitted assets or twenty-five percent of surplus as regards policyholders as of the most recent December 31; or
(b) with respect to life insurers, three percent of the insurer's admitted assets as of December 31 next preceding;
(3) reinsurance agreements or modifications to those agreements, including reinsurance pooling agreements or agreements in which the reinsurance premium or a change in the insurer's liabilities, or projected reinsurance premium or a change in the insurer's liabilities in any of the next three years, equals or exceeds five percent of the insurer's surplus as regards policyholders, as of the most recent December 31, including those agreements that may require as consideration the transfer of assets from an insurer to a non-affiliate, if an agreement or understanding exists between the insurer and non-affiliate that any portion of such assets will be transferred to one or more affiliates of the insurer;
(4) all management agreements, service contracts, tax allocation agreements, guarantees and cost-sharing arrangements;
(5) guarantees made by a domestic insurer if the amount of the guarantee can be quantified and is greater than one-half of one percent of the insurer's admitted assets or ten percent of surplus as regards policyholders as of the most recent December 31, whichever is less. A guarantee whose amount cannot be quantified is subject to the notice requirements of this subsection;
(6) direct or indirect acquisitions or investments in a person who controls the insurer or in an affiliate of the insurer in an amount that, together with its present holdings in the investments, exceeds two and one-half percent of the insurer's surplus as regards policyholders. Direct or indirect acquisitions or investments in subsidiaries acquired pursuant to Section 59A-37-3 NMSA 1978 or that are authorized pursuant to another section of the Insurance Code or in nonsubsidiary insurance affiliates that are subject to the provisions of the Insurance Holding Company Law are exempt from this requirement; and
(7) any material transactions specified by regulation that the superintendent determines may adversely affect the interests of the insurer's policyholders.
Notice to the superintendent for amendments or modifications shall provide the reasons for the change and a description of the change's financial impact on the domestic insurer. Within thirty days after the termination of a previously filed agreement, a person shall notify the superintendent of that event. The superintendent shall respond by indicating the type of filing, if any, that the person must file.
Nothing contained in this subsection shall be deemed to authorize or permit any transactions that, in the case of an insurer not a member of the same holding company system, would be otherwise contrary to law.
C. A domestic insurer may not enter into transactions that are part of a plan or series of like transactions with persons within the holding company system if the purpose of those separate transactions is to avoid the statutory threshold amount and thus avoid the review that would occur otherwise. If the superintendent determines that such separate transactions were entered into over any twelve-month period for that purpose, the superintendent may exercise authority under Section 59A-37-26 NMSA 1978.
D. The superintendent, in reviewing transactions pursuant to Subsection B of this section, shall consider whether the transactions comply with the standards set forth in Subsection A of this section and whether they may adversely affect the interests of policyholders.
E. The superintendent shall be notified within thirty days of any investment of the domestic insurer in any one corporation if the total investment in the corporation by the insurance holding company system exceeds ten percent of the corporation's voting securities.
1978 Comp., § 59A-37-20, enacted by Laws 1993, ch. 320, § 83; 2014, ch. 59, § 38.
NMSA 1978, § 59A-37-21 Adequacy of surplus
59A-37-21. Adequacy of surplus
For the purpose of this article, in determining whether an insurer's surplus as regards policyholders is reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs, the following factors, among others, shall be considered:
A. the size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria;
B. the extent to which the insurer's business is diversified among the several lines of insurance;
C. the number and size of risks insured in each line of business;
D. the extent of the geographical dispersion of the insurer's insured risks;
E. the nature and extent of the insurer's reinsurance program;
F. the quality, diversification and liquidity of the insurer's investment portfolio;
G. the recent past and projected future trend in the size of the insurer's surplus as regards policyholders;
H. the surplus as regards policyholders maintained by other comparable insurers;
I. the adequacy of the insurer's reserves; and
J. the quality and liquidity of investments in subsidiaries made pursuant to Section 145 [59A-9-12 NMSA 1978] of the Insurance Code. The superintendent may treat any such investment as a disallowed asset for purposes of determining the adequacy of surplus as regards policyholders whenever in his judgment such investment warrants.
Laws 1984, ch. 127, § 636.
NMSA 1978, § 59A-37-22 Dividends and other distributions
59A-37-22. Dividends and other distributions
A. No domestic stock insurer shall declare or distribute any dividend to shareholders, other than a pro rata distribution of any class of the insurer's own securities, except out of earned surplus. For purposes of this section, "earned surplus" means the portion of the surplus that represents the net earnings, gains or profits, after deduction of all losses, that have not been distributed to the shareholders as dividends or transferred to stated capital or capital surplus or applied to other purposes permitted by law, but does not include twenty-five percent of the unrealized appreciation of assets.
B. No domestic insurer shall pay an extraordinary dividend or make any other extraordinary distribution to its shareholders until:
(1) thirty days after the superintendent has received notice of the declaration thereof and has not within such period disapproved such payment; or
(2) the superintendent shall have approved such payment within the thirty-day period.
