§16-14-11 - Adequacy of surplus.

§16-14-11 Adequacy of surplus.

         The factors set forth in section 431:11-106(d), HRS, are not intended to be an exhaustive list. In determining the adequacy and reasonableness of an insurer's surplus, no single factor is necessarily controlling. The commissioner shall consider the net effect of all of the factors, along with other factors bearing on the financial condition of the insurer. In comparing the surplus maintained by other insurers, the commissioner shall consider the extent to which each of these factors varies among insurers. In determining the quality and liquidity of investments in subsidiaries, the commissioner shall consider the individual sub sidiary and may discount or disallow its valuation to the extent warranted by individual investments.

        [Eff 3/14/94; ren §16-14-10; 10/15/16] (Auth: HRS §§431:2-201, 431:11-109) (Imp: HRS §431:11-106)

         Amendments to and compilation of chapter 16-14, Hawaii Administrative Rules, on the Summary page dated July 21, 2016, were adopted on July 21, 2016, following a public hearing held on July 21, 2016, after public notices were given in the Honolulu Star-Advertiser, Maui News, Hawaii Tribune-Herald, West Oahu Today, and The Garden Island on June 11, 2016.

         These rules shall take effect ten days after filing with the Office of the Lieutenant Governor.

/s/ Gordon I. Ito
GORDON I. ITO
Insurance Commissioner

         APPROVED AS TO FORM: Date 09/13/2016

/s/ Daniel Jacob
Deputy Attorney General

         APPROVED: Date 09/13/2016

/s/ Catherine P. Awakuni Colón
CATHERINE P. AWAKUNI COLÓN, Director
Commerce and Consumer Affairs

         APPROVED: Date 10/03/2016

/s/ David Y. Ige
DAVID Y. IGE, Governor
State o f Hawaii

10/05/2016

         FILED

FORM A
STATEMENT REGARDING THE ACQUISITION OF CONTROL OF OR
MERGER WITH A DOMESTIC INSURER
(Name of Domestic Insurer)
By
(Name of Acquiring Person (Applicant))
Filed with the Insurance Commissioner of the State of Hawaii
Dated: __________

         Name, title, address, and telephone number of individual to whom notices and correspondence concerning this statement should be addressed:

         ITEM 1. INSURER AND METHOD OF ACQUISITION

         State the name and address of the domestic insurer to which this application relates and a brief description of how control is to be acquired.

         ITEM 2. IDENTITY AND BACKGROUND OF THE APPLICANT

         (a) State the name and address of the applicant seeking to acquire control over the insurer.

         (b) If the applicant is not an individual, state the nature of its business operations for the past five years or for the period the applicant and any predecessors have been in existence if less than five years. Briefly describe the business which the applicant and its subsidiaries intend to do.

         (c) Furnish a chart clearly presenting the identities and the interrelationships among the applicant and all of its affiliates. Indicate in the chart the percentage of voting securities of each person which is owned or controlled by the applicant or by any other person. If control of any person is maintained other than by the ownership or control of voting securities, indicate the basis of control. As to each person specified in the chart, indicate the type of organization (e.g. corporation, trust, partnership) and the state or other jurisdiction of domicile. If court proceedings involving a reorganization or liquidation are pending with respect to any person, and set forth the title of the court, the nature of the proceedings, and the date when the proceedings commenced.

         ITEM 3. IDENTITY AND BACKGROUND OF INDIVIDUALS ASSOCIATED WITH THE APPLICANT

         On the biographical affidavit, include an independent third-party background check, and state the following information with respect to (1) the applicant if the applicant is an individual or (2) all persons who are directors, executive officers, or owners of ten per cent or more of the voting securities of the applicant if the applicant is not an individual.

         (a) Name and business address;

         (b) Current principal business activity, occupation, or employment including position and office held and the name, principal business, and address of any corporation or other organization in which the employment is carried on;

         (c) Material occupations, positions, offices, or employment during the last five years, giving the starting and ending dates of each and the name, principal business, and address of any business corporation or other organization in which each occupation, position, office, or employment was carried on. If any occupation, position, office, or employment required licensing by or registration with any federal, state, or municipal governmental agency, indicate that fact, the current status of the licensing or registration, and an explanation of any surrender, revocation, suspension, or disciplinary proceedings in connection therewith.

