No. 40954 (Repeal and Reenact): Rule R590-70. Insurance Holding Companies

(Repeal and Reenact)

DAR File No.: 40954
Filed: 11/04/2016 04:05:48 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The rule change enhances the financial solvency monitoring of holding company impacts on insurers.

Summary of the rule or change:

The revised Utah Insurance Holding Company rule is aimed at assessing the "enterprise risk" within the entire insurance holding company system (including the risk caused by non-insurer affiliates) and determining the impact of such risk upon the solvency of insurers within the insurance group. To accomplish this goal, the revised model law enhances insurance regulators' authority to supervise the insurance group by mandating reporting of information regarding the solvency and risk of an insurer's noninsurer affiliates and allowing examination of such entities. Importantly, the NAIC Financial Regulation Standards and Accreditation Committee has determined that the adoption of certain revisions and significant elements of the revised model law and regulation is now required as part of the national accreditation standards for insurance departments, ensuring adoption nationwide.

Statutory or constitutional authorization for this rule:

• Section 31A-16-116
• Section 31A-2-201

Anticipated cost or savings to:

the state budget:

There will be no direct impact on the state budget. No new appropriation was requested or received as a result of this rule. The rule will require Utah Insurance Department financial analysts to perform approximately 80 hours of additional work per FTE per year on holding company analysis. However, this difference will be addressed by improving the efficiency and adjusting the emphasis of the analysis process.

local governments:

There will be no impact on local government because the rule does not address the domain of local government and no local government employees perform functions related to the holding company rule.

small businesses:

In general, there will be no impact on small businesses. In the case where a small business may be in the holding company structure of an insurance company, the small business may need to produce financial information related to the Utah Insurance Department's financial analysis of the insurance company's financial condition. The cost of compliance would generally be assumed by the insurance company itself and impacts to related small businesses will likely be incidental and not significant.

persons other than small businesses, businesses, or local governmental entities:

The rule applies only to regulated insurance companies and related companies within the insurance company's holding company structure.

Compliance costs for affected persons:

Insurance companies and their holding company organizations are already subject to costs associated with holding company insurance laws and regulations. These costs include providing various financial reports and answering questions from financial analysts in their annual and quarterly financial reviews; and providing documents to and answering questions from financial examiners every three to five years when a financial examination is performed. The impact of the rule depends on the financial condition of entities within the holding company structure. The rule requires the production by the insurer of a new enterprise risk report. The cost of producing the report should be minimal, especially for companies who already have enterprise risk processes. Otherwise, the level of the increased cost of compliance with the new sections of the rule is dependent on the level of complexity of the holding company structure and the financial condition of the holding company. In general, the additional costs should represent only a small incremental increase in the cost of compliance compared with the costs before the amended rule.

Comments by the department head on the fiscal impact the rule may have on businesses:

The fiscal impact that arises as a result of this rule will be negligible. The rule only requires additional reporting on the part of insurance holding companies and will result in no great deal of extra work on their part. In general, the additional costs should represent only a small incremental increase in the cost of compliance compared with the costs before the amended rule.

Todd E. Kiser, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Insurance
Administration
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Steve Gooch at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

01/03/2017

This rule may become effective on:

01/10/2017

Authorized by:

Steve Gooch, Information Specialist

RULE TEXT

R590. Insurance, Administration.

R590-70. Insurance Holding Companies.

[R590-70-1. Authority.

This rule is adopted pursuant to Section 31A-2-201, Utah Code Annotated, which authorizes rules to implement the Insurance Code.

 

R590-70-2. Definitions.

A. "Executive officer" means any individual charged with active management and control, in an executive capacity, including a president, vice president, treasurer, secretary, controller, and any other individual performing for a person, whether incorporated or unincorporated, functions corresponding to those performed by the foregoing officers.

B. "Ultimate controlling person" means that person within an insurance holding company system which is not controlled by any other person.

C. All other terms used herein shall have the same meanings prescribed in Section 31A-1-301 of the Utah Code.

 

R590-70-3. Acquisition of Control - Statement Filing.

A. A person required to file a statement pursuant to Section 31A-16-103 shall furnish the required information on Holding Company Form A, entitled "Statement Regarding the Acquisition of Control of or Merger with a Domestic Insurer."

