Utah Administrative Code
The Utah Administrative Code is the body of all effective administrative rules as compiled and organized by the Division of Administrative Rules (see Subsection 63G-3-102(5); see also Sections 63G-3-701 and 702).
NOTE: For a list of rules that have been made effective since October 1, 2019, please see the codification segue page.
NOTE TO RULEFILING AGENCIES: Use the RTF version for submitting rule changes.
R590. Insurance, Administration.
Rule R590-70. Insurance Holding Companies.
As in effect on October 1, 2019
Table of Contents
- R590-70-1. Authority.
- R590-70-2. Purpose.
- R590-70-3. Definitions.
- R590-70-4. Forms -- General Requirements.
- R590-70-5. Forms -- Incorporation by Reference, Summaries and Omissions.
- R590-70-6. Forms -- Information Unknown or Unavailable and Extension of Time to Furnish.
- R590-70-7. Forms -- Additional Information and Exhibits.
- R590-70-8. Subsidiaries of Domestic Insurers.
- R590-70-9. Acquisition of Control -- Statement Filing (Form A).
- R590-70-10. Amendments to Form A.
- R590-70-11. Acquisition of Section 31A-16-103(1)(f)(i) Insurers.
- R590-70-12. Pre-acquisition Notification (Form E).
- R590-70-13. Annual Registration of Insurers -- Statement Filing (Form B).
- R590-70-14. Summary of Registration -- Statement Filing (Form C).
- R590-70-15. Amendments to Form B.
- R590-70-16. Alternative and Consolidated Registrations.
- R590-70-17. Disclaimers and Termination of Registration.
- R590-70-18. Transactions Subject to Prior Notice -- Notice Filing.
- R590-70-19. Enterprise Risk Report.
- R590-70-20. Extraordinary Dividends and Other Distributions.
- R590-70-21. Adequacy of Surplus.
- R590-70-22. Severability.
- Date of Enactment or Last Substantive Amendment
- Notice of Continuation
- Authorizing, Implemented, or Interpreted Law
This rule is adopted pursuant to:
(1) Section 31A-2-201, which authorizes the commissioner to make rules to implement the Insurance Code; and
(2) Section 31A-16-116, which authorizes the commissioner to make rules pertaining to an insurer subject to Title 31A, Chapter 16.
The purpose of this regulation is to set forth rules and procedural requirements which the commissioner deems necessary to carry out the provisions of the National Association of Insurance Commissioners, NAIC, Insurance Holding Company System Regulatory Act and Sections 31A-16-101 through 31A-16-119, hereinafter referred to as "the Act". The information called for by these regulations is hereby declared to be necessary and appropriate in the public interest and for the protection of the policyholders in the State of Utah.
The definitions in Section 31A-1-301 and Title 31A, Part 16 apply to this rule.
(1) "Executive officer" means chief executive officer, chief operating officer, chief financial officer, treasurer, secretary, controller, and any other individual performing functions corresponding to those performed by the foregoing officers under whatever title.
(2) "Ultimate controlling person" means that person which is not controlled by any other person.
(1)(a) Form A, Form B, Form C, Form D, Form E and Form F are intended to be guides in the preparation of the statements required by Sections 31A-16-103, 31A-16-105, and 31A-16-106.
(b) They are not intended to be blank forms which are to be filled in.
(c) The statements filed shall contain the numbers and captions of all items, but the text of the items may be omitted provided the answers thereto are prepared in such a manner as to indicate clearly the scope and coverage of the items.
(d) All instructions, whether appearing under the items of the form or elsewhere therein, are to be omitted.
(e) Unless expressly provided otherwise, if any item is inapplicable or the answer thereto is in the negative, an appropriate statement to that effect shall be made.
(2)(a) Each statement including exhibits and all other papers and documents filed as a part thereof, shall be filed with the commissioner in electronic form by secure means.
(b) Each statement shall be signed in the manner prescribed on the form. If the signature of any person is affixed pursuant to a power of attorney or other similar authority, a copy of such power of attorney or other authority shall also be filed with the statement.