C. For the purposes of Sections 59A-37-20 through 59A-37-22 NMSA 1978, an extraordinary dividend or distribution includes any dividend or distribution of cash or other property, whose fair market value together with that of other dividends or distributions made within the preceding twelve months exceeds the lesser of ten percent of the insurer's surplus as regards policyholders as of the most recent December 31 or the net gain from operations of the insurer after dividends to policyholders and federal income taxes and before realized capital gains and losses, if the insurer is either a life insurer or a health maintenance organization, or the net income, if the insurer is not a life insurer or a health maintenance organization, not including realized capital gains, for the twelve-month period ending December 31 next preceding, but shall not include pro rata distributions of any class of the insurer's own securities.
D. In determining whether a dividend or distribution is extraordinary:
(1) an insurer other than a life insurer or a health maintenance organization may carry forward net income from the previous two calendar years that has not already been paid out as dividends, which carry-forward shall be computed by taking the net income from the second and third preceding calendar years, not including realized capital gains, less dividends paid in the second and immediate preceding calendar years; and
(2) a life insurer or a health maintenance organization may carry forward net gains from operations, not including realized capital gains from the previous two calendar years, that have not already been paid out as dividends, which carry-forward shall be computed by taking the net gain from the second and third preceding calendar years, not including realized capital gains, less dividends paid in the second and immediate preceding calendar years.
E. Notwithstanding any other provision of law, an insurer may declare an extraordinary dividend or distribution that is conditioned upon the superintendent's approval thereof, and such a declaration shall confer no rights upon shareholders until the superintendent has:
(1) approved the payment of the dividend or distribution; or
(2) not disapproved the payment within thirty days after the superintendent has received notice of the declaration.
Laws 1984, ch. 127, § 637; 1993, ch. 320, § 84; 1996, ch. 73, § 2; 2014, ch. 59, § 39.
NMSA 1978, § 59A-37-23 Examinations
59A-37-23. Examinations
A. Pursuant to general powers of investigation and examination vested in the superintendent under Chapter 59A, Article 4 NMSA 1978, the superintendent may order an insurer registered under Section 59A-37-11 NMSA 1978 to produce such records, books or other information papers in the possession of the insurer or its affiliates as are necessary to ascertain the insurer's financial condition, including the enterprise risk to the insurer by the ultimate controlling party, or by any entity or combination of entities within the insurance holding company system, or by the insurance holding company system on a consolidated basis or the insurer's compliance with the Insurance Company Holding Law. If the insurer fails to comply with the order, the superintendent may examine its affiliates to obtain the information.
B. The examination shall be conducted and otherwise be subject to applicable provisions of Chapter 59A, Article 4 NMSA 1978.
C. To determine compliance with the Insurance Holding Company Law, the superintendent may require that an insurer registered pursuant to Section 59A-37-11 NMSA 1978 produce information not possessed by the insurer if the insurer can access that information through a contractual relationship, statutory obligation or other valid method. If the insurer cannot obtain the information that the superintendent requests, the insurer shall provide the superintendent with a detailed explanation of the reasons for that inability and the identity of the holder of information. If the superintendent believes that the explanation lacks merit, the superintendent may require, after notice and a hearing, that the insurer pay a penalty of five hundred dollars ($500) for each day that the production of information is delayed, or the superintendent may suspend or revoke the insurer's license.
Laws 1984, ch. 127, § 638; 1993, ch. 320, § 85; 2014, ch. 59, § 40.
NMSA 1978, § 59A-37-24 Confidential treatment
59A-37-24. Confidential treatment
A. All documents, materials or other information in the possession or control of the office of superintendent of insurance that are obtained by or disclosed to the superintendent or any other person in the course of an examination or investigation made pursuant to Sections 59A-37-20 through 59A-37-22 NMSA 1978, and all information reported pursuant to Section 59A-37-4 NMSA 1978, shall be confidential and shall not be subject to the Inspection of Public Records Act [Chapter 14, Article 2 NMSA 1978]. Nothing in this section shall be construed as a grant of privilege or confidentiality or a bar to production of that information by an insurer in a civil suit, whether or not the office of superintendent of insurance is a party; provided that the superintendent may use the documents, materials or other information in a regulatory or legal action brought in the course of the superintendent's official duties. The documents, materials or other information shall not be made public by the superintendent or any other person, except to insurance departments of other states, without the prior written consent of the insurer to which it pertains unless the superintendent, after giving the insurer and its affiliates that would be affected by them, notice and an opportunity to be heard, determines that the interests of the policyholders, shareholders or the public will be served by the publication of them, in which case the superintendent may publish all or any part of them in the manner the superintendent deems appropriate.
B. Neither the superintendent nor a person who receives documents, materials or other information while acting pursuant to the authority of the superintendent or with whom such documents, materials or other information are shared pursuant to the Insurance Holding Company Law shall be permitted or required in a private civil action to testify on the confidential documents, materials or information identified in Subsection A of this section.
