As Introduced

130th General Assembly
Regular Session
2013-2014
H. B. No. 313


Representatives Kunze, Hackett 


A BILL
To amend sections 1751.25, 3901.043, 3901.045, 1
3901.17, 3901.32, 3901.321, 3901.33, 3901.34, 2
3901.341, 3901.35, 3901.36, 3901.62, 3901.63, 3
3901.64, 3903.72, 3903.721, 3903.83, 3907.14, 4
3913.01, 3913.34, 3915.04, 3915.071, 3915.072, 5
3921.21, 3925.08, 3939.01, and 3953.15, to amend, 6
for the purpose of adopting new section numbers as 7
indicated in parentheses, sections 3903.72 8
(3903.723) and 3903.721 (3903.724), to enact new 9
sections 3903.72 and 3903.721 and sections 10
3901.351, 3901.371, 3901.372, 3901.373, 3901.374, 11
3901.375, 3901.376, 3901.377, 3901.378, 3901.41, 12
3901.621, 3901.631, 3903.722, 3903.725, 3903.726, 13
3903.727, 3903.728, 3903.729, 3903.7210, 14
3903.7211, and 3906.01 to 3906.15, and to repeal 15
sections 3907.09, 3907.10, 3907.11, and 3907.13 of 16
the Revised Code to enact the Insurance Regulatory 17
Modernization Act to revise the insurance laws 18
regarding alternative investments, holding company 19
systems, risk management, reserves kept for life 20
insurance policies, automated transactions, 21
reinsurance, and mergers and consolidations.22


BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

       Section 1.  That sections 1751.25, 3901.043, 3901.045, 23
3901.17, 3901.32, 3901.321, 3901.33, 3901.34, 3901.341, 3901.35, 24
3901.36, 3901.62, 3901.63, 3901.64, 3903.72, 3903.721, 3903.83, 25
3907.14, 3913.01, 3913.34, 3915.04, 3915.071, 3915.072, 3921.21, 26
3925.08, 3939.01, and 3953.15 be amended, sections 3903.72 27
(3903.723) and 3903.721 (3903.724) be amended for the purpose of 28
adopting new section numbers as indicated in parentheses, new 29
sections 3903.72 and 3903.721, and sections 3901.351, 3901.371, 30
3901.372, 3901.373, 3901.374, 3901.375, 3901.376, 3901.377, 31
3901.378, 3901.41, 3901.621, 3901.631, 3903.722, 3903.725, 32
3903.726, 3903.727, 3903.728, 3903.729, 3903.7210, 3903.7211, 33
3906.01, 3906.02, 3906.03, 3906.04, 3906.05, 3906.06, 3906.07, 34
3906.08, 3906.09, 3906.10, 3906.11, 3906.12, 3906.13, 3906.14, and 35
3906.15 of the Revised Code be enacted to read as follows:36

       Sec. 1751.25. The(A) Except as provided in division (B) of 37
this section, the funds of a health insuring corporation shall be 38
invested only in securities or other investments or assets that 39
constitute permissible investments under section 1751.26 or 40
3925.08 of the Revised Code.41

       (B) A health insuring corporation may seek permission from 42
the superintendent of insurance to invest funds under Chapter 43
3906. of the Revised Code and may invest funds under that chapter 44
if such permission is granted.45

       Sec. 3901.043.  The superintendent of insurance may adopt 46
rules in accordance with Chapter 119. of the Revised Code to 47
establish reasonable fees for any service or transaction performed 48
by the department of insurance pursuant to section 1751.03, 49
3901.321, 3901.341, 3907.09, 3907.10, 3907.11, 3907.12, 3911.011, 50
3913.40, 3915.14, 3917.06, 3918.07, 3923.02, 3935.04, 3937.03, or 51
3953.28 of the Revised Code or any provision in sections 3913.01 52
to 3913.23 or in Chapter 3905. of the Revised Code, if no fee is 53
otherwise provided under Title XVII or XXXIX of the Revised Code 54
for such service or transaction. Any fee collected pursuant to 55
those rules shall be paid into the state treasury to the credit of 56
the department of insurance operating fund.57

       Sec. 3901.045. (A) The superintendent of insurance may 58
receive documents and information, including otherwise 59
confidential or privileged documents and information, from local, 60
state, federal, and international regulatory and law enforcement 61
agencies, from local, state, and federal prosecutors, and from the 62
national association of insurance commissioners and its affiliates 63
and subsidiaries, provided that the superintendent maintains as 64
confidential or privileged any document or information received 65
with notice or the understanding that the document or information 66
is confidential or privileged under the laws of the jurisdiction 67
that is the source of the document or information.68

       (B) The superintendent may also receive documents and 69
information, including otherwise confidential or privileged 70
documents and information, from the chief deputy rehabilitator, 71
the chief deputy liquidator, other deputy rehabilitators and 72
liquidators, and from any other person employed by, or acting on 73
behalf of, the superintendent pursuant to Chapter 3901. or 3903. 74
of the Revised Code, provided that the superintendent maintains as 75
confidential or privileged any document or information received 76
with the notice or understanding that the document or information 77
is confidential or privileged, except that the superintendent may 78
share and disclose such a document or information when authorized 79
by other sections of the Revised Code.80

       (C) The superintendent has the authority to maintain as 81
confidential or privileged the documents and information received 82
pursuant to this section.83

       (D) The superintendent's authority to receive documents and 84
information under this section, from the persons and subject to 85
the conditions listed in this section, is not limited in any way 86
by section 1751.19, 3901.36, 3901.44, 3901.48, 3901.70, 3903.11, 87
3903.723903.722, 3903.7211, 3903.88, 3905.492, 3905.50, 3922.21, 88
or 3999.36 of the Revised Code.89

       Sec. 3901.17.  (A) As used in this section:90

       (1) "Captive insurer" has the meaning defined in section 91
3905.36 of the Revised Code.92

       (2) "Insurer" includes, but is not limited to, any person 93
that is an affiliate of or affiliated with the insurer, as defined 94
in division (A) of section 3901.32 of the Revised Code, and any 95
person that is a subsidiary of the insurer as defined in division 96
(F) of section 3901.32 of the Revised Code.97

       (3) "Laws of this state relating to insurance" has the 98
meaning defined in division (A)(1) of section 3901.04 of the 99
Revised Code.100

       (4) "Person" has the meaning defined in division (A) of 101
section 3901.19 of the Revised Code.102

       (5) "Home state" has the same meaning as in section 3905.30 103
of the Revised Code.104

       (B) Any of the following acts in this state, effected by mail 105
or otherwise, by any foreign or alien insurer not authorized to 106
transact business within this state, any nonresident person acting 107
on behalf of an insurer, or any nonresident insurance agent 108
subjects the insurer, person, or agent to the exercise of personal 109
jurisdiction over the insurer, person, or agent to the extent 110
permitted by the constitutions of this state and of the United 111
States:112

       (1) Issuing or delivering contracts of insurance to residents 113
of this state or to corporations authorized to do business 114
therein;115

       (2) Making or proposing to make any insurance contracts;116

       (3) Soliciting, taking, or receiving any application for 117
insurance;118

       (4) Receiving or collecting any premium, commission, 119
membership fee, assessment, dues, or other consideration for any 120
insurance contract or any part thereof;121

       (5) Disseminating information as to coverage or rates, 122
forwarding applications, inspecting risks, fixing rates, 123
investigating or adjusting claims or losses, or transacting any 124
matters subsequent to effecting a contract of insurance and 125
arising out of it;126

       (6) Doing any kind of business recognized as constituting the 127
doing of an insurance business under Title XXXIX of the Revised 128
Code or subject to regulation by the superintendent of insurance 129
under the laws of this state relating to insurance.130

       Any such act shall be considered to be the doing of an 131
insurance business in this state by such insurer, person, or agent 132
and shall be its agreement that service of any lawful subpoena, 133
notice, order, or process is of the same legal force and validity 134
as personal service of the subpoena, notice, order, or process in 135
this state upon the insurer, person, or agent.136

       (C) Service of process in judicial proceedings shall be as 137
provided by the Rules of Civil Procedure. Service in or out of 138
this state of notice, orders, or subpoenas in administrative 139
proceedings before the superintendent shall be as provided in 140
section 3901.04 of the Revised Code.141

       (D) Service of any notice, order, subpoena, or process in any 142
such action, suit, or proceeding shall, in addition to the manner 143
provided in division (C) of this section, be valid if served upon 144
any person within this state who, in this state on behalf of such 145
insurer, person, or agent is or has been:146

       (1) Soliciting, procuring, effecting, or negotiating for 147
insurance;148

       (2) Making, issuing, or delivering any contract of insurance;149

       (3) Collecting or receiving any premium, membership fees, 150
assessment, dues, or other consideration for insurance;151

       (4) Disseminating information as to coverage or rates, 152
forwarding applications, inspecting risks, fixing rates, 153
investigating or adjusting claims or losses, or transacting any 154
matters subsequent to effecting a contract of insurance and 155
arising out of it.156

       (E) Nothing in this section shall limit or abridge the right 157
to serve any subpoena, order, process, notice, or demand upon any 158
insurer, person, or agent in any other manner permitted by law.159

       (F) Every person investigating or adjusting any loss or claim 160
under a policy of insurance not excepted under division (I) of 161
this section and issued by any such insurer and covering a subject 162
of insurance that was resident, located, or to be performed in 163
this state at the time of issuance shall immediately report the 164
policy to the superintendent.165

       (G) If this state is the home state of the insured, each such 166
insurer that does any of the acts set forth in division (B) of 167
this section shall be subject to the requirements of section 168
3905.36 of the Revised Code.169

       (H) No contract of insurance effected in this state by mail 170
or otherwise by any such insurer is enforceable by the insurer.171

       (I) This section does not apply to:172

       (1) Insurance obtained pursuant to sections 3905.30 to 173
3905.36 of the Revised Code;174

       (2) The transaction of reinsurance by insurers;175

        (3) Transactions in this state involving a policy of group 176
life or group accident and sickness insurance solicited, written, 177
and delivered outside this state;178

       (4) Transactions involving contracts of insurance 179
independently procured through negotiations occurring entirely 180
outside this state which are reported and the tax is paid in 181
accordance with section 3905.36 of the Revised Code;182

       (5) An attorney at law acting on behalf of the attorney's 183
clients in the adjustment of claims or losses;184

       (6) Ocean marine insurance;185

       (7) Transactions involving policies issued by a captive 186
insurer.187

       Sec. 3901.32.  As used in sections 3901.32 to 3901.37 of the 188
Revised Code:189

       (A) "Affiliate of" or "affiliated with" a specific person 190
means a person that, directly or indirectly, through one or more 191
intermediaries, controls, is controlled by, or is under common 192
control with, the person specified.193

       (B) "Control," including "controlling," "controlled by," and 194
"under common control with," means the possession, direct or 195
indirect, of the power to direct or cause the direction of the 196
management and policies of a person, whether through the ownership 197
of voting securities, by contract other than a commercial contract 198
for goods or nonmanagement services, or otherwise, unless the 199
power is the result of an official position with or corporate 200
office held by the person. Control shall be presumed to exist if 201
any person, directly or indirectly, owns, controls, holds with the 202
power to vote, or holds proxies representing, ten per cent or more 203
of the voting securities of any other person. This presumption may 204
be rebutted by a showing made in the manner provided in division 205
(J) of section 3901.33 of the Revised Code that control does not 206
exist in fact. The superintendent of insurance may determine, 207
after furnishing all persons in interest notice and opportunity to 208
be heard and making specific findings of fact to support such 209
determination, that control exists in fact, notwithstanding the 210
absence of a presumption to that effect.211

       (C) "Enterprise risk" means any activity, circumstance, 212
event, or series of events involving one or more affiliates of an 213
insurer that, if not remedied promptly, is likely to have a 214
materially adverse effect on the financial condition or liquidity 215
of the insurer or its insurance holding company system as a whole. 216
"Enterprise risk" includes anything that would cause the insurer's 217
risk-based capital to fall into company action level as set forth 218
in section 3903.83 of the Revised Code or would cause the insurer 219
to be in a hazardous financial condition.220

       (D) "Insurance holding company system" means two or more 221
affiliated persons, one or more of which is an insurer.222

       (D)(E) "Insurer" means any person engaged in the business of 223
insurance, guaranty, or membership, an inter-insurance exchange, a 224
mutual or fraternal benefit society, or a health insuring 225
corporation, excepting. "Insurer" does not include any agency, 226
authority, or instrumentality of the United States, its 227
possessions and territories, the Commonwealth of Puerto Rico, the 228
District of Columbia, or a state or political subdivision of a 229
state.230

       (E)(F) "Person" means an individual, a corporation, a 231
partnership, an association, a joint stock company, a trust, an 232
unincorporated organization, any similar entity, or any 233
combination of the foregoing acting in concert.234

       (F)(G) "Subsidiary" of a specified person is an affiliate 235
controlled by such person, directly or indirectly, through one or 236
more intermediaries.237

       (G)(H) "Voting security" includes any security convertible 238
into or evidencing a right to acquire a voting security.239

       Sec. 3901.321.  (A) For the purposes of this section:240

       (1) "Acquiring party" means any person by whom or on whose 241
behalf a merger or other acquisition of control is to be effected.242

       (2) "Domestic insurer" includes any person controlling a 243
domestic insurer unless the person, as determined by the 244
superintendent of insurance, is either directly or through its 245
affiliates primarily engaged in business other than the business 246
of insurance.247

       (3) "Person" does not include any securities broker holding, 248
in the usual and customary broker's function, less than twenty per 249
cent of the voting securities of an insurance company or of any 250
person that controls an insurance company.251

       (B)(1) Subject to compliance with division (B)(2) of this 252
section, no person other than the issuer shall do any of the 253
following if, as a result, the person would, directly or 254
indirectly, including by means of conversion or the exercise of 255
any right to acquire, be in control of a domestic insurer:256

       (a) Make a tender offer for any voting security of a domestic 257
insurer;258

       (b) Make a request or invitation for tenders of any voting 259
security of a domestic insurer;260

       (c) Enter into any agreement to exchange securities of a 261
domestic insurer;262

       (d) Seek to acquire or acquire, in the open market or 263
otherwise, any voting security of a domestic insurer;264

       (e) Enter into an agreement to merge with, or otherwise to 265
acquire control of, a domestic insurer.266

       (2)(a) No person shall engage in any transaction described in 267
division (B)(1) of this section, unless all of the following 268
conditions are met:269

       (i) The person has filed with the superintendent of insurance 270
a statement containing the information required by division (C) of 271
this section;272

       (ii) The person has sent the statement to the domestic 273
insurer;274

       (iii) The offer, request, invitation, agreement, or 275
acquisition has been approved by the superintendent in the manner 276
provided in division (F) of this section.277

       (b) The requirements of division (B)(2)(a) of this section 278
shall be met at the time any offer, request, or invitation is 279
made, or any agreement is entered into, or prior to the 280
acquisition of the securities if no offer or agreement is 281
involved.282

       (3) Any controlling person of a domestic insurer seeking to 283
divest its controlling interest in the domestic insurer shall file 284
a confidential notice of its proposed divestiture with the 285
superintendent at least thirty days prior to the cessation of 286
control, and provide a copy of the confidential notice to the 287
insurer. The superintendent may require the person seeking to 288
divest the controlling interest to file for and obtain approval of 289
the transaction. The information shall remain confidential until 290
the conclusion of the transaction unless the superintendent, in 291
the superintendent's discretion, determines that the confidential 292
treatment will interfere with enforcement of this section. If the 293
statement required by division (B)(2) of this section is otherwise 294
filed with the superintendent in relation to all parties that 295
acquire a controlling interest as a result of the divestiture, 296
this division shall not apply. 297

       (C) The statement required by division (B)(2) of this section 298
shall be made under oath or affirmation, and shall contain all of 299
the following information:300

       (1) The name and address of each acquiring party;301

       (2) If the acquiring party is an individual, the individual's 302
principal occupation and all offices and positions held during the 303
past five years, and any conviction of crimes other than minor 304
traffic violations during the past ten years;305

       (3) If the acquiring party is not an individual, a report of 306
the nature of its business operations during the past five years 307
or for such lesser period as the acquiring party and any of its 308
predecessors shall have been in existence; an informative 309
description of the business intended to be done by the acquiring 310
party and the acquiring party's subsidiaries; and a list of all 311
individuals who are or who have been selected to become directors 312
or executive officers of the acquiring party, who perform or will 313
perform functions appropriate to such positions. The list shall 314
include for each individual the information required by division 315
(C)(2) of this section.316

       (4) The source, nature, and amount of the consideration used 317
or to be used in effecting the merger or other acquisition of 318
control, a description of any transaction in which funds were or 319
are to be obtained for any such purpose, including any pledge of 320
the domestic insurer's stock, or the stock of any of its 321
subsidiaries or controlling affiliates, and the identity of 322
persons furnishing such consideration;323

       (5) Fully audited financial information as to the earnings 324
and financial condition of each acquiring party for its preceding 325
five fiscal years, or for such lesser period as the acquiring 326
party and any of its predecessors shall have been in existence, 327
and similar unaudited information as of a date not earlier than 328
ninety days prior to the filing of the statement;329

       (6) Any plans or proposals which each acquiring party may 330
have to liquidate such domestic insurer, to sell its assets or 331
merge or consolidate it with any person, or to make any other 332
material change in its business or corporate structure or 333
management;334

       (7) The number of shares of any security of such issuer or 335
such controlling person that each acquiring party proposes to 336
acquire, and the terms of the offer, request, invitation, 337
agreement, or acquisition, and a statement as to the method by 338
which the fairness of the proposal was determined;339

       (8) The amount of each class of any security of such issuer 340
or such controlling person which is beneficially owned or 341
concerning which there is a right to acquire beneficial ownership 342
by each acquiring party;343

       (9) A full description of any contracts, arrangements, or 344
understandings with respect to any security of such issuer or such 345
controlling person in which any acquiring party is involved, 346
including but not limited to transfer of any of the securities, 347
joint ventures, loan or option arrangements, puts or calls, 348
guarantees of loans, guarantees against loss or guarantees of 349
profits, division of losses or profits, or the giving or 350
withholding of proxies. The description shall identify the persons 351
with whom such contracts, arrangements, or understandings have 352
been made.353

       (10) A description of the purchase of any security of such 354
issuer or such controlling person during the year preceding the 355
filing of the statement, by any acquiring party, including the 356
dates of purchase, names of the purchasers, and consideration paid 357
or agreed to be paid therefor;358

       (11) A description of any recommendations to purchase any 359
security of such issuer or such controlling person made during the 360
year preceding the filing of the statement, by any acquiring 361
party, or by anyone based upon interviews or at the suggestion of 362
the acquiring party;363

       (12) Copies of all tender offers for, requests, or 364
invitations for tenders of, exchange offers for, and agreements to 365
acquire or exchange any securities of such issuer or such 366
controlling person, and, if distributed, of additional 367
solicitation material relating thereto;368

       (13) The terms of any agreement, contract, or understanding 369
made with or proposed to be made with any broker or dealer as to 370
solicitation of securities of such issuer or such controlling 371
person for tender, and the amount of any fees, commissions, or 372
other compensation to be paid to brokers or dealers with regard 373
thereto;374

       (14) With respect to proposed affiliations between depository 375
institutions or any affiliate thereof, within the meaning of Title 376
I, section 104(c) of the "Gramm-Leach-Bliley Act," Pub. L. No. 377
106-102, 113 Stat. 1338 (1999), and a domestic insurer, the 378
proposed effective date of the acquisition or change of control;379

       (15) An agreement by the person required to file the 380
statement required by division (B) of this section that the person 381
will provide the annual registration required by division (K) of 382
section 3901.33 of the Revised Code for so long as the person has 383
control of the domestic insurer;384

       (16) An acknowledgment by the person required to file the 385
statement required by division (B) of this section that the person 386
and all subsidiaries within the person's control in the insurance 387
holding company system will provide information to the 388
superintendent upon request as necessary to evaluate enterprise 389
risk to the insurer; 390

       (17) Such additional information as the superintendent may by 391
rule prescribe as necessary or appropriate for the protection of 392
policyholders of the domestic insurer or in the public interest.393

       (D)(1) If the person required to file the statement required 394
by division (B)(2) of this section is a partnership, limited 395
partnership, syndicate, or other group, the superintendent may 396
require that the information required by division (C) of this 397
section be furnished with respect to each partner of such 398
partnership or limited partnership, each member of such syndicate 399
or group, and each person that controls such partner or member. If 400
any such partner, member, or person is a corporation, or the 401
person required to file the statement is a corporation, the 402
superintendent may require that the information required by 403
division (C) of this section be furnished with respect to the 404
corporation, each officer and director of the corporation, and 405
each person that is directly or indirectly the beneficial owner of 406
more than ten per cent of the outstanding voting securities of the 407
corporation.408

       (2) If any material change occurs in the facts set forth in 409
the statement required by division (B)(2) of this section, an 410
amendment setting forth such change, together with copies of all 411
documents and other material relevant to the change, shall be 412
filed with the superintendent by the person subject to division 413
(B)(2) of this section and sent to the domestic insurer within two 414
business days after such person learns of the occurrence of the 415
material change.416

       (E) If any offer, request, invitation, agreement, or 417
acquisition described in division (B)(1) of this section is 418
proposed to be made by means of a registration statement under the 419
"Securities Act of 1933," 48 Stat. 74, 15 U.S.C.A. 78a, or in 420
circumstances requiring the disclosure of similar information 421
under the "Securities Exchange Act of 1934," 48 Stat. 881, 15 422
U.S.C.A. 78a, or under a state law requiring similar registration 423
or disclosure, the person required to file the statement required 424
by division (B)(2) of this section may use such documents in 425
furnishing the information required by that statement.426

       (F)(1) The superintendent shall approve any merger or other 427
acquisition of control described in division (B)(1) of this 428
section unless, after a public hearing, the superintendent finds 429
that any of the following apply:430

       (a) After the change of control, the domestic insurer would 431
not be able to satisfy the requirements for the issuance of a 432
license to write the line or lines of insurance for which it is 433
presently licensed;434

       (b) The effect of the merger or other acquisition of control 435
would be substantially to lessen competition in insurance in this 436
state or tend to create a monopoly;437

       (c) The financial condition of any acquiring party is such as 438
might jeopardize the financial stability of the domestic insurer, 439
or prejudice the interests of its policyholders;440

       (d) The plans or proposals that the acquiring party has to 441
liquidate the domestic insurer, sell its assets, or consolidate or 442
merge it with any person, or to make any other material change in 443
its business or corporate structure or management, are unfair and 444
unreasonable to policyholders of the domestic insurer and not in 445
the public interest;446

       (e) The competence, experience, and integrity of those 447
persons that would control the operation of the domestic insurer 448
are such that it would not be in the interest of policyholders of 449
the domestic insurer and of the public to permit the merger or 450
other acquisition of control;451

       (f) The acquisition is likely to be hazardous or prejudicial 452
to the insurance-buying public.453

       (2)(a) Chapter 119. of the Revised Code, except for section 454
119.09 of the Revised Code, applies to any hearing held under 455
division (F)(1) of this section, including the notice of the 456
hearing, the conduct of the hearing, the orders issued pursuant to 457
it, the review of the orders, and all other matters relating to 458
the holding of the hearing, but only to the extent that Chapter 459
119. of the Revised Code is not inconsistent or in conflict with 460
this section.461

       (b) The notice of a hearing required under this division 462
shall be transmitted by personal service, certified mail, e-mail, 463
or any other method designed to ensure and confirm receipt of the 464
notice, to the persons and addresses designated to receive notices 465
and correspondence in the information statement filed under 466
division (B)(2) of this section. Confirmation of receipt of the 467
notice, including electronic "Read Receipt" confirmation, shall 468
constitute evidence of compliance with the requirement of this 469
section. The notice of hearing shall include the reasons for the 470
proposed action and a statement informing the acquiring party that 471
the party is entitled to a hearing. The notice also shall inform 472
the acquiring party that at the hearing the acquiring party may 473
appear in person, by attorney, or by such other representative as 474
is permitted to practice before the superintendent, or that the 475
acquiring party may present its position, arguments, or 476
contentions in writing, and that at the hearing the acquiring 477
party may present evidence and examine witnesses appearing for and 478
against the acquiring party. A copy of the notice also shall be 479
transmitted to attorneys or other representatives of record 480
representing the acquiring party.481

       (c) The hearing shall be held at the offices of the 482
superintendent within ten calendar days, but not earlier than 483
seven calendar days, of the date of transmission of the notice of 484
hearing by any means, unless it is postponed or continued; but in 485
no event shall the hearing be held unless notice is received at 486
least three days prior to the hearing. The superintendent may 487
postpone or continue the hearing upon receipt of a written request 488
by an acquiring party, or upon the superintendent's motion, 489
provided, however, a hearing in connection with a proposed change 490
of control involving a depository institution or any affiliate 491
thereof, within the meaning of Title I, section 104(c) of the 492
"Gramm-Leach-Bliley Act," Pub. L. No. 106-102, 113 Stat. 1338 493
(1999), and a domestic insurer, may be postponed or continued only 494
upon the request of an acquiring party, or upon the 495
superintendent's motion when the acquiring party agrees in writing 496
to extend the sixty-day period provided for in section 104(c) of 497
the "Gramm-Leach-Bliley Act," by a number of days equal to the 498
number of days of such postponement or continuance.499

       (d) For the purpose of conducting any hearing held under this 500
section, the superintendent may require the attendance of such 501
witnesses and the production of such books, records, and papers as 502
the superintendent desires, and may take the depositions of 503
witnesses residing within or without the state in the same manner 504
as is prescribed by law for the taking of depositions in civil 505
actions in the court of common pleas, and for that purpose the 506
superintendent may, and upon the request of an acquiring party 507
shall, issue a subpoena for any witnesses or a subpoena duces 508
tecum to compel the production of any books, records, or papers, 509
directed to the sheriff of the county where such witness resides 510
or is found, which shall be served and returned in the same manner 511
as a subpoena in a criminal case is served and returned. The fees 512
of the sheriff shall be the same as that allowed in the court of 513
common pleas in criminal cases. Witnesses shall be paid the fees 514
and mileage provided for under section 119.094 of the Revised 515
Code. Fees and mileage shall be paid from the fund in the state 516
treasury for the use of the superintendent in the same manner as 517
other expenses of the superintendent are paid. In any case of 518
disobedience or neglect of any subpoena served on any person or 519
the refusal of any witness to testify in any matter regarding 520
which the witness may lawfully be interrogated, the court of 521
common pleas of any county where such disobedience, neglect, or 522
refusal occurs or any judge thereof, on application by the 523
superintendent, shall compel obedience by attachment proceedings 524
for contempt, as in the case of disobedience of the requirements 525
of a subpoena issued from the court or a refusal to testify 526
therein.527

       In any hearing held under this section, a record of the 528
testimony, as provided by stenographic means or by use of audio 529
electronic recording devices, as determined by the superintendent, 530
and other evidence submitted shall be taken at the expense of the 531
superintendent. The record shall include all of the testimony and 532
other evidence, and rulings on the admissibility thereof, 533
presented at the hearing.534

       The superintendent shall pass upon the admissibility of 535
evidence, but a party to the proceedings may at that time object 536
to the rulings of the superintendent, and if the superintendent 537
refuses to admit evidence, the party offering the evidence shall 538
proffer the evidence. The proffer shall be made a part of the 539
record of the hearing.540

       In any hearing held under this section, the superintendent 541
may call any person to testify under oath as upon 542
cross-examination. The superintendent, or any one delegated by the 543
superintendent to conduct a hearing, may administer oaths or 544
affirmations.545

       In any hearing under this section, the superintendent may 546
appoint a hearing officer to conduct the hearing; the hearing 547
officer has the same powers and authority in conducting the 548
hearing as is granted to the superintendent. The hearing officer 549
shall have been admitted to the practice of law in the state and 550
be possessed of any additional qualifications as the 551
superintendent requires. The hearing officer shall submit to the 552
superintendent a written report setting forth the hearing 553
officer's finding of fact and conclusions of law and a 554
recommendation of the action to be taken by the superintendent. A 555
copy of the written report and recommendation shall, within seven 556
days of the date of filing thereof, be served upon the acquiring 557
party or the acquiring party's attorney or other representative of 558
record, by personal service, certified mail, e-mailelectronic 559
mail, or any other method designed to ensure and confirm receipt 560
of the report. The acquiring party may, within three days of 561
receipt of the copy of the written report and recommendation, file 562
with the superintendent written objections to the report and 563
recommendation, which objections the superintendent shall consider 564
before approving, modifying, or disapproving the recommendation. 565
The superintendent may grant extensions of time to the acquiring 566
party within which to file such objections. No recommendation of 567
the hearing officer shall be approved, modified, or disapproved by 568
the superintendent until after three days following the service of 569
the report and recommendation as provided in this section. The 570
superintendent may order additional testimony to be taken or 571
permit the introduction of further documentary evidence. The 572
superintendent may approve, modify, or disapprove the 573
recommendation of the hearing officer, and the order of the 574
superintendent based on the report, recommendation, transcript of 575
testimony, and evidence, or the objections of the acquiring party, 576
and additional testimony and evidence shall have the same effect 577
as if the hearing had been conducted by the superintendent. No 578
such recommendation is final until confirmed and approved by the 579
superintendent as indicated by the order entered in the record of 580
proceedings, and if the superintendent modifies or disapproves the 581
recommendations of the hearing officer, the reasons for the 582
modification or disapproval shall be included in the record of 583
proceedings.584

       After the order is entered, the superintendent shall transmit 585
in the manner and by any of the methods set forth in division 586
(F)(2)(b) of this section a certified copy of the order and a 587
statement of the time and method by which an appeal may be 588
perfected. A copy of the order shall be mailed to the attorneys or 589
other representatives of record representing the acquiring party.590

       (e) An order of disapproval issued by the superintendent may 591
be appealed to the court of common pleas of Franklin county by 592
filing a notice of appeal with the superintendent and a copy of 593
the notice of appeal with the court, within fifteen calendar days 594
after the transmittal of the copy of the order of disapproval. The 595
notice of appeal shall set forth the order appealed from and the 596
grounds for appeal, in accordance with section 119.12 of the 597
Revised Code.598

       (3) The superintendent may retain at the acquiring party's 599
expense any attorneys, actuaries, accountants, and other experts 600
not otherwise a part of the superintendent's staff as may be 601
reasonably necessary to assist the superintendent in reviewing the 602
proposed acquisition of control.603

       (G) This section does not apply to either of the following:604

       (1) Any transaction that is subject to section 3907.09, 605
3907.10, 3907.11, or 3921.14, or sections 3925.27 to 3925.31, 606
3941.35 to 3941.46, or section 3953.19 of the Revised Code;607

       (2) Any offer, request, invitation, agreement, or acquisition 608
that the superintendent by order exempts from this section on 609
either of the following bases:610

       (a) It has not been made or entered into for the purpose and 611
does not have the effect of changing or influencing the control of 612
a domestic insurer;613

       (b) It is not otherwise comprehended within the purposes of 614
this section.615

       (H) Nothing in this section or in any other section of Title 616
XXXIX of the Revised Code shall be construed to impair the 617
authority of the attorney general to investigate or prosecute 618
actions under any state or federal antitrust law with respect to 619
any merger or other acquisition involving domestic insurers.620

       (I) In connection with a proposed change of control involving 621
a depository institution or any affiliate thereof, within the 622
meaning of Title I, section 104(c) of the "Gramm-Leach-Bliley 623
Act," Pub. L. No. 106-102, 113 Stat. 1338 (1999), and a domestic 624
insurer, not later than sixty days after the date of the 625
notification of the proposed change in control submitted pursuant 626
to division (B)(2) of this section, the superintendent shall make 627
any determination that the person acquiring control of the insurer 628
shall maintain or restore the capital of the insurer to the level 629
required by the laws and regulations of this state.630

       Sec. 3901.33.  (A) Every insurer that is authorized to do 631
business in this state and that is a member of an insurance 632
holding company system shall register with the superintendent of 633
insurance, except a foreign insurer subject to disclosure 634
requirements and standards adopted by statute or regulation in the 635
jurisdiction of its domicile that are substantially similar to 636
those contained in this section and section 3901.341 of the 637
Revised Code. Every insurer that is subject to registration under 638
this section shall register initially not later than December 31, 639
1971, or within thirty days after it becomes subject to 640
registration, whichever is later, unless the superintendent for 641
good cause shown extends the time for registration, and then 642
within the extended time, and every such insurer shall register 643
annually after its initial registration. The superintendent may 644
require any authorized insurer that is a member of a holding 645
company system that is not subject to registration under this 646
section to furnish a copy of the registration statement or other 647
information filed by the insurance company with the insurance 648
regulatory authority of domiciliary jurisdiction.649

       (B) Every insurer subject to registration shall file a 650
registration statement with the superintendent on a form and in a 651
format provided by the superintendent, which shall contain current 652
information about all of the following:653

       (1) The capital structure, general financial condition, 654
ownership, and management of the insurer and any person 655
controlling the insurer;656

       (2) The identity of every member of the insurance holding 657
company system;658

       (3) The following agreements in force, relationships 659
subsisting, and transactions currently outstanding between the 660
insurer and its affiliates:661

       (a) Loans, other investments, or purchases, sales or 662
exchanges of securities of the affiliates by the insurer or of the 663
insurer by its affiliates;664

       (b) Purchases, sales, or exchanges of assets;665

       (c) Transactions not in the ordinary course of business;666

       (d) Guarantees or undertakings for the benefit of an 667
affiliate that result in an actual contingent exposure of the 668
insurer's assets to liability, other than insurance contracts 669
entered into in the ordinary course of the insurer's business;670

       (e) All management and service contracts and all cost-sharing 671
arrangements;672

       (f) Reinsurance agreements;673

       (g) Dividends and other distributions to shareholders;674

       (h) Consolidated tax allocation agreements.675

       (4) Any pledge of the insurer's stock, including stock of any 676
subsidiary or controlling affiliate, for a loan made to any member 677
of the insurance holding company system;678

       (5) If requested by the superintendent, financial statements 679
of an insurance holding company system, including all affiliates. 680
Financial statements may include annual audited financial 681
statements filed with the United States securities and exchange 682
commission pursuant to the "Securities Act of 1933," 48 Stat. 74, 683
15 U.S.C. 77a, or the "Securities Exchange Act of 1934," 48 Stat. 684
881, 15 U.S.C. 78a. The insurer may satisfy the request by 685
providing the superintendent with the most recently filed parent 686
corporation financial statements that have been filed with the 687
securities and exchange commission.688

       (6) Other matters concerning transactions between registered 689
insurers and any affiliates as may be included from time to time 690
in any registration forms adopted or approved by the 691
superintendent;692

       (7) Statements that the insurer's board of directors oversees 693
corporate governance and internal controls and that the insurer's 694
officers or senior management have approved, implemented, and 695
continue to maintain and monitor corporate governance and internal 696
control procedures;697

       (8) Any other information required by the superintendent by 698
rule or regulation.699

       (C) Each registration statement filed pursuant to division 700
(B) of this section shall summarize the information that has 701
changed from the prior registration statement filed pursuant to 702
that division.703

       (D) No information need be disclosed on the registration 704
statement filed pursuant to division (B) of this section if the 705
information is not material for the purposes of this section. 706
Unless the superintendent by rule, regulation, or order provides 707
otherwise, sales, purchases, exchanges, loans or extensions of 708
credit, or investments involving one-half of one per cent or less 709
of an insurer's admitted assets as of the thirty-first day of 710
December next preceding shall not be deemed material for the 711
purposes of this section.712

       (E) Each registered insurer shall keep current the 713
information required to be disclosed in its registration statement 714
by reporting all material changes or additions on amendment forms 715
provided by the superintendent within fifteen days after the end 716
of the month in which it learns of each change or addition.717

       (F) The superintendent shall terminate the registration of 718
any insurer that demonstrates that it no longer is a member of an 719
insurance holding company system.720

       (G) The superintendent may require or allow two or more 721
affiliated insurers subject to registration under this section to 722
file a consolidated registration statement or consolidated reports 723
amending their consolidated registration statement or their 724
individual registration statements.725

       (H) The superintendent may allow an insurer that is 726
authorized to do business in this state and that is part of an 727
insurance holding company system to register on behalf of any 728
affiliated insurer that is required to register under division (A) 729
of this section and to file all information and material required 730
to be filed under this section.731

       (I) This section does not apply to any insurer, information, 732
or transaction if and to the extent that the superintendent by 733
rule, regulation, or order exempts it from this section.734

       (J) Any person may file with the superintendent a disclaimer 735
of affiliation with any authorized insurer or such a disclaimer 736
may be filed by the insurer or any member of an insurance holding 737
company system. The disclaimer shall fully disclose all material 738
relationships and bases for affiliation between the person and the 739
insurer as well as the basis for disclaiming the affiliation. 740
After a disclaimer has been filed, the insurer shall be relieved 741
of any duty to register or report under this section which may 742
arise out of the insurer's relationship with the person unless and 743
until the superintendent disallows the disclaimer. The 744
superintendent shall disallow such a disclaimer only in the manner 745
provided in Chapter 119. of the Revised Code.746

       (K) The ultimate controlling person of every insurer subject 747
to registration under this section also shall file an annual 748
enterprise risk report. The report shall, to the best of the 749
ultimate controlling person's knowledge and belief, identify the 750
material risks within the insurance holding company system that 751
could pose enterprise risk to the insurer. The ultimate 752
controlling person shall file the report with the lead state 753
commissioner of the insurance holding company system as determined 754
by the procedures within the financial analysis handbook adopted 755
by the national association of insurance commissioners.756

       (L) The failure to file any registration statement or any 757
amendment thereto or enterprise risk report required by this 758
section within the time specified for the filing is a violation of 759
this section.760

       Sec. 3901.34.  (A) Material transactions by registered 761
insurers with their affiliatesTransactions within an insurance 762
holding company system to which an insurer subject to registration 763
is a party shall be subject to the following standards:764

       (1) The terms shall be fair and reasonable.765

       (2) Charges or fees for services performed shall be 766
reasonable.767

       (3) Expenses incurred and payment received shall be allocated 768
to the insurer in conformity with customary insurance accounting 769
practices that are consistently applied.770

       (4) The books, accounts, and records of each party shall be 771
so maintained as to clearly and accurately disclose the precise 772
nature and details of the transactions including such accounting 773
information as is necessary to support the reasonableness of the 774
charges or fees to the respective parties.775

       (5) The insurer's surplus as regards policyholders following 776
any dividends or distributions to shareholder affiliates shall be 777
reasonable in relation to the insurer's outstanding liabilities 778
and adequate to its financial needs.779

       (6) Agreements for cost-sharing services and management 780
services shall include such provisions as required by the 781
superintendent of insurance in rule or regulation.782

       (B) For the purposes of this section, in determining whether 783
an insurer's surplus as regards policyholders is reasonable in 784
relation to the insurer's outstanding liabilities and adequate to 785
its financial needs, the following factors, among others, may be 786
considered:787

       (1) The size of the insurer as measured by its assets, 788
capital, surplus, reserves, premium writings, insurance in force, 789
and other appropriate criteria;790

       (2) The extent to which the insurer's business is diversified 791
among the several lines of insurance;792

       (3) The number and size of risks insured in each line of 793
business;794

       (4) The extent of the geographical dispersion of the 795
insurer's insured risks;796

       (5) The nature and extent of the insurer's reinsurance 797
program;798

       (6) The quality, diversification, and liquidity of the 799
insurer's investment portfolio;800

       (7) The recent past and projected future trend in the size of 801
the insurer's surplus as regards policyholders;802

       (8) The adequacy of the insurer's reserves;803

       (9) The quality and liquidity of investments in subsidiaries. 804
The superintendent may discount any such investment or treat any 805
investment as a nonadmitted asset for purposes of determining the 806
adequacy of surplus as regards policyholders whenever the 807
investment so warrants.808

       (10) The quality of the insurer's earnings and the extent to 809
which the reported earnings include extraordinary items;810

       (11) The surplus as regards policyholders maintained by other 811
comparable insurers in respect of the factors enumerated in this 812
division.813

       (C) No insurer subject to registration under section 3901.33 814
of the Revised Code shall pay any extraordinary dividend or make 815
any other extraordinary distribution to its shareholders and the 816
declaration of any such dividend or distribution shall be 817
conditional and shall confer no rights upon shareholders until 818
thirty days after the superintendent has received notice of the 819
declaration thereof and has not within the thirty-day period 820
disapproved the dividend or distribution, or the superintendent 821
has approved the dividend or distribution within the thirty-day 822
period.823

