BILL NUMBER: AB 584	CHAPTERED  10/02/01

	CHAPTER  415
	FILED WITH SECRETARY OF STATE  OCTOBER 2, 2001
	APPROVED BY GOVERNOR  OCTOBER 1, 2001
	PASSED THE ASSEMBLY  AUGUST 30, 2001
	PASSED THE SENATE  AUGUST 27, 2001
	AMENDED IN SENATE  JULY 17, 2001
	AMENDED IN SENATE  JULY 3, 2001
	AMENDED IN SENATE  JUNE 21, 2001
	AMENDED IN ASSEMBLY  MAY 25, 2001
	AMENDED IN ASSEMBLY  MAY 8, 2001
	AMENDED IN ASSEMBLY  APRIL 26, 2001

INTRODUCED BY   Assembly Member Cox

                        FEBRUARY 21, 2001

   An act to add Section 827.8 to the Insurance Code, relating to
insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 584, Cox.  Alien insurers:  issuance of securities:  exemption
from requirements.
   Existing law provides for regulation of insurers by the Insurance
Commissioner.  Existing law imposes certain requirements relative to
issuance of securities by insurers, and provides certain exemptions
from these requirements.
   This bill would additionally exempt from these requirements the
offer or sale of stock by a foreign or alien insurer to fire and
casualty broker-agents under certain conditions.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 827.8 is added to the Insurance Code, to read:

   827.8.  An offer or sale of voting common stock or preferred stock
of and by a foreign or alien insurer to fire and casualty
broker-agents, as defined in Section 33.5, shall be exempt from the
requirements of this article if all of the following requirements are
met:
   (a) The sale shall not be made to more than 35 fire and casualty
broker-agents in the State of California.
   (b) Each fire and casualty broker-agent to whom an offer is made
is an "accredited investor" as defined in Regulation D under the
Federal Securities Act of 1933, as amended.
   (c) Each fire and casualty broker-agent to whom an offer is made
meets all of the following requirements:
   (1) The broker-agent shall have been appointed by the admitted
insurer for a period of at least one year and that admitted insurer
shall meet all of the following requirements:
   (A) Be authorized to transact property and casualty insurance.
For purposes of this section, property and casualty insurance means
insurance falling within classes 2, 3, 7, 8, 10, 11, 12, 14, 15, 16,
18, and 20 under Section 100 except home protection contracts, as
defined in Section 12740.
   (B) Have at least four hundred million dollars ($400,000,000) of
statutory capital and surplus.
   (C) Hold a certificate of authority in good standing with this
state and have no regulatory action relating to financial hazard or
fraud against the company in the last three years from states,
including this state, where the insurer is authorized as an admitted
insurer to do business.
   (D) Is currently reinsuring or has definite plans to reinsure
business produced by that broker-agent with the same foreign or alien
insurer offering securities to the broker-agent.
   (2) The broker-agent generates five million dollars ($5,000,000)
in premiums per year and plans on transferring or writing at least
one million dollars ($1,000,000) per year with the admitted insurer.

   (3) The broker-agent shall pay at least fifty thousand dollars
($50,000) for the securities purchased in the transaction but not in
excess of five hundred thousand dollars ($500,000).
   (4) The broker-agent shall have a net worth of at least five
million dollars ($5,000,000).
   (d) The offer and sale of stock is accompanied by the prospectus,
private placement memorandum, together with any other information
required pursuant to Regulation D of the Federal Securities Act of
1933.
   (e) The consideration received by the issuer for the stock to be
issued consists solely of cash.
   (f) No promotional consideration or selling expenses have been
given, paid, or incurred in connection with the issuance of stock,
and the offer and sale of stock is not accompanied by the publication
of any advertisement.
   (g) All stock issued shall be evidenced by a certificate that
shall have a notice printed prominently on its face restricting the
transfer of the stock solely to the issuer or investors who have been
shareholders of the issuer for at least three years and who are
approved by at least 51 percent of the members of the board of
directors of the issuer.
   (h) The issuer of both the common and preferred stock shall be all
of the following:
   (1) A foreign or alien insurer that does not transact insurance
directly in California, but is solely a reinsurer.
   (2) A reinsurer that only reinsures commercial lines property and
casualty insurance, as specified in subparagraph (A) of paragraph (1)
of subdivision (c).