Current through Reg. 50, No. 13; March 28, 2025
(a) The ultimate
controlling person of an insurer in an insurance holding company system for
which Texas is the lead state and that is described by paragraphs (1) or (2) of
this subsection must annually file a group capital calculation report:
(1) an insurance holding company system that
is subject to a covered agreement, defined by Insurance Code Chapter 493,
Subchapter C, concerning Credit for Reinsurance; or
(2) an insurance holding company system that
is required by the United States Federal Reserve Board to perform a group
capital assessment, unless the Federal Reserve Board shares that group capital
assessment with the Texas Department of Insurance and under terms of an
information sharing agreement.
(b) Except as provided by subsection (e) of
this section, the Commissioner may require the ultimate controlling person of
an insurer in an insurance holding company system for which Texas is the lead
state and that is not subject to subsection (a) of this section to annually
file a group capital calculation. In exercising this discretion, the
Commissioner will consider the following factors:
(1) whether any insurer in the insurance
holding company system is in a risk-based capital action-level event described
by §
7.402 of this title (relating to
Risk-Based Capital and Surplus Requirements for Insurers and HMOs) or a similar
standard for a non-U.S. insurer;
(2) whether any insurer in the insurance
holding company system meets one or more of the standards of an insurer found
to be in hazardous financial condition under §
8.3 of this title (relating to
Hazardous Conditions and Remedy of Hazardous Conditions);
(3) whether the Commissioner finds that any
insurer in the insurance holding company system otherwise exhibits qualities of
a troubled insurer on the basis of any unique circumstances, including the type
and volume of business written, ownership and organizational structure, federal
agency requests, and international supervisor requests;
(4) whether the insurance holding company
system's annual direct written and unaffiliated assumed premium, excluding
premiums reinsured with the Federal Crop Insurance Corporation and Federal
Flood Program, exceeded $1,000,000,000 in its last filed financial
statement;
(5) whether the
insurance holding company system has any insurers within its holding company
structure that are domiciled outside of the United States or one of its
territories;
(6) whether the
insurance holding company system has any banking, depository, or other
financial entity that is subject to an identified regulatory capital framework
within its holding company structure;
(7) whether the insurance holding company
system attests that there are no material changes in the transactions between
insurers and non-insurers in the group; and
(8) whether any of the non-insurers in the
insurance holding company system pose a material financial risk to the
insurer's ability to honor policyholder obligations.
(c) The group capital calculation filing must
be made concurrently with the registration statement, unless given an extension
by the Commissioner on the basis of reasonable grounds shown. The person
submitting the group capital calculation must confirm that it was completed in
accordance with the latest version of the Group Capital Calculation
Instructions published by the National Association of Insurance Commissioners
(NAIC) and available on the NAIC website. The Commissioner may allow a
controlling person who is not the ultimate controlling person to file the group
capital calculation.
(d) The
Commissioner may accept an annual limited group capital filing in lieu of the
group capital calculation described in subsection (c) of this section if the
factors listed in subsection (b)(4) - (8) of this section are
present.
(e) The ultimate
controlling person of an insurer in an insurance holding company system for
which Texas is the insurer's lead state is exempt from filing a group capital
calculation if the insurance holding company system meets any of the following
criteria:
(1) an insurance holding company
system that has in its holding company structure only one insurer that:
(A) writes business in Texas only;
and
(B) assumes no business from
any other insurer;
(2) an
insurance holding company system whose non-U.S. group-wide supervisor is
located in a reciprocal jurisdiction under Insurance Code Chapter 493,
Subchapter C, that recognizes the U.S. state regulatory approach to group
supervision and group capital;
(3)
an insurance holding company system whose non-U.S. jurisdiction provides
confirmation by a competent regulatory authority in that jurisdiction that
information about the insurer and any parent, subsidiary, or affiliated entity,
if applicable, will be provided in accordance with a memorandum of
understanding or similar document; or
(4) an insurance holding company system:
(A) that provides information to its lead
state commissioner and that meets the requirements for accreditation under the
NAIC financial standards and accreditation program, directly or indirectly,
through the group-wide supervisor, who has determined the information is
satisfactory to allow the lead state to comply with group supervision
requirements; and
(B) whose
non-U.S. group-wide supervisor that is not in a reciprocal jurisdiction under
Insurance Code Chapter 493, Subchapter C, recognizes and accepts the group
capital calculation as the worldwide group capital assessment for U.S.
insurance groups that operate in that jurisdiction. A non-U.S. jurisdiction is
considered to recognize and accept the group capital calculation if:
(i) the non-U.S. jurisdiction recognizes the
U.S. state regulatory approach to group supervision and group capital by
providing confirmation by a competent regulatory authority in that jurisdiction
that insurers and insurance groups whose lead state is accredited by the NAIC
under the NAIC Accreditation Program:
(I) will
be subject only to worldwide prudential insurance group supervision, including
worldwide group governance, solvency and capital, and reporting, as applicable,
by the lead state; and
(II) will
not be subject to group supervision, including worldwide group governance,
solvency and capital, and reporting at the level of the worldwide parent
undertaking of the insurance or reinsurance group by the non-U.S. jurisdiction;
or
(ii) where no U.S.
insurance groups operate in the non-U.S. jurisdiction, that non-U.S.
jurisdiction notifies in writing to the lead state with a copy to the
International Association of Insurance Supervisors that the group capital
calculation is an acceptable international capital standard.
(f)
Notwithstanding subsection (e) of this section, the Commissioner, after
consultation with other supervisors or officials, may require the group capital
calculation filing for the U.S. operations of a non-U.S.-based insurance
holding company system for which Texas is the lead state if the Commissioner
finds the filing appropriate for prudential oversight and solvency monitoring
purposes.
(g) The Commissioner may
consult a list of non-U.S. jurisdictions that recognize and accept the group
capital calculation published through the NAIC Committee Process (NAIC List) to
determine whether the ultimate controlling person of an insurer is exempt under
subsection (e)(4) of this section.
(h) The Commissioner may recommend to the
NAIC that a non-U.S. jurisdiction where no U.S. insurance groups operate be
included on the NAIC List if that jurisdiction provides to the Commissioner
confirmation under subsection (e)(4) of this section.
(i) If the Commissioner's determination under
subsection (e)(4) of this section differs from the NAIC List, the Commissioner
will provide thoroughly documented justification for the determination to the
NAIC and other states.
(j) If the
Commissioner determines that a non-U.S. jurisdiction no longer meets one or
more of the requirements to recognize and accept the group capital calculation,
the Commissioner may recommend to the NAIC that the non-U.S. jurisdiction be
removed from the NAIC List.
(k)
Nothing in this section precludes an insurer from voluntarily providing the
Commissioner with information related to Insurance Code Chapter 823, Subchapter
B, concerning Registration.
