054.00.98 Ark. Code R. 010
This Rule and Regulation is promulgated by the Commissioner pursuant to the authority granted by Arkansas Code Annotated §§23-61 -108, 23-63-518 and 25-15-201, et seq.
This Rule and Regulation shall become effective January 1, 1999.
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.
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.
Insurance Commissioner of the State of Arkansas
1200 West Third Street
Little Rock, Arkansas 72201-1904
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.
In addition to the information expressly required to be included in Form A, Form B, Form C, Form D, and Form E, the Commissioner may request 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, D or E 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.
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.
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. Such person shall also furnish the required information on Form E, hereby made a part of this Rule and Regulation and described in Section 14 of this Rule and Regulation.
The applicant shall promptly advise the Commissioner of any changes in the information 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.
"ABC Insurance Company, a subsidiary of XYZ Holding Company".
If a domestic insurer, including any person controlling a domestic insurer, is proposing a merger or acquisition pursuant to §§ 23-63-506, et seq., that person shall file a pre-acquisition notification form, Form E, which was developed pursuant to § 23-63-527.
Additionally, if a non-domiciliary insurer licensed to do business in this State is proposing a merger or acquisition pursuant to §§ 23-63-506, et seq., that person shall file a pre-acquisition notification form, Form E. No pre-acquisition notification form need be filed If the acquisition is beyond the scope of §§ 23-63-525, et seq., as set forth in § 23-63-526(b); unless the Commissioner so requests.
In addition to the information required by Form E, the Commissioner may wish to require an expert opinion as to the competitive impact of the proposed acquisition.
The Form E filing shall be accompanied by the Rule 57 fee for notice filings or exemptions.
An insurer required to file and maintain a 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.
Notwithstanding the frequency or lack of filed amendments reporting material transactions in the intervening period, each domestic insurer subject to registration under this Rule shall update, restate and refile with the Department a full and complete registration statement (Form B), with the_companion summary (Form C), annually on or before April 1st. The Form B filing shall be accompanied by the proper Rule 57 fee.
An insurer required to file and maintain a 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 Form C in each state in which the insurer is authorized to do business, if requested by the Commissioner of that state.
An insurer required to give notice of a proposed transaction under Subsection (a)(2) 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.
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
STATEMENT REGARDING THE ACQUISITION OF CONTROL OF OR MERGER WITH A DOMESTIC INSURER
FORM A
State the name and address of the domestic insurer to which this application relates and a brief description of how control is to be acquired.
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 often percent (10%) or more of the voting securities of the applicant if the applicant is not an individual:
Describe any plans or proposals which the applicant may have to declare an extraordinary dividend, to liquidate such insurer, to sell its assets to or merge it with any person or persons or to make any other material change in its business operations or corporate structure or management.
State the number of shares of the insurer's voting securities which the applicant, its affiliates and any person listed in Item 3 plan to acquire, and the terms of the offer, request, invitation, agreement or acquisition, and a statement as to the method by which the fairness of the proposal was arrived.
State the amount of each class of any voting security of the insurer which is beneficially owned or concerning which there is a right to acquire beneficial ownership by the applicant, its affiliates or any person listed in Item 3.
Give a full description of any contracts, arrangements or understandings with respect to any voting security of the insurer in which the applicant, its affiliates or any person listed in Item 3 is involved, including but not limited to transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. Such description shall identify the persons with whom such contracts, arrangements or understandings have been entered.
Describe any purchases of any voting securities of the insurer by the applicant, its affiliates or any person listed in Item 3 during the twelve (12) calendar months preceding the filing of this Statement. Include in the description the dates of purchase, the names of the purchasers, and the consideration paid or agreed to be paid therefor. State whether any such shares so purchased are hypothecated.
Describe any recommendations to purchase any voting security of the insurer made by the applicant, its affiliates or any person listed in Item 3, or by anyone based upon interviews or at the suggestion of the applicant, its affiliates or any person listed in Item 3 during the twelve (12) calendar months preceding the filing of this Statement.
Describe the terms of any agreement, contract or understanding made with any broker-dealer as to solicitation of voting securities of the insurer for tender and the amount of any fees, commissions or other compensation to be paid to broker-dealers with regard thereto.
The annual financial statements of the applicant shall be accompanied by the certificate of an independent public accountant to the effect that such statements present fairly the financial position of the applicant 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 applicant is an insurer which is actively engaged in the business of insurance, the financial statements need not be certified, provided they are based on the Annual Statement of such person filed with the insurance department of the person's domiciliary state and are in accordance with the requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of the state.
