As Introduced

130th General Assembly Regular Session 2013-2014

S. B. No. 140

Senator Bacon 

---

A BILL

To amend sections 1751.25, 3901.043, 3901.17,

1

3901.32, 3901.321, 3901.33, 3901.34, 3901.341,

2

3901.35, 3901.36, 3901.62, 3901.63, 3901.64,

3

3907.14, 3913.34, 3921.21, 3925.08, 3939.01, and

4

3953.15, to enact sections 3901.351, 3901.371,

5

3901.372, 3901.373, 3901.374, 3901.375, 3901.376,

6

3901.377, 3901.378, 3901.41, 3901.621, 3901.631,

7

and 3906.01 to 3906.15, and to repeal sections

8

3907.09, 3907.10, 3907.11, and 3907.13 of the

9

Revised Code to make changes to the law governing

10

insurance holding company systems, to eliminate

11

the petition requirement for domestic mutual

12

companies that wish to merge or consolidate with

13

another company, to eliminate the commission

14

created to hear and determine petitions for merger

15

and consolidation, to provide the requirements for

16

maintaining a risk management framework and

17

completing an own risk and solvency assessment,

18

and to provide guidance and instructions for

19

filing an own risk and solvency assessment summary

20

report with the superintendent of insurance.

21

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

Section 1.  That sections 1751.25, 3901.043, 3901.17,	22
3901.32, 3901.321, 3901.33, 3901.34, 3901.341, 3901.35, 3901.36,	23
3901.62, 3901.63, 3901.64, 3907.14, 3913.34, 3921.21, 3925.08,	24
3939.01, and 3953.15 be amended and sections 3901.351, 3901.371,	25
3901.372, 3901.373, 3901.374, 3901.375, 3901.376, 3901.377,	26
3901.378, 3901.41, 3901.621, 3901.631, 3906.01, 3906.02, 3906.03,	27
3906.04, 3906.05, 3906.06, 3906.07, 3906.08, 3906.09, 3906.10,	28
3906.11, 3906.12, 3906.13, 3906.14, and 3906.15 of the Revised	29
Code be enacted to read as follows:	30

Sec. 1751.25. The(A) Except as provided in division (B) of	31
this section, the funds of a health insuring corporation shall be	32
invested only in securities or other investments or assets that	33
constitute permissible investments under section 1751.26 or	34
3925.08 of the Revised Code.	35

(B) A health insuring corporation may seek permission from	36
the superintendent of insurance to invest funds under Chapter	37
3906. of the Revised Code and may invest funds under that chapter	38
if such permission is granted.	39

Sec. 3901.043.  The superintendent of insurance may adopt	40
rules in accordance with Chapter 119. of the Revised Code to	41
establish reasonable fees for any service or transaction performed	42
by the department of insurance pursuant to section 1751.03,	43
3901.321, 3901.341, 3907.09, 3907.10, 3907.11, 3907.12, 3911.011,	44
3913.40, 3915.14, 3917.06, 3918.07, 3923.02, 3935.04, 3937.03, or	45
3953.28 of the Revised Code or any provision in sections 3913.01	46
to 3913.23 or in Chapter 3905. of the Revised Code, if no fee is	47
otherwise provided under Title XVII or XXXIX of the Revised Code	48
for such service or transaction. Any fee collected pursuant to	49
those rules shall be paid into the state treasury to the credit of	50
the department of insurance operating fund.	51

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

52

(1) "Captive insurer" has the meaning defined in section	53
3905.36 of the Revised Code.	54

(2) "Insurer" includes, but is not limited to, any person	55
that is an affiliate of or affiliated with the insurer, as defined	56
in division (A) of section 3901.32 of the Revised Code, and any	57
person that is a subsidiary of the insurer as defined in division	58
(F) of section 3901.32 of the Revised Code.	59

(3) "Laws of this state relating to insurance" has the	60
meaning defined in division (A)(1) of section 3901.04 of the	61
Revised Code.	62

(4) "Person" has the meaning defined in division (A) of	63
section 3901.19 of the Revised Code.	64

(5) "Home state" has the same meaning as in section 3905.30	65
of the Revised Code.	66

(B) Any of the following acts in this state, effected by mail	67
or otherwise, by any foreign or alien insurer not authorized to	68
transact business within this state, any nonresident person acting	69
on behalf of an insurer, or any nonresident insurance agent	70
subjects the insurer, person, or agent to the exercise of personal	71
jurisdiction over the insurer, person, or agent to the extent	72
permitted by the constitutions of this state and of the United	73
States:	74

(1) Issuing or delivering contracts of insurance to residents	75
of this state or to corporations authorized to do business	76
therein;	77

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

78

(3) Soliciting, taking, or receiving any application for	79
insurance;	80

(4) Receiving or collecting any premium, commission,	81
membership fee, assessment, dues, or other consideration for any	82
insurance contract or any part thereof;	83

(5) Disseminating information as to coverage or rates,	84
forwarding applications, inspecting risks, fixing rates,	85
investigating or adjusting claims or losses, or transacting any	86
matters subsequent to effecting a contract of insurance and	87
arising out of it;	88

(6) Doing any kind of business recognized as constituting the	89
doing of an insurance business under Title XXXIX of the Revised	90
Code or subject to regulation by the superintendent of insurance	91
under the laws of this state relating to insurance.	92

Any such act shall be considered to be the doing of an	93
insurance business in this state by such insurer, person, or agent	94
and shall be its agreement that service of any lawful subpoena,	95
notice, order, or process is of the same legal force and validity	96
as personal service of the subpoena, notice, order, or process in	97
this state upon the insurer, person, or agent.	98

(C) Service of process in judicial proceedings shall be as	99
provided by the Rules of Civil Procedure. Service in or out of	100
this state of notice, orders, or subpoenas in administrative	101
proceedings before the superintendent shall be as provided in	102
section 3901.04 of the Revised Code.	103

(D) Service of any notice, order, subpoena, or process in any	104
such action, suit, or proceeding shall, in addition to the manner	105
provided in division (C) of this section, be valid if served upon	106
any person within this state who, in this state on behalf of such	107
insurer, person, or agent is or has been:	108

(1) Soliciting, procuring, effecting, or negotiating for	109
insurance;	110

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

111

(3) Collecting or receiving any premium, membership fees,	112
assessment, dues, or other consideration for insurance;	113

(4) Disseminating information as to coverage or rates,	114
forwarding applications, inspecting risks, fixing rates,	115
investigating or adjusting claims or losses, or transacting any	116
matters subsequent to effecting a contract of insurance and	117
arising out of it.	118

(E) Nothing in this section shall limit or abridge the right	119
to serve any subpoena, order, process, notice, or demand upon any	120
insurer, person, or agent in any other manner permitted by law.	121

(F) Every person investigating or adjusting any loss or claim	122
under a policy of insurance not excepted under division (I) of	123
this section and issued by any such insurer and covering a subject	124
of insurance that was resident, located, or to be performed in	125
this state at the time of issuance shall immediately report the	126
policy to the superintendent.	127

(G) If this state is the home state of the insured, each such	128
insurer that does any of the acts set forth in division (B) of	129
this section shall be subject to the requirements of section	130
3905.36 of the Revised Code.	131

(H) No contract of insurance effected in this state by mail	132
or otherwise by any such insurer is enforceable by the insurer.	133

(I) This section does not apply to:

134

(1) Insurance obtained pursuant to sections 3905.30 to	135
3905.36 of the Revised Code;	136

(2) The transaction of reinsurance by insurers;

137

(3) Transactions in this state involving a policy of group	138
life or group accident and sickness insurance solicited, written,	139
and delivered outside this state;	140

(4) Transactions involving contracts of insurance	141
independently procured through negotiations occurring entirely	142
outside this state which are reported and the tax is paid in	143
accordance with section 3905.36 of the Revised Code;	144

(5) An attorney at law acting on behalf of the attorney's	145
clients in the adjustment of claims or losses;	146

(6) Ocean marine insurance;

147

(7) Transactions involving policies issued by a captive	148
insurer.	149

Sec. 3901.32.  As used in sections 3901.32 to 3901.37 of the	150
Revised Code:	151

(A) "Affiliate of" or "affiliated with" a specific person	152
means a person that, directly or indirectly, through one or more	153
intermediaries, controls, is controlled by, or is under common	154
control with, the person specified.	155

(B) "Control," including "controlling," "controlled by," and	156
"under common control with," means the possession, direct or	157
indirect, of the power to direct or cause the direction of the	158
management and policies of a person, whether through the ownership	159
of voting securities, by contract other than a commercial contract	160
for goods or nonmanagement services, or otherwise, unless the	161
power is the result of an official position with or corporate	162
office held by the person. Control shall be presumed to exist if	163
any person, directly or indirectly, owns, controls, holds with the	164
power to vote, or holds proxies representing, ten per cent or more	165
of the voting securities of any other person. This presumption may	166
be rebutted by a showing made in the manner provided in division	167
(J) of section 3901.33 of the Revised Code that control does not	168
exist in fact. The superintendent of insurance may determine,	169
after furnishing all persons in interest notice and opportunity to	170
be heard and making specific findings of fact to support such	171
determination, that control exists in fact, notwithstanding the	172
absence of a presumption to that effect.	173

(C) "Enterprise risk" means any activity, circumstance,	174
event, or series of events involving one or more affiliates of an	175
insurer that, if not remedied promptly, is likely to have a	176
material adverse effect on the financial condition or liquidity of	177
the insurer or its insurance holding company system as a whole.	178
"Enterprise risk" includes anything that would cause the insurer's	179
risk-based capital to fall into company action level as set forth	180
in section 3903.83 of the Revised Code or would cause the insurer	181
to be in a hazardous financial condition.	182

(D) "Insurance holding company system" means two or more	183
affiliated persons, one or more of which is an insurer.	184

(D)(E) "Insurer" means any person engaged in the business of	185
insurance, guaranty, or membership, an inter-insurance exchange, a	186
mutual or fraternal benefit society, or a health insuring	187
corporation, excepting. "Insurer" does not include any agency,	188
authority, or instrumentality of the United States, its	189
possessions and territories, the Commonwealth of Puerto Rico, the	190
District of Columbia, or a state or political subdivision of a	191
state.	192

(E)(F) "Person" means an individual, a corporation, a	193
partnership, an association, a joint stock company, a trust, an	194
unincorporated organization, any similar entity, or any	195
combination of the foregoing acting in concert.	196

(F)(G) "Security holder" of a specified person is one who	197
owns any security of such person, including common stock,	198
preferred stock, debt obligations, and any other security	199
convertible into or evidencing the right to acquire, any of the	200
foregoing.	201

(H) "Subsidiary" of a specified person is an affiliate	202
controlled by such person, directly or indirectly, through one or	203
more intermediaries.	204

(G)(I) "Voting security" includes any security convertible	205
into or evidencing a right to acquire a voting security.	206

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

207

(1) "Acquiring party" means any person by whom or on whose	208
behalf a merger or other acquisition of control is to be effected.	209

(2) "Domestic insurer" includes any person controlling a	210
domestic insurer unless the person, as determined by the	211
superintendent of insurance, is either directly or through its	212
affiliates primarily engaged in business other than the business	213
of insurance.	214

(3) "Person" does not include any securities broker holding,	215
in the usual and customary broker's function, less than twenty per	216
cent of the voting securities of an insurance company or of any	217
person that controls an insurance company.	218

(B)(1) Subject to compliance with division (B)(2) of this	219
section, no person other than the issuer shall do any of the	220
following if, as a result, the person would, directly or	221
indirectly, including by means of conversion or the exercise of	222
any right to acquire, be in control of a domestic insurer:	223

(a) Make a tender offer for any voting security of a domestic	224
insurer;	225

(b) Make a request or invitation for tenders of any voting	226
security of a domestic insurer;	227

(c) Enter into any agreement to exchange securities of a	228
domestic insurer;	229

(d) Seek to acquire or acquire, in the open market or	230
otherwise, any voting security of a domestic insurer;	231

(e) Enter into an agreement to merge with, or otherwise to	232
acquire control of, a domestic insurer.	233

(2)(a) No person shall engage in any transaction described in	234
division (B)(1) of this section, unless all of the following	235
conditions are met:	236

(i) The person has filed with the superintendent of insurance	237
a statement containing the information required by division (C) of	238
this section;	239

(ii) The person has sent the statement to the domestic	240
insurer;	241

(iii) The offer, request, invitation, agreement, or	242
acquisition has been approved by the superintendent in the manner	243
provided in division (F) of this section.	244

(b) The requirements of division (B)(2)(a) of this section	245
shall be met at the time any offer, request, or invitation is	246
made, or any agreement is entered into, or prior to the	247
acquisition of the securities if no offer or agreement is	248
involved.	249

(3) Any controlling person of a domestic insurer seeking to	250
divest its controlling interest in the domestic insurer shall file	251
a confidential notice of its proposed divestiture with the	252
superintendent at least thirty days prior to the cessation of	253
control, and provide a copy of the confidential notice to the	254
insurer. The superintendent may require the person seeking to	255
divest the controlling interest to file for and obtain approval of	256
the transaction. The information shall remain confidential until	257
the conclusion of the transaction unless the superintendent, in	258
the superintendent's discretion, determines that the confidential	259
treatment will interfere with enforcement of this section. If the	260
statement required by division (B)(2) of this section is otherwise	261
filed with the superintendent, this division shall not apply.	262

(C) The statement required by division (B)(2) of this section	263
shall be made under oath or affirmation, and shall contain all of	264
the following information:	265

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

266

(2) If the acquiring party is an individual, the individual's	267
principal occupation and all offices and positions held during the	268
past five years, and any conviction of crimes other than minor	269
traffic violations during the past ten years;	270

(3) If the acquiring party is not an individual, a report of	271
the nature of its business operations during the past five years	272
or for such lesser period as the acquiring party and any of its	273
predecessors shall have been in existence; an informative	274
description of the business intended to be done by the acquiring	275
party and the acquiring party's subsidiaries; and a list of all	276
individuals who are or who have been selected to become directors	277
or executive officers of the acquiring party, who perform or will	278
perform functions appropriate to such positions. The list shall	279
include for each individual the information required by division	280
(C)(2) of this section.	281

(4) The source, nature, and amount of the consideration used	282
or to be used in effecting the merger or other acquisition of	283
control, a description of any transaction in which funds were or	284
are to be obtained for any such purpose, including any pledge of	285
the domestic insurer's stock, or the stock of any of its	286
subsidiaries or controlling affiliates, and the identity of	287
persons furnishing such consideration;	288

(5) Fully audited financial information as to the earnings	289
and financial condition of each acquiring party for its preceding	290
five fiscal years, or for such lesser period as the acquiring	291
party and any of its predecessors shall have been in existence,	292
and similar unaudited information as of a date not earlier than	293
ninety days prior to the filing of the statement;	294

(6) Any plans or proposals which each acquiring party may	295
have to liquidate such domestic insurer, to sell its assets or	296
merge or consolidate it with any person, or to make any other	297
material change in its business or corporate structure or	298
management;	299

(7) The number of shares of any security of such issuer or	300
such controlling person that each acquiring party proposes to	301
acquire, and the terms of the offer, request, invitation,	302
agreement, or acquisition, and a statement as to the method by	303
which the fairness of the proposal was determined;	304

(8) The amount of each class of any security of such issuer	305
or such controlling person which is beneficially owned or	306
concerning which there is a right to acquire beneficial ownership	307
by each acquiring party;	308

(9) A full description of any contracts, arrangements, or	309
understandings with respect to any security of such issuer or such	310
controlling person in which any acquiring party is involved,	311
including but not limited to transfer of any of the securities,	312
joint ventures, loan or option arrangements, puts or calls,	313
guarantees of loans, guarantees against loss or guarantees of	314
profits, division of losses or profits, or the giving or	315
withholding of proxies. The description shall identify the persons	316
with whom such contracts, arrangements, or understandings have	317
been made.	318

(10) A description of the purchase of any security of such	319
issuer or such controlling person during the year preceding the	320
filing of the statement, by any acquiring party, including the	321
dates of purchase, names of the purchasers, and consideration paid	322
or agreed to be paid therefor;	323

(11) A description of any recommendations to purchase any	324
security of such issuer or such controlling person made during the	325
year preceding the filing of the statement, by any acquiring	326
party, or by anyone based upon interviews or at the suggestion of	327
the acquiring party;	328

(12) Copies of all tender offers for, requests, or	329
invitations for tenders of, exchange offers for, and agreements to	330
acquire or exchange any securities of such issuer or such	331
controlling person, and, if distributed, of additional	332
solicitation material relating thereto;	333

(13) The terms of any agreement, contract, or understanding	334
made with or proposed to be made with any broker or dealer as to	335
solicitation of securities of such issuer or such controlling	336
person for tender, and the amount of any fees, commissions, or	337
other compensation to be paid to brokers or dealers with regard	338
thereto;	339

(14) With respect to proposed affiliations between depository	340
institutions or any affiliate thereof, within the meaning of Title	341
I, section 104(c) of the "Gramm-Leach-Bliley Act," Pub. L. No.	342
106-102, 113 Stat. 1338 (1999), and a domestic insurer, the	343
proposed effective date of the acquisition or change of control;	344

(15) An agreement by the person required to file the	345
statement required by division (B) of this section that the person	346
will provide the annual registration required by division (K) of	347
section 3901.33 of the Revised Code for so long as the person has	348
control of the domestic insurer;	349

(16) An acknowledgment by the person required to file the	350
statement required by division (B) of this section that the person	351
and all subsidiaries within the person's control in the insurance	352
holding company system will provide information to the	353
superintendent upon request as necessary to evaluate enterprise	354
risk to the insurer;	355

(17) Such additional information as the superintendent may by	356
rule prescribe as necessary or appropriate for the protection of	357
policyholders of the domestic insurer or in the public interest.	358

(D)(1) If the person required to file the statement required	359
by division (B)(2) of this section is a partnership, limited	360
partnership, syndicate, or other group, the superintendent may	361
require that the information required by division (C) of this	362
section be furnished with respect to each partner of such	363
partnership or limited partnership, each member of such syndicate	364
or group, and each person that controls such partner or member. If	365
any such partner, member, or person is a corporation, or the	366
person required to file the statement is a corporation, the	367
superintendent may require that the information required by	368
division (C) of this section be furnished with respect to the	369
corporation, each officer and director of the corporation, and	370
each person that is directly or indirectly the beneficial owner of	371
more than ten per cent of the outstanding voting securities of the	372
corporation.	373

(2) If any material change occurs in the facts set forth in	374
the statement required by division (B)(2) of this section, an	375
amendment setting forth such change, together with copies of all	376
documents and other material relevant to the change, shall be	377
filed with the superintendent by the person subject to division	378
(B)(2) of this section and sent to the domestic insurer within two	379
business days after such person learns of the occurrence of the	380
material change.	381

(E) If any offer, request, invitation, agreement, or	382
acquisition described in division (B)(1) of this section is	383
proposed to be made by means of a registration statement under the	384
"Securities Act of 1933," 48 Stat. 74, 15 U.S.C.A. 78a, or in	385
circumstances requiring the disclosure of similar information	386
under the "Securities Exchange Act of 1934," 48 Stat. 881, 15	387
U.S.C.A. 78a, or under a state law requiring similar registration	388
or disclosure, the person required to file the statement required	389
by division (B)(2) of this section may use such documents in	390
furnishing the information required by that statement.	391

(F)(1) The superintendent shall approve any merger or other	392
acquisition of control described in division (B)(1) of this	393
section unless, after a public hearing, the superintendent finds	394
that any of the following apply:	395

(a) After the change of control, the domestic insurer would	396
not be able to satisfy the requirements for the issuance of a	397
license to write the line or lines of insurance for which it is	398
presently licensed;	399

(b) The effect of the merger or other acquisition of control	400
would be substantially to lessen competition in insurance in this	401
state or tend to create a monopoly;	402

(c) The financial condition of any acquiring party is such as	403
might jeopardize the financial stability of the domestic insurer,	404
or prejudice the interests of its policyholders;	405

(d) The plans or proposals that the acquiring party has to	406
liquidate the domestic insurer, sell its assets, or consolidate or	407
merge it with any person, or to make any other material change in	408
its business or corporate structure or management, are unfair and	409
unreasonable to policyholders of the domestic insurer and not in	410
the public interest;	411

(e) The competence, experience, and integrity of those	412
persons that would control the operation of the domestic insurer	413
are such that it would not be in the interest of policyholders of	414
the domestic insurer and of the public to permit the merger or	415
other acquisition of control;	416

(f) The acquisition is likely to be hazardous or prejudicial	417
to the insurance-buying public.	418

(2)(a) Chapter 119. of the Revised Code, except for section	419
119.09 of the Revised Code, applies to any hearing held under	420
division (F)(1) of this section, including the notice of the	421
hearing, the conduct of the hearing, the orders issued pursuant to	422
it, the review of the orders, and all other matters relating to	423
the holding of the hearing, but only to the extent that Chapter	424
119. of the Revised Code is not inconsistent or in conflict with	425
this section.	426

(b) The notice of a hearing required under this division	427
shall be transmitted by personal service, certified mail, e-mail,	428
or any other method designed to ensure and confirm receipt of the	429
notice, to the persons and addresses designated to receive notices	430
and correspondence in the information statement filed under	431
division (B)(2) of this section. Confirmation of receipt of the	432
notice, including electronic "Read Receipt" confirmation, shall	433
constitute evidence of compliance with the requirement of this	434
section. The notice of hearing shall include the reasons for the	435
proposed action and a statement informing the acquiring party that	436
the party is entitled to a hearing. The notice also shall inform	437
the acquiring party that at the hearing the acquiring party may	438
appear in person, by attorney, or by such other representative as	439
is permitted to practice before the superintendent, or that the	440
acquiring party may present its position, arguments, or	441
contentions in writing, and that at the hearing the acquiring	442
party may present evidence and examine witnesses appearing for and	443
against the acquiring party. A copy of the notice also shall be	444
transmitted to attorneys or other representatives of record	445
representing the acquiring party.	446

(c) The hearing shall be held at the offices of the	447
superintendent within ten calendar days, but not earlier than	448
seven calendar days, of the date of transmission of the notice of	449
hearing by any means, unless it is postponed or continued; but in	450
no event shall the hearing be held unless notice is received at	451
least three days prior to the hearing. The superintendent may	452
postpone or continue the hearing upon receipt of a written request	453
by an acquiring party, or upon the superintendent's motion,	454
provided, however, a hearing in connection with a proposed change	455
of control involving a depository institution or any affiliate	456
thereof, within the meaning of Title I, section 104(c) of the	457
"Gramm-Leach-Bliley Act," Pub. L. No. 106-102, 113 Stat. 1338	458
(1999), and a domestic insurer, may be postponed or continued only	459
upon the request of an acquiring party, or upon the	460
superintendent's motion when the acquiring party agrees in writing	461
to extend the sixty-day period provided for in section 104(c) of	462
the "Gramm-Leach-Bliley Act," by a number of days equal to the	463
number of days of such postponement or continuance.	464

(d) For the purpose of conducting any hearing held under this	465
section, the superintendent may require the attendance of such	466
witnesses and the production of such books, records, and papers as	467
the superintendent desires, and may take the depositions of	468
witnesses residing within or without the state in the same manner	469
as is prescribed by law for the taking of depositions in civil	470
actions in the court of common pleas, and for that purpose the	471
superintendent may, and upon the request of an acquiring party	472
shall, issue a subpoena for any witnesses or a subpoena duces	473
tecum to compel the production of any books, records, or papers,	474
directed to the sheriff of the county where such witness resides	475
or is found, which shall be served and returned in the same manner	476
as a subpoena in a criminal case is served and returned. The fees	477
of the sheriff shall be the same as that allowed in the court of	478
common pleas in criminal cases. Witnesses shall be paid the fees	479
and mileage provided for under section 119.094 of the Revised	480
Code. Fees and mileage shall be paid from the fund in the state	481
treasury for the use of the superintendent in the same manner as	482
other expenses of the superintendent are paid. In any case of	483
disobedience or neglect of any subpoena served on any person or	484
the refusal of any witness to testify in any matter regarding	485
which the witness may lawfully be interrogated, the court of	486
common pleas of any county where such disobedience, neglect, or	487
refusal occurs or any judge thereof, on application by the	488
superintendent, shall compel obedience by attachment proceedings	489
for contempt, as in the case of disobedience of the requirements	490
of a subpoena issued from the court or a refusal to testify	491
therein.	492

