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Seven Maine Banks

FEDERAL DEPOSIT INSURANCE CORPORATION

IN RE: Bangor Savings Bank, Bangor, Maine
Bath Savings Institution, Bath, Maine
Biddeford Savings Bank, Biddeford, Maine
Gorham Savings Bank, Gorham, Maine
Kennebunk Savings Bank, Kennebunk, Maine
Saco and Biddeford Savings Institution, Saco, Maine
Skowhegan Savings Bank, Skowhegan, Maine
Application to Make Minority Investments Through Majority Owned Subsidiaries in a Foreign Reinsurance Company

STATEMENT

Pursuant to provisions of Section 18(l) and Section 24 of the Federal Deposit Insurance Act and Parts 303, 347, and 362 of the Federal Deposit Insurance Corporation ("FDIC") Rules and Regulations, Bangor Savings Bank, Bangor, Maine; Bath Savings Institution, Bath, Maine; Biddeford Savings Bank, Biddeford, Maine; Gorham Savings Bank, Gorham, Maine; Kennebunk Savings Bank, Kennebunk, Maine; Saco and Biddeford Savings Institution, Saco, Maine; and Skowhegan Savings Bank, Skowhegan, Maine (collectively "Banks") seek the FDIC's consent to acquire, through majority owned subsidiaries, three percent minority interests in a foreign private mortgage insurance reinsurance company organized under the laws of the Turks and Caicos Islands, British West Indies. The foreign company will be called Dirigo Reinsurance Company, Ltd. ("Dirigo") and will have 15 separate investors, including the seven Maine state nonmember banks.

Dirigo will be capitalized with $640,000. The seven Maine state nonmember banks, two Maine savings associations, and five Maine bank holding companies will contribute $10,000 in exchange for $500 in common stock and $9,500 in participating preferred stock. A Maine insurance trust will contribute $500,000 in exchange for $10,000 in common stock and a $490,000 surplus note that will bear an eight percent interest rate. Each share of common stock includes the right to one vote, and participating preferred stock does not include any voting rights.

Dirigo will reinsure private mortgage insurance carried on loans that its investors and their affiliates originate, purchase, and service. The private mortgage insurance on these loans will be provided directly by unaffiliated mortgage insurance companies that will cede a portion of the insurance risk and premium to Dirigo. Dirigo will also purchase from the unaffiliated mortgage insurance companies stop loss insurance that will limit its losses to 115 percent of ceded premiums for any calendar year book of business. The agreements with the unaffiliated mortgage insurance companies require that all ceded premiums and interest earned thereon be held in a trust. The trust must pay net insurance claims and cover the required loss reserves, unearned premium reserves, contingency reserves, and other contractually required reserves before any funds may be remitted to Dirigo for distribution to investors.

Despite being incorporated in the Turks and Caicos Islands of the British West Indies, Dirigo will comply with the reinsurance requirements of the primary insurer's location of domicile, which will be the United States. Dirigo will comply with standard United States insurance accounting practices, including the maintenance of appropriate reserves for insurance risks. Dirigo will also be audited annually and will maintain duplicate records of its business activities in the United States.

The FDIC has fully considered all available facts and information relevant to the Banks' application. Based on the Banks' satisfactory financial conditions and the level of investment in relation to the Banks' capital, the FDIC has concluded that the application should be approved with certain conditions. In order to fulfill the FDIC's supervisory responsibilities, the conditions address concerns including, but not limited to, the FDIC's ability to assess the impact of Dirigo's operations on the Banks. The confidentiality laws of the Turks and Caicos Islands present particular concerns in this regard; therefore, the Order includes conditions to ensure FDIC access to information about Dirigo's business operations.

