Okla. Stat. tit. 36, § 36-1634

Exceptions - Examination by Commissioner.

A. The following definitions shall apply for the purposes of

this section only:

1. "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 but is not

limited to the acquisition of voting securities, the acquisition of

assets, bulk reinsurance and mergers; and

2. "Involved insurer" includes an insurer which acquires or is

acquired, is affiliated with an acquirer or acquired, or is the

result of a merger.

B. 1. Except as exempted in paragraph 2 of this subsection,

this section applies to any acquisition in which there is a change

in control of an insurer authorized to do business in this state.

2. This section shall not apply to the following:

a. a purchase of securities solely for investment

purposes so long as the securities are not used by

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voting or otherwise to cause or attempt to cause the

substantial lessening of competition in any insurance

market in this state. If a purchase of securities

results in a presumption of control under paragraph 3

of Section 1 of this act, it is not solely for

investment purposes unless the Commissioner of the

insurer's state of domicile accepts a disclaimer of

control or affirmatively finds that control does not

exist and the disclaimer action or affirmative finding

is communicated by the domiciliary Commissioner to the

Commissioner of this state,

b. 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 preacquisition notification is filed

with the Commissioner in accordance with paragraph 1

of subsection C of this section thirty (30) days prior

to the proposed effective date of the acquisition.

However, such preacquisition notification is not

required for exclusion from this section if the

acquisition would otherwise be excluded from the

requirements of this section by any other subparagraph

of this paragraph,

c. the acquisition of already affiliated persons,

d. an acquisition if, as an immediate result of the

acquisition,

(1) in no market would the combined market share of

the involved insurers exceed five percent (5%) of

the total market,

(2) there would be no increase in any market share,

or

(3) in no market would:

(a) the combined market share of the involved

insurers exceed twelve percent (12%) of the

total market, and

(b) the market share increase by more than two

percent (2%) of the total market.

For the purpose of this subparagraph, a "market" means

direct written insurance premium in this state for a

line of business as contained in the annual statement

required to be filed by insurers licensed to do

business in this state,

e. an acquisition for which a preacquisition notification

would be required pursuant to this section due solely

to the resulting effect on the ocean marine insurance

line of business, and

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f. an acquisition of an insurer whose domiciliary

Commissioner affirmatively finds that the insurer is

in failing condition; there is a lack of feasible

alternative to improving such condition; the public

benefits of improving the insurer's condition through

the acquisition exceed the public benefits that would

arise from not lessening competition; and the findings

are communicated by the domiciliary Commissioner to

the Commissioner of this state.

C. Any acquisition described 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 preacquisition notification and

the waiting period has expired. The acquired person may file a

preacquisition notification. The Commissioner shall give

confidential treatment to information submitted under this
ner of this state.

C. Any acquisition described 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 preacquisition notification and

the waiting period has expired. The acquired person may file a

preacquisition notification. The Commissioner shall give

confidential treatment to information submitted under this

subsection in the same manner as provided in Section 10 of this act.

1. The preacquisition notification shall be in such form and

contain such information as prescribed by the National Association

of Insurance Commissioners (NAIC) relating to those markets which,

under subparagraph d of paragraph 2 of subsection B of this section,

cause the acquisition not to be exempted from the provisions of this

section. The Commissioner may require such additional material and

information as deemed necessary to determine whether the proposed

acquisition, if consummated, would violate the competitive standard

of subsection D of this section. The required information may

include an opinion of an economist as to the competitive impact of

the acquisition in this state accompanied by a summary of the

education and experience of such person indicating his or her

ability to render an informed opinion.

2. The waiting period required shall begin on the date of

receipt of the Commissioner of a preacquisition notification and

shall end on the earlier of the thirtieth day after the date of

receipt, or termination of the waiting period by the Commissioner.

Prior to the end of the waiting period, the Commissioner on a one-

time basis may require the submission of additional needed

information relevant to the proposed acquisition, in which event the

waiting period shall end on the earlier of the thirtieth day after

receipt of the additional information by the Commissioner or

termination of the waiting period by the Commissioner.

D. 1. The Commissioner may enter an order under paragraph 1 of

subsection E of this section with respect to an acquisition if there

is substantial evidence that the effect of the acquisition may be

substantially to lessen competition in any line of insurance in this

state or tend to create a monopoly or if the insurer fails to file

adequate information in compliance with subsection C of this

section.

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2. In determining whether a proposed acquisition would violate

the competitive standard of paragraph 1 of this subsection, the

Commissioner shall consider the following:

a. any acquisition covered under subsection B of this

section involving two or more insurers competing in

the same market is evidence of violation of the

competitive standards.