C. To assist in the performance of the superintendent's duties, the superintendent:
(1) may share documents, materials or other information, including the confidential and privileged documents, materials or information subject to Subsection A of this section, with other state, federal and international regulatory agencies, with the national association of insurance commissioners, its affiliates or its subsidiaries and with state, federal and international law enforcement authorities, including members of a supervisory college described in Section 59A-37-32 NMSA 1978, if the recipient agrees in writing to maintain the confidentiality and privilege of the document, materials or other information and has cited in writing the legal authority to maintain the confidentiality;
(2) in the case of confidential and privileged documents, materials or information reported pursuant to Section 59A-37-30 NMSA 1978, and notwithstanding Paragraph (1) of this subsection, may share that information only with insurance supervisory officials of states that have statutes or regulations substantially similar to Subsection A of this section and that have agreed in writing not to disclose that information;
(3) may receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from the national association of insurance commissioners, its affiliates or its subsidiaries and from regulatory and law enforcement officials of foreign or domestic jurisdictions but shall maintain as confidential or privileged documents, materials or other information received with notice or the understanding that the content is confidential or privileged pursuant to the laws of the jurisdiction from which the information originates; and
(4) shall, pursuant to the Insurance Holding Company Law, enter into written agreements with the national association of insurance commissioners that govern the sharing and use of information, that are consistent with this subsection and that:
(a) specify procedures and protocols for maintaining the confidentiality and security of information shared with the national association of insurance commissioners, its affiliates or its subsidiaries, including procedures and protocols for the sharing between the national association of insurance commissioners and other state, federal or international regulators;
(b) provide that the superintendent retains ownership and governs the use of information shared with the national association of insurance commissioners, its affiliates or its subsidiaries;
(c) require that the national association of insurance commissioners promptly notify an insurer whose confidential information it possesses when that information is the subject of a request or subpoena for disclosure or production; and
(d) require that, in a judicial or administrative action in which the national association of insurance commissioners, its affiliates or its subsidiaries may be required to disclose shared confidential information about the insurer, the national association of insurance commissioners, its affiliates or its subsidiaries consent to intervention by the insurer.
D. The sharing of information by the superintendent pursuant to the Insurance Holding Company Law is not a delegation of regulatory authority or rulemaking. The superintendent alone is responsible for the administration, execution and enforcement of the provisions of the Insurance Holding Company Law.
E. The disclosure of documents, materials or information to the superintendent pursuant to this section or the sharing authorized by Subsection C of this section does not constitute a waiver of an applicable privilege or a claim of confidentiality.
Laws 1984, ch. 127, § 639; 2014, ch. 59, § 41.
NMSA 1978, § 59A-37-25 Enforcement; voting securities; civil proceedings
59A-37-25. Enforcement; voting securities; civil proceedings
A. Whenever it appears to the superintendent that any insurer or any director, officer, employee or agent thereof has committed or is about to commit a violation of Chapter 59A, Article 37 NMSA 1978 or of any rule, regulation or order of the superintendent hereunder, the superintendent may apply to the district court for the county in which the principal office of the insurer is located or, if such insurer has no such office in this state, then to the district court for Santa Fe county, for an order enjoining the insurer or the director, officer, employee or agent thereof from violating or continuing to violate that article or any rule, regulation or order, and for such other equitable relief as the nature of the case and the interest of the insurer's policyholders, creditors and shareholders or the public may require.
B. No security which is the subject of any agreement or arrangement regarding acquisition, or which is acquired or to be acquired, in contravention of the provisions of Chapter 59A, Article 37 NMSA 1978 or of any rule, regulation or order of the superintendent hereunder may be voted at any shareholders' meeting, or may be counted for quorum purposes, and any action of shareholders requiring the affirmative vote of a percentage of shares may be taken as though such securities were not issued and outstanding; but no action taken at any such meeting shall be invalidated by the voting of such securities, unless the action would materially affect control of the insurer or unless the courts of this state have so ordered. If an insurer or the superintendent has reason to believe that any security of the insurer has been or is about to be acquired in contravention of the provisions of that article or of any rule, regulation or order of the superintendent hereunder, the insurer or the superintendent may apply to the district court for Santa Fe county or to the district court for the county in which the insurer has its principal place of business to enjoin any offer, request, invitation, agreement or acquisition made in contravention of Sections 59A-37-4 through 59A-37-10 NMSA 1978, or any rule, regulation or order of the superintendent thereunder, to enjoin the voting of any security so acquired, to void any vote of such security already cast at any meeting of shareholders, and for such other equitable relief as the nature of the case and the interests of the insurer's policyholders, creditors and shareholders or the public may require.
C. In any case where a person has acquired or is proposing to acquire any voting securities in violation of Chapter 59A, Article 37 NMSA 1978 or any rule, regulation or order of the superintendent hereunder, the district court for the county in which the insurer has its principal place of business may, on such notice as the court deems appropriate, upon the application of the insurer or the superintendent, seize or sequester any voting securities of the insurer owned directly or indirectly by the person, and issue such orders with respect thereto as may be appropriate to effectuate the provisions of that article. Notwithstanding any other provisions of law, for the purpose of that article, the situs of the ownership of the securities of domestic insurers shall be deemed to be in this state.
Laws 1984, ch. 127, § 640; 1993, ch. 320, § 86.
NMSA 1978, § 59A-37-26 Enforcement, criminal proceedings; penalty
59A-37-26. Enforcement, criminal proceedings; penalty
A. Any insurer failing, without just cause, to file any registration statement as required in the Insurance Holding Company Law shall be required, after notice and hearing, to pay a penalty of fifty dollars ($50.00) for each day's delay, not to exceed a total penalty of ten thousand dollars ($10,000). The superintendent may reduce the penalty if the insurer demonstrates to the superintendent that the imposition of the penalty would constitute a financial hardship to the insurer.
