Contractors’ Bonding & Insurance acquisition
The Office of the Insurance Commissioner received a request from RLI Insurance Company for a proposed acquisition of control of Contractors’ Bonding & Insurance Company (“CBIC”) and its parent company, Data and Staff Service Company (“DSSC”).
RLI Insurance Company is a wholly-owned insurer of RLI Corporation, a publicly-held corporation on the New York Stock Exchange and headquartered in Peoria, Illinois. CBIC is a privately-held insurer wholly-owned by DSSC. DSSC’s common stock is approximately 96 percent held by Donald Sirkin. DSSC remaining owners are DSSC / CBIC employees through its employee stock ownership plan.
If approved, RLI Insurance Company and RLI Corporation would become the controlling person of DSSC and CBIC.
History of the process
We received the application for acquisition of control in late December 2010. The review of the application was completed in March 2011.
An adjudicative hearing was held at our Tumwater office to hear testimony and comments regarding the proposed acquisition on April 20, 2011 at 1 pm. The judge approved the application on April 26, 2011.
What we look at
In all proposed sales, the companies must file an application (Form A) that details:
- Financial information for both companies;
- Who will operate the insurer at the highest levels;
- Their business plan for the insurer; and
- How the market competition would be impacted.
Under state law, the commissioner must approve the deal unless:
- It would substantially lessen competition or create a monopoly;
- The buyer’s plans are unfair and unreasonable to the policyholders of the insurer;
- The buyer’s isn’t competent, honest, or financially sound enough to run a insurer; or
- It is in some way “hazardous or prejudicial to the insurance-buying public”.