521A.2 Subsidiaries of insurers. 1. Authorization. Any domestic insurer, either by itself or in cooperation with one or more persons, subject to the limitations set forth herein or elsewhere in this chapter, mayorganize or acquire one or more subsidiaries engaged or registered to engage in one or moreof the following businesses or activities: a. Any kind of insurance business authorized by the jurisdiction in which it is incorporated. b. Acting as an insurance producer for its parent or for any of its parent’s insurer subsidiaries or intermediate insurer subsidiaries. c. Investing, reinvesting, or trading in securities and derivative transactions pursuant to section 511.8, subsection 16, for the domestic insurer’s own account, that of its parent, anysubsidiary of its parent, or any affiliate or subsidiary. d. Management of any investment company subject to or registered pursuant to the Investment Company Act of 1940, as amended, including related sales and services. e. Acting as a broker dealer subject to or registered pursuant to the Securities Exchange Act of 1934 as amended. f. Rendering financial services or advice to individuals, governments, government agencies, ing as a broker dealer subject to or registered pursuant to the Securities Exchange Act of 1934 as amended. f. Rendering financial services or advice to individuals, governments, government agencies, corporations, or other organizations or groups. g. Rendering other services related to the operations of an insurance business including but not limited to actuarial, loss prevention, safety engineering, data processing, accounting,claims, appraisal, and collection services. h. Ownership and management of assets which the parent corporation could itself own and manage. However, the aggregate investment by the insurer and its subsidiaries acquiredor organized pursuant to this paragraph shall not exceed the limitations applicable to theinvestments by the insurer. i. Acting as administrative agent for a government instrumentality which is performing an insurance function. j. Financing of insurance premiums, agents and other forms of consumer financing.k. Any other business or service activity reasonably ancillary to an insurance business.l. Owning a corporation or corporations engaged or organized to engage exclusively in one or more of the businesses specified in paragraphs 'a' through y reasonably ancillary to an insurance business.l. Owning a corporation or corporations engaged or organized to engage exclusively in one or more of the businesses specified in paragraphs 'a' through 'k'. 2. Exception. Nothing contained in subsection 1 of this section shall prohibit a domestic insurer, either by itself or in cooperation with one or more persons, from investing amountsup to a total of ten percent of surplus in one or more subsidiaries or affiliates organized to doany lawful business. 3. Additional investment authority. In addition to investments in common stock, preferred stock, debt obligations and other securities permitted under all other sections ofthis subtitle, a domestic insurer may also: a. Invest, in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries, amounts which do not exceed the lesser of ten percent of the insurer’sassets or fifty percent of the insurer’s surplus as regards policyholders, if after the investmentsthe insurer’s surplus as regards policyholders will be reasonable in relation to the insurer’soutstanding liabilities and adequate to its financial needs. gards policyholders, if after the investmentsthe insurer’s surplus as regards policyholders will be reasonable in relation to the insurer’soutstanding liabilities and adequate to its financial needs. In calculating the amount of theinvestments, investments in domestic or foreign insurance subsidiaries shall be excluded andboth of the following shall be included: (1) Total net moneys or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary, including all organizational expenses andcontributions to capital and surplus of such subsidiary whether or not represented by thepurchase of capital stock or issuance of other securities. (2) 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 subsidiarysubsequent to its acquisition or formation. b. Invest any amount in common stock, preferred stock, debt obligations and other securities of one or more subsidiaries provided that each such subsidiary agrees to limitits investments in any asset so that such investments will not cause the amount of the total Sat Dec 23 00:52:27 2023 ies of one or more subsidiaries provided that each such subsidiary agrees to limitits investments in any asset so that such investments will not cause the amount of the total Sat Dec 23 00:52:27 2023 Iowa Code 2024, Section 521A.2 (22, 1) §521A.2, INSURANCE HOLDING COMPANY SYSTEMS 2 investment of the insurer to exceed any of the investment limitations specified in paragraph'a' of this subsection or in chapters 511, 515, 518A, and 520 applicable to the insurer. Forthe purpose of this paragraph, 'total investment of the insurer' shall include both: (1) Any direct investment by the insurer in an asset.(2) 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’sinvestment by the percentage of the insurer’s ownership of such subsidiary. c. With the approval of the commissioner, invest any greater amount in common stock, preferred stock, debt obligations, or other securities of one or more subsidiaries, if afterthe investment the insurer’s surplus as regards policyholders is reasonable in relation to theinsurer’s outstanding liabilities and adequate to its financial needs. d. e or more subsidiaries, if afterthe investment the insurer’s surplus as regards policyholders is reasonable in relation to theinsurer’s outstanding liabilities and adequate to its financial needs. d. Invest, reinvest, and trade in derivative transactions pursuant to section 511.8, subsection 16, for the domestic insurer’s own account, that of its parent, any subsidiary ofits parent, or any affiliate or subsidiary. 4. Exemption from investment restrictions. Investments in common stock, preferred stock, debt obligations or other securities of subsidiaries made pursuant to subsection 3 ofthis section shall not be subject to any of the otherwise applicable restrictions or prohibitionscontained in the Code applicable to such investments of insurers. 5. Qualification of investment — when determined. Whether any investment pursuant to subsection 3 meets the applicable requirements of the subsection is to be determinedbefore the investment is made by calculating the applicable investment limitations as thoughthe investment had already been made, taking into account the then outstanding principalbalance on all previous investments in debt obligations, and the value of all e investment limitations as thoughthe investment had already been made, taking into account the then outstanding principalbalance on all previous investments in debt obligations, and the value of all previousinvestments in equity securities as of the day they were made, net of any return of capitalinvested, excluding dividends. 6. Cessation of control. If an insurer ceases to control a subsidiary, it shall dispose of any investment therein made pursuant to this section within three years from the time of thecessation of control or within such further time as the commissioner may prescribe, unlessat any time after such investment shall have been made, such investment shall have met therequirements for investment under any other section of the Code, and the insurer has notifiedthe commissioner thereof. [C71, 73, 75, 77, 79, 81, §521A.2; 82 Acts, ch 1051, §3]86 Acts, ch 1102, §3 – 8; 87 Acts, ch 115, §65; 91 Acts, ch 26, §48; 2001 Acts, ch 16, §11, 37; 2006 Acts, ch 1117, §113, 114; 2021 Acts, ch 76, §130; 2023 Acts, ch 36, §9, 10; 2023 Acts, ch66, §126 Referred to in §511.8(10)(d), 521A.5Subsection 1, paragraph c amendedSubsection 3, paragraph d amendedSubsection 4 amended Sat Dec 1 Acts, ch 76, §130; 2023 Acts, ch 36, §9, 10; 2023 Acts, ch66, §126 Referred to in §511.8(10)(d), 521A.5Subsection 1, paragraph c amendedSubsection 3, paragraph d amendedSubsection 4 amended Sat Dec 23 00:52:27 2023 Iowa Code 2024, Section 521A.2 (22, 1)
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