B. The applicant shall promptly advise the commissioner of any changes in the information so furnished arising subsequent to the date upon which such information was furnished but prior to the commissioner's disposition of the application.

 

R590-70-4. Registration of Insurers - Statement Filing.

A. An insurer required to file a statement pursuant to Section 31A-16-105 U.C.A., shall furnish the required information on Holding Company Form B, entitled "Insurance Holding Company System Registration Statement."

B. An amendment to Holding Company Form B shall be filed within 15 days after the end of any month in which the following occurs:

1. There is a change in the control of the registrant, in which case the entire form shall be made current;

2. There is a material change in the information given in Item 5 or Item 6 of the form, in which case the respective item shall be made current;

C. An amendment to Holding Company Form B shall be filed by May 1 of each year. Such amendment shall make current all information in Holding Company Form B.

 

R590-70-5. Alternative and Consolidated Registrations.

A. Any authorized insurer may file a registration statement on behalf of any affiliated insurer or insurers which are required to register under Section 31A-16-105 U.C.A. A registration statement may include information regarding any insurer to the insurance holding company system even if such insurer is not authorized to do business in this State. In lieu of filing a registration statement on Holding Company Form B, the authorized insurer may file a copy of the registration statement or similar report which it is required to file in its State of domicile, provided:

1. the statement or report contains substantially similar information required to be furnished on Holding Company Form B; and

2. the filing insurer is the principal insurance company in the insurance holding company system.

B. The question of whether the filing insurer is the principal insurance company in the insurance holding company system is a question of fact and an insurer filing a registration statement or report in lieu of Holding Company Form B on behalf of an affiliated insurer, shall set forth a simple statement of facts which will substantiate the filing insurer's claim that it, in fact, is the principal insurer in the insurance holding company system.

C. With the prior approval of the commissioner, an unauthorized insurer may follow any of the procedures which could be done by an authorized insurer under paragraph (a) above.

 

R590-70-6. Disclaimers and Termination of Registration.

A disclaimer of affiliation pursuant to Section 31A-16-105(10) U.C.A., or a request for termination of registration pursuant to Section 31A-16-105(6) U.C.A., claiming that a person does not, or will not upon the taking of some proposed action, control any other person (hereinafter referred to as the "subject") shall contain the following information:

A. the number of authorized, issued and outstanding voting securities of the subject;

B. with respect to the person whose control is denied and all affiliates of such person:

1. The number and percentage of shares of the subject's voting securities which are held of record or known to be beneficially owned, and the number of such shares concerning which there is a right to acquire, directly or indirectly,

2. Information as to all transactions in any voting securities of the subject which were effected during the past six months by such persons.

C. All material relationships and bases for affiliation between the subject and the person whose control is denied and all affiliates of such person.

D. A statement explaining why such person should not be considered to control the subject.

 

R590-70-7. Extraordinary Dividends and Other Distributions.

Requests for approval of extraordinary dividends or any other extraordinary distribution shall include the following:

A. the date established for payment of the dividend;

B. a statement as to whether the dividend is to be in cash or other property and, if in property, the fair market value of such property together with an explanation of the basis for valuation;

C. the amounts and dates of dividends paid in the last 12 month period (including the date proposed for payment of the dividend for which approval is sought);

D. a balance sheet and statement of income for the period intervening from the last annual statement filed with the commissioner and the end of the month preceding the month in which the request for dividend approval is submitted;

E. a brief statement as to the effect of the proposed dividend upon the insurer's surplus and the reasonableness of surplus in relation to the insurer's outstanding liabilities and the adequacy of surplus relative to the insurer's financial needs.

 

R590-70-8. Forms - General Requirements.

A. Forms A, B, C, and D are intended to be guides in the preparation of the statements required by Sections 31A-16-103, 31A-16-105, and 31A-16-106. They are not intended to be blank forms which are to be filled in. These statements filed shall contain the numbers and captions of all items, but the text of the items may be omitted provided the answers thereto are prepared in such a manner as to indicate clearly the scope and coverage of the items. All instructions, whether appearing under the items of the form or elsewhere therein, are to be omitted. Unless expressly provided otherwise, if any item is inapplicable or the answer thereto is in the negative, an appropriate statement to that effect shall be made.

