|
|
To amend sections 1751.25, 3901.043, 3901.045, | 1 |
3901.17, 3901.32, 3901.321, 3901.33, 3901.34, | 2 |
3901.341, 3901.35, 3901.36, 3901.62, 3901.63, | 3 |
3901.64, 3903.72, 3903.721, 3903.83, 3907.14, | 4 |
3913.01, 3913.34, 3915.04, 3915.071, 3915.072, | 5 |
3921.21, 3925.08, 3939.01, and 3953.15, to amend, | 6 |
for the purpose of adopting new section numbers as | 7 |
indicated in parentheses, sections 3903.72 | 8 |
(3903.723) and 3903.721 (3903.724), to enact new | 9 |
sections 3903.72 and 3903.721 and sections | 10 |
3901.351, 3901.371, 3901.372, 3901.373, 3901.374, | 11 |
3901.375, 3901.376, 3901.377, 3901.378, 3901.41, | 12 |
3901.621, 3901.631, 3903.722, 3903.725, 3903.726, | 13 |
3903.727, 3903.728, 3903.729, 3903.7210, | 14 |
3903.7211, 3906.01 to 3906.15, and 3937.19, and to | 15 |
repeal sections 3907.09, 3907.10, 3907.11, and | 16 |
3907.13 of the Revised Code to enact the Insurance | 17 |
Regulatory Modernization Act to revise the | 18 |
insurance laws regarding alternative investments, | 19 |
holding company systems, risk management, reserves | 20 |
kept for life insurance policies, automated | 21 |
transactions, reinsurance, and mergers and | 22 |
consolidations. | 23 |
Section 1. That sections 1751.25, 3901.043, 3901.045, | 24 |
3901.17, 3901.32, 3901.321, 3901.33, 3901.34, 3901.341, 3901.35, | 25 |
3901.36, 3901.62, 3901.63, 3901.64, 3903.72, 3903.721, 3903.83, | 26 |
3907.14, 3913.01, 3913.34, 3915.04, 3915.071, 3915.072, 3921.21, | 27 |
3925.08, 3939.01, and 3953.15 be amended, sections 3903.72 | 28 |
(3903.723) and 3903.721 (3903.724) be amended for the purpose of | 29 |
adopting new section numbers as indicated in parentheses, new | 30 |
sections 3903.72 and 3903.721, and sections 3901.351, 3901.371, | 31 |
3901.372, 3901.373, 3901.374, 3901.375, 3901.376, 3901.377, | 32 |
3901.378, 3901.41, 3901.621, 3901.631, 3903.722, 3903.725, | 33 |
3903.726, 3903.727, 3903.728, 3903.729, 3903.7210, 3903.7211, | 34 |
3906.01, 3906.02, 3906.03, 3906.04, 3906.05, 3906.06, 3906.07, | 35 |
3906.08, 3906.09, 3906.10, 3906.11, 3906.12, 3906.13, 3906.14, | 36 |
3906.15, and 3937.19 of the Revised Code be enacted to read as | 37 |
follows: | 38 |
Sec. 1751.25. | 39 |
this section, the funds of a health insuring corporation shall be | 40 |
invested only in securities or other investments or assets that | 41 |
constitute permissible investments under section 1751.26 or | 42 |
3925.08 of the Revised Code. | 43 |
(B) A health insuring corporation may seek permission from | 44 |
the superintendent of insurance to invest funds under Chapter | 45 |
3906. of the Revised Code and may invest funds under that chapter | 46 |
if such permission is granted. | 47 |
Sec. 3901.043. The superintendent of insurance may adopt | 48 |
rules in accordance with Chapter 119. of the Revised Code to | 49 |
establish reasonable fees for any service or transaction performed | 50 |
by the department of insurance pursuant to section 1751.03, | 51 |
3901.321, 3901.341, | 52 |
3913.40, 3915.14, 3917.06, 3918.07, 3923.02, 3935.04, 3937.03, or | 53 |
3953.28 of the Revised Code or any provision in sections 3913.01 | 54 |
to 3913.23 or in Chapter 3905. of the Revised Code, if no fee is | 55 |
otherwise provided under Title XVII or XXXIX of the Revised Code | 56 |
for such service or transaction. Any fee collected pursuant to | 57 |
those rules shall be paid into the state treasury to the credit of | 58 |
the department of insurance operating fund. | 59 |
Sec. 3901.045. (A) The superintendent of insurance may | 60 |
receive documents and information, including otherwise | 61 |
confidential or privileged documents and information, from local, | 62 |
state, federal, and international regulatory and law enforcement | 63 |
agencies, from local, state, and federal prosecutors, and from the | 64 |
national association of insurance commissioners and its affiliates | 65 |
and subsidiaries, provided that the superintendent maintains as | 66 |
confidential or privileged any document or information received | 67 |
with notice or the understanding that the document or information | 68 |
is confidential or privileged under the laws of the jurisdiction | 69 |
that is the source of the document or information. | 70 |
(B) The superintendent may also receive documents and | 71 |
information, including otherwise confidential or privileged | 72 |
documents and information, from the chief deputy rehabilitator, | 73 |
the chief deputy liquidator, other deputy rehabilitators and | 74 |
liquidators, and from any other person employed by, or acting on | 75 |
behalf of, the superintendent pursuant to Chapter 3901. or 3903. | 76 |
of the Revised Code, provided that the superintendent maintains as | 77 |
confidential or privileged any document or information received | 78 |
with the notice or understanding that the document or information | 79 |
is confidential or privileged, except that the superintendent may | 80 |
share and disclose such a document or information when authorized | 81 |
by other sections of the Revised Code. | 82 |
(C) The superintendent has the authority to maintain as | 83 |
confidential or privileged the documents and information received | 84 |
pursuant to this section. | 85 |
(D) The superintendent's authority to receive documents and | 86 |
information under this section, from the persons and subject to | 87 |
the conditions listed in this section, is not limited in any way | 88 |
by section 1751.19, 3901.36, 3901.44, 3901.48, 3901.70, 3903.11, | 89 |
90 | |
or 3999.36 of the Revised Code. | 91 |
Sec. 3901.17. (A) As used in this section: | 92 |
(1) "Captive insurer" has the same meaning | 93 |
section 3905.36 of the Revised Code. | 94 |
(2) "Insurer" includes, but is not limited to, any person | 95 |
that is an affiliate of or affiliated with the insurer, as defined | 96 |
in | 97 |
person that is a subsidiary of the insurer as defined in | 98 |
99 |
(3) "Laws of this state relating to insurance" has the same | 100 |
meaning | 101 |
Revised Code. | 102 |
(4) "Person" has the same meaning | 103 |
as in section 3901.19 of the Revised Code. | 104 |
(5) "Home state" has the same meaning as in section 3905.30 | 105 |
of the Revised Code. | 106 |
(B) Any of the following acts in this state, effected by mail | 107 |
or otherwise, by any foreign or alien insurer not authorized to | 108 |
transact business within this state, any nonresident person acting | 109 |
on behalf of an insurer, or any nonresident insurance agent | 110 |
subjects the insurer, person, or agent to the exercise of personal | 111 |
jurisdiction over the insurer, person, or agent to the extent | 112 |
permitted by the constitutions of this state and of the United | 113 |
States: | 114 |
(1) Issuing or delivering contracts of insurance to residents | 115 |
of this state or to corporations authorized to do business | 116 |
therein; | 117 |
(2) Making or proposing to make any insurance contracts; | 118 |
(3) Soliciting, taking, or receiving any application for | 119 |
insurance; | 120 |
(4) Receiving or collecting any premium, commission, | 121 |
membership fee, assessment, dues, or other consideration for any | 122 |
insurance contract or any part thereof; | 123 |
(5) Disseminating information as to coverage or rates, | 124 |
forwarding applications, inspecting risks, fixing rates, | 125 |
investigating or adjusting claims or losses, or transacting any | 126 |
matters subsequent to effecting a contract of insurance and | 127 |
arising out of it; | 128 |
(6) Doing any kind of business recognized as constituting the | 129 |
doing of an insurance business under Title XXXIX of the Revised | 130 |
Code or subject to regulation by the superintendent of insurance | 131 |
under the laws of this state relating to insurance. | 132 |
Any such act shall be considered to be the doing of an | 133 |
insurance business in this state by such insurer, person, or agent | 134 |
and shall be its agreement that service of any lawful subpoena, | 135 |
notice, order, or process is of the same legal force and validity | 136 |
as personal service of the subpoena, notice, order, or process in | 137 |
this state upon the insurer, person, or agent. | 138 |
(C) Service of process in judicial proceedings shall be as | 139 |
provided by the Rules of Civil Procedure. Service in or out of | 140 |
this state of notice, orders, or subpoenas in administrative | 141 |
proceedings before the superintendent shall be as provided in | 142 |
section 3901.04 of the Revised Code. | 143 |
(D) Service of any notice, order, subpoena, or process in any | 144 |
such action, suit, or proceeding shall, in addition to the manner | 145 |
provided in division (C) of this section, be valid if served upon | 146 |
any person within this state who, in this state on behalf of such | 147 |
insurer, person, or agent is or has been: | 148 |
(1) Soliciting, procuring, effecting, or negotiating for | 149 |
insurance; | 150 |
(2) Making, issuing, or delivering any contract of insurance; | 151 |
(3) Collecting or receiving any premium, membership fees, | 152 |
assessment, dues, or other consideration for insurance; | 153 |
(4) Disseminating information as to coverage or rates, | 154 |
forwarding applications, inspecting risks, fixing rates, | 155 |
investigating or adjusting claims or losses, or transacting any | 156 |
matters subsequent to effecting a contract of insurance and | 157 |
arising out of it. | 158 |
(E) Nothing in this section shall limit or abridge the right | 159 |
to serve any subpoena, order, process, notice, or demand upon any | 160 |
insurer, person, or agent in any other manner permitted by law. | 161 |
(F) Every person investigating or adjusting any loss or claim | 162 |
under a policy of insurance not excepted under division (I) of | 163 |
this section and issued by any such insurer and covering a subject | 164 |
of insurance that was resident, located, or to be performed in | 165 |
this state at the time of issuance shall immediately report the | 166 |
policy to the superintendent. | 167 |
(G) If this state is the home state of the insured, each such | 168 |
insurer that does any of the acts set forth in division (B) of | 169 |
this section shall be subject to the requirements of section | 170 |
3905.36 of the Revised Code. | 171 |
(H) No contract of insurance effected in this state by mail | 172 |
or otherwise by any such insurer is enforceable by the insurer. | 173 |
(I) This section does not apply to: | 174 |
(1) Insurance obtained pursuant to sections 3905.30 to | 175 |
3905.36 of the Revised Code; | 176 |
(2) The transaction of reinsurance by insurers; | 177 |
(3) Transactions in this state involving a policy of group | 178 |
life or group accident and sickness insurance solicited, written, | 179 |
and delivered outside this state; | 180 |
(4) Transactions involving contracts of insurance | 181 |
independently procured through negotiations occurring entirely | 182 |
outside this state which are reported and the tax is paid in | 183 |
accordance with section 3905.36 of the Revised Code; | 184 |
(5) An attorney at law acting on behalf of the attorney's | 185 |
clients in the adjustment of claims or losses; | 186 |
(6) Ocean marine insurance; | 187 |
(7) Transactions involving policies issued by a captive | 188 |
insurer. | 189 |
Sec. 3901.32. As used in sections 3901.32 to 3901.37 of the | 190 |
Revised Code: | 191 |
(A) "Affiliate of" or "affiliated with" a specific person | 192 |
means a person that, directly or indirectly, through one or more | 193 |
intermediaries, controls, is controlled by, or is under common | 194 |
control with, the person specified. | 195 |
(B) "Control," including "controlling," "controlled by," and | 196 |
"under common control with," means the possession, direct or | 197 |
indirect, of the power to direct or cause the direction of the | 198 |
management and policies of a person, whether through the ownership | 199 |
of voting securities, by contract other than a commercial contract | 200 |
for goods or nonmanagement services, or otherwise, unless the | 201 |
power is the result of an official position with or corporate | 202 |
office held by the person. Control shall be presumed to exist if | 203 |
any person, directly or indirectly, owns, controls, holds with the | 204 |
power to vote, or holds proxies representing, ten per cent or more | 205 |
of the voting securities of any other person. This presumption may | 206 |
be rebutted by a showing made in the manner provided in division | 207 |
(J) of section 3901.33 of the Revised Code that control does not | 208 |
exist in fact. The superintendent of insurance may determine, | 209 |
after furnishing all persons in interest notice and opportunity to | 210 |
be heard and making specific findings of fact to support such | 211 |
determination, that control exists in fact, notwithstanding the | 212 |
absence of a presumption to that effect. | 213 |
(C) "Enterprise risk" means any activity, circumstance, | 214 |
event, or series of events involving one or more affiliates of an | 215 |
