REPORT ON ORGANIZATION
OF
OSCAR INSURANCE CORPORATION
AS OF
JUNE 25, 2013
DATE OF REPORT JULY 5, 2013
EXAMINER EDOUARD MEDINA
AndrewM.Cuomo
Governor
BenjaminM.Lawsky
Superintendent
July 5, 2013
Honorable Benjamin M. Lawsky
Superintendent of Financial Services
Albany, New York 12257
Sir:
Pursuant to the instructions contained in Appointment Number 31011, dated June 21, 2013,
and attached hereto, I have made an examination “on organization” of Oscar Insurance Corporation
and the following report thereon is respectfully submitted.
The examination was conducted at the office of Oscar Insurance Corporation located at 295
Lafayette Street, New York, NY 10012.
Wherever the designations the “Company” or “Oscar” appear herein, without qualification,
they should be understood to indicate Oscar Insurance Corporation.
Wherever the designation the “Department” appears herein, without qualification, it should
be understood to indicate the New York State Department of Financial Services.
ONESTATESTREET,NEWYORK,NY10004|WWW.DFS.NY.GOV
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1. ORGANIZATION
Oscar Insurance Corporation filed a Uniform Certificate of Authority Application (”UCAA”)
for licensure as a New York Insurance Law Article 42 Accident and Health insurer with the New
York State Department of Financial Services on December 12, 2012. Subsequently, on January 31,
2013, Oscar was incorporated, pursuant to the Company’s submission of a Declaration of Intention
and Charter (“Charter”) to the New York State Department of Financial Services. Such Charter was
approved by the Department, pursuant to Section 1201 of the New York Insurance Law, and placed
on file on the same date.
The Company’s by-laws stipulate that the number of directors, which shall constitute the
whole board of directors, shall be fixed from time to time by the resolution of the Shareholders,
consistent with the provisions of the Charter. Oscar’s Charter states that the corporation shall consist
of not less than seven (7) or more than ten (10) members. It should be noted that as of the
examination date all the directors have a business affiliation with either Oscar or Thrive Capital
Management, LLC. Thrive Capital Management, LLC, as well as Thrive Partners III GP, LLC and
Thrive Capital Partners III, L.P., are affiliates of Oscar. As of the date of this examination, the seven
(7) members of the board of directors were as follows:
Name and Residence Principal Business Affiliation
William Gaybrick
Brooklyn, NY
Thrive Capital Management, LLC
David Henderson
Loudonville, NY
Oscar Insurance Corporation
Chief Operating Officer
President of Insurance
Joshua Kushner
New York, NY
Thrive Capital Management, LLC
Managing Partner
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Name and Residence Principal Business Affiliation
Sina Kevin Nazemi Oscar Insurance Corporation
New York, NY Co-Chief Executive Officer
Christopher Paik Thrive Capital Management, LLC
New York, NY
Mario Schlosser Oscar Insurance Corporation
New York, NY Co-Chief Executive Officer
Jared Weinstein Thrive Capital Management, LLC
New York, NY Chief of Operations
The principal officers of Oscar included the following individuals as of the date of this
examination:
Name Title
Sina Kevin Nazemi Co-Chief Executive Officer
Mario Schlosser Co-Chief Executive Officer
David Henderson Chief Operating Officer and President of
Insurance
Steven Kessler Chief Financial Officer
Aran Ron, MD Chief Medical Officer
2. SCOPE OF EXAMINATION
The examination was comprised of a verification of the issuance of the Company’s capital
stock, the receipt of capital and surplus funds, and the determination of assets and liabilities. The
records examined included the Declaration of Intention and Charter, By-laws, Board of directors’
minutes, Stockholders’ register, and Holding Company Organizational Chart. In addition, an
affidavit, appended hereto, was obtained from two officers of the Company, indicating that the
transactions noted in this report were bona fide.
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3. CAPITALIZATION AND SUBSCRIPTION
The Company is a wholly-owned subsidiary of Mulberry Health Inc. (“Mulberry”), a
Delaware Corporation. On February 19, 2013, the Company issued to the parent company
20,000,000 shares of $.01 par value per share capital stock for a price of $.015 per share, resulting in
an aggregate purchase price totaling $300,000, which was infused to establish a statutory investment
account in the name of the Superintendent of Financial Services.
4. BALANCE SHEET
The following balance sheet sets forth the Company’s financial condition as of the date of
this examination:
Assets
Cash $35,700,000
Bonds (U.S. Treasury Bills) 299,802
Money market fund 198
Total assets $36,000,000
Liabilities $ 0
Capital and Surplus
Common capital stock $ 200,000
Gross paid in and contributed surplus 35,800,000
Unassigned surplus 0
Total capital and surplus $36,000,000
Total liabilities, capital and surplus $36,000,000
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5. AUTHORIZED POWERS AND MINIMUM CAPITAL REQUIRED
The Company is authorized pursuant to its Charter to transact the kind of insurance as
described in the following numbered paragraph of Section 1113(a) of the New York Insurance Law:
Paragraph Line of Business
(3)(i) Accident and health insurance
The Company’s Charter indicates that the corporate purpose of Oscar is to carry on any
business whatsoever that an insurance company licensed in New York State may deem proper or
convenient in connection with any of the foregoing purposes or otherwise, or that it may deem
calculated, directly or indirectly, to improve the interests of the Company.