In any hearing held under this section, a record of the	493
testimony, as provided by stenographic means or by use of audio	494
electronic recording devices, as determined by the superintendent,	495
and other evidence submitted shall be taken at the expense of the	496
superintendent. The record shall include all of the testimony and	497
other evidence, and rulings on the admissibility thereof,	498
presented at the hearing.	499

The superintendent shall pass upon the admissibility of	500
evidence, but a party to the proceedings may at that time object	501
to the rulings of the superintendent, and if the superintendent	502
refuses to admit evidence, the party offering the evidence shall	503
proffer the evidence. The proffer shall be made a part of the	504
record of the hearing.	505

In any hearing held under this section, the superintendent	506
may call any person to testify under oath as upon	507
cross-examination. The superintendent, or any one delegated by the	508
superintendent to conduct a hearing, may administer oaths or	509
affirmations.	510

In any hearing under this section, the superintendent may	511
appoint a hearing officer to conduct the hearing; the hearing	512
officer has the same powers and authority in conducting the	513
hearing as is granted to the superintendent. The hearing officer	514
shall have been admitted to the practice of law in the state and	515
be possessed of any additional qualifications as the	516
superintendent requires. The hearing officer shall submit to the	517
superintendent a written report setting forth the hearing	518
officer's finding of fact and conclusions of law and a	519
recommendation of the action to be taken by the superintendent. A	520
copy of the written report and recommendation shall, within seven	521
days of the date of filing thereof, be served upon the acquiring	522
party or the acquiring party's attorney or other representative of	523
record, by personal service, certified mail, e-mail, or any other	524
method designed to ensure and confirm receipt of the report. The	525
acquiring party may, within three days of receipt of the copy of	526
the written report and recommendation, file with the	527
superintendent written objections to the report and	528
recommendation, which objections the superintendent shall consider	529
before approving, modifying, or disapproving the recommendation.	530
The superintendent may grant extensions of time to the acquiring	531
party within which to file such objections. No recommendation of	532
the hearing officer shall be approved, modified, or disapproved by	533
the superintendent until after three days following the service of	534
the report and recommendation as provided in this section. The	535
superintendent may order additional testimony to be taken or	536
permit the introduction of further documentary evidence. The	537
superintendent may approve, modify, or disapprove the	538
recommendation of the hearing officer, and the order of the	539
superintendent based on the report, recommendation, transcript of	540
testimony, and evidence, or the objections of the acquiring party,	541
and additional testimony and evidence shall have the same effect	542
as if the hearing had been conducted by the superintendent. No	543
such recommendation is final until confirmed and approved by the	544
superintendent as indicated by the order entered in the record of	545
proceedings, and if the superintendent modifies or disapproves the	546
recommendations of the hearing officer, the reasons for the	547
modification or disapproval shall be included in the record of	548
proceedings.	549

After the order is entered, the superintendent shall transmit	550
in the manner and by any of the methods set forth in division	551
(F)(2)(b) of this section a certified copy of the order and a	552
statement of the time and method by which an appeal may be	553
perfected. A copy of the order shall be mailed to the attorneys or	554
other representatives of record representing the acquiring party.	555

(e) An order of disapproval issued by the superintendent may	556
be appealed to the court of common pleas of Franklin county by	557
filing a notice of appeal with the superintendent and a copy of	558
the notice of appeal with the court, within fifteen calendar days	559
after the transmittal of the copy of the order of disapproval. The	560
notice of appeal shall set forth the order appealed from and the	561
grounds for appeal, in accordance with section 119.12 of the	562
Revised Code.	563

(3) The superintendent may retain at the acquiring party's	564
expense any attorneys, actuaries, accountants, and other experts	565
not otherwise a part of the superintendent's staff as may be	566
reasonably necessary to assist the superintendent in reviewing the	567
proposed acquisition of control.	568

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

569

(1) Any transaction that is subject to section 3907.09,	570
3907.10, 3907.11, or 3921.14, or sections 3925.27 to 3925.31,	571
3941.35 to 3941.46, or section 3953.19 of the Revised Code;	572

(2) Any offer, request, invitation, agreement, or acquisition	573
that the superintendent by order exempts from this section on	574
either of the following bases:	575

(a) It has not been made or entered into for the purpose and	576
does not have the effect of changing or influencing the control of	577
a domestic insurer;	578

(b) It is not otherwise comprehended within the purposes of	579
this section.	580

(H) Nothing in this section or in any other section of Title	581
XXXIX of the Revised Code shall be construed to impair the	582
authority of the attorney general to investigate or prosecute	583
actions under any state or federal antitrust law with respect to	584
any merger or other acquisition involving domestic insurers.	585

(I) In connection with a proposed change of control involving	586
a depository institution or any affiliate thereof, within the	587
meaning of Title I, section 104(c) of the "Gramm-Leach-Bliley	588
Act," Pub. L. No. 106-102, 113 Stat. 1338 (1999), and a domestic	589
insurer, not later than sixty days after the date of the	590
notification of the proposed change in control submitted pursuant	591
to division (B)(2) of this section, the superintendent shall make	592
any determination that the person acquiring control of the insurer	593
shall maintain or restore the capital of the insurer to the level	594
required by the laws and regulations of this state.	595

Sec. 3901.33.  (A) Every insurer that is authorized to do	596
business in this state and that is a member of an insurance	597
holding company system shall register with the superintendent of	598
insurance, except a foreign insurer subject to disclosure	599
requirements and standards adopted by statute or regulation in the	600
jurisdiction of its domicile that are substantially similar to	601
those contained in this section and section 3901.341 of the	602
Revised Code. Every insurer that is subject to registration under	603
this section shall register initially not later than December 31,	604
1971, or within thirty days after it becomes subject to	605
registration, whichever is later, unless the superintendent for	606
good cause shown extends the time for registration, and then	607
within the extended time, and every such insurer shall register	608
annually after its initial registration. The superintendent may	609
require any authorized insurer that is a member of a holding	610
company system that is not subject to registration under this	611
section to furnish a copy of the registration statement or other	612
information filed by the insurance company with the insurance	613
regulatory authority of domiciliary jurisdiction.	614

(B) Every insurer subject to registration shall file a	615
registration statement with the superintendent on a form and in a	616
format provided by the superintendent, which shall contain current	617
information about all of the following:	618

(1) The capital structure, general financial condition,	619
ownership, and management of the insurer and any person	620
controlling the insurer;	621

(2) The identity of every member of the insurance holding	622
company system;	623

(3) The following agreements in force, relationships	624
subsisting, and transactions currently outstanding between the	625
insurer and its affiliates:	626

(a) Loans, other investments, or purchases, sales or	627
exchanges of securities of the affiliates by the insurer or of the	628
insurer by its affiliates;	629

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

630

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

631

(d) Guarantees or undertakings for the benefit of an	632
affiliate that result in an actual contingent exposure of the	633
insurer's assets to liability, other than insurance contracts	634
entered into in the ordinary course of the insurer's business;	635

(e) All management and service contracts and all cost-sharing	636
arrangements;	637

(f) Reinsurance agreements;

638

(g) Dividends and other distributions to shareholders;

639

(h) Consolidated tax allocation agreements.

640

(4) Any pledge of the insurer's stock, including stock of any	641
subsidiary or controlling affiliate, for a loan made to any member	642
of the insurance holding company system;	643

(5) If requested by the superintendent, financial statements	644
of an insurance holding company system, including all affiliates.	645
Financial statements may include annual audited financial	646
statements filed with the United States securities and exchange	647
commission pursuant to the "Securities Act of 1933," 48 Stat. 74,	648
15 U.S.C. 77a, or the "Securities Exchange Act of 1934," 48 Stat.	649
881, 15 U.S.C. 78a. The insurer may satisfy the request by	650
providing the superintendent with the most recently filed parent	651
corporation financial statements that have been filed with the	652
securities and exchange commission.	653

(6) Other matters concerning transactions between registered	654
insurers and any affiliates as may be included from time to time	655
in any registration forms adopted or approved by the	656
superintendent;	657

(7) Statements that the insurer's board of directors oversees	658
corporate governance and internal controls and that the insurer's	659
officers or senior management have approved, implemented, and	660
continue to maintain and monitor corporate governance and internal	661
control procedures;	662

(8) Any other information required by the superintendent by	663
rule or regulation.	664

(C) Each registration statement filed pursuant to division	665
(B) of this section shall summarize the information that has	666
changed from the prior registration statement filed pursuant to	667
that division.	668

(D) No information need be disclosed on the registration	669
statement filed pursuant to division (B) of this section if the	670
information is not material for the purposes of this section.	671
Unless the superintendent by rule, regulation, or order provides	672
otherwise, sales, purchases, exchanges, loans or extensions of	673
credit, or investments involving one-half of one per cent or less	674
of an insurer's admitted assets as of the thirty-first day of	675
December next preceding shall not be deemed material for the	676
purposes of this section.	677

(E) Each registered insurer shall keep current the	678
information required to be disclosed in its registration statement	679
by reporting all material changes or additions on amendment forms	680
provided by the superintendent within fifteen days after the end	681
of the month in which it learns of each change or addition.	682

(F) The superintendent shall terminate the registration of	683
any insurer that demonstrates that it no longer is a member of an	684
insurance holding company system.	685

(G) The superintendent may require or allow two or more	686
affiliated insurers subject to registration under this section to	687
file a consolidated registration statement or consolidated reports	688
amending their consolidated registration statement or their	689
individual registration statements.	690

(H) The superintendent may allow an insurer that is	691
authorized to do business in this state and that is part of an	692
insurance holding company system to register on behalf of any	693
affiliated insurer that is required to register under division (A)	694
of this section and to file all information and material required	695
to be filed under this section.	696

(I) This section does not apply to any insurer, information,	697
or transaction if and to the extent that the superintendent by	698
rule, regulation, or order exempts it from this section.	699

(J) Any person may file with the superintendent a disclaimer	700
of affiliation with any authorized insurer or such a disclaimer	701
may be filed by the insurer or any member of an insurance holding	702
company system. The disclaimer shall fully disclose all material	703
relationships and bases for affiliation between the person and the	704
insurer as well as the basis for disclaiming the affiliation.	705
After a disclaimer has been filed, the insurer shall be relieved	706
of any duty to register or report under this section which may	707
arise out of the insurer's relationship with the person unless and	708
until the superintendent disallows the disclaimer. The	709
superintendent shall disallow such a disclaimer only in the manner	710
provided in Chapter 119. of the Revised Code.	711

(K) The ultimate controlling person of every insurer subject	712
to registration under this section also shall file an annual	713
enterprise risk report. The report shall, to the best of the	714
ultimate controlling person's knowledge and belief, identify the	715
material risks within the insurance holding company system that	716
could pose enterprise risk to the insurer. The ultimate	717
controlling person shall file the report with the lead state	718
commissioner of the insurance holding company system as determined	719
by the procedures within the financial analysis handbook adopted	720
by the national association of insurance commissioners.	721

(L) The failure to file any registration statement or any	722
amendment thereto or enterprise risk report required by this	723
section within the time specified for the filing is a violation of	724
this section.	725

Sec. 3901.34.  (A) Material transactions by registered	726
insurers with their affiliatesTransactions within an insurance	727
holding company system to which an insurer subject to registration	728
is a party shall be subject to the following standards:	729

(1) The terms shall be fair and reasonable.

730

(2) Charges or fees for services performed shall be	731
reasonable.	732

(3) Expenses incurred and payment received shall be allocated	733
to the insurer in conformity with customary insurance accounting	734
practices that are consistently applied.	735

(4) The books, accounts, and records of each party shall be	736
so maintained as to clearly and accurately disclose the precise	737
nature and details of the transactions including such accounting	738
information as is necessary to support the reasonableness of the	739
charges or fees to the respective parties.	740

(5) The insurer's surplus as regards policyholders following	741
any dividends or distributions to shareholder affiliates shall be	742
reasonable in relation to the insurer's outstanding liabilities	743
and adequate to its financial needs.	744

(6) Agreements for cost-sharing services and management	745
services shall include such provisions as required by the	746
superintendent of insurance in rule or regulation.	747

(B) For the purposes of this section, in determining whether	748
an insurer's surplus as regards policyholders is reasonable in	749
relation to the insurer's outstanding liabilities and adequate to	750
its financial needs, the following factors, among others, may be	751
considered:	752

(1) The size of the insurer as measured by its assets,	753
capital, surplus, reserves, premium writings, insurance in force,	754
and other appropriate criteria;	755

(2) The extent to which the insurer's business is diversified	756
among the several lines of insurance;	757

(3) The number and size of risks insured in each line of	758
business;	759

(4) The extent of the geographical dispersion of the	760
insurer's insured risks;	761

(5) The nature and extent of the insurer's reinsurance	762
program;	763

(6) The quality, diversification, and liquidity of the	764
insurer's investment portfolio;	765

(7) The recent past and projected future trend in the size of	766
the insurer's surplus as regards policyholders;	767

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

768

(9) The quality and liquidity of investments in subsidiaries.	769
The superintendent may discount any such investment or treat any	770
investment as a nonadmitted asset for purposes of determining the	771
adequacy of surplus as regards policyholders whenever the	772
investment so warrants.	773

(10) The quality of the insurer's earnings and the extent to	774
which the reported earnings include extraordinary items;	775

(11) The surplus as regards policyholders maintained by other	776
comparable insurers in respect of the factors enumerated in this	777
division.	778

(C) No insurer subject to registration under section 3901.33	779
of the Revised Code shall pay any extraordinary dividend or make	780
any other extraordinary distribution to its shareholders and the	781
declaration of any such dividend or distribution shall be	782
conditional and shall confer no rights upon shareholders until	783
thirty days after the superintendent has received notice of the	784
declaration thereof and has not within the thirty-day period	785
disapproved the dividend or distribution, or the superintendent	786
has approved the dividend or distribution within the thirty-day	787
period.	788

Prior to paying any dividend or distribution, the insurer	789
shall notify the superintendent on a form provided by the	790
superintendent for informational purposes within five business	791
days following its declaration of any dividend or distribution and	792
at least ten calendar days prior to payment of such dividend or	793
distribution, such ten-calendar-day period to be measured from the	794
date of the superintendent's receipt of the notice.	795

For the purposes of this section, an extraordinary dividend	796
or distribution includes any dividend or distribution of cash or	797
other property, whose fair market value, together with that of	798
other dividends or distributions made within the preceding twelve	799
months, exceeds the greater of ten per cent of the insurer's	800
surplus as regards policyholders as of the thirty-first day of	801
December next preceding, or the net income of the insurer for the	802
twelve-month period ending the thirty-first day of December next	803
preceding, but shall not include pro rata distributions of any	804
class of the insurer's own securities.	805

Any dividend or distribution paid from other than earned	806
surplus shall be considered an extraordinary dividend or	807
extraordinary distribution. For the purposes of this section,	808
"earned surplus" means an amount equal to an insurer's unassigned	809
funds as set forth in its most recent statutory financial	810
statement submitted to the superintendent, including net	811
unrealized capital gains and losses or revaluation of assets.	812

Sec. 3901.341.  (A) No insurer subject to registration under	813
section 3901.33 of the Revised Code shall enter into any of the	814
following transactions with any person in its insurance holding	815
company system, including amendments or modifications of affiliate	816
agreements previously filed under this section that are subject to	817
the materiality standards contained in divisions (A)(1) to (5) of	818
this section, until thirty days after the superintendent of	819
insurance has received, for histhe superintendent's review,	820
written notice of the insurer's intention to enter into the	821
transaction and if, during that period, the superintendent has not	822
disapproved the proposed transaction. The notice for amendments or	823
modifications shall include the reasons for the change and the	824
financial impact on the domestic insurer. Informal notice shall be	825
reported to the superintendent within thirty days after	826
termination of a previously filed agreement. These requirements	827
shall apply to all of the following transactions:	828

(1) Any sale, purchase, exchange of assets, loan, extension	829
of credit, guarantee, or investment, if the transaction equals or	830
exceeds, with respect to insurers other than life insurers, the	831
lesser of three per cent of the insurer's admitted assets as of	832
the thirty-first day of December next preceding or twenty-five per	833
cent of the insurer's surplus as regards policyholders as of the	834
thirty-first day of December next preceding or, with respect to	835
life insurers, three per cent of the insurer's admitted assets as	836
of the thirty-first day of December next preceding;	837

(2) Any loan or extension of credit to any person that is not	838
an affiliate of the insurer, if both of the following apply:	839

(a) The loan or extension of credit equals or exceeds, with	840
respect to insurers other than life insurers, the lesser of three	841
per cent of the insurer's admitted assets as of the thirty-first	842
day of December next preceding or twenty-five per cent of the	843
insurer's surplus as regards policyholders as of the thirty-first	844
day of December next preceding or, with respect to life insurers,	845
three per cent of the insurer's admitted assets as of the	846
thirty-first day of December next preceding.	847

(b) The insurer makes the loan or extends the credit with an	848
agreement or understanding that the proceeds of the transaction,	849
in whole or in substantial part, are to be used to make loans or	850
extend credit to, to purchase assets of, or to make investments	851
in, any affiliate of the insurer.	852

(3) Reinsurance agreements or modifications of such	853
agreementsincluding both of the following:	854

(a) All reinsurance pooling agreements;

855

(b) Agreements in which the reinsurance premium or the change	856
in the insurer's liabilities, or the projected reinsurance premium	857
or a change in the insurer's liabilities in any of the next three	858
years, equals or exceeds five per cent of the insurer's surplus as	859
regards policyholders as of the thirty-first day of December next	860
preceding. Division	861

Division (A)(3) of this section also applies to reinsurance	862
agreements that may require as consideration the transfer of	863
assets from an insurer to a nonaffiliate, if the insurer and	864
nonaffiliate have an agreement or understanding that any portion	865
of the assets will be transferred to one or more affiliates of the	866
insurer.	867

(4) All management agreements, service contracts, tax	868
allocation agreements, guarantees, and cost-sharing arrangements;	869

(5) Any other material transaction that the superintendent,	870
pursuant to rules adopted in accordance with Chapter 119. of the	871
Revised Code, determines may render the insurer's surplus as	872
regards policyholders unreasonable in relation to the insurer's	873
outstanding liabilities and inadequate to its financial needs.	874

(B) In reviewing transactions under division (A) of this	875
section, the superintendent shall consider whether the terms of	876
the transaction are fair and reasonable and whether the	877
transaction may adversely affect the interests of policyholders.	878

(C) Any transaction or agreement described in division (A) of	879
this section that is not disapproved by the superintendent in	880
accordance with that division is effective as of the effective	881
date set forth in the notice required under this section.	882

(D) The superintendent, pursuant to rules adopted in	883
accordance with Chapter 119. of the Revised Code, may designate	884
certain types of transactions that need not be submitted for	885
review under division (A) of this section, if those transactions	886
would not have a significant impact on the financial condition of	887
an insurer.	888

(E) A domestic insurer shall not enter into any transaction	889
described in division (A) of this section with members of its	890
insurance holding company system if the transaction is part of a	891
plan or series of similar transactions and if the purpose of	892
entering into the separate transactions is to avoid the review	893
required under division (A) of this section that would otherwise	894
occur. If the superintendent determines that the insurer, within a	895
twelve-month period, entered into those separate transactions for	896
that purpose, hethe superintendent may take any action authorized	897
by section 3901.37 of the Revised Code.	898

(F) A domestic insurer shall give written notice to the	899
superintendent, within thirty days after making an investment, if	900
the investment is made in a corporation and the total investment	901
in the corporation by the insurance holding company system exceeds	902
ten per cent of the voting securities of the corporation.	903

(G) Nothing in division (A) of this section shall be	904
construed to authorize or permit any transaction that would	905
otherwise be contrary to law.	906

Sec. 3901.35.  (A)(1) In addition to the powers whichthat	907
the superintendent has under sections 3901.01 to 3901.31,	908
inclusive, of the Revised Code, relating to the examination of	909
insurers, the superintendent of insurance, subject to sections	910
119.01 to 119.13, inclusive, of the Revised Code, shall also have	911
the power to orderexamine any insurer registered under section	912
3901.33 of the Revised Code and its affiliates to ascertain the	913
financial condition of the insurer, including the enterprise risk	914
to the insurer by the ultimate controlling party, or by any entity	915
or combination of entities within the insurance holding company	916
system, or by the insurance holding company system on a	917
consolidated basis.	918

(2) The superintendent of insurance may order any insurer	919
registered under section 3901.33 of the Revised Code to produce	920
for examination such records, books, or other information papers	921
in the possession of the insurer and its affiliates as may be	922
reasonably necessary to ascertain the financial condition or	923
legality of conduct of such insurer, but only if the	924
superintendent finds that an examination of such insurer pursuant	925
to sections 3901.01 to 3901.31, inclusive, of the Revised Code,	926
would be inadequate or the interests of the policyholders of such	927
insurer may be adversely affected. In the event such insurer fails	928
to comply with such order, the superintendent shall have the power	929
to examine such affiliates to obtain such informationdetermine	930
compliance with sections 3901.32 to 3901.37 of the Revised Code.	931

(3) To determine compliance with sections 3901.32 to 3901.37	932
of the Revised Code, the superintendent may order any insurer	933
registered under section 3901.33 of the Revised Code to produce	934
information not in the possession of the insurer if the insurer	935
can obtain access to such information pursuant to a contractual	936
relationship, statutory obligation, or other method. If the	937
insurer cannot obtain the information requested by the	938
superintendent, the insurer shall provide the superintendent a	939
detailed explanation of the reason that the insurer cannot obtain	940
the information and the identity of the holder of information.	941
Whenever it appears to the superintendent that the detailed	942
explanation is without merit, the superintendent may require,	943
after notice and hearing, that the insurer pay a penalty of up to	944
ten thousand dollars per day, or the superintendent may suspend or	945
revoke the insurer's license.	946

(B) The superintendent may retain at the registered insurer's	947
expense such attorneys, actuaries, accountants, and other experts	948
not otherwise a part of the superintendent's staff as shall be	949
reasonably necessary to assist in the conduct of the examination	950
under division (A) of this section. Any persons so retained shall	951
be under the direction and control of the superintendent and shall	952
act in a purely advisory capacity.	953

(C) Each registered insurer producing for examination	954
records, books, and papers pursuant to division (A) of this	955
section shall be liable for and shall pay the expense of such	956
examination in accordance with section 3901.07 of the Revised	957
Code.	958

(D) If the insurer fails to comply with an order issued	959
pursuant to this section, the superintendent may examine the	960
affiliates to obtain the information. The superintendent also may	961
issue subpoenas, administer oaths, and examine under oath any	962
person for purposes of determining compliance with this section.	963
Upon the failure or refusal of any person to obey a subpoena, the	964
superintendent may petition the court of common pleas of Franklin	965
county for an order compelling the witness to appear and testify	966
or produce documentary evidence. Failure to obey the court order	967
shall be punishable as contempt of court. A person who receives a	968
subpoena issued pursuant to this division shall appear as a	969
witness at the place specified in the subpoena within the state.	970
The person is entitled to the same fees and mileage as a witness	971
in a civil action in the court of common pleas. Any fees, mileage,	972
or actual expenses necessarily incurred in securing the attendance	973
of a witness and their testimony shall be itemized and charged	974
against the insurer being examined.	975

Sec. 3901.351. (A) With respect to any insurer registered	976
under section 3901.33 of the Revised Code and in accordance with	977
division (C) of this section, the superintendent of insurance may	978
participate in a supervisory college for any domestic insurer that	979
is part of an insurance holding company system with international	980
operations in order to determine compliance by the insurer with	981
sections 3901.32 to 3901.37 of the Revised Code. In participating,	982
the superintendent may do all of the following:	983

(1) Initiate the establishment of a supervisory college;

984

(2) Clarify the membership and participation of other	985
supervisors in the supervisory college;	986

(3) Clarify the functions of the supervisory college and the	987
role of other regulators, including the establishment of a	988
group-wide supervisor;	989

(4) Coordinate the ongoing activities of the supervisory	990
college, including planning meetings, supervisory activities, and	991
processes for information sharing;	992

(5) Establish a crisis management plan.

