Section 1 Authority
This regulation is promulgated pursuant to the authority
granted by
8 V.S.A. §
15 and subchapter 13 of chapter
101.
Section 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 8 V.S.A. chapter 101, subchapter 13, which relates to holding
companies and subsidiaries.
Section
3 Severability Clause
If any provision of these regulations, or the application
thereof to any person or circumstance, is held invalid, such invalidity shall
not affect other provisions or applications of these regulations which can be
given effect without the invalid provision or application, and to that end the
provisions of these regulations are severable.
Section 4 Forms General Requirements
A. Forms A, B, C, D, E, and F are intended to
be guides in the preparation of the statements required by 8 V.S.A. chapter
101, subchapter 13. They are not intended to be blank forms which are to be
filled in. 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. 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 Vermont, Department of Financial
Regulation, 89 Main Street, Montpelier, VT 05620-3101. 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 the power of
attorney or other authority shall also be filed with the statement.
C. If an applicant requests a hearing on a
consolidated basis under
8 V.S.A.
§
3683(f)(3) of the
Act, in addition to filing the Form A with the Commissioner, the applicant
shall file a copy of Form A with the National Association of Insurance
Commissioners in electronic form.
D. Statements should be prepared
electronically. Statements shall be easily readable and suitable for review and
reproduction. 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 shall be converted into United States currency.
Section 5 Forms Incorporation by Reference,
Summaries and Omissions
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.
Information contained in any financial statement, annual report, proxy
statement, statement filed with a government 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 such document 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 (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 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 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 (3) years and may be qualified in its entirety by such reference.
In any case where two (2) 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 such documents differ from the
documents, a copy of which is filed. The Commissioner may at any time in his or
her discretion require the filing of copies of any omitted documents.
Section 6 Forms Information
Unknown or Unavailable and Extension of Time to Furnish
A. 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 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
filling the information, document or report to a specified date. The request
for extension shall be deemed granted unless the Commissioner within thirty
(30) days after receipt thereof enters an order denying the request.
Section 7 Forms
Additional Information and Exhibits
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. 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, D, E, or 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.
Section
8 Definitions
A. Executive
officer means chief executive officer, chief operating officer, chief financial
officer, president, vice president, treasurer, secretary, controller, and any
other individual performing functions corresponding to those performed by the
foregoing officers under whatever title.
B. Ultimate controlling person means that
person which is not controlled by any other person.
C. Material transactions as set forth in
8
V.S.A. §
3685(f)(4)
include, but are not limited to, transactions which result in an insurance
company gaining control of another insurance company.
D. All other terms used herein shall have the
same meanings prescribed in
8 V.S.A. §
3681
unless the context otherwise requires. Other nomenclature or terminology is
according to Vermont law applicable to insurance companies, or industry usage
if not defined by Vermont law.
Section
9 Subsidiaries of Domestic Insurers
The authority to invest in the types of subsidiaries set
forth in
8 V.S.A. §
3682(a) is in addition to
any authority to invest in subsidiaries as set forth in
8 V.S.A. §
3682(b) or as set forth in
other provisions of Vermont law applicable to insurance
companies.
Section 10
Acquisition of Control Statement Filing
A person required to file a statement pursuant to
8 V.S.A.
§
3683 shall furnish the required
information on Form A. Such person shall also furnish the required information
on Form E, described in Section 13 of this regulation.
Section 11 Amendments to Form A
The applicant shall, within seven days after it learns of
any change in the information so furnished, advise the Commissioner of any
changes in the information furnished on Form A arising subsequent to the date
upon which such information was furnished, but prior to the Commissioner's
disposition of the application.
Section
12 Acquisition of Section 3683a4 Insurer
A. If the person being acquired is a domestic
insurer solely because of the provisions of
8 V.S.A.
§
3683(a)(4), the name
of the domestic insurer on the cover page should be indicated as follows:
ABC Insurance Company, a subsidiary of XYZ Holding
Company.
B. Where a §
3683(a)(4) 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.
Section 13
PreAcquisition Notification
If a domestic insurer, including any person controlling a
domestic insurer, is proposing a merger or acquisition pursuant to
8 V.S.A.
§
3683(a)(1), that
person shall file a pre-acquisition notification form, Form E, which was
developed pursuant to
8 V.S.A.
§
3683a(c)(1).
Additionally, if a non-domiciliary insurer licensed to do business in this
state is proposing a merger or acquisition pursuant to
8 V.S.A.
§
3683a, 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
8 V.S.A.
§
3683a as set forth in
8 V.S.A.
§
3683a(b). 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.
Section 14
Registration of Insurers Annual Statement Filing
An insurer required to file a statement pursuant to
8 V.S.A. §
3684, Registration of insurers, shall furnish
the required information on Form B.
