Which Kentucky insurance statute governed an acquisition applicant's financial statements and approval period in 1993?

Plain-English summary

The Kentucky Department of Insurance asked which of two statutes governed an acquisition applicant's financial statements and the Commissioner's approval period. The AG found that KRS 304.37-120, the later Insurance Holding Company Systems Act provision, superseded conflicting parts of KRS 304.24-410. For the two issues raised, the opinion required five prior years of audited financial statements and said the older 30-day approval period no longer bound the Commissioner. It did not decide whether the older statute had been displaced in full.

Currency note

This opinion was issued in 1993. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical summary

Insurance acquisition applicants

For an applicant proceeding under the Insurance Holding Company Systems Act, the AG applied the later provision's requirement for audited statements covering the previous five years. The opinion contrasted this with the earlier provision's three-year period and found the two requirements irreconcilable on the issues presented.

Insurance Commissioner

The AG said the Commissioner was not bound by the earlier statute's 30-day period when approving an acquisition under the later provision. The opinion identified no replacement approval deadline in that provision.

Scope of the opinion

The AG limited its detailed analysis to financial statements and the approval period. Although it said the later provision would control any other conflicts, it expressly declined to examine whether the older statute had been repealed in its entirety by implication.

Common questions

Did a Kentucky insurance acquisition applicant need three or five years of financial statements?

Under the 1993 opinion, an applicant proceeding under the Insurance Holding Company Systems Act needed audited statements for the five years before the acquisition.

Did the Commissioner still have 30 days to approve the acquisition?

The AG said no. The later provision did not carry the earlier statute's 30-day limit, so the Commissioner was no longer bound by that period for the acquisition addressed.

Did the later insurance statute repeal the older one entirely?

The opinion did not resolve that question. It found an implied repeal of the conflicting portions relevant to financial statements and approval timing, and left the scope of any broader repeal unexamined.

Background and statutory framework

The request compared KRS 304.37-120 with KRS 304.24-410. The AG first applied the principle that conflicting statutes should be harmonized where possible and that implied repeal is disfavored. It then found the provisions could not both govern the two particular acquisition requirements and applied the later statute. The original opinion contains inconsistent descriptions of whether the earlier three-year statements were audited; its holding on the later five-year audited requirement is clear.

Citations and references

• KRS 304.37-120: later provision controlling the two conflicting acquisition requirements discussed.
• KRS 304.24-410: earlier provision discussed in the request.
• Cawood v. Coleman, 294 Ky. 858, 172 S.W.2d 548 (1943): harmonizing statutes where possible.
• State Property and Buildings Commission v. Hays, Ky. App., 346 S.W.2d 3 (1961): implied repeal only when provisions cannot both be given effect.
• Washburn, Mayor v. Paducah Newspapers, Inc., 275 Ky. 527, 121 S.W.2d 911 (1938): legislative intent and supersession by a later statute.

Source

• Landing page: https://www.ag.ky.gov/Resources/Opinions/Opinions/OAG93-026.htm

Original opinion text

OAG 93-26

March 16, 1993

Mr. Patrick Watts

Department of Insurance

General Counsel

P. O. Box 517

Frankfort, KY 40602

RE: Request for an opinion on the inconsistency

of KRS 304.24-410 and KRS 304.37-120

Dear Mr. Watts:

You have requested this office to render an opinion as to how any inconsistencies between KRS 304.13-120 and KRS 304.24-410 should be reconciled. Your inquiry is, of course, twofold. First, there must be a determination whether the inconsistencies exist. Specifically, you cite to two areas involving the requirement of the disclosure of financial statements and subsequent approval by the Commissioner of Insurance of the detailed information noted in the respective statutes. Second, if the statutes are in conflict, it must be determined which statute prevails.

While KRS 304.37-120, the 1992 amendment to the Insurance Holding Company Systems Act, mandates the submission of audited financial statements by the applicant for the previous five years, KRS 304.24-410, effective 1980, only requires unaudited statements for the prior three years. Furthermore, KRS 304.37-120 sets no time limit for approval of the information required by the statute by the Commissioner of Insurance whereas the earlier statute establishes a thirty day time limit. Thus, we agree that these inconsistencies between the states do indeed exist.

As a result, rules of statutory construction must be applied in order to reconcile the statutes. It is well established that courts should harmonize conflicting statutes and give effect to each if possible. See, for example, Cawood v. Coleman, 294 Ky. 858, 172 S.W.2d 548 (1943). Furthermore, repeals by implication are never favored and will be sanctioned only when there is conflict between two statutes such that effect cannot be given to both. State Property and Buildings Commission v. Hays, Ky. App., 346 S.W.2d 3 (1961). This reluctance to impliedly repeal a statute is based on the presumption that the legislature has not intended a useless or futile thing. As held in Washburn, Mayor v. Paducah Newspapers, Inc., 275 Ky. 527, 121 S.W.2d 911 (1938), the court must consequently endeavor to ascertain and follow the legislative intent. In so doing, it must examine the subject matter and necessity, or lack of necessity, of giving effect to both or all sections of such statutes. However, if a later statute accomplishes the same purpose intended to be accomplished by a previously enacted statute but by obviously different methods and in different manner, the later statute supersedes and repeals the earlier statute. In Washburn, the court followed the rule in 50 C.J. 910, Section 513, which states that a statute may repeal an earlier one by implication where it covers the whole subject matter of, and is intended to be a substitute for, the earlier one.

These general rules of statutory construction must be applied to the present inquiry. This office agrees with your conclusion that those sections of KRS 304.37-120 that conflict with the earlier statute KRS 304.24-410 cannot be harmonized. Indeed it is impossible to reconcile sections of the earlier statute, requiring an audited financial statement for the preceding three year period subject to approval by the Commissioner, with those of the later statute which mandate a more extensive submission by the applicant with unlimited time for approval by the Commissioner. These sections of the later statute dramatically change those of the earlier statute. Consequently, since the statutes contain conflicting sections, the rules of statutory construction direct that effect can not be given to each statute in construing those specific areas of law dealing with submission of financial statements and Commissioner approval. The result must be that the later statute prevails and similar sections of the previous statute are repealed by implication. Therefore, KRS 304.37-120 must control in the respect that an individual proceeding under the Insurance Holding Company Systems Act must provide the Commissioner of Insurance with audited financial statements for the five (5) years prior to the acquisition. In addition, the Commissioner is no longer bound to a time period of thirty (30) days in which to approve the acquisition.

With regard to any other inconsistencies or conflicts between the two statutes, this office is of the opinion that the later one controls; i.e., KRS 304.37-120. The exact extent of what other inconsistencies occur between these two statutes or whether there is comprehensive subject matter coverage of the earlier statute within the new one, has not been examined. Your inquiry focused on two discrepancies which have been addressed. This office will not at this point explore the possibility of whether KRS 304.24-410 has been repealed in its entirety by implication.

Sincerely,

CHRIS GORMAN

ATTORNEY GENERAL

Dennis G. Howard, II

Assistant Attorney General

(502) 564-7600

DGH:reb