         (d) Whether or not the person has ever been convicted in a criminal proceeding, excluding minor traffic violations, during the last ten years and, if so, give the date, nature of conviction, name and location of court, and penalty imposed or other disposition of the case.

         ITEM 4. NATURE, SOURCE AND AMOUNT OF CONSIDERATION

         (a) Describe the nature, source, and amount of funds or other consideration used or to be used in effecting the merger or other acquisition of control. If any part of the funds or other consideration is borrowed or otherwise obtained for the purpose of acquiring, holding, or trading securities, furnish a description of the transaction, the names of the parties thereto, the relationship, if any, between the borrower and the lender, the amounts borrowed or to be borrowed, and copies of all agreements, promissory notes, and security arrangements relating thereto.

         (b) Explain the criteria used in determining the nature and amount of the consideration.

         (c) If the source of the consideration is a loan made in the lender's ordinary course of business and if the applicant wishes the identity of the lender to remain confidential, the applicant must make a specific request.

         ITEM 5. FUTURE PLANS OF INSURER

         Describe any plans or proposals which the applicant may have to declare an extraordinary dividend, liquidate the insurer, sell the insurer's assets to or merge the insurer with any person, or make any other material change in the insurer's business operations, corporate structure, or management.

         ITEM 6. VOTING SECURITIES TO BE ACQUIRED State the number of shares of the insurer's voting securities which the applicant, its affiliates, and any person listed in Item 3 plan to acquire, the terms of the offer, request, invitation, agreement, or acquisition, and the method by which the fairness of the proposal was arrived at.

         ITEM 7. OWNERSHIP OF VOTING SECURITIES

         State the amount of each class of any voting security of the insurer which is beneficially owned or concerning which there is a right to acquire beneficial ownership by the applicant, its affiliates, or any person listed in Item 3.

         ITEM 8. CONTRACTS, ARRANGEMENTS, OR UNDERSTANDINGS WITH RESPECT TO VOTING SECURITIES OF THE INSURER Give a full description of any contracts, arrangements, or understandings with respect to any voting security of the insurer in which the applicant, its affiliates, or any person listed in Item 3 is involved, including, but not limited to, transfer of any of securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. The description shall identify the persons with whom the contracts, arrangements, or understandings have been made.

         ITEM 9. RECENT PURCHASES OF VOTING SECURITIES Describe any purchases of voting securities of the insurer by the applicant, its affiliates, or any person listed in Item 3 during the twelve calendar months preceding the filing of this Statement. Include in the description the dates of purchase, the names of the purchasers, and the consideration paid or agreed to be paid. State whether any of the voting securities purchased are hypothecated.

         ITEM 10. RECENT RECOMMENDATIONS TO PURCHASE Describe any recommendations to purchase voting securities of the insurer made by the applicant, its affiliates, or any person listed in Item 3, or by anyone based upon interviews or at the suggestion of the applicant, its affiliates, or any person listed in Item 3 during the twelve calendar months preceding the filing of this statement.

         ITEM 11. AGREEMENTS WITH BROKER-DEALERS

         Describe the terms of any agreement, contract, or understanding made with any broker-dealer as to solicitation of voting securities of the insurer for tender and the amount of any fees, commissions, or other compensation to be paid to broker-dealers with regard thereto.

         ITEM 12. FINANCIAL STATEMENTS AND EXHIBITS

         (a) List under this item the financial statements, exhibits, and three-year financial projections of the insurer(s) attached to this statement.

         (b) Include the annual financial statements of the persons identified in Item 2(c) for the preceding five fiscal years (or for the period the applicant, its affiliates, and any predecessors have been in existence, if less than five years), and similar information covering the period from the end of the person's last fiscal year, if that information is available. The statements may be prepared on either an individual basis or on a consolidated basis if consolidated statements are prepared in the usual course of business, unless the commissioner requires otherwise.

         The annual financial statements of the applicant shall be accompanied by the certificate of an independent certified public accountant stating that the statements present fairly the financial position of the applicant and the results of its operations for the year then ended in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the applicant is an insurer which is actively engaged in the business of insurance, the financial statements need not be certified, provided they are based on the annual statement filed with the insurance department of the person's domiciliary state and are in accordance with the requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of that state.

