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A BILL TO BE ENTITLED
|
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AN ACT
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relating to the functions of insurance holding company systems. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 823.002, Insurance Code, is amended by |
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adding Subdivisions (3-a), (3-b), and (4-a) and amending |
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Subdivision (6) to read as follows: |
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(3-a) "Divesting person" means a person who has |
|
control of a domestic insurer and who intends to divest control of |
|
the domestic insurer. |
|
(3-b) "Divestiture" means an abandonment of control of |
|
a domestic insurer by a divesting person that does not result in the |
|
transfer of control to another person. |
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(4-a) "Enterprise risk" means any activity, |
|
circumstance, event, or series of events involving one or more |
|
affiliates of an insurer that, if not remedied promptly, is likely |
|
to have a material adverse effect on the financial condition or |
|
liquidity of the insurer or its insurance holding company system as |
|
a whole, including anything: |
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(A) that would cause the insurer's risk-based |
|
capital to fall into company action level; or |
|
(B) that would cause the insurer to be in |
|
hazardous financial condition. |
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(6) "Insurer" means any insurance company organized |
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under the laws of this state, a commercially domiciled insurer, or |
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an insurer authorized to engage in the business of insurance in this |
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state. The term includes a capital stock company, mutual company, |
|
farm mutual insurance company, title insurance company, fraternal |
|
benefit society, local mutual aid association, statewide mutual |
|
assessment company, county mutual insurance company, Lloyd's plan, |
|
reciprocal or interinsurance exchange, stipulated premium |
|
insurance company, and group hospital service corporation. The |
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term does not include an agency, authority, or instrumentality of |
|
the United States, its possessions and territories, the |
|
Commonwealth of Puerto Rico, the District of Columbia, or a state[,
|
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or an agency, authority, instrumentality,] or political |
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subdivision of a state. |
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SECTION 2. Section 823.010, Insurance Code, is amended by |
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amending Subsections (c) and (d) and adding Subsections (e) and (f) |
|
to read as follows: |
|
(c) Except as provided by Subsection (d), [After] the |
|
disclaimer shall be deemed to have been allowed unless, not later |
|
than 60 days after the receipt of a complete disclaimer, [is filed:
|
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[(1)
the insurer is not required to register or report
|
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under Subchapter B because of a duty that arises out of the
|
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insurer's relationship with the person unless] the commissioner |
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notifies the filing party that [disallows] the disclaimer is |
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disallowed[, in which event the duty to register or report begins on
|
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the date of the disallowance; and
|
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[(2)
the person is not required to comply with
|
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Sections 823.154, 823.155, 823.159, and 823.160 unless the
|
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commissioner disallows the disclaimer]. |
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(d) Notwithstanding Subsection (c), if the commissioner at |
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any time determines that the information disclosed in the |
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disclaimer is incomplete or inaccurate or is no longer accurate, |
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the [The] commissioner may disallow the disclaimer [only after:
|
|
[(1)
providing to each party in interest notice of and
|
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the opportunity to be heard on the disallowance; and
|
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[(2)
making specific findings of fact to support the
|
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disallowance]. |
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(e) If the commissioner disallows a disclaimer, the party |