insurer that, if not remedied promptly, is likely to have a | 216 |
materially adverse effect on the financial condition or liquidity | 217 |
of the insurer or its insurance holding company system as a whole. | 218 |
"Enterprise risk" includes anything that would cause the insurer's | 219 |
risk-based capital to fall into company action level as set forth | 220 |
in section 3903.83 of the Revised Code or would cause the insurer | 221 |
to be in a hazardous financial condition. | 222 |
(D) "Insurance holding company system" means two or more | 223 |
affiliated persons, one or more of which is an insurer. | 224 |
| 225 |
insurance, guaranty, or membership, an inter-insurance exchange, a | 226 |
mutual or fraternal benefit society, or a health insuring | 227 |
corporation | 228 |
authority, or instrumentality of the United States, its | 229 |
possessions and territories, the Commonwealth of Puerto Rico, the | 230 |
District of Columbia, or a state or political subdivision of a | 231 |
state. | 232 |
| 233 |
partnership, an association, a joint stock company, a trust, an | 234 |
unincorporated organization, any similar entity, or any | 235 |
combination of the foregoing acting in concert. | 236 |
| 237 |
controlled by such person, directly or indirectly, through one or | 238 |
more intermediaries. | 239 |
| 240 |
into or evidencing a right to acquire a voting security. | 241 |
Sec. 3901.321. (A) For the purposes of this section: | 242 |
(1) "Acquiring party" means any person by whom or on whose | 243 |
behalf a merger or other acquisition of control is to be effected. | 244 |
(2) "Domestic insurer" includes any person controlling a | 245 |
domestic insurer unless the person, as determined by the | 246 |
superintendent of insurance, is either directly or through its | 247 |
affiliates primarily engaged in business other than the business | 248 |
of insurance. | 249 |
(3) "Person" does not include any securities broker holding, | 250 |
in the usual and customary broker's function, less than twenty per | 251 |
cent of the voting securities of an insurance company or of any | 252 |
person that controls an insurance company. | 253 |
(B)(1) Subject to compliance with division (B)(2) of this | 254 |
section, no person other than the issuer shall do any of the | 255 |
following if, as a result, the person would, directly or | 256 |
indirectly, including by means of conversion or the exercise of | 257 |
any right to acquire, be in control of a domestic insurer: | 258 |
(a) Make a tender offer for any voting security of a domestic | 259 |
insurer; | 260 |
(b) Make a request or invitation for tenders of any voting | 261 |
security of a domestic insurer; | 262 |
(c) Enter into any agreement to exchange securities of a | 263 |
domestic insurer; | 264 |
(d) Seek to acquire or acquire, in the open market or | 265 |
otherwise, any voting security of a domestic insurer; | 266 |
(e) Enter into an agreement to merge with, or otherwise to | 267 |
acquire control of, a domestic insurer. | 268 |
(2)(a) No person shall engage in any transaction described in | 269 |
division (B)(1) of this section, unless all of the following | 270 |
conditions are met: | 271 |
(i) The person has filed with the superintendent of insurance | 272 |
a statement containing the information required by division (C) of | 273 |
this section; | 274 |
(ii) The person has sent the statement to the domestic | 275 |
insurer; | 276 |
(iii) The offer, request, invitation, agreement, or | 277 |
acquisition has been approved by the superintendent in the manner | 278 |
provided in division (F) of this section. | 279 |
(b) The requirements of division (B)(2)(a) of this section | 280 |
shall be met at the time any offer, request, or invitation is | 281 |
made, or any agreement is entered into, or prior to the | 282 |
acquisition of the securities if no offer or agreement is | 283 |
involved. | 284 |
(3) Any controlling person of a domestic insurer seeking to | 285 |
divest its controlling interest in the domestic insurer shall file | 286 |
a confidential notice of its proposed divestiture with the | 287 |
superintendent at least thirty days prior to the cessation of | 288 |
control, and provide a copy of the confidential notice to the | 289 |
insurer. The superintendent may require the person seeking to | 290 |
divest the controlling interest to file for and obtain approval of | 291 |
the transaction. The information shall remain confidential until | 292 |
the conclusion of the transaction unless the superintendent, in | 293 |
the superintendent's discretion, determines that the confidential | 294 |
treatment will interfere with enforcement of this section. If the | 295 |
statement required by division (B)(2) of this section is otherwise | 296 |
filed with the superintendent in relation to all parties that | 297 |
acquire a controlling interest as a result of the divestiture, | 298 |
this division shall not apply. | 299 |
(C) The statement required by division (B)(2) of this section | 300 |
shall be made under oath or affirmation, and shall contain all of | 301 |
the following information: | 302 |
(1) The name and address of each acquiring party; | 303 |
(2) If the acquiring party is an individual, the individual's | 304 |
principal occupation and all offices and positions held during the | 305 |
past five years, and any conviction of crimes other than minor | 306 |
traffic violations during the past ten years; | 307 |
(3) If the acquiring party is not an individual, a report of | 308 |
the nature of its business operations during the past five years | 309 |
or for such lesser period as the acquiring party and any of its | 310 |
predecessors shall have been in existence; an informative | 311 |
description of the business intended to be done by the acquiring | 312 |
party and the acquiring party's subsidiaries; and a list of all | 313 |
individuals who are or who have been selected to become directors | 314 |
or executive officers of the acquiring party, who perform or will | 315 |
perform functions appropriate to such positions. The list shall | 316 |
include for each individual the information required by division | 317 |
(C)(2) of this section. | 318 |
(4) The source, nature, and amount of the consideration used | 319 |
or to be used in effecting the merger or other acquisition of | 320 |
control, a description of any transaction in which funds were or | 321 |
are to be obtained for any such purpose, including any pledge of | 322 |
the domestic insurer's stock, or the stock of any of its | 323 |
subsidiaries or controlling affiliates, and the identity of | 324 |
persons furnishing such consideration; | 325 |
(5) Fully audited financial information as to the earnings | 326 |
and financial condition of each acquiring party for its preceding | 327 |
five fiscal years, or for such lesser period as the acquiring | 328 |
party and any of its predecessors shall have been in existence, | 329 |
and similar unaudited information as of a date not earlier than | 330 |
ninety days prior to the filing of the statement; | 331 |
(6) Any plans or proposals which each acquiring party may | 332 |
have to liquidate such domestic insurer, to sell its assets or | 333 |
merge or consolidate it with any person, or to make any other | 334 |
material change in its business or corporate structure or | 335 |
management; | 336 |
(7) The number of shares of any security of such issuer or | 337 |
such controlling person that each acquiring party proposes to | 338 |
acquire, and the terms of the offer, request, invitation, | 339 |
agreement, or acquisition, and a statement as to the method by | 340 |
which the fairness of the proposal was determined; | 341 |
(8) The amount of each class of any security of such issuer | 342 |
or such controlling person which is beneficially owned or | 343 |
concerning which there is a right to acquire beneficial ownership | 344 |
by each acquiring party; | 345 |
(9) A full description of any contracts, arrangements, or | 346 |
understandings with respect to any security of such issuer or such | 347 |
controlling person in which any acquiring party is involved, | 348 |
including but not limited to transfer of any of the securities, | 349 |
joint ventures, loan or option arrangements, puts or calls, | 350 |
guarantees of loans, guarantees against loss or guarantees of | 351 |
profits, division of losses or profits, or the giving or | 352 |
withholding of proxies. The description shall identify the persons | 353 |
with whom such contracts, arrangements, or understandings have | 354 |
been made. | 355 |
(10) A description of the purchase of any security of such | 356 |
issuer or such controlling person during the year preceding the | 357 |
filing of the statement, by any acquiring party, including the | 358 |
dates of purchase, names of the purchasers, and consideration paid | 359 |
or agreed to be paid therefor; | 360 |
(11) A description of any recommendations to purchase any | 361 |
security of such issuer or such controlling person made during the | 362 |
year preceding the filing of the statement, by any acquiring | 363 |
party, or by anyone based upon interviews or at the suggestion of | 364 |
the acquiring party; | 365 |
(12) Copies of all tender offers for, requests, or | 366 |
invitations for tenders of, exchange offers for, and agreements to | 367 |
acquire or exchange any securities of such issuer or such | 368 |
controlling person, and, if distributed, of additional | 369 |
solicitation material relating thereto; | 370 |
(13) The terms of any agreement, contract, or understanding | 371 |
made with or proposed to be made with any broker or dealer as to | 372 |
solicitation of securities of such issuer or such controlling | 373 |
person for tender, and the amount of any fees, commissions, or | 374 |
other compensation to be paid to brokers or dealers with regard | 375 |
thereto; | 376 |
(14) With respect to proposed affiliations between depository | 377 |
institutions or any affiliate thereof, within the meaning of Title | 378 |
I, section 104(c) of the "Gramm-Leach-Bliley Act," Pub. L. No. | 379 |
106-102, 113 Stat. 1338 (1999), and a domestic insurer, the | 380 |
proposed effective date of the acquisition or change of control; | 381 |
(15) An agreement by the person required to file the | 382 |
statement required by division (B) of this section that the person | 383 |
will provide the annual registration required by division (K) of | 384 |
section 3901.33 of the Revised Code for so long as the person has | 385 |
control of the domestic insurer; | 386 |
(16) An acknowledgment by the person required to file the | 387 |
statement required by division (B) of this section that the person | 388 |
and all subsidiaries within the person's control in the insurance | 389 |
holding company system will provide information to the | 390 |
superintendent upon request as necessary to evaluate enterprise | 391 |
risk to the insurer; | 392 |
(17) Such additional information as the superintendent may by | 393 |
rule prescribe as necessary or appropriate for the protection of | 394 |
policyholders of the domestic insurer or in the public interest. | 395 |
(D)(1) If the person required to file the statement required | 396 |
by division (B)(2) of this section is a partnership, limited | 397 |
partnership, syndicate, or other group, the superintendent may | 398 |
require that the information required by division (C) of this | 399 |
section be furnished with respect to each partner of such | 400 |
partnership or limited partnership, each member of such syndicate | 401 |
or group, and each person that controls such partner or member. If | 402 |
any such partner, member, or person is a corporation, or the | 403 |
person required to file the statement is a corporation, the | 404 |
superintendent may require that the information required by | 405 |
division (C) of this section be furnished with respect to the | 406 |
corporation, each officer and director of the corporation, and | 407 |
each person that is directly or indirectly the beneficial owner of | 408 |
more than ten per cent of the outstanding voting securities of the | 409 |
corporation. | 410 |
(2) If any material change occurs in the facts set forth in | 411 |
the statement required by division (B)(2) of this section, an | 412 |
amendment setting forth such change, together with copies of all | 413 |
documents and other material relevant to the change, shall be | 414 |
filed with the superintendent by the person subject to division | 415 |
(B)(2) of this section and sent to the domestic insurer within two | 416 |
business days after such person learns of the occurrence of the | 417 |
material change. | 418 |
(E) If any offer, request, invitation, agreement, or | 419 |
acquisition described in division (B)(1) of this section is | 420 |
proposed to be made by means of a registration statement under the | 421 |
"Securities Act of 1933," 48 Stat. 74, 15 U.S.C.A. 78a, or in | 422 |
circumstances requiring the disclosure of similar information | 423 |
under the "Securities Exchange Act of 1934," 48 Stat. 881, 15 | 424 |