         (c) File as exhibits copies of all tender offers for, requests or invitations for, tenders of, exchange offers for, and agreements to acquire or exchange any voting securities of the insurer and of any additional soliciting material relating thereto, any proposed employment, consultation, advisory, or management contracts concerning the insurer, annual reports to the stockholders of the insurer and the applicant for the last two fiscal years, and any additional documents or papers required by this form or sections 16-14-2 and 16-14-3.

         ITEM 13. AGREEMENT REQUIREMENTS FOR ENTERPRISE RISK MANAGEMENT

         Applicant agrees to provide, to the best of its knowledge and belief, the information required by Form F within fifteen (15) days after the end of the month in which the acquisition of control occurs.

         ITEM 14. SIGNATURE AND CERTIFICATION

         Signature and certification required as follows:

SIGNATURE

         Pursuant to the requirements of section 431:11-105, HRS, the Registrant has caused this summary of registration statement to be duly signed on its behalf in the City of ___, State of ___ on this ___ day of __________ ___, 20___.

         __________
Name of Registrant

         (SEAL)

         By__________
Gordon I. Ito
Insurance Commissioner

         Attest:

         __________
(Signature of Officer) (Title)

         Attest:

         __________
(Signature of Officer) (Title)

CERTIFICATION

         I have duly executed the attached annual registration statement dated ___ ____, 20___, for and on behalf of (name of applicant) ; I am the (title of officer) of (name of applicant), and I am authorized to execute and file this annual registration statement. I am familiar with this annual registration statement and the contents thereof, and the facts set forth therein are true to the best of my knowledge, information, and belief.

         __________
(Signature)

         __________
(Type or print name)

FORM B
INSURANCE HOLDING COMPANY SYSTEM ANNUAL REGISTRATION
STATEMENT
Filed with the Insurance Commissioner of the State of Hawaii

         By

         __________
(Name of Registrant)

         On Behalf of Following Insurance Companies:

         Name Address

         ____________________

         Date:.__________, 20___

         Name, title, address, and telephone number of the individual to whom notices and correspondence concerning this statement should be addressed:

         ITEM 1. IDENTITY AND CONTROL OF REGISTRANT

         Furnish the exact name of each insurer registering or being registered (hereinafter called the "Registrant"), the home office address and principal executive offices of each; the date on which each Registrant became part of the insurance holding company system; and the method(s) by which control of each Registrant was acquired and is maintained.

         ITEM 2. ORGANIZATIONAL CHART

         Furnish a chart or listing clearly presenting the identities of and interrelationships among all affiliated persons within the insurance holding company system. The chart or listing should show the percentage of each class of voting securities of each affiliate which is owned, directly or indirectly, by another affiliate. If control of any person within the system is maintained other than by the ownership or control of voting securities, indicate the basis of control. As to each person specified in the chart or listing, indicate the type of organization (e.g., corporation, trust, partnership) and the state or other jurisdiction of domicile.

         ITEM 3. THE ULTIMATE CONTROLLING PERSON

         As to the ultimate controlling person in the insurance holding company system, furnish the following information:

(1) Name;
(2) Home office address;
(3) Principal executive office address;
(4) The organizational structure of the person, i.e., corporation, partnership, individual, trust, etc.;
(5) The principal business of the person;
(6) The name and address of any person who holds or owns ten per cent or more of any class of voting security, the class of the security, the number of shares held of record or known to be beneficially owned, and the percentage of the class held or owned; and
(7) If court proceedings involving a reorganization or liquidation are pending, indicate the title and location of the court, the nature of proceedings, and the date when the proceedings commenced.

         ITEM 4. BIOGRAPHICAL INFORMATION

         If the ultimate controlling person is a corporation, an organization, a limited liability company, or other legal entity, for each of the directors and executive officers of the ultimate controlling person, state the individual's name, address, principal occupation, all offices and positions held during the past five years, and any conviction of a crime other than minor traffic violations. If the ultimate controlling person is an individual, state the individual's name, address, principal occupation, all offices and positions held during the past five years, and any conviction of crimes other than minor traffic violations.