B. Every director or officer of an insurance holding company system who knowingly violates, participates in, or assents to, or who knowingly permits any officer or agent of the insurer to engage in transactions or make investments that have not been properly reported or submitted pursuant to Section 59A-37-11 NMSA 1978, Subsection B of Section 59A-37-20 NMSA 1978 or Section 59A-37-22 NMSA 1978, or that violate the Insurance Company Holding Law, shall pay, in their individual capacity, a penalty of not more than ten thousand dollars ($10,000) per violation, after notice and hearing before the superintendent. In determining the amount of the penalty, the superintendent shall take into account the appropriateness of the penalty with respect to the gravity of the violation, the history of previous violations and such other matters as justice may require.
C. Whenever it appears to the superintendent that any insurer subject to the provisions of the Insurance Holding Company Law or any director, officer, employee or agent thereof has engaged in any transaction or entered into a contract that is subject to the provisions of Sections 59A-37-20 through 59A-37-22 NMSA 1978 and that would not have been approved had the approval been requested, the superintendent may order the insurer to cease and desist immediately any further activity under that transaction or contract. After notice and hearing, the superintendent may also order the insurer to void any contracts and restore the status quo if the action is in the best interest of the policyholders, creditors or the public.
D. Whenever it appears to the superintendent that an insurer or any director, officer, employee or agent thereof has committed a willful violation of the Insurance Holding Company Law, the superintendent may cause criminal proceedings to be instituted in the district court for the county in which the principal office of the insurer is located or, if the insurer has no such office in the state, then in the district court for Santa Fe county against the insurer or the responsible director, officer, employee or agent thereof. Any insurer that willfully violates that law may be fined not more than twenty thousand dollars ($20,000). Any individual who willfully violates that law may be fined not more than ten thousand dollars ($10,000).
E. Any officer, director or employee of an insurance holding company system who willfully and knowingly subscribes to or makes or causes to be made any false statements or false reports or false filings with the intent to deceive the superintendent in the performance of the superintendent's duties under the Insurance Holding Company Law, upon conviction thereof, shall be imprisoned for not more than twenty years or fined not more than one million dollars ($1,000,000), or both. Any fines imposed shall be paid by the officer, director or employee in the officer's, director's or employee's individual capacity.
F. If the superintendent suspects that a person has violated a provision of Sections 59A-37-4 through 59A-37-10 NMSA 1978, and if that violation prevents the full understanding of the enterprise risk to the insurer by affiliates or by the insurance holding company system, the violation alone may provide the basis for disapproving dividends or distributions and for placing the insurer under an order of supervision in accordance with the Insurers Conservation, Rehabilitation and Liquidation Law [Chapter 59A, Article 41 NMSA 1978].
Laws 1984, ch. 127, § 641; 1993, ch. 320, § 87; 2014, ch. 59, § 42.
NMSA 1978, § 59A-37-27 Receivership; recovery of distributions
59A-37-27. Receivership; recovery of distributions
A. Whenever it appears to the superintendent that any person has committed a violation of Chapter 59A, Article 37 NMSA 1978 which so impairs the financial condition of a domestic insurer as to threaten insolvency or make the further transaction of business by it hazardous to its policyholders, creditors, shareholders or the public, then the superintendent may proceed as provided in Chapter 59A, Article 41 NMSA 1978, to take possession of the property of such domestic insurer and to conduct the business thereof.
B. If an order for liquidation or rehabilitation of a domestic insurer has been entered for any reason, the receiver appointed under such order shall have a right to recover on behalf of the insurer:
(1) from any parent corporation or holding company or person or affiliate who otherwise controlled the insurer, the amount of distributions, other than distributions of shares of the same class of stock, paid by the insurer on its capital stock;
(2) any payment in the form of a bonus, termination settlement or extraordinary lump-sum salary adjustment made by the insurer or its subsidiary to a director, officer or employee; or
(3) any payment on a surplus note entered into pursuant to Section 59A-34-23 NMSA 1978, where the distribution or payment pursuant to Paragraph (1), (2) or (3) of this subsection is made at any time during the two years preceding the petition for liquidation, conservation or rehabilitation, as the case may be, subject to the limitations of Subsections C, D, and E of this section.
C. No such distribution shall be recoverable if the parent or affiliate shows that when paid, the distribution was lawful and reasonable, and that the insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the insurer to fulfill its contractual obligations.
D. Any person who was a parent corporation or holding company or a person who otherwise controlled the insurer or affiliate at the time such distributions were paid shall be liable up to the amount of distributions or payments under Subsection B of this section which the person received. Any person who otherwise controlled the insurer at the time the distributions were declared shall be liable up to the amount of distributions he would have received if they had been paid immediately. If two or more persons are liable with respect to the same distributions, they shall be jointly and severally liable.
E. The maximum amount recoverable under this section shall be the amount needed in excess of all other available assets of the impaired or insolvent insurer to pay the contractual obligations of the impaired or insolvent insurer and to reimburse any guaranty associations.