U.S.C.A. 78a, or under a state law requiring similar registration | 425 |
or disclosure, the person required to file the statement required | 426 |
by division (B)(2) of this section may use such documents in | 427 |
furnishing the information required by that statement. | 428 |
(F)(1) The superintendent shall approve any merger or other | 429 |
acquisition of control described in division (B)(1) of this | 430 |
section unless, after a public hearing, the superintendent finds | 431 |
that any of the following apply: | 432 |
(a) After the change of control, the domestic insurer would | 433 |
not be able to satisfy the requirements for the issuance of a | 434 |
license to write the line or lines of insurance for which it is | 435 |
presently licensed; | 436 |
(b) The effect of the merger or other acquisition of control | 437 |
would be substantially to lessen competition in insurance in this | 438 |
state or tend to create a monopoly; | 439 |
(c) The financial condition of any acquiring party is such as | 440 |
might jeopardize the financial stability of the domestic insurer, | 441 |
or prejudice the interests of its policyholders; | 442 |
(d) The plans or proposals that the acquiring party has to | 443 |
liquidate the domestic insurer, sell its assets, or consolidate or | 444 |
merge it with any person, or to make any other material change in | 445 |
its business or corporate structure or management, are unfair and | 446 |
unreasonable to policyholders of the domestic insurer and not in | 447 |
the public interest; | 448 |
(e) The competence, experience, and integrity of those | 449 |
persons that would control the operation of the domestic insurer | 450 |
are such that it would not be in the interest of policyholders of | 451 |
the domestic insurer and of the public to permit the merger or | 452 |
other acquisition of control; | 453 |
(f) The acquisition is likely to be hazardous or prejudicial | 454 |
to the insurance-buying public. | 455 |
(2)(a) Chapter 119. of the Revised Code, except for section | 456 |
119.09 of the Revised Code, applies to any hearing held under | 457 |
division (F)(1) of this section, including the notice of the | 458 |
hearing, the conduct of the hearing, the orders issued pursuant to | 459 |
it, the review of the orders, and all other matters relating to | 460 |
the holding of the hearing, but only to the extent that Chapter | 461 |
119. of the Revised Code is not inconsistent or in conflict with | 462 |
this section. | 463 |
(b) The notice of a hearing required under this division | 464 |
shall be transmitted by personal service, certified mail, e-mail, | 465 |
or any other method designed to ensure and confirm receipt of the | 466 |
notice, to the persons and addresses designated to receive notices | 467 |
and correspondence in the information statement filed under | 468 |
division (B)(2) of this section. Confirmation of receipt of the | 469 |
notice, including electronic "Read Receipt" confirmation, shall | 470 |
constitute evidence of compliance with the requirement of this | 471 |
section. The notice of hearing shall include the reasons for the | 472 |
proposed action and a statement informing the acquiring party that | 473 |
the party is entitled to a hearing. The notice also shall inform | 474 |
the acquiring party that at the hearing the acquiring party may | 475 |
appear in person, by attorney, or by such other representative as | 476 |
is permitted to practice before the superintendent, or that the | 477 |
acquiring party may present its position, arguments, or | 478 |
contentions in writing, and that at the hearing the acquiring | 479 |
party may present evidence and examine witnesses appearing for and | 480 |
against the acquiring party. A copy of the notice also shall be | 481 |
transmitted to attorneys or other representatives of record | 482 |
representing the acquiring party. | 483 |
(c) The hearing shall be held at the offices of the | 484 |
superintendent within ten calendar days, but not earlier than | 485 |
seven calendar days, of the date of transmission of the notice of | 486 |
hearing by any means, unless it is postponed or continued; but in | 487 |
no event shall the hearing be held unless notice is received at | 488 |
least three days prior to the hearing. The superintendent may | 489 |
postpone or continue the hearing upon receipt of a written request | 490 |
by an acquiring party, or upon the superintendent's motion, | 491 |
provided, however, a hearing in connection with a proposed change | 492 |
of control involving a depository institution or any affiliate | 493 |
thereof, within the meaning of Title I, section 104(c) of the | 494 |
"Gramm-Leach-Bliley Act," Pub. L. No. 106-102, 113 Stat. 1338 | 495 |
(1999), and a domestic insurer, may be postponed or continued only | 496 |
upon the request of an acquiring party, or upon the | 497 |
superintendent's motion when the acquiring party agrees in writing | 498 |
to extend the sixty-day period provided for in section 104(c) of | 499 |
the "Gramm-Leach-Bliley Act," by a number of days equal to the | 500 |
number of days of such postponement or continuance. | 501 |
(d) For the purpose of conducting any hearing held under this | 502 |
section, the superintendent may require the attendance of such | 503 |
witnesses and the production of such books, records, and papers as | 504 |
the superintendent desires, and may take the depositions of | 505 |
witnesses residing within or without the state in the same manner | 506 |
as is prescribed by law for the taking of depositions in civil | 507 |
actions in the court of common pleas, and for that purpose the | 508 |
superintendent may, and upon the request of an acquiring party | 509 |
shall, issue a subpoena for any witnesses or a subpoena duces | 510 |
tecum to compel the production of any books, records, or papers, | 511 |
directed to the sheriff of the county where such witness resides | 512 |
or is found, which shall be served and returned in the same manner | 513 |
as a subpoena in a criminal case is served and returned. The fees | 514 |
of the sheriff shall be the same as that allowed in the court of | 515 |
common pleas in criminal cases. Witnesses shall be paid the fees | 516 |
and mileage provided for under section 119.094 of the Revised | 517 |
Code. Fees and mileage shall be paid from the fund in the state | 518 |
treasury for the use of the superintendent in the same manner as | 519 |
other expenses of the superintendent are paid. In any case of | 520 |
disobedience or neglect of any subpoena served on any person or | 521 |
the refusal of any witness to testify in any matter regarding | 522 |
which the witness may lawfully be interrogated, the court of | 523 |
common pleas of any county where such disobedience, neglect, or | 524 |
refusal occurs or any judge thereof, on application by the | 525 |
superintendent, shall compel obedience by attachment proceedings | 526 |
for contempt, as in the case of disobedience of the requirements | 527 |
of a subpoena issued from the court or a refusal to testify | 528 |
therein. | 529 |
In any hearing held under this section, a record of the | 530 |
testimony, as provided by stenographic means or by use of audio | 531 |
electronic recording devices, as determined by the superintendent, | 532 |
and other evidence submitted shall be taken at the expense of the | 533 |
superintendent. The record shall include all of the testimony and | 534 |
other evidence, and rulings on the admissibility thereof, | 535 |
presented at the hearing. | 536 |
The superintendent shall pass upon the admissibility of | 537 |
evidence, but a party to the proceedings may at that time object | 538 |
to the rulings of the superintendent, and if the superintendent | 539 |
refuses to admit evidence, the party offering the evidence shall | 540 |
proffer the evidence. The proffer shall be made a part of the | 541 |
record of the hearing. | 542 |
In any hearing held under this section, the superintendent | 543 |
may call any person to testify under oath as upon | 544 |
cross-examination. The superintendent, or any one delegated by the | 545 |
superintendent to conduct a hearing, may administer oaths or | 546 |
affirmations. | 547 |
In any hearing under this section, the superintendent may | 548 |
appoint a hearing officer to conduct the hearing; the hearing | 549 |
officer has the same powers and authority in conducting the | 550 |
hearing as is granted to the superintendent. The hearing officer | 551 |
shall have been admitted to the practice of law in the state and | 552 |
be possessed of any additional qualifications as the | 553 |
superintendent requires. The hearing officer shall submit to the | 554 |
superintendent a written report setting forth the hearing | 555 |
officer's finding of fact and conclusions of law and a | 556 |
recommendation of the action to be taken by the superintendent. A | 557 |
copy of the written report and recommendation shall, within seven | 558 |
days of the date of filing thereof, be served upon the acquiring | 559 |
party or the acquiring party's attorney or other representative of | 560 |
record, by personal service, certified mail, | 561 |
mail, or any other method designed to ensure and confirm receipt | 562 |
of the report. The acquiring party may, within three days of | 563 |
receipt of the copy of the written report and recommendation, file | 564 |
with the superintendent written objections to the report and | 565 |
recommendation, which objections the superintendent shall consider | 566 |
before approving, modifying, or disapproving the recommendation. | 567 |
The superintendent may grant extensions of time to the acquiring | 568 |
party within which to file such objections. No recommendation of | 569 |
the hearing officer shall be approved, modified, or disapproved by | 570 |
the superintendent until after three days following the service of | 571 |
the report and recommendation as provided in this section. The | 572 |
superintendent may order additional testimony to be taken or | 573 |
permit the introduction of further documentary evidence. The | 574 |
superintendent may approve, modify, or disapprove the | 575 |
recommendation of the hearing officer, and the order of the | 576 |
superintendent based on the report, recommendation, transcript of | 577 |
testimony, and evidence, or the objections of the acquiring party, | 578 |
and additional testimony and evidence shall have the same effect | 579 |
as if the hearing had been conducted by the superintendent. No | 580 |
such recommendation is final until confirmed and approved by the | 581 |
superintendent as indicated by the order entered in the record of | 582 |
proceedings, and if the superintendent modifies or disapproves the | 583 |
recommendations of the hearing officer, the reasons for the | 584 |
modification or disapproval shall be included in the record of | 585 |
proceedings. | 586 |
After the order is entered, the superintendent shall transmit | 587 |
in the manner and by any of the methods set forth in division | 588 |
(F)(2)(b) of this section a certified copy of the order and a | 589 |
statement of the time and method by which an appeal may be | 590 |
perfected. A copy of the order shall be mailed to the attorneys or | 591 |
other representatives of record representing the acquiring party. | 592 |
(e) An order of disapproval issued by the superintendent may | 593 |
be appealed to the court of common pleas of Franklin county by | 594 |
filing a notice of appeal with the superintendent and a copy of | 595 |
the notice of appeal with the court, within fifteen calendar days | 596 |
after the transmittal of the copy of the order of disapproval. The | 597 |
notice of appeal shall set forth the order appealed from and the | 598 |
grounds for appeal, in accordance with section 119.12 of the | 599 |
Revised Code. | 600 |
(3) The superintendent may retain at the acquiring party's | 601 |
expense any attorneys, actuaries, accountants, and other experts | 602 |
not otherwise a part of the superintendent's staff as may be | 603 |
reasonably necessary to assist the superintendent in reviewing the | 604 |
proposed acquisition of control. | 605 |
(G) This section does not apply to either of the following: | 606 |
(1) Any transaction that is subject to section | 607 |
608 | |
3941.35 to 3941.46, or section 3953.19 of the Revised Code; | 609 |
(2) Any offer, request, invitation, agreement, or acquisition | 610 |
that the superintendent by order exempts from this section on | 611 |
either of the following bases: | 612 |
(a) It has not been made or entered into for the purpose and | 613 |
does not have the effect of changing or influencing the control of | 614 |
a domestic insurer; | 615 |
(b) It is not otherwise comprehended within the purposes of | 616 |
this section. | 617 |
(H) Nothing in this section or in any other section of Title | 618 |
XXXIX of the Revised Code shall be construed to impair the | 619 |
authority of the attorney general to investigate or prosecute | 620 |