|
who filed the disclaimer may request an administrative hearing. |
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The commissioner shall grant the request for the hearing. |
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(f) If the commissioner allows a disclaimer, the party who |
|
filed the disclaimer is not required to register under Subchapter B |
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or comply with Section 823.154, 823.155, 823.159, or 823.160 unless |
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the commissioner determines that the disclaimer should be |
|
disallowed under Subsection (d). |
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SECTION 3. Section 823.011, Insurance Code, is amended by |
|
amending Subsections (b) and (d) and adding Subsections (e) through |
|
(i) to read as follows: |
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(b) The information shall be confidential and privileged |
|
for all purposes [treated confidentially and is not subject to
|
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subpoena]. Except as provided by Subsections (c) and (d), the |
|
information may not be disclosed without the prior written consent |
|
of the insurer to which it pertains. |
|
(d) Except as provided by Subsection (e), if the recipient |
|
of documents or other information agrees in writing to maintain the |
|
confidential and privileged status of the documents or other |
|
information, and verifies in writing the legal authority to |
|
maintain the confidential and privileged status of the documents or |
|
information, the [The] commissioner or another person may disclose |
|
the information to any of the following entities functioning in an |
|
official capacity: |
|
(1) a commissioner of insurance or an insurance |
|
department of another state; |
|
(2) an authorized law enforcement official; |
|
(3) a district attorney of this state; |
|
(4) the attorney general; [or] |
|
(5) a grand jury; or |
|
(6) members of a supervisory college described by |
|
Section 823.0145. |
|
(e) Notwithstanding Subsection (d), the commissioner may |
|
share confidential and privileged information reported under |
|
Section 823.0595 only with the commissioner of insurance of a state |
|
that has a statute or rule substantially similar to Subsection (d) |
|
who agrees in writing not to disclose the information. |
|
(f) Information described by Subsection (a), including |
|
information in the possession of the National Association of |
|
Insurance Commissioners under this section, is confidential and |
|
privileged for all purposes, including for purposes of: |
|
(1) Chapter 552, Government Code; |
|
(2) a response to a subpoena; or |
|
(3) discovery or admissibility in evidence in a civil |
|
action. |
|
(g) The commissioner shall enter into written agreements |
|
with the National Association of Insurance Commissioners regarding |
|
the sharing and use of information provided under this chapter. An |
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agreement entered into under this subsection must: |
|
(1) specify procedures and protocols regarding the |
|
confidentiality and security of information shared with the |
|
National Association of Insurance Commissioners and its affiliates |
|
and subsidiaries under this chapter, including procedures and |
|
protocols for sharing by the National Association of Insurance |
|
Commissioners with other state, federal, or international |
|
regulators; |
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(2) specify that ownership of information shared with |
|
the National Association of Insurance Commissioners and its |
|
affiliates and subsidiaries under this chapter remains with the |
|
commissioner, and that use of the information by the National |
|
Association of Insurance Commissioners is subject to the direction |
|
of the commissioner; |
|
(3) require prompt notice to an insurer whose |
|
confidential information is in the possession of the National |
|
Association of Insurance Commissioners under this chapter that the |
|
information is subject to a request or subpoena to the National |
|
Association of Insurance Commissioners for disclosure or |
|
production; and |
|
(4) require the National Association of Insurance |
|
Commissioners and its affiliates and subsidiaries to give consent |
|
to intervention by an insurer in any judicial or administrative |
|
action in which the National Association of Insurance Commissioners |
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and its affiliates and subsidiaries may be required to disclose |
|
confidential information about the insurer shared with the National |
|
Association of Insurance Commissioners and its affiliates and |
|
subsidiaries under this chapter. |
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(h) This section may not be construed to prevent the |
|
commissioner or the attorney general from using information |
|
described by Subsection (a) for any purpose with respect to which |
|
the commissioner or the attorney general is otherwise authorized to |