       Prior to paying any dividend or distribution, the insurer 824
shall notify the superintendent on a form provided by the 825
superintendent for informational purposes within five business 826
days following its declaration of any dividend or distribution and 827
at least ten calendar days prior to payment of such dividend or 828
distribution, such ten-calendar-day period to be measured from the 829
date of the superintendent's receipt of the notice.830

       For the purposes of this section, an extraordinary dividend 831
or distribution includes any dividend or distribution of cash or 832
other property, whose fair market value, together with that of 833
other dividends or distributions made within the preceding twelve 834
months, exceeds the greater of ten per cent of the insurer's 835
surplus as regards policyholders as of the thirty-first day of 836
December next preceding, or the net income of the insurer for the 837
twelve-month period ending the thirty-first day of December next 838
preceding, but shall not include pro rata distributions of any 839
class of the insurer's own securities.840

       Any dividend or distribution paid from other than earned 841
surplus shall be considered an extraordinary dividend or 842
extraordinary distribution. For the purposes of this section, 843
"earned surplus" means an amount equal to an insurer's unassigned 844
funds as set forth in its most recent statutory financial 845
statement submitted to the superintendent, including net 846
unrealized capital gains and losses or revaluation of assets.847

       Sec. 3901.341.  (A) No insurer subject to registration under 848
section 3901.33 of the Revised Code shall enter into any of the 849
following transactions with any person in its insurance holding 850
company system, including amendments or modifications of affiliate 851
agreements previously filed under this section that are subject to 852
the materiality standards contained in divisions (A)(1) to (5) of 853
this section, until thirty days after the superintendent of 854
insurance has received, for histhe superintendent's review, 855
written notice of the insurer's intention to enter into the 856
transaction and if, during that period, the superintendent has not 857
disapproved the proposed transaction. The notice for amendments or 858
modifications shall include the reasons for the change and the 859
financial impact on the domestic insurer. Informal notice shall be 860
reported to the superintendent within thirty days after 861
termination of a previously filed agreement. These requirements 862
shall apply to all of the following transactions:863

       (1) Any sale, purchase, exchange of assets, loan, extension 864
of credit, guarantee, or investment, if the transaction equals or 865
exceeds, with respect to insurers other than life insurers, the 866
lesser of three per cent of the insurer's admitted assets as of 867
the thirty-first day of December next preceding or twenty-five per 868
cent of the insurer's surplus as regards policyholders as of the 869
thirty-first day of December next preceding or, with respect to 870
life insurers, three per cent of the insurer's admitted assets as 871
of the thirty-first day of December next preceding;872

       (2) Any loan or extension of credit to any person that is not 873
an affiliate of the insurer, if both of the following apply:874

       (a) The loan or extension of credit equals or exceeds, with 875
respect to insurers other than life insurers, the lesser of three 876
per cent of the insurer's admitted assets as of the thirty-first 877
day of December next preceding or twenty-five per cent of the 878
insurer's surplus as regards policyholders as of the thirty-first 879
day of December next preceding or, with respect to life insurers, 880
three per cent of the insurer's admitted assets as of the 881
thirty-first day of December next preceding.882

       (b) The insurer makes the loan or extends the credit with an 883
agreement or understanding that the proceeds of the transaction, 884
in whole or in substantial part, are to be used to make loans or 885
extend credit to, to purchase assets of, or to make investments 886
in, any affiliate of the insurer.887

       (3) Reinsurance agreements or modifications of such 888
agreementsincluding all of the following:889

       (a) All new reinsurance pooling agreements;890

       (b) All reinsurance pooling agreements in which a domestic 891
company is newly added;892

       (c) Agreements in which the reinsurance premium or the change 893
in the insurer's liabilities, or the projected reinsurance premium 894
or a change in the insurer's liabilities in any of the next three 895
years, equals or exceeds five per cent of the insurer's surplus as 896
regards policyholders as of the thirty-first day of December next 897
preceding. Division898

       Division (A)(3) of this section also applies to reinsurance 899
agreements that may require as consideration the transfer of 900
assets from an insurer to a nonaffiliate, if the insurer and 901
nonaffiliate have an agreement or understanding that any portion 902
of the assets will be transferred to one or more affiliates of the 903
insurer.904

       (4) All management agreements, service contracts, tax 905
allocations agreements, guarantees, and cost-sharing arrangements;906

       (5) Any other material transaction that the superintendent, 907
pursuant to rules adopted in accordance with Chapter 119. of the 908
Revised Code, determines may render the insurer's surplus as 909
regards policyholders unreasonable in relation to the insurer's 910
outstanding liabilities and inadequate to its financial needs.911

       (B) In reviewing transactions under division (A) of this 912
section, the superintendent shall consider whether the terms of 913
the transaction are fair and reasonable and whether the 914
transaction may adversely affect the interests of policyholders.915

       (C) Any transaction or agreement described in division (A) of 916
this section that is not disapproved by the superintendent in 917
accordance with that division is effective as of the effective 918
date set forth in the notice required under this section.919

       (D) The superintendent, pursuant to rules adopted in 920
accordance with Chapter 119. of the Revised Code, may designate 921
certain types of transactions that need not be submitted for 922
review under division (A) of this section, if those transactions 923
would not have a significant impact on the financial condition of 924
an insurer.925

       (E) A domestic insurer shall not enter into any transaction 926
described in division (A) of this section with members of its 927
insurance holding company system if the transaction is part of a 928
plan or series of similar transactions and if the purpose of 929
entering into the separate transactions is to avoid the review 930
required under division (A) of this section that would otherwise 931
occur. If the superintendent determines that the insurer, within a 932
twelve-month period, entered into those separate transactions for 933
that purpose, hethe superintendent may take any action authorized 934
by section 3901.37 of the Revised Code.935

       (F) A domestic insurer shall give written notice to the 936
superintendent, within thirty days after making an investment, if 937
the investment is made in a corporation and the total investment 938
in the corporation by the insurance holding company system exceeds 939
ten per cent of the voting securities of the corporation.940

       (G) Nothing in division (A) of this section shall be 941
construed to authorize or permit any transaction that would 942
otherwise be contrary to law.943

       Sec. 3901.35.  (A)(1) In addition to the powers whichthat944
the superintendent has under sections 3901.01 to 3901.31, 945
inclusive, of the Revised Code, relating to the examination of 946
insurers, the superintendent of insurance, subject to sections 947
119.01 to 119.13, inclusive, of the Revised Code, shall also have 948
the power to orderexamine any insurer registered under section 949
3901.33 of the Revised Code and its affiliates to ascertain the 950
financial condition of the insurer, including the enterprise risk 951
to the insurer by the ultimate controlling party, or by any entity 952
or combination of entities within the insurance holding company 953
system, or by the insurance holding company system on a 954
consolidated basis.955

       (2) The superintendent of insurance may order any insurer 956
registered under section 3901.33 of the Revised Code to produce 957
for examination such records, books, or other information papers 958
in the possession of the insurer and its affiliates as may be 959
reasonably necessary to ascertain the financial condition or 960
legality of conduct of such insurer, but only if the 961
superintendent finds that an examination of such insurer pursuant 962
to sections 3901.01 to 3901.31, inclusive, of the Revised Code, 963
would be inadequate or the interests of the policyholders of such 964
insurer may be adversely affected. In the event such insurer fails 965
to comply with such order, the superintendent shall have the power 966
to examine such affiliates to obtain such informationdetermine 967
compliance with sections 3901.32 to 3901.37 of the Revised Code.968

       (3) To determine compliance with sections 3901.32 to 3901.37 969
of the Revised Code, the superintendent may order any insurer 970
registered under section 3901.33 of the Revised Code to produce 971
information not in the possession of the insurer if the insurer 972
can obtain access to such information pursuant to a contractual 973
relationship, statutory obligation, or other method. If the 974
insurer cannot obtain the information requested by the 975
superintendent, the insurer shall provide the superintendent a 976
detailed explanation of the reason that the insurer cannot obtain 977
the information and the identity of the holder of information. 978
Whenever it appears to the superintendent that the detailed 979
explanation is without merit, the superintendent may require, 980
after notice and hearing, that the insurer pay a penalty of up to 981
ten thousand dollars per day, or the superintendent may suspend or 982
revoke the insurer's license.983

       (B) The superintendent may retain at the registered insurer's 984
expense such attorneys, actuaries, accountants, and other experts 985
not otherwise a part of the superintendent's staff as shall be 986
reasonably necessary to assist in the conduct of the examination 987
under division (A) of this section. Any persons so retained shall 988
be under the direction and control of the superintendent and shall 989
act in a purely advisory capacity.990

       (C) Each registered insurer producing for examination 991
records, books, and papers pursuant to division (A) of this 992
section shall be liable for and shall pay the expense of such 993
examination in accordance with section 3901.07 of the Revised 994
Code.995

       (D) If the insurer fails to comply with an order issued 996
pursuant to this section, the superintendent may examine the 997
affiliates to obtain the information. The superintendent also may 998
issue subpoenas, administer oaths, and examine under oath any 999
person for purposes of determining compliance with this section. 1000
Upon the failure or refusal of any person to obey a subpoena, the 1001
superintendent may petition the court of common pleas of Franklin 1002
county for an order compelling the witness to appear and testify 1003
or produce documentary evidence. Failure to obey the court order 1004
shall be punishable as contempt of court. A person who receives a 1005
subpoena issued pursuant to this division shall appear as a 1006
witness at the place specified in the subpoena within the state. 1007
The person is entitled to the same fees and mileage as a witness 1008
in a civil action in the court of common pleas. Any fees, mileage, 1009
or actual expenses necessarily incurred in securing the attendance 1010
of a witness and their testimony shall be itemized and charged 1011
against the insurer being examined.1012

       Sec. 3901.351. (A) With respect to any insurer registered 1013
under section 3901.33 of the Revised Code and in accordance with 1014
division (C) of this section, the superintendent of insurance may 1015
participate in a supervisory college for any domestic insurer that 1016
is part of an insurance holding company system with international 1017
operations in order to determine compliance by the insurer with 1018
sections 3901.32 to 3901.37 of the Revised Code. In participating, 1019
the superintendent may do all of the following:1020

        (1) Initiate the establishment of a supervisory college;1021

        (2) Clarify the membership and participation of other 1022
supervisors in the supervisory college;1023

        (3) Clarify the functions of the supervisory college and the 1024
role of other regulators, including the establishment of a 1025
group-wide supervisor;1026

        (4) Coordinate the ongoing activities of the supervisory 1027
college, including planning meetings, supervisory activities, and 1028
processes for information sharing;1029

        (5) Establish a crisis management plan.1030

        (B) Each registered insurer subject to this section shall be 1031
liable for and shall pay the reasonable expenses of the 1032
superintendent's participation in a supervisory college in 1033
accordance with division (C) of this section, including reasonable 1034
travel expenses. The superintendent may establish a regular 1035
assessment to the insurer for the payment of these expenses. A 1036
supervisory college may be convened as either a temporary or 1037
permanent forum for communication and cooperation between the 1038
regulators charged with the supervision of the insurer or its 1039
affiliates.1040

        (C) In order to assess the business strategy, financial 1041
position, legal and regulatory position, risk exposure, risk 1042
management, and governance processes, and as part of the 1043
examination of individual insurers in accordance with section 1044
3901.35 of the Revised Code, the superintendent may participate in 1045
a supervisory college with other regulators charged with 1046
supervision of the insurer or its affiliates, including other 1047
state, federal, and international regulatory agencies. The 1048
superintendent may enter into agreements in accordance with 1049
section 3901.36 of the Revised Code that provide the basis for 1050
cooperation between the superintendent and the other regulatory 1051
agencies, and the activities of the supervisory college.1052

        (D) Nothing in this section shall delegate to the supervisory 1053
college the authority of the superintendent to regulate or 1054
supervise the insurer or its affiliates within its jurisdiction. 1055

       Sec. 3901.36. (A) All information, documents, and copies 1056
thereofDocuments, materials, or other information in the 1057
possession or control of the department of insurance that are1058
obtained by or disclosed to the superintendent of insurance or any 1059
other person in the course of an examination or investigation made 1060
pursuant to section 3901.35 of the Revised Code and all 1061
information reported pursuant to section 3901.33 of the Revised 1062
Code shall be given confidential and privileged treatment and 1063
shall not be subject to section 149.43 of the Revised Code,1064
subpoena, or be made public by the superintendent or any other 1065
person.1066

       (B) Notwithstanding division (A) of this section, the1067
discovery, and shall not be admissible in evidence in any private 1068
civil action. The superintendent may do any of the following:1069

       (1) Disclose documents and information that are the subject 1070
of this section upon obtainingshall not make the documents, 1071
materials, or other information public unless one of the following 1072
applies:1073

        (1) The superintendent uses the documents, materials, or 1074
other information in furtherance of any regulatory or legal action 1075
brought as a part of the superintendent's official duties.1076

        (2) The superintendent has obtained the prior written consent 1077
fromof the insurer to whichpertaining to the disclosure of the 1078
documents and, materials, or other information pertain;of the 1079
insurer.1080

       (2) Disclose documents and information that are the subject 1081
of this section in such a manner as the superintendent considers 1082
appropriate(3) The superintendent, after giving the insurer and 1083
those affiliates that are the subject of the documents and, 1084
materials, or other information notice and an opportunity to be 1085
heard in accordance with Chapter 119. of the Revised Code, if the 1086
superintendent determines that the interests of policyholders, 1087
shareholders, or the public will be served by the disclosure;1088

       (3) Share documents and information that are the subject of 1089
this section with the chief deputy rehabilitator, the chief deputy 1090
liquidator, other deputy rehabilitators and liquidators, and any 1091
other person employed by, or acting on behalf of, the 1092
superintendent pursuant to Chapter 3901. or 3903. of the Revised 1093
Code, in which case the superintendent may make disclosures as the 1094
superintendent considers appropriate.1095

       (B) Neither the superintendent nor any person who receives 1096
documents, materials, or other information while acting under the 1097
authority of the superintendent or with whom such documents, 1098
materials, or other information are shared pursuant to this 1099
section shall be permitted or required to testify in any private 1100
civil action concerning any confidential documents, materials, or 1101
information subject to division (A) of this section.1102

       (C) In order to assist in the performance of the 1103
superintendent's duties under this section, the superintendent may 1104
do either of the following:1105

       (1) Share documents, materials, or other information, 1106
including the confidential and privileged documents, materials, or 1107
other information subject to division (A) of this section with 1108
other local, state, federal, and international regulatory and law 1109
enforcement agencies, with local, state, and federal prosecutors, 1110
and with the national association of insurance commissioners and 1111
its affiliates and subsidiaries, and with members of any 1112
supervisory college described in section 3901.351 of the Revised 1113
Code, provided that the recipient agrees to maintain the 1114
confidential or privileged status of the confidential or 1115
privileged documentdocuments, materials, or other information and 1116
has verified in writing the legal authority to do so;1117

       (4) Disclose documents and information that are the subject 1118
of this section in the furtherance of any regulatory or legal 1119
action brought by or on behalf of the superintendent or the state, 1120
resulting from the exercise of the superintendent's official 1121
duties.1122

       (C) Notwithstanding divisions (A) and (B) of this section, 1123
the superintendent may authorize the national association of 1124
insurance commissioners and its affiliates and subsidiaries by 1125
agreement to share confidential or privileged documents or 1126
information received pursuant to division (B)(3) of this section 1127
with local, state, federal, and international regulatory and law 1128
enforcement agencies and with local, state, and federal 1129
prosecutors, provided that the recipient agrees to maintain the 1130
confidential or privileged status of the confidential or 1131
privileged document or information and has authority to do so.1132

       (D) Notwithstanding divisions (A) and (B) of this section, 1133
the chief deputy rehabilitator, the chief deputy liquidator, and 1134
other deputy rehabilitators and liquidators may disclose documents 1135
and information that are the subject of this section in the 1136
furtherance of any regulatory or legal action brought by or on 1137
behalf of the superintendent, the rehabilitator, the liquidator, 1138
or the state resulting from the exercise of the superintendent's 1139
official duties in any capacity.1140

       (E) Nothing in this section shall prohibit the superintendent 1141
from receiving documents and information in accordance with 1142
section 3901.045 of the Revised Code. The superintendent may share 1143
confidential and privileged documents, materials, or other 1144
information reported pursuant to section 3901.33 of the Revised 1145
Code only with superintendents of states having statutes or 1146
regulations substantially similar to division (A) of this section 1147
and who have agreed in writing not to disclose such information.1148

       (2) Receive documents, materials, or information, including 1149
otherwise confidential and privileged documents, materials, or 1150
information from the national association of insurance 1151
commissioners and its affiliates and subsidiaries and from 1152
regulatory and law enforcement officials of other foreign or 1153
domestic jurisdictions. The superintendent shall maintain as 1154
confidential or privileged any such document, material, or 1155
information received with notice or the understanding that it is 1156
confidential or privileged under the laws of the jurisdiction that 1157
is the source of the document, material, or information.1158

       (D) The superintendent shall enter into written agreements 1159
with the national association of insurance commissioners governing 1160
sharing and use of information provided pursuant to sections 1161
3901.32 to 3901.37 of the Revised Code consistent with division 1162
(C) of this section. The written agreements shall do all of the 1163
following:1164

       (1) Specify procedures and protocols regarding the 1165
confidentiality and security of information shared with the 1166
national association of insurance commissioners and its affiliates 1167
and subsidiaries pursuant to sections 3901.32 to 3901.37 of the 1168
Revised Code, including procedures and protocols for sharing by 1169
the national association of insurance commissioners with other 1170
state, federal, or international regulators;1171

       (2) Specify that ownership of information shared with the 1172
national association of insurance commissioners and its affiliates 1173
and subsidiaries pursuant to sections 3901.32 to 3901.37 of the 1174
Revised Code remains with the superintendent and the national 1175
association of insurance commissioners' use of the information is 1176
subject to the direction of the superintendent;1177

       (3) Require prompt notice to be given to an insurer whose 1178
confidential information is in the possession of the national 1179
association of insurance commissioners or its affiliates or 1180
subsidiaries and is subject to a request or subpoena for 1181
disclosure or production; 1182

       (4) Require the national association of insurance 1183
commissioners and its affiliates and subsidiaries to consent to 1184
intervention by an insurer in any judicial or administrative 1185
action in which the national association of insurance 1186
commissioners and its affiliates and subsidiaries may be required 1187
to disclose confidential information about the insurer shared with 1188
the national association of insurance commissioners and its 1189
affiliates and subsidiaries pursuant to sections 3901.32 to 1190
3901.37 of the Revised Code.1191

       (E) The sharing of information by the superintendent pursuant 1192
to sections 3901.32 to 3901.37 of the Revised Code shall not 1193
constitute a delegation of regulatory or rule-making authority. 1194
The superintendent is solely responsible for the administration, 1195
execution, and enforcement of the provisions of sections 3901.32 1196
to 3901.37 of the Revised Code.1197

       (F) The superintendent may enter into agreements governing 1198
the sharing and use of documents and information consistent with 1199
the requirements of this section.1200

       (G)(1) No waiver of any applicable privilege or claim of 1201
confidentiality in the documents and, materials, or other1202
information described in this section shall occur as a result of 1203
sharing or receiving documents and information as authorized in 1204
divisions (B)(3),division (C), and (E) of this section.1205

       (2) The disclosure of a document or information in connection 1206
with a regulatory or legal action pursuant to divisions (B)(4) and 1207
(D) of this section does not prohibit an insurer or any other 1208
person from taking steps to limit the dissemination of the 1209
document or information to persons not involved in or the subject 1210
of the regulatory or legal action on the basis of any recognized 1211
privilege arising under any other section of the Revised Code or 1212
the common law.(G) Documents, materials, or other information in 1213
the possession or control of the national association of insurance 1214
commissioners pursuant to this section shall be given confidential 1215
and privileged treatment and shall not be subject to section 1216
149.43 of the Revised Code, subpoena, or discovery, and shall not 1217
be admissible in evidence in any private civil action.1218

       Sec. 3901.371.  The purpose of sections 3901.371 to 3901.378 1219
of the Revised Code is to provide the requirements for maintaining 1220
a risk management framework and completing an own risk and 1221
solvency assessment, and to provide guidance and instructions for 1222
filing an own risk and solvency assessment summary report with the 1223
superintendent of insurance. The requirements of these sections 1224
shall apply to all insurers domiciled in this state unless exempt 1225
pursuant to section 3901.376 of the Revised Code.1226

       The general assembly finds and declares that the own risk and 1227
solvency assessment summary report will contain confidential and 1228
sensitive information related to an insurer or insurance group's 1229
identification of risks material and relevant to the insurer or 1230
insurance group filing the report. This information will include 1231
proprietary and trade secret information that has the potential 1232
for harm and competitive disadvantage to the insurer or insurance 1233
group if the information is made public. It is the intent of the 1234
general assembly that the own risk and solvency assessment summary 1235
report shall be a confidential document filed with the 1236
superintendent, that the own risk and solvency assessment summary 1237
report will be shared only as stated in sections 3901.371 to 1238
3901.378 of the Revised Code to assist the superintendent of 1239
insurance in the performance of the superintendent's duties, and 1240
that in no event shall the own risk and solvency assessment 1241
summary report be subject to public disclosure.1242

       Sec. 3901.372.  For the purposes of sections 3901.371 to 1243
3907.378 of the Revised Code:1244

       (A) "Insurance group" means those insurers and affiliates 1245
included within an insurance holding company system as defined in 1246
section 3901.32 of the Revised Code.1247

       (B) "Insurer" has the same meaning as set forth in section 1248
3901.32 of the Revised Code.1249

       (C) "Own risk and solvency assessment" means a confidential 1250
internal assessment, appropriate to the nature, scale, and 1251
complexity of an insurer or insurance group, conducted by that 1252
insurer or insurance group of the material and relevant risks 1253
associated with the insurer or insurance group's current business 1254
plan, and the sufficiency of capital resources to support those 1255
risks.1256

       (D) "Own risk and solvency assessment guidance manual" means 1257
the current version of the own risk and solvency assessment 1258
guidance manual developed and adopted by the national association 1259
of insurance commissioners and as amended from time to time. A 1260
change in the own risk and solvency assessment guidance manual 1261
shall be effective on the first day of January following the 1262
calendar year in which the changes have been adopted by the 1263
national association of insurance commissioners.1264

       (E) "Own risk and solvency assessment summary report" means a 1265
confidential high-level summary of an insurer or insurance group's 1266
own risk and solvency assessment.1267

       Sec. 3901.373.  An insurer shall maintain a risk management 1268
framework to assist the insurer with identifying, assessing, 1269
monitoring, managing, and reporting on its material and relevant 1270
risks. This requirement may be satisfied if the insurance group of 1271
which the insurer is a member maintains a risk management 1272
framework applicable to the operations of the insurer.1273

       Sec. 3901.374.  Unless exempted by section 3901.376 of the 1274
Revised Code, an insurer, or the insurance group of which the 1275
insurer is a member, shall regularly conduct an own risk and 1276
solvency assessment consistent with a process comparable to the 1277
own risk and solvency assessment guidance manual. The own risk and 1278
solvency assessment shall be conducted not less than annually, but 1279
also at any time when there are significant changes to the risk 1280
profile of the insurer or the insurance group of which the insurer 1281
is a member.1282

       Sec. 3901.375.  (A)(1) Upon the request of the superintendent 1283
of insurance, and not more than once annually, an insurer shall 1284
submit to the superintendent an own risk and solvency assessment 1285
summary report, or any combination of reports that together 1286
contain the information described in the own risk and solvency 1287
assessment guidance manual, applicable to the insurer or the 1288
insurance group of which it is a member.1289

       (2) Notwithstanding any request from the superintendent, if 1290
the insurer is a member of an insurance group, the insurer shall 1291
submit the report required by division (A)(1) of this section if 1292
the superintendent is the lead state commissioner of the insurance 1293
group as determined by the procedures within the financial 1294
analysis handbook adopted by the national association of insurance 1295
commissioners.1296

       (B) The report shall include a signature of the insurer or 1297
insurance group's chief risk officer, or other executive having 1298
responsibility for the oversight of the insurer's enterprise risk 1299
management process, attesting to the best of the officer's or 1300
executive's belief and knowledge that the insurer applies the 1301
enterprise risk management process described in the own risk and 1302
solvency assessment summary report, and that a copy of the report 1303
has been provided to the insurer's board of directors or the 1304
appropriate committee thereof.1305

       (C) An insurer may comply with division (A) of this section 1306
by providing the most recent and substantially similar report 1307
provided by the insurer or another member of an insurance group of 1308
which the insurer is a member to the commissioner of another state 1309
or to a supervisor or regulator of a foreign jurisdiction, if that 1310
report provides information that is comparable to the information 1311
described in the own risk and solvency assessment guidance manual. 1312
Any such report in a language other than English must be 1313
accompanied by a translation of that report into the English 1314
language.1315

       Sec. 3901.376.  (A)(1) An insurer shall be exempt from the 1316
requirements of sections 3901.371 to 3901.378 of the Revised Code 1317
if both of the following apply:1318

       (a) The insurer has annual direct written and unaffiliated 1319
assumed premium, including international direct and assumed 1320
premium, less than five hundred million dollars.1321

       (b) The insurance group of which the insurer is a member has 1322
annual direct written and unaffiliated assumed premium, including 1323
international direct and assumed premium, less than one billion 1324
dollars.1325

       (2) The annual direct written and unaffiliated assumed 1326
premium described in divisions (A)(1)(a) and (b) of this section 1327
does not include premiums reinsured with the federal crop 1328
insurance corporation and federal flood program.1329

       (B) If an insurer qualifies for exemption pursuant to 1330
division (A)(1)(a) of this section, but the insurance group of 1331
which the insurer is a member does not qualify for exemption 1332
pursuant to division (A)(1)(b) of this section, and if an own risk 1333
and solvency assessment summary report is required pursuant to 1334
division (E) of this section, then the summary report shall 1335
include every insurer within the insurance group. This requirement 1336
may be satisfied if the insurer submits more than one own risk and 1337
solvency assessment summary report for any combination of insurers 1338
provided the combination of reports includes every insurer within 1339
the insurance group.1340

       (C) If an insurer does not qualify for exemption pursuant to 1341
division (A)(1)(a) of this section, but the insurance group of 1342
which it is a member qualifies for exemption pursuant to division 1343
(A)(1)(b) of this section, then the insurer shall only file an own 1344
risk and solvency assessment summary report if required pursuant 1345
to division (E) of this section. 1346

       (D)(1) An insurer that does not qualify for exemption 1347
pursuant to division (A) of this section may apply to the 1348
superintendent of insurance for a waiver from the requirements of 1349
sections 3901.371 to 3901.378 of the Revised Code based upon 1350
unique circumstances. In deciding whether to grant the insurer's 1351
request for waiver, the superintendent may consider any of the 1352
following:1353

       (a) The type and volume of business written;1354

       (b) The ownership and organizational structure of the insurer 1355
or insurance group of which the insurer is a member;1356

       (c) Any other factor the superintendent considers relevant to 1357
the insurer or insurance group of which the insurer is a member. 1358

       (2) If the insurer is part of an insurance group with 1359
insurers domiciled in more than one state, the superintendent 1360
shall coordinate with the lead state commissioner and with the 1361
other domiciliary commissioners in considering whether to grant 1362
the insurer's request for a waiver.1363

       (E) Notwithstanding the exemptions stated in this section, 1364
the superintendent may require that an insurer maintain a risk 1365
management framework, conduct an own risk and solvency assessment, 1366
and file an own risk and solvency assessment summary report in any 1367
of the following circumstances:1368

       (1) Based on unique circumstances, including the type and 1369
volume of business written and the ownership and organizational 1370
structure of the insurer or insurance group of which the insurer 1371
is a member;1372

       (2) At the request of a federal agency;1373

       (3) At the request of an international supervisor;1374

       (4) If the insurer has risk-based capital for a company 1375
action level event as set forth in section 3903.83 of the Revised 1376
Code, meets one or more of the standards set out in section 1377
3903.09 or 3903.71 of the Revised Code, or otherwise exhibits 1378
qualities of a troubled insurer as determined by the 1379
superintendent.1380

       (F) If an insurer that qualifies for an exemption pursuant to 1381
division (A) of this section subsequently no longer qualifies for 1382
that exemption due to changes in premium as reflected in the 1383
insurer's most recent annual statement, or in the most recent 1384
annual statements of the insurers within the insurance group of 1385
which the insurer is a member, the insurer shall have one year 1386
after the year the threshold is exceeded to comply with the 1387
requirements of sections 3901.371 to 3901.378 of the Revised Code.1388

       Sec. 3901.377.  (A) The own risk and solvency assessment 1389
summary report shall be prepared consistent with the own risk and 1390
solvency assessment guidance manual, subject to the requirements 1391
of division (B) of this section, and all documentation and 1392
supporting information shall be maintained and made available for 1393
examination upon request of the superintendent of insurance.1394

       (B) The superintendent's review of the own risk and solvency 1395
assessment summary report, and any additional requests for 1396
information, shall be made using similar procedures used in the 1397
analysis and examination of multi-state or global insurers and 1398
insurance groups.1399

       Sec. 3901.378.  (A) Documents, materials, or other 1400
information, including the own risk and solvency assessment 1401
summary report, in the possession or control of the department of 1402
insurance that are obtained by, created by, or disclosed to the 1403
superintendent of insurance, or any other person under sections 1404
3901.371 to 3901.378 of the Revised Code, are recognized by this 1405
state as being proprietary and to contain trade secrets.1406

       (B) The documents described in division (A) of this section 1407
shall be confidential by law and privileged, and shall not be 1408
admissible into evidence in any private civil action or subject to 1409
section 149.43 of the Revised Code, subpoena, or discovery. 1410

       (C)(1) Notwithstanding division (B) of this section, the 1411
superintendent may use the documents, materials, or other 1412
information in furtherance of any regulatory or legal action 1413
brought as a part of the superintendent's official duties. 1414

       (2) The superintendent shall not otherwise make the 1415
documents, materials, or other information public without the 1416
prior written consent of the insurer.1417

       (D) Neither the superintendent nor any person who receives 1418
documents, materials, or other own risk and solvency assessment 1419
related information, through examination or otherwise, while 1420
acting under the authority of the superintendent or with whom such 1421
documents, materials, or other information are shared pursuant to 1422
sections 3901.371 to 3901.378 of the Revised Code shall be 1423
permitted or required to testify in any private civil action 1424
concerning any confidential documents, materials, or information 1425
subject to division (A) of this section.1426

       (E)(1) In order to assist in the performance of the 1427
superintendent's regulatory duties, the superintendent may do 1428
either of the following:1429

       (a) Upon request, share documents, materials, or other own 1430
risk and solvency assessment related information, including 1431
confidential and privileged documents, materials, or information 1432
subject to division (A) of this section, and proprietary and trade 1433
secret documents, with other state, federal and international 1434
financial regulatory agencies, members of any supervisory college 1435
as described in section 3901.351 of the Revised Code, the national 1436
association of insurance commissioners, or any third-party 1437
consultant designated by the superintendent;1438

       (b) Receive documents, materials, or other own risk and 1439
solvency assessment related information, including confidential 1440
and privileged documents, materials, or information subject to 1441
division (A) of this section, and proprietary and trade secret 1442
documents, from regulatory officials of other foreign or domestic 1443
jurisdictions, including members of any supervisory college as 1444
described in section 3901.351 of the Revised Code, and from the 1445
national association of insurance commissioners.1446

       (2) The recipient of any information pursuant to division 1447
(E)(1)(a) of this section shall agree in writing to maintain the 1448
confidentiality and privileged status of the documents, materials, 1449
or other information and verify in writing their legal authority 1450
to maintain confidentiality. If the superintendent receives any 1451
information pursuant to division (E)(1)(b) of this section, the 1452
superintendent shall maintain as confidential or privileged any 1453
documents, materials, or information received with notice or the 1454
understanding that it is confidential or privileged under the laws 1455
of the jurisdiction that is the source of the document, material, 1456
or information.1457

       (3) The superintendent shall enter into a written agreement 1458
with the national association of insurance commissioners or a 1459
third-party consultant governing sharing and use of information 1460
provided pursuant to sections 3901.371 to 3901.378 of the Revised 1461
Code. The written agreement shall do the all of the following:1462

       (a) Specify procedures and protocols regarding the 1463
confidentiality and security of information shared with the 1464
national association of insurance commissioners or a third-party 1465
consultant pursuant to sections 3901.371 to 3901.378 of the 1466
Revised Code, including procedures and protocols for sharing by 1467
the national association of insurance commissioners with other 1468
state regulators from states in which the insurance group has 1469
domiciled insurers;1470

       (b) Provide that the recipient of information agrees in 1471
writing to maintain the confidentiality and privileged status of 1472
the own risk and solvency assessment related documents, materials, 1473
or other information obtained pursuant to sections 3901.371 to 1474
3901.378 of the Revised Code, and has verified in writing the 1475
legal authority to maintain confidentiality;1476

       (c) Specify that ownership of information shared with the 1477
national association of insurance commissioners or a third-party 1478
consultant pursuant to sections 3901.371 to 3901.378 of the 1479
Revised Code remains with the superintendent and the national 1480
association of insurance commissioners' or a third-party 1481
consultant's use of the information is subject to the direction of 1482
the superintendent;1483

       (d) Prohibit the national association of insurance 1484
commissioners or a third-party consultant from storing the 1485
information obtained pursuant to sections 3901.371 to 3901.378 of 1486
the Revised Code in a permanent database after the underlying 1487
analysis is completed;1488

       (e) Require prompt notice to be given to an insurer whose 1489
confidential information in the possession of the national 1490
association of insurance commissioners or a third-party consultant 1491
pursuant to sections 3901.371 to 3901.378 of the Revised Code is 1492
subject to a request or subpoena for disclosure or production of 1493
the information;1494

       (f) Require the national association of insurance 1495
commissioners or a third-party consultant to consent to 1496
intervention by an insurer in any judicial or administrative 1497
action in which the national association of insurance 1498
commissioners or a third-party consultant may be required to 1499
disclose confidential information about the insurer that was 1500
obtained pursuant to sections 3901.371 to 3901.378 of the Revised 1501
Code;1502

       (g) Require the national association of insurance 1503
commissioners or a third-party consultant to use documents, 1504
materials, or other information, including the own risk solvency 1505
assessment summary report, for the specific purposes as directed 1506
by the superintendent;1507

        (h) Prohibit the national association of insurance 1508
commissioners or a third-party consultant from using, sharing, or 1509
disclosing any documents, materials, or other information, 1510
including the own risk and solvency assessment summary report, 1511
beyond the scope of the responsibilities outlined by the 1512
superintendent;1513

        (i) Provide for the insurer's written consent in the case of 1514
an agreement involving a third-party consultant.1515

       (F) The sharing of information, materials, and documents by 1516
the superintendent pursuant to sections 3901.371 to 3901.378 of 1517
the Revised Code shall not constitute a delegation of regulatory 1518
or rule-making authority, and the superintendent is solely 1519
responsible for the administration, execution, and enforcement of 1520
sections 3901.371 to 3901.378 of the Revised Code.1521

       (G) No waiver of any applicable privilege or claim of 1522
confidentiality in the documents, proprietary and trade-secret 1523
materials, or other own risk and solvency assessment related 1524
information shall occur as a result of disclosure of such own risk 1525
and solvency assessment related information, materials, or 1526
documents to the superintendent as a result of sharing authorized 1527
in sections 3901.371 to 3901.378 of the Revised Code.1528

       (H) Documents, materials, or other information in the 1529
possession or control of the national association of insurance 1530
commissioners or a third-party consultant pursuant to sections 1531
3901.371 to 3901.378 of the Revised Code shall be confidential by 1532
law and privileged, and shall not be subject to section 149.43 of 1533
the Revised Code, subpoena, discovery, or admissible in evidence 1534
in any private civil action.1535

       Sec. 3901.41.  (A) As used in this section:1536

       (1) "Automated transaction" has the same meaning as in 1537
section 1306.01 of the Revised Code, and includes electronic 1538
transactions between two or more persons conducting business 1539
pursuant to the laws of this state relating to insurance.1540

       (2) "Contact point" means any electronic identification to 1541
which messages can be sent, including, but not limited to, any of 1542
the following:1543

       (a) An electronic mail address;1544

       (b) An instant message identity;1545

       (c) A wireless telephone number, or any other personal 1546
electronic communication device;1547

       (d) A facsimile number.1548

       (3) "Insured" means a certificate holder, contract owner, 1549
customer, policyholder, or subscriber as those terms are used in 1550
the laws of this state relating to insurance.1551

       (4) "Insurer" has the same meaning as in section 3901.32 of 1552
the Revised Code.1553

       (5) "Laws of this state relating to insurance" has the same 1554
meaning as in section 3901.04 of the Revised Code.1555

       (6) "Personally identifiable information" means any 1556
individually identifiable information gathered in connection with 1557
an insurance transaction, including a person's name, address, 1558
social security number, and banking information.1559

       (7) "Secure web site" means a web site that meets both of the 1560
following criteria:1561

       (a) The web site uses the hypertext transfer protocol secure 1562
communication protocol or other equally secure communication 1563
protocol.1564

       (b) The web site requires a person to enter a unique user 1565
credential to access personally identifiable information for which 1566
the person has the legal right to access. 1567

       (B) Notwithstanding any laws of this state relating to 1568
insurance, sections 1306.01 to 1306.23 of the Revised Code, the 1569
"Uniform Electronics Transactions Act," apply to the business of 1570
insurance in this state.1571

       (C)(1) If an insured affirmatively agrees to conduct the 1572
business of insurance via an automated transaction, any 1573
information issued or delivered in writing may be issued or 1574
delivered electronically to a contact point provided by the 1575
insured, as long as all of the following apply:1576

       (a) The transmission of information is in compliance with 1577
sections 1306.07 and 1306.14 of the Revised Code;1578

       (b) The details of the automated transaction are fully 1579
disclosed to the insured in the application, policy, certificate, 1580
contract of insurance, or by another method that ensures notice to 1581
the insured;1582

       (c) The details of the automated transaction related to 1583
notices of cancellation, nonrenewal, termination, or changes in 1584
the terms or conditions in the policy, certificate, or contract of 1585
insurance are approved or accepted by the superintendent of 1586
insurance.1587

       (2)(a) Except for notices of cancellation, nonrenewal, or 1588
termination, an insurer may deliver information via a secure web 1589
site if the insurer sends an electronic notice to a contact point 1590
and the electronic notice includes a hyperlink to the secure web 1591
site.1592

       (b) If an insurer uses a secure web site to deliver changes 1593
in terms or conditions in an insured's policy, certificate, or 1594
contract of insurance, including any endorsements or amendments, 1595
the electronic notice to the insured's contact point shall include 1596
all of the following:1597

       (i) A list and description of the changes; 1598

       (ii) A link to the complete document located on the insurer's 1599
secure web site; 1600

       (iii) The following or substantially similar statement 1601
displayed in a prominent manner: 1602

       "There are changes in the terms or conditions of your policy, 1603
certificate, or contract of insurance."1604

       (3) At a minimum, the details of the automated transaction 1605
shall include all of the following:1606

       (a) A clear and conspicuous statement informing the insured 1607
of any right or option of the insured to receive a record on 1608
paper;1609

       (b) The right of the insured to withdraw the insured's 1610
consent, and any consequences or fees if the insured withdraws 1611
consent;1612

       (c) A description of the procedures the insured must use to 1613
withdraw consent and to update the insured's contact point.1614

       (4) Affirmative agreement to participate in a part of an 1615
automated transaction shall not be used to confirm the insured's 1616
consent to transact the entire business of insurance pursuant to 1617
this section.1618

       (5) A withdrawal of consent by an insured shall be effective 1619
within a reasonable time period, not to exceed five days after the 1620
receipt of the withdrawal by the insurer, unless otherwise noted 1621
by the insured. 1622

       (6) In the event that an insurer chooses to modify insurance 1623
forms to notify an insured of and obtain consent for an automated 1624
transaction, if the laws of this state relating to insurance 1625
require modifications to such forms to be approved or accepted by 1626
the superintendent, then the modifications must receive the 1627
required approval or acceptance. A form used only to notify an 1628
insured of and obtain consent for an automated transaction does 1629
not need to be approved or accepted by the superintendent.1630

       (D) The insurer shall send all notices of cancellation, 1631
nonrenewal, termination, or changes in the terms or conditions of 1632
the policy, certificate, or contract of insurance to the last 1633
known contact point supplied by the insured. If the insurer has 1634
knowledge that the insured's contact point is no longer valid, the 1635
insurer shall send the information via regular mail to the last 1636
known address furnished to the insurer by the insured.1637

       (E) Any insurer conducting the business of insurance via an 1638
automated transaction shall allow the insurer's insureds who agree 1639
to participate in an automated transaction the option to withdraw 1640
consent from participating in the automated transaction.1641

