[29 Pa.B. 5392]
[Continued from previous Web Page] § 25.17. Annual registration of insurers--statement filing.
* * * * * (c) An amendment to Form B shall be filed within 15 days after the end of a month in which there is a material change to the information provided in the annual registration statement, including changes in officers or directors listed in Item 4 of Form B. An amendment to Form B is not required if a material change has been reported as a dividend, other distribution to shareholders, or other transaction under §§ 25.21 and 25.22 (relating to transactions subject to prior notice--notice filing; and all dividends and other distributions), and there has been no change in the reported information.
(d) Amendments shall be filed in the Form B format with only items which are being amended reported. Each amendment shall include at the top of the [cover] first page ''Amendment No. (insert number) to Form B for (insert year of most recent filing)'' and shall indicate the date of the [change] amendment and not the date of the original filing.
§ 25.18. Summary of registration--statement filing.
An [insurer required to file an] annual registration statement filed under section 1404 of the act (40 P. S. § 991.1404) [is also required to furnish] shall include the information required on Form C as prescribed by this chapter. [An insurer shall file a] A copy of Form C shall be filed in [each state] any jurisdiction in which an insurer is authorized to do business, if [requested by the Commissioner of that state] chief insurance regulatory official of the jurisdiction has notified the insurer of its request in writing, in which case the insurer shall file the form by the date required by the requesting chief insurance regulatory official or within 15 days from receipt of the notice to file the form, whichever is later.
§ 25.19. Alternative and consolidated registrations.
(a) [An authorized] Under section 1404(i) of the act (40 P. S. § 991.1404(i)), an insurer authorized to do business in this Commonwealth may file a registration statement on behalf of an affiliated insurer which is required to register under section 1404 of the act [(40 P. S. § 991.1404)]. A registration statement may include information [not required by the act] regarding an insurer in the insurance holding company system even if the insurer is not authorized to do business in this Commonwealth. In lieu of filing a registration statement on Form B, [the authorized insurer] an insurer authorized to do business in this Commonwealth may file a copy of the registration statement or similar report which it is required to file in its state of domicile, if:
* * * * * (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]. 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] to substantiate the filing insurer's claim that it, in fact, is the principal insurer in the insurance holding company system.
* * * * * (d) An insurer may take advantage of the provisions of section 1404(h) or (i) of the act without obtaining the prior approval of the Commissioner. The Commissioner reserves the right to require individual filings if [it is deemed] the Commissioner deems that the filings are necessary in the interest of clarity, ease of administration or the public good.
§ 25.20. Disclaimers and termination of registration.
(a) A disclaimer of affiliation or a request for termination of registration under section 1404(g) and (k) of the act (40 P. S. § 991.1404(g) and (k)) claiming that a person does not, or will not upon the taking of some proposed action, control another person, referred to as the ''subject'' within this chapter, shall contain the following information:
* * * * * (b) A request for termination of registration shall be deemed to have been granted unless the [Commissioner] Department, within 30 days after [he receives] receipt of the request, notifies the registrant otherwise.
§ 25.21. Transactions subject to prior notice--notice filing.
(a) * * *
(b) The insurer shall file an amendment to Form B reporting a material change in the information furnished on Form D, including a change in the effective date of the transaction, within 15 days after the end of a month in which the transaction is effectuated.
(c) The Department may withdraw its prior approval of a transaction and require the transaction to be reversed or take other regulatory action as a result of a material change in information furnished on Form D.
§ 25.22. [Extraordinary] All dividends and other distributions.
(a) Under section 1404(e) of the act (40 P. S. § 991.1404(e)), a registered insurer is required to report to the Department all dividends and other distributions to shareholders within 5 business days following the declaration thereof and at least 10 days, commencing from the date of receipt by the Department, prior to payment thereof. The report shall include the information in section 1404(e) of the act and subsection (c)(1)--(5). Upon the insurer's request, the Commissioner may grant a waiver from providing the information in subsection (c)(5) for dividends other than dividends reported under section 1405(b) of the act (40 P. S. § 991.1405(b)) and dividends and other distributions filed under section 337.8 of the act (40 P. S. § 459.8).