993

(B) Each registered insurer subject to this section shall be	994
liable for and shall pay the reasonable expenses of the	995
superintendent's participation in a supervisory college in	996
accordance with division (C) of this section, including reasonable	997
travel expenses. The superintendent may establish a regular	998
assessment to the insurer for the payment of these expenses. A	999
supervisory college may be convened as either a temporary or	1000
permanent forum for communication and cooperation between the	1001
regulators charged with the supervision of the insurer or its	1002
affiliates.	1003

(C) In order to assess the business strategy, financial	1004
position, legal and regulatory position, risk exposure, risk	1005
management, and governance processes, and as part of the	1006
examination of individual insurers in accordance with section	1007
3901.35 of the Revised Code, the superintendent may participate in	1008
a supervisory college with other regulators charged with	1009
supervision of the insurer or its affiliates, including other	1010
state, federal, and international regulatory agencies. The	1011
superintendent may enter into agreements in accordance with	1012
section 3901.36 of the Revised Code that provide the basis for	1013
cooperation between the superintendent and the other regulatory	1014
agencies, and the activities of the supervisory college.	1015

(D) Nothing in this section shall delegate to the supervisory	1016
college the authority of the superintendent to regulate or	1017
supervise the insurer or its affiliates within its jurisdiction.	1018

Sec. 3901.36. (A) All information, documents, and copies	1019
thereofDocuments, materials, or other information in the	1020
possession or control of the department of insurance that are	1021
obtained by or disclosed to the superintendent of insurance or any	1022
other person in the course of an examination or investigation made	1023
pursuant to section 3901.35 of the Revised Code and all	1024
information reported pursuant to section 3901.33 of the Revised	1025
Code shall be given confidential and privileged treatment and	1026
shall not be subject to section 149.43 of the Revised Code,	1027
subpoena, or be made public by the superintendent or any other	1028
person.	1029

(B) Notwithstanding division (A) of this section, the	1030
discovery, and shall not be admissible in evidence in any private	1031
civil action. The superintendent may do any of the following:	1032

(1) Disclose documents and information that are the subject	1033
of this section upon obtainingshall not make the documents,	1034
materials, or other information public unless one of the following	1035
applies:	1036

(1) The superintendent uses the documents, materials, or	1037
other information in furtherance of any regulatory or legal action	1038
brought as a part of the superintendent's official duties.	1039

(2) The superintendent has obtained the prior written consent	1040
fromof the insurer to which the documents and, materials, or	1041
other information pertain;of the disclosure.	1042

(2) Disclose documents and information that are the subject	1043
of this section in such a manner as the superintendent considers	1044
appropriate(3) The superintendent, after giving the insurer and	1045
those affiliates that are the subject of the documents and,	1046
materials, or other information notice and an opportunity to be	1047
heard in accordance with Chapter 119. of the Revised Code, if the	1048
superintendent determines that the interests of policyholders,	1049
shareholders, or the public will be served by the disclosure;	1050

(3) Share documents and information that are the subject of	1051
this section with the chief deputy rehabilitator, the chief deputy	1052
liquidator, other deputy rehabilitators and liquidators, and any	1053
other person employed by, or acting on behalf of, the	1054
superintendent pursuant to Chapter 3901. or 3903. of the Revised	1055
Code, in which case the superintendent may make disclosures as the	1056
superintendent considers appropriate.	1057

(B) Neither the superintendent nor any person who receives	1058
documents, materials, or other information while acting under the	1059
authority of the superintendent or with whom such documents,	1060
materials, or other information are shared pursuant to this	1061
section shall be permitted or required to testify in any private	1062
civil action concerning any confidential documents, materials, or	1063
information subject to division (A) of this section.	1064

(C) In order to assist in the performance of the	1065
superintendent's duties under this section, the superintendent may	1066
do either of the following:	1067

(1) Share documents, materials, or other information,	1068
including the confidential and privileged documents, materials, or	1069
other information subject to division (A) of this section with	1070
other local, state, federal, and international regulatory and law	1071
enforcement agencies, with local, state, and federal prosecutors,	1072
and with the national association of insurance commissioners and	1073
its affiliates and subsidiaries, and with members of any	1074
supervisory college described in section 3901.351 of the Revised	1075
Code, provided that the recipient agrees to maintain the	1076
confidential or privileged status of the confidential or	1077
privileged documentdocuments, materials, or other information and	1078
has verified in writing the legal authority to do so;	1079

(4) Disclose documents and information that are the subject	1080
of this section in the furtherance of any regulatory or legal	1081
action brought by or on behalf of the superintendent or the state,	1082
resulting from the exercise of the superintendent's official	1083
duties.	1084

(C) Notwithstanding divisions (A) and (B) of this section,	1085
the superintendent may authorize the national association of	1086
insurance commissioners and its affiliates and subsidiaries by	1087
agreement to share confidential or privileged documents or	1088
information received pursuant to division (B)(3) of this section	1089
with local, state, federal, and international regulatory and law	1090
enforcement agencies and with local, state, and federal	1091
prosecutors, provided that the recipient agrees to maintain the	1092
confidential or privileged status of the confidential or	1093
privileged document or information and has authority to do so.	1094

(D) Notwithstanding divisions (A) and (B) of this section,	1095
the chief deputy rehabilitator, the chief deputy liquidator, and	1096
other deputy rehabilitators and liquidators may disclose documents	1097
and information that are the subject of this section in the	1098
furtherance of any regulatory or legal action brought by or on	1099
behalf of the superintendent, the rehabilitator, the liquidator,	1100
or the state resulting from the exercise of the superintendent's	1101
official duties in any capacity.	1102

(E) Nothing in this section shall prohibit the superintendent	1103
from receiving documents and information in accordance with	1104
section 3901.045 of the Revised Code. The superintendent may share	1105
confidential and privileged documents, materials, or other	1106
information reported pursuant to section 3901.33 of the Revised	1107
Code only with superintendents of states having statutes or	1108
regulations substantially similar to division (A) of this section	1109
and who have agreed in writing not to disclose such information.	1110

(2) Receive documents, materials, or information, including	1111
otherwise confidential and privileged documents, materials, or	1112
information from the national association of insurance	1113
commissioners and its affiliates and subsidiaries and from	1114
regulatory and law enforcement officials of other foreign or	1115
domestic jurisdictions. The superintendent shall maintain as	1116
confidential or privileged any such document, material, or	1117
information received with notice or the understanding that it is	1118
confidential or privileged under the laws of the jurisdiction that	1119
is the source of the document, material, or information.	1120

(D) The superintendent shall enter into written agreements	1121
with the national association of insurance commissioners governing	1122
sharing and use of information provided pursuant to sections	1123
3901.32 to 3901.37 of the Revised Code consistent with division	1124
(C) of this section. The written agreements shall do all of the	1125
following:	1126

(1) Specify procedures and protocols regarding the	1127
confidentiality and security of information shared with the	1128
national association of insurance commissioners and its affiliates	1129
and subsidiaries pursuant to sections 3901.32 to 3901.37 of the	1130
Revised Code, including procedures and protocols for sharing by	1131
the national association of insurance commissioners with other	1132
state, federal, or international regulators;	1133

(2) Specify that ownership of information shared with the	1134
national association of insurance commissioners and its affiliates	1135
and subsidiaries pursuant to sections 3901.32 to 3901.37 of the	1136
Revised Code remains with the superintendent and the national	1137
association of insurance commissioners' use of the information is	1138
subject to the direction of the superintendent;	1139

(3) Require prompt notice to be given to an insurer whose	1140
confidential information is in the possession of the national	1141
association of insurance commissioners or its affiliates or	1142
subsidiaries and is subject to a request or subpoena for	1143
disclosure or production;	1144

(4) Require the national association of insurance	1145
commissioners and its affiliates and subsidiaries to consent to	1146
intervention by an insurer in any judicial or administrative	1147
action in which the national association of insurance	1148
commissioners and its affiliates and subsidiaries may be required	1149
to disclose confidential information about the insurer shared with	1150
the national association of insurance commissioners and its	1151
affiliates and subsidiaries pursuant to sections 3901.32 to	1152
3901.37 of the Revised Code.	1153

(E) The sharing of information by the superintendent pursuant	1154
to sections 3901.32 to 3901.37 of the Revised Code shall not	1155
constitute a delegation of regulatory or rule-making authority.	1156
The superintendent is solely responsible for the administration,	1157
execution, and enforcement of the provisions of sections 3901.32	1158
to 3901.37 of the Revised Code.	1159

(F) The superintendent may enter into agreements governing	1160
the sharing and use of documents and information consistent with	1161
the requirements of this section.	1162

(G)(1) No waiver of any applicable privilege or claim of	1163
confidentiality in the documents and, materials, or other	1164
information described in this section shall occur as a result of	1165
sharing or receiving documents and information as authorized in	1166
divisions (B)(3),division (C), and (E) of this section.	1167

(2) The disclosure of a document or information in connection	1168
with a regulatory or legal action pursuant to divisions (B)(4) and	1169
(D) of this section does not prohibit an insurer or any other	1170
person from taking steps to limit the dissemination of the	1171
document or information to persons not involved in or the subject	1172
of the regulatory or legal action on the basis of any recognized	1173
privilege arising under any other section of the Revised Code or	1174
the common law.(G) Documents, materials, or other information in	1175
the possession or control of the national association of insurance	1176
commissioners pursuant to this section shall be given confidential	1177
and privileged treatment and shall not be subject to section	1178
149.43 of the Revised Code, subpoena, or discovery, and shall not	1179
be admissible in evidence in any private civil action.	1180

Sec. 3901.371.  The purpose of sections 3901.371 to 3901.378	1181
of the Revised Code is to provide the requirements for maintaining	1182
a risk management framework and completing an own risk and	1183
solvency assessment, and to provide guidance and instructions for	1184
filing an own risk and solvency assessment summary report with the	1185
superintendent of insurance. The requirements of these sections	1186
shall apply to all insurers domiciled in this state unless exempt	1187
pursuant to section 3901.376 of the Revised Code.	1188

The general assembly finds and declares that the own risk and	1189
solvency assessment summary report will contain confidential and	1190
sensitive information related to an insurer or insurance group's	1191
identification of risks material and relevant to the insurer or	1192
insurance group filing the report. This information will include	1193
proprietary and trade secret information that has the potential	1194
for harm and competitive disadvantage to the insurer or insurance	1195
group if the information is made public. It is the intent of the	1196
general assembly that the own risk and solvency assessment summary	1197
report shall be a confidential document filed with the	1198
superintendent, that the own risk and solvency assessment summary	1199
report will be shared only as stated in sections 3901.371 to	1200
3901.378 of the Revised Code to assist the superintendent of	1201
insurance in the performance of the superintendent's duties, and	1202
that in no event shall the own risk and solvency assessment	1203
summary report be subject to public disclosure.	1204

Sec. 3901.372.  For the purposes of sections 3901.371 to	1205
3907.378 of the Revised Code:	1206

(A) "Insurance group" means those insurers and affiliates	1207
included within an insurance holding company system as defined in	1208
section 3901.32 of the Revised Code.	1209

(B) "Insurer" has the same meaning as set forth in section	1210
3901.32 of the Revised Code.	1211

(C) "Own risk and solvency assessment" means a confidential	1212
internal assessment, appropriate to the nature, scale, and	1213
complexity of an insurer or insurance group, conducted by that	1214
insurer or insurance group of the material and relevant risks	1215
associated with the insurer or insurance group's current business	1216
plan, and the sufficiency of capital resources to support those	1217
risks.	1218

(D) "Own risk and solvency assessment guidance manual" means	1219
the current version of the own risk and solvency assessment	1220
guidance manual developed and adopted by the national association	1221
of insurance commissioners and as amended from time to time. A	1222
change in the own risk and solvency assessment guidance manual	1223
shall be effective on the first day of January following the	1224
calendar year in which the changes have been adopted by the	1225
national association of insurance commissioners.	1226

(E) "Own risk and solvency assessment summary report" means a	1227
confidential high-level summary of an insurer or insurance group's	1228
own risk and solvency assessment.	1229

Sec. 3901.373.  An insurer shall maintain a risk management	1230
framework to assist the insurer with identifying, assessing,	1231
monitoring, managing, and reporting on its material and relevant	1232
risks. This requirement may be satisfied if the insurance group of	1233
which the insurer is a member maintains a risk management	1234
framework applicable to the operations of the insurer.	1235

Sec. 3901.374.  Unless exempted by section 3901.376 of the	1236
Revised Code, an insurer, or the insurance group of which the	1237
insurer is a member, shall regularly conduct an own risk and	1238
solvency assessment consistent with a process comparable to the	1239
own risk and solvency assessment guidance manual. The own risk and	1240
solvency assessment shall be conducted not less than annually, but	1241
also at any time when there are significant changes to the risk	1242
profile of the insurer or the insurance group of which the insurer	1243
is a member.	1244

Sec. 3901.375.  (A)(1) Upon the request of the superintendent	1245
of insurance, and not more than once annually, an insurer shall	1246
submit to the superintendent an own risk and solvency assessment	1247
summary report, or any combination of reports that together	1248
contain the information described in the own risk and solvency	1249
assessment guidance manual, applicable to the insurer or the	1250
insurance group of which it is a member.	1251

(2) Notwithstanding any request from the superintendent, if	1252
the insurer is a member of an insurance group, the insurer shall	1253
submit the report required by division (A)(1) of this section if	1254
the superintendent is the lead state commissioner of the insurance	1255
group as determined by the procedures within the financial	1256
analysis handbook adopted by the national association of insurance	1257
commissioners.	1258

(B) The report shall include a signature of the insurer or	1259
insurance group's chief risk officer, or other executive having	1260
responsibility for the oversight of the insurer's enterprise risk	1261
management process, attesting to the best of the officer's or	1262
executive's belief and knowledge that the insurer applies the	1263
enterprise risk management process described in the own risk and	1264
solvency assessment summary report, and that a copy of the report	1265
has been provided to the insurer's board of directors or the	1266
appropriate committee thereof.	1267

(C) An insurer may comply with division (A) of this section	1268
by providing the most recent and substantially similar report	1269
provided by the insurer or another member of an insurance group of	1270
which the insurer is a member to the commissioner of another state	1271
or to a supervisor or regulator of a foreign jurisdiction, if that	1272
report provides information that is comparable to the information	1273
described in the own risk and solvency assessment guidance manual.	1274
Any such report in a language other than English must be	1275
accompanied by a translation of that report into the English	1276
language.	1277

Sec. 3901.376.  (A)(1) An insurer shall be exempt from the	1278
requirements of sections 3901.371 to 3901.378 of the Revised Code	1279
if both of the following apply:	1280

(a) The insurer has annual direct written and unaffiliated	1281
assumed premium, including international direct and assumed	1282
premium, less than five hundred million dollars.	1283

(b) The insurance group of which the insurer is a member has	1284
annual direct written and unaffiliated assumed premium, including	1285
international direct and assumed premium, less than one billion	1286
dollars.	1287

(2) The annual direct written and unaffiliated assumed	1288
premium described in divisions (A)(1)(a) and (b) of this section	1289
does not include premiums reinsured with the federal crop	1290
insurance corporation and federal flood program.	1291

(B) If an insurer qualifies for exemption pursuant to	1292
division (A)(1)(a) of this section, but the insurance group of	1293
which the insurer is a member does not qualify for exemption	1294
pursuant to division (A)(1)(b) of this section, and if an own risk	1295
and solvency assessment summary report is required pursuant to	1296
division (E) of this section, then the summary report shall	1297
include every insurer within the insurance group. This requirement	1298
may be satisfied if the insurer submits more than one own risk and	1299
solvency assessment summary report for any combination of insurers	1300
provided the combination of reports includes every insurer within	1301
the insurance group.	1302

(C) If an insurer does not qualify for exemption pursuant to	1303
division (A)(1)(a) of this section, but the insurance group of	1304
which it is a member qualifies for exemption pursuant to division	1305
(A)(1)(b) of this section, then the insurer shall only file an own	1306
risk and solvency assessment summary report if required pursuant	1307
to division (E) of this section.	1308

(D)(1) An insurer that does not qualify for exemption	1309
pursuant to division (A) of this section may apply to the	1310
superintendent of insurance for a waiver from the requirements of	1311
sections 3901.371 to 3901.378 of the Revised Code based upon	1312
unique circumstances. In deciding whether to grant the insurer's	1313
request for waiver, the superintendent may consider any of the	1314
following:	1315

(a) The type and volume of business written;

1316

(b) The ownership and organizational structure of the insurer	1317
or insurance group of which the insurer is a member;	1318

(c) Any other factor the superintendent considers relevant to	1319
the insurer or insurance group of which the insurer is a member.	1320

(2) If the insurer is part of an insurance group with	1321
insurers domiciled in more than one state, the superintendent	1322
shall coordinate with the lead state commissioner and with the	1323
other domiciliary commissioners in considering whether to grant	1324
the insurer's request for a waiver.	1325

(E) Notwithstanding the exemptions stated in this section,	1326
the superintendent may require that an insurer maintain a risk	1327
management framework, conduct an own risk and solvency assessment,	1328
and file an own risk and solvency assessment summary report in any	1329
of the following circumstances:	1330

(1) Based on unique circumstances, including the type and	1331
volume of business written and the ownership and organizational	1332
structure of the insurer or insurance group of which the insurer	1333
is a member;	1334

(2) At the request of a federal agency;

1335

(3) At the request of an international supervisor;

1336

(4) If the insurer has risk-based capital for a company	1337
action level event as set forth in section 3903.83 of the Revised	1338
Code, meets one or more of the standards set out in section	1339
3903.09 or 3903.71 of the Revised Code, or otherwise exhibits	1340
qualities of a troubled insurer as determined by the	1341
superintendent.	1342

(F) If an insurer that qualifies for an exemption pursuant to	1343
division (A) of this section subsequently no longer qualifies for	1344
that exemption due to changes in premium as reflected in the	1345
insurer's most recent annual statement, or in the most recent	1346
annual statements of the insurers within the insurance group of	1347
which the insurer is a member, the insurer shall have one year	1348
after the year the threshold is exceeded to comply with the	1349
requirements of sections 3901.371 to 3901.378 of the Revised Code.	1350

Sec. 3901.377.  (A) The own risk and solvency assessment	1351
summary report shall be prepared consistent with the own risk and	1352
solvency assessment guidance manual, subject to the requirements	1353
of division (B) of this section, and all documentation and	1354
supporting information shall be maintained and made available for	1355
examination upon request of the superintendent of insurance.	1356

(B) The superintendent's review of the own risk and solvency	1357
assessment summary report, and any additional requests for	1358
information, shall be made using similar procedures used in the	1359
analysis and examination of multi-state or global insurers and	1360
insurance groups.	1361

Sec. 3901.378.  (A) Documents, materials, or other	1362
information, including the own risk and solvency assessment	1363
summary report, in the possession or control of the department of	1364
insurance that are obtained by, created by, or disclosed to the	1365
superintendent of insurance, or any other person under sections	1366
3901.371 to 3901.378 of the Revised Code, are recognized by this	1367
state as being proprietary and to contain trade secrets.	1368

(B) The documents described in division (A) of this section	1369
shall be confidential by law and privileged, and shall not be	1370
admissible into evidence in any private civil action or subject to	1371
section 149.43 of the Revised Code, subpoena, or discovery.	1372

(C)(1) Notwithstanding division (B) of this section, the	1373
superintendent may use the documents, materials, or other	1374
information in furtherance of any regulatory or legal action	1375
brought as a part of the superintendent's official duties.	1376

(2) The superintendent shall not otherwise make the	1377
documents, materials, or other information public without the	1378
prior written consent of the insurer.	1379

(D) Neither the superintendent nor any person who receives	1380
documents, materials, or other own risk and solvency assessment	1381
related information, through examination or otherwise, while	1382
acting under the authority of the superintendent or with whom such	1383
documents, materials, or other information are shared pursuant to	1384
sections 3901.371 to 3901.378 of the Revised Code shall be	1385
permitted or required to testify in any private civil action	1386
concerning any confidential documents, materials, or information	1387
subject to division (A) of this section.	1388

(E)(1) In order to assist in the performance of the	1389
superintendent's regulatory duties, the superintendent may do	1390
either of the following:	1391

(a) Upon request, share documents, materials, or other own	1392
risk and solvency assessment related information, including	1393
confidential and privileged documents, materials, or information	1394
subject to division (A) of this section, and proprietary and trade	1395
secret documents, with other state, federal and international	1396
financial regulatory agencies, members of any supervisory college	1397
as described in section 3901.351 of the Revised Code, the national	1398
association of insurance commissioners, or any third-party	1399
consultant designated by the superintendent;	1400

(b) Receive documents, materials, or other own risk and	1401
solvency assessment related information, including confidential	1402
and privileged documents, materials, or information subject to	1403
division (A) of this section, and proprietary and trade secret	1404
documents, from regulatory officials of other foreign or domestic	1405
jurisdictions, including members of any supervisory college as	1406
described in section 3901.351 of the Revised Code, and from the	1407
national association of insurance commissioners.	1408

(2) The recipient of any information pursuant to division	1409
(E)(1)(a) of this section shall agree in writing to maintain the	1410
confidentiality and privileged status of the documents, materials,	1411
or other information and verify in writing their legal authority	1412
to maintain confidentiality. If the superintendent receives any	1413
information pursuant to division (E)(1)(b) of this section, the	1414
superintendent shall maintain as confidential or privileged any	1415
documents, materials, or information received with notice or the	1416
understanding that it is confidential or privileged under the laws	1417
of the jurisdiction that is the source of the document, material,	1418
or information.	1419

(3) The superintendent shall enter into a written agreement	1420
with the national association of insurance commissioners or a	1421
third-party consultant governing sharing and use of information	1422
provided pursuant to sections 3901.371 to 3901.378 of the Revised	1423
Code. The written agreement shall do the all of the following:	1424

(a) Specify procedures and protocols regarding the	1425
confidentiality and security of information shared with the	1426
national association of insurance commissioners or a third-party	1427
consultant pursuant to sections 3901.371 to 3901.378 of the	1428
Revised Code, including procedures and protocols for sharing by	1429
the national association of insurance commissioners with other	1430
state regulators from states in which the insurance group has	1431
domiciled insurers;	1432

(b) Provide that the recipient of information agrees in	1433
writing to maintain the confidentiality and privileged status of	1434
the own risk and solvency assessment related documents, materials,	1435
or other information obtained pursuant to sections 3901.371 to	1436
3901.378 of the Revised Code, and has verified in writing the	1437
legal authority to maintain confidentiality;	1438

(c) Specify that ownership of information shared with the	1439
national association of insurance commissioners or a third-party	1440
consultant pursuant to sections 3901.371 to 3901.378 of the	1441
Revised Code remains with the superintendent and the national	1442
association of insurance commissioners' or a third-party	1443
consultant's use of the information is subject to the direction of	1444
the superintendent;	1445

(d) Prohibit the national association of insurance	1446
commissioners or a third-party consultant from storing the	1447
information obtained pursuant to sections 3901.371 to 3901.378 of	1448
the Revised Code in a permanent database after the underlying	1449
analysis is completed;	1450

(e) Require prompt notice to be given to an insurer whose	1451
confidential information in the possession of the national	1452
association of insurance commissioners or a third-party consultant	1453
pursuant to sections 3901.371 to 3901.378 of the Revised Code is	1454
subject to a request or subpoena for disclosure or production of	1455
the information;	1456

(f) Require the national association of insurance	1457
commissioners or a third-party consultant to consent to	1458
intervention by an insurer in any judicial or administrative	1459
action in which the national association of insurance	1460
commissioners or a third-party consultant may be required to	1461
disclose confidential information about the insurer that was	1462
obtained pursuant to sections 3901.371 to 3901.378 of the Revised	1463
Code;	1464

(g) Require the notational association of insurance	1465
commissioners or a third-party consultant to use documents,	1466
materials, or other information, including the own risk solvency	1467
assessment summary report, for the specific purposes as directed	1468
by the superintendent;	1469

(h) Prohibit the national association of insurance	1470
commissioners or a third-party consultant from using, sharing, or	1471
disclosing any documents, materials, or other information,	1472
including the own risk and solvency assessment summary report,	1473
beyond the scope of the responsibilities outlined by the	1474
superintendent;	1475

(i) Provide for the insurer's written consent in the case of	1476
an agreement involving a third-party consultant.	1477

(F) The sharing of information, materials, and documents by	1478
the superintendent pursuant to sections 3901.371 to 3901.378 of	1479
the Revised Code shall not constitute a delegation of regulatory	1480
or rule-making authority, and the superintendent is solely	1481
responsible for the administration, execution, and enforcement of	1482
sections 3901.371 to 3901.378 of the Revised Code.	1483

(G) No waiver of any applicable privilege or claim of	1484
confidentiality in the documents, proprietary and trade-secret	1485
materials, or other own risk and solvency assessment related	1486
information shall occur as a result of disclosure of such own risk	1487
and solvency assessment related information, materials, or	1488
documents to the superintendent as a result of sharing authorized	1489
in sections 3901.371 to 3901.378 of the Revised Code.	1490

(H) Documents, materials, or other information in the	1491
possession or control of the national association of insurance	1492
commissioners or a third-party consultant pursuant to sections	1493
3901.371 to 3901.378 of the Revised Code shall be confidential by	1494
law and privileged, and shall not be subject to section 149.43 of	1495
the Revised Code, subpoena, discovery, or admissible in evidence	1496
in any private civil action.	1497

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

1498

(1) "Automated transaction" has the same meaning as in	1499
section 1306.01 of the Revised Code, and includes electronic	1500
transactions between two or more persons conducting business	1501
pursuant to the laws of this state relating to insurance.	1502

(2) "Contact point" means any electronic identification to	1503
which messages can be sent, including, but not limited to, any of	1504
the following:	1505

(a) An electronic mail address;

1506

(b) An instant message identity;

1507

(c) A wireless telephone, or any other personal electronic	1508
communication device;	1509

(d) A facsimile number.