       (F) Notwithstanding any laws or regulations of this state 1642
relating to insurance, any policy, certificate, or contract of 1643
insurance, including any endorsements or amendments, that do not 1644
contain personally identifiable information may be posted to the 1645
insurer's web site that is accessible by the general public in 1646
lieu of any other method of delivery. If the insurer elects to 1647
post any policy, certificate, or contract of insurance to the 1648
insurer's web site, all of the following shall apply:1649

       (1) The policy, certificate, or contract of insurance is 1650
readily accessible by the insured and, once the policy, 1651
certificate, or contract of insurance is no longer used by the 1652
insurer in this state, it is stored in a readily accessible 1653
archive;1654

       (2) The policy, certificate, or contract of insurance is 1655
posted in such a manner that the insured can easily identify the 1656
insured's applicable policy, certificate, or contract and print or 1657
download the insured's documents without charge and without the 1658
use of any special program or application that is not readily 1659
available to the public without charge;1660

       (3) The insurer provides written notice at the time of 1661
issuance of the initial policy, certificate, contract, or any 1662
renewal forms of a method by which the insured may obtain upon 1663
request a paper or electronic copy of their policy, certificate, 1664
or contract without charge;1665

       (4) The insurer clearly identifies the applicable policy, 1666
endorsements, amendments, certificate, or contract of insurance 1667
purchased by the insured on any declaration page, certificate of 1668
insurance, summary of benefits, or other evidence of coverage 1669
issued to the insured;1670

       (5) The insurer gives notice, in the manner it customarily 1671
communicates with an insured, of any changes to the policy, 1672
certificate, or contract of insurance, including any endorsements 1673
or amendments, and of the insured's right to obtain upon request a 1674
paper or electronic copy of the policy, such forms, or 1675
endorsements or amendments without charge.1676

       (G) Notwithstanding any other section of Title XXXIX or 1677
Chapters 1739. or 1751. of the Revised Code or rules adopted 1678
thereunder to the contrary, an insurer may deliver any notices, 1679
documents, or information to an insured via an automated 1680
transaction pursuant to this section.1681

       (H) This section only applies to the method of delivery of 1682
notices, documents, or information to insureds and does not 1683
supersede any time periods or content of notices, documents, or 1684
information otherwise required by the laws of this state relating 1685
to insurance.1686

       (I) If the consent of an insured to receive certain notices, 1687
documents, or information in an electronic form is on file with an 1688
insurer before the effective date of this section, and, pursuant 1689
to this section, an insurer intends to deliver additional notices, 1690
documents, or information to that insured in an electronic form, 1691
then prior to delivering such additional notice, documents, or 1692
information electronically, the insurer shall notify the insured 1693
in compliance with division (C)(3) of this section. 1694

       (J) The superintendent of insurance may adopt rules in 1695
accordance with Chapter 119. of the Revised Code as the 1696
superintendent considers necessary to carry out the purposes of 1697
this section.1698

       Sec. 3901.62.  (A) Except as provided in sections 3901.63 and 1699
3901.64 of the Revised Code, a domestic ceding insurer that is 1700
authorized to do any insurance business in this state may take 1701
credit for any reinsurance ceded as either an asset or a reduction 1702
of liability only if one of the following applies:1703

       (1) The reinsurance is ceded to an assuming insurer that is 1704
authorized to do any insurance or reinsurance business in this 1705
state.1706

       (2) The reinsurance is ceded to an assuming insurer that is 1707
accredited by the superintendent of insurance as a reinsurer in 1708
this state in accordance with division (B) of this section.1709

       (3) The reinsurance is ceded to an assuming insurer that is 1710
not authorized to do any insurance or reinsurance business in this 1711
state, provided the reinsurance is ceded to a reinsurance pool or 1712
other risk-sharing entity in which participation is required by 1713
law, rule, or regulation of the jurisdiction in which the pool or 1714
entity is located.1715

       (3)(4) The reinsurance is ceded to an assuming insurer that 1716
maintains a trust fund in a qualified United States financial 1717
institution, as defined in division (B)(2) of section 3901.63 of 1718
the Revised Code, for the payment of the valid claims of its 1719
United States policyholders and ceding insurers, and their assigns 1720
and successors in interest in accordance with division (C) of this 1721
section.1722

       (5) The reinsurance is ceded to an assuming insurer that has 1723
been certified by the superintendent as a reinsurer in this state 1724
and that secures its obligations in accordance with division (D) 1725
of this section. 1726

       (B)(1) In order to be eligible for accreditation under 1727
division (A)(2) of this section, the assuming insurer shall do all 1728
of the following:1729

       (a) File with the superintendent evidence of its submission 1730
to this state's jurisdiction;1731

       (b) Submit to this state's authority to examine its books and 1732
records;1733

       (c) Maintain a license to transact insurance or reinsurance 1734
in at least one state or, in the case of a United States branch of 1735
a foreign or alien assuming insurer, be entered through and 1736
licensed to transact insurance or reinsurance in at least one 1737
state;1738

       (d) File annually with the superintendent a copy of its 1739
annual statement filed with the insurance department of its state 1740
of domicile, and a copy of its most recent audited financial 1741
statement; 1742

       (e) Demonstrate to the satisfaction of the superintendent 1743
that it has adequate financial capacity to meet its reinsurance 1744
obligations and is otherwise qualified to assume reinsurance from 1745
domestic insurers. 1746

       (2) An assuming insurer is considered to meet the requirement 1747
of division (B)(1)(e) of this section as of the time of its 1748
application to the superintendent for accreditation if it 1749
maintains a surplus with regard to policyholders in an amount not 1750
less than twenty million dollars, and the superintendent has not 1751
denied its accreditation within ninety days after submission of 1752
its application. 1753

       (C)(1) A trust maintained by an assuming insurer under 1754
division (A)(3)(4) of this section shall meet the following 1755
requirements:1756

       (1)(a) In the case of a single assuming insurer, the trust 1757
shall consist of a trusteed account representing the assuming 1758
insurer's liabilities attributable to business underwritten in the 1759
United States. A trusteed surplus of not less than twenty million 1760
dollars shall be maintained by the assuming insurer, except that 1761
at any time after the assuming insurer has permanently 1762
discontinued underwriting new business secured by the trust for at 1763
least three full years, the superintendent with principal 1764
regulatory oversight of the trust may authorize a reduction in the 1765
required trusteed surplus, but only after a finding, based on an 1766
assessment of the risk, that the new required surplus level is 1767
adequate for the protection of ceding insurers within the United 1768
States, policyholders, and claimants in light of reasonably 1769
foreseeable adverse loss development. 1770

       The risk assessment may involve an actuarial review, 1771
including an independent analysis of reserves and cash flows, and 1772
shall consider all material risk factors, including when 1773
applicable the lines of business involved, the stability of the 1774
incurred loss estimates, and the effect of the surplus 1775
requirements on the assuming insurer's liquidity or solvency. 1776

       The minimum required trusteed surplus shall not be reduced to 1777
an amount less than thirty per cent of the assuming insurer's 1778
liabilities attributable to reinsurance ceded by ceding insurers 1779
within the United States covered by the trust.1780

       (2)(b) In the case of a group of assuming insurers, including 1781
incorporated and individual unincorporated underwriters, the trust 1782
shall consist of a trusteed account representing the group's 1783
liabilities attributable to business written in the United States. 1784
A trusteed surplus shall be maintained by the group, of which 1785
surplus one hundred million dollars shall be held jointly for the 1786
benefit of the United States ceding insurers of any member of the 1787
group. The following requirements apply to the group of assuming 1788
insurers:1789

       (a)(i) The incorporated members of the group shall not engage 1790
in any business other than underwriting as a member of the group, 1791
and shall be subject to the same level of solvency regulation and 1792
control by the group's domiciliary regulator as are the 1793
unincorporated members.1794

       (b)(ii) The group shall make available to the superintendent 1795
of insurance an annual certification of the solvency of each 1796
underwriter in the group. The certification shall be provided by 1797
the group's domiciliary regulator and its independent public 1798
accountants.1799

       (3)(c) In the case of a group of incorporated insurers under 1800
common administration with aggregate policyholders' surplus of ten 1801
billion dollars that has continuously transacted an insurance 1802
business outside the United States for at least three years 1803
immediately prior to assuming reinsurance, the trust shall be in 1804
an amount equal to the group's several liabilities attributable to 1805
business ceded by United States ceding insurers to any member of 1806
the group pursuant to reinsurance contracts issued in the name of 1807
the group. A joint trusteed surplus shall be maintained by the 1808
group, of which surplus one hundred million dollars shall be held 1809
jointly for the benefit of United States ceding insurers of any 1810
member of the group as additional security for any such 1811
liabilities. The following requirements apply to the group of 1812
incorporated insurers:1813

       (a)(i) The group shall comply with all filing requirements 1814
contained in this section.1815

       (b)(ii) The books and records of the group shall be subject 1816
to examination by the superintendent in the same manner as the 1817
books and records of insurers are subject to examination by the 1818
superintendent in accordance with section 3901.07 of the Revised 1819
Code. The group shall bear the expenses of these examinations in 1820
the manner provided by that section.1821

       (c)(iii) Each member of the group shall make available to the 1822
superintendent an annual certification of the member's solvency by 1823
the member's domiciliary regulator and an independent public 1824
accountant.1825

       (C)(2) A trust maintained by an assuming insurer under 1826
division (A)(3)(4) of this section shall remain in effect for as 1827
long as the assuming insurer has outstanding obligations due under 1828
the reinsurance agreements subject to the trust. The trust shall 1829
be in a form approved by the superintendent and shall include the 1830
following:1831

       (1)(a) The trust instrument shall provide that contested 1832
claims are valid and enforceable upon the final order of any court 1833
of competent jurisdiction in the United States.1834

       (2)(b) The trust shall vest legal title to its assets in the 1835
trustees of the trust for its United States policyholders and 1836
ceding insurers, and their assigns and successors in interest.1837

       (3)(c) The trust, and the assuming insurer maintaining the 1838
trust, shall allow the superintendent to conduct examinations in 1839
the same manner as the superintendent conducts examinations of 1840
insurers under section 3901.07 of the Revised Code.1841

       (D)(3) No later than the last day of February of each year, 1842
the trustees of a trust maintained by an assuming insurer under 1843
division (A)(3)(4) of this section shall provide the 1844
superintendent with a written report setting forth the balance of 1845
the trust and listing the trust's investments as of the preceding 1846
thirty-first day of December. The trustees shall certify the date 1847
of the termination of the trust, if termination of the trust is 1848
planned, or shall certify that the trust does not expire prior to 1849
the following thirty-first day of December.1850

       (E)(4) To enable the superintendent to determine the 1851
sufficiency of a trust maintained by an assuming insurer under 1852
division (A)(3)(4) of this section, the assuming insurer shall 1853
annually report information on the trust to the superintendent 1854
that is substantially the same as that information licensed 1855
insurers are required to report under sections 3907.19, 3909.06, 1856
and 3929.30 of the Revised Code on forms adopted under section 1857
3901.77 of the Revised Code.1858

       (D)(1) In order to be eligible for certification under 1859
division (A)(5) of this section, the assuming insurer shall do all 1860
of the following:1861

       (a) Be domiciled and licensed to transact insurance or 1862
reinsurance in a qualified jurisdiction as determined by the 1863
superintendent pursuant to division (D)(3) of this section;1864

       (b) Maintain minimum capital and surplus, or its equivalent, 1865
in an amount to be determined by the superintendent in rule or 1866
regulation;1867

       (c) Maintain financial strength ratings from two or more 1868
rating agencies that meet criteria the superintendent sets forth 1869
in rule or regulation;1870

       (d) Agree to submit to the jurisdiction of this state, 1871
appoint the superintendent as its agent for service of process in 1872
this state, and agree to provide security for one hundred per cent 1873
of the assuming insurer's liabilities attributable to reinsurance 1874
ceded by ceding insurers in the United States if it resists 1875
enforcement of a final judgment from the United States;1876

       (e) Agree to meet applicable information filing requirements 1877
as determined by the superintendent with respect to an initial 1878
application for certification and on an ongoing basis; 1879

       (f) Satisfy any other requirements for certification 1880
considered relevant by the superintendent.1881

       (2) An association, including incorporated and individual 1882
unincorporated underwriters, may be a certified reinsurer. In 1883
order to be eligible for certification, an association, in 1884
addition to satisfying the requirements of division (D)(1) of this 1885
section, shall also meet the following requirements:1886

       (a) The association shall satisfy its minimum capital and 1887
surplus requirements through the capital and surplus equivalents 1888
(net of liabilities), or the net liabilities, of the association 1889
and its members which shall include a joint central fund that may 1890
be applied to any unsatisfied obligation of the association or any 1891
of its members, in an amount determined by the superintendent in 1892
order to provide adequate protection.1893

       (b) The incorporated members of the association shall not be 1894
engaged in any business other than underwriting as a member of the 1895
association, and shall be subject to the same level of regulation 1896
and solvency control by the association's domiciliary regulator as 1897
the unincorporated members.1898

       (c) The association shall provide the superintendent an 1899
annual certification by the association's domiciliary regulator of 1900
the solvency of each underwriter member within ninety days after 1901
its financial statements are due to be filed with the 1902
association's domiciliary regulator. If a certification is 1903
unavailable, the association shall provide the superintendent with 1904
financial statements prepared by independent public accountants of 1905
each underwriter member of the association. 1906

       (3) The superintendent shall create and publish a list of 1907
qualified jurisdictions under which an assuming insurer licensed 1908
and domiciled in such jurisdiction is eligible to be considered by 1909
the superintendent for certification as a certified reinsurer. 1910

       (a) The superintendent shall consider the list of qualified 1911
jurisdictions published through the national association of 1912
insurance commissioner's committee process in determining 1913
qualified jurisdictions. If the superintendent approves a 1914
jurisdiction as qualified that does not appear on the list, the 1915
superintendent shall provide justification in accordance with 1916
criteria to be developed by the superintendent under rule or 1917
regulation.1918

       (b) Jurisdictions within the United States that meet the 1919
requirement for accreditation under the national association of 1920
insurance commissioner's financial standards and accreditation 1921
program shall be recognized as qualified. 1922

       (c) To determine if a domiciliary jurisdiction not located 1923
within the United States is eligible to be recognized as a 1924
qualified jurisdiction, the superintendent shall evaluate the 1925
appropriateness and effectiveness of the reinsurance supervisory 1926
system of the jurisdiction, both initially and on an ongoing 1927
basis, and consider the rights, benefits, and the extent of 1928
reciprocal recognition afforded by the jurisdiction to reinsurers 1929
licensed and domiciled in the United States. 1930

       (d) A qualified jurisdiction shall agree to share information 1931
and cooperate with the superintendent with respect to all 1932
certified reinsurers domiciled within that jurisdiction. 1933

       (e) A jurisdiction shall not be recognized as a qualified 1934
jurisdiction if the superintendent has determined that the 1935
jurisdiction does not adequately and promptly enforce final 1936
judgments and arbitration awards from the United States. 1937

       (f) If a certified reinsurer's domiciliary jurisdiction 1938
ceases to be a qualified jurisdiction, the superintendent may 1939
revoke the reinsurer's certification or suspend the reinsurer's 1940
certification indefinitely.1941

       (g) The superintendent may consider additional factors as the 1942
superintendent considers appropriate. 1943

       (4) The superintendent shall assign a rating to each 1944
certified reinsurer giving due consideration to the financial 1945
strength ratings assigned by rating agencies pursuant to division 1946
(D)(1)(c) of this section. The superintendent shall publish a list 1947
of all certified reinsurers and their ratings.1948

       (5) A certified reinsurer shall secure obligations assumed 1949
from a ceding insurer within the United States at a level 1950
consistent with its rating as specified by the superintendent in 1951
rule or regulation.1952

       (a) Except as otherwise provided in division (D)(5) of this 1953
section, a certified reinsurer shall maintain security in a form 1954
acceptable to the superintendent and consistent with section 1955
3901.63 of the Revised Code, or in a multibeneficiary trust on 1956
behalf of the ceding insurer in accordance with division (A)(4) of 1957
this section, in order for a domestic ceding insurer to qualify 1958
for full financial statement credit for reinsurance ceded to a 1959
certified reinsurer. 1960

       (b) If a certified reinsurer chooses to secure its 1961
obligations incurred as a certified reinsurer in the form of a 1962
multibeneficiary trust for the benefit of the ceding insurer, the 1963
certified reinsurer shall maintain separate trust accounts for its 1964
obligations incurred under reinsurance agreements issued or 1965
renewed as a certified reinsurer with reduced security as 1966
permitted by this division or comparable laws of other 1967
jurisdictions within the United States, and for its obligations 1968
subject to division (A)(4) of this section. 1969

       (c) Upon termination of any such trust account described in 1970
division (A)(4) of this section, a certified reinsurer shall be 1971
bound by the language of the trust and agreement with the 1972
superintendent that has principal regulatory oversight of each 1973
trust account to fund any deficiency of any other trust account 1974
out of the remaining surplus of such trust as a condition to 1975
certification under division (D)(1) of this section. 1976

       (d) The minimum trusteed surplus requirements provided in 1977
division (C) of this section are not applicable with respect to a 1978
multibeneficiary trust maintained by a certified reinsurer for the 1979
purpose of securing obligations incurred under division (A)(5) of 1980
this section, except that such trust shall maintain a minimum 1981
trusteed surplus of ten million dollars.1982

       (e) With respect to obligations incurred by a certified 1983
reinsurer under division (A)(5) of this section, if the security 1984
is insufficient, the superintendent shall reduce the allowable 1985
credit by an amount proportionate to the deficiency, and the 1986
superintendent may impose further reductions in allowable credit 1987
upon finding that there is a material risk that the certified 1988
reinsurer's obligations will not be paid in full when due.1989

       (f) Except as otherwise provided in division (D)(5) of this 1990
section, a reinsurer whose certification has been terminated for 1991
any reason shall be treated under this section as a certified 1992
reinsurer required to secure one hundred per cent of its 1993
obligations. The superintendent may continue to assign a higher 1994
rating to the reinsurer if the reinsurer is in inactive status or 1995
the reinsurer's certification has been suspended. As used in 1996
division (D)(5)(f) of this section, "terminated" means revocation, 1997
suspension, voluntary surrender, or inactive status.1998

       (6) If an applicant for certification has been certified as a 1999
reinsurer in a national association of insurance commissioners 2000
accredited jurisdiction, the superintendent may defer to that 2001
jurisdiction's certification and rating assignment, and the 2002
assuming insurer shall be considered to be a certified reinsurer 2003
in this state.2004

       (7) A certified reinsurer that ceases to assume new business 2005
in this state may request to maintain its certification in 2006
inactive status in order to continue to qualify for a reduction in 2007
security for its in-force business. An inactive certified 2008
reinsurer shall continue to comply with all applicable 2009
requirements of division (A)(5) of this section, and the 2010
superintendent shall assign a rating that takes into account, if 2011
relevant, the reasons why the reinsurer is not assuming new 2012
business.2013

       (F)(E) An assuming insurer shall file a written instrument 2014
appointing an attorney as its agent in this state upon whom all 2015
service of process may be served. Service of process upon this 2016
agent shall bring the assuming insurer within the jurisdiction of 2017
the courts of this state as if served upon an agent pursuant to 2018
section 3927.03 of the Revised Code.2019

       (F) Nothing in this section shall prohibit the parties to a 2020
reinsurance agreement from agreeing to provisions in the agreement 2021
establishing security requirements that exceed the minimum 2022
security requirements established for certified reinsurers under 2023
this section.2024

       Sec. 3901.621.  (A) If a reinsurer accredited pursuant to 2025
division (B)(1) of section 3901.62 of the Revised Code or 2026
certified pursuant to division (D)(1) of that section ceases to 2027
meet the requirements for accreditation or certification, the 2028
superintendent may suspend or revoke the reinsurer's accreditation 2029
or certification after a hearing held pursuant to Chapter 119. of 2030
the Revised Code. The suspension or revocation shall not take 2031
effect until after the superintendent's order or hearing, unless 2032
one of the following applies:2033

       (1) The reinsurer waives its right to a hearing.2034

       (2) The superintendent's order is based on regulatory action 2035
by the reinsurer's domiciliary jurisdiction or the voluntary 2036
surrender or termination of the reinsurer's eligibility to 2037
transact insurance or reinsurance business in its domiciliary 2038
jurisdiction or in the primary certifying state of the reinsurer 2039
under division (D)(6) of section 3901.62 of the Revised Code.2040

       (3) The superintendent finds that an emergency requires 2041
immediate action, and a court of competent jurisdiction has not 2042
stayed the superintendent's action.2043

       (B) While a reinsurer's accreditation or certification is 2044
suspended, no reinsurance contract issued or renewed after the 2045
effective date of the suspension qualifies for credit except to 2046
the extent that the reinsurer's obligations under the contract are 2047
secured in accordance with section 3901.63 of the Revised Code. 2048

       (C) If the superintendent revokes a reinsurer's accreditation 2049
or certification, no credit for reinsurance may be granted under 2050
section 3901.62 or 3901.63 of the Revised Code after the effective 2051
date of the revocation except to the extent that the reinsurer's 2052
obligations under the contract are secured in accordance with 2053
division (D)(5) of section 3901.62 or section 3901.63 of the 2054
Revised Code.2055

       Sec. 3901.63.  (A) If section 3901.62 of the Revised Code 2056
does not apply to the reinsurance ceded to an assuming insurer by 2057
a domestic ceding insurer that is authorized to do any insurance 2058
business in this state, the ceding insurer may take credit for the 2059
reinsurance ceded as a reduction of liability in an amount not 2060
exceeding the liabilities carried by the ceding insurer, if the 2061
ceding insurer complies with section 3901.64 of the Revised Code, 2062
and if funds are held directly by the ceding insurer or in trust 2063
on behalf of the ceding insurer, in accordance with this section, 2064
as security for the payment of obligations under the reinsurance 2065
contract with the assuming insurer.2066

       (B)(1) If the funds are held directly by the ceding insurer 2067
under division (A) of this section, the funds shall be held in the 2068
United States and shall be under the exclusive control of, and 2069
subject to withdrawal solely by, the ceding insurer. If the funds 2070
are held in trust on behalf of the ceding insurer under division 2071
(A) of this section, the funds shall be held in the United States 2072
in a qualified United States financial institution.2073

       (2) For the purposes of division (B)(1) of this section, a 2074
"United States financial institution" is qualified if both of the 2075
following apply:2076

       (a) The institution is organized under or, in the case of a 2077
United States branch or agency office of a foreign banking 2078
organization, is chartered under the laws of the United States or 2079
any state thereof and has been granted authority to operate with 2080
fiduciary powers.2081

       (b) The institution is regulated, supervised, and examined by 2082
federal or state officials that have regulatory authority over 2083
banks and trust companies.2084

       (C) The funds held directly by the ceding insurer or in trust 2085
on behalf of the ceding insurer shall be in any of the following 2086
forms:2087

       (1) Cash;2088

       (2) Securities that are listed by the securities valuation 2089
office of the national association of insurance commissioners, 2090
including those considered exempt from filing as defined by the 2091
purposes and procedures manual of the securities valuation office,2092
and that qualify as admitted assets;2093

       (3) Irrevocable, unconditional, and automatically renewable 2094
letters of credit that are issued or confirmed by a qualified 2095
United States financial institution. For purposes of division 2096
(C)(3) of this section, a United States financial institution is 2097
qualified if all of the following apply:2098

       (a) It is organized under or, in the case of a United States 2099
branch or agency office of a foreign banking organization, is 2100
chartered under the laws of the United States or any state 2101
thereof.2102

       (b) It is regulated, supervised, and examined by federal or 2103
state officials that have regulatory authority over banks and 2104
trust companies.2105

       (c) The superintendent of insurance or the securities 2106
valuation office of the national association of insurance 2107
commissioners has determined that it meets such standards of 2108
financial condition and standing as are considered necessary and 2109
appropriate for purposes of ensuring that its letters of credit 2110
will be of a quality that is acceptable to the superintendent.2111

       (4) Any other form of security the superintendent determines 2112
to be acceptable.2113

       (D) Notwithstanding any subsequent failure of an issuing or 2114
confirming financial institution to meet the standards of issuer 2115
acceptability set forth in division (C)(3) of this section, a 2116
letter of credit issued or confirmed by a financial institution 2117
that meets those standards on the date of the issuance or 2118
confirmation shall continue to be acceptable as security until its 2119
expiration, extension, renewal, modification, or amendment, 2120
whichever occurs first.2121

       Sec. 3901.631.  (A) A domestic ceding insurer shall take 2122
steps to manage its reinsurance recoverables proportionate to its 2123
own book of business. 2124

       (1) A domestic ceding insurer shall notify the superintendent 2125
within thirty days after reinsurance recoverables from any single 2126
assuming insurer, or group of affiliated assuming insurers, exceed 2127
fifty per cent of the domestic ceding insurer's last reported 2128
surplus to policyholders, or after it has determined that 2129
reinsurance recoverables from any single assuming insurer, or 2130
group of affiliated assuming insurers, are likely to exceed this 2131
limit.2132

       (2) The notification required in division (A)(1) of this 2133
section shall demonstrate that the exposure is safely managed by 2134
the domestic ceding insurer. 2135

       (B) A domestic ceding insurer shall take steps to diversify 2136
its reinsurance program. 2137

       (1) A domestic ceding insurer shall notify the superintendent 2138
within thirty days after ceding to any single assuming insurer, or 2139
group of affiliated assuming insurers, more than twenty per cent 2140
of the ceding insurer's gross written premium in the prior 2141
calendar year, or after it has determined that the reinsurance 2142
ceded to any single assuming insurer, or group of affiliated 2143
assuming insurers, is likely to exceed this limit. 2144

       (2) The notification required in division (B)(1) of this 2145
section shall demonstrate that the exposure is safely managed by 2146
the domestic ceding insurer.2147

       Sec. 3901.64.  (A) A domestic ceding insurer may take credit 2148
for any reinsurance ceded as provided in sections 3901.61 to 2149
3901.63 of the Revised Code only if the reinsurance agreement 2150
contained in the reinsurance contract, and any agreement that 2151
provides security for the payment of the obligations under the 2152
reinsurance agreement, including any trust agreement, provide, in 2153
substance, for the following:2154

       (1) In the event of the insolvency of the ceding insurer, the 2155
reinsurance, whether paid directly or from trust assets securing 2156
the reinsurance agreement, shall be payable by the assuming 2157
insurer on the basis of the liability of the ceding insurer under 2158
the policy or contract reinsured, without any diminution because 2159
the ceding insurer is insolvent or because the liquidator or 2160
statutory receiver has failed to pay all or any portion of any 2161
claims;2162

       (2) The reinsurance payments, whether paid directly or from 2163
trust assets securing the reinsurance agreement, shall be made by 2164
the assuming insurer directly to the ceding insurer, or in the 2165
event of its insolvency or liquidation, to its liquidator or 2166
statutory receiver except where the reinsurance contract or other 2167
written agreement specifically provides for direct payment of the 2168
reinsurance to the insured or beneficiary of the insurance policy 2169
in the event of the insolvency of the ceding insurer.2170

       (B)(1) The reinsurance agreement may provide that the 2171
domiciliary liquidator or statutory receiver shall give written 2172
notice to the assuming insurer that a claim is pending against the 2173
ceding insurer on the policy or contract reinsured. The notice 2174
shall be given within a reasonable amount of time after the claim 2175
is filed with the liquidator or statutory receiver. During the 2176
pendency of the claim, any assuming insurer may investigate the 2177
claim and interpose, at its own expense, in the proceeding where 2178
the claim is to be adjudicated any defenses which it deems to be 2179
available to the ceding insurer or its liquidator.2180

       (2) The expense may be filed as a claim against the insolvent 2181
ceding insurer to the extent of a proportionate share of the 2182
benefit that may accrue to the ceding insurer solely as a result 2183
of the defense undertaken by the assuming insurer. Where two or 2184
more assuming insurers are involved in the same claim and a 2185
majority in interest elect to interpose a defense to the claim, 2186
the expense shall be apportioned in accordance with the terms of 2187
the reinsurance agreement as though the expense had been incurred 2188
by the ceding insurer.2189

       (C) If the assuming insurer is not licensed, or accredited or 2190
certified to transact insurance or reinsurance in this state, the 2191
credit permitted by division (A)(4) of section 3901.62 of the 2192
Revised Code shall not be allowed unless the assuming insurer 2193
agrees to do both of the following in the reinsurance agreements: 2194

       (1)(a) If the assuming insurer fails to perform its 2195
obligations under the terms of the reinsurance agreement, at the 2196
request of the ceding insurer, the assuming insurer shall submit 2197
to the jurisdiction of any court of competent jurisdiction in any 2198
state within the United States, comply with all requirements 2199
necessary to give the court jurisdiction, and abide by the final 2200
decision of the court or of any appellate court in the event of an 2201
appeal.2202

       (b) The assuming insurer shall designate the superintendent 2203
or a designated attorney as its true and lawful attorney upon whom 2204
may be served any lawful process in any action, suit, or 2205
proceeding instituted by or on behalf of the ceding insurer. 2206

       (2) This division is not intended to conflict with or 2207
override the obligation of the parties to a reinsurance agreement 2208
to arbitrate their disputes, if this obligation is created in the 2209
agreement. 2210

       (D) If the assuming insurer does not meet the requirements of 2211
division (A)(1), (2), or (3) of section 3901.62 of the Revised 2212
Code, the credit permitted by divisions (A)(4) and (5) of that 2213
section shall not be allowed unless the assuming insurer agrees in 2214
the trust agreements to the following conditions: 2215

       (1) Notwithstanding any other provisions in the trust 2216
instrument, if the trust fund is inadequate because it contains an 2217
amount less than the amount required by division (C)(1) of section 2218
3901.62 of the Revised Code, or if the grantor of the trust has 2219
been declared insolvent or placed into receivership, 2220
rehabilitation, liquidation, or similar proceedings under the laws 2221
of its state or country of domicile, the trustee shall comply with 2222
an order of the superintendent with regulatory oversight over the 2223
trust or with an order of a court of competent jurisdiction 2224
directing the trustee to transfer to the superintendent with 2225
regulatory oversight all of the assets of the trust fund.2226

       (2) The assets shall be distributed by, and claims shall be 2227
filed with and valued by, the superintendent with regulatory 2228
oversight in accordance with the laws of the state, in which the 2229
trust is domiciled, that are applicable to the liquidation of 2230
domestic insurance companies.2231

       (3) If the superintendent with regulatory oversight 2232
determines that the assets of the trust fund, or any part thereof, 2233
are not necessary to satisfy the claims of the ceding insurers 2234
within the United States or the grantor of the trust, the 2235
superintendent with regulatory oversight shall return the assets 2236
or part thereof to the trustee for distribution in accordance with 2237
the trust agreement.2238

       (4) The grantor shall waive any right otherwise available to 2239
it under the laws of the United States that are inconsistent with 2240
this division.2241

       Sec. 3903.72.  (A) The definitions provided in division (B) 2242
of this section shall apply after the operative date of the 2243
valuation manual. 2244

       (B) As used in sections 3903.72 to 3903.7211 of the Revised 2245
Code:2246

       (1) "Accident and health insurance" means a contract that 2247
incorporates morbidity risk and provides protection against 2248
economic loss resulting from accident, sickness, or medical 2249
conditions and as may be specified in the valuation manual.2250

       (2) "Appointed actuary" means a qualified actuary who is 2251
appointed in accordance with the valuation manual to prepare the 2252
actuarial opinion required in section 3903.722 of the Revised 2253
Code.2254

       (3) "Company" means an entity that meets either of the 2255
following criteria:2256

       (a) The entity has written, issued, or reinsured life 2257
insurance contracts, accident and health insurance contracts, or 2258
deposit-type contracts in this state and has at least one such 2259
policy in force or on claim. 2260

       (b) The entity has written, issued, or reinsured life 2261
insurance contracts, accident and health insurance contracts, or 2262
deposit-type contracts in any state and is required to hold a 2263
certificate of authority to write life insurance, accident and 2264
health insurance, or deposit-type contracts in this state.2265

       (4) "Deposit-type contract" means a contract that does not 2266
incorporate mortality or morbidity risks and as may be specified 2267
in the valuation manual.2268

       (5) "Life insurance" means a contract that incorporates 2269
mortality risk, including an annuity and pure endowment contract, 2270
and as may be specified in the valuation manual.2271

       (6) "Operative date of the valuation manual" means the date 2272
specified in division (B) of section 3903.728 of the Revised Code.2273

       (7) "Policyholder behavior" means any action a policyholder, 2274
contract holder, or any other person with the right to elect 2275
options under a policy or contract, such as a certificate holder, 2276
may take under a policy or contract subject to this section 2277
including lapse, withdrawal, transfer, deposit, premium payment, 2278
loan, annuitization, or benefit elections prescribed by the policy 2279
or contract. "Policyholder behavior" does not include events of 2280
mortality or morbidity that result in benefits prescribed in the 2281
terms of the policy or contract.2282

       (8) "Principle-based valuation" means a reserve valuation 2283
that uses one or more methods or one or more assumptions 2284
determined by the insurer and that is required to comply with 2285
section 3903.729 of the Revised Code. 2286

       (9) "Qualified actuary" means an individual who is qualified 2287
to sign a statement of actuarial opinion in accordance with the 2288
American academy of actuaries qualification standards for 2289
actuaries signing such statements and who meets the requirements 2290
specified in the valuation manual.2291

       (10) "Superintendent" means superintendent of insurance.2292

       (11) "Tail risk" means a risk that occurs either when the 2293
frequency of low probability events is higher than expected under 2294
a normal probability distribution or when there are observed 2295
events of very significant size or magnitude.2296

       (12) "Valuation manual" means the manual of valuation 2297
instructions adopted by the national association of insurance 2298
commissioners or as subsequently amended. 2299

       Sec. 3903.721.  (A)(1) The superintendent shall annually 2300
value, or cause to be valued, the reserve liabilities, referred to 2301
as reserves, for all outstanding life insurance policies, annuity 2302
and pure endowment contracts, and deposit-type contracts of every 2303
life insurance company doing business in this state issued prior 2304
to the operative date of the valuation manual. 2305

       In calculating reserves, the superintendent may use group 2306
methods and approximate averages for fractions of a year or 2307
otherwise. 2308

       In lieu of the valuation of the reserves required of a 2309
foreign or alien company, the superintendent may accept a 2310
valuation made, or caused to be made, by the insurance supervisory 2311
official of any state or other jurisdiction when the valuation 2312
complies with the minimum standard provided in sections 3903.72 to 2313
3903.7211 of the Revised Code.2314

       (2) The provisions set forth in sections 3903.723, 3903.724, 2315
3903.725, and 3903.727 of the Revised Code shall apply to all 2316
policies and contracts, as appropriate, issued on or after August 2317
25, 1983, and prior to the operative date of the valuation manual. 2318
The provisions set forth in sections 3903.726, 3903.728, and 2319
3903.729 of the Revised Code shall not apply to any such policies 2320
and contracts. 2321

       (3) The minimum standard for the valuation of policies and 2322
contracts issued prior to August 25, 1983, shall be that provided 2323
by the laws in effect immediately prior to that date.2324

       (B)(1) For all outstanding life insurance contracts, annuity 2325
and pure endowment contracts, deposit-type contracts, and accident 2326
and health contracts of every company issued on or after the 2327
operative date of the valuation manual, the superintendent shall 2328
annually value, or cause to be valued, the reserve liabilities for 2329
such contracts according to sections 3903.728 and 3903.729 of the 2330
Revised Code. 2331

       In lieu of the valuation of the reserves required of a 2332
foreign or alien company, the superintendent may accept a 2333
valuation made, or caused to be made, by the insurance supervisory 2334
official of any state or other jurisdiction when the valuation 2335
complies with the minimum standard provided in sections 3903.72 to 2336
3903.7211 of the Revised Code.2337

       (2) The provisions set forth in sections 3903.728 and 2338
3903.729 of the Revised Code shall apply to all policies and 2339
contracts issued on or after the operative date of the valuation 2340
manual.2341

       Sec. 3903.722. (A) Every life insurance company doing 2342
business in this state shall annually submit to the superintendent 2343
the opinion of a qualified actuary as to whether the reserves and 2344
related actuarial items held in support of the policies and 2345
contracts specified by rule by the superintendent are computed 2346
appropriately, are based on assumptions that satisfy contractual 2347
provisions, are consistent with prior reported amounts, and comply 2348
with the applicable laws of this state. The superintendent shall 2349
adopt rules establishing the form and content of this opinion, and 2350
may require the life insurance company to supply information in 2351
addition to that contained in the actuarial opinion.2352

       (B)(1) Every life insurance company, except as exempted by 2353
rule adopted by the superintendent, shall also include in the 2354
annual opinion required by division (A) of this section an opinion 2355
of the same qualified actuary as to whether the reserves and 2356
related actuarial items held in support of the policies and 2357
contracts specified by rule by the superintendent, when considered 2358
in light of the assets held by the company with respect to the 2359
reserves and related actuarial items, including the investment 2360
earnings on the assets and the considerations anticipated to be 2361
received and retained under the policies and contracts, make 2362
adequate provision for the company's obligations under the 2363
policies and contracts, including the benefits under and the 2364
expenses associated with the policies and contracts.2365

       (2) The superintendent may provide by rule for a transition 2366
period for establishing any higher reserves that the qualified 2367
actuary may consider necessary to render the opinion required by 2368
division (B) of this section.2369

       (C) Each opinion required by division (B)(1) of this section 2370
shall meet both of the following requirements:2371

       (1) The opinion shall be supported by a memorandum prepared 2372
in a form and contain content as specified by rule by the 2373
superintendent.2374

       (2) If a life insurance company fails to provide a supporting 2375
memorandum within the period of time specified by rule by the 2376
superintendent, or if the superintendent determines that a 2377
supporting memorandum fails to meet the standards set out in the 2378
rule, or is otherwise unacceptable to the superintendent, the 2379
superintendent may employ, at the expense of the insurance 2380
company, a qualified actuary to review the opinion and the basis 2381
for the opinion and prepare such supporting memorandum as is 2382
required by the superintendent.2383

       (D) Every opinion required by this section is governed by the 2384
following:2385

       (1) The opinion shall be submitted with the annual statement 2386
reflecting the valuation of the reserve liabilities for each year 2387
ending on or after December 31, 2012.2388

       (2) The opinion shall apply to all business in force 2389
including individual and group health insurance plans in form and 2390
substance as specified in rules adopted by the superintendent.2391

       (3) The opinion shall be based on standards adopted from time 2392
to time by the actuarial standards board of the American academy 2393
of actuaries and on such additional standards as the 2394
superintendent may prescribe by rule.2395

       (4) In the case of an opinion required to be submitted by a 2396
foreign or alien life insurance company, the superintendent may 2397
accept the opinion filed by that company with the insurance 2398
regulatory authority of another state if the superintendent 2399
determines that the opinion reasonably meets the requirements 2400
applicable to a company domiciled in this state.2401

       (5) Except in cases of fraud or willful misconduct, the 2402
qualified actuary is not liable for damages in any civil action to 2403
any person, other than the insurance company and the 2404
superintendent, for any act, error, omission, decision, or conduct 2405
with respect to the actuary's opinion.2406

       (6) The superintendent shall establish by rule penalties for 2407
an insurance company's or qualified actuary's failure to comply 2408
with this section.2409

       (7) Except as provided in divisions (D)(9) and (E) of this 2410
section, documents, materials, or other information in the 2411
possession or control of the department of insurance that are a 2412
memorandum in support of the opinion or other material provided by 2413
the insurance company to the superintendent in connection with the 2414
memorandum shall be confidential by law and privilege and is not a 2415
public record under section 149.43 of the Revised Code, shall not 2416
be subject to subpoena, except as provided in division (D)(9) of 2417
this section, and shall not be subject to discovery or admissible 2418
in evidence in any private civil action, except as provided in 2419
division (E)(4) of this section. 2420

       (8) Neither the superintendent nor any person who received 2421
documents, materials, or other information while acting under the 2422
authority of the superintendent shall be permitted or required to 2423
testify in any private civil action concerning any confidential 2424
documents, materials, or information subject to division (E) of 2425
this section.2426

       (9) A memorandum in support of the opinion, and any other 2427
associated material, may be subject to subpoena for the purpose of 2428
defending an action seeking damages from the actuary submitting 2429
the memorandum by reason of an action required by this section or 2430
by rules adopted by the superintendent.2431