|
act, including a regulatory or other legal action. |
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(i) The commissioner remains solely responsible for the |
|
administration, execution, and enforcement of this chapter, and the |
|
commissioner's sharing of information does not constitute a |
|
delegation of regulatory or rulemaking authority. |
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SECTION 4. Subchapter A, Chapter 823, Insurance Code, is |
|
amended by adding Section 823.0145 to read as follows: |
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Sec. 823.0145. SUPERVISORY COLLEGES. (a) With respect to |
|
any insurer registered under Subchapter B, and in accordance with |
|
Subsection (c), the commissioner may participate in a supervisory |
|
college for a domestic insurer that is part of an insurance holding |
|
company system with international operations in order to determine |
|
the insurer's compliance with this chapter. The commissioner may: |
|
(1) initiate the establishment of a supervisory |
|
college; |
|
(2) clarify the membership and participation of other |
|
entities in the supervisory college; |
|
(3) clarify the functions of the supervisory college |
|
and the role of other entities in the supervisory college; |
|
(4) establish a group-wide supervisor; |
|
(5) coordinate the ongoing activities of the |
|
supervisory college, including meetings, regulatory activities, |
|
and processes for information sharing; and |
|
(6) establish a crisis management plan. |
|
(b) In order to assess the business strategy, financial |
|
position, legal and regulatory position, risk exposure, and risk |
|
management and governance processes, and as part of the examination |
|
of individual insurers under Subchapter H, the commissioner may |
|
participate in a supervisory college with other entities that |
|
regulate the insurer or its affiliates, including other state, |
|
federal, and international regulatory entities. The commissioner |
|
may enter into agreements under Section 823.011 to cooperate with |
|
other regulatory entities. Nothing in this section shall be |
|
construed as delegating to the supervisory college the |
|
commissioner's authority to regulate the insurer or its affiliates. |
|
(c) A registered insurer subject to this section shall pay |
|
the reasonable expenses, including reasonable travel expenses, of |
|
the commissioner's participation in a supervisory college under |
|
Subsection (b). For purposes of this section, a supervisory |
|
college may be convened as either a temporary or permanent forum for |
|
communication and cooperation between the entities that regulate |
|
the insurer or its affiliates, and the commissioner may establish a |
|
regular assessment to the insurer for the payment of expenses |
|
related to the regulation of the insurer. |
|
SECTION 5. Section 823.052, Insurance Code, is amended by |
|
amending Subsections (b) and (c) and adding Subsections (c-1) and |
|
(c-2) to read as follows: |
|
(b) The registration statement must be in a format |
|
prescribed by the National Association of Insurance Commissioners |
|
or adopted by rule of the commissioner and contain current |
|
information about: |
|
(1) the identity and relationship of each affiliate in |
|
the insurance holding company system of which the insurer is a part; |
|
(2) the capital structure, general financial |
|
condition, and ownership and management of the insurer, the |
|
insurer's holding company, the insurer's subsidiaries, and, if the |
|
commissioner considers the information necessary, any of the |
|
insurer's other affiliates; and |
|
(3) any pledge of stock of the insurer or a subsidiary |
|
or controlling affiliate of the insurer for a loan made to a member |
|
of the insurer's insurance holding company system. |
|
(c) The registration statement must also contain |
|
information about: |
|
(1) each outstanding loan the insurer makes to an |
|
affiliate of the insurer or an affiliate makes to the insurer; |
|
(2) each purchase, sale, or exchange of securities or |
|
other investment between the insurer and an affiliate of the |
|
insurer; |
|
(3) each purchase, sale, or exchange of assets between |
|
the insurer and an affiliate of the insurer; |
|
(4) each management and service contract or |
|
cost-sharing arrangement between the insurer and an affiliate of |
|
the insurer; |
|
(5) each reinsurance agreement between the insurer and |
|
an affiliate of the insurer that covers one or more lines of |
|
insurance of the ceding company; |
|
(6) each agreement between the insurer and an |
|
affiliate of the insurer to consolidate federal income tax returns; |
|
(7) each transaction between the insurer and an |
|
affiliated financial institution; |
|
(8) each transaction between the insurer and an |
|
affiliate of the insurer that is not in the ordinary course of |
|
business; |
|
(9) each guarantee or undertaking, other than an |
|
insurance contract entered into in the ordinary course of the |
|
insurer's business, for the benefit of an affiliate of the insurer |
|
that results in a contingent exposure of the insurer's assets to |