ACTING DIRECTOR
DIVISION OF SUPERVSION
FEDERAL DEPOSIT INSURANCE CORPORATION


FEDERAL DEPOSIT INSURANCE CORPORATION

IN RE: Bangor Savings Bank, Bangor, Maine
Bath Savings Institution, Bath, Maine
Biddeford Savings Bank, Biddeford, Maine
Gorham Savings Bank, Gorham, Maine
Kennebunk Savings Bank, Kennebunk, Maine
Saco and Biddeford Savings Institution, Saco, Maine
Skowhegan Savings Bank, Skowhegan, Maine
Application to Make Minority Investments Through Majority Owned Subsidiaries in a Foreign Reinsurance Company

ORDER

The Federal Deposit Insurance Corporation (FDIC) has fully considered all available facts and information relevant to the application of Bangor Savings Bank, Bangor, Maine; Bath Savings Institution, Bath, Maine; Biddeford Savings Bank, Biddeford, Maine; Gorham Savings Bank, Gorham, Maine; Kennebunk Savings Bank, Kennebunk, Maine; Saco and Biddeford Savings Institution, Saco, Maine; and Skowhegan Savings Bank, Skowhegan, Maine (collectively "Banks") for consent to acquire, through majority owned subsidiaries, three percent minority interests in a foreign private mortgage insurance reinsurance company organized under the laws of the Turks and Caicos Islands, British West Indies, and the undersigned, acting under delegated authority, has concluded that the application should be approved under Section 347.104(b)(13) and Section 362.4(b)(1) of the FDIC Rules and Regulations.

Accordingly, it is hereby ORDERED that the application submitted on behalf of the Banks for consent to acquire, through a majority owned subsidiary, a three percent minority interest in foreign private mortgage insurance reinsurance company called Dirigo Reinsurance Company, Ltd. ("Dirigo") be and the same is hereby approved, subject to the following conditions.

1. In addition to the records, controls, and reports required by Section 347.110(a) of the FDIC's Rules and Regulations, the Banks shall take all steps within their control to ensure that Dirigo and its officers, employees and agents, independent contractors and affiliates provide the Banks access to information and records concerning Dirigo's business operations and transactions as is permitted under the Turks and Caicos Islands law. In addition to the requirements of Sections 347.110(b) of the FDIC's Rules and Regulations, the Banks shall, upon request in connection with a FDIC examination of the Banks or otherwise, provide such information to the FDIC. To the extent that Turks and Caicos Islands law impedes the Banks' ability to obtain such information or to provide any information to the FDIC, the Banks and Dirigo shall cooperate with the FDIC in attempts to obtain any third party waivers or consents that would permit FDIC access to such information under Turks and Caicos Islands law.

2. The Banks shall ensure that consent provisions that permit Dirigo to disclose to the FDIC all documents and information concerning customer relationships and accounts are included in appropriate and relevant documents and instruments governing Dirigo's customer relationships and accounts.

3. The Banks shall ensure that the reinsurance agreements entered into by Dirigo and its customers require Dirigo to comply with the reinsurance requirements of the United States. In addition, the Banks shall ensure that Dirigo maintains a duplicate set of records in the United States of its business activities. Further, the Banks shall ensure that Dirigo is audited annually and that it complies with standard United States insurance accounting practices, including the maintenance of appropriate reserves for insurance risks.

4. The consent granted herein is based on the facts, circumstances and commitments presented to the FDIC in connection with this request. The Banks shall notify the FDIC of any significant change in facts or circumstances. The FDIC's action is conditioned on its ability to alter, suspend, or withdraw its approval should any development be deemed to warrant such action.

5. All necessary and final approvals shall have been obtained from all appropriate state, federal, and foreign authorities.

6. If the proposed investments have not occurred within twelve months from the date of this approval, the consent granted herein shall expire at the end of the twelve-month period unless, in the interim, a request for an extension of time has been approved by the FDIC.

Dated at Washington, D.C., this day of 2001.

FEDERAL DEPOSIT INSURANCE CORPORATION

BY: ______________________________
Michael J. Zamorski
Acting Director
Division of Supervision



Last Updated 03/24/2011 Legal@fdic.gov