The Company’s minimum financial requirements for the above mentioned line of business,
as set forth in Sections 4204 and 4206 of the New York Insurance Law (“NYIL”), are as follows:
Initial surplus $300,000
Surplus to be maintained $200,000
Deposit $200,000
Capital $200,000
Minimum capital investments $200,000
In accordance with the provisions of Section 1314 of the New York Insurance Law, the
Company, as of June 20, 2013, had placed into a bank account at First Republic Bank, in the name
of the Superintendent of Financial Services, qualifying U.S Treasury bills with a book value of
$299,802.49, in satisfaction of the $200,000 deposit required pursuant to Section 4206 of the New
York Insurance Law.
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In addition to the $300,000 initial surplus required by Section 4204 of the NYIL, an
additional $44,700,000 of capitalization is required based on the Company’s submitted business plan
and financial projections. $35,700,000 was to be invested prior to licensure, and another $9,000,000
must be invested by September 30, 2013, or the Company will not be allowed to sell or issue any
insurance policies (until the $9 million has been invested, and confirmed by the Department). The
Department has capitalization commitments from Thrive Capital Partners III, L.P., Mulberry, and
Oscar regarding the $9 million investment requirement.
6. HOLDING COMPANY SYSTEM
Below is a chart of the holding company system applicable to the Company and its related
parties as of the examination date:
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Jared Kushner is the Principal of the Kushner Companies, a real estate organization, with a
principal business address of 666 5
th
Avenue, New York, NY 10103.
Joshua Kushner is a member and Managing Director of Thrive Partners III GP, LLC, with a
principal business address of 295 Lafayette Street, New York, NY 10012.
Jared Kushner and Joshua Kushner are deemed the ultimate controlling persons in Oscar’s
holding company system because they are the only members of Thrive Partners III GP, LLC, which
is the general partner in Thrive Capital Partners III, L.P.
Thrive Partners III GP, LLC (“Thrive GP”) is a venture capital fund manager formed on
August 15, 2012 and organized as a limited liability company under the laws of Delaware. The
principal executive offices are located at 295 Lafayette Street, New York, NY 10012.
Thrive Capital Partners III, L.P. (“Thrive LP”) is a venture capital fund formed on August
15, 2012 and organized as a limited partnership under the laws of Delaware. The principal executive
offices are located at 295 Lafayette Street, New York, NY 10012. Thrive LP has 66.37% of the
voting control of Mulberry.
Sina Kevin Nazemi is a Co-Chief Executive Officer of Oscar and Mulberry. His principal
business address is 295 Lafayette Street, New York, NY 10012. Mr. Nazemi has 12.69% of the
voting control of Mulberry.
Mario Schlosser is a Co-Chief Executive Officer of Oscar and Mulberry. His principal
business address is 295 Lafayette Street, New York, NY 10012. Mr. Schlosser has 14.22% of the
voting control of Mulberry
.
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General Catalyst Group VI, L.P. is a venture capital fund formed on December 9, 2011 and
organized as a limited partnership under the laws of Delaware. Its principal executive offices are
located at 20 University Road, Suite 450, Cambridge, Massachusetts 02138. General Catalyst Group
VI, L.P. has 2.60% of the voting control of Mulberry.
Mulberry Health Inc. is a Delaware corporation incorporated on October 25, 2012. Mulberry
operates as the direct parent of Oscar. Its principal offices are located at 295 Lafayette Street, New
York, NY 10012.
The Holding Company Organizational Chart notes in one box, “Various Limited Partners”
and in another, “Various Individuals and Entities”. Thrive GP is the general partner of Thrive LP,
thereby controlling it. Approximately 96% of the voting control by entities and specific individuals
over Mulberry has been identified above. Thus, the unidentified individuals and entities only have
approximately 4% of the voting control of Mulberry.
As of June 25, 2013, Oscar has neither management nor service agreements with any
affiliate.
7. CONCLUSION
Based upon the foregoing examination, it is concluded that pursuant to a stock purchase
agreement, the Company transferred all of its 20,000,000 shares of $0.01 par value per share capital
stock for a sale price of $.015 per share resulting in a total sales price of $300,000 for the purposes
of depositing it into an account in the name of the Superintendent of Financial Services in order to
meet its statutory deposit and minimum capitalization requirements. In addition, it is concluded that
an additional $35,700,000 has been infused into the Company by Mulberry, bringing its total
capitalization to $36,000,000 as of the examination date. An additional $9 million is to be infused
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into the Company by September 30, 2013. The Company will not be allowed to sell or issue any
insurance policies until the $9 million has been invested. This stipulation is pursuant to capitalization
commitments the Department received from Thrive Capital Partners III, L.P., Mulberry, and Oscar.
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Respectfully submitted,
_________/S/____________
Edouard Medina
Senior Insurance Examiner
STATE OF NEW YORK )
) SS.
)
COUNTY OF NEW YORK )
EDOUARD MEDINA, being duly sworn, deposes and says that the foregoing report submitted by
him is true to the best of his knowledge and belief.
_________/S/____________
Edouard Medina
Subscribed and sworn to before me
this __________ day of __________________ 2013