|
liability; |
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(10) each dividend or distribution to the insurer's |
|
shareholders; [and] |
|
(11) each transaction between the insurer and an |
|
affiliate of the insurer not specified by this subsection that is |
|
subject to Section 823.102, 823.103, or 823.104; |
|
(12) the corporate governance and internal control |
|
responsibilities of the insurer's board of directors, including a |
|
statement that: |
|
(A) the insurer's senior management or officers |
|
have approved and implemented, and continue to maintain and |
|
monitor, corporate governance and internal control procedures; and |
|
(B) the insurer's board of directors oversees |
|
corporate governance and internal controls; and |
|
(13) any other information that the commissioner |
|
requires by rule. |
|
(c-1) On request of the commissioner, an insurer shall |
|
include with the statement a copy of all financial statements for |
|
the insurance holding company system and all affiliates of the |
|
holding company system, including annual audited financial |
|
statements filed with the United States Securities and Exchange |
|
Commission pursuant to the Securities Act of 1933 (15 U.S.C. |
|
Section 77a et seq.) or the Securities Exchange Act of 1934 (15 |
|
U.S.C. Section 78a et seq.). |
|
(c-2) An insurer required by the commissioner to submit |
|
financial statements under Subsection (c-1) may satisfy the |
|
requirement by submitting to the commissioner: |
|
(1) the financial statements that the insurer's parent |
|
corporation most recently filed with the Securities and Exchange |
|
Commission; and |
|
(2) if the insurer is required to submit financial |
|
statements for an affiliate, the financial statements that the |
|
affiliate most recently filed with an agency that regulates the |
|
affiliate. |
|
SECTION 6. Subchapter B, Chapter 823, Insurance Code, is |
|
amended by adding Section 823.0595 to read as follows: |
|
Sec. 823.0595. ENTERPRISE RISK REPORT. (a) Except as |
|
provided by Subsections (d) and (f), the ultimate controlling |
|
person, as defined by Section 823.055, of each insurer required to |
|
file an annual registration shall file with the registration an |
|
annual enterprise risk report. The report must, to the best of the |
|
ultimate controlling person's knowledge, identify the material |
|
risks within the insurance holding company system that may pose |
|
enterprise risk to the insurer. The report must be filed with the |
|
lead state commissioner of the insurance holding company system, as |
|
determined by the commissioner. In determining the lead state |
|
commissioner, the commissioner shall consider the procedures |
|
adopted by the National Association of Insurance Commissioners. |
|
(b) The ultimate controlling person of an insurer shall file |
|
the first enterprise risk report required by this section with the |
|
first annual registration statement due after: |
|
(1) January 1, 2013, if the total direct or assumed |
|
annual premiums of the insurer were $5 billion or more during the |
|
preceding 12-month period; |
|
(2) January 1, 2014, if the total direct or assumed |
|
annual premiums of the insurer were more than $1 billion but less |
|
than $5 billion during the preceding 12-month period; |
|
(3) January 1, 2015, if the total direct or assumed |
|
annual premiums of the insurer were more than $500 million but less |
|
than $1 billion during the preceding 12-month period; or |
|
(4) January 1, 2016, if the total direct or assumed |
|
annual premiums of the insurer were $300 million or more but less |
|
than $500 million during the preceding 12-month period. |
|
(c) Subsection (b) and this subsection expire January 2, |
|
2015. |
|
(d) Except as provided by Subsection (e), the ultimate |
|
controlling person of an insurer with total direct or assumed |
|
annual premiums of less than $300 million is not required to submit |
|
an enterprise risk report under Subsection (a). |
|
(e) Regardless of total direct or assumed annual premium, |
|
the ultimate controlling person of an insurer that is not in |
|
compliance with applicable risk-based capital standards or that is |
|
otherwise in hazardous condition, as determined by the |
|
commissioner, shall file an enterprise risk report required by |
|
Subsection (a) as directed by the commissioner. |
|
(f) An insurer or health maintenance organization that in |
|
the preceding calendar year had direct written and assumed premiums |
|
of more than $300 million but less than $500 million may request an |
|
exemption from the reporting requirements of Subsection (a) by |
|
filing with the commissioner a written statement describing the |
|
undue financial or organizational hardship the insurer or health |
|
maintenance organization would suffer as a result of complying with |
|
Subsection (a). The commissioner may grant the exemption if the |
|
commissioner finds that compliance with Subsection (a) would impose |
|
an undue financial or organizational hardship on the insurer or |
|
health maintenance organization. |
|