actions under any state or federal antitrust law with respect to | 621 |
any merger or other acquisition involving domestic insurers. | 622 |
(I) In connection with a proposed change of control involving | 623 |
a depository institution or any affiliate thereof, within the | 624 |
meaning of Title I, section 104(c) of the "Gramm-Leach-Bliley | 625 |
Act," Pub. L. No. 106-102, 113 Stat. 1338 (1999), and a domestic | 626 |
insurer, not later than sixty days after the date of the | 627 |
notification of the proposed change in control submitted pursuant | 628 |
to division (B)(2) of this section, the superintendent shall make | 629 |
any determination that the person acquiring control of the insurer | 630 |
shall maintain or restore the capital of the insurer to the level | 631 |
required by the laws and regulations of this state. | 632 |
Sec. 3901.33. (A) Every insurer that is authorized to do | 633 |
business in this state and that is a member of an insurance | 634 |
holding company system shall register with the superintendent of | 635 |
insurance, except a foreign insurer subject to disclosure | 636 |
requirements and standards adopted by statute or regulation in the | 637 |
jurisdiction of its domicile that are substantially similar to | 638 |
those contained in this section and section 3901.341 of the | 639 |
Revised Code. Every insurer that is subject to registration under | 640 |
this section shall register initially not later than
| 641 |
642 | |
registration, | 643 |
good cause shown extends the time for registration, and then | 644 |
within the extended time, and every such insurer shall register | 645 |
annually after its initial registration. The superintendent may | 646 |
require any authorized insurer that is a member of a holding | 647 |
company system that is not subject to registration under this | 648 |
section to furnish a copy of the registration statement or other | 649 |
information filed by the insurance company with the insurance | 650 |
regulatory authority of domiciliary jurisdiction. | 651 |
(B) Every insurer subject to registration shall file a | 652 |
registration statement with the superintendent on a form and in a | 653 |
format provided by the superintendent, which shall contain current | 654 |
information about all of the following: | 655 |
(1) The capital structure, general financial condition, | 656 |
ownership, and management of the insurer and any person | 657 |
controlling the insurer; | 658 |
(2) The identity of every member of the insurance holding | 659 |
company system; | 660 |
(3) The following agreements in force, relationships | 661 |
subsisting, and transactions currently outstanding between the | 662 |
insurer and its affiliates: | 663 |
(a) Loans, other investments, or purchases, sales or | 664 |
exchanges of securities of the affiliates by the insurer or of the | 665 |
insurer by its affiliates; | 666 |
(b) Purchases, sales, or exchanges of assets; | 667 |
(c) Transactions not in the ordinary course of business; | 668 |
(d) Guarantees or undertakings for the benefit of an | 669 |
affiliate that result in an actual contingent exposure of the | 670 |
insurer's assets to liability, other than insurance contracts | 671 |
entered into in the ordinary course of the insurer's business; | 672 |
(e) All management and service contracts and all cost-sharing | 673 |
arrangements; | 674 |
(f) Reinsurance agreements; | 675 |
(g) Dividends and other distributions to shareholders; | 676 |
(h) Consolidated tax allocation agreements. | 677 |
(4) Any pledge of the insurer's stock, including stock of any | 678 |
subsidiary or controlling affiliate, for a loan made to any member | 679 |
of the insurance holding company system; | 680 |
(5) If requested by the superintendent, financial statements | 681 |
of an insurance holding company system, including all affiliates. | 682 |
Financial statements may include annual audited financial | 683 |
statements filed with the United States securities and exchange | 684 |
commission pursuant to the "Securities Act of 1933," 48 Stat. 74, | 685 |
15 U.S.C. 77a, or the "Securities Exchange Act of 1934," 48 Stat. | 686 |
881, 15 U.S.C. 78a. The insurer may satisfy the request by | 687 |
providing the superintendent with the most recently filed parent | 688 |
corporation financial statements that have been filed with the | 689 |
securities and exchange commission. | 690 |
(6) Other matters concerning transactions between registered | 691 |
insurers and any affiliates as may be included from time to time | 692 |
in any registration forms adopted or approved by the | 693 |
superintendent; | 694 |
(7) Statements that the insurer's or its ultimate controlling | 695 |
person's board of directors oversees corporate governance and | 696 |
internal controls and that the insurer's or its ultimate | 697 |
controlling person's officers or senior management have approved, | 698 |
implemented, and continue to maintain and monitor corporate | 699 |
governance and internal control procedures; | 700 |
(8) Any other information required by the superintendent by | 701 |
rule or regulation. | 702 |
(C) Each registration statement filed pursuant to division | 703 |
(B) of this section shall summarize the information that has | 704 |
changed from the prior registration statement filed pursuant to | 705 |
that division. | 706 |
(D) No information need be disclosed on the registration | 707 |
statement filed pursuant to division (B) of this section if the | 708 |
information is not material for the purposes of this section. | 709 |
Unless the superintendent by rule, regulation, or order provides | 710 |
otherwise, sales, purchases, exchanges, loans or extensions of | 711 |
credit, or investments involving one-half of one per cent or less | 712 |
of an insurer's admitted assets as of the thirty-first day of | 713 |
December next preceding shall not be deemed material for the | 714 |
purposes of this section. | 715 |
(E) Each registered insurer shall keep current the | 716 |
information required to be disclosed in its registration statement | 717 |
by reporting all material changes or additions on amendment forms | 718 |
provided by the superintendent within fifteen days after the end | 719 |
of the month in which it learns of each change or addition. | 720 |
(F) The superintendent shall terminate the registration of | 721 |
any insurer that demonstrates that it no longer is a member of an | 722 |
insurance holding company system. | 723 |
(G) The superintendent may require or allow two or more | 724 |
affiliated insurers subject to registration under this section to | 725 |
file a consolidated registration statement or consolidated reports | 726 |
amending their consolidated registration statement or their | 727 |
individual registration statements. | 728 |
(H) The superintendent may allow an insurer that is | 729 |
authorized to do business in this state and that is part of an | 730 |
insurance holding company system to register on behalf of any | 731 |
affiliated insurer that is required to register under division (A) | 732 |
of this section and to file all information and material required | 733 |
to be filed under this section. | 734 |
(I) This section does not apply to any insurer, information, | 735 |
or transaction if and to the extent that the superintendent by | 736 |
rule, regulation, or order exempts it from this section. | 737 |
(J) Any person may file with the superintendent a disclaimer | 738 |
of affiliation with any authorized insurer or such a disclaimer | 739 |
may be filed by the insurer or any member of an insurance holding | 740 |
company system. The disclaimer shall fully disclose all material | 741 |
relationships and bases for affiliation between the person and the | 742 |
insurer as well as the basis for disclaiming the affiliation. | 743 |
After a disclaimer has been filed, the insurer shall be relieved | 744 |
of any duty to register or report under this section which may | 745 |
arise out of the insurer's relationship with the person unless and | 746 |
until the superintendent disallows the disclaimer. The | 747 |
superintendent shall disallow such a disclaimer only in the manner | 748 |
provided in Chapter 119. of the Revised Code. | 749 |
(K) The ultimate controlling person of every insurer subject | 750 |
to registration under this section also shall file an annual | 751 |
enterprise risk report. The report shall be appropriate to the | 752 |
nature, scale, and complexity of the operations of the insurance | 753 |
holding company system and shall, to the best of the ultimate | 754 |
controlling person's knowledge and belief, identify the material | 755 |
risks within the insurance holding company system that could pose | 756 |
enterprise risk to the insurer. The ultimate controlling person | 757 |
shall file the report with the lead state commissioner of the | 758 |
insurance holding company system as determined by the procedures | 759 |
within the financial analysis handbook adopted by the national | 760 |
association of insurance commissioners. | 761 |
(L) The failure to file any registration statement or any | 762 |
amendment thereto or enterprise risk report required by this | 763 |
section within the time specified for the filing is a violation of | 764 |
this section. | 765 |
Sec. 3901.34. (A) | 766 |
767 | |
holding company system to which an insurer subject to registration | 768 |
is a party shall be subject to the following standards: | 769 |
(1) The terms shall be fair and reasonable. | 770 |
(2) Charges or fees for services performed shall be | 771 |
reasonable. | 772 |
(3) Expenses incurred and payment received shall be allocated | 773 |
to the insurer in conformity with customary insurance accounting | 774 |
practices that are consistently applied. | 775 |
(4) The books, accounts, and records of each party shall be | 776 |
so maintained as to clearly and accurately disclose the precise | 777 |
nature and details of the transactions including such accounting | 778 |
information as is necessary to support the reasonableness of the | 779 |
charges or fees to the respective parties. | 780 |
(5) The insurer's surplus as regards policyholders following | 781 |
any dividends or distributions to shareholder affiliates shall be | 782 |
reasonable in relation to the insurer's outstanding liabilities | 783 |
and adequate to its financial needs. | 784 |
(6) Agreements for cost-sharing services and management | 785 |
services shall include such provisions as required by the | 786 |
superintendent of insurance in rule or regulation. | 787 |
(B) For the purposes of this section, in determining whether | 788 |
an insurer's surplus as regards policyholders is reasonable in | 789 |
relation to the insurer's outstanding liabilities and adequate to | 790 |
its financial needs, the following factors, among others, may be | 791 |
considered: | 792 |
(1) The size of the insurer as measured by its assets, | 793 |
capital, surplus, reserves, premium writings, insurance in force, | 794 |
and other appropriate criteria; | 795 |
(2) The extent to which the insurer's business is diversified | 796 |
among the several lines of insurance; | 797 |
(3) The number and size of risks insured in each line of | 798 |
business; | 799 |
(4) The extent of the geographical dispersion of the | 800 |
insurer's insured risks; | 801 |
(5) The nature and extent of the insurer's reinsurance | 802 |
program; | 803 |
(6) The quality, diversification, and liquidity of the | 804 |
insurer's investment portfolio; | 805 |
(7) The recent past and projected future trend in the size of | 806 |
the insurer's surplus as regards policyholders; | 807 |
(8) The adequacy of the insurer's reserves; | 808 |
(9) The quality and liquidity of investments in subsidiaries. | 809 |
The superintendent may discount any such investment or treat any | 810 |
investment as a nonadmitted asset for purposes of determining the | 811 |
adequacy of surplus as regards policyholders whenever the | 812 |
investment so warrants. | 813 |
(10) The quality of the insurer's earnings and the extent to | 814 |
which the reported earnings include extraordinary items; | 815 |
(11) The surplus as regards policyholders maintained by other | 816 |
comparable insurers in respect of the factors enumerated in this | 817 |
division. | 818 |
(C) No insurer subject to registration under section 3901.33 | 819 |
of the Revised Code shall pay any extraordinary dividend or make | 820 |
any other extraordinary distribution to its shareholders and the | 821 |
declaration of any such dividend or distribution shall be | 822 |
conditional and shall confer no rights upon shareholders until | 823 |
thirty days after the superintendent has received notice of the | 824 |
declaration thereof and has not within the thirty-day period | 825 |
disapproved the dividend or distribution, or the superintendent | 826 |
has approved the dividend or distribution within the thirty-day | 827 |
period. | 828 |
Prior to paying any dividend or distribution, the insurer | 829 |
shall notify the superintendent on a form provided by the | 830 |