Signature and certification required as follows:
SIGNATURE
Pursuant to the requirements of Ark. Code Ann. §§ 23-63-506 - 23-63-513 ______________has caused this application to be duly signed on its behalf in the City of_________________and State of_______________on the_______day of___________, (Year)__________.
__________________
Name of Applicant
(SEAL)
BY______________________________
(Name) (Title)
Attest:
_______________ ________________
(Signature of Officer) (Title)
CERTIFICATION
The undersigned deposes and says that (s)he has duly executed the attached application dated _______________, (Year) _______, 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 the 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)________________________________
FORM B
INSURANCE HOLDING COMPANY SYSTEM REGISTRATION STATEMENT
FORM B
Furnish the exact name of each insurer registering or being registered (hereinafter called "the Registrant"), the home office address and principal executive offices of each; the date on which each Registrant became part of the insurance holding company system; and the method(s) by which control of each Registrant was acquired and is maintained.
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% (one percent) of the total assets of the ultimate controlling person within the insurance holding company system. 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 such chart or listing indicate the type of organization (e.g., -corporation, trust, partnership) and the state or other jurisdiction of domicile.
As to the ultimate controlling person in the insurance holding company system., furnish the following information:
Furnish the following information for the directors and executive officers of the ultimate controlling person: the individual's name and address, his or her other 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 (10) years.
Briefly describe the following agreements in force, and transactions currently outstanding or which have occurred during the last calendar year between the Registrant and its affiliates:
No information need be disclosed if such information is not material for purposes of Ark. Code Ann. § 23-63-514(0).
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.
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 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 transaction, and relationship of the affiliated parties to the Registrant.
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 ultimate controlling person or any of its directors or executive officers was a party or of which the property of any such person 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:
The insurer shall furnish a statement that transactions entered into since the filing of the prior registration statement are not part of a plan or series of like transactions, the purpose of which is to avoid statutory threshold amounts and the review that might otherwise occur.
If at the time of the initial registration, the annual financial statements for the latest fiscal year are not available, annual statements for the previous fiscal year may be filed and similar financial information shall be filed for any subsequent period to the extent such information is available. Such financial statements may be prepared on either an individual basis, or unless the Commissioner otherwise requires, on a consolidated basis if such consolidated statements are prepared in the usual course of business.
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 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 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 such insurer filed with the insurance department of the insurer's domiciliary state and are in accordance with requirements of the insurance or other accounting principles prescribed or permitted under the law and regulations of that state.
A Form C, Summary of Registration Statement, must be prepared and filed with this Form B.
Signature and certification required as follows:
SIGNATURE
Pursuant to the requirements of Ark. Code Ann. § 23-63-514 ______________the Registrant has caused this registration statement to be duly signed on its behalf in the City of _________________and State of_______________on the_______day of___________, (Year)__________.
____________________
Name of Registrant
(SEAL)
BY________________________________
(Name) (Title)
Attest:
______________ ________
(Signature of Officer) (Title)
CERTIFICATION
The undersigned deposes and says that (s)he has duly executed the attached registration statement dated_______________, (Year)_______, for and on behalf of (Name of Registrant) ____________________; 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)________________________________
FORM C
SUMMARY OF REGISTRATION STATEMENT
Furnish a brief description of all items in the current registration statement which represent changes from the prior registration statement. The description shall be in a manner so as to permit the proper evaluation thereof by the Commissioner, and shall include specific references to Item numbers in the 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 such changes are ones which result in ownership or holdings of 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 ultimate controlling person; a director or executive officer terminates his or her responsibilities with the ultimate controlling person; or in the event an individual is named president of the ultimate controlling person.
If a transaction disclosed on the prior registration statement has been changed, the nature of such change shall be included. If a transaction disclosed on the prior registration statement has been effectuated, furnish the mode of completion and any flow of funds between affiliates resulting from the transaction.
The insurer shall furnish a statement that transactions entered into since the filing of the prior registration statement are not part of a plan or series of like transactions whose purpose it is to avoid statutory threshold amounts and the review that might otherwise occur.
SIGNATURE AND CERTIFICATION
Signature and certification required as follows:
SIGNATURE
Pursuant to the requirements of Ark. Code Ann. § 23-63-514,______________the Registrant has caused this summary of registration statement to be duly signed on its behalf in the City of _________________and State of_______________on the ______ day of___________,
(Year)__________.