SECTION 7. Section 823.060, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 823.060. VIOLATION OF SUBCHAPTER. The failure to file |
|
a registration statement or an amendment to a registration |
|
statement, or an enterprise risk report, within the time specified |
|
for filing the statement, [or] amendment, or report, as required by |
|
this subchapter, is a violation of this subchapter. |
|
SECTION 8. The heading to Section 823.101, Insurance Code, |
|
is amended to read as follows: |
|
Sec. 823.101. STANDARDS FOR TRANSACTION WITHIN AN INSURANCE |
|
HOLDING COMPANY SYSTEM [WITH AFFILIATE]. |
|
SECTION 9. Section 823.101, Insurance Code, is amended by |
|
amending Subsection (a) and adding Subsection (b-1) to read as |
|
follows: |
|
(a) This section applies only to a material transaction |
|
within an insurance holding company system to which an [between a
|
|
registered insurer and an affiliate of the] insurer subject to a |
|
registration under Section 823.052 is a party. |
|
(b-1) An agreement, including an agreement for |
|
cost-sharing, services, or management, must include all provisions |
|
required by rule of the commissioner. |
|
SECTION 10. Section 823.102, Insurance Code, is amended by |
|
amending Subsection (a) and adding Subsections (d) and (e) to read |
|
as follows: |
|
(a) This section applies only to a sale, purchase, exchange, |
|
loan or other extension of credit, or investment between a domestic |
|
insurer and any person in the insurer's insurance holding company |
|
system, including an amendment or modification of an affiliate |
|
agreement previously filed under this section, that involves more |
|
than the lesser of 5 percent of the insurer's admitted assets or 25 |
|
percent of the insurer's surplus, as of December 31 of the year |
|
preceding the year in which the transaction occurs. |
|
(d) The notice described by Subsection (c) must include: |
|
(1) the reasons for entering into or changing the |
|
transaction; and |
|
(2) the financial impact of the transaction on the |
|
domestic insurer. |
|
(e) Not later than the 30th day after the termination of a |
|
previously filed agreement, the domestic insurer shall give notice |
|
of the termination to the commissioner. |
|
SECTION 11. Section 823.103, Insurance Code, is amended by |
|
amending Subsection (a) and adding Subsections (e) and (f) to read |
|
as follows: |
|
(a) This section applies only to: |
|
(1) a sale, purchase, exchange, loan or other |
|
extension of credit, or investment between a domestic insurer and |
|
any person in the insurer's insurance holding company system, |
|
including an amendment or modification of an affiliate agreement |
|
previously filed under this section: |
|
(A) that involves more than the lesser of |
|
one-half of one percent of the insurer's admitted assets or five |
|
percent of the insurer's surplus, as of December 31 of the year |
|
preceding the year in which the transaction occurs; and |
|
(B) the approval of which is not required under |
|
Section 823.102; |
|
(2) a reinsurance agreement, including a reinsurance |
|
treaty or pooling agreement, or an amendment or modification of an |
|
agreement previously filed under this section, between a domestic |
|
insurer and any person in the insurer's holding company system [or a
|
|
modification of such an agreement]; |
|
(3) a rendering of services between a domestic insurer |
|
and any person in the insurer's holding company system on a regular |
|
or systematic basis, including a tax-allocation agreement, or an |
|
amendment or modification of an agreement previously filed under |
|
this section; or |
|
(4) any material transaction between a domestic |
|
insurer and any person in the insurer's holding company system that |
|
is specified by rule and that the commissioner determines may |
|
adversely affect the interests of the insurer's policyholders or of |
|
the public, including an amendment or modification of an agreement |
|
previously filed under this section. |
|
(e) The notice described by Subsection (c) must include: |
|
(1) the reasons for entering into or changing the |
|
transaction; and |
|
(2) the financial impact of the transaction on the |
|
domestic insurer. |
|
(f) Not later than the 30th day after the termination of a |
|
previously filed agreement, the domestic insurer shall give notice |
|
of the termination to the commissioner. |
|
SECTION 12. Section 823.154, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 823.154. REQUIREMENTS FOR ACQUISITION OR EXERCISE OF |
|
CONTROL OR DIVESTITURE OF DOMESTIC INSURER. (a) Before a person |
|
who directly or indirectly controls, or after the acquisition would |
|
directly or indirectly control, a domestic insurer may in any |
|
manner acquire a voting security of a domestic insurer or before a |
|
person may otherwise acquire control of a domestic insurer or |
|
exercise any control over a domestic insurer, or before a person may |
|
initiate a divestiture of control of a domestic insurer: |
|
(1) the acquiring person shall file with the |
|
commissioner a statement that satisfies the requirements of |
|
Subchapter E; [and] |
|