B. Three complete copies of each statement including exhibits and all other papers and documents filed as a part thereof, shall be filed with the commissioner by personal delivery or mail addressed to: Insurance Commissioner of the State of Utah. A copy of Form C shall be filed in each state in which an insurer is authorized to do business, if the commissioner of that state has notified the insurer of its request in writing, in which case the insurer has 14 days from receipt of the notice to file such form. At least one of the copies shall be manually signed in the manner prescribed on the form. Unsigned copies shall be conformed. If the signature of any person is affixed pursuant to a power of attorney or other similar authority, a copy of such power of attorney or other authority shall also be filed with the statement.

C. Statements should be prepared on paper 8 1/2"x 11" in size and preferably bound at the top or the top left-hand corner. Exhibits and financial statements, unless specifically prepared for the filing, may be submitted in their original size. All copies of any statement, financial statements, or exhibits shall be clear, easily readable and suitable for photocopying. Debits in credit categories and credits in debit categories shall be designated so as to be clearly distinguishable as such on photocopies. Statements shall be in the English language and monetary values shall be stated in United States currency. If any exhibit or other paper or document filed with the statement is in a foreign language, it shall be accompanied by a translation into the English language and any monetary value shown in a foreign currency normally shall be converted into United States currency.

D. Forms A, B, C, and D can be obtained from the Utah State Insurance Department.

 

R590-70-9. Forms - Incorporation by Reference, Summaries and Omissions.

A. Information required by any item of Form A, Form B or Form D may be incorporated by reference in answer or partial answer to any other item. Information contained in any financial statement, annual report, proxy statement, statement filed with a governmental authority, or any other document may be incorporated by reference in answer or partial answer to any item of Form A, Form B or Form D provided such document or paper is filed as an exhibit to the statement. Excerpts of documents may be filed as exhibits if the documents are extensive. Documents currently on file with the commissioner which were filed within three years need not be attached as exhibits. References to information contained in exhibits or in documents already on file shall clearly identify the material and shall specifically indicate that such material is to be incorporated by reference in answer to the item. Matter shall not be incorporated by reference in any case where such incorporation would render the statement incomplete, unclear or confusing.

B. Where an item requires a summary or outline of the provisions of any document, only a brief statement shall be made as to the pertinent provisions of the document. In addition to such statement, the summary or outline may incorporate by reference particular parts of any exhibit or document currently on file with the commissioner which was filed within three years and may be qualified in its entirety by such reference. In any case where two or more documents required to be filed as exhibits are substantially identical in all material respects except as to the parties thereto, the dates of execution, or other details, a copy of only one of such documents need be filed with a schedule identifying the omitted documents and setting forth the material details in which such documents differ from the documents a copy of which is filed.

 

R590-70-10. Forms-Information Unknown or Unavailable and Extension of Time to Furnish.

A. Information required need be given only insofar as it is known or reasonably available to the person filing the statement. If any required information is unknown and not reasonably available to the person filing, either because the obtaining thereof would involve unreasonable effort or expense, or because it rests peculiarly within the knowledge of another person not affiliated with the person filing, the information may be omitted, subject to the following conditions:

(1) The person filing shall give such information on the subject as it possesses or can acquire without unreasonable effort or expense, together with the sources thereof; and

(2) The person filing shall include a statement either showing that unreasonable effort or expense would be involved or indicating the absence of any affiliation with the person within whose knowledge the information rests and stating the result of a request made to such person for the information.

B. If it is impractical to furnish any required information, document or report at the time it is required to be filed, there may be filed with the commissioner as a separate document:

(1) identifying the information, document or report in question;

(2) stating why the filing thereof at the time required is impractical; and

(3) requesting an extension of time for filing the information, document or report to a specified date. The request for extension shall be deemed granted unless the commissioner within 60 days after receipt thereof enters an order denying the request.

 

R590-70-11. Forms - Additional Information and Exhibits.

