STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 5804

October 24, 1980

INSURANCE:

Political contributions by parent of a domestic insurance company

POLITICAL CAMPAIGNS:

Campaign contributions and expenditures act

A parent corporation owning a subsidiary domestic insurance corporation doing business in Michigan as, well as other subidiary insurance companies, and which also engages in other non-insurance business of a substantial nature in that all its insurance subsidiaries contributed only 10 per cent of the parent corporation's total net income for the last fiscal year is not an insurer within the prohibitions contained in 1956 PA 218, Sec. 2074, and may make contributions for the political purpose of the qualification, passage or defeat of any ballot question and may establish a separate, segregated political fund for political purposes as authorized by 1976 PA 388, Secs. 54 and 55.

Mr. William F. McLaughlin

Director

Department of Commerce

Law Building

Lansing, Michigan

You have requested my opinion on the following question:

Specifically, 1956 PA 218, Sec. 2074, supra, provides, in pertinent part, that:

OAG, 1979-1980, No 5695, p 743 (April 28, 1980), considered the question of whether the underscored portion of Section 2074, supra, was an unconstitutional limitation on the political activities of insurers doing business within the State of Michigan. The opinion considered (a) the Michigan Supreme Court decision in Advisory Opinion on Constitutionality of 1975 PA 227 (Questions 2-10), 396 Mich 465; 242 NW2d 3 (1976) which held unconstitutional a section of the former Political Reform Act which prohibited Michigan corporations from contributing to campaigns influencing the qualification, passage or defeat of ballot questions; (b) the United States Supreme Court decision in First National Bank of Boston v Bellotti, 435 US 765; 98 S Ct 1407; 55 L Ed 2d 707, reh den, 438 US 907; 98 S Ct 3126; 58 L Ed 2d 1150 (1978), which held a comparable provision in the Massachusetts law prohibiting corporations from making similar campaign contributions as a constitutional denial of the First Amendment rights of a corporation; and (c) a prior opinion of this office, OAG, 1975-1976, No 5123, p 629 (September 30, 1976), determining that a former provision of the Michigan Election Law, 1954 PA 116, Sec. 919; MCLA 168.919; MSA 6.1919, which prohibited corporations from making political contributions in support of or in opposition to a ballot question was a violation of the freedoms of expression and assembly granted by Const 1963, art 1, Secs. 1, 2, 3 and 5. OAG, 1979-1980, No 5695, p 743 (April 28, 1980), concluded that insurers doing business in the State of Michigan have the same protected rights to freedom of speech as do all other corporations doing business in the State of Michigan and found that the portion of Section 2074, supra, which prohibited contributions by insurers which would influence or affect the vote on ballot questions was unconstitutional.

Therefore, it must be determined whether the parent corporation is considered to be an insurer doing business within the State of Michigan before determining the applicability of the remaining statutory prohibitions.

The Insurance Code of 1956, 1956 PA 218, Sec. 106; MCLA 500.106; MSA 24.1106, defines an insurer as:

The supporting information submitted with your request and subsequent information provided to this office indicates that the parent corporation in question is authorized to do business in the State of Michigan but is not itself engaged in the insurance business either in Michigan or elsewhere. Furthermore, the information supplied reveals that its subsidiary, which is engaged in the business of selling insurance within the State of Michigan, is separately incorporated and its internal operations and management are separate and distinct from those of the parent corporation. In addition, the parent corporation's insurance subsidiaries provided 10 percent of its total income in 1979. Considering this information in light of the definition found in Section 106, supra, it is my opinion that the parent corporation described in your request is not an entity included within the definition of insurer found in Section 106, supra.

Thus, having concluded that the parent is not an insurer as defined by the Insurance Code of 1956, it is my opinion that the parent corporation is not bound by the remaining prohibitions found in Section 2074, supra. It should be noted, however, that the parent corporation you describe is bound by the requirements of the Campaign Finance Act, 1976 PA 338, Secs. 54 and 55; MCLA 169.254, 169.255; MSA 4.1703(54), 4.1703(55). Section 54 permits a corporation to make a contribution for a political purpose when that purpose is for the qualification, passage, or defeat of a ballot question, and Section 55 permits a corporation to establish a separate segregated fund for which funds may be solicited from very specific sources and used for very specific political purposes. See OAG, 1979-1980, No. 5695, p 743 (April 28, 1980).

Frank J. Kelley