Current through Register Vol. 49, No. 2, February 2024
SECTION
1. AUTHORITY.
This Rule and Regulation is promulgated pursuant to the
authority-granted by Arkansas Code Annotated §
23-61-108,
23-63-518 and
25-15-201, et
seq.
SECTION 2. EFFECTIVE
DATE.
This Rule and Regulation shall become effective January 1,
1992.
SECTION 3. PURPOSE.
The purposes of this Rule and Regulation are: to set forth rules
and procedural requirements which the Commissioner deems necessary to carry out
the provisions of Ark. Code Ann. §§
23-63-501, et
seq. , The Insurance Holding Company Regulatory Act, hereinafter referred to as
"the Act". The information called for by this Rule and Regulation is hereby
declared to be necessary and appropriate in the public interest and for the
protection of the policyholders in this State.
SECTION 4. SEVERABILITY CLAUSE.
If any provision of this Rule and Regulation, or the application
thereof to any person or circumstance, is held invalid, such invalidity shall
not affect other provisions or applications of this Rule and Regulation which
can be given effect without the invalid provision or application, and to that
end the provisions of this Rule and Regulation are severable.
SECTION 5. FORMS - GENERAL REQUIREMENTS.
(a) Forms A, B, C, and D are intended to be
guides in the preparation of the statements required by the Act. They are not
intended to be blank forms which are to be filled in. These 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 so prepared as to indicate to
the reader the coverage of the items without the necessity of his referring to
the text of the items or the instructions thereto. All instructions, whether
appearing under the items of the form or elsewhere therein, are to be omitted.
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.
(b) Two (2) complete copies
of each statement including exhibits and all other papers and documents filed
as a part thereof, shall be filed with the Commissioner by personal delivery or
mail addressed to:
Insurance Commissioner of the State of Arkansas
400 University Tower Building
Little Rack, Arkansas 72204
Attention: Legal Division.
A copy of Form C shall be filed in each state in which an insurer
is authorized to do business, if the Commissioner of that state has notified
the insurer of its request in writing, in which case the insurer has twenty
(20) days from receipt of the notice to file such form. At least one of the
copies shall be manually signed in the manner prescribed on the form. Unsigned
copies shall be conformed. 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.
(c) Statements
should be prepared on paper 8 1/2"x11" in size and preferably bound at the top
or the top left-hand corner. Exhibits and financial statements, unless
specifically prepared for the filing, may be submitted in their original size.
All copies of any statement, financial statements, or exhibits shall be clear,
easily readable and suitable for photocopying. Debits in credit categories and
credits in debit categories shall be designated so as to be clearly
distinguishable as such on photocopies. Statements shall be in the English
language and monetary values shall be stated in United States currency. If any
exhibit or other paper or 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.
SECTION
6. FORMS - INCORPORATION BY REFERENCE, SUMMARIES AND OMISSIONS.
(a) Information required by any item of Form
A, Form B or Form D may be incorporated by reference in answer or partial
answer to any other item. 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, Farm B or Form D provided such document or paper
is filed as an exhibit to the statement. Excerpts of documents may be filed as
exhibits if the documents are extensive. Documents currently on file with the
Commissioner 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 nor be incorporated by reference in any case where such
incorporation would render the statement incomplete, unclear or
confusing.
(b) 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 such 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 (3) years and may be qualified in its
entirety by such reference. In any case where two (2) 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 such documents need be filed with a schedule
identifying the omitted documents and setting forth the material details in
which such documents differ from the documents a copy of which is
filed.
SECTION 7.
FORMS-INFORMATION UNKNOWN OR UNAVAILABLE AND EXTENSIONS OF TIME TO FURNISH.
(a) Information required need be given only
insofar as it is known or reasonably available to the person filing the
statement. If any required information is unknown and not reasonably available
to the person filing, either because the obtaining thereof would involve
unreasonable effort or expense, or because it rests peculiarly within the
knowledge of another person not affiliated with the person filing, the
information may be omitted, subject to the following conditions:
(1) The person filing shall give such
information on the subject as it possesses or can acquire without unreasonable
effort or expense, together with the sources thereof; and
(2) The person filing shall include a
statement either showing that unreasonable effort or expense would be involved
or indicating the absence of any affiliation with the person within whose
knowledge the information rests and stating the result of a request made to
such person for the information.
(b) If it is impractical to furnish any
required information, document or report at the time it is required to be
filed, there may be filed with the Commissioner as a separate document an
application:
(1) Identifying the information,
document or report in question;
(2)
Stating why the filing thereof at the time required is impractical;
and
(3) Requesting an extension of
time for filing the information, document or report to a specified date. The
request for extension shall be deemed granted unless the Commissioner within
sixty (60) days after receipt thereof enters an order denying the
request.
SECTION
8. FORMS - ADDITIONAL INFORMATION AND EXHIBITS.
In addition to the information expressly required to be included
in Form A, Form B, Form C and Form D, there shall be added such further
material information, if any, as may be necessary to make the information
contained therein not misleading. The person filing may also file such exhibits
as it may desire in addition to those expressly required by the statement. Such
exhibits shall be so marked as to indicate clearly the subject matters to which
they refer. Changes to Forms A, B, C or D 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.
SECTION 9. DEFINITIONS.
(a) "Commissioner" means the Arkansas
Insurance Commissioner.
(b)
"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.
(c) "Foreign insurer" shall include an alien
insurer as defined in Ark. Code Ann. §
23-60-102(8)
except where clearly noted otherwise.
(d) "Ultimate controlling person" means that
person which is not controlled by any other person.