F. To the extent that any person liable under Subsection D of this section is insolvent or otherwise fails to pay claims due from it pursuant to this section, its parent corporation or holding company or person who otherwise controlled it at the time the distribution was paid shall be liable for any resulting deficiency in the amount recovered from its subsidiary.
Laws 1984, ch. 127, § 642; 1993, ch. 320, § 88.
NMSA 1978, § 59A-37-28 Suspension, revocation, noncontinuance of certificate of authority
59A-37-28. Suspension, revocation, noncontinuance of certificate of authority
Whenever it appears to the superintendent that any person has violated a provision of Chapter 59A, Article 37 NMSA 1978 which makes the continued operation of an insurer contrary to the interests of policyholders or the public, the superintendent may, after giving notice and an opportunity to be heard, suspend, revoke or refuse to continue the insurer's certificate of authority to do business in this state for such period as he finds necessary for protection of policyholders or the public. Any such order shall be accompanied by specific findings of fact and conclusions of law.
Laws 1984, ch. 127, § 643; 1993, ch. 320, § 89.
NMSA 1978, § 59A-37-29 Acquisitions that would lessen competition
59A-37-29. Acquisitions that would lessen competition
A. As used in this section:
(1) "acquisition" means an agreement, arrangement or activity whose consummation results in a person directly or indirectly acquiring the control of another person and includes the acquisition of voting securities, the acquisition of assets, bulk reinsurance and mergers; and
(2) "involved insurer" includes an insurer that acquires or is acquired, is affiliated with an acquirer or acquired or is the result of a merger.
B. Except as provided in this subsection, this section applies to an acquisition in which there is a change of control of an insurer authorized to do business in New Mexico. This section does not apply to:
(1) a purchase of securities made solely for investment purposes if the securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in an insurance market in New Mexico. If a purchase of securities results in a presumption of control as provided in Subsection C of Section 59A-37-2 NMSA 1978, this section applies to the purchase unless the insurance supervisory official of the insurer's state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist and the domiciliary insurance supervisory official communicates that disclaimer action or affirmative finding to the superintendent;
(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 the acquisition would otherwise not be excluded from this section by the provisions of another paragraph of this subsection and if the acquiring party to the acquisition files with the superintendent a notification in accordance with Paragraph (1) of Subsection C of this section at least thirty days prior to the proposed effective date of the acquisition;
(3) the acquisition of an already affiliated person;
(4) where "market" means the direct written insurance premium in New Mexico for a line of business contained in the annual statement required to be filed by an insurer licensed to do business in New Mexico, an acquisition if, as an immediate result of the acquisition:
(a) the combined market share of the involved insurers would not exceed five percent of the total market in any market;
(b) no market share would increase; or
(c) the combined market share of the involved insurers would not exceed twelve percent, and the market share would not increase by more than two percent, of the total market in any market;
(5) an acquisition for which a pre-acquisition notification would be required by the provisions of this section solely because of its effect on the ocean marine insurance line of business; and
(6) an acquisition of an insurer whose domiciliary insurance supervisory official finds that the insurer is in failing condition, that there is no feasible way to improve the condition and that the benefit to the public of improving the insurer's condition through the acquisition exceeds the benefit to the public that would arise from not lessening competition; provided that the findings are communicated to the superintendent by the domiciliary insurance supervisory official.
C. An acquisition identified in Subsection B of this section may be subject to an order pursuant to Subsection E of this section, unless the acquiring person files a pre-acquisition notification and the waiting period has expired. The acquired person may file a pre-acquisition notification. The superintendent shall treat as confidential information submitted pursuant to this subsection in the same manner as provided in Section 59A-37-24 NMSA 1978.
(1) Pre-acquisition notification shall contain the information and be in the form prescribed by the national association of insurance commissioners relating to the markets that, pursuant to Paragraph (4) of Subsection B of this section, subject the acquisition to the provisions of this section. The superintendent may require the submission of additional materials and information that the superintendent deems necessary to determine whether the proposed acquisition, if consummated, would violate the competitive standard identified in Subsection D of this section. Among other materials, the superintendent may require the submission of an economist's opinion relating to the competitive impact of the acquisition in New Mexico along with an addendum addressing the economist's educational background, experience and ability to render an informed opinion.
(2) A waiting period shall begin on the date that the superintendent receives a pre-acquisition notification and shall end on the thirtieth day after the date of receipt or upon the superintendent's termination of the waiting period, whichever is earlier. Prior to the end of the waiting period, the superintendent, through one request, may require the submission of additional information relevant to the proposed acquisition. A request for the submission of additional information shall trigger a new waiting period that begins on the date of receipt of the additional information and ends on the thirtieth day after that receipt or upon the superintendent's termination of the waiting period, whichever is earlier.
D. The superintendent may enter an order pursuant to Subsection E of this section if there is substantial evidence that the acquisition may substantially lessen competition in a line of insurance in New Mexico or that the acquisition would tend to create a monopoly or if the insurer fails to file adequate information in compliance with Subsection C of this section.
