ALJDEC

97A-190-INS · Department of Insurance · 1997-12-15

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 9, 1997 APPEARANCES: Philip T. Paris, Esq. on behalf of the Petitioner; Kurt Regner on behalf of the Arizona Department of Insurance ADMINISTRATIVE LAW JUDGE: Lewis D. Kowal _____________________________________________________________________

On December 9, 1997, a hearing took place to consider the application for the acquisition of control of Transnation Title Insurance Company (the "Insurer"), filed by Lawyers Title Corporation (the "Petitioner"), with the Arizona Department of Insurance (the "Department"), and for approval of Petitioner as the controlling person of the Insurer pursuant to the provisions of A.R.S. §20-1578. Based upon the entire record in this matter the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT AND CONCLUSIONS OF LAW The Insurer is a domestic insurer. The Petitioner has filed a statement as referred to in A.R.S. §20- 1578. The Insurer and its security holder(s) waived the notice of this proceeding. No evidence has been produced at the hearing that would indicate or form the basis for a finding that the Petitioner's acquisition of control of the Insurer:

a. Is contrary to law; b. Is inequitable to the shareholders of any domestic insurer involved; c. Would substantially reduce the security of and service to be rendered to the policyholders of the Insurer in this state or elsewhere; d. After the change of control the Insurer would not be able to satisfy the requirements for the reissuance of a certificate of authority to write the line or lines of insurance for which it is presently licensed; e. The effect of the acquisition of control would be to substantially lessen competition in insurance in this state or tend to create a monopoly; f. The financial condition of any acquiring party might jeopardize the financial stability of the Insurer or prejudice the interest of its policyholders; g. The plans or proposals that the acquiring party has to liquidate the Insurer, sell its assets or consolidate or merge it with any 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 are not in the public interest; h. 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 public interest of policyholders of the Insurer and of the public to permit the merger or other acquisition of control; or i. The acquisition is likely to be hazardous or prejudicial to the insurance-buying public. The Petitioner has furnished completed fingerprint cards to the Department to enable the Department to determine if any of Petitioner's officers or directors have been charged with or convicted of a felony or misdemeanor other than minor traffic violations. The Petitioner has made representations that none of its officers or directors have been charged with or convicted of a felony or misdemeanor other than minor traffic violations. The Petitioner requested that the fingerprint cards, biographical affidavits (Exhibit 1, Tab C and Exhibit 4) and the Bank of America loan documents (Exhibit 1, Tab D) Petitioner submitted to the Department remain confidential. The Department had no objection to Petitioner's request for confidentiality of those records. Except as provided above, the interests of policyholders, shareholders or the public will be served by the publication of all information, documents and copies, relating to the Insurer and Petitioner, and obtained by or disclosed to the Director of the Department (“Director”), or any other person in the course of a filing, an examination, or investigation made. Although this hearing was not conducted pursuant to the Holding Company statutes set forth in A.R.S. §20-481 et seq., the evidence presented established that Petitioner’s acquisition of control of the Insurer would result in a holding company situation and that the provisions of A.R.S. §§20-481 et seq. apply. Based upon its review of the Petitioner's Form A filing, the Department represented its belief that the Petitioner's filing regarding the acquisition of control of the Insurer and in compliance with Arizona law and recommended approval of this acquisition. RECOMMENDED ORDER The undersigned Administrative Law Judge recommends that: The acquisition of control of the Insurer by the Petitioner be approved subject to the express conditions as follows: a. If the completed fingerprint cards furnished to the Department reveal that any of Petitioner's officers or directors have been charged with or convicted of a felony or misdemeanor other than minor traffic violations, the individual(s) shall be removed as an officer and/or director of the Petitioner within 30 days after notice to Petitioner by the Department and shall be replaced with an officer or director acceptable to the Director. If Petitioner fails to take the prescribed action within 30 days, this failure will constitute an immediate danger to the public and the Director immediately may suspend or revoke Insurer’s certificate of authority without further proceedings. Except as provided below, all information, documents, and copies relating to the Insurer and Petitioner obtained by or disclosed to the Director, or any other person in the course of a filing, an examination or investigation made pursuant to A.R.S. §§20-481.03, 20-481.10 and 20-481.20, not be given confidential treatment, be subject to subpoena and shall be made public documents, subject to inspection, examination or copying by any person. The Petitioner advise the Director in writing of the effective date of the change of control. Until further notice from the Department, the Insurer file quarterly financial statements following the effective date of the acquisition. The fingerprint cards, biographical affidavits (Exhibit 1, Tab C and Exhibit 4) and the Bank of America loan documents (Exhibit1, Tab D) that Petitioner submitted to the Department remain confidential pursuant to A.R.S. §20-481.21. Upon consummation of this acquisition, the Insurer file its registration statement in the form prescribed by A.R.S. §20-481.10 and within the time period prescribed by A.R.S. §20-481.09 or §20-481.13. If the registration statement would duplicate the information previously submitted by the Petitioner in the statement filed with the Department pursuant to A.R.S. §20-481.03 and there have been no material changes since the filing of that statement, then the Insurer submit a statement to that effect incorporating by reference the statement previously filed with the Department in lieu of the registration statement. 8. The failure to adhere to one or more of the above terms and conditions shall result without further proceedings in the suspension or the revocation of the Insurer’s certificate of authority. Done this day, December 15, 1997.

______________________________________ Lewis D. Kowal Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 1997, to:

Mr. John A. Greene, Director Department of Insurance 2910 North 44th Street, #210 ATTN: Curvey Burton Phoenix, AZ 85018-7256

By ___________________________ -----------------------

Office of Administrative Hearings 1700 West Washington, Suite 602 Phoenix, Arizona 85007 (602) 542-9826