(3) If an applicant requests a hearing on a consolidated basis under Subsection 31A-16-103(10), in addition to filing the Form A with the commissioner, the applicant shall file a copy of Form A with the NAIC in electronic form.
(4)(a) Statements should be prepared electronically.
(b) Statements shall be easily readable and suitable for review and reproduction.
(c) Debits in credit categories and credits in debit categories shall be designated so as to be clearly distinguishable.
(d) Statements shall be in the English language. Monetary values shall be stated in United States currency. If any exhibit or other document filed with the statement is in a foreign language, it shall be accompanied by a translation into the English language and any monetary value shown in a foreign currency normally shall be converted into United States currency.
(5) Forms A, B, C, D, E, and F can be obtained from the Utah Insurance Department's website at www.insurance.utah.gov.
(1)(a) Information required by any item of Form A, Form B, Form D, Form E or Form F may be incorporated by reference in answer or partial answer to any other item.
(b) Information contained in any financial statement, annual report, proxy statement, statement filed with a governmental authority, or any other document may be incorporated by reference in answer or partial answer to any item of Form A, Form B, Form D, Form E or Form F, provided the document is filed as an exhibit to the statement.
(c) Excerpts of documents may be filed as exhibits if the documents are extensive.
(d) Documents currently on file with the Utah Insurance Department which were filed within three (3) years need not be attached as exhibits. References to information contained in exhibits or in documents already on file shall clearly identify the material and shall specifically indicate that such material is to be incorporated by reference in answer to the item. Matter shall not be incorporated by reference in any case where the incorporation would render the statement incomplete, unclear or confusing.
(2)(a) Where an item requires a summary or outline of the provisions of any document, only a brief statement shall be made as to the pertinent provisions of the document. In addition to the statement, the summary or outline may incorporate by reference particular parts of any exhibit or document currently on file with the commissioner which was filed within three years and may be qualified in its entirety by such reference.
(b) In any case where two or more documents required to be filed as exhibits are substantially identical in all material respects, except as to the parties thereto, the dates of execution, or other details, a copy of only one of the documents need be filed with a schedule identifying the omitted documents and setting forth the material details in which the documents differ from the documents, a copy of which is filed.
(1) If it is impractical to furnish any required information, document or report at the time it is required to be filed, there shall be filed with the commissioner a separate document:
(a) identifying the information, document or report in question;
(b) stating why the filing thereof at the time required is impractical; and
(c) requesting an extension of time for filing the information, document or report to a specified date.
(2) The request for extension shall be deemed granted unless the commissioner within 60 days after receipt thereof enters an order denying the request.
(1) In addition to the information expressly required to be included in Form A, Form B, Form C, Form D, Form E and Form F, the commissioner may request such further material information, if any, as may be necessary to make the information contained therein not misleading.
(2) The person filing may also file such exhibits as it may desire in addition to those expressly required by the statement. The exhibits shall be so marked as to indicate clearly the subject matters to which they refer.
(3) Changes to Form A, Form B, Form C, Form D, Form E and Form F shall include on the top of the cover page the phrase: "Change No. (insert number) to" and shall indicate the date of the change and not the date of the original filing.
The authority to invest in subsidiaries under Subsection 31A-16-102.5(2) is in addition to any authority to invest in subsidiaries which may be contained in any other provision of Title 31A.
(1) A person required to file a statement pursuant to Section 31A-16-103, shall furnish the required information on Form A.
(2) Such person shall also furnish the required information on Form E, as described in R590-70-13.
The applicant shall promptly advise the commissioner of any changes in the information furnished on Form A arising subsequent to the date upon which the information was furnished but prior to the commissioner's disposition of the application.
(1) If the person being acquired is deemed to be a "domestic insurer" solely because of the provisions of Subsection 31A-16-103(1)(f)(i), the name of the domestic insurer on the cover page should be indicated as "ABC Insurance Company, a subsidiary of XYZ Holding Company."
(2) Where a Subsection 31A-16-103(1)(f)(i) insurer is being acquired, references to "the insurer" contained in Form A shall refer to both the domestic subsidiary insurer and the person being acquired.
(1) If a domestic insurer, including any person controlling a domestic insurer, is proposing a merger or acquisition pursuant to Subsection 31A-16-103(1), that person shall file a pre-acquisition notification form, Form E.
