(a) Any domestic insurer either by itself or in cooperation with one or more persons may organize or acquire one or more subsidiaries. The subsidiaries may conduct any kind of business or businesses permitted by the Constitution and laws of this state; and their authority to do so shall not be limited by reason of the fact that they are subsidiaries of a domestic insurer.

(b) In addition to investments in common stock, preferred stock, debt obligations, and other securities permitted under all other Code sections of this title, a domestic insurer may also:

(1) Invest in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries amounts which do not exceed the lesser of 5 percent of the insurer's assets or 50 percent of the insurer's surplus as regards policyholders, provided that after the investments the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs. In calculating the amount of such investments, there shall be included:

(A) Total net moneys or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary, including all organizational expenses and contributions to capital and surplus of the subsidiary whether or not represented by the purchase of capital stock or issuance of other securities; and

(B) All amounts expended in acquiring additional common stock, preferred stock, debt obligations, and other securities and all contributions to the capital or surplus of a subsidiary subsequent to its acquisition or formation;

(2) Invest any amount in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries, if the insurer's total liabilities, as calculated for purposes of the National Association of Insurance Commissioners' annual statement, are less than 10 percent of its assets, provided that after the investment the insurer's surplus as regards policyholders, considering the investment as if it were a disallowed asset, will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs;

(3) Invest any amount in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries, provided that each subsidiary agrees to limit its investments in any asset so that the investments will not cause the amount of the total investment of the insurer to exceed any of the investment limitations applicable to the insurer as specified in paragraph (1) of this subsection or in Chapter 11 of this title. For the purpose of this paragraph, "the total investment of the insurer" shall include any direct investment by the insurer in an asset and the insurer's proportionate share of any investment in an asset by any subsidiary of the insurer which shall be calculated by multiplying the amount of the subsidiary's investment by the percentage of the insurer's ownership of such subsidiary;

(4) Invest any amount in common stock, preferred stock, debt obligations, or other securities of one or more subsidiaries with the approval of the Commissioner, provided that after the investment the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs; and

(5) Invest any amount in the common stock, preferred stock, debt obligations, or other securities of any subsidiary exclusively engaged in holding title to or holding title to and managing or developing real or personal property if, after considering as a disallowed asset so much of the investment as is represented by subsidiary assets which if held directly by the insurer would be considered as a disallowed asset, the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs and if following such investment all voting securities of such subsidiary would be owned by the insurer.

(c) Investments in common stock, preferred stock, debt obligations, or other securities of subsidiaries made pursuant to subsection (b) of this Code section shall not be subject to any of the otherwise applicable restrictions or prohibitions contained in this title applicable to the investments of insurers.

(d) Whether any investment pursuant to subsection (b) of this Code section meets the applicable requirements of paragraphs (1) through (5) of subsection (b) of this Code section is to be determined immediately after the investment is made, taking into account the then outstanding principal balance on all previous investments in debt obligations and the value of all previous investments in equity securities as of the date they were made.

(e) If an insurer ceases to control a subsidiary, it shall dispose of any investment in the subsidiary made pursuant to this Code section within three years from the time of the cessation of control or within any further time as the Commissioner may prescribe unless at any time after the investment shall have been made the investment shall have met the requirements for investment under any other Code section of this title and the insurer notifies the Commissioner that the requirement has been met.