       (10) If any portion of a confidential and privileged 2432
memorandum is cited by the company in its marketing, is cited 2433
before any governmental agency other than a state insurance 2434
regulatory authority, or is released by the company to the news 2435
media, the entire memorandum shall no longer be confidential and 2436
privileged.2437

       (E) Notwithstanding division (D) of this section, the 2438
superintendent may do any of the following:2439

       (1) Disclose memoranda and other materials described in this 2440
section upon obtaining prior written consent from the insurer to 2441
which the memorandum or other materials pertain;2442

       (2) Disclose memoranda and other materials described in this 2443
section to the American academy of actuaries upon receipt of a 2444
written request from the academy stating that a memorandum or 2445
other material is required for the purpose of professional 2446
disciplinary proceedings. A request from the American academy of 2447
actuaries shall set forth the procedures to be used by the academy 2448
for preserving the confidential and privileged status of the 2449
memorandum or other material. If the procedures set forth are not 2450
satisfactory to the superintendent, the superintendent shall not 2451
release the memorandum or other material to the academy.2452

       (3) Share documents and materials or other information, 2453
including the confidential and privileged documents, materials, or 2454
information subject to division (D) of this section, with other 2455
local, state, federal, and international regulatory and law 2456
enforcement agencies, with local, state, and federal prosecutors, 2457
and with the national association of insurance commissioners and 2458
its affiliates and subsidiaries, provided that the recipient 2459
agrees to maintain the confidential or privileged status of any 2460
confidential or privileged memorandum or other material and has 2461
authority to do so;2462

       (4) Disclose memoranda and other materials described in this 2463
section in the furtherance of any regulatory or legal action 2464
brought by or on behalf of the superintendent or the state, 2465
resulting from the exercise of the superintendent's official 2466
duties.2467

       (F) Notwithstanding divisions (D) and (E) of this section, 2468
the superintendent may authorize the national association of 2469
insurance commissioners and its affiliates and subsidiaries by 2470
agreement to share confidential or privileged memoranda and other 2471
material received pursuant to division (E)(3) of this section with 2472
local, state, federal, and international regulatory and law 2473
enforcement agencies and with local, state, and federal 2474
prosecutors, provided that the recipient agrees to maintain the 2475
confidential or privileged status of the confidential or 2476
privileged memorandum or other material and has authority to do 2477
so.2478

       (G) Nothing in this section shall prohibit the superintendent 2479
from receiving memoranda and other material in accordance with 2480
section 3901.045 of the Revised Code.2481

       (H) The superintendent may enter into agreements governing 2482
the sharing and use of memoranda and materials consistent with the 2483
requirements of this section.2484

       (I) No waiver of any applicable privilege or claim of 2485
confidentiality in the memoranda and materials described in this 2486
section shall occur as a result of sharing or receiving memoranda 2487
and material as authorized in divisions (E)(2) and (3), (F), and 2488
(G) of this section.2489

       Sec. 3903.72.        Sec. 3903.723.  (A) The superintendent of insurance 2490
shall annually value, or cause to be valued, the reserve 2491
liabilities, referred to in this section as reserves, for all 2492
outstanding life insurance policies and annuity and pure endowment 2493
contracts of every life insurance company doing business in this 2494
state. The superintendent may certify the amount of such reserves, 2495
specifying the mortality tables, rates of interest, and net level 2496
premium method and other methods used to calculate reserves. In 2497
calculating reserves, the superintendent may use group methods and 2498
approximate averages for fractions of a year or otherwise. The 2499
valuation of the reserves of a company organized under the laws of 2500
a foreign government shall be limited to its United States 2501
business.2502

       In lieu of a valuation of the reserves of a foreign company, 2503
the superintendent may accept the valuation made, or caused to be 2504
made, by the insurance supervisory official of any state or other 2505
jurisdiction when such valuation complies with the minimum 2506
standards required by this section, provided such official accepts 2507
the certificate of valuation of the superintendent when such 2508
certificate states that the valuation was made in a specified 2509
manner and when such valuation complies with the minimum standards 2510
required by the law of that state or jurisdiction.2511

       A company, which adopts a standard of valuation producing 2512
aggregate reserves greater than those required by this section, 2513
may adopt a lower standard of valuation with the approval of the 2514
superintendent, but not lower than the minimum provided by this 2515
section. However, the holding of additional reserves previously 2516
determined by a qualified actuary to be necessary for the actuary 2517
to render the opinions required by divisions (B)(1) and (2) of 2518
this section shall not be deemed to be the adoption of a higher 2519
standard of valuation.2520

       (B)(1) Every life insurance company doing business in this 2521
state shall annually submit to the superintendent the opinion of a 2522
qualified actuary as to whether the reserves and related actuarial 2523
items held in support of the policies and contracts specified by 2524
rule by the superintendent are computed appropriately, are based 2525
on assumptions that satisfy contractual provisions, and are 2526
consistent with prior reported amounts. The opinion shall be 2527
submitted no later than March 1, 1996, and no later than the first 2528
day of March of each year thereafter. The superintendent shall 2529
adopt rules establishing the form and content of this opinion, and 2530
may require the life insurance company to supply information in 2531
addition to that contained in the actuarial opinion.2532

       As used in this section, a "qualified actuary" means a person 2533
who is a member in good standing of the American academy of 2534
actuaries and who meets the requirements set by rule by the 2535
superintendent.2536

       (2)(a) Every life insurance company, except as exempted by 2537
rule adopted by the superintendent, shall also include in the 2538
annual opinion required by division (B)(1) of this section an 2539
opinion of the same qualified actuary as to whether the reserves 2540
and related actuarial items held in support of the policies and 2541
contracts specified by rule by the superintendent, when considered 2542
in light of the assets held by the company with respect to the 2543
reserves and related actuarial items, including, but not limited 2544
to, the investment earnings on the assets and the considerations 2545
anticipated to be received and retained under the policies and 2546
contracts, make adequate provision for the company's obligations 2547
under the policies and contracts, including, but not limited to, 2548
the benefits under and the expenses associated with the policies 2549
and contracts.2550

       (b) The superintendent may provide by rule for a transition 2551
period for establishing any higher reserves that the qualified 2552
actuary may consider necessary to render the opinion required by 2553
division (B) of this section.2554

       (c) Each opinion required by division (B) of this section 2555
shall be supported by a memorandum prepared in form and content as 2556
specified by rule by the superintendent.2557

       (d) If a life insurance company fails to provide a supporting 2558
memorandum within the period of time specified by rule by the 2559
superintendent, or if the superintendent determines that a 2560
supporting memorandum fails to meet the standards set out in the 2561
rule, or is otherwise unacceptable to the superintendent, the 2562
superintendent may employ, at the expense of the insurance 2563
company, a qualified actuary to review the opinion and the basis 2564
for the opinion and prepare such supporting memorandum as is 2565
required by the superintendent.2566

       (3) Every opinion required by division (B) of this section is 2567
governed by the following:2568

       (a) The opinion shall be submitted with the annual statement 2569
reflecting the valuation of the reserve liabilities.2570

       (b) The opinion shall apply to all business in force 2571
including individual and group health insurance plans.2572

       (c) The opinion shall be based on standards adopted from time 2573
to time by the actuarial standards board of the American academy 2574
of actuaries and on such additional standards as the 2575
superintendent may prescribe by rule.2576

       (d) In the case of an opinion required to be submitted by a 2577
foreign or alien life insurance company, the superintendent may 2578
accept the opinion filed by that company with the insurance 2579
regulatory authority of another state if the superintendent 2580
determines that the opinion reasonably meets the requirements 2581
applicable to a company domiciled in this state.2582

       (e) Except in cases of fraud or willful misconduct, the 2583
qualified actuary is not liable for damages in any civil action to 2584
any person, other than the insurance company and the 2585
superintendent, for any act, error, omission, decision, or conduct 2586
with respect to the actuary's opinion.2587

       (f) The superintendent shall establish by rule penalties for 2588
an insurance company's or qualified actuary's failure to comply 2589
with this section.2590

       (g) The superintendent shall keep as confidential and 2591
privileged any memorandum received in support of a qualified 2592
actuary's opinion and also any other material provided by the 2593
insurance company to the superintendent in connection with the 2594
opinion. The memorandum and other materials shall not be made 2595
public, and shall not be subject to subpoena other than for the 2596
purpose of defending an action required by this section or rules 2597
adopted under this section. However, if any portion of a 2598
confidential and privileged memorandum is cited by the company in 2599
its marketing, is cited before any governmental agency other than 2600
a state insurance regulatory authority, or is released by the 2601
company to the news media, the entire memorandum shall no longer 2602
be confidential and privileged.2603

       (h) Notwithstanding division (B)(3)(g) of this section, the 2604
superintendent may do any of the following:2605

       (i) Disclose memoranda and other materials described in this 2606
section upon obtaining prior written consent from the insurer to 2607
which the memorandum or other materials pertain;2608

       (ii) Disclose memoranda and other materials described in this 2609
section to the American academy of actuaries upon receipt of a 2610
written request from the academy stating that a memorandum or 2611
other material is required for the purpose of professional 2612
disciplinary proceedings. A request from the American academy of 2613
actuaries shall set forth the procedures to be used by the academy 2614
for preserving the confidential and privileged status of the 2615
memorandum or other material. If the procedures set forth are not 2616
satisfactory to the superintendent, the superintendent shall not 2617
release the memorandum or other material to the academy.2618

       (iii) Share memoranda and other materials described in this 2619
section with the chief deputy rehabilitator, the chief deputy 2620
liquidator, other deputy rehabilitators and liquidators, and any 2621
other person employed by, or acting on behalf of, the 2622
superintendent pursuant to Chapter 3901. or 3903. of the Revised 2623
Code, with other local, state, federal, and international 2624
regulatory and law enforcement agencies, with local, state, and 2625
federal prosecutors, and with the national association of 2626
insurance commissioners and its affiliates and subsidiaries, 2627
provided that the recipient agrees to maintain the confidential or 2628
privileged status of any confidential or privileged memorandum or 2629
other material and has authority to do so;2630

       (iv) Disclose memoranda and other materials described in this 2631
section in the furtherance of any regulatory or legal action 2632
brought by or on behalf of the superintendent or the state, 2633
resulting from the exercise of the superintendent's official 2634
duties.2635

       (i) Notwithstanding divisions (B)(3)(g) and (h) of this 2636
section, the superintendent may authorize the national association 2637
of insurance commissioners and its affiliates and subsidiaries by 2638
agreement to share confidential or privileged memoranda and other 2639
material received pursuant to division (B)(3)(h)(iii) of this 2640
section with local, state, federal, and international regulatory 2641
and law enforcement agencies and with local, state, and federal 2642
prosecutors, provided that the recipient agrees to maintain the 2643
confidential or privileged status of the confidential or 2644
privileged memorandum or other material and has authority to do 2645
so.2646

       (j) Notwithstanding divisions (B)(3)(g) and (h) of this 2647
section, the chief deputy rehabilitator, the chief deputy 2648
liquidator, and other deputy rehabilitators and liquidators may 2649
disclose memoranda and other material described in this section in 2650
the furtherance of any regulatory or legal action brought by or on 2651
behalf of the superintendent, the rehabilitator, the liquidator, 2652
or the state resulting from the exercise of the superintendent's 2653
official duties in any capacity.2654

       (k) Nothing in this section shall prohibit the superintendent 2655
from receiving memoranda and other material in accordance with 2656
section 3901.045 of the Revised Code.2657

       (l) The superintendent may enter into agreements governing 2658
the sharing and use of memoranda and materials consistent with the 2659
requirements of this section.2660

       (m)(i) No waiver of any applicable privilege or claim of 2661
confidentiality in the memoranda and materials described in this 2662
section shall occur as a result of sharing or receiving memoranda 2663
and material as authorized in divisions (B)(3)(h)(ii) and (iii), 2664
(B)(3)(i), and (B)(3)(k) of this section.2665

       (ii) The disclosure of any memorandum or material in 2666
connection with a regulatory or legal action pursuant to divisions 2667
(B)(3)(h)(iv) and (B)(3)(j) of this section does not prohibit an 2668
insurer or any other person from taking steps to limit the 2669
dissemination of the memorandum or material to persons not 2670
involved in or the subject of the regulatory or legal action on 2671
the basis of any recognized privilege arising under any other 2672
section of the Revised Code or the common law.2673

       (C) Except in the case of policies and contracts to which 2674
division (D) of this section appliesas provided in division (B) 2675
of this section and in sections 3903.724, 3903.725, and 3903.727 2676
of the Revised Code, the minimum standard for the valuation of 2677
reservespolicies and contracts issued prior to the effective date 2678
of this section shall be the method set forth in section 3915.04 2679
of the Revised Code, usingthat provided by the laws in effect 2680
immediately prior to that date.2681

       (B) Except as otherwise provided in sections 3903.724, 2682
3903.725, and 3903.727 of the Revised Code, the minimum standard 2683
for the valuation of all policies and contracts shall be derived 2684
according to the tables listed in this section and the following: 2685

       (1) The commissioner's reserve valuation methods defined in 2686
divisions (J) to (M) and (P) of this section and section 3903.727 2687
of the Revised Code for policies and contracts issued on or after 2688
August 25, 1983;2689

       (2) Three and one-half per cent interest, or, in the case of 2690
life insurance policies and contracts, other than annuity and pure 2691
endowment contracts, issued on or after January 1, 1972, and 2692
before January 1, 1976, four per cent interest and the American 2693
experience table of mortality; provided that in no event shall a 2694
company's aggregate reserves for policies and contracts which 2695
guarantee nonforfeiture benefits be less than the aggregate 2696
reserves calculated in accordance with the standard used in 2697
calculating nonforfeiture benefits for such policies and 2698
contracts.;2699

       Reserves for such policies and contracts may be calculated 2700
according to standards which produce aggregate reserves greater 2701
than the minimum reserves required by this division.2702

       (D) This division applies to all life insurance policies and 2703
annuity and pure endowment contracts issued on and after November 2704
5, 1959, or each earlier date not before July 17, 1947, elected by 2705
the company for one or more of such policies or contracts as the 2706
date on which it would comply with the provisions of the 2707
nonforfeiture law for life insurance provided in section 3915.07 2708
of the Revised Code or with the provisions of this division. The 2709
minimum standard for the valuation of all such policies and 2710
contracts shall be the commissioners reserve valuation method 2711
defined in division (E), (F), (H), or (K) of this section and the 2712
following tables and interest rates:2713

       (1)(3) Five and one-half per cent interest for single premium 2714
life insurance policies issued on and after January 1, 1976; 2715

       (4) Four and one-half per cent interest for all other 2716
policies issued on and after January 1, 1976.2717

       (C) For ordinary life insurance policies, excluding 2718
disability and accidental death benefits, issued on the standard 2719
basis:2720

       (a) On and after November 5, 1959, or an earlier date, not 2721
before July 17, 1947, specified in a written notice by the company 2722
to the superintendent of its election to use this table and before 2723
division (D)(1)(b) of this section became operative for subsequent 2724
policy issues, the(1) The commissioners 1941 standard ordinary 2725
mortality table and three and one-half per cent interestfor 2726
policies issued prior to the operative date of section 5a of the 2727
standard nonforfeiture law for life insurance as amended;2728

       (b) On and after January 1, 1966, or an earlier date, not 2729
before November 5, 1959, specified in a written notice by the 2730
company to the superintendent of its election to use this table 2731
and before division (D)(1)(c) of this section becomes operative 2732
for subsequent policy issues, the(2) The commissioners 1958 2733
standard ordinary mortality table and three and one-half per cent 2734
interest before January 1, 1975; four per cent interest on and 2735
after January 1, 1975 and before January 1, 1979; and four and 2736
one-half per cent interest on and after January 1, 1979;for 2737
policies issued on or after the operative date of section 5a of 2738
the standard nonforfeiture law for life insurance as amended and 2739
prior to the operative date of section 5c of the standard 2740
nonforfeiture law for life insurance as amended, provided that 2741
modified premiums and present values for any category of policies 2742
issued on female risks, all modified and net premiums and present 2743
values referred to in this section may be calculated ataccording 2744
to an age threenot more than six years younger than the actual 2745
age of the insured for policies issued before January 1, 1979, and 2746
at an age six years younger for policies issued on and after 2747
January 1, 1979.2748

       (c) On and after January 1, 1989, or an earlier date, not 2749
before January 1, 1983, specified in a written notice by the 2750
company to the superintendent of its election to use this table, 2751
the commissioners 1980 standard ordinary mortality table and the 2752
applicable valuation interest rate as defined in section 3903.721 2753
of the Revised Code. The company may elect to use the 2754
commissioners 1980 standard ordinary mortality table with ten-year 2755
select mortality factors for any specified plan of life insurance. 2756
The superintendent may approve the use of any ordinary mortality 2757
table adopted after 1980 by the national association of insurance 2758
commissioners for determining the minimum standard for the 2759
valuation of such policies.2760

       (2)(3) For policies issued on or after the operative date of 2761
section 5c of the standard nonforfeiture law for life insurance as 2762
amended:2763

       (a) The commissioners 1980 standard ordinary mortality table; 2764

       (b) At the election of the company for any one or more 2765
specified plans of life insurance, the commissioners 1980 standard 2766
ordinary mortality table with ten-year select mortality factors; 2767

       (c) Any ordinary mortality table, adopted after 1980 by the 2768
national association of insurance commissioners, that is approved 2769
by rules adopted by the department of insurance for use in 2770
determining the minimum standard of valuation for such policies.2771

       (D) For industrial life insurance policies, excluding 2772
disability and accidental death benefits, issued on the standard 2773
basis:2774

       (a) On and after November 5, 1959, or an earlier date, not 2775
before July 17, 1947, specified in a written notice by the company 2776
to the superintendent of its election to use this table and before 2777
division (D)(2)(b) of this section became operative for subsequent 2778
policy issues(1) Prior to the operative date of section 5b of the 2779
standard nonforfeiture law for life insurance, as amended, the 2780
1941 standard industrial mortality table and three and one-half 2781
per cent interest;2782

       (b) On and after January 1, 1968, or an earlier date, not 2783
before September 2, 1963, specified in a written notice by the 2784
company to the superintendent of its election to use this table2785
(2) On or after the effective date of section 5b of the standard 2786
nonforfeiture law for life insurance, as amended, the 2787
commissioners 1961 standard industrial mortality table and three 2788
and one-half per cent interest before January 1, 1975; four per 2789
cent interest on and after January 1, 1975 and before January 1, 2790
1979; four and one-half per cent interest on and after January 1, 2791
1979 and before January 1, 1989, or before an earlier date, not 2792
before January 1, 1983, specified in a written notice by the 2793
company to the superintendent of its election to issue such 2794
policies pursuant to the provisions of the nonforfeiture law for 2795
life insurance provided in section 3915.071 of the Revised Code. 2796
On and after January 1, 1989, or such earlier date, the interest 2797
rate to be used in calculating the minimum reserve for such 2798
policies is the applicable valuation interest rate as defined in 2799
section 3903.721 of the Revised Code. The superintendent may 2800
approve the use of any industrial mortality table adopted after 2801
1980 by the national association of insurance commissioners for 2802
determining the minimum standard for the valuation of such 2803
policiesor any industrial mortality table adopted after 1980 by 2804
the national association of insurance commissioners that is 2805
approved by rules adopted by the superintendent for use in 2806
determining the minimum standard of valuation for the policies.2807

       (3)(E) For all individual annuity and pure endowment 2808
contracts, excluding disability and accidental death benefits, 2809
issued:2810

       (a) On and after November 5, 1959, or an earlier date, not 2811
before July 17, 1947, as of which the company elected to comply 2812
with this division (D)(3)(a) and before division (D)(3)(b) of this 2813
section became operative for subsequent contract issues, the 1937 2814
standard annuity mortality table, or, at the option of the 2815
company, the annuity mortality table for 1949, ultimate, or any 2816
modification of either table approved by the superintendent and 2817
three and one-half per cent interest;2818

       (b) On and after January 1, 1979, or an earlier date, not 2819
before January 1, 1975, specified by the company in a written 2820
notice to the superintendent of its election to use this table, 2821
the 1971 individual annuity mortality table or any modification of 2822
that table approved by the superintendent and four per cent 2823
interest on and after January 1, 1975 and before January 1, 1979; 2824
four and one-half per cent interest on and after January 1, 1979, 2825
and before January 1, 1983; and the valuation interest rate as 2826
defined in section 3903.721 of the Revised Code on and after 2827
January 1, 1983, except that on and after January 1, 1975, and 2828
before January 1, 1979, the interest rate is six per cent for 2829
single premium immediate contracts and on and after January 1, 2830
1979, and before January 1, 1983, the interest rate is five and 2831
one-half per cent for single premium deferred contracts and seven 2832
and one-half per cent for single premium immediate contracts. The 2833
superintendent may approve the use of any individual annuity 2834
mortality table adopted after 1980 by the national association of 2835
insurance commissioners, either as adopted or as modified by the 2836
superintendent, for determining the minimum standard for the 2837
valuation of such contracts.2838

       (4)(F) For allgroup annuity and pure endowment contracts, 2839
excluding disability and accidental death benefits, purchased 2840
under group annuity and pure endowment contracts:2841

       (a) On and after November 5, 1959, or an earlier date, not 2842
before July 17, 1947, as of which the company elected to comply 2843
with this division (D)(4)(a) and before division (D)(4)(b) of this 2844
section became operative for subsequent contract purchasesin the 2845
policies, the group annuity mortality table for 1951, any 2846
modification of this table approved by the superintendent, or 2847
either of the tables, or modification of either of them, specified 2848
in division (D)(3)(a) of this section for individual annuity and 2849
pure endowment contracts and three and one-half per cent interest;2850

       (b) On and after January 1, 1979, or an earlier date, not 2851
before January 1, 1975, specified by the company in a written 2852
notice to the superintendent of its election to use this table, 2853
the 1971 group annuity mortality table, or any modification of 2854
that table approved by the superintendent, and six per cent 2855
interest on and after January 1, 1975, and before January 1, 1979; 2856
seven and one-half per cent interest on and after January 1, 1979, 2857
and before January 1, 1983, and the valuation interest rate as 2858
defined in section 3903.721 of the Revised Code on and after 2859
January 1, 1983. The superintendent may approve the use of, at the 2860
option of the company, any groupof the tables or modifications of 2861
tables specified for individual annuity mortality table adopted 2862
after 1980 by the national association of insurance commissioners, 2863
either as adopted or as modified by the superintendent, for 2864
determining the minimum standard for the valuation of suchand 2865
pure endowment contracts.2866

       (5)(G) For total and permanent disability benefits in or 2867
supplementary to ordinary policies and contracts issued:2868

       (a) On and after July 17, 1947, and before January 1, 1961, 2869
the class (3) disability table (1926) and three and one-half per 2870
cent interest. This table, for active lives, shall be combined 2871
with a mortality table permitted for calculating the reserves for 2872
life insurance policies.2873

       (b)(1) On and after January 1, 19611966, the tables of 2874
period 2 disablement rates and the 1930 to 1950 termination rates 2875
of the 1952 disability study of the society of actuaries, with due 2876
regard for the type of benefit; except that a company may, at its 2877
option, use the class (3) disability table (1926) for policies and 2878
contracts issued on and after January 1, 1961, and before January 2879
1, 1966. Any such table, for active lives, shall be combined with 2880
a mortality table permitted for calculating the reserves for life 2881
insurance policies. The interest rate to be used in calculating 2882
minimum reserves for such benefits may not exceed the applicable 2883
rate specified in division (D)(1) of this section for ordinary 2884
life insurance policies. The superintendent may approve the use of2885
or any other table of disablement rates and termination rates 2886
adopted after 1980 by the national association of insurance 2887
commissioners for use in determining the minimum standard for the 2888
valuation of such total and permanent benefitsthose policies;2889

       (2) On or after January 1, 1961, and prior to January 1, 2890
1966, either the tables described in division (G)(1) of this 2891
section or, at the option of the company, the class (3) disability 2892
table (1926);2893

       (3) Prior to January 1, 1961, the class (3) disability table 2894
(1926).2895

       Any such table shall, for active lives, be combined with a 2896
mortality table permitted for calculating the reserves for life 2897
insurance policies. 2898

       (6)(H) For accidental death benefits in or supplementary to 2899
policies issued:2900

       (a) On and after July 17, 1947, and before January 1, 1961, 2901
the inter-company double indemnity mortality table and three and 2902
one-half per cent interest. This table shall be combined with a 2903
mortality table permitted for calculating the reserves for life 2904
insurance policies.2905

       (b)(1) On and after January 1, 19611966, the 1959 accidental 2906
death benefits table; except that a company may, at its option, 2907
use the inter-company double indemnity mortality table for 2908
policies issued on and after January 1, 1961, and before January 2909
1, 1966. Either table shall be combined with a mortality table 2910
permitted for calculating the reserves for life insurance 2911
policies. The interest rate to be used in calculating the minimum 2912
reserves for such benefits may not exceed the applicable rate 2913
specified in division (D)(1) of this section for ordinary life 2914
insurance policies. The superintendent may approve the use ofor2915
any accidental death benefits table adopted after 1980 by the 2916
national association of insurance commissioners for use in2917
determining the minimum standard for the valuation of such 2918
accidental death benefitsthat is approved in rules adopted by the 2919
superintendent;2920

       (2) On or after January 1, 1961, and prior to January 1, 2921
1966, either the table described in division (H)(1) of this 2922
section or, at the option of the company, the inter-company double 2923
indemnity mortality table; 2924

       (3) Prior to January 1, 1961, the inter-company double 2925
indemnity mortality table.2926

       The table used shall be combined with a mortality table for 2927
calculating the reserves for life insurance policies.2928

       (7)(I) For group life insurance, life insurance issued on the 2929
substandard basis and all other special benefits, such tables as 2930
may be approved by the superintendent and interest not to exceed 2931
the applicable rate used in division (D)(1) of this section for 2932
ordinary life insurance policies.2933

       (E) This division defines the(J) Except as otherwise 2934
provided in divisions (M) and (P) of this section and in section 2935
3903.727 of the Revised Code, reserves according to the2936
commissioners reserve valuation method for all policies, riders, 2937
and supplemental policy provisions, withthe life insurance orand2938
endowment benefits, or both,of policies providing for a uniform 2939
amountsamount of life insurance and requiring the payment of2940
uniform premiums. Reserves for such policies, riders, and 2941
provisions, except as otherwise provided in divisions (F) and (K) 2942
of this section, shall be the excess, if any, of the present value 2943
on the valuation date of the future guaranteed benefits over the 2944
then present value on that date of theany future modified net 2945
premiums therefor. The modified net premium is apremiums for a 2946
policy shall be the uniform percentage of eachthe respective2947
contract premium specifiedpremiums for the guaranteed benefits 2948
such that the present value, at the date of issue of the policy, 2949
of all modified net premiums shall be equal to the sum of the then2950
present value, on the date of issue, of the future guaranteed2951
benefits plus the excessprovided for by the policy and the excess2952
of division (E)(J)(1) over division (E)(J)(2) of this section, as 2953
follows:2954

       (1) A net level annual premium equal to the present value, at 2955
the date of issue, of such benefits provided for after the first 2956
policy year, divided by the present value, at the date of issue, 2957
of an annuity of one per annum payable on the first and each 2958
subsequent anniversary of the policy on which a premium falls due; 2959
provided that such. However, the net level annual premium shall 2960
not exceed the net level annual premium on the nineteen-year 2961
premium whole life plan for insurance of the same amount at an age 2962
one year higher than the age at issue of the policy.2963

       (2) A net one-year term premium for such benefits provided 2964
for in the first policy year.2965

       (F)(K) This division defines the commissioners reserve 2966
valuation method for all life insurance policies issued on or 2967
after January 1, 1989, that have a first year premium in excess of 2968
the premium for the second policy year and for which excess no 2969
comparable benefit is provided in the first year and that provide 2970
either an endowment benefit or cash surrender value, or botha 2971
combination, in an amount greater than the excess premium. 2972
Reserves for such policies before the assumed ending date shall be 2973
the greater of the amount calculated in accordance with division 2974
(E) of this section and the reserve calculated in accordance with 2975
that division but with the following changesThe reserve according 2976
to the commissioners reserve valuation method as of any policy 2977
anniversary occurring on or before the assumed ending date defined 2978
herein as the first policy anniversary on which the sum of any 2979
endowment benefit and any cash surrender value then available is 2980
greater than the excess premium shall, except as otherwise 2981
provided in division (P) of this section, be the greater of either 2982
of the following:2983

       (1) The reserve as of the policy anniversary, with the policy 2984
anniversary being calculated as described in division (J) of this 2985
section; 2986

       (2) The reserve as of the policy anniversary calculated as 2987
described in division (J) of this section, but with:2988

       (1)(a) The value defined in division (E)(J)(1) of this 2989
section shall bebeing reduced by fifteen per cent of the amount 2990
of such excess first-year premium;2991

       (2)(b) All present values of benefits and premiums shall be2992
being determined without reference to premiums and benefits 2993
provided for by the policy after the assumed ending date;2994

       (3)(c) The policy shall bebeing assumed to mature on the 2995
assumed ending date in the amount of itsas an endowment benefits 2996
and cash surrender value. The assumed ending date is the first 2997
policy anniversary on which the sum of any endowment benefit and 2998
any cash surrender value then available is greater than such 2999
excess first-year premium.3000

       On and after the assumed ending date, the reserve for such 3001
policies shall be calculated in accordance with division (E) of 3002
this section;3003

       (d) The cash surrender value provided on the assumed ending 3004
date being considered as an endowment benefit.3005

       In making the above comparison, the mortality and interest 3006
bases stated in this section and in section 3903.724 of the 3007
Revised Code shall be used. 3008

       (G)(L) Reserves according to the commissioners reserve 3009
valuation method shall be calculated by a method consistent with 3010
the principles of divisions (J) and (K) of this section for:3011

       (1) AllLife insurance policies, riders, and supplemental 3012
policy provisions providing for a varying amountsamount of life 3013
insurance or requiring payment of varying premiums;3014

       (2) Group annuity and pure endowment contracts purchased 3015
under a retirement plan or plan of deferred compensation, 3016
established or maintained by an employer, including a partnership 3017
or sole proprietorship, or by an employee organization, or by 3018
both, other than a plan providing individual retirement accounts 3019
or individual retirement annuities under section 408 of the 3020
Internal Revenue Code of 1954, as amended;3021

       (3) Disability and accidental death benefits in all policies 3022
and contracts; and3023

       (4) All other benefits, except life insurance and endowment 3024
benefits in life insurance policies and benefits provided by all 3025
other annuity and pure endowment contracts, shall be calculated by 3026
a method consistent with the principles of division (E) of this 3027
section.3028

       Extra premiums charged because of impairments or special 3029
hazards shall be disregarded in determining modified net premiums.3030

       (H)(M)(1) This division defines the commissioners annuity 3031
reserve valuation method for all annuity and pure endowment 3032
contracts other than group annuity and pure endowment contracts 3033
purchased under a retirement plan or plan of deferred 3034
compensation, established or maintained by an employer, including 3035
a partnership or sole proprietorship, or by an employee 3036
organization, or by both, other than a plan providing individual 3037
retirement accounts or individual retirement annuities under 3038
section 408 of the Internal Revenue Code of 1954, as amended.3039

       (2) Reserves for benefits under such contracts, excluding 3040
disability and accidental death benefits, shall be the greatest of 3041
the respective excesses of the present values, at the date of 3042
valuation, of the future guaranteed benefits, including guaranteed 3043
nonforfeiture benefits, provided for by such contract at the end 3044
of each respective contract year, over the present value, at the 3045
date of valuation, of any future valuation considerations derived 3046
from future gross considerations required by the terms of the 3047
contract that become payable prior to the end of each such 3048
respective contract year. The future guaranteed benefits shall be 3049
determined by using the mortality table, if any, and the interest 3050
rate, or rates, specified in such contracts for determining 3051
guaranteed benefits. The valuation considerations are the portions 3052
of the respective gross considerations applied under the terms of 3053
such contracts to determine nonforfeiture values.3054

       (I)(N)(1) In no event shall a company's aggregate reserves 3055
for all life insurance policies, to which division (D) of this 3056
section applies, excluding disability and accidental death 3057
benefits issued on or after August 25, 1983, be less than the 3058
aggregate reserves calculated in accordance with the method set 3059
forth in divisions (E), (F), (G)(J), (K), and (L), (M), (P), and 3060
(Q) of this section and the mortality table or tables and rate or 3061
rates of interest used in calculating nonforfeiture benefits for 3062
such policies.3063

       (2) In no event shall the aggregate reserves for all 3064
policies, contracts, and benefits be less than the aggregate 3065
reserves determined by the qualifiedappointed actuary to be 3066
necessary to render the opinion required by division (B) of this3067
section 3903.722 of the Revised Code.3068

       (J)(O)(1) Reserves for policies and contracts issued prior to 3069
August 25, 1983, may be calculated, at the option of the company, 3070
according to any standards that produce greater aggregate reserves 3071
for all such policies and contracts than the minimum reserves 3072
required by the laws in effect immediately prior to that date.3073

       (2) Reserves for any category of policies, contracts, or 3074
benefits as established by the superintendent, issued on or after 3075
August 25, 1983, may be calculated, at the option of the company, 3076
according to any standards whichthat produce aggregate reserves 3077
for such category greater than those calculated according to the 3078
minimum standards provided in this section, but the rate or rates 3079
of interest used for policies and contracts, other than annuity 3080
and pure endowment contracts, shall not be higher than the 3081
corresponding rate or rates of interest used in calculating any 3082
nonforfeiture benefits provided for in such standards.3083

       (K)(3) A company, which adopts at any time a standard of 3084
valuation producing greater aggregate reserves than those 3085
calculated according to the minimum standard provided under 3086
sections 3903.72 to 3903.7211 of the Revised Code, may adopt a 3087
lower standard of valuation with the approval of the 3088
superintendent, but not lower than the minimum provided in these 3089
sections. However, for the purposes of this division, the holding 3090
of additional reserves previously determined by the appointed 3091
actuary to be necessary to render the opinion required by section 3092
3903.722 of the Revised Code shall not be considered to be the 3093
adoption of a higher standard of valuation.3094

       (P) If in any contract year the gross premium charged by a 3095
company on a policy or contract is less than the valuation net 3096
premium calculated by the method used in calculating the reserve 3097
for a policy or contract but using the minimum valuation standards 3098
of mortality and rate of interest is more than the gross premium 3099
for such policy or contract, the minimum reserve required for such 3100
policy or contract shall be the greater of either the reserve 3101
calculated according to the mortality table, rate of interest, and 3102
method actually used for such policy or contract, or the reserve 3103
calculated by such method but using the minimum valuation 3104
standards of mortality and rate of interest and replacing the 3105
valuation net premium by the actual gross premium in each contract 3106
year for which the valuation net premium exceeds the actual gross 3107
premium. The minimum valuation standards of mortality and rate of 3108
interest referred to in this division are those required by3109
division (D)divisions (A) to (I) of this section and section 3110
3903.724 of the Revised Code.3111

       For the purposes of this division, the minimum reserve for 3112
any policy to which the provisions of division (F) of this section 3113
apply shall be calculatedFor a life insurance policy issued on or 3114
after January 1, 1987, for which the gross premium in the first 3115
policy year exceeds that of the second year and for which no 3116
comparable additional benefit is provided in the first year for 3117
the excess and that provides an endowment benefit or a cash 3118
surrender value or a combination in an amount greater than the 3119
excess premium, the provisions of this division shall be applied3120
as if the method used in calculating the reserve for such policy 3121
were the method defined in division (E)(J) of this section. The 3122
minimum reserve for such policy, at each policy anniversary, shall 3123
be the greater of the minimum reserve calculated in accordance 3124
with division (F)(K) of this section and in accordance with this 3125
division.3126

       (L) Methods for determining the reserves for plans of(Q) In 3127
the case of a plan of life insurance that provides for future 3128
premium determination, the amounts of which are to be determined 3129
by the insurance company based on then estimates of future 3130
experience, or in the case of a life insurance or annuity which 3131
arethat is of such a nature that the minimum reserves cannot be 3132
determined by the methods described in divisions (J), (K), (L), 3133
(M), and (P) of this section shall be promulgated by rule adopted 3134
by the superintendent. The, the reserves to be held under such 3135
plans mustthe plan shall be appropriate in relation to the 3136
benefits and the pattern of premiums for eachthat plan and must3137
shall be computed by methods which area method that is consistent 3138
with the principles of this section as determined by rules adopted 3139
by the superintendent. This division applies to any plan of life 3140
insurance which provides for future premium determination, the 3141
amounts of which are to be determined by the company on the basis 3142
of an estimate of future experience made at the time of any such 3143
determination.3144

       (M)(R) The superintendent shall adopt rules specifying 3145
minimum reserve standards for the valuation of individual and 3146
group health plans.3147

       Sec. 3903.721.        Sec. 3903.724.  (A) TheThis section shall determine 3148
the calendar year statutory valuation interest raterates (VIR)3149
required by division (D) of section 3903.72 of the Revised Code is 3150
determinedused in determining the minimum standard for the 3151
valuation of all of the following:3152

       (1) Life insurance policies issued on or after the operative 3153
date of section 5c of the standard nonforfeiture law for life 3154
insurance as amended;3155

       (2) Individual annuity and pure endowment contracts issued on 3156
or after January 1, 1984;3157

       (3) Annuities and pure endowments purchased on or after 3158
January 1, 1984, under group annuity and pure endowment contracts; 3159

       (4) The net increase, if any, in amounts held under a 3160
guaranteed interest contact in a calendar year after January 1, 3161
1984. 3162

       (B) The calendar year statutory valuation interest rates 3163
shall be calculated as follows and the results rounded to the 3164
nearest one-quarter of one per cent:3165

       (1)(a) For all life insurance policies, by adding three per 3166
cent to the result of multiplying W (the applicable weighting 3167
factor) by R(sub-1) minus three per cent (where R(sub-1) is the 3168
lesser of the reference interest rate and nine per cent) and also 3169
adding the result of multiplying one-half of the weighting factor 3170
by R(sub-2) minus nine per cent (where R(sub-2) is the greater of 3171
the reference interest rate and nine per cent), expressed as 3172
follows:3173

VIR = .03 + W (R(sub-1) - .03) + W/2(R(sub-2) - .09).
3174

       (b) Provided that if the calendar year statutory valuation 3175
interest rate for policiesa life insurance policy issued in any 3176
calendar year determined in accordance with this division does not 3177
differ from the calendar year valuation interest rate for similar 3178
policies issued in the preceding calendar year by at least 3179
one-half of one per cent, the calendar year valuation interest 3180
rate for such policiesthe policy shall be equal to the calendar 3181
year valuation interest rate for the preceding calendar year. For 3182
any calendar year theThe calendar year statutory valuation 3183
interest rate isshall be determined for each preceding calendar 3184
year starting with 1980 and for each subsequent year, regardless 3185
of when section 5c of the standard nonforfeiture law for life 3186
insurance becomes operative.3187

       (2) For all annuity and guaranteed interest contractssingle 3188
premium immediate annuities and for annuity benefits involving 3189
life contingencies arising from other annuities with cash 3190
settlement options and from guaranteed interest contracts with 3191
cash settlement options by adding to three per cent the result of 3192
multiplying W (the applicable weighting factor) by R minus three 3193
per cent (where R is the reference interest rate), expressed as 3194
follows:3195

VIR = .03 + W (R -.03).
3196

Provided that 3197

       (3) For other annuities with cash settlement options and 3198
guaranteed interest contracts with cash settlement options, valued 3199
on an issue year basis, the life insurance formula stated in 3200
division (A)(B)(1) of this section shall apply to all annuity and 3201
guaranteed interest contracts with cash settlement options valued 3202
on an issue year basis and with guarantee durations in excess of 3203
ten years other than single premium immediate annuities and 3204
annuity benefits involving life contingencies arising from other 3205
annuity and guaranteed interest contracts.3206

       (3) The results obtained under divisions (A)(1) and (2) of 3207
this section shall be rounded to the nearer one-quarter of one per 3208
cent.3209

       (B) The weighting factors forand the formula for single 3210
premium immediate annuities stated in division (B)(2) of this 3211
section shall apply to annuities and guaranteed interest contracts 3212
with guarantee duration of ten years or less. 3213

       (4) For other annuities with no cash settlement options and 3214
for guaranteed interest contracts with no cash settlement options, 3215
the formula for single premium immediate annuities stated in 3216
division (B)(2) of this section shall apply. 3217

       (5) For other annuities with cash settlement options and 3218
guaranteed interest contracts with cash settlement options, valued 3219
on a change in fund basis, the formula for single premium 3220
immediate annuities stated in division (B)(2) of this section 3221
shall apply.3222