(1) In determining whether a proposed acquisition would violate the competitive standard identified in this subsection, the superintendent shall consider that:
(a) an acquisition identified in Subsection B of this section that involves two or more insurers competing in the same market is prima facie evidence of a violation of the competitive standard: 1) if the market is highly concentrated and the involved insurers possess the following shares of the market:
Insurer A Insurer B 4% 4% or more 10% 2% or more 15% 1% or more; or
Insurer A
Insurer B
4%
4% or more
10%
2% or more
15%
1% or more; or
2) if the market is not highly concentrated and the involved insurers possess the following shares of the market:
Insurer A Insurer B 5% 5% or more 10% 4% or more 15% 3% or more 19% 1% or more;
Insurer A
Insurer B
5%
5% or more
10%
4% or more
15%
3% or more
19%
1% or more;
(b) for the purposes of Subparagraph (a) of this paragraph, a highly concentrated market is one in which the share of the four largest insurers is seventy-five percent or more of the market; the insurer with the largest share of the market shall be deemed to be Insurer A; a percentage not shown in a table is interpolated in proportion to the percentages shown; and if more than two insurers are involved in the acquisition, exceeding the total of the two columns in the table is prima facie evidence of a violation of the competitive standard of this subsection;
(c) there is a significant trend toward increased concentration when the aggregate market share of a grouping of the largest insurers in the market, from the two largest to the eight largest, has increased by seven or more percent 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. An acquisition or a merger identified in Subsection B of this section that involves two or more insurers competing in the same market is prima facie evidence of a violation of the competitive standard of this subsection if: 1) there is a significant trend toward increased concentration in the market; 2) an involved insurer is in a grouping of large insurers showing the requisite increase in the market share; and 3) another involved insurer's market is two percent or more;
(d) for the purposes of this subsection: 1) "insurer" includes a company and a group of companies under common management, ownership or control; 2) "market" means the relevant product and geographical markets. In determining the relevant product and geographical markets, the superintendent shall give due consideration to, among other things, existing definitions or guidelines promulgated by the national association of insurance commissioners and information submitted by the 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 New Mexico, and the relevant geographical market is assumed to be New Mexico; and 3) the superintendent bears the burden of showing prima facie evidence of a violation of the competitive standard; and
(e) an acquisition that is not prima facie evidence of a violation of the competitive standard pursuant to Subparagraphs (a) and (b) of this paragraph may establish the requisite anti-competitive effect based on other substantial evidence. Using other substantial evidence, a party may establish the absence of the requisite anti-competitive effect for an acquisition that violates the competitive standard pursuant to Subparagraphs (a) and (b) of Paragraph (2) of this subsection. In making a determination pursuant to this subparagraph, the superintendent shall consider relevant factors, including: 1) market shares; 2) volatility of the ranking of market leaders; 3) the number of competitors; 4) concentration; 5) the trend of concentration in the industry; and 6) the ease of entry and exit into the market.
(2) An order shall not be entered pursuant to Subsection E of this section if:
(a) the acquisition would yield substantial economies of scale or economies in resource utilization that cannot be feasibly achieved in another way and the benefit to the public that would arise from those economies would exceed the benefits to the public that would arise from not lessening competition; or
(b) the acquisition would substantially increase the availability of insurance and the benefits to the public of the increase would exceed the benefits to the public that would arise from not lessening competition.
E. If an acquisition violates the standards of this section, the superintendent may enter an order requiring an involved insurer to cease and desist from doing business in New Mexico with respect to the line or lines of insurance involved in the violation or an order denying the application of an acquired or acquiring insurer for a license to do business in New Mexico. The superintendent shall only enter an order if notice of a hearing was issued before the end of the waiting period, but not less than fifteen days prior to the hearing, and the hearing has concluded. The superintendent shall not enter an order more than sixty days after the insurer filed with the superintendent pre-acquisition notification. A written decision by the superintendent that sets forth findings of fact and conclusions of law shall accompany an order. An order is void if the acquisition is not consummated. After notice and a hearing, the superintendent may fine a person that violates a valid cease-and-desist order no more than ten thousand dollars ($10,000) per day of the violation or suspend or revoke the person's license, or both. The superintendent may fine an insurer or other person that fails to make a filing required by this section and fails to demonstrate a good faith effort to comply with a filing requirement no more than fifty thousand dollars ($50,000).
F. Subsections B and C of Section 59A-37-25 NMSA 1978 and Subsection A of Section 59A-37-27 NMSA 1978 do not apply to an acquisition identified in Subsection B of this section.
1978 Comp., § 59A-37-29, enacted by Laws 2014, ch. 59, § 43.
NMSA 1978, § 59A-37-30 Enterprise risk filing
59A-37-30. Enterprise risk filing
The ultimate controlling person of every insurer that is subject to registration shall file an enterprise risk report each year. The report shall reflect that person's knowledge and belief of the material risks within the insurance holding company system that pose enterprise risk to the insurer. The report shall be filed with the lead state insurance supervisory official of the insurance holding company system and in compliance with the relevant procedures outlined in the financial analysis handbook adopted by the association.