(e) Unless the context otherwise requires,
other terms found in this Rule and Regulation and in Ark. Code Ann. §
23-63-503
are used as defined in the said Code Section. Other nomenclature or terminology
is according to the Insurance Code, or industry usage if not defined by the
Code.
SECTION 10.
SUBSIDIARIES OF DOMESTIC INSURERS.
The authority to invest in subsidiaries under Ark. Code Ann. §
23-63-505
is in addition to any authority to invest in subsidiaries which may be
contained in any other provision of the Insurance Code.
SECTION 11. ACQUISITION OF CONTROL -
STATEMENT FILING.
A person required to file a statement pursuant to Ark. Code Ann.
§
23-63-514
shall furnish the required information on Form A, hereby made a part of this
Rule and Regulation.
SECTION
12. AMENDMENTS TO FORM A.
The applicant shall promptly advise the Commissioner of any
changes in the information so furnished on Form A arising subsequent to the
date upon which such information was furnished, but prior to the Commissioner's
disposition of the application.
SECTION
13. ACQUISITION OF ARK. CODE ANN. §
23-63-506
INSURERS.
(a) If the person being acquired is
deemed to be a "domestic insurer" solely because of the provisions of Ark. Code
Ann. §
23-63-506,
the name of the domestic insurer on the cover page should be indicated as
follows:
"ABC Insurance Company, a subsidiary of XYZ Holding
Company".
(b) Where a §
23-63-506
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.
SECTION 14.
ANNUAL REGISTRATION OF INSURERS - STATEMENT FILING.
An insurer required to file an annual registration statement
pursuant to Ark. Code Ann. §
23-63-514
shall furnish the required information on Form B, hereby made a part of this
Rule and Regulation.
SECTION
15. SUMMARY OF REGISTRATION - STATEMENT FILING.
An insurer required to file an annual registration statement
pursuant to Ark. Code Ann. §
23-63-514
is also required to furnish information required on Form C, hereby made a part
of this Rule and Regulation. An insurer shall file a copy of Farm C in each
state in which the insurer is authorized to do business, if requested by the
Commissioner of that state.
SECTION
16. ALTERNATIVE AND CONSOLIDATED REGISTRATIONS.
(a) Any authorized insurer may file a
registration statement on behalf of any affiliated insurer or insurers which
are required to register under Ark. Code Ann. §
23-63-514.
A registration statement may include information not required by the Act
regarding any insurer in the insurance holding company system even if such
insurer is not authorized to do business in this State. 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:
(1) The
statement or report contains substantially similar information required to be
furnished on Form B; and
(2) The
filing insurer is the principal insurance company in the insurance holding
company system.
(b) 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.
(c) 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 paragraph (a) above.
(d) Any insurer may take advantage of the
provisions of Ark. Code Ann. §
23-63-514(f)
or (g) without obtaining the prior approval
of the Commissioner. The Commissioner, however, reserves the right to require
individual filings if he deems such filings necessary in the interest of
clarity, ease of administration or the public good.
SECTION 17. DISCLAIMERS AND TERMINATION OF
REGISTRATION.
(a) A disclaimer of affiliation
or a request for termination of registration claiming that a person does not,
or will not upon the taking of some proposed action, control another person
(hereinafter referred to as the "subject") shall contain the following
information:
(1) The number of authorized,
issued and outstanding voting securities of the subject;
(2) With respect to the person whose control
is denied and all affiliates of such person, 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;
(3) All material relationships and bases for
affiliation between the subject and the person whose control is denied and all
affiliates of such person;
(4) A
statement explaining why such person should not be considered to control the
subject.
(b) A request
for termination of registration shall be deemed to have been granted unless the
Commissioner, within 30 days after he receives the request, notifies the
registrant otherwise.
SECTION
18. TRANSACTIONS SUBJECT TO PRIOR NOTICE - NOTICE FILING.
An insurer required to give notice of a proposed transaction
pursuant to Ark. Code Ann. §
23-63-515
shall furnish the required information on Form D, hereby made a part of this
Rule and Regulation.
SECTION
19. EXTRAORDINARY DIVIDENDS AND OTHER DISTRIBUTIONS.
(a) Requests for approval of extraordinary
dividends or any other extraordinary distribution to shareholders shall include
the following:
(1) The amount of the proposed
dividend;
(2) The date established
for payment of the dividend;
(3) 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;
(4) A copy of the calculations determining
that the proposed dividend is extraordinary. The work paper shall include the
following information:
(i) The amounts, dates
and form of payment of all dividends or distributions (including regular
dividends but excluding distributions of the insurers own securities) paid
within the period of twelve (12) 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 twelve (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 far the twelve (12) month period
ending the 31st day of December next preceding and the two preceding twelve
(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 (2) calendar
years.
(5) 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
(6) A brief statement as to the effect of the
proposed dividend upon the insurer's surplus and the reasonableness of surplus
in relation to the insurer's outstanding liabilities and the adequacy of
surplus relative to the insurer's financial needs.
(b) Subject to Ark. Code Ann. §
23-63-515(c), (d), (e) and
(f), each registered insurer shall report to
the Commissioner all dividends and other distributions to shareholders within
15 business days following the declaration thereof, including the same
information required by Subsections (a)(4) (i)-(v) of this
Section.
SECTION 20.
ADEQUACY OF SURPLUS.
The factors set forth in Ark. Code Ann. §
23-63-515(b)
are not intended to be an exhaustive list. 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. 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.
FORM A
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FORM B
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FORM C
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FORM D
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