       (C) For life insurance policies change with the guarantee 3223
duration of the plan of insurance. The, the guarantee duration is 3224
the maximum number of years the life insurance can remain in force 3225
on a basis guaranteed in the policy or under an option to convert 3226
to a plan of life insurance with premium rates or nonforfeiture 3227
values, or both, guaranteed in the policy. The3228

       (D) The weighting factors for the formulas prescribed in 3229
division (B) of this section are shown in the following table:3230

Weighting Factors for Life Insurance
3231

Guarantee Duration Weighting 3232
(Years) Factors 3233

10 or less .50 3234
More than 10, but not more than 20 .45 3235
More than 20 .35 3236

       (C)(E) The weighting factor for single premium immediate 3237
annuities and for annuity benefits involving life contingencies 3238
arising from other annuity and guaranteed interest contracts with 3239
cash settlement options is eighty-hundredths.80.3240

       (D)(F) Weighting factors for all other annuity and guaranteed 3241
interest contracts vary with the type of plan and guarantee 3242
duration. The types of plans are as follows:3243

       (1) A plan type A is one in which funds may not be withdrawn 3244
or may be withdrawn in only one of three ways:3245

       (a) With an adjustment to reflect changes in interest rates 3246
or asset values since receipt of the funds by the company;3247

       (b) Without such adjustment but in installments over five or 3248
more years;3249

       (c) As an immediate life annuity.3250

       (2) A plan type B is one in which the funds may not be 3251
withdrawn before the expiration of the interest rate guarantee 3252
unless an adjustment is made to reflect changes in interest rates 3253
or asset values since receipt of the funds by the company or 3254
unless they are withdrawn in installments over five or more years. 3255
At the end of the interest rate guarantee, funds may be withdrawn 3256
in a single sum or in installments over less than five years 3257
without adjustment.3258

       (3) A plan type C is one in which the funds may be withdrawn 3259
before the end of the interest rate guarantee in a single sum or 3260
in installments over less than five years without adjustment to 3261
reflect changes in interest rates or asset values since receipt of 3262
the funds by the company or subject only to a fixed surrender 3263
charge stipulated in the contract as a percentage of the fund.3264

       (4) The guarantee duration for an annuity or guaranteed 3265
interest contract with cash settlement options is the number of 3266
years for which the contract guarantees interest rates in excess 3267
of the calendar year valuation interest rate for life insurance 3268
policies with guarantee duration in excess of twenty years. The 3269
guarantee duration for annuity and guaranteed interest contracts 3270
without cash settlement options is the number of years from the 3271
date of issue or date of purchase to the date annuity benefits are 3272
scheduled to commence.3273

       (5) Annuity and guaranteed interest contracts with cash 3274
settlement options may be valued on an issue year basis or on a 3275
change in fund basis. If valued on an issue year basis, the 3276
interest rate used to determine the minimum valuation standard for 3277
the entire duration is the valuation interest rate for the year of 3278
issue or purchase. If valued on a change in fund basis, the 3279
interest rate used to determine the minimum valuation standard 3280
applicable to each change in the fund held under the contract is 3281
the valuation interest rate for the year of change in the fund.3282
Annuity and guaranteed interest contracts without cash settlement 3283
options must be valued on an issue year basis. As used in this 3284
division, an issue year basis of valuation refers to a valuation 3285
basis under which the interest rate used to determine the minimum 3286
valuation standard for the entire duration of the annuity or 3287
guaranteed interest contract is the calendar year valuation 3288
interest rate for the year of issue or year of purchase of the 3289
annuity or guaranteed interest contract, and the change in fund 3290
basis of valuation refers to a valuation basis under which the 3291
interest rate used to determine the minimum valuation standard 3292
applicable to each change in the fund held under the annuity or 3293
guaranteed interest contract is the calendar year valuation 3294
interest rate for the year of the change in the fund. 3295

       (6) These weightingWeighting factors for other annuities and 3296
for guaranteed interest contracts, except as stated in division 3297
(E) of this section, are specified in the applicable table shown3298
below. Table I applies to3299

       (a) For annuity and guaranteed interest contracts valued on 3300
an issue year basis that either guarantee interest on 3301
considerations received more than one year after issue or purchase 3302
or that have no cash settlement options. Table II applies to 3303
annuity and guaranteed interest contracts with cash settlement 3304
options valued on an issue year basis that do not guarantee 3305
interest on considerations received more than one year after issue 3306
or purchase. Tables III and IV are for contracts similar to those 3307
in tables I and II, respectively, except that they are valued on a 3308
change in fund basis and the one-year guarantee refers to one year 3309
following the valuation date.:3310

Weighting Factors for Annuities and Guaranteed
3311

Interest Contracts
3312

Table I
3313

Issue Year Basis - Interest on Considerations After First Year
3314

Guaranteed Or No Cash Settlement Options
3315

Weighting Factor for 3316
Plan Type 3317
Guarantee Duration (Years) A B C 3318
5 or less .80 .60 .50 3319
More than 5, but not more than 10 .75 .60 .50 3320
More than 10, but not more than 20 .65 .50 .45 3321
More than 20 .45 .35 .35 3322

Table II
3323

Issue Year Basis - Interest on Considerations After First Year
3324

NOT Guaranteed And Cash Settlement Options
3325

Weighting Factor for 3326
Plan Type 3327
Guarantee Duration (Years) A B C 3328
5 or less .85 .65 .55 3329
More than 5, but not more than 10 .80 .65 .55 3330
More than 10, but not more than 20 .70 .55 .50 3331
More than 20 .50 .40 .40 3332

Table III
3333

Change in Fund Basis - Interest on Considerations Guaranteed
3334

More Than Twelve Months After Valuation Date
3335

Weighting Factor for 3336
Plan Type 3337
Guarantee Duration (Years) A B C 3338
5 or less .95 .85 .55 3339
More than 5, but not more than 10 .90 .85 .55 3340
More than 10, but not more than 20 .80 .75 .50 3341
More than 20 .60 .60 .40 3342

Table IV
3343

Change in Fund Basis - Interest on Considerations NOT
3344

Guaranteed More Than Twelve Months After Valuation Date
3345

Weighting Factor for 3346
Plan Type 3347
Guarantee Duration (Years) A B C 3348
5 or less 1.00 .90 .60 3349
More than 5, but not more than 10 .95 .90 .90 3350
More than 10, but not more than 20 .85 .80 .55 3351
More than 20 .65 .65 .45 3352

       (E)(b) For annuities and guaranteed interest contracts valued 3353
on a change in fund basis, the factors shown in division (F)(6)(a) 3354
of this section increased by the following amounts:3355

       (i) For plan type A, .15; 3356

       (ii) For plan type B, .25;3357

       (iii) For plan type C, .05.3358

       (c) For annuities and guaranteed interest contracts valued on 3359
an issue year basis, other than those with no cash settlement 3360
options, that do not guarantee interest on considerations received 3361
more than one year after issue or purchase and for annuities and 3362
guaranteed interest contracts valued on a change in fund basis 3363
that do not guarantee interest rates on considerations received 3364
more than twelve months beyond the valuation date, the factors 3365
shown in item (F)(6)(a) or derived in item (F)(6)(b) increased by 3366
.05 for all plan types.3367

       (G) The reference interest rate is determined by taking3368
comparing the monthly average forof the applicable period of time 3369
of Moody's corporate bond yield average - monthly average 3370
corporatescomposite yield of the monthly average on seasoned 3371
corporate bonds, as published by Moody's investors service, inc. 3372
for the applicable time period, as prescribed below:3373

       (1) The reference interest rate for all life insurance is the 3374
lesser of such average over the thirty-six month period and such 3375
average over the twelve-month period ending on the thirtieth day 3376
of June of the calendar year preceding the year of issue.3377

       (2) The reference interest rate for annuity and guaranteed 3378
interest contracts with cash settlement options, except single 3379
premium immediate annuities and annuity benefits involving life 3380
contingencies arising from other annuity and guaranteed interest 3381
contracts with cash settlement options, valued on an issue year 3382
basis with guarantee durations in excess of ten years, is the 3383
lesser of such average over the thirty-six month period and such 3384
average over the twelve-month period ending on the thirtieth day 3385
of June of the calendar year of issue or purchase.3386

       (3) The reference interest rate for other annuities with cash 3387
settlement options and guaranteed interest contracts with cash 3388
settlement options, valued on a year of issue basis, except as 3389
stated in division (G)(6) of this section, with guarantee duration 3390
of ten years or less, the average over a period of twelve months, 3391
ending on June 30 of the calendar year of issue or purchase.3392

       (4) The reference interest rate for other annuities with no 3393
cash settlement options and for guaranteed interest contracts with 3394
no cash settlement options, the average over a period of twelve 3395
months, ending on June 30 of the calendar year of issue or 3396
purchase.3397

       (5) The reference interest rate for all other annuity and 3398
guaranteed interest contracts with cash settlement options valued 3399
on a change in fund basis is such average over the twelve-month 3400
period ending on the thirtieth day of June of the calendar year in 3401
which a change in the fund occurs.3402

       (4)(6) The reference interest rate for all single premium 3403
immediate annuities,and annuity benefits involving life 3404
contingencies arising from other annuity and guaranteed interest 3405
contracts with cash settlement options, and all other annuity and 3406
guaranteed interest contracts is such average over the 3407
twelve-month period ending on the thirtieth day of June of the 3408
calendar year of issue or purchase.3409

       (5)(7) If such corporate bond rate average is no longer 3410
published or the national association of insurance commissioners 3411
determines that such average is no longer appropriate, the 3412
superintendent may by rule approve the use of any alternative 3413
method for the determination of the reference interest rate 3414
adopted by the commissioners.3415

       Sec. 3903.725.  (A) Except as provided in section 3903.724 of 3416
the Revised Code, for individual annuity and pure endowment 3417
contracts issued on or after the effective date of this section 3418
and for annuities and pure endowments purchased on or after the 3419
effective date of this section under group annuity and pure 3420
endowment contracts, the minimum standard of valuation shall be 3421
the commissioners reserve valuation methods defined in divisions 3422
(J), (K), (L), and (M) of section 3903.723 of the Revised Code and 3423
the following tables and interest rates:3424

       (1) For individual annuity and pure endowment contracts 3425
issued prior to January 1, 1976, excluding any disability and 3426
accidental death benefits in those contracts, the 1971 individual 3427
annuity mortality table, or any modification of this table 3428
approved by the superintendent, and six per cent interest for 3429
single premium immediate annuity contracts and four per cent 3430
interest for all other individual annuity and pure endowment 3431
contracts;3432

       (2) For individual single premium immediate annuity contracts 3433
issued on or after January 1, 1976, excluding any disability and 3434
accidental death benefits in those contracts, the 1971 individual 3435
annuity mortality table or any individual annuity mortality table 3436
adopted after 1980 by the national association of insurance 3437
commissioners that is approved in rules adopted by the 3438
superintendent for use in determining the minimum standard of 3439
valuation for these contracts, or any modification of these tables 3440
approved by the superintendent, and seven and one-half per cent 3441
interest;3442

       (3) For individual annuity and pure endowment contracts 3443
issued on or after January 1, 1976, other than single premium 3444
immediate annuity contracts, excluding any disability and 3445
accidental death benefits in those contracts, the 1971 individual 3446
annuity mortality table or any individual annuity mortality table 3447
adopted after 1980 by the national association of insurance 3448
commissioners that is adopted in rules by the superintendent for 3449
use in determining the minimum standard of valuation for those 3450
contracts, or any modification of these tables approved by the 3451
superintendent, and five and one-half per cent interest for single 3452
premium deferred annuity and pure endowment contracts and four and 3453
one-half per cent interest for all other individual annuity and 3454
pure endowment contracts;3455

       (4) For annuities and pure endowments purchased prior to 3456
January 1, 1976, under group annuity and pure endowment contracts, 3457
excluding any disability and accidental death benefits purchased 3458
under those contracts, the 1971 group annuity mortality table, or 3459
any modification of this table approved by the superintendent, and 3460
six per cent interest; 3461

       (5) For annuities and pure endowments purchased on or after 3462
January 1, 1976, under group annuity and pure endowment contracts, 3463
excluding any disability and accidental death benefits purchased 3464
under those contracts, the 1971 group annuity mortality table, or 3465
any group annuity mortality table adopted after 1980 by the 3466
national association of insurance commissioners that is approved 3467
in rules adopted by the superintendent for use in determining the 3468
minimum standard of valuation for annuities and pure endowments, 3469
or any modification of these tables approved by the 3470
superintendent, and seven and one-half per cent interest. 3471

       (B)(1) If any company files with the superintendent a written 3472
notice of its election to comply with the provisions of this 3473
section after a specified date that is after January 1, 1972, and 3474
before January 1, 1979, that specified date shall be the effective 3475
date of this section for that company. 3476

       (2) If a company makes no election under division (B)(1) of 3477
this section, the effective date of this section for that company 3478
shall be January 1, 1979.3479

       Sec. 3903.726.  (A) This section shall apply on and after the 3480
effective date of the valuation manual. 3481

       (B) Every company with an outstanding life insurance 3482
contract, accident and health insurance contract, or deposit-type 3483
contract in this state that is subject to rules adopted by the 3484
superintendent shall annually submit the opinion of an appointed 3485
actuary as to whether the reserves and related actuarial items 3486
held in support of the policies and contracts are computed 3487
appropriately, are based on assumptions that satisfy contractual 3488
provisions, are consistent with prior reported amounts, and comply 3489
with applicable laws. The valuation manual shall prescribe the 3490
specifics of this opinion.3491

       (C) Every company with an outstanding life insurance 3492
contract, accident and health insurance contract, or deposit-type 3493
contract in this state that is subject to rules adopted by the 3494
superintendent, except as exempted in the valuation manual, shall 3495
also annually include in the opinion required by division (B) of 3496
this section, an opinion of the same appointed actuary as to 3497
whether the reserves and related actuarial items held in support 3498
of the policies and contracts specified in the valuation manual, 3499
when considered in light of the assets held by the company with 3500
respect to the reserves and related actuarial items, including the 3501
investment earnings on the assets and the considerations 3502
anticipated to be received and retained under the policies and 3503
contracts, make adequate provision for the company's obligations 3504
under the policies and contracts, including the benefits under and 3505
expenses associated with the policies and contracts.3506

       (D) Each opinion required by divisions (B) and (C) of this 3507
section shall be governed by the following provisions:3508

       (1) The opinion shall be in form and substance as specified 3509
in the valuation manual and acceptable to the superintendent. 3510

       (2) The opinion shall be submitted with the annual statement 3511
reflecting the valuation of such reserve liabilities for each year 3512
ending on or after the operative date of the valuation manual. 3513

       (3) The opinion shall apply to all policies and contracts 3514
subject to division (C) of this section, plus other actuarial 3515
liabilities as may be specified in the valuation manual.3516

       (4) The opinion shall be based on standards adopted from time 3517
to time by the actuarial standards board or its successor, and on 3518
such additional standards as may be prescribed in the valuation 3519
manual.3520

       (5) In the case of an opinion required to be submitted by a 3521
foreign or alien company, the superintendent may accept the 3522
opinion filed by that company with the insurance supervisory 3523
official of another state if the superintendent determines that 3524
the opinion reasonably meets the requirements applicable to a 3525
company domiciled in this state.3526

       (6) Except in cases of fraud or willful misconduct, the 3527
appointed actuary shall not be liable for damages to any person, 3528
other than the insurance company and the superintendent, for any 3529
act, error, omission, decision, or conduct with respect to the 3530
appointed actuary's opinion.3531

       (7) Disciplinary action by the superintendent against the 3532
company or the appointed actuary shall be defined in rules adopted 3533
by the superintendent.3534

       (E) In addition to the requirements specified in division (D) 3535
of this section, each opinion required by division (C) of this 3536
section shall be governed by the following provisions:3537

       (1) A memorandum, in form and substance as specified in the 3538
valuation manual, and acceptable to the superintendent, shall be 3539
prepared to support each actuarial opinion. 3540

       (2) If the insurance company fails to provide a supporting 3541
memorandum at the request of the superintendent within a period 3542
specified in the valuation manual or the superintendent determines 3543
that the supporting memorandum provided by the insurance company 3544
fails to meet the standards prescribed by the valuation manual or 3545
is otherwise unacceptable to the superintendent, the 3546
superintendent may engage a qualified actuary at the expense of 3547
the company to review the opinion and the basis for the opinion 3548
and prepare the supporting memorandum required by the 3549
superintendent.3550

       Sec. 3903.727.  For accident and health insurance contracts 3551
issued on or after the operative date of the valuation manual, the 3552
standard prescribed in the valuation manual is the minimum 3553
standard of valuation required under division (B) of section 3554
3903.721 of the Revised Code. For disability, accident and 3555
sickness, accident and health insurance contracts issued on or 3556
after August 25, 1983, and prior to the operative date of the 3557
valuation manual, the minimum standard of valuation is the 3558
standard adopted in rules by the superintendent.3559

       Sec. 3903.728.  (A) For policies issued on or after the 3560
operative date of the valuation manual, the standard prescribed in 3561
the valuation manual is the minimum standard of valuation required 3562
under division (B) of section 3903.721 of the Revised Code, except 3563
as provided under divisions (F) and (H) of this section.3564

       (B) The operative date of the valuation manual is January 1 3565
of the first calendar year following the first July 1 as of which 3566
all of the following have occurred:3567

       (1) The valuation manual has been adopted by the national 3568
association of insurance commissioners by an affirmative vote of 3569
at least forty-two members, or three-fourths of the members 3570
voting, whichever is greater.3571

       (2) The standard valuation law, as amended by the national 3572
association of insurance commissioners in 2009, or legislation 3573
including substantially similar terms and provisions, has been 3574
enacted by states representing greater than seventy-five per cent 3575
of the direct premiums written as reported in one or more of the 3576
following annual statements submitted for 2008: life, accident, 3577
and health annual statements; health annual statements; or 3578
fraternal annual statements.3579

       (3) The standard valuation law, as amended by the national 3580
association of insurance commissioners in 2009, or legislation 3581
including substantially similar terms and provisions, has been 3582
enacted by at least forty-two of the following fifty-five 3583
jurisdictions: the fifty states of the United States, American 3584
Samoa, the American Virgin Islands, the District of Columbia, 3585
Guam, and Puerto Rico.3586

       (C) Unless a change in the valuation manual specifies a later 3587
effective date, changes to the valuation manual shall be effective 3588
on January 1 following the date when all of the following have 3589
occurred:3590

       (1) The change to the valuation manual has been adopted by 3591
the national association of insurance commissioners by an 3592
affirmative vote representing both of the following:3593

       (a) At least three-fourths of the members of the national 3594
association of insurance commissioners voting, but not less than a 3595
majority of the total membership; 3596

       (b) Members of the national association of insurance 3597
commissioners representing jurisdictions totaling greater than 3598
seventy-five per cent of the direct premiums written as reported 3599
in one or more of the following annual statements most recently 3600
available prior to the vote in division (C)(1)(a) of this section: 3601
life, accident, and health annual statements; health annual 3602
statements; or fraternal annual statements.3603

       (D) The valuation manual may become effective pursuant to the 3604
superintendent adopting the manual via rule. 3605

       (E) The valuation manual shall specify all of the following: 3606

       (1) Minimum valuation standards for and definitions of the 3607
policies or contracts subject to division (B) of section 3903.721 3608
of the Revised Code. The minimum valuation standards shall be:3609

       (a) The commissioners reserve valuation method for life 3610
insurance contracts, other than annuity contracts, subject to 3611
division (B) of section 3903.721 of the Revised Code;3612

       (b) The commissioners annuity reserve valuation method for 3613
annuity contracts subject to division (B) of section 3903.721 of 3614
the Revised Code; 3615

       (c) Minimum reserves for all other policies or contracts 3616
subject to division (B) of section 3903.721 of the Revised Code. 3617

       (2) Which policies or contracts or types of policies or 3618
contracts are subject to the requirements of a principle-based 3619
valuation in division (A) of section 3903.729 of the Revised Code 3620
and the minimum valuation standards consistent with those 3621
requirements.3622

       (3) For policies and contracts subject to a principle-based 3623
valuation under section 3903.729 of the Revised Code:3624

       (a) Requirements for the format of reports to the 3625
superintendent under division (B)(3) of section 3903.729 of the 3626
Revised Code that shall include information necessary to determine 3627
if the valuation is appropriate and in compliance with sections 3628
3903.72 to 3903.7211 of the Revised Code.3629

       (b) Assumptions for risks over which the company does not 3630
have significant control or influence.3631

       (c) Procedures for corporate governance and oversight of the 3632
actuarial function, and a process for appropriate waiver or 3633
modification of such procedures.3634

       (4) For policies not subject to a principle-based valuation 3635
under section 3903.729 of the Revised Code, the minimum valuation 3636
standard, which shall be or do either of the following: 3637

       (a) Be consistent with the minimum standard of valuation 3638
prior to the operative date of the valuation manual; 3639

       (b) Develop reserves that quantify the benefits and 3640
guarantees, and the funding, associated with the contracts and 3641
their risks at a level of conservatism that reflects conditions 3642
that include unfavorable events that have a reasonable probability 3643
of occurring. 3644

       (5) Other requirements, including those relating to reserve 3645
methods, models for measuring risk, generation of economic 3646
scenarios, assumptions, margins, use of company experience, risk 3647
measurement, disclosure, certifications, reports, actuarial 3648
opinions and memorandums, transition rules, and internal controls; 3649

       (6) The data and form of the data required under section 3650
3903.7210 of the Revised Code, with whom the data must be 3651
submitted, and other requirements specified by the superintendent, 3652
which may include data analyses and reporting of analyses.3653

       (F) In the absence of a specific valuation requirement or if 3654
a specific valuation requirement in the valuation manual is not, 3655
in the opinion of the superintendent, in compliance with sections 3656
3903.72 to 3903.7211 of the Revised Code, then the company shall, 3657
with respect to such requirements, comply with minimum valuation 3658
standards prescribed in rules adopted by the superintendent.3659

       (G) The superintendent may engage a qualified actuary, at the 3660
expense of the company, to perform an actuarial examination of the 3661
company and opine on the appropriateness of any reserve assumption 3662
or method used by the company, or to review and opine on a 3663
company's compliance with any requirement set forth in sections 3664
3903.72 to 3903.7211 of the Revised Code. The superintendent may 3665
rely upon the opinion, regarding provisions contained within 3666
sections 3903.72 to 3903.7211 of the Revised Code, of a qualified 3667
actuary engaged by the insurance commissioner of another state, 3668
district, or territory of the United States. As used in this 3669
division, the term "engage" includes employment and contracting.3670

       (H) The superintendent may require a company to change any 3671
assumption or method that in the opinion of the superintendent is 3672
necessary in order to comply with the requirements of the 3673
valuation manual or sections 3903.72 to 3903.7211 of the Revised 3674
Code, and the company shall adjust the reserves as required by the 3675
superintendent. The superintendent may take other disciplinary 3676
action as permitted under applicable laws.3677

       Sec. 3903.729.  (A) A company shall establish reserves using 3678
a principle-based valuation that meets the following conditions 3679
for policies or contracts as specified in the valuation manual:3680

       (1) The principle-based valuation shall quantify the benefits 3681
and guarantees, and the funding, associated with the contracts and 3682
their risks at a level of conservatism that reflects conditions 3683
that include unfavorable events that have a reasonable probability 3684
of occurring during the lifetime of the contracts. 3685

       (2) The principle-based valuation shall reflect conditions, 3686
for policies or contracts with significant tail risk, 3687
appropriately adverse to quantify the tail risk.3688

       (3) The principle-based valuation shall incorporate 3689
assumptions, risk analysis methods, and financial models and 3690
management techniques that are consistent with, but not 3691
necessarily identical to, those utilized within the company's 3692
overall risk assessment process, while recognizing potential 3693
differences in financial reporting structures and any prescribed 3694
assumptions or methods.3695

       (4) The principle-based valuation shall incorporate 3696
assumptions that are derived in one of the following manners:3697

       (a) The assumption is prescribed in the valuation manual.3698

       (b) For assumptions that are not prescribed, the assumptions 3699
shall:3700

       (i) Be established utilizing the company's available 3701
experience, to the extent it is relevant and statistically 3702
credible; 3703

       (ii) To the extent company data is not available, relevant, 3704
or statistically credible, be established utilizing other relevant 3705
statistically credible experience. 3706

       (5) The principle-based valuation shall provide margins for 3707
uncertainty including adverse deviation and estimation error, such 3708
that the greater the uncertainty the larger the margin and 3709
resulting reserve.3710

       (B) A company using a principle-based valuation for one or 3711
more policies or contracts subject to this section as specified in 3712
the valuation manual shall do all of the following:3713

       (1) Establish procedures for corporate governance and 3714
oversight of the actuarial valuation function consistent with 3715
those described in the valuation manual;3716

       (2) Provide to the superintendent and the company's board of 3717
directors an annual certification of the effectiveness of the 3718
internal controls with respect to the principle-based valuation. 3719
Such controls shall be designed to assure that all material risks 3720
inherent in the liabilities and associated assets subject to such 3721
valuation are included in the valuation, and that valuations are 3722
made in accordance with the valuation manual. The certification 3723
shall be based on the controls in place as of the end of the 3724
preceding calendar year.3725

       (3) Develop, and file with the superintendent upon request, a 3726
principle-based valuation report that complies with standards 3727
prescribed in the valuation manual. 3728

       Sec. 3903.7210. A company shall submit mortality, morbidity, 3729
policyholder behavior, or expense experience and other data as 3730
prescribed in the valuation manual for policies it has issued that 3731
are in force on or after the operative date of the valuation 3732
manual.3733

       Sec. 3903.7211.  (A) As used in this section:3734

       (1) "Confidential information" means all of the following:3735

       (a) A memorandum in support of an opinion submitted under 3736
sections 3903.722 and 3903.726 of the Revised Code and any other 3737
documents, materials, and other information, including all working 3738
papers, and copies thereof, created, produced, or obtained by or 3739
disclosed to the superintendent or any other person in connection 3740
with such memorandum.3741

       (b)(i) Except as provided in division (A)(1)(b)(ii) of this 3742
section, all documents, materials, and other information, 3743
including all working papers, and copies thereof, created, 3744
produced, or obtained by or disclosed to the superintendent or any 3745
other person in the course of an examination made under division 3746
(G) of section 3903.728 of the Revised Code.3747

       (ii) If an examination report or other material prepared in 3748
connection with an examination made under section 3901.07 of the 3749
Revised Code is not held as private and confidential information 3750
under that section, an examination report or other material 3751
prepared in connection with an examination made under division (G) 3752
of section 3903.728 of the Revised Code shall not be considered 3753
confidential information to the same extent as if such examination 3754
report or other material had been prepared under section 3901.07 3755
of the Revised Code.3756

       (c) Any reports, documents, materials, and other information 3757
developed by a company in support of, or in connection with, an 3758
annual certification by the company under division (B)(2) of 3759
section 3903.729 of the Revised Code evaluating the effectiveness 3760
of the company's internal controls with respect to a 3761
principle-based valuation and any other documents, materials, and 3762
other information, including all working papers, and copies 3763
thereof, created, produced, or obtained by or disclosed to the 3764
superintendent or any other person in connection with such 3765
reports, documents, materials, and other information;3766

       (d) Any principle-based valuation report developed under 3767
division (B)(3) of section 3903.729 of the Revised Code and any 3768
other documents, materials, and other information, including all 3769
working papers, and copies thereof, created, produced, or obtained 3770
by or disclosed to the superintendent or any other person in 3771
connection with such report; 3772

       (e) Any documents, materials, data, and other information 3773
submitted by a company under section 3903.7210 of the Revised 3774
Code, referred to collectively as "experience data," and any other 3775
documents, materials, data, and other information, including all 3776
working papers, and copies thereof, created or produced in 3777
connection with such experience data, in each case that include 3778
any potentially company-identifying or personally identifiable 3779
information, that is provided to or obtained by the 3780
superintendent, which when combined with any experience data is 3781
referred to as "experience materials," and any other documents, 3782
materials, data, and other information, including all working 3783
papers, and copies thereof, created, produced, or obtained by or 3784
disclosed to the superintendent or any other person in connection 3785
with such experience materials.3786

       (2) "Regulatory agency," "law enforcement agency," and the 3787
"national association of insurance commissioners" includes their 3788
employees, agents, consultants, and contractors.3789

       (B)(1) Except as provided in division (B)(2) of this section 3790
and as otherwise provided in this section, a company's 3791
confidential information is confidential by law and privileged, is 3792
not a public record under section 149.43 of the Revised Code, 3793
shall not be subject to subpoena, and shall not be subject to 3794
discovery or admissible in evidence in any private civil action. 3795
Except as otherwise provided in this section, neither the 3796
superintendent nor any person who received confidential 3797
information while acting under the superintendent's authority 3798
shall be permitted or required to testify in any private civil 3799
action concerning that confidential information.3800

       (2) The superintendent is authorized to use the confidential 3801
information in the furtherance of any regulatory or legal action 3802
brought against the company as a part of the superintendent's 3803
official duties.3804

       (C)(1) In order to assist in the performance of the 3805
superintendent's duties, the superintendent may share confidential 3806
information with all of the following: 3807

       (a) Other state, federal, and international regulatory 3808
agencies; 3809

       (b) The national association of insurance commissioners and 3810
its affiliates and subsidiaries;3811

       (c) The actuarial board for counseling and discipline, or its 3812
successor, in the case of confidential information specified in 3813
divisions (A)(1)(a) and (d) of this section only, upon a request 3814
stating that the confidential information is required for the 3815
purpose of professional disciplinary proceedings; 3816

       (d) State, federal, and international law enforcement 3817
officials. 3818

       (2) The superintendent may share confidential information as 3819
specified in divisions (C)(1)(a), (b), and (c) of this section 3820
only if the recipient agrees, and has the legal authority to 3821
agree, to maintain the confidentiality and privileged status of 3822
such documents, materials, data, and other information in the same 3823
manner and to the same extent as required for the superintendent.3824

       (D) The superintendent may receive documents, materials, 3825
data, and other information, including otherwise confidential and 3826
privileged documents, materials, data, or information, from the 3827
national association of insurance commissioners and its affiliates 3828
and subsidiaries, from regulatory or law enforcement officials of 3829
other foreign or domestic jurisdictions, and from the actuarial 3830
board for counseling and discipline or its successor. The 3831
superintendent shall maintain as confidential or privileged any 3832
document, material, data, or other information received with 3833
notice or the understanding that it is confidential or privileged 3834
under the laws of the jurisdiction that is the source of the 3835
document, material, data, or other information.3836

       (E) The superintendent may enter into agreements governing 3837
sharing and use of information consistent with this section.3838

       (F) No waiver of any applicable privilege or claim of 3839
confidentiality in the confidential information shall occur as a 3840
result of disclosure to the superintendent under this section or 3841
as a result of sharing as authorized in division (C) of this 3842
section. 3843

       (G) A privilege established under the law of any state or 3844
jurisdiction that is substantially similar to the privilege 3845
established under this section shall be available and enforced in 3846
any proceeding in, and in any court of, this state.3847

       (H) Notwithstanding divisions (B) to (G) of this section, any 3848
confidential information specified in divisions (A)(1)(a) and (d) 3849
of this section are subject to all of the following:3850

       (1) The confidential information may be subject to subpoena 3851
for the purpose of defending an action seeking damages from the 3852
appointed actuary submitting the related memorandum in support of 3853
an opinion submitted under sections 3903.722 and 3903.726 of the 3854
Revised Code or principle-based valuation report developed under 3855
division (B)(3) of section 3903.729 of the Revised Code by reason 3856
of an action required by sections 3903.72 to 3903.7211 of the 3857
Revised Code or by rules adopted pursuant to those sections. 3858

       (2) The confidential information may otherwise be released by 3859
the superintendent with the written consent of the company. 3860

       (3) Once any portion of a memorandum in support of an opinion 3861
submitted under section 3903.722 and 3903.726 of the Revised Code 3862
or a principle-based valuation report developed under division 3863
(B)(3) of section 3903.729 of the Revised Code is cited by the 3864
company in its marketing or is publicly volunteered to or before a 3865
governmental agency other than a state insurance department or is 3866
released by the company to the news media, all portions of that 3867
memorandum or report shall no longer be confidential.3868

       Sec. 3903.83.  (A) For purposes of sections 3903.81 to 3869
3903.93 of the Revised Code, a "company action level event" is any 3870
of the following events:3871

       (1) A domestic or foreign insurer's filing of an RBC report 3872
that indicates that the insurer's total adjusted capital is 3873
greater than or equal to its regulatory action level RBC but less 3874
than its company action level RBC;3875

       (2) A life or health insurer's filing of an RBC report that 3876
indicates that the insurer's total adjusted capital is greater 3877
than or equal to its company action level RBC but less than the 3878
product of 2.53.0 and its authorized control level RBC, and that 3879
indicates a negative trend;3880

       (3) A property and casualty insurer's filing of an RBC report 3881
that indicates that the insurer's total adjusted capital is 3882
greater than or equal to its company action level RBC but less 3883
than the product of its authorized control level RBC and 3.0, and 3884
that triggers the trend test determined in accordance with the 3885
trend test calculation included in the property and casualty RBC 3886
instructions;3887

       (4) The notification by the superintendent of insurance to an 3888
insurer of an adjustment to the insurer's RBC report, which 3889
adjusted RBC report shows the insurer's total adjusted capital 3890
within the range described in either division (A)(1) or (2) of 3891
this section, provided that the insurer does not challenge the 3892
adjusted RBC report under section 3903.87 of the Revised Code;3893

       (5) The superintendent's notification to an insurer, 3894
following the hearing required under section 3903.87 of the 3895
Revised Code, that the superintendent has rejected the insurer's 3896
challenge to an adjusted RBC report showing the insurer's total 3897
adjusted capital within the range described in either division 3898
(A)(1) or (2) of this section.3899

       (B) In the case of a company action level event, the insurer 3900
shall prepare and submit to the superintendent an RBC plan that 3901
shall:3902

       (1) Identify the conditions that contributed to the company 3903
action level event;3904

       (2) Contain proposals of corrective actions that the insurer 3905
intends to take to eliminate the conditions leading to the company 3906
action level event;3907

       (3) Provide projections of the insurer's financial results in 3908
the current year and at least the four succeeding years, both in 3909
the absence of the proposed corrective actions and giving effect 3910
to the proposed corrective actions. The projections shall include 3911
projections of statutory operating income, net income, capital, 3912
and surplus. Projections for both new and renewal business may 3913
include separate projections for each major line of business, and 3914
may separately identify each significant income, expense, and 3915
benefit component of the projection.3916

       (4) Identify the key assumptions impacting the insurer's 3917
projections made pursuant to division (B)(3) of this section, and 3918
describe the sensitivity of the projections to the assumptions;3919

       (5) Identify the quality of, and problems associated with, 3920
the insurer's business, including, but not limited to, its assets, 3921
anticipated business growth and associated surplus strain, 3922
extraordinary exposure to risk, mix of business, and use of 3923
reinsurance.3924

       (C) The RBC plan shall be submitted within forty-five days 3925
after a company action level event. However, if an insurer has 3926
challenged an adjusted RBC report pursuant to section 3903.87 of 3927
the Revised Code, the RBC plan need not be submitted until after 3928
the hearing required under section 3903.87 of the Revised Code. If 3929
the superintendent rejects the insurer's challenge, the RBC plan 3930
shall be submitted within forty-five days after the 3931
superintendent's notification to the insurer of the rejection of 3932
the challenge.3933

       (D)(1) Within sixty days after an insurer submits an RBC plan 3934
to the superintendent, the superintendent shall either require the 3935
insurer to implement the RBC plan or shall notify the insurer that 3936
the RBC plan is unsatisfactory in the judgment of the 3937
superintendent. If the superintendent has determined that the RBC 3938
plan is unsatisfactory, the notification to the insurer shall set 3939
forth the reasons for the determination, and may set forth 3940
proposed revisions that will render the RBC plan satisfactory in 3941
the judgment of the superintendent. Upon such notification from 3942
the superintendent, the insurer shall prepare and submit a revised 3943
RBC plan, which may incorporate by reference any revisions 3944
proposed by the superintendent.3945

       (2) If an insurer challenges, under section 3903.87 of the 3946
Revised Code, a notification from the Superintendent that the 3947
insurer's RBC plan or a revised RBC plan is unsatisfactory, 3948
submission of a revised RBC plan need not be made unless the 3949
superintendent rejects the insurer's challenge following the 3950
hearing required by section 3903.87 of the Revised Code and then 3951
notifies the insurer of this rejection.3952

       (3) An insurer shall submit a revised RBC plan to the 3953
superintendent within forty-five days after receiving notification 3954
from the superintendent that its RBC plan is unsatisfactory, or, 3955
that its challenge to a notification made under division (D)(1) of 3956
this section has been rejected, as applicable.3957

       (E) Notwithstanding division (D) of this section, if the 3958
superintendent notifies an insurer that its RBC plan or revised 3959
RBC plan is unsatisfactory, the superintendent may, at the 3960
superintendent's discretion, but subject to the insurer's right to 3961
a hearing under section 3903.87 of the Revised Code, specify in 3962
the notification that the notification constitutes a regulatory 3963
action level event.3964

       (F) Every domestic insurer that submits an RBC plan or 3965
revised RBC plan to the superintendent shall file a copy of the 3966
RBC plan or revised RBC plan with the insurance regulatory 3967
authority of every state in which the insurer is authorized to do 3968
business upon receiving the insurance regulatory authority's 3969
written request for a copy of the plan, if the state has a 3970
confidentiality law with provisions substantially similar to those 3971
set forth in divisions (A) and (B) of section 3903.88 of the 3972
Revised Code. The insurer shall file the copy in that state no 3973
later than the later of:3974

       (1) Fifteen days after receiving the request for a copy of 3975
the plan;3976

       (2) The date on which the RBC plan or revised RBC plan is 3977
filed pursuant to division (C) or (D) of this section.3978

       Sec. 3906.01.  As used in this chapter:3979

       (A) "Annual financial statement" means an insurer's 3980
statutorily required financial statement under the insurer's 3981
respective authorizing chapter of the Revised Code. 3982

       (B) "Authorized control level risked-based capital" means 3983
authorized control level RBC as defined in sections 1753.31 and 3984
3903.81 of the Revised Code. 3985

       (C) "Cash equivalent" means a short-term, highly liquid 3986
investment that is both readily convertible to known amounts of 3987
cash and so near its maturity that it presents an insignificant 3988
risk of change in value because of changes in interest rates, and 3989
that has an original maturity date, to the entity holding the 3990
investment, of three months or less.3991

       (D) "Covered" means that an insurer owns, or can immediately 3992
acquire through the exercise of options, warrants, or conversion 3993
rights already owned, the underlying interest in order to fulfill 3994
or secure its obligation under the call option, cap, or floor it 3995
has written.3996

       (E)(1) "Derivative instrument" means an agreement, option, 3997
instrument, or a series or a combination thereof of either of the 3998
following types:3999

       (a) To make or take delivery of, or assume or relinquish, a 4000
specified amount of one or more underlying interest, or to make a 4001
cash settlement in lieu thereof; 4002

       (b) That has a price, performance, value, or cash flow based 4003
primarily upon the actual or expected price, level, performance, 4004
value, or cash flow of one or more underlying interests. 4005

       (2) "Derivative instrument" includes options, warrants, caps, 4006
floors, collars, swaps, forwards, futures, and any other 4007
agreements, options, or instruments substantially similar thereto 4008
or any series or combination thereof.4009

       (F) "Derivative transaction" means a transaction involving 4010
the use of one or more derivative instruments.4011

       (G) "Hedging transaction" means a derivative transaction that 4012
is entered into and maintained to reduce either of the following:4013

       (1) The risk of economic loss due to a change in the value, 4014
yield, price, cash flow, or quantity of assets or liabilities that 4015
the insurer has acquired or incurred or anticipates acquiring or 4016
incurring;4017

       (2) The currency exchange rate risk or the degree of exposure 4018
as to assets or liabilities that an insurer has acquired or 4019
incurred or anticipates acquiring or incurring.4020

       (H) "Income generation" means a derivative transaction 4021
involving the writing of covered options, caps, or floors that is 4022
intended to generate income or enhance return.4023

       (I) "Lower-grade investment" means a rated credit instrument 4024
or debt-like preferred stock rated 4, 5, or 6 by the securities 4025
valuation office. 4026

       (J) "Medium-grade investment" means a rated credit instrument 4027
or debt-like preferred stock rated 3 by the securities valuation 4028
office.4029

       (K) "Minimum asset requirement" is the requirement that an 4030
insurer maintain assets in an amount equal to the sum of the 4031
insurer's liabilities and its minimum financial security 4032
benchmark, as required by division (A) of section 3906.11 of the 4033
Revised Code.4034