In addition to the information expressly required to be included in Form A, Form B, Form C and Form D, there shall be added such further material information, if any, as may be necessary to make the information contained therein not misleading. The person filing may also file such exhibits as it may desire in addition to those expressly required by the statement. Such exhibits shall be so marked as to indicate clearly the subject matters to which they refer. Changes to Forms A, B, C or D shall include on the top of the cover page the phrase: "Change No. (insert number) to" and shall indicate the date of the change and not the date of the original filing.

 

R590-70-12. Summary of Registration - Statement Filing.

An insurer required to file an annual registration statement pursuant to Section 31A-16-105, Utah Code is also required to furnish information required on Form C, hereby made a part of these regulations. An insurer shall file a copy of Form C in each state in which the insurer is authorized to do business, if requested by the commissioner of that state.

 

R590-70-13. Separability.

If any provision of this rule or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the rule and the application of such provision to other persons or circumstances shall not be affected thereby.]

R590-70-1. Authority.

This rule is adopted pursuant to:

(1) Section 31A-2-201, which authorizes the commissioner to make rules to implement the Insurance Code; and

(2) Section 31A-16-116, which authorizes the commissioner to make rules pertaining to an insurer subject to Title 31A, Chapter 16.

 

R590-70-2. Purpose.

The purpose of this regulation is to set forth rules and procedural requirements which the commissioner deems necessary to carry out the provisions of the National Association of Insurance Commissioners, NAIC, Insurance Holding Company System Regulatory Act and Sections 31A-16-101 through 31A-16-119, hereinafter referred to as "the Act". The information called for by these regulations is hereby declared to be necessary and appropriate in the public interest and for the protection of the policyholders in the State of Utah.

 

R590-70-3. Definitions.

The definitions in Section 31A-1-301 and Title 31A, Part 16 apply to this rule.

(1) "Executive officer" means chief executive officer, chief operating officer, chief financial officer, treasurer, secretary, controller, and any other individual performing functions corresponding to those performed by the foregoing officers under whatever title.

(2) "Ultimate controlling person" means that person which is not controlled by any other person.

 

R590-70-4. Forms -- General Requirements.

(1)(a) Form A, Form B, Form C, Form D, Form E and Form F are intended to be guides in the preparation of the statements required by Sections 31A-16-103, 31A-16-105, and 31A-16-106.

(b) They are not intended to be blank forms which are to be filled in.

(c) The statements filed shall contain the numbers and captions of all items, but the text of the items may be omitted provided the answers thereto are prepared in such a manner as to indicate clearly the scope and coverage of the items.

(d) All instructions, whether appearing under the items of the form or elsewhere therein, are to be omitted.

(e) Unless expressly provided otherwise, if any item is inapplicable or the answer thereto is in the negative, an appropriate statement to that effect shall be made.

(2)(a) Each statement including exhibits and all other papers and documents filed as a part thereof, shall be filed with the commissioner in electronic form by secure means.

(b) Each statement shall be signed in the manner prescribed on the form. If the signature of any person is affixed pursuant to a power of attorney or other similar authority, a copy of such power of attorney or other authority shall also be filed with the statement.

(3) If an applicant requests a hearing on a consolidated basis under Subsection 31A-16-103(10), in addition to filing the Form A with the commissioner, the applicant shall file a copy of Form A with the NAIC in electronic form.

(4)(a) Statements should be prepared electronically.

(b) Statements shall be easily readable and suitable for review and reproduction.

(c) Debits in credit categories and credits in debit categories shall be designated so as to be clearly distinguishable.

(d) Statements shall be in the English language. Monetary values shall be stated in United States currency. If any exhibit or other document filed with the statement is in a foreign language, it shall be accompanied by a translation into the English language and any monetary value shown in a foreign currency normally shall be converted into United States currency.

(5) Forms A, B, C, D, E, and F can be obtained from the Utah Insurance Department's website at www.insurance.utah.gov.

 

R590-70-5. Forms -- Incorporation by Reference, Summaries and Omissions.

(1)(a) Information required by any item of Form A, Form B, Form D, Form E or Form F may be incorporated by reference in answer or partial answer to any other item.

(b) Information contained in any financial statement, annual report, proxy statement, statement filed with a governmental authority, or any other document may be incorporated by reference in answer or partial answer to any item of Form A, Form B, Form D, Form E or Form F, provided the document is filed as an exhibit to the statement.

