Bill Text: AZ HB2006 | 2023 | Fifty-sixth Legislature 1st Regular | Chaptered
Bill Title: Insurance; liquidity; financial assessment
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2023-04-13 - Chapter 45 [HB2006 Detail]
Download: Arizona-2023-HB2006-Chaptered.html
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House Engrossed
insurance; liquidity; financial assessment |
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State of Arizona House of Representatives Fifty-sixth Legislature First Regular Session 2023
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CHAPTER 45
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HOUSE BILL 2006 |
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An Act
amending sections 20-481, 20-481.03, 20-481.10, 20-481.11, 20-481.12 and 20-481.21, Arizona Revised Statutes; relating to insurance holding company systems.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 20-481, Arizona Revised Statutes, is amended to read:
20-481. Definitions
In this article, unless the context otherwise requires:
1. "Affiliate" or person "affiliated" with a specific person means a person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the person specified.
2. "Continuing proxies" means proxies that are valid for more than one annual or special meeting of security holders and any adjournments thereof.
3. "Control" and "controlling" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote or holds proxies representing ten per cent percent or more of the voting securities of any other person. This presumption may be rebutted by a showing made in the manner provided by section 20-481.18 that control does not exist in fact. The director may determine, after furnishing all persons in interest notice and an opportunity to be heard and making specific findings of fact to support such determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.
4. "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 causing the insurer's risk-based capital to decrease to or below a company action level under section 20-488.02, or would cause an insurer to be in hazardous financial condition pursuant to section 20-220.01.
5. "Group capital calculation instructions" means the national association of insurance commissioners group capital calculation instructions as adopted and amended in accordance with the national association of insurance commissioners' procedures.
5. 6. "Group-wide supervisor" means the regulatory official who is authorized to engage in conducting and coordinating group-wide supervision activities and who is determined or acknowledged by the director pursuant to section 20-481.33 to have sufficient significant contacts with the internationally active insurance group.
6. 7. "Insurance holding company system" means two or more affiliated persons, one or more of whom is an insurer.
7. 8. "Insurer" means every person engaged in the business of making contracts of insurance except:
(a) Agencies, authorities or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia or a state or political subdivision of a state.
(b) Nonprofit medical and hospital service associations.
(c) Credit life and disability reinsurers as defined in section 20-1082 that are not affiliated with another insurer as defined in section 20-104.
8. 9. "Internationally active insurance group" means an insurance holding company system that includes an insurer registered pursuant to section 20-481.09 and that meets the following criteria:
(a) Has premiums written in at least three countries.
(b) The percentage of gross premiums written outside the United States is at least ten percent of the insurance holding company system's total gross written premiums.
(c) Based on a three-year rolling average, the total assets of the insurance holding company system are at least $50,000,000,000, or the total gross written premiums of the insurance holding company system are at least $10,000,000,000.
10. "Liquidity Stress Test Framework" means a separate publication by the national association of insurance commissioners that may include any amendment adopted in accordance with national association of insurance commissioners' procedures and instructions and reporting templates for a specific data year and that may contain the following information:
(a) A history of the regulatory liquidity stress testing.
(b) The scope criteria applicable for a specific data year.
9. 11. "Person" means an individual, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization and any similar entity or any combination of the foregoing acting in concert but does not include any joint venture partnership exclusively engaged in owning, managing, leasing or developing real or tangible personal property.
12. "Scope criteria" means the DESIGNATED exposure bases and minimum magnitudes that may be used to establish a preliminary list of insurers that are selected into the liquidity stress test framework for a specific year and that are detailed in the liquidity stress test framework.
10. 13. "Security holder of a specified person" means a person who owns any security of such person, including common stock, preferred stock, debt obligations, and any other security that is convertible into or evidencing that evidences the right to acquire any of the foregoing.
11. 14. "Subsidiary of a specified person" means an affiliate controlled by such person directly or indirectly through one or more intermediaries.
12. 15. "Supervisory college" means a temporary or permanent forum for communication and cooperation between regulators charged with the supervision of entities that belong to an insurance holding company system that has international operations.
13. 16. "Voting security" means a security that carries with it a right to vote in decisions and also includes securities that are convertible into or evidence a right to acquire a security that includes such right to vote.
