ALJDEC

00A-124-INS · Department of Insurance · 2000-09-21

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 5, 2000

APPEARANCES: Petitioner was represented by its attorney Werner Meyer; the Arizona Department of Insurance was represented by its authorized representative Kurt Regner.

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Hearing in this matter was convened to consider the Plan and Agreement of Merger, filed by Petitioner with the Arizona Department of Insurance (“Department”), whereby Citizen’s Life Assurance Company ("Insurer") will merge into Fountain Square Insurance Company ("Petitioner"). The hearing concerned approval of Petitioner’s merger plan pursuant to A.R.S. § 20-731, release of Insurer’s statutory deposit pursuant to A.R.S. §§ 20-581, 20-588, and Arizona Administrative Code (A.A.C.) R20-6-303, and refund of Insurer’s deposit with the Insurance Examiner’s Revolving Fund (IERF), pursuant to A.R.S. § 20-159. Petitioner presented evidence at the hearing. Kurt Regner, Examiner/Analyst for the Department, testified regarding his review of the documentation. Based upon the entire record, this Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Order for approval.

FINDINGS OF FACT 1. Insurer is duly qualified and authorized as a domestic life and disability reinsurer in the State of Arizona. 2. Petitioner is duly qualified and authorized as a domestic life and disability reinsurer in the State of Arizona. 3. Notice of Hearing was issued on August 14, 2000. Both Insurer and Petitioner waived the 30-day notice requirements of A.R.S. §41- 1092.05(D). (Exhibit A, attachments E-3 and E-4.) 4. Insurer’s shareholders and Petitioner’s shareholders waived the 10-day notice of hearing required by A.R.S. § 20-731(C). (Exhibit B; Exhibit A, attachment E-2.) 5. The evidence establishes that the Plan and Agreement of Merger: a. Is not contrary to law; b. Is not unfair in its terms and conditions of the issuance and exchange of securities; and c. Would not substantially reduce the security of and service to be rendered to policyholders of Insurer in this State or elsewhere. 6. Insurer has surrendered its certificate of authority to the Department. (Exhibit A, attachment F.) 7. Notice to creditors and policyholders of Petitioner, setting forth the date, place, nature, and purpose of the hearing was published and mailed at least ten (10) business days before the hearing. A.A.C. R20-6- 303(E)(3)(a)(iv). Notice was published in a newspaper of general circulation published in the county in which Insurer has its principle place of business. (Exhibit D.) Known creditors received individual notice by certified mail to their last known address, as evidenced by Exhibit C. 8. Based upon his review of Petitioner's filing, Mr. Regner recommends that the Director approve the Plan and Agreement of Merger filed in this matter. 9. Petitioner has requested that the $100,000.00 statutory deposit held by the State Treasurer in the name of Insurer be released upon approval of the merger. 10. Petitioner has also requested that the $100.00 deposit in the IERF be released upon approval of the merger. 11. Petitioner has prepared Articles of Merger it intends to file with the Arizona Corporation Commission. (Exhibit A, attachment D.) 12. Exhibit 1, submitted by the Department, shows that Insurer owes the Department $683.48 for examination expenses and other items. CONCLUSIONS OF LAW 1. The evidence of record establishes that Petitioner has complied with the provisions of A.R.S. §20-731. 2. The record establishes by credible evidence that the Plan and Agreement of Merger between the Insurer and Petitioner should be approved. RECOMMENDED ORDER Based on the findings and conclusions above, IT IS RECOMMENDED that the Director order that: a. Petitioner may file its Articles of Merger with the Arizona Corporation Commission. b. The Plan and Agreement of Merger between Insurer and Petitioner be approved. c. The statutory deposit of Insurer in the amount of $100,000.00 be released upon receipt by the Department of Insurance of the following: (1) payment of examination fee and other outstanding assessments totaling $683.48; (2) a copy of the Articles of Merger of Insurer and Petitioner certified as having been filed with the Arizona Corporation Commission; and (3) a fully executed Notice of Trust Deposit Release Form E126. The statutory deposit cannot be released until the Department receives a fully executed copy of the official State Treasurer Release Receipt Form E101. d. The sum of $100.00, previously credited to the IERF, be refunded pursuant to A.R.S. §20-159. e. Insurer shall file its 2000 Annual Statement with the Department, together with all applicable fees, unless Petitioner files the Articles of Merger with the Arizona Corporation Commission on or before December 31, 2000.

Done this 21st day of September 2000.

OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Eric A. Bryant Administrative Law Judge

Original mailed this ___ day of September 2000, to:

Charles R. Cohen, Director ATTN: Curvey Burton Arizona Department of Insurance 2910 N. 44th Street, Suite 210 Phoenix, AZ 85018

By ___________________________

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826