superintendent for informational purposes within five business | 831 |
days following its declaration of any dividend or distribution and | 832 |
at least ten calendar days prior to payment of such dividend or | 833 |
distribution, such ten-calendar-day period to be measured from the | 834 |
date of the superintendent's receipt of the notice. | 835 |
For the purposes of this section, an extraordinary dividend | 836 |
or distribution includes any dividend or distribution of cash or | 837 |
other property, whose fair market value, together with that of | 838 |
other dividends or distributions made within the preceding twelve | 839 |
months, exceeds the greater of ten per cent of the insurer's | 840 |
surplus as regards policyholders as of the thirty-first day of | 841 |
December next preceding, or the net income of the insurer for the | 842 |
twelve-month period ending the thirty-first day of December next | 843 |
preceding, but shall not include pro rata distributions of any | 844 |
class of the insurer's own securities. | 845 |
Any dividend or distribution paid from other than earned | 846 |
surplus shall be considered an extraordinary dividend or | 847 |
extraordinary distribution. For the purposes of this section, | 848 |
"earned surplus" means an amount equal to an insurer's unassigned | 849 |
funds as set forth in its most recent statutory financial | 850 |
statement submitted to the superintendent, including net | 851 |
unrealized capital gains and losses or revaluation of assets. | 852 |
Sec. 3901.341. (A) No insurer subject to registration under | 853 |
section 3901.33 of the Revised Code shall enter into any of the | 854 |
following transactions with any person in its insurance holding | 855 |
company system, including amendments or modifications of affiliate | 856 |
agreements previously filed under this section that are subject to | 857 |
the materiality standards contained in divisions (A)(1) to (5) of | 858 |
this section, until thirty days after the superintendent of | 859 |
insurance has received, for | 860 |
written notice of the insurer's intention to enter into the | 861 |
transaction and if, during that period, the superintendent has not | 862 |
disapproved the proposed transaction. The notice for amendments or | 863 |
modifications shall include the reasons for the change and the | 864 |
financial impact on the domestic insurer. Informal notice shall be | 865 |
reported to the superintendent within thirty days after | 866 |
termination of a previously filed agreement. These requirements | 867 |
shall apply to all of the following transactions: | 868 |
(1) Any sale, purchase, exchange of assets, loan, extension | 869 |
of credit, guarantee, or investment, if the transaction equals or | 870 |
exceeds, with respect to insurers other than life insurers, the | 871 |
lesser of three per cent of the insurer's admitted assets as of | 872 |
the thirty-first day of December next preceding or twenty-five per | 873 |
cent of the insurer's surplus as regards policyholders as of the | 874 |
thirty-first day of December next preceding or, with respect to | 875 |
life insurers, three per cent of the insurer's admitted assets as | 876 |
of the thirty-first day of December next preceding; | 877 |
(2) Any loan or extension of credit to any person that is not | 878 |
an affiliate of the insurer, if both of the following apply: | 879 |
(a) The loan or extension of credit equals or exceeds, with | 880 |
respect to insurers other than life insurers, the lesser of three | 881 |
per cent of the insurer's admitted assets as of the thirty-first | 882 |
day of December next preceding or twenty-five per cent of the | 883 |
insurer's surplus as regards policyholders as of the thirty-first | 884 |
day of December next preceding or, with respect to life insurers, | 885 |
three per cent of the insurer's admitted assets as of the | 886 |
thirty-first day of December next preceding. | 887 |
(b) The insurer makes the loan or extends the credit with an | 888 |
agreement or understanding that the proceeds of the transaction, | 889 |
in whole or in substantial part, are to be used to make loans or | 890 |
extend credit to, to purchase assets of, or to make investments | 891 |
in, any affiliate of the insurer. | 892 |
(3) Reinsurance agreements or modifications | 893 |
894 |
(a) All new reinsurance pooling agreements; | 895 |
(b) All reinsurance pooling agreements in which a domestic | 896 |
company is newly added; | 897 |
(c) Agreements in which the reinsurance premium or the change | 898 |
in the insurer's liabilities, or the projected reinsurance premium | 899 |
or a change in the insurer's liabilities in any of the next three | 900 |
years, equals or exceeds five per cent of the insurer's surplus as | 901 |
regards policyholders as of the thirty-first day of December next | 902 |
preceding. | 903 |
Division (A)(3) of this section also applies to reinsurance | 904 |
agreements that may require as consideration the transfer of | 905 |
assets from an insurer to a nonaffiliate, if the insurer and | 906 |
nonaffiliate have an agreement or understanding that any portion | 907 |
of the assets will be transferred to one or more affiliates of the | 908 |
insurer. | 909 |
(4) All management agreements, service contracts, tax | 910 |
allocations agreements, and cost-sharing arrangements; | 911 |
(5) Any other material transaction that the superintendent, | 912 |
pursuant to rules adopted in accordance with Chapter 119. of the | 913 |
Revised Code, determines may render the insurer's surplus as | 914 |
regards policyholders unreasonable in relation to the insurer's | 915 |
outstanding liabilities and inadequate to its financial needs. | 916 |
(B) In reviewing transactions under division (A) of this | 917 |
section, the superintendent shall consider whether the terms of | 918 |
the transaction are fair and reasonable and whether the | 919 |
transaction may adversely affect the interests of policyholders. | 920 |
(C) Any transaction or agreement described in division (A) of | 921 |
this section that is not disapproved by the superintendent in | 922 |
accordance with that division is effective as of the effective | 923 |
date set forth in the notice required under this section. | 924 |
(D) The superintendent, pursuant to rules adopted in | 925 |
accordance with Chapter 119. of the Revised Code, may designate | 926 |
certain types of transactions that need not be submitted for | 927 |
review under division (A) of this section, if those transactions | 928 |
would not have a significant impact on the financial condition of | 929 |
an insurer. | 930 |
(E) A domestic insurer shall not enter into any transaction | 931 |
described in division (A) of this section with members of its | 932 |
insurance holding company system if the transaction is part of a | 933 |
plan or series of similar transactions and if the purpose of | 934 |
entering into the separate transactions is to avoid the review | 935 |
required under division (A) of this section that would otherwise | 936 |
occur. If the superintendent determines that the insurer, within a | 937 |
twelve-month period, entered into those separate transactions for | 938 |
that purpose, | 939 |
by section 3901.37 of the Revised Code. | 940 |
(F) A domestic insurer shall give written notice to the | 941 |
superintendent, within thirty days after making an investment, if | 942 |
the investment is made in a corporation and the total investment | 943 |
in the corporation by the insurance holding company system exceeds | 944 |
ten per cent of the voting securities of the corporation. | 945 |
(G) Nothing in division (A) of this section shall be | 946 |
construed to authorize or permit any transaction that would | 947 |
otherwise be contrary to law. | 948 |
Sec. 3901.35. (A)(1) In addition to the powers | 949 |
the superintendent has under sections 3901.01 to 3901.31 | 950 |
951 | |
insurers, the superintendent of insurance, subject to sections | 952 |
119.01 to 119.13 | 953 |
the power to | 954 |
3901.33 of the Revised Code and its affiliates to ascertain the | 955 |
financial condition of the insurer, including the enterprise risk | 956 |
to the insurer by the ultimate controlling party, or by any entity | 957 |
or combination of entities within the insurance holding company | 958 |
system, or by the insurance holding company system on a | 959 |
consolidated basis. | 960 |
(2) The superintendent of insurance may order any insurer | 961 |
registered under section 3901.33 of the Revised Code to produce | 962 |
963 | |
in the possession of the insurer and its affiliates as may be | 964 |
reasonably necessary to | 965 |
966 | |
967 | |
968 | |
969 | |
970 | |
971 | |
972 | |
compliance with sections 3901.32 to 3901.37 of the Revised Code. | 973 |
(3) To determine compliance with sections 3901.32 to 3901.37 | 974 |
of the Revised Code, the superintendent may order any insurer | 975 |
registered under section 3901.33 of the Revised Code to produce | 976 |
information not in the possession of the insurer if the insurer | 977 |
can obtain access to such information pursuant to a contractual | 978 |
relationship, statutory obligation, or other method. If the | 979 |
insurer cannot obtain the information requested by the | 980 |
superintendent, the insurer shall provide the superintendent a | 981 |
detailed explanation of the reason that the insurer cannot obtain | 982 |
the information and the identity of the holder of information. | 983 |
Whenever it appears to the superintendent that the detailed | 984 |
explanation is without merit, the superintendent may require, | 985 |
after notice and hearing, that the insurer pay a penalty of up to | 986 |
five hundred dollars per day, or the superintendent may suspend or | 987 |
revoke the insurer's license. | 988 |
(B) The superintendent may retain at the registered insurer's | 989 |
expense such attorneys, actuaries, accountants, and other experts | 990 |
not otherwise a part of the superintendent's staff as shall be | 991 |
reasonably necessary to assist in the conduct of the examination | 992 |
under division (A) of this section. Any persons so retained shall | 993 |
be under the direction and control of the superintendent and shall | 994 |
act in a purely advisory capacity. | 995 |
(C) Each registered insurer producing for examination | 996 |
records, books, and papers pursuant to division (A) of this | 997 |
section shall be liable for and shall pay the expense of such | 998 |
examination in accordance with section 3901.07 of the Revised | 999 |
Code. | 1000 |
(D) If the insurer fails to comply with an order issued | 1001 |
pursuant to this section, the superintendent may examine the | 1002 |
affiliates to obtain the information. The superintendent also may | 1003 |
issue subpoenas, administer oaths, and examine under oath any | 1004 |
person for purposes of determining compliance with this section. | 1005 |
Upon the failure or refusal of any person to obey a subpoena, the | 1006 |
superintendent may petition the court of common pleas of Franklin | 1007 |
county for an order compelling the witness to appear and testify | 1008 |
or produce documentary evidence. Failure to obey the court order | 1009 |
shall be punishable as contempt of court. A person who receives a | 1010 |
subpoena issued pursuant to this division shall appear as a | 1011 |
witness at the place specified in the subpoena within the state. | 1012 |
The person is entitled to the same fees and mileage as a witness | 1013 |
in a civil action in the court of common pleas. Any fees, mileage, | 1014 |
or actual expenses necessarily incurred in securing the attendance | 1015 |
of a witness and their testimony shall be itemized and charged | 1016 |
against the insurer being examined. | 1017 |
Sec. 3901.351. (A) With respect to any insurer registered | 1018 |
under section 3901.33 of the Revised Code and in accordance with | 1019 |
division (C) of this section, the superintendent of insurance may | 1020 |
participate in a supervisory college for any domestic insurer that | 1021 |
is part of an insurance holding company system with international | 1022 |
operations in order to determine compliance by the insurer with | 1023 |
sections 3901.32 to 3901.37 of the Revised Code. In participating, | 1024 |
the superintendent may do all of the following: | 1025 |
(1) Initiate the establishment of a supervisory college; | 1026 |
(2) Clarify the membership and participation of other | 1027 |
supervisors in the supervisory college; | 1028 |
(3) Clarify the functions of the supervisory college and the | 1029 |
role of other regulators, including the establishment of a | 1030 |
group-wide supervisor; | 1031 |
(4) Coordinate the ongoing activities of the supervisory | 1032 |
college, including planning meetings, supervisory activities, and | 1033 |
processes for information sharing; | 1034 |
(5) Establish a crisis management plan. | 1035 |
(B) Each registered insurer subject to this section shall be | 1036 |
liable for and shall pay the reasonable expenses of the | 1037 |