Sec. 2. Section 20-481.03, Arizona Revised Statutes, is amended to read:
20-481.03. Contents of statement
A. The statement to be filed with the director as provided in section 20-481.02 shall be made under oath or affirmation and shall contain the following:
1. The name and address of each person by whom or on whose behalf the tender offer, merger or other acquisition of control referred to in section 20-481.02 is to be effected.
2. If the acquiring party is an individual, his the individual's principal occupation and all offices and positions held during the past five years and any convictions of crimes other than minor traffic violations during the past ten years.
3. If the acquiring party is not an individual:
(a) A report of the nature of its business operations during the past five years or for such lesser period as such person and any predecessors thereof shall have been in existence.
(b) An informative description of the business intended to be done by such person and such person's subsidiaries.
(c) A list of all individuals who are or who have been selected to become directors or executive officers of such person, or who perform or will perform functions appropriate to such positions. Such list shall include for each such individual the information required by paragraph 2 of this subsection.
4. The source, nature and amount of the consideration used or to be used in effecting the merger or other acquisition of control, a description of any transaction wherein funds were or are to be obtained for any such purpose including a pledge of the insurer's stocks or the stock of any of its subsidiaries or controlling affiliates, and the identity of persons furnishing such consideration, provided that if a source of such consideration is a loan made in the lender's ordinary course of business, the identity of the lender shall remain confidential, if the person filing such statement so requests.
5. Fully audited financial information as to the earnings and financial condition of each acquiring party for the preceding five fiscal years of each such acquiring party or for such lesser period as such acquiring party and any predecessors thereof have been in existence and similar unaudited information as of a date not earlier than ninety days before the filing of the statement. If audited financial information is unavailable, unaudited financial information may be substituted if such information is acceptable to the director.
6. Any plans or proposals that each acquiring party may have to liquidate such insurer, to sell its assets or merge or consolidate it with any person or to make any other material change in its business or corporate structure or management.
7. The number of shares of any security referred to in section 20-481.02 that each acquiring party proposes to acquire, and the terms of the offer, request, invitation, agreement or acquisition referred to in section 20-481.02 and a statement as to the method by which the fairness of the proposal was arrived at.
8. The amount of each class of any security referred to in section 20-481.02 that is beneficially owned or about which there is a right to acquire beneficial ownership by each acquiring party or that each acquiring party has the right to acquire.
9. A full description of any contracts, arrangements or understandings with respect to any security referred to in section 20-481.02 in which any acquiring party is involved, including but not limited to transfer of any of the 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. Such description shall identify the persons with whom such contracts, arrangements or understandings have been entered into.
10. A description of the purchase of any security referred to in section 20-481.02 during the twelve calendar months preceding the filing of the statement, by any acquiring party, including the dates of purchases, names of the purchasers and consideration paid or agreed to be paid therefor.
11. A description of any recommendations to purchase any security referred to in section 20-481.02 made during the twelve calendar months preceding the filing of the statement, by any acquiring party, or by anyone based on interviews or at the suggestion of such acquiring party.
12. Copies of all tender offers for, requests or invitations for tenders of exchange offers for and agreements to acquire or exchange any securities referred to in section 20-481.02 and any additional soliciting material relating thereto.
13. The terms of any proposed or executed agreement, contract or understanding made with any broker-dealer as to solicitation of securities referred to in section 20-481.02 for tender, and the amount of any fees, commissions or other compensation to be paid to broker-dealers with regard thereto.
14. An agreement by the person required to file the statement referred to in section 20-481.02 that the person will file with the director the annual enterprise risk report pursuant to section 20-481.10, subsection D, paragraph 1 while in control of the insurer.
15. An acknowledgement by the person required to file the statement referred to in section 20-481.02 that the person and all subsidiaries in its control in the insurance holding company system will provide all information requested by the director for the director to evaluate enterprise risk to the insurer.
16. Such additional information as the director may by rule prescribe as necessary or appropriate for the protection of policyholders and security holders of the insurer or in the public interest.
B. The director may require each statement to be accompanied by the fingerprints of any individual named in such statement as an acquiring party or as directors or executive officers of an acquiring party. Such fingerprints shall be taken in an approved manner and certified by a municipal police department, a sheriff's office or another recognized authority acceptable to the director.