(2) the acquisition or divestiture of control must be |
|
approved by the commissioner in accordance with this subchapter; |
|
and |
|
(3) if the person is initiating a divestiture of |
|
control, the divesting person shall file with the commissioner a |
|
notice of divestiture on a form adopted by the National Association |
|
of Insurance Commissioners or adopted by the commissioner by rule. |
|
(b) The acquiring person or divesting person shall send a |
|
copy of the statement filed under this section to the domestic |
|
insurer. |
|
(c) A statement or notice filed under this section must be |
|
filed not later than the 60th day before the proposed effective date |
|
of the acquisition or change of control or divestiture and is |
|
subject to public inspection at the office of the commissioner. |
|
(d) Notwithstanding Subsection (a), a divesting person is |
|
not required to provide the commissioner with notice of divestiture |
|
required by Subsection (a)(3) if an acquiring person submits the |
|
statement required by Subsection (a)(1) and that acquisition is |
|
approved by the commissioner. |
|
SECTION 13. Section 823.157, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 823.157. APPROVAL OF ACQUISITION, CHANGE, OR |
|
DIVESTITURE OF CONTROL. (a) The commissioner shall approve or |
|
deny an acquisition, [or] change, or divestiture of control for |
|
which a statement or notice is filed under Section 823.154 not later |
|
than the 60th day after the date the statement required by that |
|
section is filed. The 60-day period may be waived by the person |
|
filing the statement or notice required by Section 823.154 and the |
|
domestic insurer. On the request of either the person filing the |
|
statement or notice required by Section 823.154, or the domestic |
|
insurer, the commissioner shall hold a hearing on a denial. |
|
(b) In considering whether to approve or deny, the |
|
commissioner shall consider whether: |
|
(1) immediately on the acquisition, [or] change, or |
|
divestiture of control the domestic insurer would not be able to |
|
satisfy the requirements for the issuance of a new certificate of |
|
authority to write the line or lines of insurance for which the |
|
insurer holds a certificate of authority; |
|
(2) the effect of the acquisition, [or] change, or |
|
divestiture of control would be substantially to lessen competition |
|
in a line or subclassification lines of insurance in this state or |
|
tend to create a monopoly in a line or subclassification lines of |
|
insurance in this state; |
|
(3) the financial condition of the acquiring person |
|
may jeopardize the financial stability of the domestic insurer or |
|
prejudice the interest of the domestic insurer's policyholders; |
|
(4) the acquiring person has a plan or proposal to |
|
liquidate the domestic insurer or cause the insurer to declare |
|
dividends or make distributions, sell any of its assets, |
|
consolidate or merge with any person, make a material change in its |
|
business or corporate structure or management, or enter into a |
|
material agreement, arrangement, or transaction of any kind with |
|
any person, and that the plan or proposal is unfair, prejudicial, |
|
hazardous, or unreasonable to the insurer's policyholders and not |
|
in the public interest; |
|
(5) due to a lack of competence, trustworthiness, |
|
experience, and integrity of the persons who would control the |
|
operation of the domestic insurer, the acquisition or change of |
|
control would not be in the interest of the insurer's policyholders |
|
and the public; |
|
(5-a) the divestiture of control may jeopardize the |
|
financial stability of the domestic insurer or prejudice the |
|
interest of the domestic insurer's policyholders and other |
|
claimants; or |
|
(6) the acquisition, [or] change, or divestiture of |
|
control would violate the law of this or another state or the United |
|
States. |
|
(c) If a proposed acquisition, change, or divestiture of |
|
control will require the approval of more than one commissioner, |
|
the commissioner may participate in a public hearing referred to in |
|
this chapter held on a consolidated basis on request of the person |
|
filing the statement required by Section 823.154. The person |
|
filing the statement under Section 823.154 shall file the statement |
|
with the National Association of Insurance Commissioners within |
|
five days of making the request for a public hearing. A hearing |
|
conducted on a consolidated basis shall be public and shall be held |
|
within the United States before the commissioners of the states in |
|
which the insurers are domiciled. The commissioners shall hear and |
|
receive evidence at the hearing. The commissioner may attend the |
|
hearing in person or by telecommunication. |
|
(d) This section does not require the commissioner to hold a |
|
hearing before approving or denying an acquisition, change, or |
|
divestiture of control. |
|
SECTION 14. Section 823.201, Insurance Code, is amended by |
|
adding Subsections (d) and (e) to read as follows: |
|
(d) The acquiring person shall agree to provide the annual |
|