superintendent's participation in a supervisory college in | 1038 |
accordance with division (C) of this section, including reasonable | 1039 |
travel expenses. The superintendent may establish a regular | 1040 |
assessment to the insurer for the payment of these expenses. A | 1041 |
supervisory college may be convened as either a temporary or | 1042 |
permanent forum for communication and cooperation between the | 1043 |
regulators charged with the supervision of the insurer or its | 1044 |
affiliates. | 1045 |
(C) In order to assess the business strategy, financial | 1046 |
position, legal and regulatory position, risk exposure, risk | 1047 |
management, and governance processes, and as part of the | 1048 |
examination of individual insurers in accordance with section | 1049 |
3901.35 of the Revised Code, the superintendent may participate in | 1050 |
a supervisory college with other regulators charged with | 1051 |
supervision of the insurer or its affiliates, including other | 1052 |
state, federal, and international regulatory agencies. The | 1053 |
superintendent may enter into agreements in accordance with | 1054 |
section 3901.36 of the Revised Code that provide the basis for | 1055 |
cooperation between the superintendent and the other regulatory | 1056 |
agencies, and the activities of the supervisory college. | 1057 |
(D) Nothing in this section shall delegate to the supervisory | 1058 |
college the authority of the superintendent to regulate or | 1059 |
supervise the insurer or its affiliates within its jurisdiction. | 1060 |
(E) As used in this section, "supervisory college" means a | 1061 |
forum for cooperation and communication between the involved | 1062 |
supervisors established for the fundamental purpose of | 1063 |
facilitating all of the following: | 1064 |
(1) The effectiveness of supervision of entities that belong | 1065 |
to an insurance group; | 1066 |
(2) The supervision of the insurance group as a whole on a | 1067 |
group-wide basis; | 1068 |
(3) Improving the legal entity supervision of the entities | 1069 |
within the insurance group. | 1070 |
Sec. 3901.36. (A) | 1071 |
1072 | |
possession or control of the department of insurance that are | 1073 |
obtained by or disclosed to the superintendent of insurance or any | 1074 |
other person in the course of an examination or investigation made | 1075 |
pursuant to section 3901.35 of the Revised Code and all | 1076 |
information reported pursuant to section 3901.33 of the Revised | 1077 |
Code shall be given confidential and privileged treatment and | 1078 |
shall not be subject to section 149.43 of the Revised Code, | 1079 |
subpoena, or | 1080 |
1081 |
| 1082 |
discovery, and shall not be admissible in evidence in any private | 1083 |
civil action. The superintendent | 1084 |
| 1085 |
1086 | |
materials, or other information public unless one of the following | 1087 |
applies: | 1088 |
(1) The superintendent uses the documents, materials, or | 1089 |
other information in furtherance of any regulatory or legal action | 1090 |
brought as a part of the superintendent's official duties. | 1091 |
(2) The superintendent has obtained the prior written consent | 1092 |
1093 | |
documents | 1094 |
insurer. | 1095 |
| 1096 |
1097 | |
1098 | |
those affiliates that are the subject of the documents | 1099 |
materials, or other information notice and an opportunity to be | 1100 |
heard in accordance with Chapter 119. of the Revised Code, | 1101 |
1102 | |
shareholders, or the public will be served by the disclosure | 1103 |
| 1104 |
1105 | |
1106 | |
1107 | |
1108 | |
1109 | |
superintendent considers appropriate. | 1110 |
(B) Neither the superintendent nor any person who receives | 1111 |
documents, materials, or other information while acting under the | 1112 |
authority of the superintendent or with whom such documents, | 1113 |
materials, or other information are shared pursuant to this | 1114 |
section shall be permitted or required to testify in any private | 1115 |
civil action concerning any confidential documents, materials, or | 1116 |
information subject to division (A) of this section. | 1117 |
(C) In order to assist in the performance of the | 1118 |
superintendent's duties under this section, the superintendent may | 1119 |
do either of the following: | 1120 |
(1) Share documents, materials, or other information, | 1121 |
including the confidential and privileged documents, materials, or | 1122 |
other information subject to division (A) of this section with | 1123 |
other local, state, federal, and international regulatory and law | 1124 |
enforcement agencies, | 1125 |
1126 | |
its affiliates and subsidiaries, and with members of any | 1127 |
supervisory college described in section 3901.351 of the Revised | 1128 |
Code, provided that the recipient agrees to maintain the | 1129 |
confidential or privileged status of the confidential or | 1130 |
privileged | 1131 |
has verified in writing the legal authority to do so | 1132 |
| 1133 |
1134 | |
1135 | |
1136 | |
1137 |
| 1138 |
1139 | |
1140 | |
1141 | |
1142 | |
1143 | |
1144 | |
1145 | |
1146 | |
1147 |
| 1148 |
1149 | |
1150 | |
1151 | |
1152 | |
1153 | |
1154 | |
1155 |
| 1156 |
1157 | |
1158 | |
confidential and privileged documents, materials, or other | 1159 |
information reported pursuant to section 3901.33 of the Revised | 1160 |
Code only with superintendents of states having statutes or | 1161 |
regulations substantially similar to division (A) of this section | 1162 |
and who have agreed in writing not to disclose such information. | 1163 |
(2) Receive documents, materials, or information, including | 1164 |
otherwise confidential and privileged documents, materials, or | 1165 |
information from the national association of insurance | 1166 |
commissioners and its affiliates and subsidiaries and from | 1167 |
regulatory and law enforcement officials of other foreign or | 1168 |
domestic jurisdictions. The superintendent shall maintain as | 1169 |
confidential or privileged any such document, material, or | 1170 |
information received with notice or the understanding that it is | 1171 |
confidential or privileged under the laws of the jurisdiction that | 1172 |
is the source of the document, material, or information. | 1173 |
(D) The superintendent shall enter into written agreements | 1174 |
with the national association of insurance commissioners governing | 1175 |
sharing and use of information provided pursuant to sections | 1176 |
3901.32 to 3901.37 of the Revised Code consistent with division | 1177 |
(C) of this section. The written agreements shall do all of the | 1178 |
following: | 1179 |
(1) Specify procedures and protocols regarding the | 1180 |
confidentiality and security of information shared with the | 1181 |
national association of insurance commissioners and its affiliates | 1182 |
and subsidiaries pursuant to sections 3901.32 to 3901.37 of the | 1183 |
Revised Code, including procedures and protocols for sharing by | 1184 |
the national association of insurance commissioners with other | 1185 |
state, federal, or international regulators; | 1186 |
(2) Specify that ownership of information shared with the | 1187 |
national association of insurance commissioners and its affiliates | 1188 |
and subsidiaries pursuant to sections 3901.32 to 3901.37 of the | 1189 |
Revised Code remains with the superintendent and the national | 1190 |
association of insurance commissioners' use of the information is | 1191 |
subject to the direction of the superintendent; | 1192 |
(3) Require prompt notice to be given to an insurer whose | 1193 |
confidential information is in the possession of the national | 1194 |
association of insurance commissioners or its affiliates or | 1195 |
subsidiaries and is subject to a request or subpoena for | 1196 |
disclosure or production; | 1197 |
(4) Require the national association of insurance | 1198 |
commissioners and its affiliates and subsidiaries to consent to | 1199 |
intervention by an insurer in any judicial or administrative | 1200 |
action in which the national association of insurance | 1201 |
commissioners and its affiliates and subsidiaries may be required | 1202 |
to disclose confidential information about the insurer shared with | 1203 |
the national association of insurance commissioners and its | 1204 |
affiliates and subsidiaries pursuant to sections 3901.32 to | 1205 |
3901.37 of the Revised Code. | 1206 |
(E) The sharing of information by the superintendent pursuant | 1207 |
to sections 3901.32 to 3901.37 of the Revised Code shall not | 1208 |
constitute a delegation of regulatory or rule-making authority. | 1209 |
The superintendent is solely responsible for the administration, | 1210 |
execution, and enforcement of the provisions of sections 3901.32 | 1211 |
to 3901.37 of the Revised Code. | 1212 |
(F) | 1213 |
1214 | |
1215 |
| 1216 |
confidentiality in the documents | 1217 |
information described in this section shall occur as a result of | 1218 |
sharing or receiving documents and information as authorized in | 1219 |
1220 |
| 1221 |
1222 | |
1223 | |
1224 | |
1225 | |
1226 | |
1227 | |
1228 | |
the possession or control of the national association of insurance | 1229 |
commissioners pursuant to this section shall be given confidential | 1230 |
and privileged treatment and shall not be subject to section | 1231 |
149.43 of the Revised Code, subpoena, or discovery, and shall not | 1232 |
be admissible in evidence in any private civil action. | 1233 |
Sec. 3901.371. The purpose of sections 3901.371 to 3901.378 | 1234 |
of the Revised Code is to provide the requirements for maintaining | 1235 |
a risk management framework and completing an own risk and | 1236 |
solvency assessment, and to provide guidance and instructions for | 1237 |
filing an own risk and solvency assessment summary report with the | 1238 |
superintendent of insurance. The requirements of these sections | 1239 |
shall apply to all insurers domiciled in this state unless exempt | 1240 |
pursuant to section 3901.376 of the Revised Code. | 1241 |
The general assembly finds and declares that the own risk and | 1242 |
solvency assessment summary report will contain confidential and | 1243 |
sensitive information related to an insurer or insurance group's | 1244 |
identification of risks material and relevant to the insurer or | 1245 |
insurance group filing the report. This information will include | 1246 |
proprietary and trade secret information that has the potential | 1247 |
for harm and competitive disadvantage to the insurer or insurance | 1248 |
group if the information is made public. It is the intent of the | 1249 |
general assembly that the own risk and solvency assessment summary | 1250 |
report shall be a confidential document filed with the | 1251 |
superintendent, that the own risk and solvency assessment summary | 1252 |
report will be shared only as stated in sections 3901.371 to | 1253 |
3901.378 of the Revised Code to assist the superintendent of | 1254 |
insurance in the performance of the superintendent's duties, and | 1255 |
that in no event shall the own risk and solvency assessment | 1256 |
summary report be subject to public disclosure. | 1257 |
Sec. 3901.372. For the purposes of sections 3901.371 to | 1258 |
3907.378 of the Revised Code: | 1259 |
(A) "Insurance group" means those insurers and affiliates | 1260 |
included within an insurance holding company system as defined in | 1261 |
section 3901.32 of the Revised Code. | 1262 |
(B) "Insurer" has the same meaning as set forth in section | 1263 |
3901.32 of the Revised Code. | 1264 |
(C) "Own risk and solvency assessment" means a confidential | 1265 |
internal assessment, appropriate to the nature, scale, and | 1266 |
complexity of an insurer or insurance group, conducted by that | 1267 |
insurer or insurance group of the material and relevant risks | 1268 |
associated with the insurer or insurance group's current business | 1269 |
plan, and the sufficiency of capital resources to support those | 1270 |
risks. | 1271 |
(D) "Own risk and solvency assessment guidance manual" means | 1272 |
the current version of the own risk and solvency assessment | 1273 |
guidance manual developed and adopted by the national association | 1274 |
of insurance commissioners and as amended from time to time. A | 1275 |
change in the own risk and solvency assessment guidance manual | 1276 |
shall be effective on the first day of January following the | 1277 |
calendar year in which the changes have been adopted by the | 1278 |
national association of insurance commissioners. | 1279 |
(E) "Own risk and solvency assessment summary report" means a | 1280 |
confidential high-level summary of an insurer or insurance group's | 1281 |
own risk and solvency assessment. | 1282 |
Sec. 3901.373. An insurer shall maintain a risk management | 1283 |
framework to assist the insurer with identifying, assessing, | 1284 |
monitoring, managing, and reporting on its material and relevant | 1285 |
