Current through Register Vol. 49, No. 6, March 15, 2024
PURPOSE: This amendment clarifies the rule and
relaxes certain restrictions.
(1) Annual Reporting Requirements.
(A) An association captive insurance company
doing business in this state shall annually submit to the director a report of
its financial condition, verified by oath of two (2) of its executive officers.
The report shall be prepared in accordance with section
375.041,
RSMo.
(B) A pure or industrial
insured captive insurance company doing business in this state shall annually
submit to the director a report of its financial condition, verified by oath of
two (2) of its executive officers. Except as otherwise approved by the
director, the report shall:
1. Be prepared on
the basis of generally accepted accounting principles consistently applied;
and
2. Consist of a:
A. Balance sheet;
B. Statement of gain or loss from
operations;
C. Statement of cash
flows;
D. Statement of changes in
financial position;
E. Statement of
changes in capital paid up, gross paid in and contributed surplus and
unassigned funds (surplus); and
F.
Notes to financial statements. The notes to financial statements shall be those
required by generally accepted accounting principles, and shall include:
(I) A summary of ownership and relationship
of the company and all affiliated corporations or companies insured by the
captive; and
(II) A narrative
explanation of all material transactions and balances with the company.
(C)
A special purpose life reinsurance captive (SPLRC) doing business in this state
shall annually submit on or before March 1 of each year a report of its
financial condition, verified by oath of two (2) of its executive officers. The
report shall be prepared in accordance with section
375.041,
RSMo.
(2) Annual Audit.
All companies shall have an annual audit by an independent certified public
accountant (CPA), except to the extent waived by the director. The company
shall within ninety (90) days of admission apply to the director for approval
of the C PA by submitting an application to the director (Form CI-3). Annual
audited financial reports are due to the director on or before June 30 (except
for SPLRCs, whose filings are due on or before May 31) for the year ending
December 31 immediately preceding, unless the director has approved a fiscal
year ending on a date other than December 31 in which case the audited
financial report shall be filed with the director within six (6) months after
the end of such approved fiscal year. The annual audit report will be
considered part of the company's annual report of financial condition except
with respect to the filing due date. The annual audit shall consist of the
following:
(A) Opinion of Independent
Certified Public Accountant. Financial statements furnished pursuant to this
section shall be examined by independent certified public accountants in
accordance with generally accepted auditing standards as determined by the
American Institute of Certified Public Accountants. The opinion of the
independent certified public accountant shall cover all years presented, be
addressed to the company on stationery of the accountant showing the address of
issuance, bear signatures, and be dated;
(B) Report of Evaluation of Internal
Controls. This report shall include an evaluation of the internal controls of
the company relating to the methods and procedures used in the securing of
assets and the reliability of the financial records, including but not limited
to such controls as the system of authorization and approval and the separation
of duties. Unless otherwise approved by the director, the review will be
conducted in accordance with generally accepted auditing standards;
(C) Accountant's Letter. The accountant shall
furnish the company, for inclusion in the filing of the audited annual report,
a letter stating:
1. That the accountant is
independent with respect to the company and conforms to the standards of the
profession as contained in the Code of Professional Ethics and pronouncements
of the American Institute of Certified Public Accountants and pronouncements of
the Financial Accounting Standards Board;
2. The general background and experience of
the staff engaged in audit including the experience in auditing captives or
other insurance companies;
3. That
the accountant understands that the audited annual report and his opinions
thereon will be filed in compliance with the rules of this chapter with the
director;
4. That the accountant
consents to the requirements of section (3) of this rule and that the
accountant consents and agrees to make available for review by the director,
his designee or his appointed agent, the work papers as defined in section (3);
and
5. That the accountant is
properly licensed by an appropriate state licensing authority and is a member
in good standing in the American Institute of Certified Public
Accountants;
(D)
Financial Statements. Included financial statements shall be as follows:
1. Balance sheet;
2. Statement of gain or loss from
operations;
3. Statement of changes
in financial position;
4. Statement
of changes in capital paid up, gross paid in and contributed surplus and
unassigned funds (surplus); and
5.