Sec. 3. Section 20-481.10, Arizona Revised Statutes, is amended to read:
20-481.10. Form and content of registration statement; disclosure of information; enterprise risk filing
A. Every insurer subject to registration shall file a registration statement on a form provided by the director, which shall contain current information concerning:
1. The capital structure, general financial condition, ownership and management of the insurer and the identity of any person controlling the insurer.
2. The identity of every member of the insurance holding company system that directly or indirectly controls the insurer.
3. The following agreements in force, relationships subsisting and transactions currently outstanding or that have occurred during the last calendar year between such insurer and its affiliates:
(a) Loans, other investments or purchases, sales or exchanges of securities of the affiliates by the insurer or of the insurer by its affiliates.
(b) Purchases, sales or exchanges of assets.
(c) Transactions not in the ordinary course of business.
(d) Guarantees or undertakings for the benefit of any affiliate that 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.
(e) All management and service contracts and all cost sharing arrangements.
(f) Reinsurance agreements.
(g) Dividends and other distributions to shareholders.
(h) Consolidated tax allocation agreements.
4. A pledge of the insurer's stock, including stock of any subsidiary or controlling affiliate, for a loan made to a member of the insurance holding company system.
5. If requested by the director, financial statements of or within an insurance holding company system, including all affiliates. Financial statements may include annual audited financial statements filed with the United States securities and exchange commission pursuant to the securities act of 1933 or the securities exchange act of 1934. An insurer required to file financial statements pursuant to this paragraph may satisfy the request by providing the director with the most recent parent corporation financial statements filed with the United States securities and exchange commission.
6. 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 director.
7. A statement that the insurer's board of directors oversees corporate governance and internal controls of the insurer and that the insurer's officers or senior management have approved, and implemented and maintain and monitor corporate governance and internal control procedures.
8. Any other information required by the director by rule.
B. All registration statements shall contain a summary outlining all items in the current registration statement representing changes from the prior registration statement.
C. A person within an insurance holding company system that is subject to registration shall provide complete and accurate information to an insurer if this information is reasonably necessary to enable the insurer to comply with this article.
D. The following provisions apply to enterprise risk filings:
D. 1. The ultimate controlling person of each insurer that is subject to registration shall file an annual enterprise risk report that to the best of the ultimate controlling person's knowledge and belief identifies the material risks within the insurance holding company system that could pose enterprise risk to the insurer. The ultimate controlling person shall file the report according to the procedures of the national association of insurance commissioners' financial analysis handbook.
2. Except as otherwise provided in this paragraph, the ultimate controlling person of each insurer that is subject to registration shall concurrently file an annual group capital calculation report as directed by the lead state director or commissioner. The report shall be completed in accordance with the group capital calculation INSTRUCTIONS, which may allow the lead state director or commissioner to allow a controlling person that is not the ultimate controlling person to file the group capital calculation report. The report shall be filed with the lead state director or commissioner in accordance with the procedures outlined in the national association of insurance commissioners' Financial Analysis Handbook. The following provisions apply to filing the group capital calculation report:
(a) The following insurance holding companies are exempt from filing the group capital calculation report:
(i) An insurance holding company system THAT has only one insurer within its holding company structure, that writes only business and is licensed only in its domestic state and that 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 lead state director or commissioner shall request the calculation from the federal reserve board under the terms of information sharing agreements that are in effect. If the federal reserve board cannot share the calculation with the lead state director or commissioner, the insurance holding company system is not exempt from the group capital calculation filing.
(iii) An insurance holding company system whose non-United States group-wide supervisor is located within a reciprocal jurisdiction, as described in section 20-3602, subsection H, paragraph 1, that recognizes the United States state regulatory approach to group supervision and group capital.
(iv) An insurance holding company system that provides information to the lead state that meets the requirements for accreditation under the National association of insurance commissioners financial standards and accreditation program through the group-wide supervisor who has determined that the information is satisfactory to allow the lead state to comply with the national association of insurance commissioners group supervision approach in accordance with the national association of insurance commissioners' financial analysis handbook, and whose non-United States group-wide supervisor who is not in a reciprocal jurisdiction recognizes and accepts, as specified by the director, the group capital calculation as a worldwide group capital assessment for United States insurance groups that operate in that jurisdiction.
