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§ 991.1404. Registration of insurers

Purdon's Pennsylvania Statutes and Consolidated StatutesTitle 40 P.S. InsuranceEffective: September 9, 2022

Purdon's Pennsylvania Statutes and Consolidated Statutes
Title 40 P.S. Insurance (Refs & Annos)
Chapter 2. Insurance Companies (Refs & Annos)
Article XIV. Insurance Holding Companies (Refs & Annos)
Effective: September 9, 2022
40 P.S. § 991.1404
§ 991.1404. Registration of insurers
Currentness
(a)(1) Every insurer which is authorized to do business in this Commonwealth and which is a member of an insurance holding company system shall register with the department, except a foreign insurer subject to registration requirements and standards adopted by statute or regulation in the jurisdiction of its domicile which are substantially similar to those contained in this section and section 1405(a)(1) and (2), (b) and (d)(1).1 Each registered insurer shall keep current the information required to be disclosed in its registration statement by reporting all material changes or additions within fifteen (15) days after the end of the month in which it learns of each such change or addition.
(2) Any insurer which is subject to registration under this section shall register within fifteen (15) days after it becomes subject to registration, and annually thereafter by the thirty-first day of March of each year for the previous calendar year, unless the department for good cause shown extends the time for registration, and then within such extended time. The department may require any insurer authorized to do business in this Commonwealth which is a member of an insurance holding company system and which is not subject to registration under this section to furnish a copy of the registration statement, the summary specified in subsection (c) or other information filed by such insurance company with the insurance regulatory authority of its domiciliary jurisdiction.
(b) Every insurer subject to registration shall file the registration statement with the department on a form and in a format prescribed by the NAIC, which shall contain all of the following current information:
(1) The capital structure, general financial condition, ownership and management of the insurer and any person controlling the insurer.
(2) The identity and relationship of every member of the insurance holding company system.
(3) All of the following agreements in force and transactions currently outstanding or which have occurred during the last calendar year between such insurer and its affiliates:
(i) Loans and other investments and the purchase, sale or exchange of securities of an affiliate by the insurer or of the insurer by an affiliate.
(ii) Purchases, sales or exchange of assets.
(iii) Transactions not in the ordinary course of business.
(iv) Guarantees or undertakings for the benefit of an affiliate which result in an actual contingent exposure of the insurer's assets to liability, other than insurance contracts entered into in the ordinary course of the insurer's business.
(v) All management agreements, service contracts and all cost-sharing arrangements.
(vi) Reinsurance agreements.
(vii) Dividends and other distributions to shareholders.
(viii) Consolidated tax allocation agreements.
(4) Any pledge of the insurer's stock, including stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system.
(4.1) If requested by the department, the insurer shall include financial statements of an insurance holding company system, including its affiliates. Financial statements may include, but are not limited to:
(i) annual audited financial statements filed with the SEC under the Securities Exchange Act of 1933 (48 Stat. 74, 15 U.S.C. § 77a et seq.); or
(ii) the Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. § 78a et seq.).
An insurer required to file financial statements under this paragraph may satisfy the request by providing the department with the most recent parent corporation financial statements filed with the SEC.
(4.2) Statements that the insurer's board of directors oversees corporate governance and internal controls and that the insurer's officers or senior management have approved, implemented and continue to maintain and monitor corporate governance and internal control procedures.
(5) Any other matters concerning transactions between registered insurers and any affiliates as may be included from time to time in any registration forms adopted or approved by the department.
(6) Other necessary or appropriate information as required by the department by regulation.
(c) All registration statements shall contain a summary outlining all items in the current registration statement representing changes from the prior registration statement.
(d)(1) No information need be disclosed on the registration statement filed pursuant to subsection (b) if such information is not material for the purposes of this section.
(2) Unless the department by regulation or order provides otherwise, sales, purchases, exchanges, loans or extensions of credit, investments or guarantees involving one-half of one per centum (0.5%) or less of an insurer's admitted assets as of the thirty-first day of December next preceding shall not be deemed material for purposes of this section.