1510

(3) "Insured" means a certificate holder, contract owner,	1511
customer, policyholder, or subscriber as those terms are used in	1512
the laws of this state relating to insurance.	1513

(4) "Insurer" has the same meaning as in section 3901.32 of	1514
the Revised Code.	1515

(5) "Laws of this state relating to insurance" has the same	1516
meaning as in section 3901.04 of the Revised Code.	1517

(6) "Personally identifiable information" means any	1518
individually identifiable information gathered in connection with	1519
an insurance transaction, including an individual's name, address,	1520
social security number, and banking information.	1521

(B) Notwithstanding any laws of this state relating to	1522
insurance, sections 1306.01 to 1306.23 of the Revised Code, the	1523
"Uniform Electronics Transactions Act," apply to the business of	1524
insurance in this state by insurers.	1525

(C)(1) If an insured affirmatively agrees to conduct the	1526
business of insurance via an automated transaction, any	1527
information issued or delivered in writing may be issued or	1528
delivered electronically to a contact point provided by the	1529
insured, as long as all of the following apply:	1530

(a) The transmission of information is in compliance with	1531
sections 1306.07 and 1306.14 of the Revised Code;	1532

(b) The details of the automated transaction are fully	1533
disclosed to the insured in the application, policy, certificate,	1534
contract of insurance, or by another method that ensures notice to	1535
the insured;	1536

(c) The details of the automated transaction related to	1537
notices of cancellation, nonrenewal, termination, or changes in	1538
the terms or conditions in the policy, certificate, or contract of	1539
insurance are approved or accepted by the superintendent of	1540
insurance.	1541

(2) At a minimum, the details of the automated transaction	1542
shall include all of the following:	1543

(a) A clear and conspicuous statement informing the insured	1544
of any right or option of the insured to receive a record on	1545
paper;	1546

(b) The right of the insured to withdraw the insured's	1547
consent, and any consequences or fees if the insured withdraws	1548
consent;	1549

(c) A description of the procedures the insured must use to	1550
withdraw consent and to update the insured's contact point.	1551

(3) Affirmative agreement to participate in a part of an	1552
automated transaction shall not be used to confirm the insured's	1553
consent to transact the entire business of insurance pursuant to	1554
this section.	1555

(D) The insurer shall send all notices of cancellation,	1556
nonrenewal, termination, or changes in the terms or conditions in	1557
the policy, certificate, or contract of insurance to the last	1558
known contact point supplied by the insured. If the insurer has	1559
knowledge that the insured's contact point is no longer valid, the	1560
insurer shall send the information via regular mail to the last	1561
known address furnished to the insurer by the insured.	1562

(E) Any insurer conducting the business of insurance via an	1563
automated transaction shall allow the insurer's insureds who agree	1564
to participate in an automated transaction the option to transact	1565
business with the insurer in a nonautomated transaction.	1566

(F)(1) Notwithstanding any laws of this state relating to	1567
insurance, any policy, certificate, or contract of insurance,	1568
including any endorsements or amendments, that do not contain	1569
personally identifiable information may be posted to the insurer's	1570
web site that is accessible by the general public in lieu of any	1571
other method of delivery. If the insurer elects to post any	1572
policy, certificate, or contract of insurance to the insurer's web	1573
site, all of the following apply:	1574

(a) The policies, certificates, or contracts of insurance are	1575
readily accessible by the insured and, once the policies,	1576
certificates, or contracts of insurance are no longer used by the	1577
insurer in this state, they are stored in a readily accessible	1578
archive;	1579

(b) The policies, certificates, or contracts of insurance are	1580
posted in such a manner that the insured can easily identify the	1581
insured's applicable policy, certificate, or contract and print or	1582
download the insured's documents without charge, and without the	1583
use of any special program or application that is not readily	1584
available to the public without charge;	1585

(c) The insurer provides written notice at the time of	1586
issuance of the initial policy, certificate, contract, or any	1587
renewal forms of a method by which the insured may obtain upon	1588
request a paper or electronic copy of their policy, certificate,	1589
or contract without charge;	1590

(d) The insurer clearly identifies the exact policies,	1591
certificates, or contracts of insurance purchased by the insured	1592
on any declaration page, summary of benefits, or other evidence of	1593
coverage issued to the insured;	1594

(e) The insurer gives notice, in the manner it customarily	1595
communicates with an insured, of any changes to the policies or	1596
contracts of insurance, and of the insured's right to obtain upon	1597
request a paper or electronic copy of such forms or endorsements	1598
without charge.	1599

(2) Insurers shall maintain all records of cancellation,	1600
nonrenewal, termination, and changes in the terms or conditions in	1601
the policy, certificate, or contract of insurance for a period of	1602
eight years.	1603

(G) This section only applies to the method of delivery of	1604
notices or information to insureds and does not supersede any time	1605
periods or content of notices otherwise required by the laws of	1606
this state relating to insurance.	1607

(H) The superintendent of insurance may adopt rules in	1608
accordance with Chapter 119. of the Revised Code as the	1609
superintendent considers necessary to carry out the purposes of	1610
this section.	1611

Sec. 3901.62.  (A) Except as provided in sections 3901.63 and	1612
3901.64 of the Revised Code, a domestic ceding insurer that is	1613
authorized to do any insurance business in this state may take	1614
credit for any reinsurance ceded as either an asset or a reduction	1615
of liability only if one of the following applies:	1616

(1) The reinsurance is ceded to an assuming insurer that is	1617
authorized to do any insurance or reinsurance business in this	1618
state.	1619

(2) The reinsurance is ceded to an assuming insurer that is	1620
accredited by the superintendent of insurance as a reinsurer in	1621
this state in accordance with division (B) of this section.	1622

(3) The reinsurance is ceded to an assuming insurer that is	1623
not authorized to do any insurance or reinsurance business in this	1624
state, provided the reinsurance is ceded to a reinsurance pool or	1625
other risk-sharing entity in which participation is required by	1626
law, rule, or regulation of the jurisdiction in which the pool or	1627
entity is located.	1628

(3)(4) The reinsurance is ceded to an assuming insurer that	1629
maintains a trust fund in a qualified United States financial	1630
institution, as defined in division (B)(2) of section 3901.63 of	1631
the Revised Code, for the payment of the valid claims of its	1632
United States policyholders and ceding insurers, and their assigns	1633
and successors in interest in accordance with division (C) of this	1634
section.	1635

(5) The reinsurance is ceded to an assuming insurer that has	1636
been certified by the superintendent as a reinsurer in this state	1637
and that secures its obligations in accordance with division (D)	1638
of this section.	1639

(B)(1) In order to be eligible for accreditation under	1640
division (A)(2) of this section, the assuming insurer shall do all	1641
of the following:	1642

(a) File with the superintendent evidence of its submission	1643
to this state's jurisdiction;	1644

(b) Submit to this state's authority to examine its books and	1645
records;	1646

(c) Maintain a license to transact insurance or reinsurance	1647
in at least one state or, in the case of a United States branch of	1648
a foreign or alien assuming insurer, be entered through and	1649
licensed to transact insurance or reinsurance in at least one	1650
state;	1651

(d) File annually with the superintendent a copy of its	1652
annual statement filed with the insurance department of its state	1653
of domicile, and a copy of its most recent audited financial	1654
statement;	1655

(e) Demonstrate to the satisfaction of the superintendent	1656
that it has adequate financial capacity to meet its reinsurance	1657
obligations and is otherwise qualified to assume reinsurance from	1658
domestic insurers.	1659

(2) An assuming insurer is considered to meet the requirement	1660
of division (B)(1)(e) of this section as of the time of its	1661
application to the superintendent for accreditation if it	1662
maintains a surplus with regard to policyholders in an amount not	1663
less than twenty million dollars, and the superintendent has not	1664
denied its accreditation within ninety days after submission of	1665
its application.	1666

(C)(1) A trust maintained by an assuming insurer under	1667
division (A)(3)(4) of this section shall meet the following	1668
requirements:	1669

(1)(a) In the case of a single assuming insurer, the trust	1670
shall consist of a trusteed account representing the assuming	1671
insurer's liabilities attributable to business underwritten in the	1672
United States. A trusteed surplus of not less than twenty million	1673
dollars shall be maintained by the assuming insurer, except that	1674
at any time after the assuming insurer has permanently	1675
discontinued underwriting new business secured by the trust for at	1676
least three full years, the superintendent with principal	1677
regulatory oversight of the trust may authorize a reduction in the	1678
required trusteed surplus, but only after a finding, based on an	1679
assessment of the risk, that the new required surplus level is	1680
adequate for the protection of ceding insurers within the United	1681
States, policyholders, and claimants in light of reasonably	1682
foreseeable adverse loss development.	1683

The risk assessment may involve an actuarial review,	1684
including an independent analysis of reserves and cash flows, and	1685
shall consider all material risk factors, including when	1686
applicable the lines of business involved, the stability of the	1687
incurred loss estimates, and the effect of the surplus	1688
requirements on the assuming insurer's liquidity or solvency.	1689

The minimum required trusteed surplus shall not be reduced to	1690
an amount less than thirty per cent of the assuming insurer's	1691
liabilities attributable to reinsurance ceded by ceding insurers	1692
within the United States covered by the trust.	1693

(2)(b) In the case of a group of assuming insurers, including	1694
incorporated and individual unincorporated underwriters, the trust	1695
shall consist of a trusteed account representing the group's	1696
liabilities attributable to business written in the United States.	1697
A trusteed surplus shall be maintained by the group, of which	1698
surplus one hundred million dollars shall be held jointly for the	1699
benefit of the United States ceding insurers of any member of the	1700
group. The following requirements apply to the group of assuming	1701
insurers:	1702

(a)(i) The incorporated members of the group shall not engage	1703
in any business other than underwriting as a member of the group,	1704
and shall be subject to the same level of solvency regulation and	1705
control by the group's domiciliary regulator as are the	1706
unincorporated members.	1707

(b)(ii) The group shall make available to the superintendent	1708
of insurance an annual certification of the solvency of each	1709
underwriter in the group. The certification shall be provided by	1710
the group's domiciliary regulator and its independent public	1711
accountants.	1712

(3)(c) In the case of a group of incorporated insurers under	1713
common administration with aggregate policyholders' surplus of ten	1714
billion dollars that has continuously transacted an insurance	1715
business outside the United States for at least three years	1716
immediately prior to assuming reinsurance, the trust shall be in	1717
an amount equal to the group's several liabilities attributable to	1718
business ceded by United States ceding insurers to any member of	1719
the group pursuant to reinsurance contracts issued in the name of	1720
the group. A joint trusteed surplus shall be maintained by the	1721
group, of which surplus one hundred million dollars shall be held	1722
jointly for the benefit of United States ceding insurers of any	1723
member of the group as additional security for any such	1724
liabilities. The following requirements apply to the group of	1725
incorporated insurers:	1726

(a)(i) The group shall comply with all filing requirements	1727
contained in this section.	1728

(b)(ii) The books and records of the group shall be subject	1729
to examination by the superintendent in the same manner as the	1730
books and records of insurers are subject to examination by the	1731
superintendent in accordance with section 3901.07 of the Revised	1732
Code. The group shall bear the expenses of these examinations in	1733
the manner provided by that section.	1734

(c)(iii) Each member of the group shall make available to the	1735
superintendent an annual certification of the member's solvency by	1736
the member's domiciliary regulator and an independent public	1737
accountant.	1738

(C)(2) A trust maintained by an assuming insurer under	1739
division (A)(3)(4) of this section shall remain in effect for as	1740
long as the assuming insurer has outstanding obligations due under	1741
the reinsurance agreements subject to the trust. The trust shall	1742
be in a form approved by the superintendent and shall include the	1743
following:	1744

(1)(a) The trust instrument shall provide that contested	1745
claims are valid and enforceable upon the final order of any court	1746
of competent jurisdiction in the United States.	1747

(2)(b) The trust shall vest legal title to its assets in the	1748
trustees of the trust for its United States policyholders and	1749
ceding insurers, and their assigns and successors in interest.	1750

(3)(c) The trust, and the assuming insurer maintaining the	1751
trust, shall allow the superintendent to conduct examinations in	1752
the same manner as the superintendent conducts examinations of	1753
insurers under section 3901.07 of the Revised Code.	1754

(D)(3) No later than the last day of February of each year,	1755
the trustees of a trust maintained by an assuming insurer under	1756
division (A)(3)(4) of this section shall provide the	1757
superintendent with a written report setting forth the balance of	1758
the trust and listing the trust's investments as of the preceding	1759
thirty-first day of December. The trustees shall certify the date	1760
of the termination of the trust, if termination of the trust is	1761
planned, or shall certify that the trust does not expire prior to	1762
the following thirty-first day of December.	1763

(E)(4) To enable the superintendent to determine the	1764
sufficiency of a trust maintained by an assuming insurer under	1765
division (A)(3)(4) of this section, the assuming insurer shall	1766
annually report information on the trust to the superintendent	1767
that is substantially the same as that information licensed	1768
insurers are required to report under sections 3907.19, 3909.06,	1769
and 3929.30 of the Revised Code on forms adopted under section	1770
3901.77 of the Revised Code.	1771

(D)(1) In order to be eligible for certification under	1772
division (A)(5) of this section, the assuming insurer shall do all	1773
of the following:	1774

(a) Be domiciled and licensed to transact insurance or	1775
reinsurance in a qualified jurisdiction as determined by the	1776
superintendent pursuant to division (D)(3) of this section;	1777

(b) Maintain minimum capital and surplus, or its equivalent,	1778
in an amount to be determined by the superintendent in rule or	1779
regulation;	1780

(c) Maintain financial strength ratings from two or more	1781
rating agencies that meet criteria the superintendent sets forth	1782
in rule or regulation;	1783

(d) Agree to submit to the jurisdiction of this state,	1784
appoint the superintendent as its agent for service of process in	1785
this state, and agree to provide security for one hundred per cent	1786
of the assuming insurer's liabilities attributable to reinsurance	1787
ceded by ceding insurers in the United States if it resists	1788
enforcement of a final judgment from the United States;	1789

(e) Agree to meet applicable information filing requirements	1790
as determined by the superintendent with respect to an initial	1791
application for certification and on an ongoing basis;	1792

(f) Satisfy any other requirements for certification	1793
considered relevant by the superintendent.	1794

(2) An association, including incorporated and individual	1795
unincorporated underwriters, may be a certified reinsurer. In	1796
order to be eligible for certification, an association, in	1797
addition to satisfying the requirements of division (D)(1) of this	1798
section, shall also meet the following requirements:	1799

(a) The association shall satisfy its minimum capital and	1800
surplus requirements through the capital and surplus equivalents,	1801
or the net liabilities, of the association and its members which	1802
shall include a joint central fund that may be applied to any	1803
unsatisfied obligation of the association or any of its members,	1804
in an amount determined by the superintendent in order to provide	1805
adequate protection.	1806

(b) The incorporated members of the association shall not be	1807
engaged in any business other than underwriting as a member of the	1808
association, and shall be subject to the same level of regulation	1809
and solvency control by the association's domiciliary regulator as	1810
the unincorporated members.	1811

(c) The association shall provide the superintendent an	1812
annual certification by the association's domiciliary regulator of	1813
the solvency of each underwriter member within ninety days after	1814
its financial statements are due to be filed with the	1815
association's domiciliary regulator. If a certification is	1816
unavailable, the association shall provide the superintendent with	1817
financial statements prepared by independent public accountants of	1818
each underwriter member of the association.	1819

(3) The superintendent shall create and publish a list of	1820
qualified jurisdictions under which an assuming insurer licensed	1821
and domiciled in such jurisdiction is eligible to be considered by	1822
the superintendent for certification as a certified reinsurer.	1823

(a) The superintendent shall consider the list of qualified	1824
jurisdictions published through the national association of	1825
insurance commissioner's committee process in determining	1826
qualified jurisdictions. If the superintendent approves a	1827
jurisdiction as qualified that does not appear on the list, the	1828
superintendent shall provide justification in accordance with	1829
criteria to be developed by the superintendent under rule or	1830
regulation.	1831

(b) Jurisdictions within the United States that meet the	1832
requirement for accreditation under the national association of	1833
insurance commissioner's financial standards and accreditation	1834
program shall be recognized as qualified.	1835

(c) To determine if a domiciliary jurisdiction not located	1836
within the United States is eligible to be recognized as a	1837
qualified jurisdiction, the superintendent shall evaluate the	1838
appropriateness and effectiveness of the reinsurance supervisory	1839
system of the jurisdiction, both initially and on an ongoing	1840
basis, and consider the rights, benefits, and the extent of	1841
reciprocal recognition afforded by the jurisdiction to reinsurers	1842
licensed and domiciled in the United States.	1843

(d) A qualified jurisdiction shall agree to share information	1844
and cooperate with the superintendent with respect to all	1845
certified reinsurers domiciled within that jurisdiction.	1846

(e) A jurisdiction shall not be recognized as a qualified	1847
jurisdiction if the superintendent has determined that the	1848
jurisdiction does not adequately and promptly enforce final	1849
judgments and arbitration awards from the United States.	1850

(f) If a certified reinsurer's domiciliary jurisdiction	1851
ceases to be a qualified jurisdiction, the superintendent may	1852
revoke the reinsurer's certification or suspend the reinsurer's	1853
certification indefinitely.	1854

(g) The superintendent may consider additional factors as the	1855
superintendent considers appropriate.	1856

(4) The superintendent shall assign a rating to each	1857
certified reinsurer giving due consideration to the financial	1858
strength ratings assigned by rating agencies pursuant to division	1859
(D)(1)(c) of this section. The superintendent shall publish a list	1860
of all certified reinsurers and their ratings.	1861

(5) A certified reinsurer shall secure obligations assumed	1862
from a ceding insurer within the United States at a level	1863
consistent with its rating as specified by the superintendent in	1864
rule or regulation.	1865

(a) Except as otherwise provided in division (D)(5) of this	1866
section, a certified reinsurer shall maintain security in a form	1867
acceptable to the superintendent and consistent with section	1868
3901.63 of the Revised Code, or in a multibeneficiary trust on	1869
behalf of the ceding insurer in accordance with division (A)(4) of	1870
this section, in order for a domestic ceding insurer to qualify	1871
for full financial statement credit for reinsurance ceded to a	1872
certified reinsurer.	1873

(b) If a certified reinsurer chooses to secure its	1874
obligations incurred as a certified reinsurer in the form of a	1875
multibeneficiary trust for the benefit of the ceding insurer, the	1876
certified reinsurer shall maintain separate trust accounts for its	1877
obligations incurred under reinsurance agreements issued or	1878
renewed as a certified reinsurer with reduced security as	1879
permitted by this division or comparable laws of other	1880
jurisdictions within the United States, and for its obligations	1881
subject to division (A)(4) of this section.	1882

(c) Upon termination of any such trust account described in	1883
division (A)(4) of this section, a certified reinsurer shall be	1884
bound by the language of the trust and agreement with the	1885
superintendent that has principal regulatory oversight of each	1886
trust account to fund any deficiency of any other trust account	1887
out of the remaining surplus of such trust as a condition to	1888
certification under division (D)(1) of this section.	1889

(d) The minimum trusteed surplus requirements provided in	1890
division (C) of this section are not applicable with respect to a	1891
multibeneficiary trust maintained by a certified reinsurer for the	1892
purpose of securing obligations incurred under division (A)(5) of	1893
this section, except that such trust shall maintain a minimum	1894
trusteed surplus of ten million dollars.	1895

(e) With respect to obligations incurred by a certified	1896
reinsurer under division (A)(5) of this section, if the security	1897
is insufficient, the superintendent shall reduce the allowable	1898
credit by an amount proportionate to the deficiency, and the	1899
superintendent may impose further reductions in allowable credit	1900
upon finding that there is a material risk that the certified	1901
reinsurer's obligations will not be paid in full when due.	1902

(f) Except as otherwise provided in division (D)(5) of this	1903
section, a reinsurer whose certification has been terminated for	1904
any reason shall be treated under this section as a certified	1905
reinsurer required to secure one hundred per cent of its	1906
obligations. The superintendent may continue to assign a higher	1907
rating to the reinsurer if the reinsurer is in inactive status or	1908
the reinsurer's certification has been suspended. As used in	1909
division (D)(5)(f) of this section, "terminated" means revocation,	1910
suspension, voluntary surrender, or inactive status.	1911

(6) If an applicant for certification has been certified as a	1912
reinsurer in a national association of insurance commissioners	1913
accredited jurisdiction, the superintendent may defer to that	1914
jurisdiction's certification and rating assignment, and the	1915
assuming insurer shall be considered to be a certified reinsurer	1916
in this state.	1917

(7) A certified reinsurer that ceases to assume new business	1918
in this state may request to maintain its certification in	1919
inactive status in order to continue to qualify for a reduction in	1920
security for its in-force business. An inactive certified	1921
reinsurer shall continue to comply with all applicable	1922
requirements of division (A)(5) of this section, and the	1923
superintendent shall assign a rating that takes into account, if	1924
relevant, the reasons why the reinsurer is not assuming new	1925
business.	1926

(F)(E) An assuming insurer shall file a written instrument	1927
appointing an attorney as its agent in this state upon whom all	1928
service of process may be served. Service of process upon this	1929
agent shall bring the assuming insurer within the jurisdiction of	1930
the courts of this state as if served upon an agent pursuant to	1931
section 3927.03 of the Revised Code.	1932

Sec. 3901.621.  (A) If a reinsurer accredited pursuant to	1933
division (B)(1) of section 3901.62 of the Revised Code or	1934
certified pursuant to division (D)(1) of that section ceases to	1935
meet the requirements for accreditation or certification, the	1936
superintendent may suspend or revoke the reinsurer's accreditation	1937
or certification after a hearing held pursuant to Chapter 119. of	1938
the Revised Code. The suspension or revocation shall not take	1939
effect until after the superintendent's order or hearing, unless	1940
one of the following applies:	1941

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

1942

(2) The superintendent's order is based on regulatory action	1943
by the reinsurer's domiciliary jurisdiction or the voluntary	1944
surrender or termination of the reinsurer's eligibility to	1945
transact insurance or reinsurance business in its domiciliary	1946
jurisdiction or in the primary certifying state of the reinsurer	1947
under division (D)(6) of section 3901.62 of the Revised Code.	1948

