Are there restrictions over who owns or controls insurers (including restrictions on foreign ownership)?
Insurance & Reinsurance
Under the Japanese regulatory framework, shareholders who own a certain percentage of voting rights in insurers are subject to oversight by the regulator.
- A shareholder with more than 50% voting rights in an insurance company is required to obtain approval from the FSA in advance of acquiring such voting rights (Insurance Holding Company; Article 271-18-1 of the Insurance Business Act). Insurance Holding Companies are subject to strict regulations, including those regulating the scope of business and imposing subsidiary restrictions, and, in certain instances, reporting obligations.
- Apart from Insurance Holding Companies, a shareholder with 20% or more voting rights in an insurance company requires approval from the FSA in advance of acquiring such voting rights (Major Shareholder of Insurance Companies; Article 271-10-1), even if such investor resides overseas. The FSA oversees Major Shareholders of Insurance Companies by imposing reporting obligations and taking administrative dispositions.
- A shareholder with more than 5% voting rights in an insurance company is required to report the acquisition of such voting rights to the FSA within five days (or one month in the case of foreign investors) (Shareholders with Large Voting Rights in Insurance Company; Article 271-3-1 of the Insurance Business Act). That shareholder has to submit a report if their percentage of voting rights changes by 1% or more (either as an increase or decrease). The FSA may take administrative dispositions against Shareholders with Large Voting Rights in an Insurance Company if it finds that the submitted report includes false information, or lacks important or necessary information, thus causing a potential misunderstanding.
The Financial Sector (Shareholdings) Act 1998 (Cth) restricts persons from holding more than a 15% stake in an insurer. The Insurance Acquisitions and Takeovers Act 1991 (Cth) (IATA) implements a similar 15% cap on the acquisition of an insurer's total asset value. Any holding above these limits must be approved by the Commonwealth Treasurer who will assess the application on the basis of whether it is in the national interest. Approval is also required under the IATA where there is an agreement with an Australian insurer that proposes to allow the acquiring entity to have the power to control the directorate of the insurer.
The application should demonstrate the financial security of the proposed shareholders and their commitment to long term investment and capital in the insurer. Requirements on capital must also be satisfied. The IATA Decision-Making Principles IDM 1/1992 provides further guidance on the national interest test, which includes whether the proposal could adversely affect the stability and strength of the insurance industry and financial system, the interests of policy holders and compliance with Australia's Foreign Investment Policy.
It may be a criminal offence to acquire or increase control in an insurance company authorised in Denmark without the prior approval of the DFSA. According to the Danish Financial Business Act, approval by the DFSA is required when:
- Acquiring 10% or more of the shares or voting power in an undertaking (or its parent company) or where it is able to exercise significant influence over the undertaking,
- increasing the shareholdings or voting power in an undertaking (or its parent company) above 20%, 30% or 50%, or
- turning the undertaking into a subsidiary or into another company.
The approval may be given if a number of criteria are fulfilled, among these whether the entity in question is regarded as ”fit and proper” to own such holdings (see also question 13 below).
There are no legislative restrictions on foreign ownership of insurance companies.
When a chairman or member of the board of an insurance company are appointed or changed, the chairman and/or the member of the board must notify the DFSA of the person’s experience and knowledge regarding the employment.
The acquisition (directly or indirectly) of shares in an insurance and/or reinsurance company representing 1/10, 1/5, 1/3 and 1/2 of the votes exercisable at the general shareholders' meeting or the same percentage of shares in the share capital requires prior notification to and approval from the KNF. The same requirement applies to any entity or person that intends to become a controlling entity of an insurance and/or reinsurance company in any other way.
There is a detailed list of information and documents that must be submitted to the KNF. The approval process is strictly regulated. The KNF examines whether the criteria laid down in the Insurance Law have been satisfied, including:
- the financial condition and reputation of the notifying entity and its capital group;
- the education, experience and reputation of the persons managing the activity of the notifying entity as well as of the persons who are intended to be management board members of the insurance and/or reinsurance company;
- the business plan of the insurance and/or reinsurance company; and
- anti-money laundering aspects.