(b) Under section 337.8 of the act, a domestic insurance company, association or exchange may pay dividends and other distributions to shareholders only out of unassigned funds (surplus) or upon approval of the Commissioner. Information filed with the Commissioner under section 337.8 of the act shall include the information in subsection (c)(1)--(5).
(c) Requests for approval of extraordinary dividends or another extraordinary distribution[, jointly referred to as ''dividend'' in this section,] to shareholders under section 1405(b) of the act shall include the following:
(1) The amount of the proposed dividend or other distribution.
(2) The date established for payment of the dividend or other distribution.
(3) A statement as to whether the dividend or other distribution 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 or other distribution is or is not extraordinary. The work paper shall include the following information with respect to the domestic insurer:
(i) The amounts, dates and form of payment of [dividends, including regular dividends but excluding distributions of the insurer's own securities, paid within the period of 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] all dividends and other distributions made within the previous 12 consecutive months ending on the date fixed for payment of the proposed dividend 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) [The net gain from operations as described in section 1405 of the act (40 P. S. § 991.1405) for the 12-month period ending the 31st day of December next preceding, if the insurer is a life insurer.] The net income for the 12-month period ending the 31st of December next preceding.
[(iv) The net investment income earned before net realized capital gains or losses as described in section 1405 of the act for the 12-month period ending the 31st day of December next preceding and the two preceding 12-month periods, if the insurer is not a life insurer.
(v) The dividends paid to stockholders excluding distributions of the insurer's own securities in the preceding 2 calendar years, if the insurer is not a life insurer.
(6)] (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 or other distribution approval is submitted.
[(7)] (6) A statement demonstrating the transaction's compliance with section 1405(d) of the act by describing the effect of the proposed dividend or other distribution 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) Under section 1405(b)(1)(i) of the act, a registered insurer shall provide written notice to the Commissioner of all dividends to shareholders within 15 business days following the declaration thereof, including the same information required by subsection (a)(4)(i)--(v).]
(d) Reports of dividends and other distributions under this section shall include on the top of the first page the phrase: ''Notice of Dividend or Other Distribution'' and the name of the insurer.
(e) The insurer shall report changes in information furnished under subsection (c) within 15 days after the end of a month in which the dividend or other distribution is paid. If the dividend or other distribution is required to be reported on Form B, the insurer shall report the changes as an amendment to Form B. If the dividend or other distribution is not subject to a Form B filing, the report of changes shall state on the top of the first page the phrase: ''Change No. (insert number) to,'' and shall include the date of the change, date of declaration, amount paid, payment date, form of payment and the nature of and reason for the change.
(f) The Department may withdraw its prior approval of a dividend or other distribution and require the transaction to be reversed or take other regulatory action as a result of a material change in information furnished under this section.
§ 25.23. Adequacy of surplus.
[(a)] The factors in section 1405(d) of the act (40 P. S. § 991.1405(d)) to be considered in determining whether an insurer's surplus is reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs 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 will consider the net effect 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]. 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
STATEMENT REGARDING THE ACQUISITION OF CONTROL OF OR MERGER WITH A DOMESTIC INSURER (Name of Domestic Insurer)
BY: (Name of Acquiring Person ([Applicants] Applicant))
Filed with the Insurance Department of the Commonwealth of Pennsylvania
Dated:
Name, title, address and telephone number of individual to whom notices and correspondence concerning this [statement] form should be addressed:
Item 1. Insurer and Method of [acquisition] Acquisition
State the name, NAIC code number and address of the domestic insurer to which this application relates and a brief description of how control is to be acquired.
Item 2. Identity and Background of the Applicant
* * * * * C. Furnish a chart or listing clearly presenting the identities and the interrelationships among the applicant and all affiliates of the applicant. No affiliate need be identified if its total assets are equal to less than 1/2 of 1% of the total assets of [the] an ultimate controlling person affiliated with the applicant. Indicate in the chart or listing the percentage of voting securities of each person which is owned or controlled by the applicant or by any other person. If control of any person is maintained other than by the ownership or control of voting securities, indicate the basis of control. As to each person specified in the chart or listing indicate the type of organization (e.g. corporation, trust, partnership) and the state or other jurisdiction of domicile. If court proceedings involving a reorganization or liquidation are pending with respect to any such person, indicate which person, and set forth the title of the court, nature of proceedings and the date when commenced.