       (L) "Minimum financial security benchmark" is the amount an 4035
insurer is required to have under section 3906.03 of the Revised 4036
Code.4037

       (M) "Replication transaction" means a derivative transaction 4038
that is intended to replicate the performance of one or more 4039
assets that an insurer is authorized to acquire under this 4040
chapter. "Replication transaction" does not include a derivative 4041
transaction that is entered into as a hedging transaction.4042

       (N) "Securities valuation office" means the securities 4043
valuation office of the national association of insurance 4044
commissioners or any successor office.4045

       (O) "Securities valuation office listed mutual fund" means a 4046
money market mutual fund or short-term bond fund that is 4047
registered with the United States securities and exchange 4048
commission under the "Investment Company Act of 1940," 54 Stat. 4049
789, 15 U.S.C. 80a-1 to 80a-64, and that has been determined by 4050
the securities valuation office to be eligible for special reserve 4051
and reporting treatment, rather than as common stock.4052

       (P) "Securities valuation office listed exchange traded fund" 4053
means a bond or preferred stock exchange traded fund that is 4054
registered with the United States securities and exchange 4055
commission under the "Investment Company Act of 1940," 54 Stat. 4056
789, 15 U.S.C. 80a-1 to 80a-64, and that has been rated 1 or 2 by 4057
the securities valuation office and determined by the office to be 4058
eligible for special reserve and reporting treatment, rather than 4059
as common stock.4060

       (Q) "Superintendent" means the superintendent of insurance.4061

       Sec. 3906.02.  (A) This chapter, and any rules adopted under 4062
it, apply to entities organized under Chapters 1731., 1751., 4063
3907., 3919., 3921., 3925., 3931., 3939., 3941., and 3953. of the 4064
Revised Code. 4065

       (B) An insurer may apply to the superintendent for permission 4066
to make investments under this chapter, in lieu of making 4067
investments under any other section of the Revised Code.4068

       (C) In determining whether to permit an entity to invest 4069
pursuant to this chapter, the superintendent shall consider all of 4070
the following:4071

       (1) The character, reputation, and financial standing of the 4072
officers of the entity;4073

       (2) The character, reputation, and financial condition of the 4074
entity;4075

       (3) The adequacy of the expertise, experience, character, and 4076
reputation of the person or persons who will manage the 4077
investments on behalf of the entity;4078

       (4) The quality of the enterprise risk management program 4079
implemented by the entity to identify, assess, monitor, manage, 4080
and report on its key investment and related risks;4081

       (5) Any other factor the superintendent considers relevant.4082

       (D) Separate accounts established in accordance with section 4083
3907.15 of the Revised Code shall continue to be governed by that 4084
section.4085

       Sec. 3906.03. (A)(1) Unless otherwise established in 4086
accordance with divisions (A)(2) and (3) of this section, the 4087
amount of the minimum financial security benchmark for an insurer 4088
shall be the greatest of the following:4089

       (a) Three hundred per cent of the authorized control level 4090
risk-based capital applicable to the insurer, as defined and set 4091
forth by sections 1753.31 to 1753.43 or 3903.81 to 3903.93 of the 4092
Revised Code, less the asset valuation reserve as defined in the 4093
risk-based capital instructions defined in division (M) of section 4094
3903.81 of the Revised Code;4095

       (b) The minimum capital or minimum surplus required by 4096
statute or rule for maintenance of an insurer's certificate of 4097
authority in this state;4098

       (c) All invested assets of an entity organized under Chapter 4099
3919. or 3939. of the Revised Code;4100

       (d) For title insurers, the quotient of annualized net earned 4101
premiums divided by eight;4102

       (e) For multiple employer welfare arrangements, the greater 4103
of three hundred per cent of the risk-based capital amount 4104
reported in the annual statement or the quotient of annualized net 4105
earned premiums divided by twelve.4106

       (2) The superintendent may, in accordance with division (B) 4107
of this section, establish by order a minimum financial security 4108
benchmark to apply to a specific insurer that exceeds the amount 4109
arrived at under division (A)(1) of this section.4110

       (3) The superintendent may by rule change the minimum 4111
financial security benchmark that is a multiple of authorized 4112
control level risk-based capital, or equivalent risk-based capital 4113
calculation, to apply to any class of insurers provided the amount 4114
established by the rule is not less than the amount arrived at 4115
under division (A)(1) of this section.4116

       (B) The superintendent shall determine the amount of minimum 4117
capital or minimum surplus as specified in division (A)(1)(b) of 4118
this section to determine an insurer's minimum financial security 4119
benchmark. The amount shall be sufficient to provide reasonable 4120
security against contingencies affecting the insurer's financial 4121
position that are not fully covered by reserves or by reinsurance.4122

       (1) In determining this amount, the superintendent shall 4123
consider all of the following risks:4124

       (a) Increases in the frequency or severity of losses beyond 4125
the levels contemplated by the premium rates charged;4126

       (b) Increases in expenses beyond those contemplated by the 4127
premium rates charged;4128

       (c) Decreases in the value of assets, or the return on 4129
invested assets below those planned on;4130

       (d) Changes in economic conditions that would make liquidity 4131
more important than contemplated and would force untimely sale of 4132
assets or prevent timely investments;4133

       (e) Currency devaluation to which the insurer may be subject;4134

       (f) Any other contingencies the superintendent identifies 4135
that may affect the insurer's operations.4136

       (2) In determining the minimum financial security benchmark 4137
under division (A)(2) of this section, the superintendent shall 4138
also take into account the following factors:4139

       (a) The most reliable information available as to the 4140
magnitude of the various risks under division (B)(1) of this 4141
section;4142

       (b) The extent to which the risks in division (B)(1) of this 4143
section are independent of each other or are related, and whether 4144
any dependency is direct or inverse;4145

       (c) The insurer's recent history of profits or losses;4146

       (d) The extent to which the insurer has provided protection 4147
against adverse contingencies in ways other than the establishment 4148
of surplus, including redundancy of premiums, adjustability of 4149
contracts under their terms, investment valuation reserves, 4150
whether voluntary or mandatory, appropriate reinsurance, the use 4151
of conservative actuarial assumptions to provide a margin of 4152
security, reserve adjustments in recognition of previous rate 4153
inadequacies, contingency or catastrophe reserves, diversification 4154
of assets, and underwriting risks;4155

       (e) Independent judgments on the soundness of the insurer's 4156
operations, as evidenced by the ratings of reliable professional 4157
financial reporting services;4158

       (f) Any other factor the superintendent considers relevant.4159

       Sec. 3906.04. (A) Subject to this chapter, an insurer making 4160
investments under this chapter may loan or invest its funds, and 4161
may buy, sell, hold title to, possess, occupy, pledge, convey, 4162
manage, protect, insure, and deal with its investments, property, 4163
and other assets to the same extent as any other person or 4164
corporation under the laws of this state and of the United States.4165

       (B) With respect to all of the insurer's investments, the 4166
board of directors of an insurer making investments under this 4167
chapter shall exercise the judgment and care, under the 4168
circumstances then prevailing, that persons of reasonable 4169
prudence, discretion, and intelligence would exercise in the 4170
management of a like enterprise, not in regard to speculating but 4171
in regard to the permanent disposition of their funds, considering 4172
the probable income as well as the probable safety of their 4173
capital. Investments shall be of sufficient value, liquidity, and 4174
diversity to assure the insurer's ability to meet its outstanding 4175
obligations based on reasonable assumptions as to new business 4176
production for current lines of business. As part of its exercise 4177
of judgment and care, the board of directors shall take into 4178
account the prudence evaluation criteria of division (C) of 4179
section 3906.05 of the Revised Code.4180

       (C) An insurer making investments under this chapter shall 4181
establish and implement internal controls and procedures to assure 4182
compliance with investment policies and procedures to assure that 4183
all of the following are met:4184

       (1) The insurer's investment staff and any consultants used 4185
are reputable and capable.4186

       (2) A periodic evaluation and monitoring process occurs for 4187
assessing the effectiveness of investment policy and strategies.4188

       (3) Management's performance is assessed in meeting the 4189
stated objectives within the investment policy through periodic 4190
presentations to the board of directors.4191

       (4) Appropriate analyses are undertaken on the degree to 4192
which asset cash flows are adequate to meet liability cash flows 4193
under different economic environments. These analyses shall be 4194
conducted at least annually and make specific reference to the 4195
economic conditions considered.4196

       Sec. 3906.05.  (A) An insurer making investments under this 4197
chapter shall consider the factors listed in division (C) of this 4198
section along with its business in determining whether an 4199
investment portfolio or investment policy is prudent. 4200

       (B) The superintendent shall consider the factors listed in 4201
division (C) of this section prior to making a determination that 4202
an insurer's investment portfolio or investment policy is not 4203
prudent.4204

       (C) Insurers and the superintendent shall consider the 4205
following factors according to divisions (A) and (B) of this 4206
section:4207

       (1) General economic conditions;4208

       (2) The possible effect of inflation or deflation;4209

       (3) The expected tax consequences of investment decisions or 4210
strategies;4211

       (4) The fairness and reasonableness of the terms of an 4212
investment considering its probable risk and reward 4213
characteristics and relationship to the investment portfolio as a 4214
whole;4215

       (5) The extent of the diversification of the insurer's 4216
investments among all of the following:4217

       (a) Individual investments;4218

       (b) Classes of investments;4219

       (c) Industry concentrations;4220

       (d) Dates of maturity;4221

       (e) Geographic areas.4222

       (6) The quality and liquidity of investments in affiliates;4223

       (7) The investment exposure to all of the following risks, 4224
quantified in a manner consistent with the insurer's acceptable 4225
risk level as described in the insurer's written investment 4226
policy, required under division (H) of section 3906.06 of the 4227
Revised Code:4228

       (a) Liquidity;4229

       (b) Credit and default;4230

       (c) Systemic or market;4231

       (d) Interest rate;4232

       (e) Call, prepayment, and extension;4233

       (f) Currency;4234

       (g) Foreign sovereign.4235

       (8) The amount of the insurer's assets, capital and surplus, 4236
premium writings, insurance in force, and other appropriate 4237
characteristics;4238

       (9) The amount and adequacy of the insurer's reported 4239
liabilities;4240

       (10) The relationship of the expected cash flows of the 4241
insurer's assets and liabilities, and the risk of adverse changes 4242
in the insurer's assets and liabilities;4243

       (11) The adequacy of the insurer's capital and surplus to 4244
secure the risks and liabilities of the insurer;4245

       (12) Any other factors relevant to whether an investment is 4246
prudent.4247

       Sec. 3906.06. In acquiring, investing, exchanging, holding, 4248
selling, and managing investments under this chapter, an insurer 4249
shall establish and follow a written investment policy that shall 4250
be reviewed and approved by the insurer's board of directors on at 4251
least an annual basis. The content and format of an insurer's 4252
investment policy are at the insurer's discretion, but shall 4253
include written guidelines appropriate to the insurer's business 4254
with regard to all of the following:4255

       (A) The general investment policy of the insurer, containing 4256
policies, procedures, and controls covering all aspects of the 4257
investing function;4258

       (B) Quantified goals and objectives regarding the composition 4259
of classes of investments, including maximum internal limits;4260

       (C) Periodic evaluations of the investment portfolio as to 4261
its risk and reward characteristics;4262

       (D) Professional standards for the individuals making 4263
day-to-day investment decisions to assure that investments are 4264
managed in an ethical, prudent, and capable manner;4265

       (E) The types of investments that are allowed and that are 4266
prohibited, based on their risk and reward characteristics and the 4267
insurer's level of experience with the investments;4268

       (F) The relationship of classes of investments to the 4269
insurer's insurance products and liabilities;4270

       (G) The manner in which the insurer intends to implement 4271
section 3906.05 of the Revised Code;4272

       (H) The level of risk, based on quantitative measures, 4273
appropriate for the insurer given the level of capitalization and 4274
expertise available to the insurer.4275

       Sec. 3906.07.  All of the following classes of investments 4276
may be counted for the purposes specified in section 3906.11 of 4277
the Revised Code, whether they are made directly or as a 4278
participant in a partnership, joint venture, or limited liability 4279
company:4280

       (A) Cash, and cash equivalents, in the direct possession of 4281
the insurer or on deposit with a financial institution regulated 4282
by any federal or state agency of the United States;4283

       (B) Bonds, debt-like preferred stock, and other evidences of 4284
indebtedness of governmental units in the United States or Canada, 4285
or the instrumentalities of the governmental units, or private 4286
business entities domiciled in the United States or Canada, 4287
including asset-backed securities, securities valuation office 4288
listed mutual funds, and securities valuation office listed 4289
exchange traded funds;4290

       (C) Loans with a loan to value ratio of no greater than 4291
eighty per cent that are secured by mortgages, trust deeds, or 4292
other security interests in real property located in the United 4293
States or Canada, or secured by insurance against default issued 4294
by a government insurance corporation of the United States or 4295
Canada or by an insurer authorized to do business in this state;4296

       (D) Unaffiliated common stock, or equity-like preferred 4297
stock, or equity interests in any business entity organized under 4298
the United States, any state thereof, the District of Columbia, 4299
the Commonwealth of Puerto Rico, Canada, or any province or 4300
territory of Canada, or shares of mutual funds or exchange traded 4301
funds registered with the securities and exchange commission of 4302
the United States under the "Investment Company Act of 1940," 54 4303
Stat. 789, 15 U.S.C. 80a-1 to 80a-64, other than securities 4304
valuation office listed mutual funds and securities valuation 4305
office listed exchange traded funds;4306

       (E) Real property necessary for the convenient transaction of 4307
the insurer's business;4308

       (F) Real property, together with the fixtures, furniture, 4309
furnishings, and equipment pertaining thereto in the United States 4310
or Canada, which produces, or after suitable improvement can 4311
reasonably be expected to produce, substantial income;4312

       (G) Loans, securities, or other investments of the types 4313
described in divisions (A) to (F) of this section in countries 4314
other than the United States and Canada;4315

       (H) Bonds or other evidences of indebtedness of international 4316
development organizations of which the United States is a member;4317

       (I) Loans upon the security of the insurer's own policies in 4318
amounts that are adequately secured by the policies and that in no 4319
case exceed the surrender values of the policies;4320

       (J) Subsidiary or affiliate equity investments, including 4321
common stock, equity-like preferred stock, limited liability 4322
partnerships, or limited liability membership interests, of 4323
entities that are engaged exclusively in insurance, finance, or 4324
investments, and investment management companies that are 4325
registered with the securities and exchange commission under the 4326
"Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a-1 to 4327
80a-64, as amended;4328

       (K) Investments not otherwise permitted by this section, not 4329
specifically prohibited by statute, to which both of the following 4330
apply:4331

       (1) The assets do not exceed five per cent of the first five 4332
hundred million dollars of the insurer's admitted assets plus ten 4333
per cent of the insurer's admitted assets exceeding five hundred 4334
million dollars.4335

       (2) The assets qualified to meet the minimum asset 4336
requirement at the time they were acquired.4337

       Sec. 3906.08.  (A) For the purposes of determining an 4338
insurer's minimum asset requirement under section 3906.11 of the 4339
Revised Code, the following limitations on classes of investments 4340
shall apply:4341

       (1) For investments authorized by division (B) of section 4342
3906.07 of the Revised Code and investments authorized by division 4343
(G) of section 3906.07 of the Revised Code that are of the types 4344
described in division (B) of section 3906.07 of the Revised Code 4345
the following limitations shall apply:4346

       (a) The aggregate amount of medium- and lower-grade 4347
investments shall be not more than twenty per cent of an insurer's 4348
admitted assets.4349

       (b) The aggregate amount of lower-grade investments shall be 4350
not more than ten per cent of an insurer's admitted assets.4351

       (c) The aggregate amount of investments rated 5 or 6 by the 4352
securities valuation office shall be not more than five per cent 4353
of the insurer's admitted assets.4354

       (d) The aggregate amount of investments rated 6 by the 4355
securities valuation office shall be not more than one per cent of 4356
an insurer's admitted assets.4357

       (e) The aggregate amount of medium- and lower-grade 4358
investments that receive as cash income less than the yield for 4359
treasury issues with a comparative average life shall be not more 4360
than one per cent of an insurer's admitted assets.4361

       (2) Investments authorized by division (C) of section 3906.07 4362
of the Revised Code shall be not more than forty-five per cent of 4363
an insurer's admitted assets in the case of life insurers and not 4364
more than twenty-five per cent of an insurer's admitted assets in 4365
the case of insurers that are not life insurers.4366

       (3) Investments authorized by division (D) of section 3906.07 4367
of the Revised Code shall be not more than twenty per cent of an 4368
insurer's admitted assets in the case of life insurers and not 4369
more than twenty-five per cent of an insurer's admitted assets in 4370
the case of insurers that are not life insurers.4371

       (4) Investments authorized by division (E) of section 3906.07 4372
of the Revised Code shall be not more than ten per cent of an 4373
insurer's admitted assets.4374

       (5) Investments authorized by division (F) of section 3906.07 4375
of the Revised Code shall be not more than ten per cent of an 4376
insurer's admitted assets.4377

       (6) Investments authorized by division (G) of section 3906.07 4378
of the Revised Code shall be not more than twenty per cent of an 4379
insurer's admitted assets.4380

       (7) Investments authorized by division (H) of section 3906.07 4381
of the Revised Code shall be not more than two per cent of an 4382
insurer's admitted assets.4383

       (8) Investments authorized by division (J) of section 3906.07 4384
of the Revised Code shall be not more than ten per cent of an 4385
insurer's admitted assets in the case of life insurers and not 4386
more than three per cent of an insurer's admitted assets in the 4387
case of insurers that are not life insurers. An insurer may exceed 4388
the limits described in division (A)(8) of this section with 4389
investments in a wholly owned domestic insurer, or in a 4390
corporation, or similar business entity organized under the laws 4391
of the United States, any state thereof, or any other jurisdiction 4392
approved by the superintendent, that is formed and maintained to 4393
acquire or hold shares of an insurer, with the prior written 4394
consent of the superintendent.4395

       (B)(1) For purposes of determining compliance with section 4396
3906.11 of the Revised Code, securities issued by a single entity 4397
and its affiliates, other than the government of the United 4398
States, or agencies whose securities are backed by the full faith 4399
and credit of the United States, and subsidiaries authorized under 4400
division (J) of section 3906.07 of the Revised Code, shall be not 4401
more than five per cent of an insurer's admitted assets in the 4402
case of life insurers and shall be not more than five per cent of 4403
an insurer's admitted assets in the case of insurers that are 4404
non-life insurers.4405

       (2) Notwithstanding division (B)(1) of this section, 4406
investments in the voting securities of a depository institution, 4407
or any company that controls a depository institution, shall not 4408
exceed five per cent of an insurer's admitted assets.4409

       (C) For purposes of determining compliance with this section, 4410
the admitted portion of assets of subsidiaries of an insurer 4411
invested in under division (J) of section 3906.07 of the Revised 4412
Code shall be deemed to be owned directly by the insurer and any 4413
other investors in proportion to the market value of their 4414
interest in the subsidiaries. If interest in the subsidiary has no 4415
market value, then the asset allocation proportion shall be 4416
determined by the reasonable value of interest in the subsidiary 4417
as determined under the national association of insurance 4418
commissioners' accounting practices and procedures manual.4419

       (D) If the superintendent considers it necessary to get a 4420
proper evaluation of the investment portfolio of an insurer, the 4421
superintendent may require that investments in mutual funds, 4422
exchange traded funds, pooled investment vehicles, or other 4423
investment companies be treated for purposes of this chapter as if 4424
the investor owned directly its proportional share of the assets 4425
owned by the mutual fund, exchange traded fund, pooled investment 4426
vehicle, or investment company.4427

       (E) Unless otherwise specified in this chapter, an insurer's 4428
investment limitations shall be computed using the insurer's 4429
general account admitted assets, capital, or surplus as reported 4430
in the insurer's most recent annual financial statement required 4431
to be filed with the superintendent.4432

       Sec. 3906.09.  An insurer investing under this chapter that 4433
is doing business that requires the insurer to make payment in 4434
different currencies shall have investments in securities in each 4435
of these currencies in an amount that, independent of all other 4436
investments, meets the requirements of this chapter, as applied 4437
separately to the insurer's obligations in each currency. The 4438
superintendent may, by order, exempt an insurer, or, by rule, a 4439
class of insurers, from this requirement if the obligations in 4440
other currencies are small enough that no significant problem for 4441
financial solidity would be created by substantial fluctuations in 4442
relative currency values.4443

       Sec. 3906.10. (A) An insurer investing under this chapter 4444
shall not invest in investments that are prohibited for an insurer 4445
by statute or rules of this state.4446

       (B) An insurer investing under this chapter shall not invest 4447
in a partnership as a general partner.4448

       (C) The superintendent shall set a reasonable amount of time, 4449
not to exceed five years, for disposal of a prohibited investment 4450
in hardship cases if the insurer demonstrates that the investment 4451
was legal when made or the result of a mistake made in good faith, 4452
or if the superintendent determines that the sale of the asset 4453
would be contrary to the interests of insureds, creditors, or the 4454
general public.4455

       (D) Violation of division (A) of this section may be grounds 4456
for regulatory action pursuant to divisions (A) and (I) of section 4457
3903.12 of the Revised Code.4458

       Sec. 3906.11.  (A) An insurer investing under this chapter 4459
shall maintain assets in an amount equivalent to the sum of its 4460
liabilities and its minimum financial security benchmark at all 4461
times.4462

       (B) Assets invested under this chapter may be counted toward 4463
satisfaction of the minimum asset requirement only so far as they 4464
are invested in compliance with this chapter and any applicable 4465
rules adopted, or orders issued, by the superintendent pursuant to 4466
this chapter.4467

       (C) The amount of admitted assets used to calculate the 4468
minimum asset requirement shall be reduced by the amount of the 4469
liability recorded on an insurer's statutory balance sheet for all 4470
of the following:4471

       (1) The return of acceptable collateral received in a reverse 4472
repurchase transaction or a securities lending transaction;4473

       (2) Cash received in a dollar roll transaction;4474

       (3) Other amounts reported as borrowed money.4475

       (D) Assets other than invested assets may be counted toward 4476
satisfaction of the minimum asset requirement at admitted annual 4477
financial statement value. However, loans to officers or directors 4478
or their immediate families shall not be counted toward the 4479
satisfaction of the minimum asset requirement.4480

       (E) An investment held as an admitted asset by an insurer on 4481
the effective date of this section that qualified under the 4482
applicable insurance investment law of this state shall remain 4483
qualified as an admitted asset under this chapter.4484

       (F) Notwithstanding any provision of this chapter to the 4485
contrary, an asset acquired in the bona fide enforcement of 4486
creditors' rights or in bona fide workouts or settlements of 4487
disputed claims may be counted toward the minimum asset 4488
requirement for five years if the asset is real property and three 4489
years if the asset is not real property.4490

       (G) The superintendent may determine an insurer to be 4491
financially hazardous under section 3903.09 of the Revised Code if 4492
either of the following apply:4493

       (1) The insurer does not own the amount of assets needed to 4494
meet its minimum asset requirement.4495

       (2) The insurer is unable to apply the amount of assets 4496
needed to meet its minimum asset requirement toward compliance 4497
with this chapter.4498

       Sec. 3906.12.  (A) Prior to an insurer entering into 4499
derivative transactions, the board of directors of the insurer 4500
investing under this chapter shall approve a derivative use plan.4501

       (B) The derivative use plan shall require the insurer, when 4502
entering into a derivative transaction that carries a risk of 4503
losing more than the amount invested in a derivative, to establish 4504
a liability in its financial statements for the full amount of 4505
that potential loss.4506

       (C) Prior to entering into derivative transactions, an 4507
insurer shall file with the superintendent a copy of its 4508
derivative use plan and internal controls, for informational 4509
purposes. The insurer shall keep current the copy of its 4510
derivative use plan and internal controls filed with the 4511
superintendent. The insurer shall not enter into derivative 4512
transactions until thirty calendar days after the date on which 4513
the derivative use plan and internal controls is filed with the 4514
superintendent. This thirty-calendar-day period is to begin on the 4515
date that the superintendent receives the derivative use plan and 4516
internal controls.4517

       (D) The superintendent may adopt rules prescribing the form 4518
and content of derivative use plans, as well as any internal 4519
controls the superintendent considers necessary.4520

       (E) An insurer that engages in hedging transactions or 4521
replication transactions shall do both of the following:4522

       (1) Maintain its position in any outstanding derivative 4523
instrument used as part of a hedging transaction or replication 4524
transaction for as long as the hedging transaction or replication 4525
transaction continues to be effective;4526

       (2) Demonstrate to the superintendent, upon request, that any 4527
derivative transaction entered into and involving hedging 4528
transaction or replication transaction is an effective hedging 4529
transaction or replication transaction. The insurer must be able 4530
to demonstrate this at the time the derivative transaction is 4531
entered into, and for as long as the transaction continues to be 4532
in place.4533

       (F) An insurer may not invest, or use, a derivative 4534
instrument for any purpose other than a hedging transaction, 4535
income generation, or replication. 4536

       Sec. 3906.13.  (A) If the superintendent determines that an 4537
insurer's investment practices do not meet the requirements of 4538
this chapter, the superintendent may, after notification to the 4539
insurer of the superintendent's findings, order the insurer to 4540
make changes necessary to comply with this chapter.4541

       (B) If the superintendent determines that the financial 4542
condition, current investment practice, or current investment plan 4543
of an insurer are or may endanger the interests of insureds, 4544
creditors, or the general public, the superintendent may impose 4545
reasonable additional restrictions upon the admissibility or 4546
valuation of investments and may impose restrictions on the 4547
investment practices of the insurer, including prohibiting an 4548
investment or requiring the divestment of an investment.4549

       (C) The superintendent may count toward satisfaction of the 4550
minimum asset requirement any assets that an insurer is required 4551
to invest under the laws of a country other than the United States 4552
as a condition for doing business in that country if the 4553
superintendent finds that counting them does not endanger the 4554
interests of the insurer's insureds or creditors, or the general 4555
public.4556

       (D) If the superintendent is satisfied by evidence of the 4557
solidity of an insurer and the competence of management and its 4558
investment advisors, the superintendent, after a hearing, may, by 4559
order, adjust the class limitations prescribed in section 3906.08 4560
of the Revised Code for that insurer, to the extent that the 4561
superintendent is satisfied that the interests of the insurer's 4562
insureds and creditors and the general public are sufficiently 4563
protected. Such adjustments, in aggregate, shall be limited to an 4564
amount equal to ten per cent of the insurer's liabilities.4565

       Sec. 3906.14.  (A) An insurer subject to an order of the 4566
superintendent under section 3906.03 or 3906.13 of the Revised 4567
Code may request a hearing within thirty days of the date of the 4568
order. The hearing shall be held in compliance with Chapter 119. 4569
of the Revised Code.4570

       (B) The superintendent shall hold hearings required under 4571
this section privately unless the insurer requests a public 4572
hearing, in which case the hearing shall be public.4573

       Sec. 3906.15.  (A) The superintendent may, in accordance with 4574
section 119.03 of the Revised Code, adopt rules interpreting and 4575
implementing the provisions of this chapter.4576

       (B) The superintendent may, in accordance with section 119.03 4577
of the Revised Code, adopt one or more of the following 4578
restrictions on investments in rules:4579

       (1) The superintendent may prescribe for defined classes of 4580
insurers special procedural requirements, including special 4581
reports and prior approval on investments, as well as disapproval 4582
of investments subsequent to either.4583

       (2) The superintendent may prescribe substantive restrictions 4584
on investments of defined classes of insurers, including all of 4585
the following:4586

       (a) Specification of classes of assets that may not be 4587
counted toward satisfaction of the minimum asset requirement even 4588
though the assets may be counted for unrestricted insurers;4589

       (b) Specification of maximum amounts of assets that an 4590
insurer may invest in a single investment, issue, or class or 4591
group of classes of investments that shall be expressed as 4592
percentages of total assets, capital, surplus, legal reserves, or 4593
other variables;4594

       (c) Prescription of qualitative tests for investments and 4595
conditions under which investments may be made, including 4596
requirements of specified ratings from investment advisory 4597
services, listing on specified stock exchanges, collateral, 4598
marketability, currency matching, and the financial and legal 4599
status of the issuer and its earnings capacity.4600

       (C) If the superintendent is satisfied by evidence of the 4601
solidity of an insurer and the competence of management and its 4602
investment advisors, the superintendent, after a hearing, may by 4603
order grant an exemption to that insurer from any restriction made 4604
under division (B) of this section to the extent that the 4605
superintendent is satisfied that the interests of the insurer's 4606
insureds and creditors, as well as the general public, are 4607
protected.4608

       Sec. 3907.14.  The capital, surplus, and all accumulations of 4609
every domestic life insurance company shall be invested as 4610
follows:4611

       (A) A domestic company may acquire, hold, and convey real 4612
estate:4613

       (1) Which has been acquired or is acquired for its principal 4614
offices, or which is used in connection therewith, provided that 4615
it shall not invest more than five per cent of its admitted assets 4616
on the preceding thirty-first day of December in such real estate;4617

       (2) Which has been mortgaged to it in good faith by way of 4618
security for loans previously contracted or for money due;4619

       (3) Which has been conveyed to it in satisfaction of debts 4620
previously contracted in the course of its dealings, or which it 4621
may receive in or on account of an exchange for real estate 4622
acquired in its operations;4623

       (4) Which it has purchased at sales under mortgages and on 4624
any legal process in connection with its investments or under 4625
decrees obtained or made for such debts;4626

       (5) Which is acquired, owned, or held for the purpose of 4627
developing, improving, or otherwise utilizing such real estate for 4628
the production of income, without restriction or limitation as to 4629
time, and may acquire, lease, hold, and manage personal property 4630
used in connection therewith. No investments in real estate to be 4631
used primarily for recreational, agricultural, or mining purposes 4632
shall be made under authority of division (A)(5) of this section 4633
and except for investments authorized under divisions (A)(1), (2), 4634
(3), and (4) of this section, no domestic life insurance company 4635
shall invest in real estate under divisions (A)(5) and (R) of this 4636
section a sum exceeding in the aggregate ten per cent of its 4637
admitted assets on the preceding thirty-first day of December.4638

       All real estate specified in divisions (A)(3) and (4) of this 4639
section, which is not necessary for its accommodation in the 4640
convenient transaction of its business, shall be sold by the 4641
company and disposed of within five years after it has acquired 4642
the title to such real estate or within five years after such real 4643
estate has ceased to be necessary for the accommodation of its 4644
business, unless the company procures the certificate of the 4645
superintendent of insurance that its interests will suffer 4646
materially by a forced sale of the real estate, in which event the 4647
time for the sale may be extended to such time as the 4648
superintendent directs in such certificate.4649

       (B) A domestic company may acquire, hold, and convey tangible 4650
personal property or interests therein for the production of 4651
income, provided no domestic company shall invest in excess of two 4652
per cent of its admitted assets as of the preceding thirty-first 4653
day of December under this division.4654

       (C) In loans and liens upon the security of its own policies, 4655
not exceeding the reserve or present value of the policies, 4656
computed according to any standard authorized by law or according 4657
to such higher standard as the company has adopted and maintains 4658
on the policy, the reserve being the amount of debts of the life 4659
insurance company by reason of its outstanding policies in gross, 4660
which may be so treated in the returns for taxation made by it;4661

       (D) In bankers' acceptances and bills of exchange of the 4662
kinds and maturities made eligible by law for rediscount with 4663
federal reserve banks, provided that such acceptances and bills of 4664
exchange are accepted by a bank or trust company incorporated 4665
under the laws of the United States or of this state or any other 4666
bank or trust company which is a member of the federal reserve 4667
system;4668

       (E) In equipment trust obligations or certificates, security 4669
agreements, or other evidences of indebtedness entered into 4670
directly or guaranteed by any company operating wholly or partly 4671
within the United States or Canada, provided that the debt 4672
obligation is secured by a first lien on tangible personal 4673
property which is purchased or secured for payment thereof and the 4674
debt obligation is repayable within twenty years from the date of 4675
issue in annual, semiannual, or more frequent installments 4676
beginning not later than the first year after such date;4677

       (F) In bonds issued by or for federal land banks and any 4678
debentures issued by or for federal intermediate credit banks 4679
under the "Federal Farm Loan Act of 1916," 39 Stat. 360, 12 4680
U.S.C.A. 641 as amended; any debentures issued by or for banks for 4681
cooperatives under the "Farm Credit Act of 1933," 48 Stat. 257, 12 4682
U.S.C.A. 131 as amended;4683

       (G) In bonds issued under the "Home Owners' Loan Act of 4684
1933," 48 Stat. 128, 12 U.S.C.A. 1461;4685

       (H) In notes, bonds, debentures, or other such obligations 4686
issued by the federal housing administrator;4687

       (I)(1)(a) In bonds or other evidences of indebtedness, not in 4688
default as to principal or interest, which are valid obligations 4689
issued, assumed or guaranteed by the United States, by any state 4690
thereof, by the Commonwealth of Puerto Rico, by any territory or 4691
insular possession of the United States, or by the District of 4692
Columbia, or which are valid obligations issued, assumed, or 4693
guaranteed by any county, municipal corporation, district, or 4694
political subdivision, or by any civil division or public 4695
instrumentality of such governmental units, if by statutory or 4696
other legal requirements such obligations are payable, as to both 4697
principal and interest, from taxes levied upon all taxable 4698
property within the jurisdiction of such governmental unit;4699

       (b) In bonds or other obligations issued by or for account of 4700
any such governmental unit having a population of five thousand or 4701
more by the latest official federal or state census, which are 4702
payable as to both principal and interest from revenues or 4703
earnings from the whole or any part of a publicly owned utility 4704
supplying water, gas, sewage disposal facility, or electricity, or 4705
any or all of them, provided that by statute or other applicable 4706
legal requirements, rates from the service or operation of such 4707
utility must be fixed, maintained, and collected at all times so 4708
as to produce sufficient revenues or earnings to pay both 4709
principal and interest of such bonds or obligations as they become 4710
due;4711

       (c) In any bonds or obligations payable from and secured by 4712
revenues of the United States, the Commonwealth of Puerto Rico, or 4713
any state or instrumentality of any of them, or of the District of 4714
Columbia or of any commission, board, or other instrumentality of 4715
one or more of them, provided there is a specific pledge of 4716
revenues, and provided that there is adequate provision for 4717
payment of interest prior to completion of construction and that 4718
rates, fees, tolls, or charges fixed are, after completion of 4719
construction, sufficient to pay all expenses of operation and 4720
maintenance and the principal and interest when due.4721

       (2) In legally authorized and executed bonds, notes, 4722
warrants, and securities which are the direct obligation of or are 4723
guaranteed by Canada, or which are the direct obligation of or are 4724
guaranteed as to both principal and interest by any province of 4725
Canada, or which are the direct obligation of or are guaranteed as 4726
to both principal and interest by any municipality of Canada 4727
having a population of fifty thousand or more by the latest 4728
official census, and which are not in default as to principal or 4729
interest;4730

       (3) In bonds or other evidence of indebtedness, not in 4731
default as to principal or interest, which are valid obligations 4732
issued, assumed, or guaranteed by the United States, by any state 4733
thereof, the Commonwealth of Puerto Rico, or by the District of 4734
Columbia, if by statutory or other legal requirements such 4735
obligations are payable, as to both principal and interest, from 4736
selective taxes levied by such governmental unit.4737

       (J)(1) In mortgage bonds which are the direct obligation of a 4738
railroad, and which are the first lien on a substantial portion of 4739
its property, situated wholly in the United States or partly in 4740
the United States and partly in Canada, the average net yearly 4741
earnings of which, after deducting proper charges for maintenance 4742
of way and equipment, for the five fiscal years preceding such 4743
investments, have been at least one and one-half times the average 4744
yearly interest for the same period on its mortgages, bonds, and 4745
funded debts, and in the junior mortgage bond issues of such 4746
railroad corporations of the same character and under the same 4747
conditions where the average net yearly earnings for the five 4748
fiscal years preceding such investment, after deducting proper 4749
charges for maintenance of way and equipment, have been at least 4750
three times the average yearly interest charges on such issues and 4751
all prior liens; or in the mortgage bonds of any incorporated 4752
railroad company which have been assumed or guaranteed, both as to 4753
principal and interest, by any incorporated railroad company whose 4754
bonds constitute a legal investment under division (J)(1) of this 4755
section. In applying the earnings test to any issuing, assuming, 4756
or guaranteeing company, whether or not in legal existence during 4757
the whole of such five years next preceding the date of investment 4758
by such insurer, which has at any time during such five-year 4759
period acquired the assets of any other company by purchase, 4760
merger, consolidation, or otherwise, substantially as an entirety, 4761
or has been reorganized pursuant to the bankruptcy law, the 4762
earnings of such other predecessor or constituent companies, or of 4763
the company so reorganized, available for interest for such 4764
portion of such period that has preceded such acquisition, or such 4765
reorganization, may be included in the earnings of such issuing, 4766
assuming, or guaranteeing company for such portion of such period 4767
as is determined in accordance with adjusted or pro forma 4768
consolidated earnings statements covering such portion of such 4769
period. In such cases the requirements as to earnings shall be 4770
based upon the mortgages, bonds, and funded debts as they exist 4771
immediately after such acquisitions or such reorganizations.4772

       (2) In mortgage bonds or other interest-bearing obligations 4773
of terminal companies organized under the laws of the United 4774
States or any state thereof, provided such bonds or obligations 4775
have been assumed or guaranteed jointly or severally by two or 4776
more railroad corporations whose bonds constitute legal 4777
investments under division (J)(1) of this section;4778

       (3) In loans to veterans guaranteed in whole or in part by 4779
the United States pursuant to Title III of the "Servicemen's 4780
Readjustment Act of 1944," 58 Stat. 284, 38 U.S.C.A. 693, as 4781
amended, provided such guaranteed loans are liens upon real 4782
estate;4783

       (4) In mortgage bonds which are the direct obligation of and 4784
first lien upon the property of a corporation engaged directly and 4785
primarily in the production and sale of, or in the purchase and 4786
sale of electricity or gas, or in the operation of telephone or 4787
telegraph systems or waterworks, or in some combination of them, 4788
and situated wholly in the United States, or the Commonwealth of 4789
Puerto Rico, or partly in the United States and partly in Canada, 4790
the average net yearly earnings of which, after deducting proper 4791
charges for replacements, depreciation, and obsolescence, for the 4792
five fiscal years preceding such investment, have been at least 4793
one and one-half times the average yearly interest for the same 4794
period on its mortgages, bonds, and funded debts;4795

       (5) Any such corporation, or any of its predecessors, 4796
constituent, or successor corporations, must have been in business 4797
not less than ten years prior to the date of the purchase of such 4798
bonds, and must not have defaulted on the interest or principal of 4799
any of its bonds or funded debts outstanding during the five years 4800
immediately preceding the date of purchase, provided that division 4801
(J)(5) of this section does not preclude investments in mortgage 4802
bonds of railroads reorganized through purchase of assets, merger, 4803
consolidation, bankruptcy proceedings, or otherwise if such bonds 4804
are eligible for investment under division (J)(1) of this section;4805

       (6) No investment shall be made under division (J)(1), (2), 4806
(4), or (5) of this section if such railroad or other utility 4807
corporation and its business, and its issue of bonds, funded 4808
debts, and stocks are not under the supervision and control of an 4809
authorized state or federal official or commission, provided that 4810
division (J)(6) of this section does not apply to the mortgage 4811
bonds or other interest-bearing obligations of companies engaged 4812
in the operation of telephone or telegraph systems.4813

       (K)(1) In bonds or notes secured by mortgages or deeds of 4814
trust which are a first lien upon unencumbered fee simple real 4815
estate in any state, the Commonwealth of Puerto Rico, the District 4816
of Columbia, or Canada, provided the amount loaned does not exceed 4817
eighty per cent of the actual market value of such property.4818

       The actual market value of any such property shall be shown 4819
by a valuation and appraisement in writing by a qualified land 4820
appraiser.4821

       In the event the amount loaned under division (K)(1) of this 4822
section exceeds eighty per cent of the actual market value of the 4823
land, the structures on the land must be insured by an authorized 4824
fire insurance company or covered by other comparable 4825
indemnification, and the policies or indemnifications shall be 4826
payable or assigned to the mortgagee or to a trustee in its behalf 4827
and shall be held by the mortgagee or an agent of the mortgagee or 4828
by such trustee; or in lieu of holding such policies or 4829
indemnifications, the mortgagee may purchase a policy or policies 4830
of mortgage protection insurance, payable to the mortgagee or a 4831
trustee in its behalf, insuring the mortgagee against loss 4832
resulting from the failure of the mortgagor to acquire and 4833
maintain, from such an authorized fire insurance company or other 4834
comparable source, insurance or indemnification.4835

