[Federal Register Volume 68, Number 238 (Thursday, December 11, 2003)]
[Notices]
[Pages 69091-69092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-30700]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27771]


Filings Under the Public Utility Holding Company Act of 1935, as 
Amended (``Act'')

December 5, 2003.
    Notice is hereby given that the following filing(s) has/have been 
made with the Commission pursuant to provisions of the Act and rules 
promulgated under the Act. All interested persons are referred to the 
application(s) and/or declaration(s) for complete statements of the 
proposed transaction(s) summarized below. The application(s) and/or 
declaration(s) and any amendment(s) is/are available for public 
inspection through the Commission's Branch of Public Reference.
    Interested persons wishing to comment or request a hearing on the 
application(s) and/or declaration(s) should submit their views in 
writing by December 29, 2003, to the Secretary, Securities and Exchange 
Commission, Washington, DC 20549-0609, and serve a copy on the relevant 
applicant(s) and/or declarant(s) at the address(es) specified below. 
Proof of service (by affidavit or, in the case of an attorney at law, 
by certificate) should be filed with the request. Any request for 
hearing should identify specifically the issues of facts or law that 
are disputed. A person who so requests will be notified of any hearing, 
if ordered, and will receive a copy of any notice or order issued in 
the matter. After December 29, 2003, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

KeySpan Corporation, et al.

[70-9957]

    KeySpan Corporation (``KeySpan''), a registered holding company, 
and its subsidiary, KeySpan Insurance Company (``KIC'') (collectively, 
``Applicants''), One MetroTech Center, Brooklyn, New York 11201, have 
filed, under sections 9(a), 10, 12(b) and 13(b) of the Act and rules 45 
and 54 under the Act, a post-effective amendment to a previous 
application.
    Applicants ask to expand the authority granted to KeySpan by order 
dated April 24, 2003 (Holding Co. Act Release No. 27669) (``Captive 
Order''). In the Captive Order, the Commission authorized KeySpan to 
organize a subsidiary to engage in activities associated with a captive 
insurance company. In accordance with the Captive Order, KeySpan formed 
KIC to provide certain insurance services to KeySpan and its 
subsidiaries (``KeySpan System''). Applicants request authority for KIC 
to expand the insurance it provides to include property, boiler and 
machinery, and ``all risk'' insurance services for the KeySpan System.
    The Captive Order authorized KeySpan to organize a captive 
insurance company that would reinsure certain commercial insurance 
bought by the KeySpan System from commercial insurance companies. In 
particular, KIC is authorized to provide to the KeySpan System 
automobile liability, workers' compensation and general liability 
insurance coverage. In addition, KIC is authorized to provide general 
liability and workers' compensation insurance to its principal 
contractor under an Owner's Controlled Insurance Program (``OCIP''). 
The contractor provides

[[Page 69092]]

scheduled gas main construction and maintenance to the KeySpan System. 
Except for the general liability and workers' compensation insurance 
provided to the principal contractor under OCIP, KIC does not intend to 
extend or provide to any non-affiliated company any insurance services, 
unless otherwise expressly authorized by the Commission. Currently, KIC 
assumes the risk of the more predictable loss layer from the commercial 
insurers for automobile and general liability losses and for workers' 
compensation. Commercial insurance continues to be purchased for 
``unpredictable'' losses above the predictable loss layers for 
automobile and general liability and for workers' compensation from 
various commercial insurance companies. To the extent that KIC procures 
insurance at a lower cost than could be obtained through traditional 
insurers, the savings in the premiums flow through ratably to the 
KeySpan System companies through the operation of the allocation 
methodology used to establish premiums.
    Applicants propose that KIC offer property, boiler and machinery, 
and ``all risk'' insurance services to the KeySpan System. KeySpan 
currently insures these property-related risks through the traditional, 
commercial insurance market. It has various deductibles ranging from 
$100,000 on common structures to $2,500,000 on the KeySpan System's 
power generation units. It purchases limits up to $2 billion from the 
commercial insurance market. Due to the state of the commercial 
insurance market, KeySpan has not been able to obtain coverage below 
the minimum $100,000 deductible. KeySpan says that this has created a 
burden for some of the smaller KeySpan System companies that do not 
want to expose themselves to such a large self-insured retention.
    KIC could be utilized, Applicants state, to provide property-
related coverage with smaller self-insured retentions to those KeySpan 
System companies that do not have such a large capacity for risk. KIC 
would allocate premiums based on the property values at KeySpan System 
company locations down to a level of a $10,000 deductible. This added 
service would not increase costs to the KeySpan System because such 
costs are currently, and would continue to be, paid through operating 
expenses, Applicants state. There would be no additional staffing 
requirements for KeySpan System companies. To the extent that KIC can 
provide insurance at a lower cost than that which could be obtained 
through traditional insurers, the savings will continue to flow through 
ratably to the KeySpan System companies through the allocation 
methodology used to establish premiums.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 03-30700 Filed 12-10-03; 8:45 am]
BILLING CODE 8010-01-P