(3) The superintendent finds that an emergency requires	1949
immediate action, and a court of competent jurisdiction has not	1950
stayed the superintendent's action.	1951

(B) While a reinsurer's accreditation or certification is	1952
suspended, no reinsurance contract issued or renewed after the	1953
effective date of the suspension qualifies for credit except to	1954
the extent that the reinsurer's obligations under the contract are	1955
secured in accordance with section 3901.63 of the Revised Code.	1956

(C) If the superintendent revokes a reinsurer's accreditation	1957
or certification, no credit for reinsurance may be granted under	1958
section 3901.62 or 3901.63 of the Revised Code after the effective	1959
date of the revocation except to the extent that the reinsurer's	1960
obligations under the contract are secured in accordance with	1961
division (D)(5) of section 3901.62 or section 3901.63 of the	1962
Revised Code.	1963

Sec. 3901.63.  (A) If section 3901.62 of the Revised Code	1964
does not apply to the reinsurance ceded to an assuming insurer by	1965
a domestic ceding insurer that is authorized to do any insurance	1966
business in this state, the ceding insurer may take credit for the	1967
reinsurance ceded as a reduction of liability in an amount not	1968
exceeding the liabilities carried by the ceding insurer, if the	1969
ceding insurer complies with section 3901.64 of the Revised Code,	1970
and if funds are held directly by the ceding insurer or in trust	1971
on behalf of the ceding insurer, in accordance with this section,	1972
as security for the payment of obligations under the reinsurance	1973
contract with the assuming insurer.	1974

(B)(1) If the funds are held directly by the ceding insurer	1975
under division (A) of this section, the funds shall be held in the	1976
United States and shall be under the exclusive control of, and	1977
subject to withdrawal solely by, the ceding insurer. If the funds	1978
are held in trust on behalf of the ceding insurer under division	1979
(A) of this section, the funds shall be held in the United States	1980
in a qualified United States financial institution.	1981

(2) For the purposes of division (B)(1) of this section, a	1982
"United States financial institution" is qualified if both of the	1983
following apply:	1984

(a) The institution is organized under or, in the case of a	1985
United States branch or agency office of a foreign banking	1986
organization, is chartered under the laws of the United States or	1987
any state thereof and has been granted authority to operate with	1988
fiduciary powers.	1989

(b) The institution is regulated, supervised, and examined by	1990
federal or state officials that have regulatory authority over	1991
banks and trust companies.	1992

(C) The funds held directly by the ceding insurer or in trust	1993
on behalf of the ceding insurer shall be in any of the following	1994
forms:	1995

(1) Cash;

1996

(2) Securities that are listed by the securities valuation	1997
office of the national association of insurance commissioners,	1998
including those considered exempt from filing as defined by the	1999
purposes and procedures manual of the securities valuation office,	2000
and that qualify as admitted assets;	2001

(3) Irrevocable, unconditional, and automatically renewable	2002
letters of credit that are issued or confirmed by a qualified	2003
United States financial institution. For purposes of division	2004
(C)(3) of this section, a United States financial institution is	2005
qualified if all of the following apply:	2006

(a) It is organized under or, in the case of a United States	2007
branch or agency office of a foreign banking organization, is	2008
chartered under the laws of the United States or any state	2009
thereof.	2010

(b) It is regulated, supervised, and examined by federal or	2011
state officials that have regulatory authority over banks and	2012
trust companies.	2013

(c) The superintendent of insurance or the securities	2014
valuation office of the national association of insurance	2015
commissioners has determined that it meets such standards of	2016
financial condition and standing as are considered necessary and	2017
appropriate for purposes of ensuring that its letters of credit	2018
will be of a quality that is acceptable to the superintendent.	2019

(4) Any other form of security the superintendent determines	2020
to be acceptable.	2021

(D) Notwithstanding any subsequent failure of an issuing or	2022
confirming financial institution to meet the standards of issuer	2023
acceptability set forth in division (C)(3) of this section, a	2024
letter of credit issued or confirmed by a financial institution	2025
that meets those standards on the date of the issuance or	2026
confirmation shall continue to be acceptable as security until its	2027
expiration, extension, renewal, modification, or amendment,	2028
whichever occurs first.	2029

Sec. 3901.631.  (A) A domestic ceding insurer shall take	2030
steps to manage its reinsurance recoverables proportionate to its	2031
own book of business.	2032

(1) A domestic ceding insurer shall notify the superintendent	2033
within thirty days after reinsurance recoverables from any single	2034
assuming insurer, or group of affiliated assuming insurers, exceed	2035
fifty per cent of the domestic ceding insurer's last reported	2036
surplus to policyholders, or after it has determined that	2037
reinsurance recoverables are likely to exceed this limit.	2038

(2) The notification required in division (A)(1) of this	2039
section shall demonstrate that the exposure is safely managed by	2040
the domestic ceding insurer.	2041

(B) A domestic ceding insurer shall take steps to diversify	2042
its reinsurance program.	2043

(1) A domestic ceding insurer shall notify the superintendent	2044
within thirty days after ceding to any single assuming insurer, or	2045
group of affiliated assuming insurers, more than twenty per cent	2046
of the ceding insurer's gross written premium in the prior	2047
calendar year, or after it has determined that the reinsurance	2048
ceded to any single assuming insurer, or group of affiliated	2049
assuming insurers, is likely to exceed this limit.	2050

(2) The notification required in division (B)(1) of this	2051
section shall demonstrate that the exposure is safely managed by	2052
the domestic ceding insurer.	2053

Sec. 3901.64.  (A) A domestic ceding insurer may take credit	2054
for any reinsurance ceded as provided in sections 3901.61 to	2055
3901.63 of the Revised Code only if the reinsurance agreement	2056
contained in the reinsurance contract, and any agreement that	2057
provides security for the payment of the obligations under the	2058
reinsurance agreement, including any trust agreement, provide, in	2059
substance, for the following:	2060

(1) In the event of the insolvency of the ceding insurer, the	2061
reinsurance, whether paid directly or from trust assets securing	2062
the reinsurance agreement, shall be payable by the assuming	2063
insurer on the basis of the liability of the ceding insurer under	2064
the policy or contract reinsured, without any diminution because	2065
the ceding insurer is insolvent or because the liquidator or	2066
statutory receiver has failed to pay all or any portion of any	2067
claims;	2068

(2) The reinsurance payments, whether paid directly or from	2069
trust assets securing the reinsurance agreement, shall be made by	2070
the assuming insurer directly to the ceding insurer, or in the	2071
event of its insolvency or liquidation, to its liquidator or	2072
statutory receiver except where the reinsurance contract or other	2073
written agreement specifically provides for direct payment of the	2074
reinsurance to the insured or beneficiary of the insurance policy	2075
in the event of the insolvency of the ceding insurer.	2076

(B)(1) The reinsurance agreement may provide that the	2077
domiciliary liquidator or statutory receiver shall give written	2078
notice to the assuming insurer that a claim is pending against the	2079
ceding insurer on the policy or contract reinsured. The notice	2080
shall be given within a reasonable amount of time after the claim	2081
is filed with the liquidator or statutory receiver. During the	2082
pendency of the claim, any assuming insurer may investigate the	2083
claim and interpose, at its own expense, in the proceeding where	2084
the claim is to be adjudicated any defenses which it deems to be	2085
available to the ceding insurer or its liquidator.	2086

(2) The expense may be filed as a claim against the insolvent	2087
ceding insurer to the extent of a proportionate share of the	2088
benefit that may accrue to the ceding insurer solely as a result	2089
of the defense undertaken by the assuming insurer. Where two or	2090
more assuming insurers are involved in the same claim and a	2091
majority in interest elect to interpose a defense to the claim,	2092
the expense shall be apportioned in accordance with the terms of	2093
the reinsurance agreement as though the expense had been incurred	2094
by the ceding insurer.	2095

(C) If the assuming insurer is not licensed, or accredited or	2096
certified to transact insurance or reinsurance in this state, the	2097
credit permitted by division (A)(4) of section 3901.62 of the	2098
Revised Code shall not be allowed unless the assuming insurer	2099
agrees to do both of the following in the reinsurance agreements:	2100

(1)(a) If the assuming insurer fails to perform its	2101
obligations under the terms of the reinsurance agreement, at the	2102
request of the ceding insurer, the assuming insurer shall submit	2103
to the jurisdiction of any court of competent jurisdiction in any	2104
state within the United States, comply with all requirements	2105
necessary to give the court jurisdiction, and abide by the final	2106
decision of the court or of any appellate court in the event of an	2107
appeal.	2108

(b) The assuming insurer shall designate the superintendent	2109
or a designated attorney as its true and lawful attorney upon whom	2110
may be served any lawful process in any action, suit, or	2111
proceeding instituted by or on behalf of the ceding insurer.	2112

(2) This division is not intended to conflict with or	2113
override the obligation of the parties to a reinsurance agreement	2114
to arbitrate their disputes, if this obligation is created in the	2115
agreement.	2116

(D) If the assuming insurer does not meet the requirements of	2117
division (A)(1), (2), or (3) of section 3901.62 of the Revised	2118
Code, the credit permitted by divisions (A)(4) and (5) of that	2119
section shall not be allowed unless the assuming insurer agrees in	2120
the trust agreements to the following conditions:	2121

(1) Notwithstanding any other provisions in the trust	2122
instrument, if the trust fund is inadequate because it contains an	2123
amount less than the amount required by division (D)(3) of this	2124
section, or if the grantor of the trust has been declared	2125
insolvent or placed into receivership, rehabilitation,	2126
liquidation, or similar proceedings under the laws of its state or	2127
country of domicile, the trustee shall comply with an order of the	2128
superintendent with regulatory oversight over the trust or with an	2129
order of a court of competent jurisdiction directing the trustee	2130
to transfer to the superintendent with regulatory oversight all of	2131
the assets of the trust fund.	2132

(2) The assets shall be distributed by, and claims shall be	2133
filed with and valued by, the superintendent with regulatory	2134
oversight in accordance with the laws of the state, in which the	2135
trust is domiciled, that are applicable to the liquidation of	2136
domestic insurance companies.	2137

(3) If the superintendent with regulatory oversight	2138
determines that the assets of the trust fund, or any part thereof,	2139
are not necessary to satisfy the claims of the ceding insurers	2140
within the United States or the grantor of the trust, the	2141
superintendent with regulatory oversight shall return the assets	2142
or part thereof to the trustee for distribution in accordance with	2143
the trust agreement.	2144

(4) The grantor shall waive any right otherwise available to	2145
it under the laws of the United States that are inconsistent with	2146
this division.	2147

Sec. 3906.01.  As used in this chapter:

2148

(A) "Annual financial statement" means an insurer's	2149
statutorily required financial statement under the insurer's	2150
respective authorizing chapter of the Revised Code.	2151

(B) "Authorized control level risked-based capital" means	2152
authorized control level RBC as defined in sections 1753.31 and	2153
3903.81 of the Revised Code.	2154

(C) "Cash equivalent" means a short-term, highly liquid	2155
investment that is both readily convertible to known amounts of	2156
cash and so near its maturity that it presents an insignificant	2157
risk of change in value because of changes in interest rates, and	2158
that has an original maturity date, to the entity holding the	2159
investment, of three months or less.	2160

(D) "Derivative instrument" means an item appropriately	2161
reported in schedule DB, covering derivative instruments,	2162
insurance futures and insurance futures options, of an insurer's	2163
annual financial statement, or their successor schedules, pursuant	2164
to applicable annual statement instructions or statutory	2165
accounting guidelines.	2166

(E) "Derivative transaction" means a transaction involving	2167
the use of one or more derivative instruments.	2168

(F) "Hedging transaction" means a derivative transaction that	2169
is entered into and maintained to reduce either of the following:	2170

(1) The risk of economic loss due to a change in the value,	2171
yield, price, cash flow, or quantity of assets or liabilities that	2172
the insurer has acquired or incurred or anticipates acquiring or	2173
incurring;	2174

(2) The currency exchange rate risk or the degree of exposure	2175
as to assets or liabilities that an insurer has acquired or	2176
incurred or anticipates acquiring or incurring.	2177

(G) "Lower-grade investment" means a rated credit instrument	2178
or debt-like preferred stock rated 4, 5, or 6 by the securities	2179
valuation office.	2180

(H) "Medium-grade investment" means a rated credit instrument	2181
or debt-like preferred stock rated 3 by the securities valuation	2182
office.	2183

(I) "Minimum asset requirement" is the requirement that an	2184
insurer maintain assets in an amount equal to the sum of the	2185
insurer's liabilities and its minimum financial security	2186
benchmark, as required by division (A) of section 3906.11 of the	2187
Revised Code.	2188

(J) "Minimum financial security benchmark" is the amount an	2189
insurer is required to have under section 3906.03 of the Revised	2190
Code.	2191

(K) "Replication" means a derivative transaction used to	2192
modify the cash flow characteristics of one or more investments	2193
held by an insurer in a manner so that the aggregate cash flows of	2194
the derivative instruments and investments reproduce the cash	2195
flows of another investment having a higher risk-based capital	2196
charge than the risk-based capital charge of the original	2197
instruments or investments.	2198

(L) "Securities valuation office" means the securities	2199
valuation office of the national association of insurance	2200
commissioners or any successor office.	2201

(M) "Securities valuation office listed mutual fund" means a	2202
money market mutual fund or short-term bond fund that is	2203
registered with the United States securities and exchange	2204
commission under the "Investment Company Act of 1940," 54 Stat.	2205
789, 15 U.S.C. 80a-1 to 80a-64, and that has been determined by	2206
the securities valuation office to be eligible for special reserve	2207
and reporting treatment, rather than as common stock.	2208

(N) "Securities valuation office exchange traded fund" means	2209
a bond or preferred stock exchange traded fund that is registered	2210
with the United States securities and exchange commission under	2211
the "Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C.	2212
80a-1 to 80a-64, and that has been rated 1 or 2 by the securities	2213
valuation office and determined by the office to be eligible for	2214
special reserve and reporting treatment, rather than as common	2215
stock.	2216

(O) "Superintendent" means the superintendent of insurance.

2217

Sec. 3906.02.  (A) This chapter, and any rules adopted under	2218
it, apply to entities organized under Chapters 1731., 1751.,	2219
3907., 3919., 3921., 3925., 3931., 3939., 3941., and 3953. of the	2220
Revised Code.	2221

(B) An insurer may apply to the superintendent for permission	2222
to make investments under this chapter, in lieu of making	2223
investments under any other section of the Revised Code.	2224

(C) In determining whether to permit an entity to invest	2225
pursuant to this chapter, the superintendent shall consider all of	2226
the following:	2227

(1) The character, reputation, and financial standing of the	2228
officers of the entity;	2229

(2) The character, reputation, and financial condition of the	2230
entity;	2231

(3) The adequacy of the expertise, experience, character, and	2232
reputation of the person or persons who will manage the	2233
investments on behalf of the entity;	2234

(4) The quality of the enterprise risk management program	2235
implemented by the entity to identify, assess, monitor, manage,	2236
and report on its key investment and related risks;	2237

(5) Any other factor the superintendent considers relevant.

2238

(D) Separate accounts established in accordance with section	2239
3907.15 of the Revised Code shall continue to be governed by that	2240
section.	2241

Sec. 3906.03. (A)(1) Unless otherwise established in	2242
accordance with divisions (A)(2) and (3) of this section, the	2243
amount of the minimum financial security benchmark for an insurer	2244
shall be the greatest of the following:	2245

(a) Three hundred per cent of the authorized control level	2246
risk-based capital applicable to the insurer, as defined and set	2247
forth by sections 1753.31 to 1753.43 or 3903.81 to 3903.93 of the	2248
Revised Code, less the asset valuation reserve as defined in the	2249
risk-based capital instructions defined in division (M) of section	2250
3903.81 of the Revised Code;	2251

(b) The minimum capital or minimum surplus required by	2252
statute or rule for maintenance of an insurer's certificate of	2253
authority in this state;	2254

(c) All invested assets of an entity organized under Chapter	2255
3919. or 3939. of the Revised Code;	2256

(d) For title insurers, the quotient of annualized net earned	2257
premiums divided by eight;	2258

(e) For multiple employer welfare arrangements, the greater	2259
of three hundred per cent of the risk-based capital amount	2260
reported in the annual statement or the quotient of annualized net	2261
earned premiums divided by twelve.	2262

(2) The superintendent may, in accordance with division (B)	2263
of this section, establish by order a minimum financial security	2264
benchmark to apply to a specific insurer that exceeds the amount	2265
arrived at under division (A)(1) of this section.	2266

(3) The superintendent may by rule change the minimum	2267
financial security benchmark that is a multiple of authorized	2268
control level risk-based capital, or equivalent risk-based capital	2269
calculation, to apply to any class of insurers provided the amount	2270
established by the rule is not less than the amount arrived at	2271
under division (A)(1) of this section.	2272

(B) The superintendent shall determine the amount of minimum	2273
capital or minimum surplus as specified in division (A)(1)(b) of	2274
this section to determine an insurer's minimum financial security	2275
benchmark. The amount shall be sufficient to provide reasonable	2276
security against contingencies affecting the insurer's financial	2277
position that are not fully covered by reserves or by reinsurance.	2278

(1) In determining this amount, the superintendent shall	2279
consider all of the following risks:	2280

(a) Increases in the frequency or severity of losses beyond	2281
the levels contemplated by the premium rates charged;	2282

(b) Increases in expenses beyond those contemplated by the	2283
premium rates charged;	2284

(c) Decreases in the value of assets, or the return on	2285
invested assets below those planned on;	2286

(d) Changes in economic conditions that would make liquidity	2287
more important than contemplated and would force untimely sale of	2288
assets or prevent timely investments;	2289

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

2290

(f) Any other contingencies the superintendent identifies	2291
that may affect the insurer's operations.	2292

(2) In determining the minimum financial security benchmark,	2293
the superintendent shall also take into account the following	2294
factors:	2295

(a) The most reliable information available as to the	2296
magnitude of the various risks under division (B)(1) of this	2297
section;	2298

(b) The extent to which the risks in division (B)(1) of this	2299
section are independent of each other or are related, and whether	2300
any dependency is direct or inverse;	2301

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

2302

(d) The extent to which the insurer has provided protection	2303
against adverse contingencies in ways other than the establishment	2304
of surplus, including redundancy of premiums, adjustability of	2305
contracts under their terms, investment valuation reserves,	2306
whether voluntary or mandatory, appropriate reinsurance, the use	2307
of conservative actuarial assumptions to provide a margin of	2308
security, reserve adjustments in recognition of previous rate	2309
inadequacies, contingency or catastrophe reserves, diversification	2310
of assets, and underwriting risks;	2311

(e) Independent judgments on the soundness of the insurer's	2312
operations, as evidenced by the ratings of reliable professional	2313
financial reporting services;	2314

(f) Any other factor the superintendent considers relevant.

2315

Sec. 3906.04. (A) Subject to this chapter, an insurer making	2316
investments under this chapter may loan or invest its funds, and	2317
may buy, sell, hold title to, possess, occupy, pledge, convey,	2318
manage, protect, insure, and deal with its investments, property,	2319
and other assets to the same extent as any other person or	2320
corporation under the laws of this state and of the United States.	2321

(B) With respect to all of the insurer's investments, the	2322
board of directors of an insurer making investments under this	2323
chapter shall exercise the judgment and care, under the	2324
circumstances then prevailing, that persons of reasonable	2325
prudence, discretion, and intelligence would exercise in the	2326
management of a like enterprise, not in regard to speculating but	2327
in regard to the permanent disposition of their funds, considering	2328
the probable income as well as the probable safety of their	2329
capital. Investments shall be of sufficient value, liquidity, and	2330
diversity to assure the insurer's ability to meet its outstanding	2331
obligations based on reasonable assumptions as to new business	2332
production for current lines of business. As part of its exercise	2333
of judgment and care, the board of directors shall take into	2334
account the prudence evaluation criteria of division (C) of	2335
section 3906.05 of the Revised Code.	2336

(C) An insurer making investments under this chapter shall	2337
establish and implement internal controls and procedures to assure	2338
compliance with investment policies and procedures to assure that	2339
all of the following are met:	2340

(1) The insurer's investment staff and any consultants used	2341
are reputable and capable.	2342

(2) A periodic evaluation and monitoring process occurs for	2343
assessing the effectiveness of investment policy and strategies.	2344

(3) Management's performance is assessed in meeting the	2345
stated objectives within the investment policy through periodic	2346
presentations to the board of directors.	2347

(4) Appropriate analyses are undertaken on the degree to	2348
which asset cash flows are adequate to meet liability cash flows	2349
under different economic environments. These analyses shall be	2350
conducted at least annually and make specific reference to the	2351
economic conditions considered.	2352

Sec. 3906.05.  (A) An insurer making investments under this	2353
chapter shall consider the factors listed in division (C) of this	2354
section along with its business in determining whether an	2355
investment portfolio or investment policy is prudent.	2356

(B) The superintendent shall consider the factors listed in	2357
division (C) of this section prior to making a determination that	2358
an insurer's investment portfolio or investment policy is not	2359
prudent.	2360

(C) Insurers and the superintendent shall consider the	2361
following factors according to divisions (A) and (B) of this	2362
section:	2363

(1) General economic conditions;

2364

(2) The possible effect of inflation or deflation;

2365

(3) The expected tax consequences of investment decisions or	2366
strategies;	2367

(4) The fairness and reasonableness of the terms of an	2368
investment considering its probable risk and reward	2369
characteristics and relationship to the investment portfolio as a	2370
whole;	2371

(5) The extent of the diversification of the insurer's	2372
investments among all of the following:	2373

(a) Individual investments;

2374

(b) Classes of investments;

2375

(c) Industry concentrations;

2376

(d) Dates of maturity;

2377

(e) Geographic areas.

2378

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

2379

(7) The investment exposure to all of the following risks,	2380
quantified in a manner consistent with the insurer's acceptable	2381
risk level as described in the insurer's written investment	2382
policy, required under division (H) of section 3906.06 of the	2383
Revised Code:	2384

(a) Liquidity;

2385

(b) Credit and default;

2386

(c) Systemic or market;

2387

(d) Interest rate;

2388

(e) Call, prepayment, and extension;

2389

(f) Currency;

2390

(g) Foreign sovereign.

