Section 1505(d) of the New York Insurance Law states, in part:
"The following transactions between a domestic controlled insurer and any person
in its holding company system may not be entered into unless the insurer has
notified the superintendent in writing of its intention to enter into any such
transaction at least thirty days prior thereto, or such shorter period as he may
permit, and he has not disapproved it within such period:
(1) sales, purchases, exchanges, loans or extension of credit, or investments,
involving more than one-half of one percent but less than five percent of the
insurer's admitted assets at last year-end;
(2) reinsurance treaties or agreements;
(3) rendering of services on a regular or systematic basis . . . "
The following transactions were in violation of Section 1505(d)(1) of the New York
1. In December 1999, the parent, ULLICO Inc., made a surplus contribution to the Company in
the amount of $15,000,000. The amount of this transaction was approximately 0.56% of the
Company's 1998 admitted assets. The Company failed to provide notice to the superintendent
of this transaction.
2. In December 1999, the Company transferred its interest in certain limited partnerships,
amounting to $19,328,447, to MRCo, Inc., an affiliate, in exchange for a three-year
promissory note dated December 30, 1999. This transaction amounted to approximately
0.72% of the Company's 1998 admitted assets. The Company did not notify the
superintendent prior to entering into this transaction.
The Company violated Section 1505(d)(1) of the New York Insurance Law by failing to
provide the superintendent notice prior to entering into the aforementioned transactions with
members of its holding company system which exceeded one-half of one percent of its prior
year's admitted assets.
The Company failed to notify the superintendent prior to entering into two reinsurance
treaties with Ulico Casualty Company, an affiliate. The Company violated Section 1505(d)(2) of
the New York Insurance Law by failing to notify the superintendent prior to entering into
reinsurance treaties with an affiliate.
The examiner notified the Company that it was required to submit the above two
transactions and the two reinsurance agreements to the superintendent pursuant to Section
1505(d) of the New York Insurance Law. The Company submitted the two transactions and the