(c) Excerpts of documents may be filed as exhibits if the documents are extensive.

(d) Documents currently on file with the Utah Insurance Department which were filed within three (3) years need not be attached as exhibits. References to information contained in exhibits or in documents already on file shall clearly identify the material and shall specifically indicate that such material is to be incorporated by reference in answer to the item. Matter shall not be incorporated by reference in any case where the incorporation would render the statement incomplete, unclear or confusing.

(2)(a) Where an item requires a summary or outline of the provisions of any document, only a brief statement shall be made as to the pertinent provisions of the document. In addition to the statement, the summary or outline may incorporate by reference particular parts of any exhibit or document currently on file with the commissioner which was filed within three years and may be qualified in its entirety by such reference.

(b) In any case where two or more documents required to be filed as exhibits are substantially identical in all material respects, except as to the parties thereto, the dates of execution, or other details, a copy of only one of the documents need be filed with a schedule identifying the omitted documents and setting forth the material details in which the documents differ from the documents, a copy of which is filed.

 

R590-70-6. Forms -- Information Unknown or Unavailable and Extension of Time to Furnish.

(1) If it is impractical to furnish any required information, document or report at the time it is required to be filed, there shall be filed with the commissioner a separate document:

(a) identifying the information, document or report in question;

(b) stating why the filing thereof at the time required is impractical; and

(c) requesting an extension of time for filing the information, document or report to a specified date.

(2) The request for extension shall be deemed granted unless the commissioner within 60 days after receipt thereof enters an order denying the request.

 

R590-70-7. Forms -- Additional Information and Exhibits.

(1) In addition to the information expressly required to be included in Form A, Form B, Form C, Form D, Form E and Form F, the commissioner may request such further material information, if any, as may be necessary to make the information contained therein not misleading.

(2) The person filing may also file such exhibits as it may desire in addition to those expressly required by the statement. The exhibits shall be so marked as to indicate clearly the subject matters to which they refer.

(3) Changes to Form A, Form B, Form C, Form D, Form E and Form F shall include on the top of the cover page the phrase: "Change No. (insert number) to" and shall indicate the date of the change and not the date of the original filing.

 

R590-70-8. Subsidiaries of Domestic Insurers.

The authority to invest in subsidiaries under Subsection 31A-16-102.5(2) is in addition to any authority to invest in subsidiaries which may be contained in any other provision of Title 31A.

 

R590-70-9. Acquisition of Control -- Statement Filing (Form A).

(1) A person required to file a statement pursuant to Section 31A-16-103, shall furnish the required information on Form A.

(2) Such person shall also furnish the required information on Form E, as described in R590-70-13.

 

R590-70-10. Amendments to Form A.

The applicant shall promptly advise the commissioner of any changes in the information furnished on Form A arising subsequent to the date upon which the information was furnished but prior to the commissioner's disposition of the application.

 

R590-70-11. Acquisition of Section 31A-16-103(1)(f)(i) Insurers.

(1) If the person being acquired is deemed to be a "domestic insurer" solely because of the provisions of Subsection 31A-16-103(1)(f)(i), the name of the domestic insurer on the cover page should be indicated as "ABC Insurance Company, a subsidiary of XYZ Holding Company."

(2) Where a Subsection 31A-16-103(1)(f)(i) insurer is being acquired, references to "the insurer" contained in Form A shall refer to both the domestic subsidiary insurer and the person being acquired.

 

R590-70-12. Pre-acquisition Notification (Form E).

(1) If a domestic insurer, including any person controlling a domestic insurer, is proposing a merger or acquisition pursuant to Subsection 31A-16-103(1), that person shall file a pre-acquisition notification form, Form E.

(2) If a non-domiciliary insurer licensed to do business in this state is proposing a merger or acquisition pursuant to Section 31A-16-104.5, that person shall file a pre-acquisition notification form, Form E. No pre-acquisition notification form need be filed if the acquisition is beyond the scope of Section 31A-16-104.5 as set forth in Subsection 31A-16-104.5(2)(b).