Name of Registrant
(SEAL)
BY________________________________
(Name) (Title)
Attest:
_______________ ___________
(Signature of Officer) (Title)
CERTIFICATION
The undersigned deposes and says that (s)he has duly executed the attached summary of registration statement dated _______________, (Year)_______, for and on behalf of ____________________ (Name of Registrant); 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)________________________________
FORM D
PRIOR NOTICE OF A TRANSACTION
Furnish the following information for each of the parties to the transaction:
Furnish the following information for each transaction for which notice is being given:
Furnish a brief description of the amount and source of funds, securities, property or other consideration for the sale, purchase, exchange, loan, extension of credit, guarantee, or investment, whether any provision exists for purchase by the insurer filing notice, by any party to the transaction, or by any affiliate of the insurer filing notice, a description of the terms of any securities being received, if any, and a description of any other agreements relating to the transaction such as contracts or agreements for services, consulting agreements and the like. If the transaction involves other than cash, furnish a description of the consideration, its cost and its fair market value, together with an explanation of the basis for evaluation.
If the transaction involves a loan, extension of credit or a guarantee, furnish a description of the maximum amount which the insurer will be obligated to make available under such loan, extension of credit or guarantee, the date on which the credit or guarantee will terminate, and any provisions for the accrual of or deferral of interest.
If the transaction involves an investment, guarantee or other arrangement, state the time period during which the investment, guarantee or other arrangement will remain in effect, together with any provisions for extensions or renewals of such investments, guarantees or arrangements. Furnish a brief statement as to the effect of the transaction upon the insurer's 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 three percent (3%) of the insurer's admitted assets or twenty-five percent (25%) of surplus as regards policyholders or, (b) in the case of life insurers, three percent (3%) of the insurer's admitted assets, each as of the 31st day of December next preceding.
If the transaction involves a loan or extension of credit to any person who is not an affiliate, furnish a brief description of the agreement or understanding whereby the proceeds of the proposed transaction, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase the assets of, or to make investments in, any affiliate of the insurer making such loans or extensions of credit, and specify in what manner the proceeds are to be used to loan to, extend credit to, purchase assets of or make investments in any affiliate. Describe the amount and source of funds, securities, property or other consideration for the loan or extension of credit and, if the transaction is one involving consideration other than cash, a description of its cost and its fair market value together with an explanation of the basis for evaluation. Furnish a brief statement as to the effect of the transaction upon the insurer's surplus.
No notice need be given if the loan or extension of credit is one which is equal less than, in the case of non-life insurers, the lesser of three percent (3%) of the insurer's admitted assets or twenty-five percent (25%) of surplus as regards policyholders or, with respect to life insurers, three percent (3%) of the insurer's admitted assets, each as of the 31st day of December next preceding.
If the transaction is a reinsurance agreement or modification thereto, as described by Ark. Code Ann. § 23-63-515(a)(2)(C), 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 five percent (5%) of the insurer's surplus as regards policyholders, as of the 31st day of December next preceding.
For management and service agreements, furnish:
For cost-sharing arrangements, furnish:
Signature and certification required as follows:
SIGNATURE
Pursuant to the requirements of Ark. Code Ann. § 23-63-515 ______________has caused this notice to be duly signed on its behalf in the City of _________________ and State of _______________on the_______day of___________, (Year)__________.
_____________________
Name of Applicant
(SEAL)
BY________________________________
(Name) (Title)
Attest:
______________ _____________
(Signature of Officer) (Title)
CERTIFICATION
The undersigned deposes and says that (s)he has duly executed the attached statement dated _______________, (Year)_______, 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)________________________________
FORM E
PRE-ACQUISITION NOTIFICATION FORM REGARDING THE POTENTIAL COMPETITIVE IMPACT OF A PROPOSED MERGER OR ACQUISITION BY A NON-DOMICILIARY INSURER DOING BUSINESS IN THIS STATE OR BY A DOMESTIC INSURER
State the names and addresses of the persons who hereby provide notice of their involvement in a pending acquisition or change in corporate control.
State the names and addresses of the persons affiliated with those listed in Item 1. Describe their affiliations.
State the nature and purpose of the proposed merger or acquisition.
State the nature of the business performed by each of the persons identified in response to Item 1 and Item 2.
State specifically what market and market share in each relevant insurance market the persons identified in Item 1 and Item 2 currently enjoy in this state. Provide historical market and market share data for each person identified in Item 1 and Item 2 for the past five (5) years and identify the source of such data.
For purposes of this notice "market" means direct written insurance premium in this state for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this state. Under § 23-63-525(1)"acquisition" is defined to include acquisition of assets, bulk reinsurance and mergers, as well as a change in control.
CERTIFICATION
The undersigned deposes and says that (s)he has duly executed the attached pre-acquisition notification dated _______________, (Year) _______, 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 above)__________________________________
054.00.98 Ark. Code R. 010