(3) Paragraph (2) does not apply to the group capital calculation or the liquidity stress test framework.
(e) Subject to section 1405(b), each registered insurer shall report to the department all dividends and other distributions to shareholders within five (5) business days following the declaration thereof and at least ten (10) days, commencing from the date of receipt by the department, prior to payment thereof. The report shall include a schedule setting forth all dividends or other distributions made within the previous twelve (12) months, including any dividends or other distributions approved by the department to be paid out of other than unassigned surplus pursuant to section 337.8.2
(f) Any person within an insurance holding company system subject to registration shall be required to provide complete and accurate information to an insurer, where such information is reasonably necessary to enable the insurer to comply with the provisions of this article.
(g) The department shall terminate the registration of any insurer which demonstrates that it no longer is a member of an insurance holding company system.
(h) The department may require or allow two or more affiliated insurers subject to registration hereunder to file a consolidated registration statement.
(i) The department may allow an insurer which is authorized to do business in this Commonwealth and which is part of an insurance holding company system to register on behalf of any affiliated insurer which is required to register under subsection (a) and to file all information and material required to be filed under this section.
(j) The provisions of this section shall not apply to any insurer, information or transaction if and to the extent that the department by regulation or order shall exempt the same from the provisions of this section.
(k) Any person may file with the department a disclaimer of affiliation with any authorized insurer or such a disclaimer may be filed by such insurer or any member of an insurance holding company system. The disclaimer shall fully disclose all material relationships and bases for affiliation between such person and such insurer as well as the basis for disclaiming such affiliation. A disclaimer of affiliation is deemed granted unless the department notifies the filing party the disclaimer is disallowed within thirty (30) days following receipt of a complete disclaimer. In the event of disallowance, the disclaiming party may request an administrative hearing under the provisions of 2 Pa.C.S. (relating to administrative law and procedure), which must be granted. If the commissioner approves the disclaimer or if the disclaimer is deemed approved, the disclaiming party is relieved of the duty to register under this section.
(k.1)(1) The ultimate controlling person of every insurer subject to registration shall also file an annual enterprise risk report. The report must, to the best of the ultimate controlling person's knowledge and belief, identify the material risks within the insurance holding company system that could pose enterprise risk to the insurer. The report must be filed with the lead state regulator of the insurance holding company system as determined by the procedures within the Financial Analysis Handbook adopted by the NAIC. Beginning in 2014, and every year thereafter, the report shall be filed by March 31 for the previous calendar year.
(2) Except as provided in paragraph (3), the ultimate controlling person of every insurer subject to registration shall concurrently file with the registration an annual group capital calculation report as directed by the lead state regulator of the insurance holding company system. The report shall be completed in accordance with the NAIC group capital calculation instructions, which may permit the lead state regulator to allow a controlling person that is not the ultimate controlling person to file the group capital calculation. The report shall be filed with the lead state regulator of the insurance holding company system as directed by the commissioner in accordance with the procedures outlined in the Financial Analysis Handbook adopted by the NAIC.
(3) The following insurance holding company systems are not required to file the group capital calculation:
(i) An insurance holding company system that has only one insurer within the insurance holding company system structure, only writes business in a domestic state and is only licensed in a domestic state and assumes no business from any other insurer.
(ii) An insurance holding company system that is required to perform a group capital calculation specified by the Federal Reserve Board. The commissioner shall request the calculation from the Federal Reserve Board under the terms of information sharing agreements in effect. If the Federal Reserve Board cannot share the calculation with the commissioner, the insurance holding company system is not exempt from the group capital calculation filing.