         ITEM 5. TRANSACTIONS AND AGREEMENTS

         Briefly describe the following agreements and transactions currently outstanding or which have occurred during the last calendar year between the Registrant and its affiliates:

(1) Loans, other investments, or purchases, sales, or exchanges of securities of the affiliates by the Registrant or of the Registrant by its affiliates;
(2) Purchases, sales, or exchanges of assets;
(3) Transactions not in the ordinary course of business;
(4) Guarantees or undertakings for the benefit of an affiliate which result in an actual or contingent exposure of the Registrant's assets to liability, other than insurance contracts entered into in the ordinary course of the Registrant's business;
(5) All management agreements, service contracts, and cost-sharing arrangements;
(6) Reinsurance agreements;
(7) Dividends and other distributions to shareholders;
(8) Consolidated tax allocation agreements; and
(9) Any pledge of the Registrant's stock or of the stock of any subsidiary or controlling affiliate for a loan made to any member of the insurance holding company system.

         No information need be disclosed if the information is not material for purposes of section 431:11-105, HRS. As to any sales, purchases, exchanges, loans or extensions of credit, investments, or guarantees involving one-half ofone percent or less of the Registrant's admitted assets as of December 31 next preceding, the Registrant shall submit a sufficiently detailed description to permit the commissioner to evaluate the materiality of the transaction. The description shall include at least the following:

(1) The nature and purpose of the transaction;
(2) The nature and amounts of any payments or transfers of assets between the parties;
(3) The identity of all parties to the transaction; and
(4) The relationship of the affiliated parties to the Registrant.

         The commissioner may request additional information at the commissioner's discretion. If the commissioner determines that a transaction is material, the commissioner shall notify the Registrant who shall file an Amendment to the registration statement pursuant to section 16-14-6(c), within thirty days from the date of the commissioner's notice, setting forth the required information about the transaction.

         ITEM 6. LITIGATION OR ADMINISTRATIVE PROCEEDINGS

         Briefly describe any litigation or administrative proceedings of the following types, either pending or concluded within the preceding fiscal year, to which the ultimate controlling person or any of its directors or executive officers was a party or of which the property of any such person is or was the subject, giving the names of the parties and the court or agency in which the litigation or proceeding is or was pending:

(1) Criminal prosecutions or administrative proceedings by any government agency or authority which may be relevant to the trustworthiness of any party to the litigation or proceeding; and
(2) Proceedings which may have a material effect upon the solvency or capital structure of the ultimate controlling person, including but not limited to bankruptcy, receivership, or other corporate reorganizations.

         ITEM 7. STATEMENT REGARDING PLAN OR SERIES OF TRANSACTIONS

         Furnish a statement that transactions entered into since the filing of the prior year's annual registration statement are not part of a plan or series of like transactions whose purpose is to avoid statutory threshold amounts and the review that might otherwise occur.

         ITEM 8. FINANCIAL STATEMENTS AND EXHIBITS

         (a) List under this item the financial statements and exhibits attached to this registration statement.

         (b) If the ultimate controlling person is a corporation, an organization, a limited liability company, or other legal entity, the financial statements shall include the annual financial statements of the ultimate controlling person in the insurance holding company system as of the end of the person's latest fiscal year.

         If at the time of the initial registration, the annual financial statements for the latest fiscal year are not available, annual statements for the previous fiscal year may be filed, along with similar financial information for subsequent periods to the extent the information is available. The financial statements may be prepared on either an individual basis or on a consolidated basis if consolidated statements are prepared in the usual course of business, unless the commissioner requires otherwise.

         In addition, such financial statement shall be filed in a standard form and format adopted by the National Association of Insurance Commissioners, unless an alternative form is adopted by the Commissioner. Documentation and financial statements filed with the Securities and Exchange Commission or audited generally accepted accounting principles shall be deemed to be an appropriate form and format.

         Unless the commissioner permits otherwise, the annual financial statements shall be accompanied by the certificate of an independent public accountant stating that the statements present fairly the financial position of the ultimate controlling person and the results of its operations for the year then ended in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the ultimate controlling person is an insurer which is actively engaged in the business of insurance, the annual financial statements need not be certified, provided they are based on the annual statement of the insurer's domiciliary state and are in accordance with requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of that state.

