40-3305.
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/ks/chapter-40/40-3305A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
40-3305. Insurers of an insurance holding company system subject to registration; annual groups capital calculation and NAIC liquidity stress test framework, when required.
(a)Every insurer that is authorized to do business in this state and is a member of an insurance holding company system shall register with the commissioner of insurance, except a foreign insurer subject to registration requirements and standards adopted by statute or regulation in the jurisdiction of its domicile that are substantially similar to those contained in this section. Any insurer that is subject to registration under this section shall register within 15 days after it becomes subject to registration and annually thereafter by May 1 of each year for the previous calendar year the commissioner of insurance for good cause shown extends the time for registration, and then within such extended time. The commissioner of insurance may require any authorized insurer that is a member of an insurance holding company system and is not subject to registration under this section to furnish a copy of the registration statement, the summary specified in subsection
(c)or other information filed by such insurance company with the insurance regulatory authority of domiciliary jurisdiction.
(b)Pursuant to subsection (a), every insurer subject to registration shall file a registration statement on a form provided by the commissioner of insurance that shall contain current information regarding:
(1)The capital structure, general financial condition, ownership and management of the insurer and any person controlling the insurer;
(2)the identity and relationship of every member of the insurance holding company system;
(3)the following agreements in force and transactions currently outstanding or that 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 an 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 agreements, service contracts and cost sharing arrangements;
(F)reinsurance agreements;
(G)dividends and other distributions to shareholders; and
(H)consolidated tax allocation agreements;
(4)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 commissioner of insurance;
(5)any pledge of the insurer's stock, including stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system;
(6)financial statements of or within an insurance holding company system, including all affiliates, if requested by the commissioner of insurance. Financial statements may include, but not be limited to, annual audited financial statements filed with the U.S. securities and exchange commission, SEC, pursuant to the securities act of 1933, as amended, or the securities exchange act of 1934, as amended. An insurer required to file financial statements pursuant to this paragraph may satisfy the request by providing the commissioner of insurance with the most recently filed parent corporation financial statements that have been filed with the SEC;
(7)statements that the insurer's board of directors and principal officers oversee corporate governance and internal controls and that the insurer's principal officers have approved, implemented and continue to maintain and monitor corporate governance and internal control procedures; and
(8)any other information required by the commissioner of insurance by rules and regulations.
(c)All registration statements shall be accompanied by a summary outlining all items in the current registration statement representing changes from the prior registration statement.
(d)No information need be disclosed on the registration statement filed pursuant to subsection
(b)if such information is not material for the purpose of this section. Unless the commissioner of insurance by rules and regulations or order provides otherwise, sales, purchases, exchanges, loans or extensions of credit, investments or guarantees, involving 0.5% or less of an insurer's admitted assets as of the December 31 next preceding shall be deemed immaterial for purposes of this section.
(e)Each registered insurer shall keep current the information required to be disclosed in such insurer's registration statement by reporting all material changes or additions on amendment forms provided by the commissioner of insurance within 15 days after the end of the month in which it learns of each such change or addition, except that each registered insurer shall report all dividends and other distributions to shareholders within five business days following its declaration. Any such dividend or distribution shall not be paid for at least 10 business days from the commissioner's receipt of the notice of its declaration.
(f)Any person within an insurance holding company system subject to registration shall provide complete and accurate information to an insurer if such information is reasonably necessary to enable the insurer to comply with the provisions of this act.
(g)The commissioner shall terminate the registration of any insurer that demonstrates that such insurer is no longer a member of an insurance holding company system.
(h)The commissioner may require or allow two or more affiliated insurers subject to registration hereunder to file a consolidated registration statement.
(i)The commissioner may allow an insurer that is authorized to do business in this state and part of an insurance holding company system to register on behalf of any affiliated insurer that is required to register under subsection
(a)and file all information and material required to be filed under this section.
(j)The provisions of this section shall not apply to any information or transaction if and to the extent the commissioner by rule and regulation or order exempts the same from the provisions of this section.
(k)Any person may file with the commissioner a disclaimer of affiliation with any authorized insurer or such a disclaimer may be filed by such insurer or any member of an insurance holding company system. The disclaimer shall fully disclose all material relationships and bases for affiliation between such person and such insurer as well as the basis for disclaiming such affiliation. After a disclaimer has been filed, the insurer shall be relieved of any duty to register or report under this section that may arise out of the insurer's relationship with such person unless and until the commissioner disallows such a disclaimer. The commissioner shall disallow such a disclaimer only after furnishing all parties in interest with notice and opportunity to be heard in accordance with the provisions of the Kansas administrative procedure act.
(1)Except as provided in paragraph (2), the ultimate controlling person of every insurer subject to registration also shall file an annual enterprise risk report. The report, to the best of the ultimate controlling person's knowledge and belief, shall identify the material risks within the insurance holding company system that could pose enterprise risk to the insurer. The report shall be appropriate to the nature, scale and complexity of the insurer. The report shall be filed with the lead state commissioner of insurance of the insurance holding company system as determined by the procedures within the financial analysis handbook adopted by the NAIC. The first enterprise risk report shall be filed not later than May 1 of each year unless the commissioner extends the time for filing for good cause shown.