(3) In addition to the information required by Form E, the commissioner may wish to require an expert opinion as to the competitive impact of the proposed acquisition.

 

R590-70-13. Annual Registration of Insurers -- Statement Filing (Form B).

An insurer required to file an annual registration statement pursuant to Section 31A-16-105 shall furnish the required information on Form B.

 

R590-70-14. Summary of Registration -- Statement Filing (Form C).

An insurer required to file an annual registration statement pursuant to Section 31A-16-105 is also required to furnish information required on Form C.

 

R590-70-15. Amendments to Form B.

(1) An amendment to Form B shall be filed within fifteen days after the end of any month in which there is a material change to the information provided in the annual registration statement.

(2) Amendments shall be filed in the Form B format with only those items which are being amended reported. Each amendment shall include at the top of the cover page "Amendment No. (insert number) to Form B for (insert year)" and shall indicate the date of the change and not the date of the original filings.

 

R590-70-16. Alternative and Consolidated Registrations.

(1)(a) Any authorized insurer may file a registration statement on behalf of any affiliated insurer or insurers which are required to register under Section 31A-16-105. A registration statement may include information not required by the Act regarding any insurer in the insurance holding company system even if the insurer is not authorized to do business in this state.

(b) In lieu of filing a registration statement on Form B, the authorized insurer may file a copy of the registration statement or similar report which it is required to file in its state of domicile, provided:

(i) the statement or report contains substantially similar information required to be furnished on Form B; and

(ii) the filing insurer is the principal insurance company in the insurance holding company system.

(2) The question of whether the filing insurer is the principal insurance company in the insurance holding company system is a question of fact and an insurer filing a registration statement or report in lieu of Form B on behalf of an affiliated insurer, shall set forth a brief statement of facts which will substantiate the filing insurer's claim that it, in fact, is the principal insurer in the insurance holding company system.

(3) With the prior approval of the commissioner, an unauthorized insurer may follow any of the procedures which could be done by an authorized insurer under R590-70-16(1).

(4) Any insurer may take advantage of the provisions of Subsections 31A-16-105(8) or 31A-16-105(9) without obtaining the prior approval of the commissioner. The commissioner, however, reserves the right to require individual filings if the commissioner deems such filings necessary in the interest of clarity, ease of administration, or the public good.

 

R590-70-17. Disclaimers and Termination of Registration.

(1) A disclaimer of affiliation pursuant or a request for termination of registration claiming that a person does not, or will not upon the taking of some proposed action, control any other person, hereinafter referred to as the "subject", shall contain the following information:

(a) the number of authorized, issued and outstanding voting securities of the subject;

(b) with respect to the person whose control is denied and all affiliates of such person:

(i) the number and percentage of shares of the subject's voting securities which are held of record or known to be beneficially owned, and the number of such shares concerning which there is a right to acquire, directly or indirectly; and

(ii) information as to all transactions in any voting securities of the subject which were effected during the past six months by such persons.

(c) all material relationships and bases for affiliation between the subject and the person whose control is denied and all affiliates of such person; and

(d) a statement explaining why such person should not be considered to control the subject; and

(2) A request for termination of registration shall be deemed to have been granted unless the commissioner, within thirty days after receipt of the request, notifies the registrant otherwise.

 

R590-70-18. Transactions Subject to Prior Notice -- Notice Filing.

(1) An insurer required to give notice of a proposed transaction pursuant to Section 31A-16-106 shall furnish the required information on Form D.

(2) Agreements for cost sharing services and management services shall at a minimum and as applicable:

(a) identify the person providing services and the nature of such services;

(b) set forth the methods to allocate costs;

(c) require timely settlement, not less frequently than on a quarterly basis, and in compliance with the requirements in the Accounting Practices and Procedures Manual;

(d) prohibit advancement of funds by the insurer to the affiliate except to pay for services defined in the agreement;

(e) state that the insurer will maintain oversight for functions provided to the insurer by the affiliate and that the insurer will monitor services annually for quality assurance;

(f) define books and records of the insurer to include all books and records developed or maintained under or related to the agreement;

(g) specify that all books and records of the insurer are and remain the property of the insurer and are subject to control of the insurer;