1978 Comp., § 59A-37-30, enacted by Laws 2014, ch. 59, § 44; 2025, ch. 108, § 2.
NMSA 1978, § 59A-37-31 Management of domestic insurers subject to registration
59A-37-31. Management of domestic insurers subject to registration
A. The control of a domestic insurer by a person does not relieve the insurer's officers and directors of an obligation or a liability to which they are otherwise subject by law. An insurer shall be managed so that its separate operating identity is consistent with the Insurance Holding Company Law.
B. Nothing in this section precludes a domestic insurer from participating in a common management function, a cooperative or the joint use of personnel if that participation meets the standards of Subsection A of Section 59A-37-20 NMSA 1978.
C. At least two-thirds of the directors and two-thirds of the members of each committee of the board of directors of a domestic insurer shall not be officers or employees of the insurer or of an entity that controls, is controlled by or is under common control with the insurer and shall not be beneficial owners of a controlling interest in the voting stock of the insurer or entity. At least one person in that group of two-thirds of the directors shall be present prior to the transaction of business at a meeting of the board of directors or a committee of the board of directors.
D. The board of directors of a domestic insurer shall establish at least one committee composed solely of directors who are not officers or employees of the insurer or of an entity that controls, is controlled by or is under common control with the insurer and who are not beneficial owners of a controlling interest in the voting stock of the insurer or entity. The committee or committees shall:
(1) nominate the candidates for director, who shall be elected by the shareholders or policyholders;
(2) evaluate the performance of officers deemed to be principal officers of the insurer; and
(3) recommend to the board of directors the selection and compensation of the principal officers.
E. The provisions of Subsections C and D of this section do not apply to a domestic insurer if the person controlling the insurer, such as an insurer, a mutual insurance holding company or a publicly held corporation, has a board of directors and committees of the board of directors that meet the requirements of Subsections C and D of this section.
F. An insurer whose annual direct written and assumed premium, excluding premiums reinsured with the federal crop insurance corporation and the national flood insurance program, is less than three hundred million dollars ($300,000,000) may apply to the superintendent for a waiver from the requirements of this section. An insurer whose circumstances are unusual may apply to the superintendent for a waiver from the requirements of this section. In determining whether the insurer qualifies for a waiver, the superintendent may consider, among other factors, the insurer's type of business entity, the volume of its business written, the availability of qualified board members and its ownership or organizational structure.
1978 Comp., § 59A-37-31, enacted by Laws 2014, ch. 59, § 45.
NMSA 1978, § 59A-37-32 Supervisory colleges
59A-37-32. Supervisory colleges
A. In order to determine compliance with the Insurance Holding Company Law by an insurer registered pursuant to Section 59A-37-11 NMSA 1978, the superintendent may participate in a supervisory college for a domestic insurer that is part of an insurance holding company system with international operations. Concerning a supervisory college, the superintendent may:
(1) initiate its establishment;
(2) clarify its membership and the participation of other supervisors;
(3) clarify its functions and the role of other regulators, including the establishment of a group-wide supervisor;
(4) coordinate its ongoing activities, including planning meetings, supervision and processes for information sharing; and
(5) establish a crisis management plan.
B. A registered insurer subject to this section shall pay the reasonable expenses, including for travel, associated with the superintendent's participation in a supervisory college pursuant to Subsection C of this section. A supervisory college may be convened as a temporary or permanent forum for communication and cooperation between the regulators charged with the supervision of the insurer or its affiliates. The superintendent may establish a regular assessment to the insurer for the payment of these expenses.
C. In order to assess the business strategy, financial position, legal and regulatory position, risk exposure, risk management and governance processes of an insurer, and as part of the examination of individual insurers pursuant to Section 59A-37-23 NMSA 1978, the superintendent may participate in a supervisory college with other regulators charged with the supervision of the insurer or its affiliates, including other state, federal and international regulatory agencies. The superintendent may enter into agreements in accordance with Subsection C of Section 59A-37-24 NMSA 1978 that provide the basis for cooperation between the superintendent and the other regulatory agencies and the activities of the supervisory college. Nothing in this section shall delegate to the supervisory college the authority of the superintendent to regulate or supervise the insurer or its affiliates within its jurisdiction.
D. The superintendent may act as the group-wide supervisor for an internationally active insurance group and may also acknowledge another commissioner as the group-wide supervisor when the internationally active insurance group:
(1) does not have substantial insurance operations in the United States;
(2) has substantial insurance operations in the United States, but not in New Mexico; or
(3) has substantial operations in the United States, including in New Mexico, but the superintendent has determined that another commissioner is the appropriate group-wide supervisor.
E. An insurance holding company system that does not qualify as an internationally active insurance group may request that the superintendent make a determination as to a group-wide supervisor.
F. The superintendent shall identify a single group-wide supervisor for an internationally active insurance group in cooperation with other state, federal and international regulatory agencies.
G. The superintendent may determine that the superintendent is the appropriate group-wide supervisor for an internationally active insurance group that conducts substantial insurance operations conducted in New Mexico.