(A)Except as provided hereunder, the ultimate controlling person of every insurer subject to registration shall concurrently file with the registration an annual group capital calculation as directed by the lead state commissioner. The report shall be completed in accordance with the NAIC group capital calculation instructions, which may permit the lead state commissioner to allow a controlling person that is not the ultimate controlling person to file the group capital calculation. The report shall be filed with the lead state commissioner of the insurance holding company system as determined by the commissioner of insurance in accordance with the procedures within the financial analysis handbook. An insurance holding company system shall be exempt from filing the group capital calculation if:
(i)It has only one insurer within its holding company structure, only writes business is only licensed in its domestic state and assumes no business from any other insurer;
(ii)it is required to perform a group capital calculation specified by the board of governors of the federal reserve system. The lead state commissioner shall request the calculation from the federal reserve board under the terms of information sharing agreements in effect. If the federal reserve board cannot share the calculation with the lead state commissioner, the insurance holding company shall not be exempt from the group capital calculation filing;
(iii)its non-United States group-wide supervisor is located within a reciprocal jurisdiction, as defined in K.S.A. 40-221a , and amendments thereto, that recognizes the United States regulatory approach to group supervision and group capital; and
(iv)it is an insurance holding company system:
(a)That provides information to the lead state that meets the requirements for accreditation under the NAIC financial standards and accreditation program, either directly or indirectly through the group-wide supervisor, who has determined that such information is satisfactory to allow the lead state to comply with the NAIC group supervision approach, as detailed in the NAIC financial analysis handbook; and
(b)whose non-United States group-wide supervisor who is not in a reciprocal jurisdiction recognizes and accepts, as specified by the commissioner in rules and regulations, the group capital calculation as the worldwide group capital assessment for United States insurance groups that operate in that jurisdiction.
(B)Notwithstanding the provisions of K.S.A. 40-3305, and amendments thereto, a lead state commissioner shall require the group capital calculation for the United States operations of any non-United States based insurance holding company system if, after any necessary consultation with other supervisors or officials, it is deemed appropriate by the lead state commissioner for prudential oversight and solvency monitoring purposes or for ensuring the competitiveness of the insurance marketplace.
(C)Notwithstanding the exemptions from filing the group capital calculation stated in K.S.A. 40-3305, and amendments thereto, the lead state commissioner has the discretion to exempt the ultimate controlling person from filing the annual group capital calculation or to accept a limited group capital filing or report in accordance with criteria specified by the commissioner in regulation.
(D)If the lead state commissioner determines that an insurance holding company system no longer meets one or more of the requirements for an exemption from filing the group capital calculation under this section, the insurance holding company system shall file the group capital calculation at the next annual filing date unless given an extension by the lead state commissioner based on reasonable grounds shown.
(E)The ultimate controlling person of every insurer subject to registration and also scoped into the NAIC liquidity stress test framework shall file the results of a specific year's liquidity stress test. The filing shall be made to the lead state insurance commissioner of the insurance holding company system as determined by the procedures within the financial analysis handbook and that:
(i)The NAIC liquidity stress test framework includes scope criteria applicable to a specific data year. These scope criteria are reviewed at least annually by the financial stability task force or its successor. Any change to the NAIC liquidity stress test framework or to the data year for which the scope criteria are to be measured shall be effective on January 1 of the year following the calendar year in which such changes are adopted. Insurers meeting at least one threshold of the scope criteria are considered scoped into the NAIC liquidity stress test framework for the specified data year, unless the lead state insurance commissioner, in consultation with the NAIC financial stability task force or its successor, determines that such insurer should not be scoped into the framework for that data year. Similarly, insurers that do not trigger at least one threshold of the scope criteria are considered scoped out of the NAIC liquidity stress test framework for the specified data year, unless the lead state insurance commissioner, in consultation with the NAIC financial stability task force or its successor, determines that the insurer should be scoped into the framework for that data year.
(ii)The lead state insurance commissioner, in consultation with the financial stability task force or its successor, shall assess the concerns of regulators that wish to avoid having insurers scoped in and out of the NAIC liquidity stress test framework on a frequent basis as part of the determination for an insurer.
(F)The performance and filing of the results of a specific year's liquidity stress test shall comply with the NAIC liquidity stress test framework instructions and reporting templates for that year and any lead state insurance commissioner determinations, in consultation with the financial stability task force or its successor, provided within the framework.
(m)The failure of an insurer or an ultimate controlling person of the insurer to file a registration statement, any summary of the registration statement or enterprise risk filing within the specified time for filing shall be a violation by the insurer or by the ultimate controlling person of the insurer, as applicable.