Item 3. Identity and Background of Individuals Associated with the Applicant
[State the following with respect to (1) the applicant if (s)he is an individual or (2) all persons who are directors, executive officers or owners of 10% or more of the voting securities of the applicant if the applicant is not an individual.] Furnish a biographical affidavit for (1) the applicant if the applicant is an individual or (2) all persons who are directors, executive officers or owners of 10% or more of the voting securities of the applicant if the applicant is not an individual. Biographical affidavits filed with the Department within the immediately preceding 3 years need not be included if there has been no change in the information already on file.
Biographical affidavits shall be signed in the original, notarized and shall include the following:
* * * * * Item 4. Nature, Source and Amount of Consideration
* * * * * C. If the source of the consideration is a loan made in the lender's ordinary course of business and if the applicant wishes the identity of the lender to remain confidential, [he] the applicant must specifically request that the identity be kept confidential.
* * * * *
FORM B
INSURANCE HOLDING COMPANY SYSTEM ANNUAL REGISTRATION STATEMENT Filed with the Insurance Department of the Commonwealth of Pennsylvania by (Name of Registrant) on behalf of the following insurance companies:
Name Address
NAIC Code Number State of Domicile
Date: ____ , ____
Name, title, address and telephone number of individual to whom notices and correspondence concerning this statement should be addressed:
* * * * * Item 2. Organizational Chart
Furnish a chart or listing clearly presenting the identities of and interrelationships among all affiliated persons within the insurance holding company system. No affiliate need be shown if its total assets are equal to less than 1/2 of 1% of the total assets of [the] an ultimate controlling person within the insurance holding company system unless it has assets valued at or exceeding $5,000,000. The chart or listing should show the percentage of each class of voting securities of each affiliate which is owned, directly or indirectly, by another affiliate.
If control of any person within the system is maintained other than by the ownership or control of voting securities, indicate the basis of such control. As to each person specified in the chart or listing indicate the type of organization (e.g., corporation, trust, partnership) and the state or other jurisdiction of domicile.
Item 3. [The] Ultimate Controlling Person
As to [the] an ultimate controlling person in the insurance holding company system furnish the following information:
* * * * * Item 4. Biographical Information
Furnish the following information for the directors and executive officers of [the] an ultimate controlling person in the form of biographical affidavits signed in the original and notarized: the individual's name and address, his or her principal occupation and all offices and positions held during the past five (5) years, and any conviction of crimes other than minor traffic violations during the past ten years. Biographical affidavits filed with the Department within the immediately preceding 3 years need not be included if there has been no change in the information already on file.
Item 5. Transactions and Agreements
Briefly describe the following agreements in force, and transactions currently outstanding or which have occurred during the last calendar year, including extraordinary dividends and other material transactions reported under §§ 25.21 and 25.22 of this chapter, between the Registrant and its affiliates:
* * * * * [No information need be disclosed if such information is not material for purposes of Section 1404 of the Act.]
Sales, purchases, exchanges, loans or extensions of credit, investments or guarantees involving one-half of 1% or less of the Registrant's admitted assets as of the 31st day of December next preceding shall not be deemed material and need not be disclosed.
The description shall be in a manner as to permit the proper evaluation thereof by the Commissioner, and shall include at least the following: the effective date, nature and purpose of the transaction, the nature and amounts of any payments or transfers of assets between the parties, the identity of all parties to [such] the transaction, and relationship of the affiliated parties to the Registrant.
Item 6. Litigation or Administrative [proceedings] Proceedings
A brief description of any litigation or administrative proceedings of the following types, either then pending or concluded within the preceding fiscal year, to which [the] an ultimate controlling person or any of its directors or executive officers was a party or of which the property of [the] an ultimate controlling person or any of its directors or executive officers is or was the subject; give the names of the parties and the court or agency in which the litigation or proceeding is or was pending:
* * * * * B. Proceedings which may have a material effect upon the solvency or capital structure of [the] an ultimate [holding company] controlling person including, but not necessarily limited to, bankruptcy, receivership or other corporate reorganizations.