(b) notwithstanding subdivision (a), items (iii) and (iv) of this paragraph, a lead state director or commissioner shall require the group capital calculation for United States operations of any non-United States based insurance holding company system where, after any necessary consultation with other supervisors or officials, it is deemed appropriate by the lead state director or commissioner for prudential oversight and solvency monitoring purposes or for ensuring the competitiveness of the insurance marketplace.
(c) notwithstanding subdivision (a) of this paragraph, the lead state director or commissioner has discretion to exempt the ultimate controlling person from filing the annual group capital calculation report or to accept a limited group capital filing or report in accordance with the criteria as specified by the director or commissioner in regulation.
(d) If the lead state director or commissioner determines that an exemption from filing the group capital calculation report no longer applies to an insurance holding company system, the insurance holding company system shall file the GROUP CAPITAL CALCULATION report at the next annual filing date unless reasonable grounds exist for the lead state director or commissioner to grant an extension.
3. The ultimate controlling person of each insurer that is subject to registration and selected into the national association of insurance commissioners liquidity stress test framework shall file the results of a specific year's liquidity stress test with the lead state director or commissioner according to the procedures prescribed in the national association of insurance commissioners' financial analysis handbook. The following provisions apply to the liquidity stress test framework:
(a) The liquidity stress test framework includes scope criteria that are applicable to a specific data year. The scope criteria must be reviewed at least annually by the national association of insurance commissioners financial stability task force or its successor. Any change to the liquidity stress test framework or to a data year for which the scope criteria is to be measured shall be effective on January 1 of the year following the calendar year when the changes are adopted. Insurers that meet at least one threshold of the scope criteria are considered selected into the liquidity stress test framework for the specified data year unless the lead state director or commissioner, in consultation with the national association of insurance commissioners financial stability task force or its successor, determines that the insurer should not be included into the liquidity stress test framework for that data year. insurers that do not meet at least one threshold of the scope criteria are excluded from the liquidity stress test framework for the specified data year unless the director, in consultation with the national association of insurance commissioners financial stability task force or its successor, determines that the insurer should be included into the liquidity stress test framework for that data year.
(b) An insurance holding company system shall perform and file a specific year's liquidity stress test in accordance with the liquidity stress test framework's instructions and reporting templates for that specific year and any lead state director or commissioner determinati0ns.
Sec. 4. Section 20-481.11, Arizona Revised Statutes, is amended to read:
20-481.11. Exemption for nonmaterial items
A. No information need be disclosed on the registration statement filed under section 20-481.10 if such information is not material.
B. Unless otherwise prescribed by the director, sales, purchases, exchanges, loans or extensions of credit, or investments, involving one-half of one per cent percent or less of an insurer's admitted assets as of the thirty-first day of December 31 next preceding shall not be deemed material. For the purposes of this subsection, what is considered material does not apply to the group capital calculation or to the liquidity stress test framework.
Sec. 5. Section 20-481.12, Arizona Revised Statutes, is amended to read:
20-481.12. Standards
A. Transactions within an insurance holding company system to which an insurer subject to registration is a party are subject to the following standards:
1. The terms are fair and reasonable.
2. Agreements for cost sharing or management services and management must include provisions that are required by rule.
3. Charges or fees for services performed are reasonable.
4. Expenses incurred and payment received are allocated to the insurer in conformity with customary insurance accounting practices consistently applied.
5. The books, accounts and records of each party to all transactions clearly and accurately disclose the nature and details of the transactions including any accounting information that is necessary to support the reasonableness of the charges or fees to the respective parties.
6. The insurer's surplus as regards policyholders following any dividends or distributions to shareholder affiliates is reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs.
7. If the director deems that an insurer subject to this article is in a hazardous financial condition pursuant to section 20-220.01 or that a condition exists that constitutes grounds for supervision, conservation or a delinquency proceeding, the director may require the insurer to submit a deposit, held by the director, or a bond to protect the insurer for the duration of any outstanding contract or agreement. In determining WHETHER to require a deposit or bond, the director shall consider whether an affiliated person would be able to fulfill the contract or agreement if the insurer were to be placed into liquidation. The director may determine the amount of the deposit or bond, not to exceed the value of the contract or agreement in any one year, and whether the deposit or bond should be required for a single contract, MULTIPLE contracts or a contract with a specific person.