Some extra requirements apply in the case of a non-EU acquirer.
The process (from the submission of the filing to the obtaining of the KNF's approval) takes approximately from 4 to 6 months.
A change of control over or ownership of insurance intermediaries (agents/brokers) is not regulated (no notification or approval is required).
However, there is a specific regulation under the new Insurance Distribution Law regarding agency and brokerage activity. Neither the agent nor the agent's shareholder will be able to hold shares in a capital company conducting brokerage activity. Moreover, agents and brokers should not have any "other relations" that could jeopardize the carrying on of brokerage activities honestly, fairly, professionally and in accordance with the client's interests. The concept of "other relations" is not defined. Therefore, as of 1 October 2018 (when this regulation will come into force) the nature of the relationship between brokers and agents will need to be carefully assessed on case by case basis.
According to the Article 3 of IA, an insurer can operate only in form of a joint stock or cooperative company. There are restrictions over both shareholding and management structures of insurance and reinsurance companies. These restrictions are generally related to the financial strength, good standing and criminal record history of founders and managers.
Article 3/2 of IA provides that the founders of an insurance or reinsurance company shall not have been bankrupt or been subject to an official debt restructuring procedure, must hold financial assets and shall not have a criminal record with respect to financial crimes.
There is no restriction to the foreign ownership of Turkish insurance and reinsurance companies. On the other hand, according to Article 1 of the Council of Ministers’ Decree No. 2007/12467 Regarding International Activities in Insurance Industry, foreign insurers intending to have activities in Turkey and reinsurance companies are required to establish a local branch.
The authorisation process requires the submission of details of all of the entity’s proposed shareholders to the Central Bank. However, there are no restrictions on the ownership or control of an insurance or reinsurance undertaking, other than the requirement that the proposed controller must be of good standing. The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016 have introduced increased disclosure requirements in respect of ownership of corporate entities. These regulations require entities to maintain a register of the beneficial owner (i.e., the natural person who ultimately owns or controls the share capital or the voting rights or has control by any other means of the undertaking) in order to ensure greater transparency of ownership.
The application for authorisation requests details of any proposed person that will ‘qualifying holding’ in the applicant. A ‘qualifying holding’ is defined in the 2015 Regulations as a holding representing 10% or more of the capital or voting rights, or which makes it possible to exercise a significant influence over the management of the undertaking. Furthermore, where there is a change in the ownership or control of a regulated entity, the 2015 Regulations require certain notifications to be made to the Central Bank. The acquisition, increase and/or disposal of a ‘qualifying holding’ triggers the requirement to notify the Central Bank. The Central Bank will assess any proposed acquisition by reference to, amongst others, the financial soundness of the proposed acquirer and the suitability of all proposed directors and senior management in accordance with its Fitness and Probity regime (to ensure the sound and prudent management of the undertaking).
It is a criminal offence to acquire or increase control in an insurer authorised in the UK without the prior approval of the PRA. The PRA may approve the change in control unconditionally, impose conditions or object to the acquisition.
A person will acquire control for their purposes if (i) they (alone or with their associated persons) hold 10% or more of the shares or voting power in an insurance undertaking (or its parent company) or (ii) they are able to exercise significant influence over the undertaking.
Approval by the PRA is also required when an existing controller proposes to increase its shareholding or voting power in an undertaking (or its parent company) above 20%, 30% or 50%.
There are no legislative restrictions on non-UK (or EU) nationals owning insurance companies.
There are rules governing both how transactions regarding larger shares of capital or voting rights in insurance companies can be conducted, as well as who is allowed to acquire shares over certain sizes. It is therefore required to get the FSA’s approval before:
- directly or indirectly acquiring 10 % or more of the share capital or voting rights of an insurance company, or otherwise acquiring the ability to materially influence an insurance company’s management,
- increasing the shareholdings in an insurance company to more than 20 %, 30 % or 50 % of the company's share capital or voting rights, and,
- turning the insurance company into a subsidiary to another company.,
The FSA will approve the acquisition if the acquiring party is deemed fit and proper and the acquisition is financially sound.