       (2) In bonds or notes secured by mortgages insured by the 4836
federal housing administrator;4837

       (3) In bonds or notes secured by mortgages or deeds of trust 4838
which are a first lien on leasehold estates in wholly or partly 4839
improved real property, unencumbered, except rentals accruing from 4840
the property to the owner of the fee, provided that any loan 4841
secured by a leasehold estate must provide for amortization by 4842
repayment of principal at least once in each year in amounts 4843
sufficient to repay the loan within a period of four-fifths of the 4844
unexpired term of the leasehold but within a period of not more 4845
than thirty years, and further provided that the amount loaned on 4846
the leasehold estate does not exceed seventy-five per cent of 4847
total market value of the leasehold estate determined by 4848
appraisements in writing made under oath by two real estate 4849
owners, residents of the county or local district in which the 4850
real estate is located, or by a qualified land appraiser; if the 4851
amount loaned exceeds seventy-five per cent of the value of that 4852
portion of the leasehold estate represented by the value of the 4853
land, exclusive of improvements on the land, such improvements 4854
shall be insured against fire for the benefit of the mortgagee in 4855
an amount not less than the difference between seventy-five per 4856
cent of the value of such land, exclusive of buildings, and the 4857
amount loaned; the policies for such amount shall be payable to 4858
and held by the mortgagee or a trustee named in the lease who 4859
shall be required by the terms of said lease to use and apply the 4860
proceeds of such insurance for repairing, restoring, or rebuilding 4861
such buildings;4862

       (4) The following shall not be considered as prior liens or 4863
encumbrances in the construction and application of this section: 4864
leasehold estates of any duration, rights-of-way, servitudes, 4865
joint driveways, easements, party wall agreements, current taxes 4866
and assessments not delinquent, and restrictions as to building, 4867
use, and occupancy.4868

       (5) This section does not prohibit a domestic life insurance 4869
company from renewing or extending a loan for the original or a 4870
lesser amount nor does it prohibit a company from accepting as 4871
part payment for real estate sold by it a mortgage on the real 4872
estate for a greater percentage of the purchase price of the real 4873
estate than is otherwise permitted by this section.4874

       (L) In bonds, notes, or other evidences of indebtedness of 4875
corporations, trusts, partnerships, or similar business entities 4876
organized under the laws of the United States, or any state 4877
thereof, the Commonwealth of Puerto Rico, the District of 4878
Columbia, or Canada or any province of Canada, secured by 4879
assignment of lease or leases or the rentals payable under such 4880
leases, of real or personal property or both to (1) the United 4881
States or any instrumentality thereof, or any state of the United 4882
States, the Commonwealth of Puerto Rico, or the District of 4883
Columbia, or any county, city, town, school, or water district, 4884
authority, or other political subdivision in any such government, 4885
or Canada, any province of Canada, or any municipal corporation of 4886
Canada that has a population of fifty thousand or more by the 4887
latest official census; or (2) one or more corporations, trusts, 4888
partnerships, or similar business entities organized under the 4889
laws of the United States, any state thereof, the Commonwealth of 4890
Puerto Rico, the District of Columbia, or Canada or any province 4891
of Canada, provided that (a) the fixed rentals assigned shall be 4892
sufficient to repay the indebtedness within the unexpired term of 4893
the lease, exclusive of the term which may be provided by an 4894
enforceable option of renewal; (b) such lessee has not defaulted 4895
in payment of interest or principal on any of its bonds, notes, 4896
debentures, or other evidences of indebtedness during the five 4897
years immediately preceding the date of the investment, and 4898
provided the average net earnings available for fixed charges of 4899
such lessee under division (L)(2) of this section for not less 4900
than five fiscal years preceding such investment have been at 4901
least one and one-half times average fixed charges for that period 4902
and during either of the last two years of such period, the net 4903
earnings available for fixed charges shall have been not less than 4904
one and one-half times fixed charges for such year, except that 4905
railroad companies and utility companies may qualify as lessees 4906
herein by application of the earnings test provided for railroads 4907
under division (J)(1) of this section and for utilities under 4908
division (J)(4) of this section; and (c) a first lien on the 4909
interest of the lessor in the unencumbered property so leased 4910
shall be obtained as additional security for the indebtedness;4911

       (M) In ground rents, land trust certificates, or fee 4912
ownership certificates representing or evidencing beneficial 4913
ownership of or interest in improved real estate under lease for 4914
not less than twenty-five years from the date of such lease, in 4915
which it must be provided that the lessee shall pay all taxes and 4916
assessments levied on or assessed against said real estate, shall 4917
maintain the improvements on the real estate in good repair, and 4918
shall provide and maintain fire insurance in an amount equal to 4919
the insurable value of the building on the real estate; provided:4920

       (1) The value of the land and improvements shall be evidenced 4921
by an appraisement made under oath by a disinterested appraiser 4922
resident in and the owner of real estate in the city in which the 4923
property is situated, and such appraisement shall not be less than 4924
one and sixty-seven hundredths times the amount of such land trust 4925
certificates, which amount shall be not less than twenty times the 4926
net annual rental distributable to holders of outstanding 4927
certificates;4928

       (2) Such beneficial interests shall only be in properties on 4929
which actual earning records for five years immediately preceding 4930
are available;4931

       (3) Such declaration of trust or other trust instrument shall 4932
provide for a depreciation or other similar fund, in an amount 4933
which is not less than nine per cent of the net annual 4934
distributable rental, for the benefit of the holders of 4935
outstanding certificates.4936

       (N)(1) In certificates of deposit or other evidence of 4937
indebtedness of a savings and loan association provided the 4938
certificates or other evidence of deposit are insured pursuant to 4939
the "Financial Institutions Reform, Recovery, and Enforcement Act 4940
of 1989," 103 Stat. 183, 12 U.S.C.A. 1811, as amended;4941

       (2) In interest-bearing obligations, including savings 4942
accounts and time certificates of deposit of a national bank or 4943
state bank provided such bank is a member of the federal deposit 4944
insurance corporation created pursuant to the "Banking Act of 4945
1933," 92 Stat. 624, 12 U.S.C.A. 624, as amended.4946

       (O) In obligations issued, assumed, or guaranteed by the 4947
international finance corporation or by the international bank for 4948
reconstruction and development, the Asian development bank, the 4949
inter-American development bank, the African development bank, or 4950
other similar development bank in which the president, as 4951
authorized by congress and on behalf of the United States, has 4952
accepted membership;4953

       (P)(1) In the preferred stocks of any company organized under 4954
the laws of the United States or of any state thereof engaged 4955
directly and primarily in the production and sale of, or in the 4956
purchase and sale of electricity or gas, or in the operation of 4957
telephone or telegraph systems or water works, or in some 4958
combination of them, if the average annual net earnings of such 4959
company, for not less than five fiscal years preceding purchase 4960
thereof, after deduction of interest on all mortgages, bonds, 4961
debentures, and funded debts and after deduction of the proper 4962
charges for replacements, depreciation, and obsolescence, have 4963
been at least two times the average yearly amount which is 4964
required to pay the dividends or distributions on all preferred 4965
stocks; and in which the mortgages, bonds, debentures, funded 4966
debts, and preferred stocks shall not in the aggregate exceed 4967
seventy per cent of the total capitalization of such company, 4968
including mortgages, bonds, debentures, funded debts, and 4969
preferred and common stocks;4970

       (2) In the preferred stocks of any other company organized 4971
under the laws of the United States, or of any state thereof if 4972
the average annual net earnings of such company for a period of 4973
not less than five fiscal years preceding purchase thereof, after 4974
deduction of interest on all mortgages, bonds, debentures, and 4975
funded debts and after deduction of the proper charges for 4976
replacements, depreciation, and obsolescence, have been at least 4977
four times the amount which is required to pay the dividends or 4978
distributions on all preferred stocks, and in which the mortgages, 4979
bonds, debentures, funded debts, and preferred stocks shall not in 4980
the aggregate exceed sixty per cent of the total capitalization of 4981
such company, including mortgages, bonds, debentures, funded 4982
debts, and preferred and common stocks;4983

       (3) A domestic life insurance company shall not purchase any 4984
preferred stocks when the total market values of such stocks then 4985
owned with those purchased exceed in the aggregate of book values 4986
and purchase price the capital, surplus, and contingency funds, 4987
excluding all reserves required by law, of such company on the 4988
thirty-first day of December preceding the date of such purchase, 4989
or contemplated purchase, provided that in case of appreciations 4990
in values of stocks owned the cost rather than the market values 4991
shall be used in arriving at such aggregate; the purpose being to 4992
restrict the investments of such company in all preferred stocks 4993
to capital, surplus, and contingency funds.4994

       (4) In the bonds, notes, debentures, or other evidences of 4995
indebtedness of a solvent corporation, trust, partnership, or 4996
similar business entity existing under the laws of the United 4997
States, of any state thereof, the Commonwealth of Puerto Rico, or 4998
Canada or any province of Canada, provided that either:4999

       (a) The bonds, notes, debentures, or other evidences of 5000
indebtedness of such corporation, trust, partnership, or similar 5001
business entity are rated 1 or 2 by the securities valuation 5002
office of the national association of insurance commissioners;5003

       (b) The corporation, trust, partnership, or similar business 5004
entity has not defaulted in payment of interest or principal on 5005
any of its bonds, notes, debentures, or other evidences of 5006
indebtedness during the five years immediately preceding the date 5007
of purchase, and the average annual net earnings of such 5008
corporation, trust, partnership, or similar business entity that 5009
are available for fixed charges for not less than five fiscal 5010
years preceding such purchase have been at least one and one-half 5011
times the average fixed charges of such corporation, trust, 5012
partnership, or similar business entity for that period and during 5013
either of the last two years of such period, the net earnings 5014
available for fixed charges shall have been not less than one and 5015
one-half times the fixed charges of such corporation, trust, 5016
partnership, or similar business entity for such year.5017

       (5) In common stocks or shares of any solvent incorporated 5018
company organized under the laws of the United States, or of any 5019
state, district, or territory thereof, or the Commonwealth of 5020
Puerto Rico, provided that a dividend or distribution has been 5021
paid by the corporation in the preceding twelve months upon such 5022
stock to be purchased, or that such corporation, together with its 5023
predecessor corporation or corporations, has been in existence for 5024
a period of at least five years. No domestic company shall invest 5025
in common stock or shares under divisions (P)(5) and (R) of this 5026
section a sum exceeding in the aggregate ten per cent of its 5027
admitted assets on the preceding thirty-first day of December.5028

       (6) In the stocks, limited liability company membership 5029
interests, limited partnership interests, or limited liability 5030
partnership interests of insurance, financial, investment, and 5031
investment management companies, which investment management 5032
companies are registered with the securities and exchange 5033
commission under the "Investment Company Act of 1940," 54 Stat. 5034
789, 15 80a-1, as amended, or the stocks, limited liability 5035
company membership interests, limited partnership interests, or 5036
limited liability partnership interests in an entity wholly owned 5037
by a domestic company or by a domestic company and its affiliates, 5038
that is formed and maintained to acquire or hold specific assets 5039
or liabilities for bankruptcy remoteness or limitation of 5040
liability purposes, except its own stock, but no domestic life 5041
insurance company shall invest in such stocks, limited liability 5042
company membership interests, or limited liability partnership 5043
interests under division (P)(6) of this section, exclusive of its 5044
investments in stocks or limited liability company membership 5045
interests of insurance company subsidiaries or subsidiaries 5046
engaged exclusively in the ownership of insurance company 5047
subsidiaries, a sum exceeding the lesser of fifty per cent of its 5048
policyholder surplus or ten per cent of its admitted assets as of 5049
the preceding thirty-first day of December unless the approval of 5050
the superintendent of insurance is first obtained. Whenever the 5051
superintendent has reason to believe that the retention, 5052
investment, or acquisition of the stock, limited liability company 5053
membership interest, limited partnership interest, or limited 5054
liability partnership interest of any such company substantially 5055
lessens competition generally in the business of insurance or 5056
creates a monopoly therein the superintendent shall proceed under 5057
section 3901.13 of the Revised Code to cause such domestic 5058
insurance company to divest itself of such stock, limited 5059
liability company membership interest, limited partnership 5060
interest, or limited liability partnership interest.5061

       (7)(a) In bonds, notes, debentures, or other evidences of 5062
indebtedness issued, assumed, or guaranteed by a solvent 5063
corporation, trust, or partnership formed or existing under the 5064
laws of a foreign jurisdiction, provided each such foreign 5065
investment is of the same kind and quality as United States 5066
investments authorized under this section; or in common or 5067
preferred stock, shares, membership interest, or partnership 5068
interest of any solvent business entity formed or existing under 5069
the laws of a foreign jurisdiction provided each such foreign 5070
investment is of the same kind and quality as United States 5071
investments authorized under this section; or in bonds or other 5072
evidences of indebtedness issued, assumed, or guaranteed by a 5073
foreign jurisdiction.5074

       An insurer shall not invest in foreign investments under 5075
division (P)(7) of this section, including investments denominated 5076
in foreign currency, a sum exceeding in the aggregate fifteen per 5077
cent of its admitted assets as of the preceding thirty-first day 5078
of December. The aggregate amount of investments held by an 5079
insurer in a single foreign jurisdiction shall not exceed three 5080
per cent of its admitted assets as of the preceding thirty-first 5081
day of December.5082

       As used in division (P)(7)(a) of this section, "foreign 5083
jurisdiction" means a jurisdiction outside the United States, 5084
Puerto Rico, or canadaCanada, whose bonds are rated 1 by the 5085
securities valuation office of the national association of 5086
insurance commissioners.5087

       (b) An insurer may acquire investments denominated in foreign 5088
currency whether or not they are foreign investments.5089

       An insurer shall not invest in investments denominated in 5090
foreign currency a sum exceeding in the aggregate ten per cent of 5091
its admitted assets as of the preceding thirty-first day of 5092
December. The aggregate amount of investments denominated in a 5093
single foreign currency held by an insurer shall not exceed three 5094
per cent of an insurer's admitted assets as of the preceding 5095
thirty-first day of December.5096

       (c) As used in division (P)(7) of this section, "foreign 5097
currency" means a currency other than that of the United States.5098

       (8) An insurer may invest without limitation in investments 5099
of government money market funds. As used in division (P)(8) of 5100
this section, "government money market fund" means a mutual fund 5101
that at all times invests in obligations issued, guaranteed, or 5102
insured by the federal government of the United States, or 5103
collateralized repurchase agreements comprised of these 5104
obligations, and that qualifies for investment without a reserve 5105
pursuant to the purposes and procedures of the securities 5106
valuation office of the national association of insurance 5107
commissioners.5108

       (Q) In loans upon the pledge of any securities in which such 5109
companies are authorized by this section to invest, provided that 5110
any loan upon such a pledge shall not exceed eighty per cent of 5111
the cash market value of the collateral at the time of the making 5112
of such loan and at the end of each twelve-month period 5113
thereafter, and such company, through the collateral pledged to 5114
it, shall not exceed the amounts which it may, under this section, 5115
invest in one corporation so that, in the stocks and securities 5116
which may be owned and those which are pledged to it, the 5117
limitations in this section might be indirectly evaded;5118

       (R)(1) Any domestic legal reserve life insurance company may 5119
loan or invest its funds, to an extent not exceeding in the 5120
aggregate five per cent of its total admitted assets, in loans or 5121
investments not permitted under this section. Any such company may 5122
also invest up to an additional five per cent of its total 5123
admitted assets, in loans or investments in small businesses 5124
having more than half of their assets or employees in this state 5125
and in venture capital firms having an office within this state, 5126
provided that, as a condition of a company making an investment in 5127
a venture capital firm, the firm must agree to use its best 5128
efforts to make investments, in an aggregate amount at least equal 5129
to the investment to be made by the company in that venture 5130
capital firm, in small businesses having their principal offices 5131
within this state and having either more than one-half of their 5132
assets within this state or more than one-half of their employees 5133
employed within this state.5134

       As used in division (R) of this section:5135

       (a) "Small businesses" means any corporation, partnership, 5136
proprietorship, or other entity that either does not have more 5137
than four hundred employees, or would qualify as a small business 5138
for the purpose of receiving financial assistance from small 5139
business investment companies licensed under the "Small Business 5140
Investment Act of 1958," 72 Stat. 689, 15 U.S.C.A. 661, as 5141
amended, and rules of the small business administration.5142

       (b) "Venture capital firms" means any corporation, 5143
partnership, proprietorship, or other entity, the principal 5144
business of which is or will be the making of investments in small 5145
businesses.5146

       (c) "Investments" means any equity investment, including 5147
limited partnership interests and other equity interests in which 5148
liability is limited to the amount of the investment, but does not 5149
include general partnership interests or other interests involving 5150
general liability.5151

       (2) In the event that, subsequent to being made under 5152
provisions of division (R) of this section, an investment is 5153
determined to have become qualified as an investment for a 5154
domestic life insurance company as provided for in this section, 5155
the company may consider such investment as held under the 5156
applicable provisions of the foregoing divisions (A) to (Q) of 5157
this section and such investment shall no longer be considered as 5158
having been made under the provisions of this division.5159

       (S)(1) No domestic life insurance company shall subscribe to 5160
or participate in any underwriting for the purchase or sale of 5161
securities or property, nor shall it enter into any such 5162
transaction for purchase or sale on account of said company 5163
jointly with any other person, nor shall any such company enter 5164
into any agreement to withhold from sale any of its property, but 5165
the disposition of its property shall be at all times within the 5166
control of its board of directors. Nothing contained in division 5167
(S)(1) of this section shall be construed to invalidate or 5168
prohibit an agreement by an insurance company for the purchase for 5169
its own account of an entire issue of the securities of a 5170
corporation or to invalidate or prohibit an agreement by an 5171
insurance company and one or more other investors to join and 5172
share in the purchase of investments for their individual accounts 5173
and for bona fide investment purposes.5174

       (2) In the determination of capitalization in this section 5175
the value of all bonds, debentures, and funded debts, and 5176
nonconvertible or nonparticipating preferred stocks shall be 5177
figured at par. Participating or convertible preferred shares 5178
shall be figured at par or market on the preceding thirty-first 5179
day of December, whichever is higher, and the value of all common 5180
shares shall be figured at the market on the preceding 5181
thirty-first day of December.5182

       (3) As used in this section:5183

       (a) "Funded debt" means all interest-bearing obligations 5184
maturing in more than one year from their issuance and all 5185
guaranteed or assumed interest-bearing obligations or stock. 5186
Securities or stock of a corporation pledged to secure other 5187
funded debt of the corporation are not included in the funded 5188
debt.5189

       (b) "Fixed charges" include actual interest incurred in each 5190
year on funded and unfunded debt and annual apportionment of debt 5191
discount or premium. Where interest is partially or entirely 5192
contingent upon earnings, "fixed charges" include contingent 5193
interest payments.5194

       (c) "Net earnings available for fixed charges" means income 5195
after deducting operating and maintenance expenses, taxes other 5196
than income taxes, depreciation, and depletion. Extraordinary, 5197
nonrecurring items of income or expense shall be excluded.5198

       (4) Except as provided in a plan of mutualization adopted 5199
pursuant to the provisions of sections 3913.01 to 3913.10 of the 5200
Revised Code, no domestic life insurance company may invest in or 5201
loan upon its own stock, either directly or indirectly.5202

       (5) If the investments of any domestic life insurance company 5203
are at the time of the making thereof or on October 13, 1953, 5204
otherwise than as authorized in this section, such investments 5205
shall not be admitted or accepted as authorized investments for 5206
such company.5207

       (6) Any earnings test provided for in this section shall be 5208
deemed to have been met if the requirements of such earnings test 5209
are met by any company which assumes or guarantees the investment 5210
or which assumes or guarantees the performance of any lease which 5211
is the security for the investment. In applying any such earnings 5212
test, the operations of a company's predecessor companies, if any, 5213
for the stipulated period shall be included.5214

       (7) No domestic life insurance company shall at any time have 5215
invested in or loaned upon the security of the obligations, 5216
property, or securities of a particular corporation, trust, 5217
partnership, or similar business entity a sum exceeding the 5218
greater of two per cent of its admitted assets as of the preceding 5219
thirty-first day of December or twenty-five per cent of that 5220
portion of its capital and surplus, or its surplus in the case of 5221
a mutual company, that exceeds the minimum required capital and 5222
surplus under section 3907.05 of the Revised Code unless the 5223
approval of the superintendent of insurance is first obtained. The 5224
restrictions of division (S)(7) of this section do not apply to 5225
divisions (C), (F), (G), (H), (P)(6), and (R) of this section or 5226
to any valid obligation issued, assumed, or guaranteed by the 5227
United States, or any state thereof, the Commonwealth of Puerto 5228
Rico, the District of Columbia, or Canada or any province of 5229
Canada. For purposes of division (S)(7) of this section, such 5230
company may, at its option, consider either the lessor or the 5231
lessee under division (L) of this section to be the person to whom 5232
any such investment or loan is made.5233

       (8) This section does not affect the propriety or legality of 5234
an investment made by a domestic life insurance company which was 5235
in accordance with the laws in force at the time of the making of 5236
the investment.5237

       (T) A domestic life insurance company may seek permission 5238
from the superintendent of insurance to invest funds under Chapter 5239
3906. of the Revised Code and may invest funds under that chapter 5240
if such permission is granted.5241

       (U) As used in divisions (U) and (V) of this section:5242

       (1) "Covered" means that an insurer owns, or can immediately 5243
acquire through the exercise of options, warrants, or conversion 5244
rights already owned, the underlying interest in order to fulfill 5245
or secure its obligation under the call option, cap, or floor it 5246
has written. 5247

       (2)(a) "Derivative instrument" means an agreement, option, 5248
instrument, or a series or combination thereof of either of the 5249
following types:5250

       (i) To make or take delivery of, or assume or relinquish, a 5251
specified amount of one or more underlying interests, or to make a 5252
cash settlement in lieu thereof; 5253

       (ii) That has a price, performance, value, or cash flow based 5254
primarily upon the actual or expected price, level, performance, 5255
value, or cash flow of one or more underlying interests.5256

       (b) Derivative instruments include options, warrants, caps, 5257
floors, collars, swaps, forwards, futures, and any other 5258
agreements, options, or instruments substantially similar thereto 5259
or any series or combination thereof. 5260

       (3) "Derivative transaction" means a transaction involving 5261
the use of one or more derivative instruments.5262

       (4) "Hedging transaction" means a derivative transaction that 5263
is entered into and maintained to reduce either of the following:5264

       (a) The risk of economic loss due to a change in the value, 5265
yield, price, cash flow, or quantity of assets or liabilities that 5266
the insurer has acquired or incurred or anticipates acquiring or 5267
incurring;5268

       (b) The currency exchange rate risk or the degree of exposure 5269
as to assets or liabilities that an insurer has acquired or 5270
incurred or anticipates acquiring or incurring.5271

       (5) "Income generation" means a derivative transaction 5272
involving the writing of covered options, caps, or floors that is 5273
intended to generate income or enhance return.5274

       (6) "Replication transaction" means a derivative transaction 5275
that is intended to replicate the performance of one or more 5276
assets that an insurer is authorized to acquire under this 5277
chapter. "Replication transaction" does not include a derivative 5278
transaction that is entered into as a hedging transaction.5279

       (V)(1) Prior to an insurer entering into derivative 5280
transactions, the board of directors of the insurer shall approve 5281
a derivative use plan.5282

       (2) The derivative use plan shall require the insurer, when 5283
entering into a derivative transaction that carries a risk of 5284
losing more than the amount invested in a derivative, to establish 5285
a liability in its financial statements for the full amount of 5286
that potential loss.5287

       (3) Prior to entering into derivative transactions, an 5288
insurer shall file with the superintendent a copy of its 5289
derivative use plan and internal controls, for informational 5290
purposes. The insurer shall keep current the copy of its 5291
derivative use plan and internal controls filed with the 5292
superintendent. The insurer shall not enter into derivative 5293
transactions until thirty calendar days after the date on which 5294
the derivative use plan and internal controls is filed with the 5295
superintendent. This thirty-calendar-day period is to begin on the 5296
date that the superintendent receives the derivative use plan and 5297
internal controls.5298

       (4) The superintendent may adopt rules prescribing the form 5299
and content of derivative use plans, as well as any internal 5300
controls the superintendent considers necessary.5301

       (5) An insurer that engages in hedging transactions or 5302
replication transactions shall do both of the following:5303

       (a) Maintain its position in any outstanding derivative 5304
instrument used as part of a hedging transaction or replication 5305
transaction for as long as the hedging transaction or replication 5306
transaction remains in effect;5307

       (b) Demonstrate to the superintendent, upon request, that any 5308
derivative transaction entered into and involving hedging 5309
transaction or replication transaction is an effective hedging 5310
transaction or replication transaction. The insurer must be able 5311
to demonstrate this at the time the derivative transaction is 5312
entered into, and for as long as the transaction continues to be 5313
in place.5314

       (6) An insurer may not invest in, or use, a derivative 5315
instrument for any purpose other than a hedging transaction, 5316
income generation, or replication.5317

       (7) An insurer shall not invest in, or use a derivative 5318
instrument for purposes of income generation in a sum exceeding in 5319
the aggregate five per cent of its admitted assets, as of the 5320
preceding thirty-first day of December.5321

       Sec. 3913.01.  Any domestic stock life insurance corporation, 5322
incorporated under a general law, may become a mutual life 5323
insurance corporation, and to that end may carry out a plan for 5324
the acquisition of shares of its capital stock, provided such 5325
plan:5326

       (A) Has been adopted by a vote of a majority of the directors 5327
of such corporation;5328

       (B) Has been approved by a vote of stockholders representing 5329
a majority of the capital stock then outstanding at a meeting of 5330
stockholders called for the purpose;5331

       (C) Has been approved by a majority of the policyholders 5332
voting at a meeting of policyholders called for the purpose, each 5333
of whom is insured in a sum of at least one thousand dollars and 5334
whose insurance shall then be in force and shall have been in 5335
force for at least one year prior to such meeting.5336

       As used in this section, "policyholder" means the person 5337
insured under an individual policy of life insurance, and the 5338
person to whom any annuity or pure endowment is presently or 5339
prospectively payable by the terms of an individual annuity or 5340
pure endowment contract, except where the policy or contract 5341
declares some other person to be the owner or holder thereof, in 5342
which case such owner or policyholder shall be deemed the 5343
policyholder, and except in cases of assignment. In the case of 5344
any individual policy or contract insuring two or more persons 5345
jointly or in case the policy or contract declares two or more 5346
persons to be the owner, the persons insured or declared to be the 5347
owner are considered as one policyholder for the purposes of this 5348
section. In case any such policy or contract has been assigned by 5349
an assignment absolute on its face to an assignee other than the 5350
corporation, and such assignment has been filed at the principal 5351
office of the corporation at least thirty days prior to the date 5352
of the meeting of policyholders, then such assignee shall be 5353
deemed a policyholder. Except as provided in this section, an 5354
assignee of a policy or contract shall not be deemed a 5355
policyholder. The reference in division (C) of this section to 5356
insurance in the amount of one thousand dollars or more is deemed 5357
to include any annuity contract, the commuted value of which is 5358
one thousand dollars or more on the date of said meeting, and any 5359
pure endowment contract for the principal sum of one thousand 5360
dollars or more.5361

       Notice of the meeting of policyholders shall be given by 5362
mailing such notice from the home office of the corporation at 5363
least thirty days prior to such meeting in a sealed envelope, 5364
postage prepaid, addressed to such policyholders at their last 5365
known post-office addresses, provided that personal delivery of 5366
such written notice to any policyholder evidenced by written 5367
receipt therefor may be substituted for mailing the same. The 5368
meeting shall be otherwise provided for and conducted in such 5369
manner as is provided in the mutualization plan, provided that 5370
policyholders may vote in person, by proxy, or by mail, and that 5371
all votes shall be cast by ballot on a uniform ballot furnished by 5372
the corporation. The superintendent of insurance shall supervise 5373
and direct the method and procedure of said meeting and shall 5374
appoint an adequate number of inspectors to conduct the voting at 5375
said meeting who may determine all questions concerning the 5376
verification of the ballots, the ascertainment of the validity of 5377
such ballots, the qualifications of the voters, and the canvass of 5378
the vote, and who shall certify to the superintendent and to the 5379
corporation the result of such proceedings, which shall be 5380
supervised by said inspectors in accordance with such rules as are 5381
prescribed by the superintendent. All necessary expenses incurred 5382
by the superintendent shall be paid by the corporation, as 5383
certified to by himthe superintendent.5384

       Before such a plan can be carried out, it must be submitted 5385
to the superintendent and must be approved by himthe 5386
superintendent in writing; provided that every payment for the 5387
acquisition of any shares of the capital stock of such 5388
corporation, the purchase price of which is not fixed by such 5389
plan, shall be subject to the approval of the superintendent, and 5390
provided that neither such plan, nor any such payment, shall be 5391
approved by the superintendent unless at the time of such 5392
approvals, respectively, the corporation, after deducting the 5393
aggregate sum appropriated by such plan for the acquisition of any 5394
part or all of its capital stock, and, in the case of any payment 5395
not fixed by such plan and subject to separate approval by the 5396
superintendent, after deducting also the amount of such payment, 5397
shall be possessed of net assets of not less than two hundred 5398
thousand dollars from which it shall maintain its deposit made 5399
previously with the superintendent, and such assets shall be not 5400
less than the entire liabilities of the corporation, including the 5401
net values of its outstanding contracts computed according to the 5402
standard adopted by the corporation under sectionsections 3903.72 5403
to 3903.7211 of the Revised Code and including all funds, 5404
contingent reserves, and surplus, except for such surplus as has 5405
been appropriated or paid under such plan.5406

       Sec. 3913.34.  (A) Sections 3913.11 to 3913.13 and 3913.20 to 5407
3913.23 of the Revised Code shall apply to a mutual insurance 5408
holding company as if the mutual insurance holding company were a 5409
domestic mutual insurance company. The members of the mutual 5410
insurance holding company are deemed to be members of a domestic 5411
mutual insurance company for all purposes of such sections.5412

       (B) A reorganization of a domestic mutual life insurance 5413
company subject to sections 3913.25 to 3913.38 of the Revised Code 5414
also is subject to sections 3907.09 to 3907.11 of the Revised 5415
Code, if applicable, but is not subject to sections 3901.32 to 5416
3901.323 of the Revised Code.5417

       (C) Notwithstanding division (B) of this section, for a 5418
period of five years following the effective date of a 5419
reorganization under sections 3913.25 to 3913.38 of the Revised 5420
Code, no person shall acquire control of a reorganized stock 5421
company without compliance with sections 3901.32 to 3901.323 of 5422
the Revised Code. For purposes of this division, "control" has the 5423
same meaning as in division (B) of section 3901.32 of the Revised 5424
Code, except that control is presumed to exist if any person, 5425
directly or indirectly, owns, controls, holds with the power to 5426
vote, or holds proxies representing five per cent or more of the 5427
voting securities of any other person.5428

       (D) An intermediate holding company or, if there is no such 5429
company, a reorganized stock company shall not issue shares of 5430
stock, in addition to the shares issued pursuant to the 5431
reorganization plan under which the company was formed, without 5432
the prior approval of the mutual insurance holding company as its 5433
majority shareholder. The prior approval of the mutual insurance 5434
holding company must be evidenced by a resolution of the board of 5435
directors of the mutual insurance holding company delivered to the 5436
board of directors of the intermediate holding company or the 5437
reorganized stock company prior to the issuance of the additional 5438
shares.5439

       (E) A mutual insurance holding company, and an intermediate 5440
holding company, if any, are deemed to be insurers subject to 5441
sections 3901.07, 3901.071, and 3901.48 of the Revised Code.5442

       Sec. 3915.04.  Life insurance policies may provide for not 5443
more than one year preliminary term insurance by incorporation 5444
therein of the following clause immediately preceding the "change 5445
of beneficiary" clause:5446

       "The first year's insurance under this policy is term 5447
insurance."5448

       If the premium charged for term insurance under a limited 5449
payment life or endowment preliminary term policy, providing for 5450
the payment of all premiums thereon in less than twenty years from 5451
the date of the policy, exceeds that charged for like insurance 5452
under whole life preliminary term policies of the same company, 5453
the reserve thereon at the end of any year, including the first, 5454
shall not be less than the reserve on a whole life preliminary 5455
term policy issued in the same year and at the same age together 5456
with an amount equivalent to the accumulation of a net level 5457
premium sufficient to provide for a pure endowment at the end of 5458
the premium-payment period equal to the difference between the 5459
value at the end of such period of such a whole life preliminary 5460
term policy and the full reserve at such time of such limited 5461
payment life or endowment policy. This section does not apply to 5462
any policy issued under section 3915.07 of the Revised Code on or 5463
after the operative date for such policy as authorized by division 5464
(H) of such section.5465

       This section is applicable to any preliminary term policies, 5466
except in the case of policies which are subject to the valuation 5467
requirements of division (D) oflife insurance policies and 5468
annuity and pure endowment contracts issued between July 17, 1947, 5469
and November 5, 1959, that are subject to valuation under section 5470
3903.723903.723 of the Revised Code.5471

       Sec. 3915.071.  (A) As used in this section, "operative date 5472
of the valuation manual" means the January 1 of the first calendar 5473
year that the valuation manual, as defined in section 3903.72 of 5474
the Revised Code, is effective. 5475

       (B) No policy of life insurance shall be delivered or issued 5476
for delivery in this state, on or after January 1, 1989, or the 5477
operative date (not before January 1, 1983) applicable to such 5478
policy, as permitted by division (P) of this section, unless it 5479
contains in substance the provisions set out in this division 5480
which are applicable to the plan of insurance or corresponding 5481
provisions which, in the opinion of the superintendent of 5482
insurance, are at least as favorable to the policyholder:5483

       (1) That the company will, upon proper request within sixty 5484
days after the due date of a premium in default, grant a paid-up 5485
nonforfeiture benefit on a plan stated in the policy. The 5486
effective date of the benefit shall be the due date of the unpaid 5487
premium. The benefit shall be in the amount specified in this 5488
section.5489

       (2) That upon proper request, within the same sixty-day 5490
period, the company may substitute an alternative nonforfeiture 5491
benefit of an actuarially equivalent value. The amount may be 5492
greater or the death benefit may be for a longer period. If the 5493
benefit is an endowment benefit, the amount may be greater or 5494
payment may be made earlier.5495

       (3) That after premiums have been paid for at least three 5496
full years for ordinary insurance or for at least five full years 5497
for industrial insurance, the company will, upon surrender of the 5498
policy within sixty days after the due date of an unpaid premium, 5499
pay a cash surrender value in the amount specified in this section 5500
in lieu of any paid-up nonforfeiture benefits.5501

       (4) That if another available nonforfeiture benefit is not 5502
elected within sixty days after the due date of an unpaid premium, 5503
the paid-up nonforfeiture benefit specified in the policy shall 5504
become effective.5505

       (5) That if all premiums for the policy have been paid, the 5506
company will pay the cash surrender value, upon surrender of the 5507
policy within thirty days after a policy anniversary, in the 5508
amount specified in this section. That value will also be 5509
available within any such thirty-day period if the policy is 5510
continuing under any nonforfeiture benefit which became effective 5511
on or after the third policy anniversary in the case of ordinary 5512
insurance or the fifth policy anniversary in the case of 5513
industrial insurance.5514

       (6) A statement of the mortality table, interest rate, and 5515
method used in calculating cash surrender values and paid-up 5516
nonforfeiture benefits available under policies which guarantee 5517
unscheduled changes in benefits or premiums upon the happening of 5518
specified events or upon the exercise of an option without change 5519
to a new policy.5520

       For all other policies, a statement of the mortality table 5521
and interest rate used in calculating the cash surrender values 5522
and paid-up nonforfeiture benefits, together with a table showing 5523
such values and benefits on each policy anniversary during the 5524
first twenty policy years, or the term of the policy, if shorter. 5525
Values and benefits are to be calculated on the assumption that 5526
there are no dividends or paid-up additions credited to the policy 5527
and that there is no indebtedness to the company on the policy.5528

       (7) A statement that the cash surrender values and paid-up 5529
nonforfeiture benefits are not less than those required by the law 5530
of the state in which the policy is delivered.5531

       (8) An explanation of the manner in which cash surrender 5532
values and paid-up nonforfeiture benefits are increased by any 5533
paid-up additions to the policy and decreased by any indebtedness 5534
to the company on the policy.5535

       (9) A statement that a detailed statement of the method of 5536
computation of values and benefits has been filed with the 5537
insurance supervisory official of the state in which the policy is 5538
delivered if such a detailed statement is not included in the 5539
policy.5540

       (10) A statement of the method used in calculating the cash 5541
surrender value and paid-up nonforfeiture benefit available on any 5542
policy anniversary beyond the last anniversary for which values 5543
and benefits are consecutively shown in the policy.5544

       The company shall reserve the right to defer the payment of 5545
any cash surrender value for a period of six months after demand 5546
and surrender of the policy.5547

       (B)(C) Upon default in payment of a premium due on a policy 5548
anniversary, any cash surrender value shall be determined as of 5549
the due date. The value shall be not less than the present value 5550
on the anniversary of the future guaranteed benefits which would 5551
have been provided for by the policy, including any existing 5552
paid-up additions, had default not occurred, less the present 5553
value on the anniversary of the adjusted premiums corresponding to 5554
the premiums which would have fallen due on and after such 5555
anniversary and less any indebtedness to the company on the 5556
policy. Any cash surrender value provided for by the policy shall 5557
be in substantial compliance with section 3915.072 of the Revised 5558
Code.5559

       If supplemental life insurance or annuity benefits are added 5560
at issue, at the option of the insured, to a policy by rider or 5561
supplemental policy provision and for an identifiable additional 5562
premium, the cash surrender values for the basic insurance and for 5563
the supplemental insurance or benefits shall be determined as if 5564
each had been issued as a separate policy. The cash surrender 5565
value of the policy shall be the sum of the cash surrender value 5566
of the basic insurance and of the supplemental insurance or 5567
benefits.5568

       The cash surrender value for a family policy, which defines a 5569
primary insured and which provides term insurance on the life of 5570
the spouse of the primary insured expiring before the spouse's age 5571
seventy-one, is the sum of the cash surrender value of the 5572
insurance on the primary insured and the cash surrender value of 5573
the term insurance on the spouse, determined as if the insurance 5574
on each had been issued as a separate policy.5575

       Any cash surrender value available within thirty days after a 5576
policy anniversary, under a policy paid up by completion of all 5577
premium payments or continued under any paid-up nonforfeiture 5578
benefit, shall be not less than the present value, on the 5579
anniversary, of the future guaranteed benefits provided by the 5580
policy, including any paid-up additions, and decreased by any 5581
indebtedness to the company on the policy.5582

       Any paid-up nonforfeiture benefit available upon default in 5583
payment of the premium due on a policy anniversary shall have a 5584
present value as of the anniversary at least equal to the policy's 5585
cash surrender value on that date or, if none is provided for, the 5586
cash surrender value which would have been required by this 5587
section in the absence of the condition that premiums shall have 5588
been paid for the requisite number of years.5589

       (C)(D)(1) Amounts payable as extra premiums to cover 5590
impairments or special hazards and uniform annual contract charges 5591
or policy fees specified in the policy statement of the method to 5592
be used in calculating cash surrender values and paid-up 5593
nonforfeiture benefits are excluded in calculating adjusted 5594
premiums and recalculated future adjusted premiums.5595

       A policy issued on a substandard basis but similar to one 5596
issued on a standard basis may be considered the same as the 5597
standard policy in calculating adjusted premiums and present 5598
values if tabular mortality costs in each policy year are the same 5599
as those in the standard policy and if the policies differ only in 5600
that the substandard policy provides reduced graded amounts of 5601
insurance and the standard policy provides higher uniform amounts 5602
of insurance.5603

       (2) The adjusted premiums for any policy are calculated on an 5604
annual basis and shall be a uniform per cent of the respective 5605
premiums specified in the policy for each policy year such that 5606
the present value, at the date of issue, of all such adjusted 5607
premiums is equal to the sum of the following:5608

       (a) The present value at the date of issue of the future 5609
guaranteed benefits;5610

       (b) One per cent of either the amount of insurance, if 5611
uniform in amount, or the average amount of insurance at the 5612
beginning of each of the first ten policy years; and5613