         Any ultimate controlling person who is an individual may file personal financial statements that are reviewed rather than audited by an independent public accountant. The review shall b e conducted in accordance with standard s for review of personal financial statements published in the Personal Financial Statements Guide by the American Institute of Certified Public Accountants. Personal financial statements shall be accompanied by the independent public accountant's Standard Review Report stating that the accountant is not aware of any material modifications that should be made to the financial statements in order for the statements to conform with United States generally accepted accounting principles.

         (c) Exhibits shall include copies of the latest annual reports to shareholders of the ultimate controlling person and proxy material used by the ultimate controlling person; and any additional documents or papers required by this form or sections 1 6-14-2 and 16-14-3.

         ITEM 9. FORM C REQUIRED

         Form C, Summary of Changes to Registration Statement, shall be prepared and filed with this form.

         ITEM 10. SIGNATURE AND CERTIFICATION

         Signature and certification required as follows:

SIGNATURE

         Pursuant to the requirements of section 431:11-105, HRS, the Registrant has caused this annual registration statement to be duly signed on its behalf in the City of ___ , State of__________on this ___day of __________, 20___.

         __________
Name of Applicant

         (SEAL)

         By __________(Name)(Title)

         Attest:

         __________
(Signature of Officer) (Title)

CERTIFICATION

         I have duly executed the attached annual registration statement dated ___ ___, 20___, for and on behalf of (name of applicant) ; I am the (title of officer) of (name of applicant), and I am authorized to execute and file this annual registration statement. I am familiar with this annual registration statement and the contents thereof, and the facts set forth therein are true to the best of my knowledge, information, and belief.

         __________
(Signature)

         __________
(Type or print name)

FORM C
SUMMARY OF CHANGES TO REGISTRATION STATEMENT
Filed with the Insurance Commissioner of the State of Hawaii

         By

         __________
(Name of Registrant)

         On Behalf of Following Insurance Companies

         Name Address

         __________

         Date: ___, 20_

         Name, title, address, and telephone number of the individual to whom notices and correspondence concerning this statement should be addressed:

         Furnish a brief description of all items in the current annual registration statement which represent changes from the prior year's annual registration statement. Include specific references to the item numbers in the annual registration statement and to the terms contained therein, and make the description sufficiently detailed to permit proper evaluation by the commissioner.

         Changes occurring under item 2 of Form B relating to changes in the percentage of each class of voting securities held by each affiliate need only be included where the changes result in ownership or holdings of ten per cent or more of voting securities, loss or transfer of control, or acquisition or loss of partnership interest.

         Changes occurring under Item 4 of Form B need only be included where:

(1) An individual is, for the first time, made a director or executive officer of the ultimate controlling person;
(2) A director or executive officer terminates responsibilities with the ultimate controlling person; or
(3) An individual is named president of the ultimate controlling person.

         If a transaction disclosed on the prior year's annual registration statement

         has been changed, include a description of the nature of the change. If a transaction disclosed on the prior year's annual registration statement has been effectuated, furnish the mode of completion and any flow of funds between affiliates resulting from the transaction.

         Furnish a statement that transactions entered into since the filing of the prior year's annual registration statement are not part of a plan or series of like transactions whose purpose is to avoid statutory threshold amounts and the review that might otherwise occur.

SIGNATURE AND CERTIFICATION
Signature and certification required as follows:
SIGNATURE

         Pursuant to the requirements of section 431:11-105, HRS, the Registrant has caused this summary of registration statement to be duly signed on its behalf in the City of ___, State of ___ on this ___day of ___ ___, 20___.

         __________
Name of Registrant

         (SEAL)

         By __________(Name)(Title)

         Attest:

         __________
(Signature of Officer) (Title)

CERTIFICATION

         I have duly executed the attached summary of registration statement dated __________, 20___, for and on behalf of (name of registrant) . I am the (title of officer) of (name of registrant) , and I am authorized to execute and file this summary of registration statement. I am familiar with this summary of registration statement and the contents thereof, and the facts set forth therein are true to the best of my knowledge, information, and belief.