(2) If a non-domiciliary insurer licensed to do business in this state is proposing a merger or acquisition pursuant to Section 31A-16-104.5, that person shall file a pre-acquisition notification form, Form E. No pre-acquisition notification form need be filed if the acquisition is beyond the scope of Section 31A-16-104.5 as set forth in Subsection 31A-16-104.5(2)(b).
(3) In addition to the information required by Form E, the commissioner may wish to require an expert opinion as to the competitive impact of the proposed acquisition.
An insurer required to file an annual registration statement pursuant to Section 31A-16-105 shall furnish the required information on Form B.
An insurer required to file an annual registration statement pursuant to Section 31A-16-105 is also required to furnish information required on Form C.
(1) An amendment to Form B shall be filed within fifteen days after the end of any month in which there is a material change to the information provided in the annual registration statement.
(2) Amendments shall be filed in the Form B format with only those items which are being amended reported. Each amendment shall include at the top of the cover page "Amendment No. (insert number) to Form B for (insert year)" and shall indicate the date of the change and not the date of the original filings.
(1)(a) Any authorized insurer may file a registration statement on behalf of any affiliated insurer or insurers which are required to register under Section 31A-16-105. A registration statement may include information not required by the Act regarding any insurer in the insurance holding company system even if the insurer is not authorized to do business in this state.
(b) In lieu of filing a registration statement on Form B, the authorized insurer may file a copy of the registration statement or similar report which it is required to file in its state of domicile, provided:
(i) the statement or report contains substantially similar information required to be furnished on Form B; and
(ii) the filing insurer is the principal insurance company in the insurance holding company system.
(2) The question of whether the filing insurer is the principal insurance company in the insurance holding company system is a question of fact and an insurer filing a registration statement or report in lieu of Form B on behalf of an affiliated insurer, shall set forth a brief statement of facts which will substantiate the filing insurer's claim that it, in fact, is the principal insurer in the insurance holding company system.
(3) With the prior approval of the commissioner, an unauthorized insurer may follow any of the procedures which could be done by an authorized insurer under R590-70-16(1).
(4) Any insurer may take advantage of the provisions of Subsections 31A-16-105(8) or 31A-16-105(9) without obtaining the prior approval of the commissioner. The commissioner, however, reserves the right to require individual filings if the commissioner deems such filings necessary in the interest of clarity, ease of administration, or the public good.
(1) A disclaimer of affiliation pursuant or a request for termination of registration claiming that a person does not, or will not upon the taking of some proposed action, control any other person, hereinafter referred to as the "subject", shall contain the following information:
(a) the number of authorized, issued and outstanding voting securities of the subject;
(b) with respect to the person whose control is denied and all affiliates of such person:
(i) the number and percentage of shares of the subject's voting securities which are held of record or known to be beneficially owned, and the number of such shares concerning which there is a right to acquire, directly or indirectly; and
(ii) information as to all transactions in any voting securities of the subject which were effected during the past six months by such persons.
(c) all material relationships and bases for affiliation between the subject and the person whose control is denied and all affiliates of such person; and
(d) a statement explaining why such person should not be considered to control the subject; and
(2) A request for termination of registration shall be deemed to have been granted unless the commissioner, within thirty days after receipt of the request, notifies the registrant otherwise.
(1) An insurer required to give notice of a proposed transaction pursuant to Section 31A-16-106 shall furnish the required information on Form D.