H. The superintendent may acknowledge that a commissioner from another jurisdiction is the appropriate group-wide supervisor. In making this determination, the superintendent shall consider the following factors:
(1) the place of domicile of the insurers within the internationally active insurance group that holds the largest share of the group's written premiums, assets or liabilities;
(2) the place of domicile of the top-tiered insurers in the insurance holding company's system of the internationally active insurance group;
(3) the location of the executive offices or largest operational offices of the internationally active insurance group;
(4) whether another commissioner is acting or seeking to act as the group-wide supervisor under a regulatory system that the superintendent determines to be substantially similar to New Mexico's system of regulation or otherwise sufficient in terms of providing for group-wide supervision, enterprise risk analysis and cooperation with other regulatory officials; and
(5) whether the commissioner acting or seeking to act as the group-wide supervisor provides the superintendent with reasonably reciprocal recognition and cooperation.
I. Another commissioner identified as the group-wide supervisor may determine that it is appropriate to acknowledge another supervisor to serve as the group-wide supervisor after considering the factors in Subsection H of this section. Such acknowledgment shall be made in cooperation with the subject of the acknowledgment, the internationally active insurance group and other commissioners involved with supervision of members of the internationally active insurance group.
J. Notwithstanding any other provision of law, when another commissioner is acting as the group-wide supervisor of an internationally active insurance group, the superintendent shall acknowledge that commissioner as the group-wide supervisor.
1978 Comp., § 59A-37-32, enacted by Laws 2014, ch. 59, § 46; 2025, ch. 108, § 3.
NMSA 1978, § 59A-37-33 Group capital calculation
59A-37-33. Group capital calculation
A. Except as provided below, the ultimate controlling person of an insurer subject to registration pursuant to the provisions of the Insurance Code [Chapter 59A NMSA 1978] shall also file an annual group capital calculation report in accordance with the group capital calculation instructions in the financial analysis handbook adopted by the association as directed by the superintendent.
B. The following insurance holding company systems shall be exempt from filing the group capital calculation report:
(1) an insurance holding company system that has only one insurer within its holding company structure, only writes business and is licensed in its domestic state and assumes no business from any other insurer;
(2) an insurance holding company system that is required to perform a group capital calculation as specified by the United States federal reserve board;
(3) an insurance holding company system whose non-United States group-wide supervisor is located in a reciprocal jurisdiction that recognizes the United States regulatory approach to group supervision and group capital; and
(4) an insurance holding company system:
(a) that provides information to a lead state that meets the association's accreditation requirements and financial standards; and
(b) whose non-United States group-wide supervisor recognizes and accepts the world-wide capital assessment for United States insurance groups that operate in that jurisdiction.
C. If an insurance holding company system is required to perform a group capital calculation with the United States federal reserve board, the superintendent shall request the calculation from the United States federal reserve board. If the United States federal reserve board cannot share the calculation, the insurance holding company system is not exempt from the group capital calculation report.
D. Notwithstanding any other provisions of this section, a lead state regulator shall require a group capital calculation for United States operation of any non-United States-based insurance holding company system where, after any necessary consultation with other commissioners, it is deemed appropriate by the lead state regulator for prudential oversight and solvency monitoring purposes or for ensuring a competitive insurance marketplace.
E. Notwithstanding the filing exemptions provided in this section, the superintendent may exempt the ultimate controlling person from filing that annual group capital calculation and accept a limited group capital calculation report in accordance with criteria specified by the superintendent in regulation.
F. If the superintendent determines that an insurance holding company system no longer meets the requirements for an exemption, the insurance holding company system shall file the group capital calculation at the next annual filing date unless given an extension by the superintendent based on reasonable grounds shown.
Laws 2025, ch. 108, § 4.
NMSA 1978, § 59A-37-34 Liquidity stress test
59A-37-34. Liquidity stress test
A. A large life insurance company subject to registration pursuant to the provisions of the Insurance Code [Chapter 59A NMSA 1978] shall file the results of a specific year's liquidity stress test in accordance with the instructions in the financial analysis handbook adopted by the association as directed by the superintendent.
B. A change to the association's liquidity stress test framework or to the data year for which the scope criteria are to be measured shall be effective on January 1 of the year following the calendar year when the change was adopted.
C. A large life insurance company that meets the requirements of the scope criteria is considered scoped into the association's liquidity stress test framework for that data year. A large life insurance company that does not meet the requirements of the scope criteria is considered scoped out of the association's liquidity stress test framework for that data year, unless the superintendent, in consultation with the association's financial stability task force or its successor, determines that the large life insurance company should be scoped into the liquidity stress test framework for that year.
D. The superintendent shall, in consultation with the association's financial stability task force or its successor, assess the concerns of the superintendent's wishes to avoid having insurers scoped in and out of the association's liquidity stress test framework.
E. The superintendent shall comply with the association's liquidity stress test framework instruction and reporting templates and shall file the results of a specific year's determinations.
F. A large life insurance company subject to registration pursuant to the provisions of the Insurance Code shall file the results of a specific year's liquidity stress test in accordance with the instructions in the financial analysis handbook adopted by the association as directed by the superintendent.
G. A change to the association's liquidity stress test framework or to the data year for which the scope criteria are to be measured shall be effective on January 1 of the year following the calendar year when the change was adopted.
Laws 2025, ch. 108, § 5.
Source: New Mexico Compilation Commission (nmonesource.com)URL: https://nmonesource.com/nmos/nmsa-unanno/en/item/18562/index.doFetched: 10/20/2026