In its assessment, the FSA considers several factors, such as the acquirer's reputation, financial strength, and possible connections to money laundering or terrorist financing. Applications are typically handled within 60 to 80 days of receipt. The FSA can oppose the acquisition or change in control if there are reasonable grounds to do so.
The FSA's approval is not required for acquisitions or increases in control of non-EEA insurers that are active on the Swedish market, although such insurers must notify the FSA of the proposed acquisition or change in control.
There are no restrictions regarding foreign ownership.
Assessment of Ownership’s Management
A company having a qualifying holding in an insurance company under the FSA’s supervision shall notify the FSA, which then will assess the person’s experience and knowledge, when any of the following persons are appointed or changed:
- chairman, member or alternate member of the board, or
- executive director or his/her representative.
If such a person is a foreign citizen, the FSA will contact the relevant competent authority in that country to get necessary additional information. There are, however, no restrictions regarding foreign ownership or management, other than the residence requirement in the Swedish Companies Act (SFS 2005:551), requiring at least half of the board of directors to reside within the EEA.
Pursuant to Sections 16, 7 para. 3 VAG, holders of 10 % or more of the capital or voting rights in an entity must fulfil the requirements for sound and prudent management of the entity. In particular, they have to be trustworthy. If the shares are held by legal entities, the same requirements apply to their legal representatives.
Additionally, under Section 17 VAG, any person or legal entity has to immediately notify BaFin in writing if they intend to acquire 10 % or more of the capital or voting rights. If a holder of more than 10 % of the capital or voting rights intends to increase its shares beyond 20 %, 30 % or 50 %, they also have to inform BaFin. BaFin has to review the request within 60 days of receiving the notification.
An entity who wants to become owner of a qualified holding of an insurance company's shares or votes must obtain permission from the Ministry of Finance, pursuant to chapter 6 of the Financial Institutions Act. Qualified holdings are shareholdings that represent 10% or more of the insurance company's shares or votes, with further thresholds at 20%, 30% and 50 %.
The evaluation of whether permission shall be granted is based on a number of criteria, where an important factor is whether the entity is regarded as fit and proper to own such holdings (see also question 13 below).
Owners of a qualified holding, who want to reduce the holding, or reduce a qualified holding to a level below a threshold, must notify the FSAN in advance. If the sale will take place outside a regulated market (stock exchange), the FSAN must also receive specified information on the new owner of the shareholding.
There are no specific restrictions on foreign ownership under Norwegian law.
There are currently no restrictions to foreign investment in insurance companies. In all cases, the CNSF must approve ownership and control of insurance companies incorporated in Mexico. The respective application must include, among others, the following information:
- Amount of shares they will acquire and source of the assets to acquire such shares;
- Economic reports or financial statements for the last three years; and
- Evidence of good credit reputation and financial capability.
The CNSF must approve any direct or indirect purchase of more than 5% of the shares of an insurance company. The respective application must include, among others, the information set forth above.
For direct or indirect purchases of 20% or more of the shares of an insurance company, the application should include, inter alia, the information set forth above and in addition, information on the candidates to be appointed as directors, officers and manager of the insurance company.
Article 24 of the Federal Law No. 6 of 2007 provides that only (i) public stock companies established in the UAE, or (ii) branches of foreign insurances companies, or (iii) insurance agents are allowed to carry out insurance and re-insurance operations in the UAE. Additionally, as per IA Resolution No. 42 of 2009, it is mandatory that insurance companies incorporated in the UAE have at least seventy-five percent (75%) of their capital owned by UAE or GCC nationals or by juristic entities wholly owned by them.