(iii) An insurance holding company system whose group-wide supervisor is located within a reciprocal jurisdiction as defined in section 319.3(k)3 that recognizes the United States' state regulatory approach to group supervision and group capital.
(iv) An insurance holding company system:
(A) That provides information to the lead state regulator that meets the requirements for accreditation under the NAIC financial standards and accreditation program, either directly or indirectly through the group-wide supervisor, who has determined the information is satisfactory to allow the lead state regulator to comply with the NAIC group supervision approach, as detailed in the NAIC Financial Analysis Handbook.
(B) Whose group-wide supervisor, located outside the United States and not in a reciprocal jurisdiction as defined in section 319.3(k), recognizes and accepts the group capital calculation as the worldwide group capital assessment for United States insurance groups who operate in that reciprocal jurisdiction.
(4) Notwithstanding paragraph (3)(iii) and (iv), the commissioner, as the lead state regulator, shall require the group capital calculation for United States-based operations of any non-United States-based insurance holding company system where, after necessary consultation with other supervisors or officials, the group capital calculation is deemed appropriate by the lead state regulator for prudential oversight and solvency monitoring purposes or for ensuring the competitiveness of the insurance marketplace.
(5) In addition to and notwithstanding the entities described in paragraph (3), the commissioner, as the lead state regulator, has the discretion to exempt the ultimate controlling person from filing the annual group capital calculation or accept a limited group capital filing or report in accordance with criteria specified in section 1404.1.4
(6) If the commissioner, as the lead state regulator, determines that an insurance holding company system no longer meets one or more of the requirements of paragraph (3), the insurance holding company system shall file the group capital calculation at the next annual filing date unless given an extension by the lead state regulator based on reasonable grounds shown.
(7) The ultimate controlling person of an insurer subject to registration and also scoped into the NAIC liquidity stress test framework shall file the results of a specific year's liquidity stress test with the lead state regulator of the insurance holding company system in accordance with the procedures in the NAIC Financial Analysis Handbook and the following standards:
(i) With regard to the development of the NAIC liquidity stress test framework, the following standards are recognized:
(A) The NAIC liquidity stress test framework includes scope criteria applicable to a specific data year.
(B) The scope criteria are reviewed at least annually by the NAIC Financial Stability Task Force or its successor.
(C) Any change to the NAIC liquidity stress test framework or to the data year for which the scope criteria are to be measured shall be effective on January 1 of the year following the calendar year when the changes are adopted.
(D) Insurers meeting at least one threshold of the scope criteria are considered scoped into the NAIC liquidity stress test framework for the specified data year unless the lead state regulator, in consultation with the NAIC Financial Stability Task Force or its successor, determines the insurer should not be scoped into the NAIC liquidity stress test framework for that data year.
(E) Insurers that do not trigger at least one threshold of the scope criteria are considered scoped out of the NAIC liquidity stress test framework for the specified data year, unless the lead state regulator, in consultation with the NAIC Financial Stability Task Force or its successor, determines the insurer should be scoped into the NAIC liquidity stress test framework for that data year.
(ii) The performance of, and filing of the results from, a specific year's NAIC liquidity stress test shall comply with the NAIC liquidity stress test framework's instructions and reporting templates for that year and, if applicable, with any determinations by the lead state regulator and the NAIC Financial Stability Task Force or its successor, provided within the NAIC liquidity stress test framework.
(l) The failure to file a registration statement, any summary of the registration statement or enterprise risk report required by this section within the time specified for such filing shall be a violation of this section.

Credits

1921, May 17, P.L. 682, No. 284, art. XIV, § 1404, added 1992, Dec. 18, P.L. 1519, No. 178, § 19, effective in 120 days. Amended 1994, Feb. 17, P.L. 92, No. 9, § 14, imd. effective; 2012, July 5, P.L. 1111, No. 136, § 4; 2022, July 11, P.L. 1599, No. 93, § 2, effective in 60 days [Sept. 9, 2022].

Footnotes

1
40 P.S. § 991.1405.
2
40 P.S. § 459.8.
3
40 P.S. § 442.3.
4
40 P.S. § 991.1404a.
40 P.S. § 991.1404, PA ST 40 P.S. § 991.1404
Current through Act 10 of the 2024 Regular Session. Some statute sections may be more current, see credits for details.
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