(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
ner shall consider the following:

a. any acquisition covered under subsection B of this

section involving two or more insurers competing in

the same market is evidence of violation of the

competitive standards.

(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

(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

A highly concentrated market, for purposes of this

subparagraph, is one in which the share of the four

largest insurers is seventy-five percent (75%) or more

of the market. Percentages not shown in the tables

are interpolated proportionately to the percentages

that are shown. If more than two insurers are

involved, exceeding the total of the two columns in

the table is prima facie evidence of violation of the

competitive standard in paragraph 1 of this

subsection. For the purpose of this subparagraph, the

insurer with the largest share of the market shall be

deemed to be Insurer A,

b. there is a significant trend toward increased

concentration when the aggregate market share of any

grouping of the largest insurers in the market, from

the two largest to the eight largest, has increased by

seven percent (7%) or more of the market over a period

of time extending from any base year five (5) to ten

(10) years prior to the acquisition up to the time of

the acquisition. Any acquisition or merger covered

under subsection B of Section 5 of this act involving

two or more insurers competing in the same market is

evidence of violation of the competitive standard in

paragraph 1 of this subsection if:

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(1) there is a significant trend toward increased

concentration in the market,

(2) one of the insurers involved is one of the

insurers in a grouping of large insurers showing

the requisite increase in the market share, and

(3) another involved insurer's market is two percent

(2%) or more,

c. for the purposes of this paragraph:

(1) the term "insurer" includes any company or group

of companies under common management, ownership

or control,

(2) the term "market" means the relevant product and

geographical markets. In determining the

relevant product and geographical markets, the

Commissioner shall give due consideration to,

among other things, the definitions or

guidelines, if any, promulgated by the NAIC and

to information, if any, submitted by 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 this state, and the relevant geographical

market is assumed to be this state,
if any, submitted by 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 this state, and the relevant geographical

market is assumed to be this state,

(3) the burden of showing prima facie evidence of

violation of the competitive standard rests upon

the Commissioner, and

d. even though an acquisition is not a prima facie

violation of the competitive standard under

subparagraphs a and b of this paragraph, the

Commissioner may establish the requisite

anticompetitive effect based upon other substantial

evidence. Even though an acquisition is a prima facie

violation of the competitive standard under

subparagraphs a and b of this paragraph, a party may

establish the absence of the requisite anticompetitive

effect based upon other substantial evidence.

Relevant factors in making a determination under this

subparagraph include, but are not limited to, market

shares, volatility of ranking of market leaders,

number of competitors, concentration, trend of

concentration in the industry, and ease of entry and

exit into the market.

3. An order may not be entered under subsection E of this

section if:

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a. the acquisition will yield substantial economies of

scale or economies in resource utilization that cannot

be feasibly achieved in any other way, and the public

benefits which would arise from such economies exceed

the public benefits which would arise from not

lessening competition, or

b. the acquisition will substantially increase the

availability of insurance, and the public benefits of

the increase exceed the public benefits which would

arise from not lessening competition.

E. 1. a. If an acquisition violates the standards of this

section, the Commissioner may enter an order:

(1) requiring an involved insurer to cease and desist

from doing business in this state with respect to

the line or lines of insurance involved in the

violation, or

(2) denying the application of an acquired or

acquiring insurer for a license to do business in

this state.

b. The order shall not be entered unless:

(1) there is a hearing,

(2) notice of the hearing is issued prior to the end

of the waiting period and not less than fifteen

(15) days prior to the hearing, and

(3) the hearing is concluded and the order is issued

no later than sixty (60) days after the date of

the filing of the preacquisition notification

with the Commissioner.

c. Every order shall be accompanied by a written decision

of the Commissioner setting forth findings of fact and

conclusions of law.

d. An order pursuant to this paragraph shall not apply if

the acquisition is not consummated.

2. Any person who violates a cease and desist order of the

Commissioner under paragraph 1 of this subsection and while the

order is in effect may, after notice and hearing and upon order of

the Commissioner, be subject at the discretion of the Commissioner

to one or more of the following:

a. a monetary penalty of not more than Ten Thousand

Dollars ($10,000.00) for every day of violation, or

b. suspension or revocation of the person's license.

3. Any insurer or other person who fails to make any filing

required by this section, and who also fails to demonstrate a good-

faith effort to comply with any filing requirement, shall be subject

to a fine of not more than Fifty Thousand Dollars ($50,000.00).

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F. Subsections B and C of Section 12 of this act and Section 14

of this act shall not apply to acquisitions covered under subsection

B of this section.