For other entities engaged in onshore UAE insurance related activities, such as brokering and third party claims administration, the UAE Commercial Companies Law requires that the LLC that holds the license must be at least 51% owned by a UAE or GCC National or juristic entity wholly owned by such nationals.
The DIFC does allow 100% foreign ownership, but the activities of free zone entities are limited as set forth above.
Restrictions concerning the ownership or control of insurers are generally found in the laws governing the formation of insurance companies or the change in their corporate structure or control. The specific requirements for forming new insurance companies or changing control vary from state to state. The requirements of the state where the company is or will be domiciled govern.
Many states, however, have adopted the Uniform Certificate of Authority Applications (“UCAA”) – a system established by the NAIC which streamlines the application process by creating standardized application forms. Nevertheless, some states continue to have specific filing requirements and each state performs an independent review of all applications. The UCAA Primary Application, which a newly formed company would use to seek a certificate of authority to do business in its domicile state, calls for the disclosure of information related to minimum capital and surplus requirements, statutory deposit requirements, name approval, a plan of operation (which includes financial statements and projections), any holding company financial information, biographical information regarding officers and directors, and other similar matters.
Entities must notify the FMA, if they intend to acquire, directly or indirectly, an equity holding in an Austrian insurance or reinsurance undertaking or to further increase, directly or indirectly, such an equity holding, as a result of which the proportion of the voting rights or of the capital held would reach 20, 30 or 50 percent (Article 24(2) VAG).
In assessing the intended acquisition or increase in shares, the FMA will scrutinise the reputation of the acquirer and its proposed key personnel, its financial soundness and whether it will be able to comply with regulatory requirements. In addition, the FMA will ascertain that there is no reason to suspect any connection to money laundering or the financing of terrorism (cf. Article 26 VAG).
If the FMA is of the opinion that the influence exercised by the acquirer or holder of such qualified equity holding is likely to operate against the sound and prudent management of the undertaking, it is authorised to take the measures appropriate to put an end to such situation, including appointing a government commissioner or even ordering the discontinuation of business operations (cf. Articles 27 and 284 VAG).
Foreign ownership is not restricted. However, if a foreign investor wishes to acquire an Austrian insurance undertaking, the VAG grants the FMA additional rights in the course of the authorization process, e.g. an extension of the FMA’s timeframe for requesting information from the acquirer (cf. Article 25(3) VAG).
There are no restrictions regarding nationality, domicile or other circumstances. Foreign capitals are not restricted to participate in the formation of a company of insurance o reinsurance or to take control thereof.
However, proof is required that the shareholders, the controlling parties and holders of 10 per cent or more of the shareholder equity have not been convicted of crimes or other criminal offences; that none of them has been subject to any prohibition or incapacity to conduct business, or subject to any sanction, fine or penalty imposed by the regulator.
In case of transference of 10% or more of the company’s shares, the above requirements as well as the equity requirement mentioned in No., 4 above, shall be met.
Foreign insurers may open a branch in Chile, but capital and other requirements are the same as those imposed upon Chilean insurance companies to be organized in Chile. Transactions between the local branch and its parent or related companies are deemed to have been effected between different entities, and therefore, do not affect the requirement of technical reserves. The parent company is not responsible for the obligations assumed by the Chilean branch office and may reinsure its risks without any limitation.
Information regarding persons holding at least 10 per cent of the shares in an insurance company has to be submitted to FINMA during the authorisation process for approval. Anyone who intends to acquire a participation in an existing Swiss insurance company has to inform FINMA if such participation reaches 10, 20, 33 or 50 per cent of the share capital or the voting rights of such company. The same notification duties apply if an existing participation is reduced, Art 21 para 2 and 3 ISA. FINMA is authorised to restrict such participation if it might endanger the insurance company or the interests of the insureds, Art 21 para 4 LSA.
Regarding the restrictions, according to the current Peruvian Constitution, national and foreign investments are subject to the same conditions. Therefore, there is no prohibition for foreigners from holding shares in an insurance company.
