OGC Op. No. 11-01-10

The Office of General Counsel issued the following opinion on January 31, 2011, representing the position of the New York State Insurance Department.

Re: Merger of Domestic Life Insurer into Authorized Foreign Life Insurer

Question Presented:

Does the New York Insurance Law (“Insurance Law”) prohibit the merger of a domestic stock life insurer with an authorized foreign stock life insurer affiliate where the survivor of the merger is the foreign stock life insurer?


No. The Insurance Law does not prohibit a merger where the foreign insurer is the survivor, although the Superintendent has broad discretion in applying the statutory standards in determining whether to approve any particular proposed merger.


A domestic stock life insurer, licensed only in New York, issued life insurance and annuity contracts in this state after August 2, 1985, but has ceased writing new business. The insurer now proposes to merge with an affiliated foreign stock life insurer. The affiliate is licensed to write life insurance in New York as well as numerous other states in addition to its state of domicile. It is also an authorized reinsurer in all other states (except one).

Both insurers are members of a larger group of insurers headquartered outside New York. The parent reports that, in order to gain efficiencies through economies of scale, it plans to merge the New York domestic into the foreign affiliate. The surviving foreign insurer would remain licensed to write life insurance in New York.


Article 71 of the Insurance Law governs mergers of insurers. The following definitions set forth in Insurance Law § 7101 are relevant to the discussion that follows:

(a) “Merger” means the merger of two or more companies in a single company which is one of the constituent companies.

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(c) “Constituent company” means an existing company that is participating in the merger or consolidation with one or more other companies.

(d) “Surviving company” means the constituent company into which one or more other constituent companies are merged.

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(f) “Company” means an insurance company.

Insurance Law § 7102 sets forth the following statutory requirements for a merger between two insurers.

(a) Upon complying with this article and subject to section seven thousand one hundred nine of this article, any domestic company is hereby authorized and empowered to:

(1) consolidate, merge with or acquire the assets of any other domestic company, and

(2) consolidate or merge with any foreign company which is authorized to do an insurance business in this state or acquire the assets of any foreign company if such merger, consolidation or acquisition of assets is authorized by the laws of the state in which such foreign company is organized.

The plain language of these provisions permits a merger of a domestic company into an authorized foreign insurer where the foreign insurer survives the merger. Insurance Law § 7102 states that a domestic insurer may “merge with” both another domestic insurer or with a foreign insurer authorized in New York. Nor do these provisions make any distinction with respect to the type of insurer – life, property/casualty, health or other – that is subject to its provisions. Insurance Law § 7102(a)(2), however, does require a foreign insurer to be authorized in New York as an insurer prior to merging with or into a domestic insurer regardless of whether the domestic or foreign insurer survives. See OGC Opinion No. 11-30-06 (Nov 30, 2006).

Nonetheless, these mergers are subject to the approval of the Superintendent. Insurance Law § 7105 sets forth the standards for the superintendent’s review of a proposed merger, and provides as follows:

The superintendent shall thereupon consider such agreement, and if satisfied that it complies with this article [Article 71 of the Insurance Law], is fair and equitable, does not tend to substantially lessen competition in any line of insurance or tend to create a monopoly therein, and is not inconsistent with law, he shall approve such agreement. If the superintendent shall refuse to approve such agreement, notification of such refusal, assigning the reasons therefor, shall within thirty days from the date of submission to him of such agreement be given in writing by the superintendent to each of the constituent or contracting companies.

The Superintendent has broad discretion as to whether to approve or reject any particular merger, and will take into account all necessary factors in reaching such a decision.

For further information you may contact Associate Tax Counsel Ann H. Logan at the New York City Office.