(h) state that all funds and invested assets of the insurer are the exclusive property of the insurer, held for the benefit of the insurer and are subject to the control of the insurer;

(i) include standards for termination of the agreement with and without cause;

(j) include provisions for indemnification of the insurer in the event of gross negligence or willful misconduct on the part of the affiliate providing the services;

(k) specify that, if the insurer is placed in receivership or seized by the commissioner under Title 31, Chapter 27a:

(i) all of the rights of the insurer under the agreement extend to the receiver or commissioner; and,

(ii) all books and records will immediately be made available to the receiver or the commissioner, and shall be turned over to the receiver or commissioner immediately upon the receiver or the commissioner's request;

(l) specify that the affiliate has no automatic right to terminate the agreement if the insurer is placed in receivership pursuant to Title 31, Chapter 27a; and

(m) specify that the affiliate will continue to maintain any systems, programs, or other infrastructure notwithstanding a seizure by the commissioner under Title 31, Chapter 27a, and will make them available to the receiver, for so long as the affiliate continues to receive timely payment for services rendered.

 

R590-70-19. Enterprise Risk Report.

The ultimate controlling person of an insurer required to file an enterprise risk report pursuant to Subsection 31A-16-105(12) shall furnish the required information on Form F.

 

R590-70-20. Extraordinary Dividends and Other Distributions.

(1) Requests for approval of extraordinary dividends or any other extraordinary distribution to shareholders shall include the following:

(a) the amount of proposed dividend;

(b) the date established for payment of the dividend;

(c) a statement as to whether the dividend is to be in cash or other property and if in property, a description thereof, its cost, and its fair market value together with an explanation of the basis for valuation;

(d) a copy of the calculations determining that the proposed dividend is extraordinary. The work paper shall include the following information:

(i) the amounts, date and form of payment of all dividends or distributions, including regular dividends but excluding distributions of the insurer's own securities, paid within the period of twelve consecutive months ending on the date fixed for payment of the proposed dividend for which approval is sought and commencing on the day after the same day of the same month in the last preceding year;

(ii) surplus as regards policyholders, total capital and surplus, as of the 31st day of December next preceding;

(iii) if the insurer is a life insurer, the net gain from operations for the 12-month period ending the 31st day of December next preceding;

(iv) if the insurer is not a life insurer, the net income less realized capital gains for the 12-month period ending the 31st day of December next preceding and the two preceding 12-month periods; and

(v) if the insurer is not a life insurer, the dividends paid to stockholders excluding distributions of the insurer's own securities in the preceding two calendar years;

(e) a balance sheet and statement of income for the period intervening from the last annual statement filed with the commissioner and the end of the month preceding the month in which the request for dividend approval is submitted; and

(f) a brief statement as to the effect of the proposed dividend upon the insurer's surplus and reasonableness of surplus in relation to the insurer's outstanding liabilities and the adequacy of surplus relative to the insurer's financial needs.

(2) Subject to Subsection 31A-16-106(2), each registered insurer shall report to the commissioner all dividends and other distributions to shareholders within fifteen business days following the declaration thereof, including the same information required by R590-70-20(1)(d).

 

R590-70-21. Adequacy of Surplus.

(1) The factors set forth in Subsection 31A-16-106(4) are not intended to be an exhaustive list.

(2) In determining the adequacy and reasonableness of an insurer's surplus no single factor is necessarily controlling. The commissioner instead will consider the net effect of all of these factors plus other factors bearing on the financial condition of the insurer.

(3) In comparing the surplus maintained by other insurers, the commissioner will consider the extent to which each of these factors varies from company to company and in determining the quality and liquidity of investments in subsidiaries, the commissioner will consider the individual subsidiary and may discount or disallow its valuation to the extent that the individual investments so warrant.

 

R590-70-22. Severability.

If any provision of this rule or its application to any person or situation is held to be invalid, that invalidity shall not affect any other provision or application of this rule which can be given effect without the invalid provision or application, and to this end the provisions of this rule are declared to be severable.

 

KEY: insurance law

Date of Enactment or Last Substantive Amendment: [1992]2017

Notice of Continuation: January 10, 2012

Authorizing, and Implemented or Interpreted Law: 31A-2-201

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