Notwithstanding the foregoing, the General Law provides that shareholders must meet requirements of moral suitability and economic solvency, that is to say, they should not be involved in the scenarios of the impediments established in said Law. Therefore, a shareholder cannot be someone who has been convicted of felony crimes, has been expressly prohibited by their functions in public office, has been involved in insolvency proceedings, has exceed the maximum percentage of shares in two companies of the financial system of the same nature, among others.
Regarding the means of control over the owners of insurance companies, the article 50 of the General Law states that any natural or legal person who acquires shares, directly or indirectly, in the amount of one percent (1%) of the stock capital, in the course of twelve months or, who reaches a participation of three percent (3%) or more, is obliged to provide the SBS with the information requested, in order to identify its main economic activities and the structure of its assets. Moreover, the article 57 of the General Law provides that for the transfer of shares for more than ten percent (10%) of the stock capital in favor of a single person, authorization from the SBS will be required.
Any direct or indirect foreign investment in an insurer or insurance intermediary is restricted to 49% of paid up equity capital. Further, under Indian law, all insurers and insurance intermediaries are required to be Indian-owned and controlled at all times. ‘Indian control’ is defined to mean control by resident Indian citizens or Indian companies, which are owned and controlled by resident Indian citizens. The term ‘Indian ownership’ has been defined to mean more than 50% of the equity capital beneficially owned by resident Indian citizens or Indian companies, which are owned and controlled by resident Indian citizens.
Prior approval from the MAS is required before anyone, whether acting together with another person or otherwise, obtains an interest or holding in voting shares ≤ 5% of the total voting share in a licensed insurer incorporated in Singapore.
Prior approval is also required from MAS before anyone obtains effective control of a licensed insurer in Singapore. A person is regarded as obtaining effective control of a licensed insurer if, inter alia, that person (whether alone or together with his associates) hold ≤ 20% of the total number of issued shares or is in a position to control such voting power in the insurer. Approval from MAS may be subject to conditions, such as restricting the person's disposal or further acquisition of shares or voting power in the licensed insurer concerned.
The applicant must satisfy MAS that he is a fit and proper person, and that having regard to the likely influence of the person, the licensed insurer concerned will continue to conduct its business prudently and comply with the provisions of the IA.
There are restrictions on the corporate control group of insurers and reinsurers only as in terms of technical and economic-financial capacity. There is no restriction on foreign capital.
It is important to mention that mandatory insurance covering risks in Brazil, taken out by individuals resident in Brazil or legal entities that are domiciled here, can only be issued in Brazil itself. The rule does not apply to insurance taken out by Brazilian citizens to cover risks abroad. In general terms, there are no additional requirements imposed on foreign insurers seeking authorisation to operate in Brazil. In relation to reinsurance, the legislation issued post-2007 ended the state monopoly on reinsurance and permitted the entry of new national and foreign reinsurers.
Even though there is still (to some extent) a reserved market for local reinsurers (albeit a declining one), a significant amount of risk is placed on the international market via reinsurers that have been authorised to operate in Brazil (i.e., foreign capital reinsurers that have a branch in Brazil and are subject to some additional requirements) and “eventual” reinsurers (i.e., foreign capital reinsurers that are not subject to additional requirements other than a minimum rating).
According to the Control Law the control of more than 5 per cent of a type of means of control of an insurer is conditional on receiving a permit from the Commissioner. In considering the granting of such permit, the Commissioner takes into consideration a wide variety of factors, including the financial means and business background of the entities requesting the permits, prevention of potential conflict of interest and ensuring the insurer is properly managed. In addition, the Commissioner will not grant a control permit and a permit to hold means of control unless the applicants have personal and business integrity, and professional experience and knowledge.
The definition of "means of control" includes: rights to vote in the General Assembly of the Company and power to nominate a director in the company.
There is no restriction regarding foreign investors, however the identity of the investor will be taken into consideration by the Commissioner before granting the investor a permit for holding means of control.