risks. This requirement may be satisfied if the insurance group of | 1286 |
which the insurer is a member maintains a risk management | 1287 |
framework applicable to the operations of the insurer. | 1288 |
Sec. 3901.374. Unless exempted by section 3901.376 of the | 1289 |
Revised Code, an insurer, or the insurance group of which the | 1290 |
insurer is a member, shall regularly conduct an own risk and | 1291 |
solvency assessment consistent with a process comparable to the | 1292 |
own risk and solvency assessment guidance manual. The own risk and | 1293 |
solvency assessment shall be conducted not less than annually, but | 1294 |
also at any time when there are significant changes to the risk | 1295 |
profile of the insurer or the insurance group of which the insurer | 1296 |
is a member. | 1297 |
Sec. 3901.375. (A)(1) Upon the request of the superintendent | 1298 |
of insurance, and not more than once annually, an insurer shall | 1299 |
submit to the superintendent an own risk and solvency assessment | 1300 |
summary report, or any combination of reports that together | 1301 |
contain the information described in the own risk and solvency | 1302 |
assessment guidance manual, applicable to the insurer or the | 1303 |
insurance group of which it is a member. | 1304 |
(2) Notwithstanding any request from the superintendent, if | 1305 |
the insurer is a member of an insurance group, the insurer shall | 1306 |
submit the report required by division (A)(1) of this section if | 1307 |
the superintendent is the lead state commissioner of the insurance | 1308 |
group as determined by the procedures within the financial | 1309 |
analysis handbook adopted by the national association of insurance | 1310 |
commissioners. | 1311 |
(B) The report shall include a signature of the insurer or | 1312 |
insurance group's chief risk officer, or other executive having | 1313 |
responsibility for the oversight of the insurer's enterprise risk | 1314 |
management process, attesting to the best of the officer's or | 1315 |
executive's belief and knowledge that the insurer applies the | 1316 |
enterprise risk management process described in the own risk and | 1317 |
solvency assessment summary report, and that a copy of the report | 1318 |
has been provided to the insurer's board of directors or the | 1319 |
appropriate committee thereof. | 1320 |
(C) An insurer may comply with division (A) of this section | 1321 |
by providing the most recent and substantially similar report | 1322 |
provided by the insurer or another member of an insurance group of | 1323 |
which the insurer is a member to the commissioner of another state | 1324 |
or to a supervisor or regulator of a foreign jurisdiction, if that | 1325 |
report provides information that is comparable to the information | 1326 |
described in the own risk and solvency assessment guidance manual. | 1327 |
Any such report in a language other than English must be | 1328 |
accompanied by a translation of that report into the English | 1329 |
language. | 1330 |
Sec. 3901.376. (A)(1) An insurer shall be exempt from the | 1331 |
requirements of sections 3901.371 to 3901.378 of the Revised Code | 1332 |
if both of the following apply: | 1333 |
(a) The insurer has annual direct written and unaffiliated | 1334 |
assumed premium, including international direct and assumed | 1335 |
premium, less than five hundred million dollars. | 1336 |
(b) The insurance group of which the insurer is a member has | 1337 |
annual direct written and unaffiliated assumed premium, including | 1338 |
international direct and assumed premium, less than one billion | 1339 |
dollars. | 1340 |
(2) The annual direct written and unaffiliated assumed | 1341 |
premium described in divisions (A)(1)(a) and (b) of this section | 1342 |
does not include premiums reinsured with the federal crop | 1343 |
insurance corporation and federal flood program. | 1344 |
(B) If an insurer qualifies for exemption pursuant to | 1345 |
division (A)(1)(a) of this section, but the insurance group of | 1346 |
which the insurer is a member does not qualify for exemption | 1347 |
pursuant to division (A)(1)(b) of this section, and if an own risk | 1348 |
and solvency assessment summary report is required pursuant to | 1349 |
division (E) of this section, then the summary report shall | 1350 |
include every insurer within the insurance group. This requirement | 1351 |
may be satisfied if the insurer submits more than one own risk and | 1352 |
solvency assessment summary report for any combination of insurers | 1353 |
provided the combination of reports includes every insurer within | 1354 |
the insurance group. | 1355 |
(C) If an insurer does not qualify for exemption pursuant to | 1356 |
division (A)(1)(a) of this section, but the insurance group of | 1357 |
which it is a member qualifies for exemption pursuant to division | 1358 |
(A)(1)(b) of this section, then the insurer shall only file an own | 1359 |
risk and solvency assessment summary report if required pursuant | 1360 |
to division (E) of this section. | 1361 |
(D)(1) An insurer that does not qualify for exemption | 1362 |
pursuant to division (A) of this section may apply to the | 1363 |
superintendent of insurance for a waiver from the requirements of | 1364 |
sections 3901.371 to 3901.378 of the Revised Code based upon | 1365 |
unique circumstances. In deciding whether to grant the insurer's | 1366 |
request for waiver, the superintendent may consider any of the | 1367 |
following: | 1368 |
(a) The type and volume of business written; | 1369 |
(b) The ownership and organizational structure of the insurer | 1370 |
or insurance group of which the insurer is a member; | 1371 |
(c) Any other factor the superintendent considers relevant to | 1372 |
the insurer or insurance group of which the insurer is a member. | 1373 |
(2) If the insurer is part of an insurance group with | 1374 |
insurers domiciled in more than one state, the superintendent | 1375 |
shall coordinate with the lead state commissioner and with the | 1376 |
other domiciliary commissioners in considering whether to grant | 1377 |
the insurer's request for a waiver. | 1378 |
(E) Notwithstanding the exemptions stated in this section, | 1379 |
the superintendent may require that an insurer maintain a risk | 1380 |
management framework, conduct an own risk and solvency assessment, | 1381 |
and file an own risk and solvency assessment summary report in any | 1382 |
of the following circumstances: | 1383 |
(1) Based on unique circumstances, including the type and | 1384 |
volume of business written and the ownership and organizational | 1385 |
structure of the insurer or insurance group of which the insurer | 1386 |
is a member; | 1387 |
(2) At the request of a federal agency; | 1388 |
(3) At the request of an international supervisor; | 1389 |
(4) If the insurer has risk-based capital for a company | 1390 |
action level event as set forth in section 3903.83 of the Revised | 1391 |
Code, meets one or more of the standards set out in section | 1392 |
3903.09 or 3903.71 of the Revised Code, or otherwise exhibits | 1393 |
qualities of a troubled insurer as determined by the | 1394 |
superintendent. | 1395 |
(F) If an insurer that qualifies for an exemption pursuant to | 1396 |
division (A) of this section subsequently no longer qualifies for | 1397 |
that exemption due to changes in premium as reflected in the | 1398 |
insurer's most recent annual statement, or in the most recent | 1399 |
annual statements of the insurers within the insurance group of | 1400 |
which the insurer is a member, the insurer shall have one year | 1401 |
after the year the threshold is exceeded to comply with the | 1402 |
requirements of sections 3901.371 to 3901.378 of the Revised Code. | 1403 |
Sec. 3901.377. (A) The own risk and solvency assessment | 1404 |
summary report shall be prepared consistent with the own risk and | 1405 |
solvency assessment guidance manual, subject to the requirements | 1406 |
of division (B) of this section, and all documentation and | 1407 |
supporting information shall be maintained and made available for | 1408 |
examination upon request of the superintendent of insurance. | 1409 |
(B) The superintendent's review of the own risk and solvency | 1410 |
assessment summary report, and any additional requests for | 1411 |
information, shall be made using similar procedures used in the | 1412 |
analysis and examination of multi-state or global insurers and | 1413 |
insurance groups. | 1414 |
Sec. 3901.378. (A) Documents, materials, or other | 1415 |
information, including the own risk and solvency assessment | 1416 |
summary report, in the possession or control of the department of | 1417 |
insurance that are obtained by, created by, or disclosed to the | 1418 |
superintendent of insurance, or any other person under sections | 1419 |
3901.371 to 3901.378 of the Revised Code, are recognized by this | 1420 |
state as being proprietary and to contain trade secrets. | 1421 |
(B) The documents described in division (A) of this section | 1422 |
shall be confidential by law and privileged, and shall not be | 1423 |
admissible into evidence in any private civil action or subject to | 1424 |
section 149.43 of the Revised Code, subpoena, or discovery. | 1425 |
(C)(1) Notwithstanding division (B) of this section, the | 1426 |
superintendent may use the documents, materials, or other | 1427 |
information in furtherance of any regulatory or legal action | 1428 |
brought as a part of the superintendent's official duties. | 1429 |
(2) The superintendent shall not otherwise make the | 1430 |
documents, materials, or other information public without the | 1431 |
prior written consent of the insurer. | 1432 |
(D) Neither the superintendent nor any person who receives | 1433 |
documents, materials, or other own risk and solvency assessment | 1434 |
related information, through examination or otherwise, while | 1435 |
acting under the authority of the superintendent or with whom such | 1436 |
documents, materials, or other information are shared pursuant to | 1437 |
sections 3901.371 to 3901.378 of the Revised Code shall be | 1438 |
permitted or required to testify in any private civil action | 1439 |
concerning any confidential documents, materials, or information | 1440 |
subject to division (A) of this section. | 1441 |
(E)(1) In order to assist in the performance of the | 1442 |
superintendent's regulatory duties, the superintendent may do | 1443 |
either of the following: | 1444 |
(a) Upon request, share documents, materials, or other own | 1445 |
risk and solvency assessment related information, including | 1446 |
confidential and privileged documents, materials, or information | 1447 |
subject to division (A) of this section, and proprietary and trade | 1448 |
secret documents, with other state, federal and international | 1449 |
financial regulatory agencies, members of any supervisory college | 1450 |
as described in section 3901.351 of the Revised Code, the national | 1451 |
association of insurance commissioners, or any third-party | 1452 |
consultant designated by the superintendent; | 1453 |
(b) Receive documents, materials, or other own risk and | 1454 |
solvency assessment related information, including confidential | 1455 |
and privileged documents, materials, or information subject to | 1456 |
division (A) of this section, and proprietary and trade secret | 1457 |
documents, from regulatory officials of other foreign or domestic | 1458 |
jurisdictions, including members of any supervisory college as | 1459 |
described in section 3901.351 of the Revised Code, and from the | 1460 |
national association of insurance commissioners. | 1461 |
(2) The recipient of any information pursuant to division | 1462 |
(E)(1)(a) of this section shall agree in writing to maintain the | 1463 |
confidentiality and privileged status of the documents, materials, | 1464 |
or other information and verify in writing their legal authority | 1465 |
to maintain confidentiality. If the superintendent receives any | 1466 |
information pursuant to division (E)(1)(b) of this section, the | 1467 |
superintendent shall maintain as confidential or privileged any | 1468 |
documents, materials, or information received with notice or the | 1469 |
understanding that it is confidential or privileged under the laws | 1470 |
of the jurisdiction that is the source of the document, material, | 1471 |
or information. | 1472 |
(3) The superintendent shall enter into a written agreement | 1473 |
with the national association of insurance commissioners or a | 1474 |
third-party consultant governing sharing and use of information | 1475 |
provided pursuant to sections 3901.371 to 3901.378 of the Revised | 1476 |
Code. The written agreement shall do the all of the following: | 1477 |
(a) Specify procedures and protocols regarding the | 1478 |
confidentiality and security of information shared with the | 1479 |
national association of insurance commissioners or a third-party | 1480 |
consultant pursuant to sections 3901.371 to 3901.378 of the | 1481 |