8. All records and data of the insurer that are held by an affiliate are the property of the insurer and are subject to the insurer's control. The records and data must be maintained in an identifiable manner and must be segregated or readily capable of being segregated at no additional cost to the insurer. At the request of the insurer, the affiliate shall allow the receiver to obtain a complete set of all records of any type that pertain to the insurer's business, obtain access to the operating systems on which the data is maintained, obtain the software that runs those systems and restrict the use of the data by the affiliate if it is not operating the insurer's business. Notwithstanding any other law, the affiliate shall provide a waiver of any landlord lien or other encumbrance to give the insurer access to all records and data in the event of the affiliate's default under a lease or other agreement. FOr the purposes of this paragraph, "All records and data" includes claims and claim files, policyholder lists, application files, litigation files, premium records, rate books, underwriting manuals, personnel records, financial records or similar records within the possession, custody or control of the affiliate.
9. Premiums or other funds that belong to the insurer and that are collected by or held by an affiliate are the exclusive property of the insurer and are subject to the control of the insurer. If an insurer is placed into receivership, any right of offset is subject to chapter 3, article 4 of this title.
B. The following transactions involving a domestic insurer and any person in its insurance holding company system, including amendments and modifications of affiliate agreements previously filed pursuant to this section that are subject to any materiality standards contained in paragraphs 1, 2, 3, 4 and 5 of this subsection, may not be entered into unless the insurer notifies the director in writing not less than thirty days before entering the transaction, unless the director permits a shorter notification period, of its intention to enter into the transaction and the director does not disapprove the transaction within that period:
1. Sales, purchases, exchanges, loans or extensions of credit, guarantees or investments if the transactions equal or exceed, with respect to nonlife insurers, the lesser of three per cent percent of the insurer's admitted assets or twenty-five per cent percent of surplus as regards policyholders as of December 31 next preceding or, with respect to life insurers, three per cent percent of the insurer's admitted assets as of December 31 next preceding.
2. Loans or extensions of credit to any person who is not an affiliate if the insurer makes the loans or extensions of credit with the agreement or understanding that the proceeds of the transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase assets of or to make investments in any affiliate of the insurer making such loans or extensions of credit if the transactions equal or exceed, with respect to nonlife insurers, the lesser of three per cent percent of the insurer's admitted assets or twenty-five per cent percent of surplus as regards policyholders as of December 31 next preceding or, with respect to life insurers, three per cent percent of the insurer's admitted assets as of December 31 next preceding.
3. Reinsurance agreements or modifications to reinsurance agreements, including:
(a) All reinsurance pooling agreements.
(b) Agreements in which the reinsurance premium or a change in the insurer's liabilities, or the projected reinsurance premium or a change in the insurer's liabilities in any of the next three years, equals or exceeds five per cent percent of the insurer's surplus as regards policyholders as of December 31 next preceding, including those agreements that may require as consideration the transfer of assets from an insurer to a nonaffiliate if an agreement or understanding exists between the insurer and the nonaffiliate that any portion of the assets will be transferred to one or more affiliates of the insurer.
4. All management agreements, service contracts, tax allocation agreements, guarantees and cost-sharing cost sharing arrangements.
5. Guarantees at the time executed by a domestic insurer, provided that a guarantee that is quantifiable as to amount is not subject to the notice requirements of this subsection unless the guarantee exceeds the lesser of one-half of one per cent percent of the insurer's admitted assets or ten per cent percent of the insurer's surplus as regards policyholders as of December 31 next preceding the execution of the guarantee. All guarantees that are not quantifiable as to amount are subject to the notice requirements of this subsection.
6. Direct or indirect acquisitions or investments in a person that controls the insurer or in an affiliate of the insurer in an amount that, together with its present holding in such investments, exceeds two and one-half per cent percent of the insurer's surplus to policyholders. Direct or indirect acquisitions or investments in subsidiaries acquired pursuant to section 20-481.01, or in nonsubsidiary insurance affiliates that are subject to this article, are exempt from this requirement.
7. Any material transaction that is specified by rule and that the director determines may adversely affect the interests of the insurer's policyholders.
C. The notice prescribed in subsection B of this section for amendments or modifications must include the reasons for the change and the financial impact on the domestic insurer. Informal notice shall be given within thirty days after a termination of a previously filed agreement to the director for determination of the type of filing required, if any.
D. Subsection B of this section does not authorize or permit allow any transactions that would be otherwise contrary to law.