       (c) One hundred twenty-five per cent of the nonforfeiture net 5614
level premium, as defined in division (C)(D)(3) of this section, 5615
provided that for the purposes of this division (C)(D)(2)(c) the 5616
nonforfeiture net level premium shall not be deemed to exceed four 5617
per cent of either the amount of insurance, if uniform in amount, 5618
or the average amount of insurance at the beginning of each of the 5619
first ten policy years.5620

       The date of issue, as used in this division, is the date as 5621
of which the rated age of the insured is determined.5622

       (3) The nonforfeiture net level premium is equal to the 5623
present value, at the date of issue, of the guaranteed benefits 5624
provided for by the policy divided by the present value, at the 5625
date of issue, of an annuity of one per annum payable on the date 5626
of issue and on each anniversary of the policy on which a premium 5627
falls due.5628

       (4) Adjusted premiums, present values, additional expense 5629
allowances, and nonforfeiture net level premiums for policies 5630
which guarantee unscheduled changes in benefits or premiums upon 5631
the happening of specified events or upon the exercise of an 5632
option without change to a new policy are determined as follows:5633

       (a) At the date of issue, adjusted premiums, nonforfeiture 5634
net level premiums, and present values are calculated on the 5635
assumption that there will be no change in future benefits or 5636
premiums;5637

       (b) At the time of a change in benefits or premiums, future 5638
adjusted premiums, nonforfeiture net level premiums and present 5639
values are recalculated on the assumption that there will be no 5640
other change in future benefits or premiums;5641

       (c) These recalculated future adjusted premiums are a uniform 5642
percentage of the respective future premiums specified in the 5643
policy for each policy year after the change such that the present 5644
value, at the time of change, of the future adjusted premiums is 5645
equal to the sum of:5646

       (i) The present value at the time of change of all future 5647
guaranteed benefits provided for by the policy;5648

       (ii) Any additional expense allowance less the cash surrender 5649
value at that time or, if none, the value of any paid-up 5650
nonforfeiture benefit.5651

       (d) The additional expense allowance, at the time of change, 5652
is the sum of one per cent of any increase in the average amount 5653
of insurance and one hundred twenty-five per cent of any increase 5654
in the nonforfeiture net level premium. The average amount of 5655
insurance after the change is the average amount of insurance at 5656
the beginning of the first ten policy years following the change. 5657
The average amount of insurance before the change is the average 5658
amount of insurance at the beginning of each of the first ten 5659
policy years starting with the date of the most recent previous 5660
change or, if there has been no change, the date of issue.5661

       (e) The recalculated nonforfeiture net level premium is the 5662
quotient of (i) the present value of the increase in future 5663
guaranteed benefits provided by the policy plus (ii) the 5664
nonforfeiture net level premium before the change times the 5665
present value of an annuity of one per annum payable on each 5666
anniversary of the policy on and after the date of change on which 5667
a premium would, except for the change, have fallen due divided by 5668
(iii) the present value of an annuity of one per annum payable on 5669
each anniversary on or after the date of change on which a premium 5670
falls due.5671

       (D)(E) For policies issued prior to the operative date of the 5672
valuation manual:5673

       (1) For all policies of ordinary insurance issued on the 5674
standard basis, all adjusted premiums and present values referred 5675
to in this section shall be calculated on the basis of the 5676
commissioners 1980 standard ordinary mortality table and a rate of 5677
interest not exceeding the nonforfeiture interest rate provided 5678
for by division (F)(E)(3) of this section or, at the option of the 5679
company, a rate not exceeding the nonforfeiture interest rate for 5680
policies issued in the preceding calendar year. The company may 5681
elect to use the commissioners 1980 standard ordinary mortality 5682
table with ten-year select mortality factors for any specified 5683
plan of life insurance. The superintendent may approve the use of 5684
any ordinary mortality table adopted after 1980 by the national 5685
association of insurance commissioners in determining the minimum 5686
nonforfeiture standard for such policies.5687

       (E)(2) For all policies of industrial insurance issued on the 5688
standard basis, all adjusted premiums and present values referred 5689
to in this section shall be calculated on the basis of the 5690
commissioners 1961 standard industrial mortality table and a rate 5691
of interest not exceeding the nonforfeiture interest rate provided 5692
for by division (F)(E)(3) of this section or, at the option of the 5693
company, a rate not exceeding the nonforfeiture interest rate for 5694
policies issued in the preceding calendar year. The superintendent 5695
may approve the use of any industrial mortality table adopted 5696
after 1980 by the national association of insurance commissioners 5697
in determining the minimum nonforfeiture standard for such 5698
policies.5699

       (F)(3) The nonforfeiture interest rate for a policy issued in 5700
any calendar year is equal to one hundred twenty-five per cent of 5701
the valuation interest rate for the policy as defined in section5702
3903.7213903.724 of the Revised Code, rounded to the nearer 5703
one-quarter of one per cent.5704

       (F) For all policies issued on or after the operative date of 5705
the valuation manual:5706

       (1) For all policies of ordinary insurance, the valuation 5707
manual shall provide the commissioners standard mortality table 5708
for use in determining the minimum nonforfeiture standard that may 5709
be substituted for the commissioners 1980 standard ordinary 5710
mortality table, with or without ten-year select mortality 5711
factors, or for the commissioners 1980 extended term insurance 5712
table. If the superintendent approves by rule any commissioners 5713
standard ordinary mortality table adopted by the national 5714
association of insurance commissioners for use in determining the 5715
minimum nonforfeiture standard for policies issued on or after the 5716
operative date of the valuation manual, then that minimum 5717
nonforfeiture standard supersedes the minimum nonforfeiture 5718
standard provided by the valuation manual. 5719

       (2) For all policies of industrial insurance, the valuation 5720
manual shall provide the commissioners standard mortality table 5721
for use in determining the minimum nonforfeiture standard that may 5722
be substituted for the commissioners 1961 standard industrial 5723
mortality table or the commissioners 1961 industrial extended term 5724
insurance table. If the superintendent approves by rule any 5725
commissioners standard industrial mortality table adopted by the 5726
national association of insurance commissioners for use in 5727
determining the minimum nonforfeiture standard for policies issued 5728
on or after the operative date of the valuation manual, then that 5729
minimum nonforfeiture standard supersedes the minimum 5730
nonforfeiture standard provided by the valuation manual. 5731

       (3) The nonforfeiture interest rate per annum for any policy 5732
issued in a particular calendar year shall be provided by the 5733
valuation manual. 5734

       (G) Any cash surrender value for any paid-up nonforfeiture 5735
benefit including any paid-up dividend additions shall be 5736
calculated on the basis of the mortality table and rate of 5737
interest used in determining the amount of such benefit and 5738
paid-up dividend additions.5739

       (H) Guaranteed paid-up nonforfeiture benefits, including any 5740
paid-up additions, shall be calculated on the basis of an interest 5741
rate no lower than that specified in the policy when calculating 5742
cash surrender values.5743

       (I) Present values, for any paid-up term insurance or any 5744
paid-up term insurance with accompanying pure endowment offered as 5745
a nonforfeiture benefit, shall be calculated using rates of 5746
mortality not to exceed those shown in the commissioners 1980 5747
extended term insurance table for policies of ordinary insurance 5748
and those shown in the commissioners 1961 industrial extended term 5749
insurance table for policies of industrial insurance. The 5750
superintendent may approve the use of any extended term insurance 5751
table adopted after 1980 by the national association of insurance 5752
commissioners in determining such present values.5753

       (J) Adjusted premiums and present values for policies that 5754
are issued on a substandard basis may be calculated on the basis 5755
of such table of mortality as may be specified by the company and 5756
approved by the superintendent.5757

       (K) The superintendent of insurance may by rule adopt methods 5758
for computing cash surrender values and paid-up nonforfeiture 5759
benefits for plans of life insurance which are of such a nature 5760
that values cannot be determined by any method described in this 5761
section, provided the superintendent is satisfied that the 5762
benefits provided in any such plan are substantially as favorable 5763
to policyholders and insureds as the minimum benefits otherwise 5764
required by this section and that the benefits and patterns of 5765
premiums for the plan will not mislead prospective policyholders 5766
or insureds. Such methods must be consistent with the principles 5767
of this section. This division shall apply to any plan of life 5768
insurance which provides for future premium determination, the 5769
amounts of which are to be determined by the company on the basis 5770
of estimates of future experience made at the time of any such 5771
determination.5772

       (L) Any cash surrender value and any paid-up nonforfeiture 5773
benefit, available upon default in payment of a premium due at any 5774
time other than on a policy anniversary, shall be calculated with 5775
allowance for lapse of time and payment of fractional premiums 5776
beyond the preceding policy anniversary. All values referred to in 5777
this section may be calculated upon the assumption that any death 5778
benefit is payable at the end of the policy year of death. The net 5779
value of any paid-up addition, other than paid-up term additions, 5780
shall be not less than the amount used to provide such additions.5781

       (M) All other policy benefits additional to life insurance 5782
and endowment benefits shall be disregarded, and premiums for all 5783
such additional benefits and any extra premiums to cover 5784
impairments or special hazards shall be disregarded, in 5785
ascertaining the cash surrender values and nonforfeiture benefits 5786
required by this section. No such additional benefits shall be 5787
required to be included in any paid-up nonforfeiture benefit. Such 5788
benefits include additional benefits payable:5789

       (1) For death or dismemberment by accident or accidental 5790
means;5791

       (2) For total and permanent disability;5792

       (3) As reversionary annuity or deferred reversionary annuity 5793
benefits;5794

       (4) As term insurance benefits provided by rider or 5795
supplemental policy provisions to which, issued as a separate 5796
policy, this section would not apply;5797

       (5) As term insurance on the life of a child or lives of 5798
children provided in a policy on the life of a parent, if such 5799
term insurance expires before the child's age is twenty-six, is 5800
uniform in amount after the child's age is one, and has not become 5801
paid-up by reason of the death of a parent.5802

       (N) This section does not apply to any reinsurance, group 5803
insurance, pure endowment or annuity or reversionary annuity 5804
contract nor to any:5805

       (1) Term policy, or renewal thereof, of uniform amount and 5806
for twenty years or less expiring before age seventy-one which 5807
provides no guaranteed nonforfeiture or endowment benefit and for 5808
which uniform premiums are payable during the entire term and any 5809
renewal of the policy;5810

       (2) Term policy of decreasing amount, which provides no 5811
guaranteed nonforfeiture or endowment benefits, and for which each 5812
adjusted premium is less than the adjusted premium for a term 5813
policy described in division (N)(1) of this section issued at the 5814
same age and for the same initial amount of insurance;5815

       (3) Policy, which provides no guaranteed nonforfeiture or 5816
endowment benefits, and for which the cash surrender value or 5817
present value of any paid-up nonforfeiture benefit for any policy 5818
year calculated according to this section as of the beginning of 5819
such policy year, does not exceed two and one-half per cent of the 5820
amount of insurance at the beginning of the same policy year;5821

       (4) Policy which is delivered outside this state through an 5822
agent or other representative of the company issuing the policy.5823

       For purposes of determining the applicability of this 5824
division to a joint-term life insurance policy, the age at expiry 5825
shall be the age at expiry of the oldest life.5826

       (O) No approved policy form need be refiled if nonforfeiture 5827
values or methods for computing such values for it are refiled and 5828
the only change is in the interest rate or the mortality table.5829

       (P) The operative date of this section shall be January 1, 5830
1989, except that an earlier operative date may be elected as 5831
provided in this division. A company may, by written notice filed 5832
with the superintendent, elect to issue all, or one or more, of 5833
its policy forms pursuant to this section on and after a date 5834
specified in the notice. The date specified may be any date on or 5835
after January 1, 1983, and before January 1, 1989. The date 5836
specified shall be the operative date of this section for the 5837
policy form or forms specified in the notice.5838

       No other statute shall be construed to prohibit any life 5839
insurance company from classifying its policies and electing to 5840
issue specified forms of policies pursuant to the plan set forth 5841
in this section, while using other legal basis as to reserve 5842
calculations and nonforfeiture values for other of its policies, 5843
nor shall it be construed to prohibit any life insurance company 5844
from adopting other reasonable classifications of policies or 5845
policyholders.5846

       Sec. 3915.072.  This section applies to all policies of life 5847
insurance, not excluded by division (N) of section 3915.071 of the 5848
Revised Code, that are delivered, or issued for delivery, in this 5849
state on or after January 1, 1989.5850

       (A) Upon default in payment of the premium due on a policy 5851
anniversary, the cash surrender value shall not differ by more 5852
than two-tenths of one per cent of the amount of insurance from 5853
the sum of the greater of zero or the basic cash value, as defined 5854
in division (B) of this section, and the present value of any 5855
paid-up additions less any indebtedness to the company on the 5856
policy. If the amount of insurance is not uniform, the amount is 5857
the average amount of insurance in force at the beginning of each 5858
of the first ten policy years.5859

       (B) The basic cash value is equal to the present value on the 5860
anniversary of the future guaranteed benefits which would have 5861
been provided for by the policy had default not occurred less the 5862
present value on the anniversary of the nonforfeiture factors 5863
corresponding to the premiums which would have fallen due on and 5864
after the anniversary. The basic cash value may not be less than 5865
the value obtained by substituting the adjusted premiums, as 5866
defined in division (C)(D)(2) of section 3915.071 of the Revised 5867
Code, for the nonforfeiture factors. Paid-up additions and 5868
indebtedness to the company on the policy are not taken into 5869
consideration in determining basic cash value. Basic cash values 5870
for policies having supplemental life insurance or annuity 5871
benefits or for a family policy as described in division (B) of 5872
section 3915.071 of the Revised Code shall be determined in the 5873
manner provided in division (B) of that section for cash surrender 5874
values.5875

       (C) The nonforfeiture factor is a percentage of the adjusted 5876
premium, as defined in division (C)(D)(2) of section 3915.071 of 5877
the Revised Code, for each policy year. The percentage must be the 5878
same for each policy year after the second until the later of the 5879
fifth policy anniversary and the first policy anniversary after 5880
the second on which the cash surrender value, before including any 5881
paid-up additions and before deducting any indebtedness, is at 5882
least equal to two-tenths of one per cent of the amount of 5883
insurance. Any change in percentage after the fifth policy 5884
anniversary must apply to no fewer than five consecutive policy 5885
years before a different percentage can be adopted. If the amount 5886
of insurance is not uniform, the amount is the average amount of 5887
insurance in force at the beginning of each of the first ten 5888
policy years.5889

       (D) Adjusted premiums and present values shall be calculated 5890
using the same mortality table and interest rate used to 5891
demonstrate the policy's compliance with section 3915.071 of the 5892
Revised Code. The cash surrender values referred to in this 5893
section include any endowment benefit provided for by the policy.5894

       (E) Any cash surrender value available upon default in a 5895
premium payment due at any time other than on a policy 5896
anniversary, and the amount of any paid-up nonforfeiture benefit 5897
available upon default in a premium at any time shall be 5898
calculated in accordance with the requirements for determining 5899
analogous minimum amounts in section 3915.071 of the Revised Code. 5900
The amounts of any cash surrender values and paid-up nonforfeiture 5901
benefits granted in connection with additional benefits such as 5902
those listed in division (M) of section 3915.071 of the Revised 5903
Code shall conform with the principles of this section.5904

       Sec. 3921.21. A(A) Except as provided in division (B) of 5905
this section, a fraternal benefit society shall invest its funds 5906
only in such investments as are authorized by section 3907.14 of 5907
the Revised Code for the investment of assets of life insurers and 5908
subject to the limitations thereon. Any foreign or alien society 5909
permitted or seeking to do business in this state that invests its 5910
funds in accordance with the laws of the state, district, 5911
territory, country, or province in which it is incorporated, is 5912
held to meet the requirements of this section for the investment 5913
of funds.5914

       (B) A fraternal benefit society may seek permission from the 5915
superintendent of insurance to invest funds under Chapter 3906. of 5916
the Revised Code and may invest funds under that chapter if such 5917
permission is granted.5918

       Sec. 3925.08.  Funds accumulated in the course of business, 5919
or surplus money above the capital stock, of any company organized 5920
under any law of this state, for the purpose provided in section 5921
3925.01 of the Revised Code, shall only be loaned or invested in 5922
the securities listed in sections 3925.05 and 3925.06 of the 5923
Revised Code, or in the following:5924

       (A)(1) Bonds and mortgages on unencumbered real estate within 5925
this or any other state worth twenty-five per cent more than the 5926
sum loaned thereon, exclusive of buildings, unless such buildings 5927
are insured in some company authorized to do business in this 5928
state, and the policy is transferred to the company making the 5929
investment; or, in lieu of transferring such policies, the 5930
mortgagee may purchase a policy or policies of mortgage protection 5931
insurance, payable to the mortgagee or a trustee in its behalf, 5932
insuring the mortgagee against loss resulting from the failure of 5933
the mortgagor to acquire and maintain, from such an authorized 5934
insurance company, insurance in the amount required by this 5935
section;5936

       (2) Bonds or notes secured by mortgages insured by the 5937
federal housing administrator;5938

       (3) Loans to veterans guaranteed in whole or in part by the 5939
United States pursuant to Title III of the "Servicemen's 5940
Readjustment Act of 1944," 58 Stat. 284, 38 U.S.C. 693, as 5941
amended, provided such guaranteed loans are liens upon real 5942
estate.5943

       (B)(1) Legally authorized and executed bonds, notes, 5944
warrants, and securities which are the direct obligation of or are 5945
guaranteed as to both principal and interest by Canada, or which 5946
are the direct obligation of or are guaranteed as to both 5947
principal and interest by any province of Canada, or which are the 5948
direct obligation of or are guaranteed as to both principal and 5949
interest by any municipal corporation of Canada having a 5950
population of one hundred thousand or more by the latest official 5951
census, and which are not in default as to principal or interest;5952

       (2) Obligations issued, assumed, or guaranteed by the 5953
international finance corporation or by the international bank for 5954
reconstruction and development, the Asian development bank, the 5955
inter-American development bank, the African development bank, or 5956
similar development bank in which the president, as authorized by 5957
congress and on behalf of the United States, has accepted 5958
membership.5959

       (C) Bonds or other evidences of indebtedness, not in default 5960
as to principal or interest, which are valid obligations issued, 5961
assumed, or guaranteed by the United States, by any state thereof, 5962
the Commonwealth of Puerto Rico, by any territory or insular 5963
possession of the United States, or by the District of Columbia, 5964
or which are valid obligations issued, assumed, or guaranteed by 5965
any county, municipal corporation, district, or political 5966
subdivision, or by any civil division or public instrumentality of 5967
such governmental units, if by statutory or other legal 5968
requirements such obligations are payable, as to both principal 5969
and interest, from taxes levied upon all taxable property within 5970
the jurisdiction of such governmental unit, or in bonds or other 5971
obligations issued by or for account of any such governmental unit 5972
having a population of five thousand or more by the latest 5973
official federal or state census, which are payable as to both 5974
principal and interest from revenues or earnings from the whole or 5975
any part of a publicly owned utility, provided that by statute or 5976
other applicable legal requirements, rates from the service or 5977
operation of such utility must be fixed, maintained, and collected 5978
at all times so as to produce sufficient revenues or earnings to 5979
pay both principal and interest of such bonds or obligations as 5980
they become due, and in any bonds or obligations issued or 5981
guaranteed by the United States, any state, the District of 5982
Columbia, the Commonwealth of Puerto Rico, any county, municipal 5983
corporation, district, political subdivision, civil division, 5984
commission, board, authority, agency, or other instrumentality of 5985
one or more of them, provided there is a specific pledge of 5986
revenues, earnings, or other adequate security and provided that 5987
no prior or parity obligation of the same issuer, payable from 5988
revenues or earnings from the same source, has been in default as 5989
to principal or interest during the five years next preceding the 5990
date of such investment, but such issuer need not have been in 5991
existence for that period, and obligations acquired under this 5992
section may be newly issued, and further provided that there is 5993
adequate provision for payment of expenses of operation and 5994
maintenance and the principal and interest on all obligations when 5995
due;5996

       (D)(1) Bonds or other evidences of indebtedness, bearing or 5997
accruing interest, issued, assumed, or guaranteed by any solvent 5998
corporation, trust, partnership, or similar business entity 5999
organized and existing under the laws of this or any other state, 6000
or of the United States, the Commonwealth of Puerto Rico, or of 6001
the District of Columbia, or of Canada or any province of Canada, 6002
upon which there is no existing interest or principal default, 6003
provided that either:6004

       (a) The bonds or other evidences of indebtedness are rated 1 6005
or 2 by the securities valuation office of the national 6006
association of insurance commissioners;6007

       (b) The corporation, together with its predecessor 6008
corporation or corporations, or the trust, partnership, or similar 6009
business entity, has been in existence for a period of at least 6010
five years.6011

       (2) Stocks, limited liability company membership interests, 6012
limited partnership interests, or limited liability partnership 6013
interests of any insurance, financial, investment, or investment 6014
management companies, which investment management companies are 6015
registered with the securities and exchange commission under the 6016
"Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a-1, 6017
as amended, or the stocks, limited liability company membership 6018
interests, limited partnership interests, or limited liability 6019
partnership interests in an entity wholly owned by a domestic 6020
company or by a domestic company and its affiliates, that is 6021
formed and maintained to acquire or hold specific assets or 6022
liabilities for bankruptcy remoteness or limitation of liability 6023
purposes, except its own stock, and stocks, limited liability 6024
company membership interests, limited partnership interests, 6025
limited liability partnership interests, bonds, notes, and 6026
debentures of any company which is organized for, and limited in 6027
its operations to, the financing of insurance premiums, upon 6028
approval of such investments by the superintendent of insurance; 6029
except that approval shall not be required for the purchase of the 6030
outstanding stocks, limited liability company membership 6031
interests, limited partnership interests, or limited liability 6032
partnership interests of any such company, if investment in each 6033
such company does not exceed in the aggregate two and one-half per 6034
cent of the total admitted assets of the company making the 6035
investment as of the preceding thirty-first day of December. 6036
Whenever the superintendent has reason to believe that the 6037
retention, investment, or acquisition of the stock, limited 6038
liability company membership interest, limited partnership 6039
interest, or limited liability partnership interest of any such 6040
company substantially lessens competition generally in the 6041
business of insurance or creates a monopoly therein the 6042
superintendent shall proceed under section 3901.13 of the Revised 6043
Code to cause such domestic insurance company to divest itself of 6044
such stock, limited liability company membership interest, limited 6045
partnership interest, or limited liability partnership interest.6046

       (3) Other stocks, limited liability company membership 6047
interests, or limited partnership interests, or limited liability 6048
partnership interests of any solvent corporation organized under 6049
the laws of this or any other state, or of the United States, or 6050
of the District of Columbia, or of Canada or any province of 6051
Canada, provided that a dividend or distribution has been paid by 6052
the business entity in the preceding twelve months upon the stock, 6053
membership interest, or partnership interest to be purchased or 6054
such business entity, together with its predecessor entity or 6055
entities, has been in existence for a period of at least five 6056
years.6057

       (4) A domestic company may acquire, hold, and convey tangible 6058
personal property or interests therein for the production of 6059
income, provided no domestic company shall invest in excess of two 6060
per cent of its admitted assets as of the preceding thirty-first 6061
day of December under this division.6062

       (5) In equipment trust obligations or certificates, security 6063
agreements, or other evidences of indebtedness entered into 6064
directly or guaranteed by any company operating wholly or partly 6065
within the United States or Canada, provided that such debt 6066
obligation is secured by a first lien on tangible personal 6067
property which is purchased or secured for payment thereof and 6068
such debt obligation is repayable within twenty years from the 6069
date of issue in annual, semiannual, or more frequent installments 6070
beginning not later than the first year after such date.6071

       (6) An insurer may invest without limitation in investments 6072
of government money market funds. As used in division (D)(6) of 6073
this section, "government money market fund" means a fund that at 6074
all times invests in obligations issued, guaranteed, or insured by 6075
the federal government of the United States or collateralized 6076
repurchase agreements comprised of such obligations, and that 6077
qualifies for investment without a reserve pursuant to the 6078
purposes and procedures of the securities valuation office of the 6079
national association of insurance commissioners.6080

       (E) Negotiable promissory notes maturing in not more than six 6081
months from the date thereof, secured by collateral security 6082
through the transfer of any of the classes of securities described 6083
in this section or in sections 3925.05 and 3925.06 of the Revised 6084
Code, with absolute power of sale within twenty days after default 6085
in payment at maturity;6086

       (F)(1) Repurchase agreements with, and interest-bearing 6087
obligations, including savings accounts and time certificates of 6088
deposit of, a national bank of the United States, a commonwealth 6089
bank of Puerto Rico, a chartered bank of Canada, or a state bank, 6090
provided such bank is either a member of the federal deposit 6091
insurance corporation created pursuant to the "Banking Act of 6092
1933," as amended, or the Canada deposit insurance corporation 6093
created pursuant to the act of parliament known as the "Canada 6094
Deposit Insurance Corporation Act," as amended.6095

       (2) Certificates of deposit, savings share accounts, 6096
investment share accounts, stock deposits, stock certificates, or 6097
other evidences of indebtedness of a savings and loan association, 6098
provided all such evidences of indebtedness are insured pursuant 6099
to the "Financial Institutions Reform, Recovery, and Enforcement 6100
Act of 1989," 103 Stat. 183, 12 U.S.C.A. 1811, as amended;6101

       (3) Bankers' acceptances and bills of exchange of the kinds 6102
and maturities made eligible by law for rediscount with the 6103
federal reserve banks, provided that the same are accepted by a 6104
bank or trust company incorporated under the laws of the United 6105
States or of this state or any other bank or trust company which 6106
is a member of the federal reserve system.6107

       (G) Any securities issued as a result of any reorganization, 6108
or capital or debt adjustment, in whole or in part, in exchange 6109
for securities acquired by it prior to such reorganization, or 6110
capital or debt adjustment;6111

       (H)(1) In bonds, notes, debentures, or other evidences of 6112
indebtedness issued, assumed, or guaranteed by a solvent 6113
corporation, trust, or partnership formed or existing under the 6114
laws of a foreign jurisdiction, provided each such foreign 6115
investment is of the same kind and quality as United States 6116
investments authorized under this section; or in common or 6117
preferred stock, shares, membership interests, or partnership 6118
interests of any solvent business entity formed or existing under 6119
the laws of a foreign jurisdiction, provided each such foreign 6120
investment is of the same kind and quality as United States 6121
investments authorized under this section; or in bonds or other 6122
evidences of indebtedness issued, assumed, or guaranteed by a 6123
foreign jurisdiction.6124

       An insurer shall not invest in foreign investments under 6125
division (H) of this section, including investments denominated in 6126
foreign currency, a sum exceeding in the aggregate fifteen per 6127
cent of its admitted assets as of the preceding thirty-first day 6128
of December. The aggregate amount of investments held by an 6129
insurer in a single foreign jurisdiction shall not exceed three 6130
per cent of its admitted assets as of the preceding thirty-first 6131
day of December.6132

       As used in division (H)(1) of this section, "foreign 6133
jurisdiction" means a jurisdiction outside the United States, 6134
Puerto Rico, or Canada whose bonds are rated 1 by the securities 6135
valuation office of the national association of insurance 6136
commissioners.6137

       (2) An insurer may acquire investments denominated in foreign 6138
currency whether or not they are foreign investments.6139

       An insurer shall not invest in investments denominated in 6140
foreign currency a sum exceeding in the aggregate fifteen per cent 6141
of its admitted assets as of the preceding thirty-first day of 6142
December. The aggregate amount of investments denominated in a 6143
single foreign currency held by an insurer shall not exceed three 6144
per cent of an insurer's admitted assets as of the preceding 6145
thirty-first day of December.6146

       (3) As used in division (H) of this section, "foreign 6147
currency" means a currency other than that of the United States.6148

       (I)(1) Any securities or other property not permitted under 6149
section 3925.05, 3925.06, 3925.08, or 3925.20 of the Revised Code 6150
to an extent not exceeding in the aggregate six per cent of the 6151
total admitted assets of such company on the preceding 6152
thirty-first day of December, within the limitations prescribed in 6153
division (J) of this section. Any such company may also invest up 6154
to an additional five per cent of the total admitted assets of 6155
such company on the preceding thirty-first day of December, within 6156
the limitations prescribed in division (J) of this section, in 6157
loans or investments in small businesses having more than half of 6158
their assets or employees in this state and in venture capital 6159
firms having an office within this state, provided that, as a 6160
condition of a company making an investment in a venture capital 6161
firm, the firm must agree to use its best efforts to make 6162
investments, in an aggregate amount at least equal to the 6163
investment to be made by the company in that venture capital firm, 6164
in small businesses having their principal offices within this 6165
state and having either more than one-half of their assets within 6166
this state or more than one-half of their employees employed 6167
within this state.6168

       As used in division (I) of this section:6169

       (a) "Small businesses" means any corporation, partnership, 6170
proprietorship, or other entity that either does not have more 6171
than four hundred employees, or would qualify as a small business 6172
for the purpose of receiving financial assistance from small 6173
business investment companies licensed under the "Small Business 6174
Investment Act of 1958," 72 Stat. 689, 15 U.S.C.A. 661, as 6175
amended, and rules of the small business administration.6176

       (b) "Venture capital firms" means any corporation, 6177
partnership, proprietorship, or other entity, the principal 6178
business of which is or will be the making of investments in small 6179
businesses.6180

       (c) "Investments" means any equity investment, including 6181
limited partnership interests and other equity interests in which 6182
liability is limited to the amount of the investment, but does not 6183
include general partnership interests or other interests involving 6184
general liability.6185

       (2) In the event that, subsequent to being made under this 6186
division, a loan or investment is determined to have become 6187
qualified as a loan or investment under any of the divisions (A) 6188
to (F) of this section or under section 3925.05, 3925.06, or 6189
3925.20 of the Revised Code, the company may consider such loan or 6190
investment as held under such other statutory provision and such 6191
loan or investment shall no longer be considered as having been 6192
made under this division.6193

       (J) No domestic insurance company shall at any time have 6194
invested a sum exceeding five per cent of its admitted assets as 6195
of the preceding thirty-first day of December in the bonds, notes, 6196
debentures, other evidences of indebtedness, and stocks of a 6197
particular corporation, trust, partnership, or similar business 6198
entity, except for investments authorized under divisions (A) and 6199
(D)(2) of this section, and no domestic insurance company together 6200
with its subsidiary, if any, shall at any time own directly or 6201
indirectly more than twenty-five per cent of the outstanding 6202
bonds, notes, debentures, other evidences of indebtedness, and 6203
stocks of any corporation, except for investments authorized under 6204
divisions (A) and (D)(2) of this section.6205

       This section does not affect the propriety or legality of an 6206
investment made by such domestic insurance company which was in 6207
accordance with the laws in force at the time of the making of the 6208
investment.6209

       A business entity organized for the purpose provided in 6210
section 3925.01 of the Revised Code may seek permission from the 6211
superintendent of insurance to invest funds under Chapter 3906. of 6212
the Revised Code and may invest funds under that chapter if such 6213
permission is granted.6214

       (K) As used in divisions (K) and (L) of this section:6215

       (1) "Covered" means that an insurer owns, or can immediately 6216
acquire through the exercise of options, warrants, or conversion 6217
rights already owned, the underlying interest in order to fulfill 6218
or secure its obligation under the call option, cap, or floor it 6219
has written.6220

       (2)(a) "Derivative instrument" means an agreement, option, 6221
instrument, or a series or combination thereof of either of the 6222
following types:6223

       (i) To make or take delivery of, or assume or relinquish, a 6224
specified amount of one or more underlying interest, or to make a 6225
cash settlement in lieu thereof; 6226

       (ii) That has a price, performance, value, or cash flow based 6227
primarily upon the actual or expected price, level, performance, 6228
value, or cash flow of one or more underlying interests.6229

       (b) Derivative instruments include options, warrants, caps, 6230
floors, collars, swaps, forwards, futures, and any other 6231
agreements, options, or instruments substantially similar thereto 6232
or any series or combination thereof. 6233

       (3) "Derivative transaction" means a transaction involving 6234
the use of one or more derivative instruments.6235

       (4) "Hedging transaction" means a derivative transaction that 6236
is entered into and maintained to reduce either of the following:6237

       (a) The risk of economic loss due to a change in the value, 6238
yield, price, cash flow, or quantity of assets or liabilities that 6239
the insurer has acquired or incurred or anticipates acquiring or 6240
incurring;6241

       (b) The currency exchange rate risk or the degree of exposure 6242
as to assets or liabilities that an insurer has acquired or 6243
incurred or anticipates acquiring or incurring.6244

       (5) "Income generation" means a derivative transaction 6245
involving the writing of covered options, caps, or floors that is 6246
intended to generate income or enhance return.6247

       (6) "Replication transaction" means a derivative transaction 6248
that is intended to replicate the performance of one or more 6249
assets that an insurer is authorized to acquire under this 6250
chapter. "Replication transaction" does not include a derivative 6251
transaction that is entered into as a hedging transaction.6252

       (L)(1) Prior to an insurer entering into derivative 6253
transactions, the board of directors of the insurer shall approve 6254
a derivative use plan.6255

       (2) The derivative use plan shall require the insurer, when 6256
entering into a derivative transaction that carries a risk of 6257
losing more than the amount invested in a derivative, to establish 6258
a liability in its financial statements for the full amount of 6259
that potential loss.6260

       (3) Prior to entering into derivative transactions, an 6261
insurer shall file with the superintendent a copy of its 6262
derivative use plan and internal controls, for informational 6263
purposes. The insurer shall keep current the copy of its 6264
derivative use plan and internal controls filed with the 6265
superintendent. The insurer shall not enter into derivative 6266
transactions until thirty calendar days after the date on which 6267
the derivative use plan and internal controls is filed with the 6268
superintendent. This thirty-calendar-day period is to begin on the 6269
date that the superintendent receives the derivative use plan and 6270
internal controls.6271

       (4) The superintendent may adopt rules prescribing the form 6272
and content of derivative use plans, as well as any internal 6273
controls the superintendent considers necessary.6274

       (5) An insurer that engages in hedging transactions or 6275
replication transactions shall do both of the following:6276

       (a) Maintain its position in any outstanding derivative 6277
instrument used as part of a hedging transaction or replication 6278
transaction for as long as the hedging transaction or replication 6279
transaction remains in effect;6280

       (b) Demonstrate to the superintendent, upon request, that any 6281
derivative transaction entered into and involving hedging 6282
transaction or replication transaction is an effective hedging 6283
transaction or replication transaction. The insurer must be able 6284
to demonstrate this at the time the derivative transaction is 6285
entered into, and for as long as the transaction continues to be 6286
in place.6287

       (6) An insurer may not invest in, or use, a derivative 6288
instrument for any purpose other than a hedging transaction, 6289
income generation, or replication.6290

       (7) An insurer shall not invest in, or use a derivative 6291
instrument for purposes of income generation a sum exceeding in 6292
the aggregate five per cent of its admitted assets, as of the 6293
preceding thirty-first day of December.6294

       Sec. 3939.01.  (A) Any number of persons of lawful age, not 6295
less than ten in number, owning insurable property in this state, 6296
may associate themselves together for the purpose of insuring each 6297
other against the risk of direct physical loss or damage to 6298
property in this state, including theft of property in this state, 6299
except loss or damage to motor vehicles caused by collision. Any 6300
association organized under this section shall file with the 6301
department of insurance all policy forms currently in use by the 6302
association and all additions, deletions, or amendments to the 6303
policy forms at least thirty days prior to the use of the policy 6304
forms, additions, deletions, or amendments. Each filing under this 6305
division is deemed approved thirty days after the filing is 6306
received by the superintendent of insurance, unless the filing is 6307
disapproved by the superintendent during that thirty-day period.6308

       (B) Any association organized under this section, from time 6309
to time, may assess upon and collect from its members or other 6310
responsible parties sums of money that are necessary to pay 6311
expenses and losses that occur, or are anticipated to occur, from 6312
those covered perils. The assessment and collection of those sums 6313
of money shall be regulated by the constitution of the association 6314
adopted under section 3939.06 of the Revised Code. The 6315
constitution shall require the assessments to be made directly and 6316
specifically upon the members or other responsible parties, and to 6317
be paid by them out of any funds paid to or deposited with the 6318
association in anticipation of assessments. Any association 6319
organized under this section may borrow money for the payment of 6320
losses and associated expenses, but those loans shall not be made 6321
for a period of time that extends beyond the collection of the 6322
association's next assessment. 6323

       (C) Any association organized under this section may 6324
accumulate a surplus from its assessments. ThatExcept as provided 6325
in division (D) of this section, that surplus and all other funds 6326
received or accumulated in the course of business shall be 6327
invested under sections 3925.05 and 3925.08 of the Revised Code. 6328
Upon prior approval of the superintendent of insurance, the 6329
association may invest that surplus and those other funds in real 6330
estate for the association's convenient accommodation in the 6331
transaction of its business. The association shall not have at any 6332
one time more than ten per cent of its admitted assets invested in 6333
real estate.6334

       (D) An association organized under this section may seek 6335
permission from the superintendent of insurance to invest funds 6336
under Chapter 3906. of the Revised Code and may invest funds under 6337
that chapter if such permission is granted.6338

       (E) Any association organized under this section may insure 6339
farm buildings, residential and detached dwellings, outbuildings, 6340
churches, township buildings, grange buildings, farm machinery, 6341
equipment, and other farm personal property, household goods and 6342
personal effects, pleasure and utility vehicles, and other similar 6343
property, except motor vehicles titled or capable of being titled 6344
for use on public roads and property used exclusively for 6345
commercial or industrial purposes.6346

        The property described in this division may be classified 6347
only for the purpose of determining and levying assessments, and 6348
that property may be located within or without the limits of any 6349
municipal corporation. 6350

       (E)(F) Any association organized under this section may 6351
collect a charge on each contract of insurance in accordance with 6352
its constitution adopted under section 3939.06 of the Revised 6353
Code.6354

       (F)(G) Any association organized under this section may make 6355
contracts of reinsurance for the kinds of insurance authorized by 6356
sections 3939.01 to 3939.11 of the Revised Code or accept 6357
reinsurance on any portion of that insurance.6358

       Sec. 3953.15. The(A) Except as provided in division (B) of 6359
this section, the unearned premium reserve of a title insurance 6360
company shall be invested in accordance with sections 3925.05 to 6361
3925.08, inclusive, of the Revised Code.6362

       (B) A title insurance company may seek permission from the 6363
superintendent of insurance to invest funds under Chapter 3906. of 6364
the Revised Code and may invest funds under that chapter if such 6365
permission is granted.6366

       Section 2. That existing sections 1751.25, 3901.043, 6367
3901.045, 3901.17, 3901.32, 3901.321, 3901.33, 3901.34, 3901.341, 6368
3901.35, 3901.36, 3901.62, 3901.63, 3901.64, 3903.72, 3903.721, 6369
3903.83, 3907.14, 3913.01, 3913.34, 3915.04, 3915.071, 3915.072, 6370
3921.21, 3925.08, 3939.01, and 3953.15, and sections 3907.09, 6371
3907.10, 3907.11, and 3907.13 of the Revised Code are hereby 6372
repealed.6373

       Section 3.  Sections 3901.371 to 3907.378 of the Revised 6374
Code, as enacted in this act, shall take effect on January 1, 6375
2015. The first filing of the own risk and solvency assessment 6376
summary report, as required by section 3901.375 of the Revised 6377
Code, shall be in 2015.6378

       Section 4. The intent of the General Assembly, in enacting 6379
this act is to protect and to further the interests of insureds, 6380
creditors, and the general public by providing, with minimum 6381
interference with management initiative and judgment, prudent 6382
standards for the development and administration of insurer 6383
investment programs. 6384

       Section 5.  This act shall be known as the "Ohio Insurer 6385
Investment Act." 6386

       Section 6.  The Superintendent of Insurance shall adopt rules 6387
in accordance with Chapter 119. of the Revised Code to implement 6388
the amendments to sections 3901.62, 3901.63, and 3901.64 of the 6389
Revised Code as enacted in this act and to implement new sections 6390
3901.621 and 3901.631 of the Revised Code as enacted in this act. 6391
It is the intent of the General Assembly in mandating the adoption 6392
of these rules that the Superintendent adopt rules that are 6393
substantially similar to the Credit for Reinsurance Model 6394
Regulation, #786, as approved by the National Association of 6395
Insurance Commissioners on November 6, 2011. 6396

       Section 7.  Notwithstanding division (V)(13) of sections 6397
3907.14 and division (L)(3) of section 3925.08 of the Revised 6398
Code, an insurer that is engaged in derivative transactions, 6399
pursuant to a derivative use plan approved by that insurer's board 6400
of directors, prior to the effective date of this act, may 6401
continue to engage in derivative transactions pursuant to that 6402
derivative use plan for a period of no longer than one hundred 6403
twenty days after the effective date of this act.6404