2391

(8) The amount of the insurer's assets, capital and surplus,	2392
premium writings, insurance in force, and other appropriate	2393
characteristics;	2394

(9) The amount and adequacy of the insurer's reported	2395
liabilities;	2396

(10) The relationship of the expected cash flows of the	2397
insurer's assets and liabilities, and the risk of adverse changes	2398
in the insurer's assets and liabilities;	2399

(11) The adequacy of the insurer's capital and surplus to	2400
secure the risks and liabilities of the insurer;	2401

(12) Any other factors relevant to whether an investment is	2402
prudent.	2403

Sec. 3906.06. In acquiring, investing, exchanging, holding,	2404
selling, and managing investments under this chapter, an insurer	2405
shall establish and follow a written investment policy that shall	2406
be reviewed and approved by the insurer's board of directors on at	2407
least an annual basis. The content and format of an insurer's	2408
investment policy are at the insurer's discretion, but shall	2409
include written guidelines appropriate to the insurer's business	2410
with regard to all of the following:	2411

(A) The general investment policy of the insurer, containing	2412
policies, procedures, and controls covering all aspects of the	2413
investing function;	2414

(B) Quantified goals and objectives regarding the composition	2415
of classes of investments, including maximum internal limits;	2416

(C) Periodic evaluations of the investment portfolio as to	2417
its risk and reward characteristics;	2418

(D) Professional standards for the individuals making	2419
day-to-day investment decisions to assure that investments are	2420
managed in an ethical, prudent, and capable manner;	2421

(E) The types of investments that are allowed and that are	2422
prohibited, based on their risk and reward characteristics and the	2423
insurer's level of experience with the investments;	2424

(F) The relationship of classes of investments to the	2425
insurer's insurance products and liabilities;	2426

(G) The manner in which the insurer intends to implement	2427
section 3906.05 of the Revised Code;	2428

(H) The level of risk, based on quantitative measures,	2429
appropriate for the insurer given the level of capitalization and	2430
expertise available to the insurer.	2431

Sec. 3906.07.  All of the following classes of investments	2432
may be counted for the purposes specified in section 3906.11 of	2433
the Revised Code, whether they are made directly or as a	2434
participant in a partnership, joint venture, or limited liability	2435
company:	2436

(A) Cash, and cash equivalents, in the direct possession of	2437
the insurer or on deposit with a financial institution regulated	2438
by any federal or state agency of the United States;	2439

(B) Bonds, debt-like preferred stock, and other evidences of	2440
indebtedness of governmental units in the United States or Canada,	2441
or the instrumentalities of the governmental units, or private	2442
business entities domiciled in the United States or Canada,	2443
including asset-backed securities, securities valuation office	2444
listed mutual funds, and securities valuation office listed	2445
exchange traded funds;	2446

(C) Loans with a loan to value ratio of no greater than	2447
eighty per cent that are secured by mortgages, trust deeds, or	2448
other security interests in real property located in the United	2449
States or Canada, or secured by insurance against default issued	2450
by a government insurance corporation of the United States or	2451
Canada or by an insurer authorized to do business in this state;	2452

(D) Unaffiliated common stock, or equity-like preferred	2453
stock, or equity interests in any United States or Canadian	2454
business entity, or shares of securities valuation office listed	2455
mutual funds registered with the securities and exchange	2456
commission of the United States under the "Investment Company Act	2457
of 1940," 54 Stat. 789, 15 U.S.C. 80a-1 to 80a-64, other than	2458
mutual funds and exchange traded funds listed with the securities	2459
valuation office;	2460

(E) Real property necessary for the convenient transaction of	2461
the insurer's business;	2462

(F) Real property, together with the fixtures, furniture,	2463
furnishings, and equipment pertaining thereto in the United States	2464
or Canada, which produces, or after suitable improvement can	2465
reasonably be expected to produce, substantial income;	2466

(G) Loans, securities, or other investments of the types	2467
described in divisions (A) to (F) of this section in countries	2468
other than the United States and Canada;	2469

(H) Bonds or other evidences of indebtedness of international	2470
development organizations of which the United States is a member;	2471

(I) Loans upon the security of the insurer's own policies in	2472
amounts that are adequately secured by the policies and that in no	2473
case exceed the surrender values of the policies;	2474

(J) Subsidiary or affiliate equity investments, including	2475
common stock, equity-like preferred stock, limited liability	2476
partnerships, or limited liability membership interests, of	2477
entities that are engaged exclusively in insurance, finance, or	2478
investments, and investment management companies that are	2479
registered with the securities and exchange commission under the	2480
"Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a-1 to	2481
80a-64, as amended;	2482

(K) Investments not otherwise permitted by this section, not	2483
specifically prohibited by statute, to which both of the following	2484
apply:	2485

(1) The assets do not exceed five per cent of the first five	2486
hundred million dollars of the insurer's admitted assets plus ten	2487
per cent of the insurer's admitted assets exceeding five hundred	2488
million dollars.	2489

(2) The assets qualified to meet the minimum asset	2490
requirement at the time they were acquired.	2491

Sec. 3906.08.  (A) For the purposes of determining an	2492
insurer's minimum asset requirement under section 3906.11 of the	2493
Revised Code, the following limitations on classes of investments	2494
shall apply:	2495

(1) For investments authorized by division (B) of section	2496
3906.07 of the Revised Code and investments authorized by division	2497
(G) of section 3906.07 of the Revised Code that are of the types	2498
described in division (B) of section 3906.07 of the Revised Code	2499
the following limitations shall apply:	2500

(a) The aggregate amount of medium- and lower-grade	2501
investments shall be not more than twenty per cent of an insurer's	2502
admitted assets.	2503

(b) The aggregate amount of lower-grade investments shall be	2504
not more than ten per cent of an insurer's admitted assets.	2505

(c) The aggregate amount of investments rated 5 or 6 by the	2506
securities valuation office shall be not more than five per cent	2507
of the insurer's admitted assets.	2508

(d) The aggregate amount of investments rated 6 by the	2509
securities valuation office shall be not more than one per cent of	2510
an insurer's admitted assets.	2511

(e) The aggregate amount of medium- and lower-grade	2512
investments that receive as cash income less than the yield for	2513
treasury issues with a comparative average life shall be not more	2514
than one per cent of an insurer's admitted assets.	2515

(2) Investments authorized by division (C) of section 3906.07	2516
of the Revised Code shall be not more than forty-five per cent of	2517
an insurer's admitted assets in the case of life insurers and not	2518
more than twenty-five per cent of an insurer's admitted assets in	2519
the case of insurers that are not life insurers.	2520

(3) Investments authorized by division (D) of section 3906.07	2521
of the Revised Code shall be not more than twenty per cent of an	2522
insurer's admitted assets in the case of life insurers and not	2523
more than twenty-five per cent of an insurer's admitted assets in	2524
the case of insurers that are not life insurers.	2525

(4) Investments authorized by division (E) of section 3906.07	2526
of the Revised Code shall be not more than ten per cent of an	2527
insurer's admitted assets.	2528

(5) Investments authorized by division (F) of section 3906.07	2529
of the Revised Code shall be not more than ten per cent of an	2530
insurer's admitted assets.	2531

(6) Investments authorized by division (G) of section 3906.07	2532
of the Revised Code shall be not more than twenty per cent of an	2533
insurer's admitted assets.	2534

(7) Investments authorized by division (H) of section 3906.07	2535
of the Revised Code shall be not more than two per cent of an	2536
insurer's admitted assets.	2537

(8) Investments authorized by division (J) of section 3906.07	2538
of the Revised Code shall be not more than ten per cent of an	2539
insurer's admitted assets in the case of life insurers and not	2540
more than three per cent of an insurer's admitted assets in the	2541
case of insurers that are not life insurers.	2542

(B)(1) For purposes of determining compliance with section	2543
3906.11 of the Revised Code, securities issued by a single entity	2544
and its affiliates, other than the government of the United	2545
States, or agencies whose securities are backed by the full faith	2546
and credit of the United States, and subsidiaries authorized under	2547
division (J) of section 3906.07 of the Revised Code, shall be not	2548
more than five per cent of an insurer's admitted assets in the	2549
case of life insurers and shall be not more than five per cent of	2550
an insurer's admitted assets in the case of insurers that are	2551
non-life insurers.	2552

(2) Notwithstanding division (B)(1) of this section,	2553
investments in the voting securities of a depository institution,	2554
or any company that controls a depository institution, shall not	2555
exceed five per cent of an insurer's admitted assets.	2556

(C) For purposes of determining compliance with this section,	2557
the admitted portion of assets of subsidiaries of an insurer	2558
invested in under division (J) of section 3906.07 of the Revised	2559
Code shall be deemed to be owned directly by the insurer and any	2560
other investors in proportion to the market value of their	2561
interest in the subsidiaries. If interest in the subsidiary has no	2562
market value, then the asset allocation proportion shall be	2563
determined by the reasonable value of interest in the subsidiary	2564
as determined under the national association of insurance	2565
commissioners' accounting practices and procedures manual.	2566

(D) If the superintendent considers it necessary to get a	2567
proper evaluation of the investment portfolio of an insurer, the	2568
superintendent may require that investments in mutual funds,	2569
exchange traded funds, pooled investment vehicles, or other	2570
investment companies be treated for purposes of this chapter as if	2571
the investor owned directly its proportional share of the assets	2572
owned by the mutual fund, exchange traded fund, pooled investment	2573
vehicle, or investment company.	2574

(E) Unless otherwise specified in this chapter, an insurer's	2575
investment limitations shall be computed using the insurer's	2576
general account admitted assets, capital, or surplus as reported	2577
in the insurer's most recent annual financial statement required	2578
to be filed with the superintendent.	2579

Sec. 3906.09.  An insurer investing under this chapter that	2580
is doing business that requires the insurer to make payment in	2581
different currencies shall have investments in securities in each	2582
of these currencies in an amount that, independent of all other	2583
investments, meets the requirements of this chapter, as applied	2584
separately to the insurer's obligations in each currency. The	2585
superintendent may, by order, exempt an insurer, or, by rule, a	2586
class of insurers, from this requirement if the obligations in	2587
other currencies are small enough that no significant problem for	2588
financial solidity would be created by substantial fluctuations in	2589
relative currency values.	2590

Sec. 3906.10. (A) An insurer investing under this chapter	2591
shall not invest in investments that are prohibited for an insurer	2592
by statute or rules of this state.	2593

(B) An insurer investing under this chapter shall not invest	2594
in a partnership as a general partner.	2595

(C) The superintendent shall set a reasonable amount of time,	2596
not to exceed five years, for disposal of a prohibited investment	2597
in hardship cases if the insurer demonstrates that the investment	2598
was legal when made or the result of a mistake made in good faith,	2599
or if the superintendent determines that the sale of the asset	2600
would be contrary to the interests of insureds, creditors, or the	2601
general public.	2602

(D) Violation of division (A) of this section may be grounds	2603
for regulatory action pursuant to divisions (A) and (I) of section	2604
3903.12 of the Revised Code.	2605

Sec. 3906.11.  (A) An insurer investing under this chapter	2606
shall maintain assets in an amount equivalent to the sum of its	2607
liabilities and its minimum financial security benchmark at all	2608
times.	2609

(B) Assets invested under this chapter may be counted toward	2610
satisfaction of the minimum asset requirement only so far as they	2611
are invested in compliance with this chapter and any applicable	2612
rules adopted, or orders issued, by the superintendent pursuant to	2613
this chapter.	2614

(C) The amount of admitted assets used to calculate the	2615
minimum asset requirement shall be reduced by the amount of the	2616
liability recorded on an insurer's statutory balance sheet for all	2617
of the following:	2618

(1) The return of acceptable collateral received in a reverse	2619
repurchase transaction or a securities lending transaction;	2620

(2) Cash received in a dollar roll transaction;

2621

(3) Other amounts reported as borrowed money.

2622

(D) Assets other than invested assets may be counted toward	2623
satisfaction of the minimum asset requirement at admitted annual	2624
financial statement value. However, loans to officers or directors	2625
or their immediate families shall not be counted toward the	2626
satisfaction of the minimum asset requirement.	2627

(E) An investment held as an admitted asset by an insurer on	2628
the effective date of this section that qualified under the	2629
applicable insurance investment law of this state shall remain	2630
qualified as an admitted asset under this chapter.	2631

(F) Notwithstanding any provision of this chapter to the	2632
contrary, an asset acquired in the bona fide enforcement of	2633
creditors' rights or in bona fide workouts or settlements of	2634
disputed claims may be counted toward the minimum asset	2635
requirement for five years if the asset is real property and three	2636
years if the asset is not real property.	2637

(G) The superintendent may determine an insurer to be	2638
financially hazardous under section 3903.09 of the Revised Code if	2639
either of the following apply:	2640

(1) The insurer does not own the amount of assets needed to	2641
meet its minimum asset requirement.	2642

(2) The insurer is unable to apply the amount of assets	2643
needed to meet its minimum asset requirement toward compliance	2644
with this chapter.	2645

Sec. 3906.12.  (A) Prior to an insurer entering into	2646
derivative transactions, the board of directors of the insurer	2647
investing under this chapter shall approve a derivative use plan.	2648

(B) The derivative use plan shall require the insurer, when	2649
entering into a derivative transaction that carries a risk of	2650
losing more than the amount invested in a derivative, to establish	2651
a liability in its financial statements for the full amount of	2652
that potential loss.	2653

(C) Prior to entering into derivative transactions, an	2654
insurer shall file with the superintendent a copy of its	2655
derivative use plan and internal controls, for informational	2656
purposes. The insurer shall keep current the copy of its	2657
derivative use plan and internal controls filed with the	2658
superintendent. The insurer shall not enter into derivative	2659
transactions until thirty calendar days after the date on which	2660
the derivative use plan and internal controls is filed with the	2661
superintendent. Such a thirty-calendar-day period is to begin on	2662
the date that the superintendent receives the derivative use plan	2663
and internal controls.	2664

(D) The superintendent may adopt rules prescribing the form	2665
and content of derivative use plans, as well as any internal	2666
controls the superintendent considers necessary.	2667

(E) An insurer that engages in hedging transactions or	2668
replication transactions shall do both of the following:	2669

(1) Maintain its position in any outstanding derivative	2670
instrument used as part of a hedging transaction or replication	2671
transaction for as long as the hedging transaction or replication	2672
transaction remains in effect;	2673

(2) Demonstrate to the superintendent, upon request, that any	2674
derivative transaction entered into and involving hedging	2675
transaction or replication transaction is an effective hedging	2676
transaction or replication transaction. The insurer must be able	2677
to demonstrate this at the time the derivative transaction is	2678
entered into, and for as long as the transaction continues to be	2679
in place.	2680

Sec. 3906.13.  (A) If the superintendent determines that an	2681
insurer's investment practices do not meet the requirements of	2682
this chapter, the superintendent may, after notification to the	2683
insurer of the superintendent's findings, order the insurer to	2684
make changes necessary to comply with this chapter.	2685

(B) If the superintendent determines that the financial	2686
condition, current investment practice, or current investment plan	2687
of an insurer are or may endanger the interests of insureds,	2688
creditors, or the general public, the superintendent may impose	2689
reasonable additional restrictions upon the admissibility or	2690
valuation of investments and may impose restrictions on the	2691
investment practices of the insurer, including prohibiting an	2692
investment or requiring the divestment of an investment.	2693

(C) The superintendent may count toward satisfaction of the	2694
minimum asset requirement any assets that an insurer is required	2695
to invest under the laws of a country other than the United States	2696
as a condition for doing business in that country if the	2697
superintendent finds that counting them does not endanger the	2698
interests of the insurer's insureds or creditors, or the general	2699
public.	2700

(D) If the superintendent is satisfied by evidence of the	2701
solidity of an insurer and the competence of management and its	2702
investment advisors, the superintendent, after a hearing, may, by	2703
order, adjust the class limitations prescribed in section 3906.08	2704
of the Revised Code for that insurer, to the extent that the	2705
superintendent is satisfied that the interests of the insurer's	2706
insureds and creditors and the general public are sufficiently	2707
protected. Such adjustments, in aggregate, shall be limited to an	2708
amount equal to ten per cent of the insurer's liabilities.	2709

Sec. 3906.14.  (A) An insurer subject to an order of the	2710
superintendent under section 3906.03 or 3906.13 of the Revised	2711
Code may request a hearing within thirty days of the date of the	2712
order. The hearing shall be held in compliance with Chapter 119.	2713
of the Revised Code.	2714

(B) The superintendent shall hold hearings required under	2715
this section privately unless the insurer requests a public	2716
hearing, in which case the hearing shall be public.	2717

Sec. 3906.15.  (A) The superintendent may, in accordance with	2718
section 119.03 of the Revised Code, adopt rules interpreting and	2719
implementing the provisions of this chapter.	2720

(B) The superintendent may, in accordance with section 119.03	2721
of the Revised Code, adopt one or more of the following	2722
restrictions on investments in rules:	2723

(1) The superintendent may prescribe for defined classes of	2724
insurers special procedural requirements, including special	2725
reports and prior approval on investments, as well as disapproval	2726
of investments subsequent to either.	2727

(2) The superintendent may prescribe substantive restrictions	2728
on investments of defined classes of insurers, including all of	2729
the following:	2730

(a) Specification of classes of assets that may not be	2731
counted toward satisfaction of the minimum asset requirement even	2732
though the assets may be counted for unrestricted insurers;	2733

(b) Specification of maximum amounts of assets that an	2734
insurer may invest in a single investment, issue, or class or	2735
group of classes of investments that shall be expressed as	2736
percentages of total assets, capital, surplus, legal reserves, or	2737
other variables;	2738

(c) Prescription of qualitative tests for investments and	2739
conditions under which investments may be made, including	2740
requirements of specified ratings from investment advisory	2741
services, listing on specified stock exchanges, collateral,	2742
marketability, currency matching, and the financial and legal	2743
status of the issuer and its earnings capacity.	2744

(C) If the superintendent is satisfied by evidence of the	2745
solidity of an insurer and the competence of management and its	2746
investment advisors, the superintendent, after a hearing, may by	2747
order grant an exemption to that insurer from any restriction made	2748
under division (B) of this section to the extent that the	2749
superintendent is satisfied that the interests of the insurer's	2750
insureds and creditors, as well as the general public, are	2751
protected.	2752

Sec. 3907.14.  The capital, surplus, and all accumulations of	2753
every domestic life insurance company shall be invested as	2754
follows:	2755

(A) A domestic company may acquire, hold, and convey real	2756
estate:	2757

(1) Which has been acquired or is acquired for its principal	2758
offices, or which is used in connection therewith, provided that	2759
it shall not invest more than five per cent of its admitted assets	2760
on the preceding thirty-first day of December in such real estate;	2761

(2) Which has been mortgaged to it in good faith by way of	2762
security for loans previously contracted or for money due;	2763

(3) Which has been conveyed to it in satisfaction of debts	2764
previously contracted in the course of its dealings, or which it	2765
may receive in or on account of an exchange for real estate	2766
acquired in its operations;	2767

(4) Which it has purchased at sales under mortgages and on	2768
any legal process in connection with its investments or under	2769
decrees obtained or made for such debts;	2770

(5) Which is acquired, owned, or held for the purpose of	2771
developing, improving, or otherwise utilizing such real estate for	2772
the production of income, without restriction or limitation as to	2773
time, and may acquire, lease, hold, and manage personal property	2774
used in connection therewith. No investments in real estate to be	2775
used primarily for recreational, agricultural, or mining purposes	2776
shall be made under authority of division (A)(5) of this section	2777
and except for investments authorized under divisions (A)(1), (2),	2778
(3), and (4) of this section, no domestic life insurance company	2779
shall invest in real estate under divisions (A)(5) and (R) of this	2780
section a sum exceeding in the aggregate ten per cent of its	2781
admitted assets on the preceding thirty-first day of December.	2782

All real estate specified in divisions (A)(3) and (4) of this	2783
section, which is not necessary for its accommodation in the	2784
convenient transaction of its business, shall be sold by the	2785
company and disposed of within five years after it has acquired	2786
the title to such real estate or within five years after such real	2787
estate has ceased to be necessary for the accommodation of its	2788
business, unless the company procures the certificate of the	2789
superintendent of insurance that its interests will suffer	2790
materially by a forced sale of the real estate, in which event the	2791
time for the sale may be extended to such time as the	2792
superintendent directs in such certificate.	2793

(B) A domestic company may acquire, hold, and convey tangible	2794
personal property or interests therein for the production of	2795
income, provided no domestic company shall invest in excess of two	2796
per cent of its admitted assets as of the preceding thirty-first	2797
day of December under this division.	2798

(C) In loans and liens upon the security of its own policies,	2799
not exceeding the reserve or present value of the policies,	2800
computed according to any standard authorized by law or according	2801
to such higher standard as the company has adopted and maintains	2802
on the policy, the reserve being the amount of debts of the life	2803
insurance company by reason of its outstanding policies in gross,	2804
which may be so treated in the returns for taxation made by it;	2805

(D) In bankers' acceptances and bills of exchange of the	2806
kinds and maturities made eligible by law for rediscount with	2807
federal reserve banks, provided that such acceptances and bills of	2808
exchange are accepted by a bank or trust company incorporated	2809
under the laws of the United States or of this state or any other	2810
bank or trust company which is a member of the federal reserve	2811
system;	2812

(E) In equipment trust obligations or certificates, security	2813
agreements, or other evidences of indebtedness entered into	2814
directly or guaranteed by any company operating wholly or partly	2815
within the United States or Canada, provided that the debt	2816
obligation is secured by a first lien on tangible personal	2817
property which is purchased or secured for payment thereof and the	2818
debt obligation is repayable within twenty years from the date of	2819
issue in annual, semiannual, or more frequent installments	2820
beginning not later than the first year after such date;	2821

(F) In bonds issued by or for federal land banks and any	2822
debentures issued by or for federal intermediate credit banks	2823
under the "Federal Farm Loan Act of 1916," 39 Stat. 360, 12	2824
U.S.C.A. 641 as amended; any debentures issued by or for banks for	2825
cooperatives under the "Farm Credit Act of 1933," 48 Stat. 257, 12	2826
U.S.C.A. 131 as amended;	2827

(G) In bonds issued under the "Home Owners' Loan Act of	2828
1933," 48 Stat. 128, 12 U.S.C.A. 1461;	2829

(H) In notes, bonds, debentures, or other such obligations	2830
issued by the federal housing administrator;	2831

(I)(1)(a) In bonds or other evidences of indebtedness, not in	2832
default as to principal or interest, which are valid obligations	2833
issued, assumed or guaranteed by the United States, by any state	2834
thereof, by the Commonwealth of Puerto Rico, by any territory or	2835
insular possession of the United States, or by the District of	2836
Columbia, or which are valid obligations issued, assumed, or	2837
guaranteed by any county, municipal corporation, district, or	2838
political subdivision, or by any civil division or public	2839
instrumentality of such governmental units, if by statutory or	2840
other legal requirements such obligations are payable, as to both	2841
principal and interest, from taxes levied upon all taxable	2842
property within the jurisdiction of such governmental unit;	2843

(b) In bonds or other obligations issued by or for account of	2844
any such governmental unit having a population of five thousand or	2845
more by the latest official federal or state census, which are	2846
payable as to both principal and interest from revenues or	2847
earnings from the whole or any part of a publicly owned utility	2848
supplying water, gas, sewage disposal facility, or electricity, or	2849
any or all of them, provided that by statute or other applicable	2850
legal requirements, rates from the service or operation of such	2851
utility must be fixed, maintained, and collected at all times so	2852
as to produce sufficient revenues or earnings to pay both	2853
principal and interest of such bonds or obligations as they become	2854
due;	2855

(c) In any bonds or obligations payable from and secured by	2856
revenues of the United States, the Commonwealth of Puerto Rico, or	2857
any state or instrumentality of any of them, or of the District of	2858
Columbia or of any commission, board, or other instrumentality of	2859
one or more of them, provided there is a specific pledge of	2860
revenues, and provided that there is adequate provision for	2861
payment of interest prior to completion of construction and that	2862
rates, fees, tolls, or charges fixed are, after completion of	2863
construction, sufficient to pay all expenses of operation and	2864
maintenance and the principal and interest when due.	2865

(2) In legally authorized and executed bonds, notes,	2866
warrants, and securities which are the direct obligation of or are	2867
guaranteed by Canada, or which are the direct obligation of or are	2868
guaranteed as to both principal and interest by any province of	2869
Canada, or which are the direct obligation of or are guaranteed as	2870
to both principal and interest by any municipality of Canada	2871
having a population of fifty thousand or more by the latest	2872
official census, and which are not in default as to principal or	2873
interest;	2874

(3) In bonds or other evidence of indebtedness, not in	2875
default as to principal or interest, which are valid obligations	2876
issued, assumed, or guaranteed by the United States, by any state	2877
thereof, the Commonwealth of Puerto Rico, or by the District of	2878
Columbia, if by statutory or other legal requirements such	2879
obligations are payable, as to both principal and interest, from	2880
selective taxes levied by such governmental unit.	2881

(J)(1) In mortgage bonds which are the direct obligation of a	2882
railroad, and which are the first lien on a substantial portion of	2883
its property, situated wholly in the United States or partly in	2884
the United States and partly in Canada, the average net yearly	2885
earnings of which, after deducting proper charges for maintenance	2886
of way and equipment, for the five fiscal years preceding such	2887
investments, have been at least one and one-half times the average	2888
yearly interest for the same period on its mortgages, bonds, and	2889
funded debts, and in the junior mortgage bond issues of such	2890
railroad corporations of the same character and under the same	2891
conditions where the average net yearly earnings for the five	2892
fiscal years preceding such investment, after deducting proper	2893
charges for maintenance of way and equipment, have been at least	2894
three times the average yearly interest charges on such issues and	2895
all prior liens; or in the mortgage bonds of any incorporated	2896
railroad company which have been assumed or guaranteed, both as to	2897
principal and interest, by any incorporated railroad company whose	2898
bonds constitute a legal investment under division (J)(1) of this	2899
section. In applying the earnings test to any issuing, assuming,	2900
or guaranteeing company, whether or not in legal existence during	2901
the whole of such five years next preceding the date of investment	2902
by such insurer, which has at any time during such five-year	2903
period acquired the assets of any other company by purchase,	2904
merger, consolidation, or otherwise, substantially as an entirety,	2905
or has been reorganized pursuant to the bankruptcy law, the	2906
earnings of such other predecessor or constituent companies, or of	2907
the company so reorganized, available for interest for such	2908
portion of such period that has preceded such acquisition, or such	2909
reorganization, may be included in the earnings of such issuing,	2910
assuming, or guaranteeing company for such portion of such period	2911
as is determined in accordance with adjusted or pro forma	2912
consolidated earnings statements covering such portion of such	2913
period. In such cases the requirements as to earnings shall be	2914
based upon the mortgages, bonds, and funded debts as they exist	2915
immediately after such acquisitions or such reorganizations.	2916