E. A domestic insurer shall not enter into transactions that are part of a plan or series of like transactions with persons within the holding company system if the purpose of those separate transactions is to avoid the statutory threshold amount and thereby avoid the review that otherwise would occur. If the director determines that separate transactions were entered into during any twelve month period for that purpose, the director may order the insurer to cease and desist under section 20-481.26.
F. In reviewing transactions pursuant to subsection B of this section, the director shall consider if the transactions comply with the standards set forth in subsection A of this section and if they adversely affect the interests of policyholders.
G. Within thirty days of after an investment of a domestic insurer in any one corporation the director shall be notified of the investment if the total investment in the corporation by the insurance holding company system exceeds ten per cent percent of the corporation's voting securities.
H. The director may adopt rules to exempt transactions involving nonmaterial amounts from the notice requirements of this section.
I. For the purposes of supervision, seizure, conservatorship or receivership proceedings:
1. An affiliate that is a party to an agreement or contract with a domestic insurer that is subject to subsection B, paragraph 4 of this section is subject to the jurisdiction of any supervision, seizure, conservatorship or receivership proceedings against the insurer and to the authority of any supervisor, conservator, rehabilitator or liquidator for the insurer that is appointed pursuant to chapter 3, article 4 of this title for the purpose of interpreting, enforcing and overseeing the affiliate's obligations under the agreement or contract to perform services for the insurer that either:
(a) Are an integral part of the insurer's operations, including management, ADMINISTRATIVE, accounting, data processing, marketing, underwriting, claims handling, investment or other similar functions.
(b) Are essential to the insurer's ability to fulfill its obligations under insurance policies.
2. The director may require that an agreement or contract pursuant to subsection B, paragraph 4 of this section for the provision of services described in paragraph 1 of this subsection specify that the affiliate consents to the jurisdiction prescribed in this subsection.
Sec. 6. Section 20-481.21, Arizona Revised Statutes, is amended to read:
20-481.21. Confidential records; consent to release; release without consent; information sharing
A. All documents, materials or other information that is in the possession or control of the department and that is obtained by or disclosed to the director or any other person in the course of a filing, an examination or an investigation made pursuant to sections 20-481.03, 20-481.10, 20-481.12, 20-481.19 and 20-481.20 is recognized by this state as being proprietary and containing trade secrets, is confidential and privileged, is not subject to title 39, chapter 1, article 2, is not subject to subpoena and shall is not be subject to discovery or admissible as evidence in a private civil action. The director may use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the director's official duties. The director shall not make the documents, materials or other information public without the prior written consent of the insurer to which it pertains unless the director determines, after giving the insurer and its affiliates who would be affected by the publication notice and an opportunity to be heard, that the interests of policyholders, shareholders or the public will be served by the publication. The director may then publish all or any part of the documents, materials or other information as the director deems appropriate.
B. for the purposes of the information that is reported and provided to the department pursuant to section 20-481.10, subsection D, paragraph 2, the director shall maintain the confidentiality of the following:
1. THe group capital calculation and the group capital ratio produced within the calculation.
2. any group capital calculation information that is received from an insurance holding company system supervised by the federal reserve board or any United States group-wide supervisor.
C. For the purposes of the information that is reported and provided to the department pursuant to section 20-481.10, subsection D, paragraph 3, the director shall maintain the confidentiality of the liquidity stress test results and supporting disclosures and any liquidity stress test framework information that is received from an insurance holding company system supervised by the federal reserve board or any non-united states group-wide supervisor.
B. D. The director may:
1. Share nonpublic documents, materials or other information, including proprietary and trade secret documents and materials, with other state, federal and international regulatory agencies, with the national association of insurance commissioners and its affiliates and subsidiaries and with any third-party consultants designated by the director, with state, federal and international law enforcement authorities, including members of any supervisory college described in section 20-481.31, if the recipient agrees and warrants that it has the authority to maintain the confidentiality and privileged status of the documents, materials or other information and has verified in writing the legal authority to maintain confidentiality.
2. Receive documents, materials and other information, including proprietary and trade secret documents and materials, from the national association of insurance commissioners and its affiliates and subsidiaries or a third-party consultant designated by the director and from regulatory and law enforcement officials of other jurisdictions and shall maintain as confidential or privileged any document, material or other information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or other information.