Yes, the shareholders and partners of insurance companies must be able to ensure that the undertaking has a healthy and prudent policy (Article 39 of the Supervision Act). If they fail to do so, the NBB will not grant a license. The assessment of the capacity to guarantee such a policy is based on the following criteria: (1) the reliability of the shareholders and partners, (2) the professional reliability and expertise of every person that will take the actual lead in the undertaking, (3) the financial soundness of the shareholders and partners in respect of the exercised and intended activities within the undertaking, (4) whether the undertaking will continue to comply with the prudential obligations of the Act, and (5) whether there is good cause to believe that money laundering may take place or that terrorism has been or is currently being financed.
The Insurance Act or the Supervision Act do not contain any restrictions on foreign ownership or shareholding.
A prior notification must be made to the ACPR (by the acquiring and the transferring parties) and authorizations need to be obtained in instances where the envisaged changes in share ownership would lead to:
- the proportion of voting rights held by the buyer or the seller rising beyond or decreasing below certain thresholds, namely 10%, 20%, 33% or 50%, or
- the acquisition or transmission of a subsidiary by one of the parties, or
- a significant change in management.
The following criteria will be taken into account by the ACPR when considering whether to allow the envisaged change in ownership:
- the reputation and the financial strength of the acquiring party, the reputation and experience of the person who will be in charge of the business, the undertaking’s ability to fulfil the French Insurance Code requirements and the absence of reasonable grounds for suspecting money laundering, and
- whether the envisaged transaction calls into question the conditions to which the license is subject (if this proves to be the case, the ACPR will inform the parties within sixty days of the application’s submission).
The ACPR may either agree to, or refuse, the contemplated change in ownership. It can also grant conditional approval, subordinated to one of the parties taking certain steps.
Where the envisaged transaction involves a company situated outside the EEA, the ACPR will need to inform the European Commission, whose approval is also necessary (the European Commission has three months to indicate whether it opposes or approves the change in ownership).
The federal Insurance Companies Act (ICA) and the laws of certain provinces (such as Québec) require Ministerial approval for a change of control of an insurer incorporated under the laws of that jurisdiction. The ICA identifies the factors that the Minister shall take into account in determining whether or not to approve the transaction, such as the nature and sufficiency of the financial resources of the applicant, the soundness and feasibility of their plans and the best interests of the financial system in Canada, but the criteria are neutral as to foreign ownership except for non-WTO member foreign institutions where the Minister has to be satisfied that treatment as favorable for Canadian companies exists in the relevant jurisdiction. Federally regulated Canadian insurers are also subject to additional ownership rules that limit ownership of large life insurance companies by major shareholders and impose a 35% public holding requirement on insurance companies that have equity of two billion dollars of more.
The Ordination Supervision and Solvency of Insurance and Reinsurance Companies Act 2015
requires that the directors and officers of insurance and reinsurance companies and of the parent of insurance or reinsurance groups shall have a recognized commercial and professional reputation and be in possession of adequate knowledge and experience for a healthy and prudent management of the company.
Further, in respect of shareholders, the Act states that the individuals or companies that directly or indirectly have a relevant participation in an insurer or reinsurer shall be adequate, so that the management of this be healthy and prudent.
According to article 162 of PIRL, the direct or indirect acquirer of a shareholding stake in an insurance or reinsurance undertaking, as well as any other shareholder that intends to increase its shareholding stake, must communicate such circumstance to ASF provided that (i) the following thresholds are met: 10%, 20%, 33.33% and 50%, or (ii) the company becomes an affiliate company.
The aforementioned thresholds shall also be applicable to the acquisition of voting rights.
ASF might oppose to the projected acquisition/transfer provided that the person/entity being considered fails to guarantee a sound and prudent management of the insurance or reinsurance undertaking.
The reduction of a qualified shareholding to a stake below 20%, 33.33% and 50% is also subject to prior communication to the ASF.
As regards to foreign ownership, PIRL does not impose any limitations as long as the insurer complies with the provisions set forth thereunder.