         __________
(Signature)

         __________
(Type or print name)

FORM D
PRIOR NOTICE OF A TRANSACTION
Filed with the Insurance Commissioner of the State of Hawaii
By

         __________
(Name of Registrant)

         On Behalf of Following Insurance Companies

         Name Address

         __________

         Date: __________, 20___

         Name, title, address, and telephone number of the individual to whom notices and correspondence concerning this statement should be addressed:

         ITEM 1. IDENTITY OF PARTIES TO TRANSACTION

         Furnish the following information for each of the parties to the transaction:

(1) Name;
(2) Home office address;
(3) Principal executive office address;
(4) The organizational structure, i.e. corporation, partnership, individual, trust, etc.;
(5) A description of the nature of the parties' business operations;
(6) Relationship, if any, of other parties to the transaction to the insurer filing the notice, including any ownership or debtor/creditor interest by any other parties to the transaction in the insurer seeking approval, or by the insurer filing the notice in the affiliated parties; and
(7) Where the transaction is with a non-affiliate, the name of any affiliate which will receive, in whole or in substantial part, the proceeds of the transaction.

         ITEM 2. DESCRIPTION OF THE TRANSACTION

         Furnish the following information for each transaction for which notice is being given:

(1) A statement as to whether notice is being given under section 431:11-106(a)(2)(A), (B), (C), (D), (E), (F) or (G), HRS;
(2) A statement of the nature of the transaction;
(3) A statement of how the transaction meets the 'fair and reasonable' standard of section 431:11-106(a)(1 )(A), HRS; and
(4) The proposed effective date of the transaction.

         ITEM 3. SALES, PURCHASES, EXCHANGES, LOANS, EXTENSIONS OF CREDIT, GUARANTEES, OR INVESTMENTS

         Furnish a brief description of:

(1) The amount and source of funds, securities, property, or other consideration for the sale, purchase, exchange, loan, extension of credit, guarantee, or investment, and whether any provision exists for purchase by the insurer filing notice, by any party to the transaction, or by any affiliate of the insurer filing notice;
(2) The terms of any securities being received, if any; and
(3) Any other agreements relating to the transaction such as contracts or agreements for services or consulting agreements.

         If the transaction involves other than cash, furnish a description of the consideration, its cost, and its fair market value, together with an explanation of the basis for valuation.

         If the transaction involves a loan, extension of credit, or guarantee, furnish a description of the maximum amount which the insurer will be obligated to make available under the loan, extension of credit, or guarantee, the date on which the credit or guarantee will terminate, and any provisions for the accrual or deferral of interest.

         If the transaction involves an investment, guarantee, or other arrangement, state the time period during which the investment, guarantee, or other arrangement will remain in effect, together with any provisions for extension or renewal of the investment, guarantee, or arrangement. Furnish a brief statement as to the effect of the transaction upon the insurer's surplus.

         No notice need be given if the maximum amount which can at any time be outstanding or for which the insurer can be legally obligated under the loan, extension of credit, or guarantee is less than:

         (a) In the case of non-life insurers, the lesser of three per cent of the insurer's admitted assets or twenty five per cent of surplus as regards policyholders as of the December 31 next preceding; or

         (b) In the case of life insurers, three per cent of the insurer's admitted assets as of the December 31 next preceding.

         ITEM 4. LOANS OR EXTENSIONS OF CREDIT TO A NON-AFFILIATE

         If the transaction involves a loan or extension of credit to any person who is not an affiliate, furnish a brief description of the agreement or understanding whereby the proceeds of the proposed transaction, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase the assets of, or to make investments in, any affiliate of the insurer making the loans or extensions of credit, and specify in what manner the proceeds are to be used to make a loan to, extend credit to, purchase assets of, or make investments in any affiliate. Describe the amount and source of securities, property, or other consideration for the loan or extension of credit and, if the transaction involves consideration other than cash, a description of the cost and fair market value of the consideration, together with an explanation of the basis for valuation. Furnish a brief statement as to the effect of the transaction upon the insurer's surplus.