C. E. The director shall enter into written agreements with the national association of insurance commissioners and any third-party consultant designated by the director that govern the sharing and use of information provided pursuant to this article and that are consistent with this section and that do all of the following:
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 or a third-party consultant designated by the director pursuant to this article, including procedures and protocols for sharing information by the national association of insurance commissioners with other state, federal or international regulators. The agreement shall provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the documents, materials or other information and has verified in writing the legal authority to maintain such confidentiality.
2. Specify that the director has ownership of all information shared with the national association of insurance commissioners and its affiliates and subsidiaries or a third-party consultant designated by the director pursuant to this article and the national association of insurance commissioners' or the third-party consultant's use of the information is subject to the direction of the director.
3. Except as provided in section 20-481.10, subsection D, paragraph 3, prohibit The national association of insurance commissioners or a third-party consultant designated by the director from storing the information shared in this article in a PERMANENT database after the underlying analysis is completed.
3. 4. Require prompt notice to be given to an insurer whose confidential information in the possession of the national association of insurance commissioners or its affiliates or subsidiaries a third-party consultant designated by the director pursuant to this article is subject to a request or subpoena to the national association of insurance commissioners or its affiliates or subsidiaries a third-party consultant designated by the director for disclosure or production.
4. 5. Require the national association of insurance commissioners and its affiliates or subsidiaries or a third-party consultant designated by the director to consent to intervention by an insurer in any judicial or administrative action in which the national association of insurance commissioners and its affiliates or subsidiaries or a third-party consultant designated by the director may be required to disclose confidential information about the insurer shared with the national association of insurance commissioners and its affiliates and subsidiaries pursuant to this article.
6. For reporting pursuant to section 20-481.10, subsection D, paragraph 3, if the agreement involves a third-party consultant, provide notification of the identity of any third-party consultant to all applicable insurers.
D. F. Notwithstanding subsection B D, paragraph 1 of this section, the director may share confidential and privileged documents, material or information reported pursuant to section 20-481.10, subsection D only with the directors or commissioners of insurance of other states having statutes or regulations substantially similar to subsection A of this section and who have agreed in writing not to disclose such information. The sharing of information by the director pursuant to this article does not constitute a delegation of regulatory authority by the director and the director is solely responsible for the administration, execution and enforcement of this article.
E. G. A disclosure to or by the director pursuant to this section or as a result of sharing information pursuant to subsection B D of this section is not a waiver of any applicable privilege or claim of confidentiality in the documents, materials or other information disclosed or shared.
F. H. Documents, materials or other information in the possession or control of the national association of insurance commissioners or its affiliates or subsidiaries a third-party consultant designated by the director pursuant to this article is confidential by law and privileged, is not subject to title 39, chapter 1, article 2, is not subject to subpoena and is not subject to discovery or admissible in evidence in any private civil action.
I. the group capital calculation and resulting group capital ratio required by section 20-481.10, subsection D, paragraph 2 and the liquidity stress test along with its results and supporting disclosures required by section 20-481.10, subsection d, paragraph 3 are regulatory tools for assessing group risks and capital adequacy and group liquidity risks, respectively, and are not intended as a means to rank insurers or insurance holding company systems generally. Except as otherwise provided in this article, the making, publishing, disseminating, circulating or placing before the public, or causing directly or indirectly to be made, published, disseminated, circulated or placed before the public in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station or any electronic means of communication available to the public, or in any other way as an advertisement, announcement or statement containing a representation or statement with regard to the group capital calculation, group capital ratio, the liquidity stress test results, or supporting disclosures for the liquidity stress test of any insurer or any insurer group, or of any component derived in the calculation by any insurer, broker or other person engaged in any manner in the insurance business would be misleading and is prohibited. If any materially false statement with respect to the group capital calculation, resulting group capital ratio, an inappropriate comparison of any amount to an insurer's or insurance group's group capital calculation or resulting group capital ratio, liquidity stress test result, supporting disclosures for the liquidity stress test or an inappropriate comparison of any amount to an insurer's or insurance group's liquidity stress test result or supporting disclosures is published in any written publication and the insurer is able to demonstrate to the commissioner with substantial proof the falsity of the statement or the inappropriATE COMPARISON, the insurer may publish announcements in a written publication if the sole purpose of the announcement is to rebut the materially false statement.
APPROVED BY THE GOVERNOR APRIL 13, 2023.
FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 13, 2023.