* * * * * Item 8. Financial Statements and Exhibits
* * * * * B. The financial statements shall include the annual financial statements of [the] any ultimate controlling person in the insurance holding company system as of the end of the person's latest fiscal year. Financial statements are required for an ultimate controlling person who is an individual as well as a corporation or other type of business organization.
If a holding company system includes more than one ultimate controlling person, annual financial statements are required for each ultimate controlling person unless the Commissioner, in the Commissioner's discretion, finds that annual financial statements for one or more of the ultimate controlling persons are not necessary to carry out the act.
* * * * * Unless the Commissioner otherwise permits, the annual financial statements shall be accompanied by the certificate of an independent public accountant to the effect that the statements present fairly the financial position of [the] an ultimate controlling person and the results of its operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If [the] an ultimate controlling person is an insurer which is actively engaged in the business of insurance, the annual financial statements need not be certified, provided they are based on the Annual Statement of the insurer filed with the chief insurance [department] regulatory official of the insurer's domiciliary [state] jurisdiction and are in accordance with requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of that [state] jurisdiction. Any ultimate controlling person who is an individual may file personal financial statements that are reviewed rather than audited by an independent public accountant. The review shall be conducted in accordance with standards for review of personal financial statements published in the Personal Financial Statements Guide by the American Institute of Certified Public Accountants. Personal financial statements shall be accompanied by the independent public accountant's Standard Review Report stating that the accountant is not aware of any material modifications that should be made to the financial statements in order for the statements to be in conformity with generally accepted accounting principles.
C. Exhibits shall include copies of the latest annual reports to shareholders of [the] an ultimate controlling person and proxy material used by [the] an ultimate controlling person; and any additional documents or papers required by this Chapter.
* * * * *
FORM C
SUMMARY OF REGISTRATION STATEMENT Filed with the Insurance Department of the Commonwealth of Pennsylvania by (Name of Registrant) on behalf of the following insurance companies:
Name Address
NAIC Code Number State of Domicile
Date: ____ , ____
* * * * * Furnish a brief description, including a reference to any amendments filed in the intervening year, of all items in the current annual registration statement which represent changes from the prior year's annual registration statement. The description shall include the date and dollar amount of each change, identify any previous filings as a result of the change by amendment number or by type and date of filing, be in a manner as to permit the proper evaluation thereof by the Commissioner, and shall include specific references to Item numbers in the annual registration statement and to the terms contained therein.
Changes occurring under Item 2 of Form B, insofar as changes in the percentage of each class of voting securities held by each affiliate is concerned, need only be included where the changes are ones which result in ownership or holdings of ten (10) percent or more of voting securities, loss or transfer of control, or acquisition or loss of partnership interest.
Changes occurring under Item 4 of Form B need only be included where: an individual is, for the first time, made a director or executive officer of [the] an ultimate controlling person; a director or executive officer terminates his or her responsibilities with [the] an ultimate controlling person; or in the event an individual is named president of [the] an ultimate controlling person.
* * * * *
FORM D
PRIOR NOTICE OF A TRANSACTION Filed with the Insurance Department of the Commonwealth of Pennsylvania by (Name of Registrant) on behalf of the following insurance companies:
Name Address
NAIC Code Number State of Domicile
Date: ____ , ____
* * * * * Item 1. Identity of [parties] Parties to Transaction
Furnish the following information for each of the parties to the transaction:
* * * * * G. [Where] If the transaction is with a non-affiliate, the name(s) of the affiliate(s) which will receive, in whole or in substantial part, the proceeds of the transaction.
Item 2. Description of the Transaction
Furnish the following information for each transaction for which notice is being given:
* * * * * B. A [statement of the nature] description of the nature and purpose of the transaction, including the anticipated immediate and long-term effect of the transaction on the financial condition of the insurer.
* * * * * Item 3. Sales, Purchases, Exchanges, Loans, Extensions of Credit, Guarantees, Investments or Contributions to Surplus
* * * * * No notice need be given if the maximum amount which can at any time be outstanding or for which the insurer can be legally obligated under the loan, extension of credit or guarantee is less than [(a) in the case of non-life insurers, the lesser of 5% of the insurer's admitted assets or 35% of surplus as regards policyholders or (b) in the case of life insurers, 3% of the insurer's admitted assets, each] 5% of the insurer's admitted assets or 25% of its surplus as of the 31st day of December next preceding.