enterprise risk report required by Section 823.0595 for as long as |
|
the acquiring person maintains control of the insurer. |
|
(e) The acquiring person and all subsidiaries within the |
|
acquiring person's control in the insurance holding company system |
|
shall provide information to the commissioner on request of the |
|
commissioner as the commissioner deems necessary to evaluate |
|
enterprise risk to the insurer. |
|
SECTION 15. Section 823.205, Insurance Code, is amended by |
|
adding Subsection (c) to read as follows: |
|
(c) An insurer required to file information under Section |
|
823.154 may satisfy the requirement of Section 823.052(c-1) by |
|
providing the commissioner with the most recently filed parent |
|
corporation reports that have been filed with the United States |
|
Securities and Exchange Commission, if required by the |
|
commissioner. |
|
SECTION 16. Section 823.351, Insurance Code, is amended by |
|
amending Subsections (a) and (b) and adding Subsections (a-1) and |
|
(b-1) to read as follows: |
|
(a) Subject to Section 823.352, the commissioner may order |
|
an insurer registered under Subchapter B to produce records, books, |
|
or other information papers in the possession of the insurer or an |
|
affiliate of the insurer that are necessary to ascertain the |
|
financial condition or legality of conduct of the insurer, |
|
including the enterprise risk to the insurer by the ultimate |
|
controlling party, or by any entity or combination of entities |
|
within the insurance holding company system, or by the insurance |
|
holding company system on a consolidated basis. |
|
(a-1) To determine compliance with this chapter, the |
|
commissioner may order any insurer registered under Subchapter B to |
|
produce information not in the possession of the insurer if the |
|
insurer can obtain access to the information pursuant to |
|
contractual relationships, statutory obligations, or other |
|
methods. In the event that the insurer is unable to obtain the |
|
information requested by the commissioner, the insurer shall |
|
provide the commissioner with a detailed explanation of the reason |
|
why the insurer is unable to obtain the information and the identity |
|
of the holder of information. If it appears to the commissioner |
|
that the insurer's explanation is without merit, the commissioner |
|
may after notice and hearing: |
|
(1) require the insurer to pay a penalty of not less |
|
than $100 for each day the insurer delays producing the |
|
information; or |
|
(2) suspend or revoke the insurer's license. |
|
(b) If an insurer fails to comply with an order under this |
|
section [Subsection (a)], the commissioner by order may require the |
|
examination of each holding company of the insurer and each |
|
controlled person or affiliate in the insurer's insurance holding |
|
company system if the commissioner has cause to believe that: |
|
(1) the operations of that person may materially |
|
affect the operations, management, or financial condition of any |
|
controlled insurer in that system; and |
|
(2) the commissioner is unable to obtain relevant |
|
information from the controlled insurer. |
|
(b-1) The commissioner may issue subpoenas, administer |
|
oaths, and examine under oath any person for purposes of |
|
determining compliance with this section. On the failure or |
|
refusal of a person to obey a subpoena, the commissioner may |
|
petition a court of competent jurisdiction, and on proper showing |
|
the court may enter an order compelling the witness to appear and |
|
testify or produce documentary evidence. Failure to obey the court |
|
order is punishable as contempt of court. A person shall attend as |
|
a witness at the place specified in the subpoena, when subpoenaed, |
|
at any location in this state. The person is entitled to the same |
|
fees and mileage, if claimed, as a witness in district court. Fees, |
|
mileage, and actual expenses necessarily incurred in securing the |
|
attendance of a witness shall be itemized and charged against, and |
|
be paid by, the insurer being examined. |
|
SECTION 17. Section 823.452, Insurance Code, is amended by |
|
adding Subsection (a-1) to read as follows: |
|
(a-1) If it appears to the commissioner that a person has |
|
committed a violation of Subchapter D that prevents the full |
|
understanding of the enterprise risk to the insurer by affiliates |
|
or by the insurance holding company system, the violation may serve |
|
as an independent basis for disapproving dividends or distributions |
|
and for issuing an order under Chapter 404 or Chapter 441. |
|
SECTION 18. The Texas Department of Insurance may not |
|
implement Section 823.0595, Insurance Code, as added by this Act, |
|
until the date that the commissioner determines that the National |
|
Association of Insurance Commissioners has promulgated an |
|
enterprise risk form and has proposed a master confidentiality |
|
agreement and places notice of that determination in the Texas |
|
Register. |
|
SECTION 19. This Act takes effect September 1, 2011. |
|
|
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* * * * * |