Unless otherwise approved by the director, notes to financial statements
required by generally accepted accounting principles, including:
A. A reconciliation of differences, if any,
between the audited financial report and the statement or form filed with the
director;
B. A summary of ownership
and relationship of the company and all affiliated corporations or companies
insured by the captive; and
C. A
narrative explanation of all material transactions and balances with the
company; and
(E) Actuarial Certification. The annual audit
shall include an opinion as to the adequacy of the company's loss reserves and
loss expense reserves. The individual who certifies as to the adequacy of
reserves shall be a member in good standing of the American Academy of
Actuaries and apply to the director for approval by submitting an application
to the director (Form CI-4). As to any SPLRC or any company providing life
insurance or annuity contracts, such certification shall include the opinion
detailed in section
376.380,
RSMo.
(3) Availability
and Maintenance of Work[ing] Papers of the Independent Certified Public
Accountant. Each company shall require the independent certified public
accountant to make available for review and photocopying by the director or the
director's appointed agent the work papers prepared in the conduct of the audit
of the company. The company shall require that the accountant retain the audit
work papers for a period of not less than five (5) years after the period
reported upon. The aforementioned review by the director is an examination and
all work[ing] papers obtained during the course of such examination are
confidential. Such work[ing] papers may be retained by the department. "Work
papers" as referred to in this section include, but are not necessarily limited
to, schedules, analyses, reconciliations, abstracts, memoranda, narratives,
flow charts, copies of company records or other documents prepared or obtained
by the accountant and the accountant's employees in the conduct of their
examination of the company.
(4)
Notification of Adverse Financial Condition. A company shall require the
certified public accountant to immediately notify in writing an officer and all
members of the board of directors of the company of any determination by the
independent certified public accountant that the company has materially
misstated its financial condition in its report to the director pursuant to
section
379.1312 or
379.1403,
RSMo. The company will furnish such notification to the director within five
(5) working days of receipt thereof.
(5) Deposit Requirement. Whenever the
director deems that the financial condition of the company warrants additional
security, the director may require a company to deposit with the director in a
depository chosen by the director cash or securities approved by the director
or, alternatively, to furnish the director a clean irrevocable letter of credit
issued by a bank chartered by the State of Missouri or a member bank of the
Federal Reserve System and approved by the director (Form CI-2). The company
may receive interest or dividends from said deposit or exchange the deposits
for others of equal value with the approval of the director. If such company
discontinues business, the director will return such deposit only after being
satisfied that all obligations of the company have been discharged.
(6) Reinsurance.
(A) Any company authorized to do business in
this state may take credit for reserves on risks ceded to a reinsurer subject
to the following limitations. No credit shall be allowed-
1. For reinsurance where the reinsurance
contract does not result in the complete transfer of the risk or liability to
the reinsurer with respect to the portion of the liability purported to be
reinsured; and
2. As an asset or a
deduction from liability, to any ceding insurer for reinsurance unless the
reinsurance is payable by the assuming insurer on the basis of the liability of
the ceding insurer under the contract reinsured without diminution because of
the insolvency of the ceding insurer;
(B) Reinsurance under this section is to be
effected through a written agreement of reinsurance setting forth the terms,
provisions and conditions governing such reinsurance; and
(C) The director in his discretion may
require that complete copies of all reinsurance treaties and contracts be filed
and/or approved by him.
(7) Premium Tax.
(A) On or before February 1 of each year,
each company shall file a premium tax return (Form CI-5) on a form provided by
the director with respect to its direct premiums written and reinsurance
assumed premiums written for the year ending the preceding December
31.
(B) On or before March 31 of
each year, the director will certify to the director of revenue the taxes
payable by each company.
(C) On or
before April 30 of each year, the director of revenue will notify each company
of its assessment of taxes.
(D)
Payment of taxes assessed is due to the director of revenue on or before May
1.
*Original authority: 374.045, RSMo 1967, amended 1993,
1995; 379.1328, RSMo 2007; and 379.1421, RSMo 2007
.