Section 15 Summary of Registration Statement
Filing
An insurer required to file an annual registration statement
pursuant to
8 V.S.A. §
3684 is also required to furnish information
required on Form C.
Section
16 Amendments to Form B
A. An
amendment to Form B shall be filed within 15 days after the end of any month in
which there is a material change to the information provided in the annual
registration statement.
B.
Amendments shall be filed in the Form B format with only those items which are
being amended reported. Each such 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.
Section 17
Alternative and Consolidated Registration
A.
Any authorized insurer may file a registration statement on behalf of any
affiliated insurer or insurers which are required to register under
8 V.S.A. §
3684. A registration statement may include
information regarding any insurer in 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 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 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 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.
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.
D. Any insurer may take advantage of the
provisions of
8 V.S.A. §
3684(i) or § 3684(j)
without obtaining the prior approval of the Commissioner. The Commissioner,
however, reserves the right to require individual filings if he or she deems
such filings necessary in the interest of clarity, ease of administration or
the public good.
Section
18 Disclaimers and Termination of Registration
A. A disclaimer of affiliation pursuant to
8 V.S.A. §
3684(1) or a request for
termination of registration pursuant to
8 V.S.A. §
3684(h) claiming that a
person does not, or will not upon the taking of some proposed action, control
another person (hereinafter referred to as the subject) shall contain the
following information:
(1) the number of
authorized, issued and outstanding voting securities of the subject;
(2) with respect to the person whose control
is denied and all affiliates of such person, 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;
(3) all material relationships and bases for
affiliation between the subject and the person whose control is denied and all
affiliates of such person;
(4) a
statement explaining why such person should not be considered to control the
subject.
B. A request for
termination of registration shall be deemed to have been granted unless the
Commissioner, within 30 days after he received the request, notifies the
registrant otherwise.
Section
19 Transactions Subject to Prior Notice Notice Filing
A. An insurer required to give notice of a
proposed transaction pursuant to
8
V.S.A. §
3685 shall furnish the required
information on Form D.
B.
Agreements for cost sharing services and management services shall at a minimum
and as applicable:
(1) Identify the person
providing services and the nature of such services;
(2) Set forth the methods to allocate
costs;
(3) Require timely
settlement, not less frequently than on a quarterly basis, and compliance with
the requirements in the NAIC Accounting Practices and Procedures
Manual;
(4) Prohibit advancement of
funds by the insurer to the affiliate except to pay for services defined in the
agreement;
(5) 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;
(6) Define books and
records of the insurer to include all books and records developed or maintained
under or related to the agreement;
(7) 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;
(8) 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;
(9) Include standards
for termination of the agreement with and without cause;
(10) 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;
(11) Specify that, if the insurer is placed
in receivership or seized by the Commissioner under 8 V.S.A. chapter 145:
(a) all of the rights of the insurer under
the agreement extend to the receiver or Commissioner; and,
(b) 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;
(12) Specify that the affiliate has no
automatic right to terminate the agreement if the insurer is placed in
receivership pursuant to 8 V.S.A. chapter 145; and
(13) Specify that the affiliate will continue
to maintain any systems, programs, or other infrastructure notwithstanding a
seizure by the Commissioner under 8 V.S.A. chapter 145, and will make them
available to the receiver, for so long as the affiliate continues to receive
timely payment for services rendered.
Section 20 Enterprise Risk Report
The ultimate controlling person of an insurer required to
file an enterprise risk report pursuant to
8 V.S.A. §
3684(m) shall furnish the
required information on Form F.
Section
21 Extraordinary Dividends and Other Distributions
A. Requests for approval of extraordinary
dividends or any other extraordinary distribution to shareholders shall include
the following:
(1) the amount of the proposed
dividend;
(2) the date established
for payment of the dividend;
(3) a
statement as to whether the dividend is to be in cash or other property and, if
in property, a description thereof, its costs, and its fair market value
together with an explanation of the basis for valuation;
(4) a copy of the calculations determining
that the proposed dividend is extraordinary. The work paper shall include the
following information:
(i) The amounts, dates
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 12 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 31 st 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.
(5) 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;
(6) 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.
B. Subject to
8
V.S.A. §
3685(c), each
registered insurer shall report to the Commissioner all dividends and other
distributions to shareholders within 15 business days following the declaration
thereof, including the same information required by subsections
A(4)(i)(v).
Section 22
Adequacy of Surplus
The factors set forth in
8
V.S.A. §
3685(b) 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 instead will consider the net effect of all of
these factors plus other factors bearing on the financial condition of the
insurer. 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.
Section 23 Effective Date
This regulation shall become effective [date of
adoption].
