The changes to ch. Ins 40, Wis. Adm. Code, modify the reporting requirements for licensed insurers that are a part of an insurance holding company system. The changes adopt the modifications to the NAIC model act and model regulation which were designed to address transactions involving complex insurance holding company organizations and insurers licensed in multiple jurisdictions. A summary of significant changes follows:
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Enterprise Risk Management Report: The ultimate controlling person of an insurer is required to file a confidential enterprise risk report on a newly developed Form F. Form F identifies material risks within the insurance company holding system that could pose enterprise risk to the insurer. [s. Ins 40.03 (9), Wis. Adm. Code] The first Form F filing is due October 1, 2015. Any questions about what information should be included in Form F should be directed to Yvonne Sherry at yvonne.sherry@wisconsin.gov.
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Insurer Acquisitions and Divestitures: In addition to the existing requirement to file a statement of acquisition of control of a domestic insurer (Form A), any person seeking to acquire control of an insurer is now required to file a pre-acquisition notification addressing the competitive impact of the acquisition (Form E). [s. Ins 40.025 (3), Wis. Adm. Code] Further, the rule mandates the filing of a confidential notice from any controlling person of an insurer documenting its plan to divest the controlling interest of the insurer 30 days prior to cessation of control. Upon receipt of the notice, the Commissioner shall determine whether the controlling person will be required to file for and obtain approval for the proposed divestiture. [s. Ins 40.02 (1) (c), Wis. Adm. Code]
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Affiliate Transactions: Under s. Ins 40.04, Wis. Adm. Code, certain material transactions between insurers and their affiliates require the filing of prior notice of a transaction at least 30 days in advance of the transaction (Form D). The changes to the rule require insurers file Form D for amendments or modifications to all previously filed affiliate agreements that include an explanation for the change and the financial impact on the domestic insurer. Insurers must also notify OCI within 30 days after termination of a previously filed agreement if termination is other than according to the terms of the agreement as filed. In addition, the rule specifies several provisions that must be included in future affiliated agreements.
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Annual Registration Statements: The Insurance Holding Company System Annual Registration Statement (Form B) must include the enterprise risk management report provided by the insurer's controlling person. If requested by OCI, the domestic insurer will also be required to include financial statements for the entire insurance holding company system, including non-insurer affiliates, with its Form B. This requirement may be satisfied by attaching documentation and financial statements filed with the Securities and Exchange Commission.
In addition, s. Ins 16.01 (6) (d), Wis. Adm. Code, was created to implement assessments to insurers who are subject to a supervisory college.
If you have any questions about the changes to the insurance holding company reporting requirements, please e-mail Yvonne Sherry at yvonne.sherry@wisconsin.gov.