(2) In mortgage bonds or other interest-bearing obligations	2917
of terminal companies organized under the laws of the United	2918
States or any state thereof, provided such bonds or obligations	2919
have been assumed or guaranteed jointly or severally by two or	2920
more railroad corporations whose bonds constitute legal	2921
investments under division (J)(1) of this section;	2922

(3) In loans to veterans guaranteed in whole or in part by	2923
the United States pursuant to Title III of the "Servicemen's	2924
Readjustment Act of 1944," 58 Stat. 284, 38 U.S.C.A. 693, as	2925
amended, provided such guaranteed loans are liens upon real	2926
estate;	2927

(4) In mortgage bonds which are the direct obligation of and	2928
first lien upon the property of a corporation engaged directly and	2929
primarily in the production and sale of, or in the purchase and	2930
sale of electricity or gas, or in the operation of telephone or	2931
telegraph systems or waterworks, or in some combination of them,	2932
and situated wholly in the United States, or the Commonwealth of	2933
Puerto Rico, or partly in the United States and partly in Canada,	2934
the average net yearly earnings of which, after deducting proper	2935
charges for replacements, depreciation, and obsolescence, for the	2936
five fiscal years preceding such investment, have been at least	2937
one and one-half times the average yearly interest for the same	2938
period on its mortgages, bonds, and funded debts;	2939

(5) Any such corporation, or any of its predecessors,	2940
constituent, or successor corporations, must have been in business	2941
not less than ten years prior to the date of the purchase of such	2942
bonds, and must not have defaulted on the interest or principal of	2943
any of its bonds or funded debts outstanding during the five years	2944
immediately preceding the date of purchase, provided that division	2945
(J)(5) of this section does not preclude investments in mortgage	2946
bonds of railroads reorganized through purchase of assets, merger,	2947
consolidation, bankruptcy proceedings, or otherwise if such bonds	2948
are eligible for investment under division (J)(1) of this section;	2949

(6) No investment shall be made under division (J)(1), (2),	2950
(4), or (5) of this section if such railroad or other utility	2951
corporation and its business, and its issue of bonds, funded	2952
debts, and stocks are not under the supervision and control of an	2953
authorized state or federal official or commission, provided that	2954
division (J)(6) of this section does not apply to the mortgage	2955
bonds or other interest-bearing obligations of companies engaged	2956
in the operation of telephone or telegraph systems.	2957

(K)(1) In bonds or notes secured by mortgages or deeds of	2958
trust which are a first lien upon unencumbered fee simple real	2959
estate in any state, the Commonwealth of Puerto Rico, the District	2960
of Columbia, or Canada, provided the amount loaned does not exceed	2961
eighty per cent of the actual market value of such property.	2962

The actual market value of any such property shall be shown	2963
by a valuation and appraisement in writing by a qualified land	2964
appraiser.	2965

In the event the amount loaned under division (K)(1) of this	2966
section exceeds eighty per cent of the actual market value of the	2967
land, the structures on the land must be insured by an authorized	2968
fire insurance company or covered by other comparable	2969
indemnification, and the policies or indemnifications shall be	2970
payable or assigned to the mortgagee or to a trustee in its behalf	2971
and shall be held by the mortgagee or an agent of the mortgagee or	2972
by such trustee; or in lieu of holding such policies or	2973
indemnifications, the mortgagee may purchase a policy or policies	2974
of mortgage protection insurance, payable to the mortgagee or a	2975
trustee in its behalf, insuring the mortgagee against loss	2976
resulting from the failure of the mortgagor to acquire and	2977
maintain, from such an authorized fire insurance company or other	2978
comparable source, insurance or indemnification.	2979

(2) In bonds or notes secured by mortgages insured by the	2980
federal housing administrator;	2981

(3) In bonds or notes secured by mortgages or deeds of trust	2982
which are a first lien on leasehold estates in wholly or partly	2983
improved real property, unencumbered, except rentals accruing from	2984
the property to the owner of the fee, provided that any loan	2985
secured by a leasehold estate must provide for amortization by	2986
repayment of principal at least once in each year in amounts	2987
sufficient to repay the loan within a period of four-fifths of the	2988
unexpired term of the leasehold but within a period of not more	2989
than thirty years, and further provided that the amount loaned on	2990
the leasehold estate does not exceed seventy-five per cent of	2991
total market value of the leasehold estate determined by	2992
appraisements in writing made under oath by two real estate	2993
owners, residents of the county or local district in which the	2994
real estate is located, or by a qualified land appraiser; if the	2995
amount loaned exceeds seventy-five per cent of the value of that	2996
portion of the leasehold estate represented by the value of the	2997
land, exclusive of improvements on the land, such improvements	2998
shall be insured against fire for the benefit of the mortgagee in	2999
an amount not less than the difference between seventy-five per	3000
cent of the value of such land, exclusive of buildings, and the	3001
amount loaned; the policies for such amount shall be payable to	3002
and held by the mortgagee or a trustee named in the lease who	3003
shall be required by the terms of said lease to use and apply the	3004
proceeds of such insurance for repairing, restoring, or rebuilding	3005
such buildings;	3006

(4) The following shall not be considered as prior liens or	3007
encumbrances in the construction and application of this section:	3008
leasehold estates of any duration, rights-of-way, servitudes,	3009
joint driveways, easements, party wall agreements, current taxes	3010
and assessments not delinquent, and restrictions as to building,	3011
use, and occupancy.	3012

(5) This section does not prohibit a domestic life insurance	3013
company from renewing or extending a loan for the original or a	3014
lesser amount nor does it prohibit a company from accepting as	3015
part payment for real estate sold by it a mortgage on the real	3016
estate for a greater percentage of the purchase price of the real	3017
estate than is otherwise permitted by this section.	3018

(L) In bonds, notes, or other evidences of indebtedness of	3019
corporations, trusts, partnerships, or similar business entities	3020
organized under the laws of the United States, or any state	3021
thereof, the Commonwealth of Puerto Rico, the District of	3022
Columbia, or Canada or any province of Canada, secured by	3023
assignment of lease or leases or the rentals payable under such	3024
leases, of real or personal property or both to (1) the United	3025
States or any instrumentality thereof, or any state of the United	3026
States, the Commonwealth of Puerto Rico, or the District of	3027
Columbia, or any county, city, town, school, or water district,	3028
authority, or other political subdivision in any such government,	3029
or Canada, any province of Canada, or any municipal corporation of	3030
Canada that has a population of fifty thousand or more by the	3031
latest official census; or (2) one or more corporations, trusts,	3032
partnerships, or similar business entities organized under the	3033
laws of the United States, any state thereof, the Commonwealth of	3034
Puerto Rico, the District of Columbia, or Canada or any province	3035
of Canada, provided that (a) the fixed rentals assigned shall be	3036
sufficient to repay the indebtedness within the unexpired term of	3037
the lease, exclusive of the term which may be provided by an	3038
enforceable option of renewal; (b) such lessee has not defaulted	3039
in payment of interest or principal on any of its bonds, notes,	3040
debentures, or other evidences of indebtedness during the five	3041
years immediately preceding the date of the investment, and	3042
provided the average net earnings available for fixed charges of	3043
such lessee under division (L)(2) of this section for not less	3044
than five fiscal years preceding such investment have been at	3045
least one and one-half times average fixed charges for that period	3046
and during either of the last two years of such period, the net	3047
earnings available for fixed charges shall have been not less than	3048
one and one-half times fixed charges for such year, except that	3049
railroad companies and utility companies may qualify as lessees	3050
herein by application of the earnings test provided for railroads	3051
under division (J)(1) of this section and for utilities under	3052
division (J)(4) of this section; and (c) a first lien on the	3053
interest of the lessor in the unencumbered property so leased	3054
shall be obtained as additional security for the indebtedness;	3055

(M) In ground rents, land trust certificates, or fee	3056
ownership certificates representing or evidencing beneficial	3057
ownership of or interest in improved real estate under lease for	3058
not less than twenty-five years from the date of such lease, in	3059
which it must be provided that the lessee shall pay all taxes and	3060
assessments levied on or assessed against said real estate, shall	3061
maintain the improvements on the real estate in good repair, and	3062
shall provide and maintain fire insurance in an amount equal to	3063
the insurable value of the building on the real estate; provided:	3064

(1) The value of the land and improvements shall be evidenced	3065
by an appraisement made under oath by a disinterested appraiser	3066
resident in and the owner of real estate in the city in which the	3067
property is situated, and such appraisement shall not be less than	3068
one and sixty-seven hundredths times the amount of such land trust	3069
certificates, which amount shall be not less than twenty times the	3070
net annual rental distributable to holders of outstanding	3071
certificates;	3072

(2) Such beneficial interests shall only be in properties on	3073
which actual earning records for five years immediately preceding	3074
are available;	3075

(3) Such declaration of trust or other trust instrument shall	3076
provide for a depreciation or other similar fund, in an amount	3077
which is not less than nine per cent of the net annual	3078
distributable rental, for the benefit of the holders of	3079
outstanding certificates.	3080

(N)(1) In certificates of deposit or other evidence of	3081
indebtedness of a savings and loan association provided the	3082
certificates or other evidence of deposit are insured pursuant to	3083
the "Financial Institutions Reform, Recovery, and Enforcement Act	3084
of 1989," 103 Stat. 183, 12 U.S.C.A. 1811, as amended;	3085

(2) In interest-bearing obligations, including savings	3086
accounts and time certificates of deposit of a national bank or	3087
state bank provided such bank is a member of the federal deposit	3088
insurance corporation created pursuant to the "Banking Act of	3089
1933," 92 Stat. 624, 12 U.S.C.A. 624, as amended.	3090

(O) In obligations issued, assumed, or guaranteed by the	3091
international finance corporation or by the international bank for	3092
reconstruction and development, the Asian development bank, the	3093
inter-American development bank, the African development bank, or	3094
other similar development bank in which the president, as	3095
authorized by congress and on behalf of the United States, has	3096
accepted membership;	3097

(P)(1) In the preferred stocks of any company organized under	3098
the laws of the United States or of any state thereof engaged	3099
directly and primarily in the production and sale of, or in the	3100
purchase and sale of electricity or gas, or in the operation of	3101
telephone or telegraph systems or water works, or in some	3102
combination of them, if the average annual net earnings of such	3103
company, for not less than five fiscal years preceding purchase	3104
thereof, after deduction of interest on all mortgages, bonds,	3105
debentures, and funded debts and after deduction of the proper	3106
charges for replacements, depreciation, and obsolescence, have	3107
been at least two times the average yearly amount which is	3108
required to pay the dividends or distributions on all preferred	3109
stocks; and in which the mortgages, bonds, debentures, funded	3110
debts, and preferred stocks shall not in the aggregate exceed	3111
seventy per cent of the total capitalization of such company,	3112
including mortgages, bonds, debentures, funded debts, and	3113
preferred and common stocks;	3114

(2) In the preferred stocks of any other company organized	3115
under the laws of the United States, or of any state thereof if	3116
the average annual net earnings of such company for a period of	3117
not less than five fiscal years preceding purchase thereof, after	3118
deduction of interest on all mortgages, bonds, debentures, and	3119
funded debts and after deduction of the proper charges for	3120
replacements, depreciation, and obsolescence, have been at least	3121
four times the amount which is required to pay the dividends or	3122
distributions on all preferred stocks, and in which the mortgages,	3123
bonds, debentures, funded debts, and preferred stocks shall not in	3124
the aggregate exceed sixty per cent of the total capitalization of	3125
such company, including mortgages, bonds, debentures, funded	3126
debts, and preferred and common stocks;	3127

(3) A domestic life insurance company shall not purchase any	3128
preferred stocks when the total market values of such stocks then	3129
owned with those purchased exceed in the aggregate of book values	3130
and purchase price the capital, surplus, and contingency funds,	3131
excluding all reserves required by law, of such company on the	3132
thirty-first day of December preceding the date of such purchase,	3133
or contemplated purchase, provided that in case of appreciations	3134
in values of stocks owned the cost rather than the market values	3135
shall be used in arriving at such aggregate; the purpose being to	3136
restrict the investments of such company in all preferred stocks	3137
to capital, surplus, and contingency funds.	3138

(4) In the bonds, notes, debentures, or other evidences of	3139
indebtedness of a solvent corporation, trust, partnership, or	3140
similar business entity existing under the laws of the United	3141
States, of any state thereof, the Commonwealth of Puerto Rico, or	3142
Canada or any province of Canada, provided that either:	3143

(a) The bonds, notes, debentures, or other evidences of	3144
indebtedness of such corporation, trust, partnership, or similar	3145
business entity are rated 1 or 2 by the securities valuation	3146
office of the national association of insurance commissioners;	3147

(b) The corporation, trust, partnership, or similar business	3148
entity has not defaulted in payment of interest or principal on	3149
any of its bonds, notes, debentures, or other evidences of	3150
indebtedness during the five years immediately preceding the date	3151
of purchase, and the average annual net earnings of such	3152
corporation, trust, partnership, or similar business entity that	3153
are available for fixed charges for not less than five fiscal	3154
years preceding such purchase have been at least one and one-half	3155
times the average fixed charges of such corporation, trust,	3156
partnership, or similar business entity for that period and during	3157
either of the last two years of such period, the net earnings	3158
available for fixed charges shall have been not less than one and	3159
one-half times the fixed charges of such corporation, trust,	3160
partnership, or similar business entity for such year.	3161

(5) In common stocks or shares of any solvent incorporated	3162
company organized under the laws of the United States, or of any	3163
state, district, or territory thereof, or the Commonwealth of	3164
Puerto Rico, provided that a dividend or distribution has been	3165
paid by the corporation in the preceding twelve months upon such	3166
stock to be purchased, or that such corporation, together with its	3167
predecessor corporation or corporations, has been in existence for	3168
a period of at least five years. No domestic company shall invest	3169
in common stock or shares under divisions (P)(5) and (R) of this	3170
section a sum exceeding in the aggregate ten per cent of its	3171
admitted assets on the preceding thirty-first day of December.	3172

(6) In the stocks, limited liability company membership	3173
interests, limited partnership interests, or limited liability	3174
partnership interests of insurance, financial, investment, and	3175
investment management companies, which investment management	3176
companies are registered with the securities and exchange	3177
commission under the "Investment Company Act of 1940," 54 Stat.	3178
789, 15 80a-1, as amended, or the stocks, limited liability	3179
company membership interests, limited partnership interests, or	3180
limited liability partnership interests in an entity wholly owned	3181
by a domestic company or by a domestic company and its affiliates,	3182
that is formed and maintained to acquire or hold specific assets	3183
or liabilities for bankruptcy remoteness or limitation of	3184
liability purposes, except its own stock, but no domestic life	3185
insurance company shall invest in such stocks, limited liability	3186
company membership interests, or limited liability partnership	3187
interests under division (P)(6) of this section, exclusive of its	3188
investments in stocks or limited liability company membership	3189
interests of insurance company subsidiaries or subsidiaries	3190
engaged exclusively in the ownership of insurance company	3191
subsidiaries, a sum exceeding the lesser of fifty per cent of its	3192
policyholder surplus or ten per cent of its admitted assets as of	3193
the preceding thirty-first day of December unless the approval of	3194
the superintendent of insurance is first obtained. Whenever the	3195
superintendent has reason to believe that the retention,	3196
investment, or acquisition of the stock, limited liability company	3197
membership interest, limited partnership interest, or limited	3198
liability partnership interest of any such company substantially	3199
lessens competition generally in the business of insurance or	3200
creates a monopoly therein the superintendent shall proceed under	3201
section 3901.13 of the Revised Code to cause such domestic	3202
insurance company to divest itself of such stock, limited	3203
liability company membership interest, limited partnership	3204
interest, or limited liability partnership interest.	3205

(7)(a) In bonds, notes, debentures, or other evidences of	3206
indebtedness issued, assumed, or guaranteed by a solvent	3207
corporation, trust, or partnership formed or existing under the	3208
laws of a foreign jurisdiction, provided each such foreign	3209
investment is of the same kind and quality as United States	3210
investments authorized under this section; or in common or	3211
preferred stock, shares, membership interest, or partnership	3212
interest of any solvent business entity formed or existing under	3213
the laws of a foreign jurisdiction provided each such foreign	3214
investment is of the same kind and quality as United States	3215
investments authorized under this section; or in bonds or other	3216
evidences of indebtedness issued, assumed, or guaranteed by a	3217
foreign jurisdiction.	3218

An insurer shall not invest in foreign investments under	3219
division (P)(7) of this section, including investments denominated	3220
in foreign currency, a sum exceeding in the aggregate fifteen per	3221
cent of its admitted assets as of the preceding thirty-first day	3222
of December. The aggregate amount of investments held by an	3223
insurer in a single foreign jurisdiction shall not exceed three	3224
per cent of its admitted assets as of the preceding thirty-first	3225
day of December.	3226

As used in division (P)(7)(a) of this section, "foreign	3227
jurisdiction" means a jurisdiction outside the United States,	3228
Puerto Rico, or canadaCanada, whose bonds are rated 1 by the	3229
securities valuation office of the national association of	3230
insurance commissioners.	3231

(b) An insurer may acquire investments denominated in foreign	3232
currency whether or not they are foreign investments.	3233

An insurer shall not invest in investments denominated in	3234
foreign currency a sum exceeding in the aggregate ten per cent of	3235
its admitted assets as of the preceding thirty-first day of	3236
December. The aggregate amount of investments denominated in a	3237
single foreign currency held by an insurer shall not exceed three	3238
per cent of an insurer's admitted assets as of the preceding	3239
thirty-first day of December.	3240

(c) As used in division (P)(7) of this section, "foreign	3241
currency" means a currency other than that of the United States.	3242

(8) An insurer may invest without limitation in investments	3243
of government money market funds. As used in division (P)(8) of	3244
this section, "government money market fund" means a mutual fund	3245
that at all times invests in obligations issued, guaranteed, or	3246
insured by the federal government of the United States, or	3247
collateralized repurchase agreements comprised of these	3248
obligations, and that qualifies for investment without a reserve	3249
pursuant to the purposes and procedures of the securities	3250
valuation office of the national association of insurance	3251
commissioners.	3252

(Q) In loans upon the pledge of any securities in which such	3253
companies are authorized by this section to invest, provided that	3254
any loan upon such a pledge shall not exceed eighty per cent of	3255
the cash market value of the collateral at the time of the making	3256
of such loan and at the end of each twelve-month period	3257
thereafter, and such company, through the collateral pledged to	3258
it, shall not exceed the amounts which it may, under this section,	3259
invest in one corporation so that, in the stocks and securities	3260
which may be owned and those which are pledged to it, the	3261
limitations in this section might be indirectly evaded;	3262

(R)(1) Any domestic legal reserve life insurance company may	3263
loan or invest its funds, to an extent not exceeding in the	3264
aggregate five per cent of its total admitted assets, in loans or	3265
investments not permitted under this section. Any such company may	3266
also invest up to an additional five per cent of its total	3267
admitted assets, in loans or investments in small businesses	3268
having more than half of their assets or employees in this state	3269
and in venture capital firms having an office within this state,	3270
provided that, as a condition of a company making an investment in	3271
a venture capital firm, the firm must agree to use its best	3272
efforts to make investments, in an aggregate amount at least equal	3273
to the investment to be made by the company in that venture	3274
capital firm, in small businesses having their principal offices	3275
within this state and having either more than one-half of their	3276
assets within this state or more than one-half of their employees	3277
employed within this state.	3278

As used in division (R) of this section:

3279

(a) "Small businesses" means any corporation, partnership,	3280
proprietorship, or other entity that either does not have more	3281
than four hundred employees, or would qualify as a small business	3282
for the purpose of receiving financial assistance from small	3283
business investment companies licensed under the "Small Business	3284
Investment Act of 1958," 72 Stat. 689, 15 U.S.C.A. 661, as	3285
amended, and rules of the small business administration.	3286

(b) "Venture capital firms" means any corporation,	3287
partnership, proprietorship, or other entity, the principal	3288
business of which is or will be the making of investments in small	3289
businesses.	3290

(c) "Investments" means any equity investment, including	3291
limited partnership interests and other equity interests in which	3292
liability is limited to the amount of the investment, but does not	3293
include general partnership interests or other interests involving	3294
general liability.	3295

(2) In the event that, subsequent to being made under	3296
provisions of division (R) of this section, an investment is	3297
determined to have become qualified as an investment for a	3298
domestic life insurance company as provided for in this section,	3299
the company may consider such investment as held under the	3300
applicable provisions of the foregoing divisions (A) to (Q) of	3301
this section and such investment shall no longer be considered as	3302
having been made under the provisions of this division.	3303

(S)(1) No domestic life insurance company shall subscribe to	3304
or participate in any underwriting for the purchase or sale of	3305
securities or property, nor shall it enter into any such	3306
transaction for purchase or sale on account of said company	3307
jointly with any other person, nor shall any such company enter	3308
into any agreement to withhold from sale any of its property, but	3309
the disposition of its property shall be at all times within the	3310
control of its board of directors. Nothing contained in division	3311
(S)(1) of this section shall be construed to invalidate or	3312
prohibit an agreement by an insurance company for the purchase for	3313
its own account of an entire issue of the securities of a	3314
corporation or to invalidate or prohibit an agreement by an	3315
insurance company and one or more other investors to join and	3316
share in the purchase of investments for their individual accounts	3317
and for bona fide investment purposes.	3318

(2) In the determination of capitalization in this section	3319
the value of all bonds, debentures, and funded debts, and	3320
nonconvertible or nonparticipating preferred stocks shall be	3321
figured at par. Participating or convertible preferred shares	3322
shall be figured at par or market on the preceding thirty-first	3323
day of December, whichever is higher, and the value of all common	3324
shares shall be figured at the market on the preceding	3325
thirty-first day of December.	3326

(3) As used in this section:

3327

(a) "Funded debt" means all interest-bearing obligations	3328
maturing in more than one year from their issuance and all	3329
guaranteed or assumed interest-bearing obligations or stock.	3330
Securities or stock of a corporation pledged to secure other	3331
funded debt of the corporation are not included in the funded	3332
debt.	3333

(b) "Fixed charges" include actual interest incurred in each	3334
year on funded and unfunded debt and annual apportionment of debt	3335
discount or premium. Where interest is partially or entirely	3336
contingent upon earnings, "fixed charges" include contingent	3337
interest payments.	3338

(c) "Net earnings available for fixed charges" means income	3339
after deducting operating and maintenance expenses, taxes other	3340
than income taxes, depreciation, and depletion. Extraordinary,	3341
nonrecurring items of income or expense shall be excluded.	3342

(4) Except as provided in a plan of mutualization adopted	3343
pursuant to the provisions of sections 3913.01 to 3913.10 of the	3344
Revised Code, no domestic life insurance company may invest in or	3345
loan upon its own stock, either directly or indirectly.	3346

(5) If the investments of any domestic life insurance company	3347
are at the time of the making thereof or on October 13, 1953,	3348
otherwise than as authorized in this section, such investments	3349
shall not be admitted or accepted as authorized investments for	3350
such company.	3351

(6) Any earnings test provided for in this section shall be	3352
deemed to have been met if the requirements of such earnings test	3353
are met by any company which assumes or guarantees the investment	3354
or which assumes or guarantees the performance of any lease which	3355
is the security for the investment. In applying any such earnings	3356
test, the operations of a company's predecessor companies, if any,	3357
for the stipulated period shall be included.	3358