(2) Agreements for cost sharing services and management services shall at a minimum and as applicable:
(a) identify the person providing services and the nature of such services;
(b) set forth the methods to allocate costs;
(c) require timely settlement, not less frequently than on a quarterly basis, and in compliance with the requirements in the Accounting Practices and Procedures Manual;
(d) prohibit advancement of funds by the insurer to the affiliate except to pay for services defined in the agreement;
(e) state that the insurer will maintain oversight for functions provided to the insurer by the affiliate and that the insurer will monitor services annually for quality assurance;
(f) define books and records of the insurer to include all books and records developed or maintained under or related to the agreement;
(g) specify that all books and records of the insurer are and remain the property of the insurer and are subject to control of the insurer;
(h) state that all funds and invested assets of the insurer are the exclusive property of the insurer, held for the benefit of the insurer and are subject to the control of the insurer;
(i) include standards for termination of the agreement with and without cause;
(j) include provisions for indemnification of the insurer in the event of gross negligence or willful misconduct on the part of the affiliate providing the services;
(k) specify that, if the insurer is placed in receivership or seized by the commissioner under Title 31, Chapter 27a:
(i) all of the rights of the insurer under the agreement extend to the receiver or commissioner; and,
(ii) all books and records will immediately be made available to the receiver or the commissioner, and shall be turned over to the receiver or commissioner immediately upon the receiver or the commissioner's request;
(l) specify that the affiliate has no automatic right to terminate the agreement if the insurer is placed in receivership pursuant to Title 31, Chapter 27a; and
(m) specify that the affiliate will continue to maintain any systems, programs, or other infrastructure notwithstanding a seizure by the commissioner under Title 31, Chapter 27a, and will make them available to the receiver, for so long as the affiliate continues to receive timely payment for services rendered.
The ultimate controlling person of an insurer required to file an enterprise risk report pursuant to Subsection 31A-16-105(12) shall furnish the required information on Form F.
(1) Requests for approval of extraordinary dividends or any other extraordinary distribution to shareholders shall include the following:
(a) the amount of proposed dividend;
(b) the date established for payment of the dividend;
(c) a statement as to whether the dividend is to be in cash or other property and if in property, a description thereof, its cost, and its fair market value together with an explanation of the basis for valuation;
(d) a copy of the calculations determining that the proposed dividend is extraordinary. The work paper shall include the following information:
(i) the amounts, date and form of payment of all dividends or distributions, including regular dividends but excluding distributions of the insurer's own securities, paid within the period of twelve consecutive months ending on the date fixed for payment of the proposed dividend for which approval is sought and commencing on the day after the same day of the same month in the last preceding year;
(ii) surplus as regards policyholders, total capital and surplus, as of the 31st day of December next preceding;
(iii) if the insurer is a life insurer, the net gain from operations for the 12-month period ending the 31st day of December next preceding;
(iv) if the insurer is not a life insurer, the net income less realized capital gains for the 12-month period ending the 31st day of December next preceding and the two preceding 12-month periods; and
(v) if the insurer is not a life insurer, the dividends paid to stockholders excluding distributions of the insurer's own securities in the preceding two calendar years;
(e) a balance sheet and statement of income for the period intervening from the last annual statement filed with the commissioner and the end of the month preceding the month in which the request for dividend approval is submitted; and
(f) a brief statement as to the effect of the proposed dividend upon the insurer's surplus and reasonableness of surplus in relation to the insurer's outstanding liabilities and the adequacy of surplus relative to the insurer's financial needs.
(2) Subject to Subsection 31A-16-106(2), each registered insurer shall report to the commissioner all dividends and other distributions to shareholders within fifteen business days following the declaration thereof, including the same information required by R590-70-20(1)(d).
(1) The factors set forth in Subsection 31A-16-106(4) are not intended to be an exhaustive list.
(2) In determining the adequacy and reasonableness of an insurer's surplus no single factor is necessarily controlling. The commissioner instead will consider the net effect of all of these factors plus other factors bearing on the financial condition of the insurer.
(3) In comparing the surplus maintained by other insurers, the commissioner will consider the extent to which each of these factors varies from company to company and in determining the quality and liquidity of investments in subsidiaries, the commissioner will consider the individual subsidiary and may discount or disallow its valuation to the extent that the individual investments so warrant.
If any provision of this rule or its application to any person or situation is held to be invalid, that invalidity shall not affect any other provision or application of this rule which can be given effect without the invalid provision or application, and to this end the provisions of this rule are declared to be severable.
January 10, 2017
January 9, 2017
For questions regarding the content or application of rules under Title R590, please contact the promulgating agency (Insurance, Administration). A list of agencies with links to their homepages is available at http://www.utah.gov/government/agencylist.html or from http://www.rules.utah.gov/contact/agencycontacts.htm.