         No notice need be given if the loan or extension of credit is one which equals less than, in the case of non-life insurers, the lesser of three per cent of the insurer's admitted assets or twenty five per cent of surplus as regards policyholders or, with respect to life insurers, three per cent of the insurer's admitted assets, each as of the December 31 next preceding.

         ITEM 5. REINSURANCE

         If the transaction is a reinsurance agreement or modification thereto, as described by section 431:11-106(a)(2)(C)(ii), HRS, or a reinsurance pooling agreement or modification thereto as described by 431:11-106(a)(2)(C)(i), furnish a description of the known or estimated amount of liability to be ceded or assumed in each calendar year, the period of time during which the agreement will be in effect, and a statement whether an agreement or understanding exists between the insurer and the non-affiliate that any portion of the assets constituting the consideration for the agreement will be transferred to one or more of the insurer's affiliates. Furnish a brief description of the consideration involved in the transaction and a brief statement of the effect of the transaction upon the insurer's surplus.

         No notice need be given for reinsurance agreements or modifications thereto if the reinsurance premium or the change in the insurer's liabilities, or the projected reinsurance premium or change in the insurer's liabilities in any of the next three years, in connection with the reinsurance agreement is less than five per cent of the insurer's surplus as regards policyholders as of the December 31 next preceding. Notice shall be given for all reinsurance pooling agreements including modifications thereto.

         ITEM 6. MANAGEMENT AGREEMENTS, SERVICE AGREEMENTS, AND COST-SHARING ARRANGEMENTS

         For management and service agreements, furnish:

         (a) A brief description of the managerial responsibilities or services to be performed; and

         (b) A brief description of the agreement, including a statement of its duration, together with brief descriptions of the basis for compensation and the terms under which payment or compensation is to be made.

         For cost-sharing arrangements, furnish:

         (a) A brief description of the purpose of the agreement;

         (b) A description of the period of time during which the agreement is to be in effect;

         (c) A brief description of each party's expenses or costs covered by the agreement;

         (d) A brief description of the accounting basis to be used in calculating each party's costs under the agreement;

         (e) A brief statement as to the effect of the transaction upon the insurer's policyholder surplus;

         (f) A statement regarding the cost allocation methods that specifies whether proposed charges are based on "cost or market." If market based, rationale for using market instead of cost, including justification for the company's determination that amounts are fair and reasonable; and

         (g) A statement regarding compliance with the National Association of Insurance Commissioners' Accounting Practices and Procedure Manual regarding expense allocation.

         ITEM 7. SIGNATURE AND CERTIFICATION

         Signature and certification are required as follows:

         SIGNATURE

         Pursuant to the requirements of section 431:11-106, HRS, (name of registrant) has caused this notice to be duly signed on its behalf in the City of ___ __________ and State of __________ on this ___ day of __________ __________, 20____.

         __________
Name of Applicant

         (SEAL)

         By __________(Name)(Title)

         Attest:

         __________
(Signature of Officer) (Title)

CERTIFICATION

         I have duly executed the attached notice dated __________ _, 20___, for and on behalf of (name of applicant); I am the (title of officer) of (name of applicant), and I am authorized to file the notice. I am familiar with the notice and the contents thereof, and the facts set forth therein are true to the best of my knowledge, information and belief.

         __________
(Signature)

         __________
(Type or print name)

FORM E
PRE-ACQUISITION NOTIFICATION FORM
REGARDING THE POTENTIAL COMPETITIVE IMPACT
OF A PROPOSED MERGER OR ACQUISITION BY A
NON-DOMICILIARY INSURER DOING BUSINESS IN THIS
STATE OR BY A DOMESTIC INSURER

         __________
(Name of Applicant)

         __________
(Name of Other Person Involved in Merger or Acquisition)

         Filed with the Insurance Commissioner of the State of Hawaii

         Dated: __________

         Name, title, address, and telephone number of individual to whom notices and correspondence concerning this statement should be addressed:

         __________

         ITEM 1. NAME AND ADDRESS

         State the names and addresses of the persons who hereby provide notice of their involvement in a pending acquisition or change in corporate control.

         ITEM 2. NAME AND ADDRESSES OF AFFILIATED COMPANIES

         State the names and addresses of the persons affiliated with those listed in Item 1. Describe their affiliations.