(7) No domestic life insurance company shall at any time have	3359
invested in or loaned upon the security of the obligations,	3360
property, or securities of a particular corporation, trust,	3361
partnership, or similar business entity a sum exceeding the	3362
greater of two per cent of its admitted assets as of the preceding	3363
thirty-first day of December or twenty-five per cent of that	3364
portion of its capital and surplus, or its surplus in the case of	3365
a mutual company, that exceeds the minimum required capital and	3366
surplus under section 3907.05 of the Revised Code unless the	3367
approval of the superintendent of insurance is first obtained. The	3368
restrictions of division (S)(7) of this section do not apply to	3369
divisions (C), (F), (G), (H), (P)(6), and (R) of this section or	3370
to any valid obligation issued, assumed, or guaranteed by the	3371
United States, or any state thereof, the Commonwealth of Puerto	3372
Rico, the District of Columbia, or Canada or any province of	3373
Canada. For purposes of division (S)(7) of this section, such	3374
company may, at its option, consider either the lessor or the	3375
lessee under division (L) of this section to be the person to whom	3376
any such investment or loan is made.	3377

(8) This section does not affect the propriety or legality of	3378
an investment made by a domestic life insurance company which was	3379
in accordance with the laws in force at the time of the making of	3380
the investment.	3381

(T) A domestic life insurance company may seek permission	3382
from the superintendent of insurance to invest funds under Chapter	3383
3906. of the Revised Code and may invest funds under that chapter	3384
if such permission is granted.	3385

Sec. 3913.34.  (A) Sections 3913.11 to 3913.13 and 3913.20 to	3386
3913.23 of the Revised Code shall apply to a mutual insurance	3387
holding company as if the mutual insurance holding company were a	3388
domestic mutual insurance company. The members of the mutual	3389
insurance holding company are deemed to be members of a domestic	3390
mutual insurance company for all purposes of such sections.	3391

(B) A reorganization of a domestic mutual life insurance	3392
company subject to sections 3913.25 to 3913.38 of the Revised Code	3393
also is subject to sections 3907.09 to 3907.11 of the Revised	3394
Code, if applicable, but is not subject to sections 3901.32 to	3395
3901.323 of the Revised Code.	3396

(C) Notwithstanding division (B) of this section, for a	3397
period of five years following the effective date of a	3398
reorganization under sections 3913.25 to 3913.38 of the Revised	3399
Code, no person shall acquire control of a reorganized stock	3400
company without compliance with sections 3901.32 to 3901.323 of	3401
the Revised Code. For purposes of this division, "control" has the	3402
same meaning as in division (B) of section 3901.32 of the Revised	3403
Code, except that control is presumed to exist if any person,	3404
directly or indirectly, owns, controls, holds with the power to	3405
vote, or holds proxies representing five per cent or more of the	3406
voting securities of any other person.	3407

(D) An intermediate holding company or, if there is no such	3408
company, a reorganized stock company shall not issue shares of	3409
stock, in addition to the shares issued pursuant to the	3410
reorganization plan under which the company was formed, without	3411
the prior approval of the mutual insurance holding company as its	3412
majority shareholder. The prior approval of the mutual insurance	3413
holding company must be evidenced by a resolution of the board of	3414
directors of the mutual insurance holding company delivered to the	3415
board of directors of the intermediate holding company or the	3416
reorganized stock company prior to the issuance of the additional	3417
shares.	3418

(E) A mutual insurance holding company, and an intermediate	3419
holding company, if any, are deemed to be insurers subject to	3420
sections 3901.07, 3901.071, and 3901.48 of the Revised Code.	3421

Sec. 3921.21. A(A) Except as provided in division (B) of	3422
this section, a fraternal benefit society shall invest its funds	3423
only in such investments as are authorized by section 3907.14 of	3424
the Revised Code for the investment of assets of life insurers and	3425
subject to the limitations thereon. Any foreign or alien society	3426
permitted or seeking to do business in this state that invests its	3427
funds in accordance with the laws of the state, district,	3428
territory, country, or province in which it is incorporated, is	3429
held to meet the requirements of this section for the investment	3430
of funds.	3431

(B) A fraternal benefit society may seek permission from the	3432
superintendent of insurance to invest funds under Chapter 3906. of	3433
the Revised Code and may invest funds under that chapter if such	3434
permission is granted.	3435

Sec. 3925.08.  Funds accumulated in the course of business,	3436
or surplus money above the capital stock, of any company organized	3437
under any law of this state, for the purpose provided in section	3438
3925.01 of the Revised Code, shall only be loaned or invested in	3439
the securities listed in sections 3925.05 and 3925.06 of the	3440
Revised Code, or in the following:	3441

(A)(1) Bonds and mortgages on unencumbered real estate within	3442
this or any other state worth twenty-five per cent more than the	3443
sum loaned thereon, exclusive of buildings, unless such buildings	3444
are insured in some company authorized to do business in this	3445
state, and the policy is transferred to the company making the	3446
investment; or, in lieu of transferring such policies, the	3447
mortgagee may purchase a policy or policies of mortgage protection	3448
insurance, payable to the mortgagee or a trustee in its behalf,	3449
insuring the mortgagee against loss resulting from the failure of	3450
the mortgagor to acquire and maintain, from such an authorized	3451
insurance company, insurance in the amount required by this	3452
section;	3453

(2) Bonds or notes secured by mortgages insured by the	3454
federal housing administrator;	3455

(3) Loans to veterans guaranteed in whole or in part by the	3456
United States pursuant to Title III of the "Servicemen's	3457
Readjustment Act of 1944," 58 Stat. 284, 38 U.S.C. 693, as	3458
amended, provided such guaranteed loans are liens upon real	3459
estate.	3460

(B)(1) Legally authorized and executed bonds, notes,	3461
warrants, and securities which are the direct obligation of or are	3462
guaranteed as to both principal and interest by Canada, or which	3463
are the direct obligation of or are guaranteed as to both	3464
principal and interest by any province of Canada, or which are the	3465
direct obligation of or are guaranteed as to both principal and	3466
interest by any municipal corporation of Canada having a	3467
population of one hundred thousand or more by the latest official	3468
census, and which are not in default as to principal or interest;	3469

(2) Obligations issued, assumed, or guaranteed by the	3470
international finance corporation or by the international bank for	3471
reconstruction and development, the Asian development bank, the	3472
inter-American development bank, the African development bank, or	3473
similar development bank in which the president, as authorized by	3474
congress and on behalf of the United States, has accepted	3475
membership.	3476

(C) Bonds or other evidences of indebtedness, not in default	3477
as to principal or interest, which are valid obligations issued,	3478
assumed, or guaranteed by the United States, by any state thereof,	3479
the Commonwealth of Puerto Rico, by any territory or insular	3480
possession of the United States, or by the District of Columbia,	3481
or which are valid obligations issued, assumed, or guaranteed by	3482
any county, municipal corporation, district, or political	3483
subdivision, or by any civil division or public instrumentality of	3484
such governmental units, if by statutory or other legal	3485
requirements such obligations are payable, as to both principal	3486
and interest, from taxes levied upon all taxable property within	3487
the jurisdiction of such governmental unit, or in bonds or other	3488
obligations issued by or for account of any such governmental unit	3489
having a population of five thousand or more by the latest	3490
official federal or state census, which are payable as to both	3491
principal and interest from revenues or earnings from the whole or	3492
any part of a publicly owned utility, provided that by statute or	3493
other applicable legal requirements, rates from the service or	3494
operation of such utility must be fixed, maintained, and collected	3495
at all times so as to produce sufficient revenues or earnings to	3496
pay both principal and interest of such bonds or obligations as	3497
they become due, and in any bonds or obligations issued or	3498
guaranteed by the United States, any state, the District of	3499
Columbia, the Commonwealth of Puerto Rico, any county, municipal	3500
corporation, district, political subdivision, civil division,	3501
commission, board, authority, agency, or other instrumentality of	3502
one or more of them, provided there is a specific pledge of	3503
revenues, earnings, or other adequate security and provided that	3504
no prior or parity obligation of the same issuer, payable from	3505
revenues or earnings from the same source, has been in default as	3506
to principal or interest during the five years next preceding the	3507
date of such investment, but such issuer need not have been in	3508
existence for that period, and obligations acquired under this	3509
section may be newly issued, and further provided that there is	3510
adequate provision for payment of expenses of operation and	3511
maintenance and the principal and interest on all obligations when	3512
due;	3513

(D)(1) Bonds or other evidences of indebtedness, bearing or	3514
accruing interest, issued, assumed, or guaranteed by any solvent	3515
corporation, trust, partnership, or similar business entity	3516
organized and existing under the laws of this or any other state,	3517
or of the United States, the Commonwealth of Puerto Rico, or of	3518
the District of Columbia, or of Canada or any province of Canada,	3519
upon which there is no existing interest or principal default,	3520
provided that either:	3521

(a) The bonds or other evidences of indebtedness are rated 1	3522
or 2 by the securities valuation office of the national	3523
association of insurance commissioners;	3524

(b) The corporation, together with its predecessor	3525
corporation or corporations, or the trust, partnership, or similar	3526
business entity, has been in existence for a period of at least	3527
five years.	3528

(2) Stocks, limited liability company membership interests,	3529
limited partnership interests, or limited liability partnership	3530
interests of any insurance, financial, investment, or investment	3531
management companies, which investment management companies are	3532
registered with the securities and exchange commission under the	3533
"Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a-1,	3534
as amended, or the stocks, limited liability company membership	3535
interests, limited partnership interests, or limited liability	3536
partnership interests in an entity wholly owned by a domestic	3537
company or by a domestic company and its affiliates, that is	3538
formed and maintained to acquire or hold specific assets or	3539
liabilities for bankruptcy remoteness or limitation of liability	3540
purposes, except its own stock, and stocks, limited liability	3541
company membership interests, limited partnership interests,	3542
limited liability partnership interests, bonds, notes, and	3543
debentures of any company which is organized for, and limited in	3544
its operations to, the financing of insurance premiums, upon	3545
approval of such investments by the superintendent of insurance;	3546
except that approval shall not be required for the purchase of the	3547
outstanding stocks, limited liability company membership	3548
interests, limited partnership interests, or limited liability	3549
partnership interests of any such company, if investment in each	3550
such company does not exceed in the aggregate two and one-half per	3551
cent of the total admitted assets of the company making the	3552
investment as of the preceding thirty-first day of December.	3553
Whenever the superintendent has reason to believe that the	3554
retention, investment, or acquisition of the stock, limited	3555
liability company membership interest, limited partnership	3556
interest, or limited liability partnership interest of any such	3557
company substantially lessens competition generally in the	3558
business of insurance or creates a monopoly therein the	3559
superintendent shall proceed under section 3901.13 of the Revised	3560
Code to cause such domestic insurance company to divest itself of	3561
such stock, limited liability company membership interest, limited	3562
partnership interest, or limited liability partnership interest.	3563

(3) Other stocks, limited liability company membership	3564
interests, or limited partnership interests, or limited liability	3565
partnership interests of any solvent corporation organized under	3566
the laws of this or any other state, or of the United States, or	3567
of the District of Columbia, or of Canada or any province of	3568
Canada, provided that a dividend or distribution has been paid by	3569
the business entity in the preceding twelve months upon the stock,	3570
membership interest, or partnership interest to be purchased or	3571
such business entity, together with its predecessor entity or	3572
entities, has been in existence for a period of at least five	3573
years.	3574

(4) A domestic company may acquire, hold, and convey tangible	3575
personal property or interests therein for the production of	3576
income, provided no domestic company shall invest in excess of two	3577
per cent of its admitted assets as of the preceding thirty-first	3578
day of December under this division.	3579

(5) In equipment trust obligations or certificates, security	3580
agreements, or other evidences of indebtedness entered into	3581
directly or guaranteed by any company operating wholly or partly	3582
within the United States or Canada, provided that such debt	3583
obligation is secured by a first lien on tangible personal	3584
property which is purchased or secured for payment thereof and	3585
such debt obligation is repayable within twenty years from the	3586
date of issue in annual, semiannual, or more frequent installments	3587
beginning not later than the first year after such date.	3588

(6) An insurer may invest without limitation in investments	3589
of government money market funds. As used in division (D)(6) of	3590
this section, "government money market fund" means a fund that at	3591
all times invests in obligations issued, guaranteed, or insured by	3592
the federal government of the United States or collateralized	3593
repurchase agreements comprised of such obligations, and that	3594
qualifies for investment without a reserve pursuant to the	3595
purposes and procedures of the securities valuation office of the	3596
national association of insurance commissioners.	3597

(E) Negotiable promissory notes maturing in not more than six	3598
months from the date thereof, secured by collateral security	3599
through the transfer of any of the classes of securities described	3600
in this section or in sections 3925.05 and 3925.06 of the Revised	3601
Code, with absolute power of sale within twenty days after default	3602
in payment at maturity;	3603

(F)(1) Repurchase agreements with, and interest-bearing	3604
obligations, including savings accounts and time certificates of	3605
deposit of, a national bank of the United States, a commonwealth	3606
bank of Puerto Rico, a chartered bank of Canada, or a state bank,	3607
provided such bank is either a member of the federal deposit	3608
insurance corporation created pursuant to the "Banking Act of	3609
1933," as amended, or the Canada deposit insurance corporation	3610
created pursuant to the act of parliament known as the "Canada	3611
Deposit Insurance Corporation Act," as amended.	3612

(2) Certificates of deposit, savings share accounts,	3613
investment share accounts, stock deposits, stock certificates, or	3614
other evidences of indebtedness of a savings and loan association,	3615
provided all such evidences of indebtedness are insured pursuant	3616
to the "Financial Institutions Reform, Recovery, and Enforcement	3617
Act of 1989," 103 Stat. 183, 12 U.S.C.A. 1811, as amended;	3618

(3) Bankers' acceptances and bills of exchange of the kinds	3619
and maturities made eligible by law for rediscount with the	3620
federal reserve banks, provided that the same are accepted by a	3621
bank or trust company incorporated under the laws of the United	3622
States or of this state or any other bank or trust company which	3623
is a member of the federal reserve system.	3624

(G) Any securities issued as a result of any reorganization,	3625
or capital or debt adjustment, in whole or in part, in exchange	3626
for securities acquired by it prior to such reorganization, or	3627
capital or debt adjustment;	3628

(H)(1) In bonds, notes, debentures, or other evidences of	3629
indebtedness issued, assumed, or guaranteed by a solvent	3630
corporation, trust, or partnership formed or existing under the	3631
laws of a foreign jurisdiction, provided each such foreign	3632
investment is of the same kind and quality as United States	3633
investments authorized under this section; or in common or	3634
preferred stock, shares, membership interests, or partnership	3635
interests of any solvent business entity formed or existing under	3636
the laws of a foreign jurisdiction, provided each such foreign	3637
investment is of the same kind and quality as United States	3638
investments authorized under this section; or in bonds or other	3639
evidences of indebtedness issued, assumed, or guaranteed by a	3640
foreign jurisdiction.	3641

An insurer shall not invest in foreign investments under	3642
division (H) of this section, including investments denominated in	3643
foreign currency, a sum exceeding in the aggregate fifteen per	3644
cent of its admitted assets as of the preceding thirty-first day	3645
of December. The aggregate amount of investments held by an	3646
insurer in a single foreign jurisdiction shall not exceed three	3647
per cent of its admitted assets as of the preceding thirty-first	3648
day of December.	3649

As used in division (H)(1) of this section, "foreign	3650
jurisdiction" means a jurisdiction outside the United States,	3651
Puerto Rico, or Canada whose bonds are rated 1 by the securities	3652
valuation office of the national association of insurance	3653
commissioners.	3654

(2) An insurer may acquire investments denominated in foreign	3655
currency whether or not they are foreign investments.	3656

An insurer shall not invest in investments denominated in	3657
foreign currency a sum exceeding in the aggregate fifteen per cent	3658
of its admitted assets as of the preceding thirty-first day of	3659
December. The aggregate amount of investments denominated in a	3660
single foreign currency held by an insurer shall not exceed three	3661
per cent of an insurer's admitted assets as of the preceding	3662
thirty-first day of December.	3663

(3) As used in division (H) of this section, "foreign	3664
currency" means a currency other than that of the United States.	3665

(I)(1) Any securities or other property not permitted under	3666
section 3925.05, 3925.06, 3925.08, or 3925.20 of the Revised Code	3667
to an extent not exceeding in the aggregate six per cent of the	3668
total admitted assets of such company on the preceding	3669
thirty-first day of December, within the limitations prescribed in	3670
division (J) of this section. Any such company may also invest up	3671
to an additional five per cent of the total admitted assets of	3672
such company on the preceding thirty-first day of December, within	3673
the limitations prescribed in division (J) of this section, in	3674
loans or investments in small businesses having more than half of	3675
their assets or employees in this state and in venture capital	3676
firms having an office within this state, provided that, as a	3677
condition of a company making an investment in a venture capital	3678
firm, the firm must agree to use its best efforts to make	3679
investments, in an aggregate amount at least equal to the	3680
investment to be made by the company in that venture capital firm,	3681
in small businesses having their principal offices within this	3682
state and having either more than one-half of their assets within	3683
this state or more than one-half of their employees employed	3684
within this state.	3685

As used in division (I) of this section:

3686

(a) "Small businesses" means any corporation, partnership,	3687
proprietorship, or other entity that either does not have more	3688
than four hundred employees, or would qualify as a small business	3689
for the purpose of receiving financial assistance from small	3690
business investment companies licensed under the "Small Business	3691
Investment Act of 1958," 72 Stat. 689, 15 U.S.C.A. 661, as	3692
amended, and rules of the small business administration.	3693

(b) "Venture capital firms" means any corporation,	3694
partnership, proprietorship, or other entity, the principal	3695
business of which is or will be the making of investments in small	3696
businesses.	3697

(c) "Investments" means any equity investment, including	3698
limited partnership interests and other equity interests in which	3699
liability is limited to the amount of the investment, but does not	3700
include general partnership interests or other interests involving	3701
general liability.	3702

(2) In the event that, subsequent to being made under this	3703
division, a loan or investment is determined to have become	3704
qualified as a loan or investment under any of the divisions (A)	3705
to (F) of this section or under section 3925.05, 3925.06, or	3706
3925.20 of the Revised Code, the company may consider such loan or	3707
investment as held under such other statutory provision and such	3708
loan or investment shall no longer be considered as having been	3709
made under this division.	3710

(J) No domestic insurance company shall at any time have	3711
invested a sum exceeding five per cent of its admitted assets as	3712
of the preceding thirty-first day of December in the bonds, notes,	3713
debentures, other evidences of indebtedness, and stocks of a	3714
particular corporation, trust, partnership, or similar business	3715
entity, except for investments authorized under divisions (A) and	3716
(D)(2) of this section, and no domestic insurance company together	3717
with its subsidiary, if any, shall at any time own directly or	3718
indirectly more than twenty-five per cent of the outstanding	3719
bonds, notes, debentures, other evidences of indebtedness, and	3720
stocks of any corporation, except for investments authorized under	3721
divisions (A) and (D)(2) of this section.	3722

This section does not affect the propriety or legality of an	3723
investment made by such domestic insurance company which was in	3724
accordance with the laws in force at the time of the making of the	3725
investment.	3726

A business entity organized for the purpose provided in	3727
section 3925.01 of the Revised Code may seek permission from the	3728
superintendent of insurance to invest funds under Chapter 3906. of	3729
the Revised Code and may invest funds under that chapter if such	3730
permission is granted.	3731

Sec. 3939.01.  (A) Any number of persons of lawful age, not	3732
less than ten in number, owning insurable property in this state,	3733
may associate themselves together for the purpose of insuring each	3734
other against the risk of direct physical loss or damage to	3735
property in this state, including theft of property in this state,	3736
except loss or damage to motor vehicles caused by collision. Any	3737
association organized under this section shall file with the	3738
department of insurance all policy forms currently in use by the	3739
association and all additions, deletions, or amendments to the	3740
policy forms at least thirty days prior to the use of the policy	3741
forms, additions, deletions, or amendments. Each filing under this	3742
division is deemed approved thirty days after the filing is	3743
received by the superintendent of insurance, unless the filing is	3744
disapproved by the superintendent during that thirty-day period.	3745

(B) Any association organized under this section, from time	3746
to time, may assess upon and collect from its members or other	3747
responsible parties sums of money that are necessary to pay	3748
expenses and losses that occur, or are anticipated to occur, from	3749
those covered perils. The assessment and collection of those sums	3750
of money shall be regulated by the constitution of the association	3751
adopted under section 3939.06 of the Revised Code. The	3752
constitution shall require the assessments to be made directly and	3753
specifically upon the members or other responsible parties, and to	3754
be paid by them out of any funds paid to or deposited with the	3755
association in anticipation of assessments. Any association	3756
organized under this section may borrow money for the payment of	3757
losses and associated expenses, but those loans shall not be made	3758
for a period of time that extends beyond the collection of the	3759
association's next assessment.	3760

(C) Any association organized under this section may	3761
accumulate a surplus from its assessments. ThatExcept as provided	3762
in division (D) of this section, that surplus and all other funds	3763
received or accumulated in the course of business shall be	3764
invested under sections 3925.05 and 3925.08 of the Revised Code.	3765
Upon prior approval of the superintendent of insurance, the	3766
association may invest that surplus and those other funds in real	3767
estate for the association's convenient accommodation in the	3768
transaction of its business. The association shall not have at any	3769
one time more than ten per cent of its admitted assets invested in	3770
real estate.	3771

(D) An association organized under this section may seek	3772
permission from the superintendent of insurance to invest funds	3773
under Chapter 3906. of the Revised Code and may invest funds under	3774
that chapter if such permission is granted.	3775

(E) Any association organized under this section may insure	3776
farm buildings, residential and detached dwellings, outbuildings,	3777
churches, township buildings, grange buildings, farm machinery,	3778
equipment, and other farm personal property, household goods and	3779
personal effects, pleasure and utility vehicles, and other similar	3780
property, except motor vehicles titled or capable of being titled	3781
for use on public roads and property used exclusively for	3782
commercial or industrial purposes.	3783

The property described in this division may be classified	3784
only for the purpose of determining and levying assessments, and	3785
that property may be located within or without the limits of any	3786
municipal corporation.	3787

(E)(F) Any association organized under this section may	3788
collect a charge on each contract of insurance in accordance with	3789
its constitution adopted under section 3939.06 of the Revised	3790
Code.	3791

(F)(G) Any association organized under this section may make	3792
contracts of reinsurance for the kinds of insurance authorized by	3793
sections 3939.01 to 3939.11 of the Revised Code or accept	3794
reinsurance on any portion of that insurance.	3795

Sec. 3953.15. The(A) Except as provided in division (B) of	3796
this section, the unearned premium reserve of a title insurance	3797
company shall be invested in accordance with sections 3925.05 to	3798
3925.08, inclusive, of the Revised Code.	3799

(B) A title insurance company may seek permission from the	3800
superintendent of insurance to invest funds under Chapter 3906. of	3801
the Revised Code and may invest funds under that chapter if such	3802
permission is granted.	3803

Section 2. That existing sections 1751.25, 3901.043, 3901.17,	3804
3901.32, 3901.321, 3901.33, 3901.34, 3901.341, 3901.35, 3901.36,	3805
3901.62, 3901.63, 3901.64, 3907.14, 3913.34, 3921.21, 3925.08,	3806
3939.01, and 3953.15, and sections 3907.09, 3907.10, 3907.11, and	3807
3907.13 of the Revised Code are hereby repealed.	3808

Section 3.  Sections 3901.371 to 3907.378 of the Revised	3809
Code, as enacted in this act, shall take effect on January 1,	3810
2015. The first filing of the own risk and solvency assessment	3811
summary report, as required by section 3901.375 of the Revised	3812
Code, shall be in 2015.	3813

Section 4. The intent of the General Assembly, in enacting	3814
this act is to protect and to further the interests of insureds,	3815
creditors, and the general public by providing, with minimum	3816
interference with management initiative and judgment, prudent	3817
standards for the development and administration of insurer	3818
investment programs.	3819

Section 5.  This act shall be known as the "Ohio Insurer	3820
Investment Act."	3821