Item 4. Loans or Extensions of Credit to a Non-Affiliate
* * * * * No notice need be given if the loan or extension of credit is one which equals less than[, in the case of non-life insurers, the lesser of 5% of the insurer's admitted assets or 35% of surplus as regards policyholders or, with respect to life insurers, 3% of the insurer's admitted assets, each] 5% of the insurer's admitted assets or 25% of its surplus as of the 31st day of December next preceding.
Item 5. Reinsurance
If the transaction is a reinsurance agreement or modification thereto, as described by Section 1405(a)(2)(iii) of the Act, [and a domestic insurer has experienced a decline in policyholder surplus in an amount of 10% or more for two consecutive years and net loss from operations in both those years,] furnish a description of the known and/or estimated amount of liability to be ceded and/or assumed in each calendar year, the period of time during which the agreement will be in effect, and a statement whether an agreement or understanding exists between the insurer and non-affiliate to the effect that any portion of the assets constituting the consideration for the agreement will be transferred to one or more of the insurer's affiliates. Furnish a brief description of the consideration involved in the transaction, and a brief statement as to the effect of the transaction upon the insurer's surplus.
No notice need be given for reinsurance agreements or modifications thereto if the reinsurance premium [or a change in the insurer's liabilities in connection with the reinsurance agreement or modification thereto is less than 5% of the insurer's surplus as regards policyholders, as of the 31st day of December next preceding] is less than 5% of the insurer's surplus as of the 31st day of December next preceding; or the change in the insurer's liabilities or any transfer of assets required to fund the transaction equals or exceeds 25% of the insurer's surplus as of the 31st day of December next preceding, including those agreements which may require as consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement or understanding exists between the insurer and nonaffiliate that any portion of the assets will be transferred to one or more affiliates of the insurer.
* * * * *
FORM E
PRE-ACQUISITION NOTIFICATION STATEMENT OF THE POTENTIAL COMPETITIVE IMPACT OF A PROPOSED MERGER OR ACQUISITION
(Name of Applicant)
(Name of Other Person Involved in Merger or Acquisition) Filed with the Insurance Department of the Commonwealth of Pennsylvania
Date:
Name, title, address and telephone number of person completing this statement:
Item 1. Name and Address
State the names and addresses of the persons who hereby provide notice of their involvement in a pending acquisition or change in control.
Item 2. Name and Addresses of Affiliated Companies
State the names and addresses of the persons affiliated with those listed in Item 1. Describe their affiliations.
Item 3. Nature and Purpose of Proposed Merger or Acquisition
State the nature and purpose of the proposed merger or acquisition.
Item 4. Nature of Business
State the nature of the business performed by each of the persons identified in response to Item 1 and Item 2.
Item 5. Market and Market Share
State specifically what market and market share the persons identified in Item 1 and Item 2 currently enjoy in this Commonwealth in each insurance market which, under section 1403(b)(2)(v) of the act (40 P. S. § 1403(b)(2)(v)), causes the proposed merger or acquisition not to be exempted from Article XIV of the act. Provide historical market and market share data for each person identified in Item 1 and Item 2 for the past 5 years, or for the number of years the person and any predecessors thereof have been transacting business if less than 5 years, and identify the source of the data.
For purposes of this item, market means direct written insurance premium in this Commonwealth for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this Commonwealth.
Item 6. Signature and Certification
Signature and certification required as follows:
SIGNATURE
Pursuant to the requirements of Section 1402 of the act has caused this application to be duly signed on its behalf in the City of ______ and State of ______ on the _____ day of _____ , _____ .
(SEAL)
Name of Applicant
BY (Name) (Title)
Attest:
(Signature of Officer)
(Title)
CERTIFICATION The undersigned deposes and says that (s)he has duly executed the attached application dated ______ , ______ , for and on behalf of (Name of Applicant); that (s)he is the (Title of Officer) of such company and that (s)he is authorized to execute and file such instrument. Deponent further says that (s)he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his/her knowledge, information and belief.
(Signature)
(Type or print name beneath)
[Pa.B. Doc. No. 99-1744. Filed for public inspection October 15, 1999, 9:00 a.m.]
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