         ITEM 3. NATURE AND PURPOSE OF THE PROPOSED MERGER OR ACQUISITION

         State the nature and purpose of the proposed merger or acquisition.

         ITEM 4. NATURE OF BUSINESS

         State the nature of the business performed by each of the persons identified in response to Item 1 and Item 2.

         ITEM 5. MARKET AND MARKET SHARE

         State specifically what market and market share in each relevant insurance market the persons identified in Item 1 and Item 2 currently enjoy in this State. Provide historical market and market share data for each person identified in Item 1 and Item 2 for the past five years and identify the source of such data. Provide a determination as to whether the proposed acquisition or merger, if consummated, would violate the competitive standards of the state as stated in section 431:11-104.4, HRS. If the proposed acquisition or merger would violate competitive standards, provide justification of why the acquisition or merger would not substantially lessen competition or create a monopoly in the State.

         For purposes of this question, market means direct written insurance premium in this state for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this state.

FORM F
ENTERPRISE RISK REPORT
Filed with the Insurance Commissioner of the State of Hawaii
By

         __________
(Name of Registrant)

         On Behalf of Following Insurance Companies

         Name Address

         ____________________

         Date: __________ 20___

         Name, title, address, and telephone number of the individual to whom notices and correspondence concerning this statement should be addressed:

         ITEM 1. ENTERPRISE RISK

         The Registrant/Applicant, to the best of its knowledge and belief, shall provide information regarding the following areas that could produce enterprise risk as defined in [insert cross reference to definition of Enterprise Risk in section 431:11-102, HRS], provided such information is not disclosed in the Insurance Holding Company System Annual Registration Statement filed on behalf of itself or another insurer for which it is the ultimate controlling person:

• Any material developments regarding strategy, internal audit findings, compliance or risk management affecting the insurance holding company system;
• Acquisition or disposal of insurance entities and reallocating of existing financial or insurance entities within the insurance holding company system;
• Any changes of shareholders of the insurance holding company system exceeding ten per cent or more of voting securities;
• Developments in various investigations, regulatory activities or litigation that may have a significant bearing or impact on the insurance holding company system;
• Business plan of the insurance holding company system and summarized strategies for next twelve months;
• Identification of material concerns of the insurance holding company system raised by supervisory college, if any, in the last year;
• Identification of insurance holding company system capital resources and material distribution patterns;
• Identification of any negative movement, or discussions with rating agencies which may have caused, or may cause, potential negative movement in the credit ratings assessment of the insurance holding company system (including both the rating score and outlook);
• Identification of any negative movement, or discussions with rating agencies which may have caused, or may cause, potential negative movement in individual insurers' financial strength ratings, including both the rating scores and outlooks, affecting the insurance holding company system;
• Information on corporate or parental guarantees throughout the holding company and the expected source of liquidity should such guarantees be called upon; and
• Identification of any material activity or development of the insurance holding company system that, in the opinion of senior management, could adversely affect the insurance holding company system.

         The Registrant/Applicant may attach the appropriate form most recently filed with the United States Securities and Exchange Commission, provided the Registrant/Applicant includes specific references to those areas listed in Item 1 for which the form provides responsive information. If the Registrant/Applicant is not domiciled in the United States, it may attach its most recent public audited financial statement filed in its country of domicile, provided the Registrant/Applicant includes specific references to those areas listed in Item 1 for which the financial statement provides responsive information.

         ITEM 2. OBLIGATION TO REPORT.

         If the Registrant/Applicant has not disclosed any information pursuant to Item 1, the Registrant/Applicant shall include a statement affirming that, to the best of its knowledge and belief, it has not identified enterprise risk subj ect to disclosure pursuant to Item 1.

DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS
AMENDMENT AND COMPILATION OF CHAPTER 16-14,
HAWAII ADMINISTRATIVE RULES
July 21, 2016
SUMMARY

         1. §16-14-1 through §16-14-3 are amended.

         2. §16-14-5 through §16-14-6 are amended.

         3. §16-14-8 through §16-14-10 are amended.

         4. §16-14-11 is new.

         5. Chapter 14 is compiled.

The following state regulations pages link to this page.