Revised Code, including procedures and protocols for sharing by | 1482 |
the national association of insurance commissioners with other | 1483 |
state regulators from states in which the insurance group has | 1484 |
domiciled insurers; | 1485 |
(b) Provide that the recipient of information agrees in | 1486 |
writing to maintain the confidentiality and privileged status of | 1487 |
the own risk and solvency assessment related documents, materials, | 1488 |
or other information obtained pursuant to sections 3901.371 to | 1489 |
3901.378 of the Revised Code, and has verified in writing the | 1490 |
legal authority to maintain confidentiality; | 1491 |
(c) Specify that ownership of information shared with the | 1492 |
national association of insurance commissioners or a third-party | 1493 |
consultant pursuant to sections 3901.371 to 3901.378 of the | 1494 |
Revised Code remains with the superintendent and the national | 1495 |
association of insurance commissioners' or a third-party | 1496 |
consultant's use of the information is subject to the direction of | 1497 |
the superintendent; | 1498 |
(d) Prohibit the national association of insurance | 1499 |
commissioners or a third-party consultant from storing the | 1500 |
information obtained pursuant to sections 3901.371 to 3901.378 of | 1501 |
the Revised Code in a permanent database after the underlying | 1502 |
analysis is completed; | 1503 |
(e) Require prompt notice to be given to an insurer whose | 1504 |
confidential information in the possession of the national | 1505 |
association of insurance commissioners or a third-party consultant | 1506 |
pursuant to sections 3901.371 to 3901.378 of the Revised Code is | 1507 |
subject to a request or subpoena for disclosure or production of | 1508 |
the information; | 1509 |
(f) Require the national association of insurance | 1510 |
commissioners or a third-party consultant to consent to | 1511 |
intervention by an insurer in any judicial or administrative | 1512 |
action in which the national association of insurance | 1513 |
commissioners or a third-party consultant may be required to | 1514 |
disclose confidential information about the insurer that was | 1515 |
obtained pursuant to sections 3901.371 to 3901.378 of the Revised | 1516 |
Code; | 1517 |
(g) Require the national association of insurance | 1518 |
commissioners or a third-party consultant to use documents, | 1519 |
materials, or other information, including the own risk solvency | 1520 |
assessment summary report, for the specific purposes as directed | 1521 |
by the superintendent; | 1522 |
(h) Prohibit the national association of insurance | 1523 |
commissioners or a third-party consultant from using, sharing, or | 1524 |
disclosing any documents, materials, or other information, | 1525 |
including the own risk and solvency assessment summary report, | 1526 |
beyond the scope of the responsibilities outlined by the | 1527 |
superintendent; | 1528 |
(i) Provide for the insurer's written consent in the case of | 1529 |
an agreement involving a third-party consultant. | 1530 |
(F) The sharing of information, materials, and documents by | 1531 |
the superintendent pursuant to sections 3901.371 to 3901.378 of | 1532 |
the Revised Code shall not constitute a delegation of regulatory | 1533 |
or rule-making authority, and the superintendent is solely | 1534 |
responsible for the administration, execution, and enforcement of | 1535 |
sections 3901.371 to 3901.378 of the Revised Code. | 1536 |
(G) No waiver of any applicable privilege or claim of | 1537 |
confidentiality in the documents, proprietary and trade-secret | 1538 |
materials, or other own risk and solvency assessment related | 1539 |
information shall occur as a result of disclosure of such own risk | 1540 |
and solvency assessment related information, materials, or | 1541 |
documents to the superintendent as a result of sharing authorized | 1542 |
in sections 3901.371 to 3901.378 of the Revised Code. | 1543 |
(H) Documents, materials, or other information in the | 1544 |
possession or control of the national association of insurance | 1545 |
commissioners or a third-party consultant pursuant to sections | 1546 |
3901.371 to 3901.378 of the Revised Code shall be confidential by | 1547 |
law and privileged, and shall not be subject to section 149.43 of | 1548 |
the Revised Code, subpoena, discovery, or admissible in evidence | 1549 |
in any private civil action. | 1550 |
Sec. 3901.41. (A) As used in this section: | 1551 |
(1) "Automated transaction" has the same meaning as in | 1552 |
section 1306.01 of the Revised Code, and includes electronic | 1553 |
transactions between two or more persons conducting business | 1554 |
pursuant to the laws of this state relating to insurance. | 1555 |
(2) "Contact point" means any electronic identification to | 1556 |
which messages can be sent, including, but not limited to, any of | 1557 |
the following: | 1558 |
(a) An electronic mail address; | 1559 |
(b) An instant message identity; | 1560 |
(c) A wireless telephone number, or any other personal | 1561 |
electronic communication device; | 1562 |
(d) A facsimile number. | 1563 |
(3) "Insured" means a certificate holder, contract owner, | 1564 |
customer, policyholder, or subscriber as those terms are used in | 1565 |
the laws of this state relating to insurance. | 1566 |
(4) "Insurer" has the same meaning as in section 3901.32 of | 1567 |
the Revised Code. | 1568 |
(5) "Laws of this state relating to insurance" has the same | 1569 |
meaning as in section 3901.04 of the Revised Code. | 1570 |
(6) "Personally identifiable information" means any | 1571 |
individually identifiable information gathered in connection with | 1572 |
an insurance transaction, including a person's name, address, | 1573 |
social security number, and banking information. | 1574 |
(7) "Secure web site" means a web site that meets both of the | 1575 |
following criteria: | 1576 |
(a) The web site uses the hypertext transfer protocol secure | 1577 |
communication protocol or other equally secure communication | 1578 |
protocol. | 1579 |
(b) The web site requires a person to enter a unique user | 1580 |
credential to access personally identifiable information for which | 1581 |
the person has the legal right to access. | 1582 |
(B) Notwithstanding any laws of this state relating to | 1583 |
insurance, sections 1306.01 to 1306.23 of the Revised Code, the | 1584 |
"Uniform Electronics Transactions Act," apply to the business of | 1585 |
insurance in this state. | 1586 |
(C)(1) If an insured agrees to conduct the business of | 1587 |
insurance via an automated transaction, any information issued or | 1588 |
delivered in writing may be issued or delivered electronically to | 1589 |
a contact point provided by the insured, as long as both of the | 1590 |
following apply: | 1591 |
(a) The transmission of information is in compliance with | 1592 |
sections 1306.07 and 1306.14 of the Revised Code. | 1593 |
(b) The details of the automated transaction are fully | 1594 |
disclosed to the insured in the application, policy, certificate, | 1595 |
contract of insurance, or by another method that ensures notice to | 1596 |
the insured. An insurer's form used only to notify an insured of | 1597 |
and obtain consent for an automated transaction does not need to | 1598 |
be approved or accepted by the superintendent of insurance. | 1599 |
(2)(a) Except for notices of cancellation, nonrenewal, or | 1600 |
termination, an insurer may deliver information via a secure web | 1601 |
site if the insurer sends an electronic notice to a contact point | 1602 |
and the electronic notice includes a hyperlink to the secure web | 1603 |
site. | 1604 |
(b) If an insurer uses a secure web site to deliver changes | 1605 |
in terms or conditions in an insured's policy, certificate, or | 1606 |
contract of insurance, including any endorsements or amendments, | 1607 |
the electronic notice to the insured's contact point shall include | 1608 |
all of the following: | 1609 |
(i) A list or summary of the changes; | 1610 |
(ii) A link to the complete document located on the insurer's | 1611 |
secure web site; | 1612 |
(iii) The following or substantially similar statement | 1613 |
displayed in a prominent manner: | 1614 |
"There are changes in the terms or conditions of your policy, | 1615 |
certificate, or contract of insurance." | 1616 |
(3) At a minimum, the details of the automated transaction | 1617 |
shall include all of the following: | 1618 |
(a) A clear and conspicuous statement informing the insured | 1619 |
of any right or option of the insured to receive a record on | 1620 |
paper; | 1621 |
(b) The right of the insured to withdraw the insured's | 1622 |
consent, and any consequences or fees if the insured withdraws | 1623 |
consent; | 1624 |
(c) A description of the procedures the insured must use to | 1625 |
withdraw consent and to update the insured's contact point. | 1626 |
(4) Agreement to participate in a part of an automated | 1627 |
transaction shall not be used to confirm the insured's consent to | 1628 |
transact the entire business of insurance pursuant to this | 1629 |
section. | 1630 |
(5) A withdrawal of consent by an insured shall be effective | 1631 |
within a reasonable time period, not to exceed ten business days | 1632 |
after the receipt of the withdrawal by the insurer. | 1633 |
(D) The insurer shall send all notices of cancellation, | 1634 |
nonrenewal, termination, or changes in the terms or conditions of | 1635 |
the policy, certificate, or contract of insurance to the last | 1636 |
known contact point supplied by the insured. If the insurer has | 1637 |
knowledge that the insured's contact point is no longer valid, the | 1638 |
insurer shall send the information via regular mail to the last | 1639 |
known address furnished to the insurer by the insured. | 1640 |
(E) Any insurer conducting the business of insurance via an | 1641 |
automated transaction shall allow the insurer's insureds who agree | 1642 |
to participate in an automated transaction the option to withdraw | 1643 |
consent from participating in the automated transaction. | 1644 |
(F) Notwithstanding any laws or regulations of this state | 1645 |
relating to insurance, any policy, certificate, or contract of | 1646 |
insurance, including any endorsements or amendments, that do not | 1647 |
contain personally identifiable information may be posted to the | 1648 |
insurer's web site in lieu of any other method of delivery. If the | 1649 |
insurer elects to post any policy, certificate, or contract of | 1650 |
insurance to the insurer's web site, all of the following shall | 1651 |
apply: | 1652 |
(1) The policy, certificate, or contract of insurance is | 1653 |
readily accessible by the insured and, once the policy, | 1654 |
certificate, or contract of insurance is no longer used by the | 1655 |
insurer in this state, it is stored in a readily accessible | 1656 |
archive; | 1657 |
(2) The policy, certificate, or contract of insurance is | 1658 |
posted in such a manner that the insured can easily identify the | 1659 |
insured's applicable policy, certificate, or contract and print or | 1660 |
download the insured's documents without charge and without the | 1661 |
use of any special program or application that is not readily | 1662 |
available to the public without charge; | 1663 |
(3) The insurer provides written notice at the time of | 1664 |
issuance of the initial policy, certificate, contract, or any | 1665 |
renewal forms of a method by which the insured may obtain upon | 1666 |
request a paper or electronic copy of their policy, certificate, | 1667 |
or contract without charge; | 1668 |
(4) The insurer clearly identifies the applicable policy, | 1669 |
endorsements, amendments, certificate, or contract of insurance | 1670 |
purchased by the insured on any declaration page, certificate of | 1671 |
insurance, summary of benefits, or other evidence of coverage | 1672 |
issued to the insured; | 1673 |
(5) The insurer gives notice, in the manner it customarily | 1674 |
communicates with an insured, of any changes to the policy, | 1675 |
certificate, or contract of insurance, including any endorsements | 1676 |
or amendments, and of the insured's right to obtain upon request a | 1677 |
paper or electronic copy of the policy, endorsements, or | 1678 |
amendments without charge. | 1679 |
(G) Notwithstanding any other section of Title XXXIX or | 1680 |
Chapters 1739. or 1751. of the Revised Code or rules adopted | 1681 |
thereunder to the contrary, an insurer may deliver any notices, | 1682 |
documents, or information to an insured via an automated | 1683 |
transaction pursuant to this section. | 1684 |
(H) This section does not supersede any time periods, filing | 1685 |
requirements, or content of notices, documents, notices to | 1686 |
insureds' agents required pursuant to sections 3937.25, 3937.26, | 1687 |
and 3937.27 of the Revised Code, or information otherwise required | 1688 |
by a law other than this section relating to insurance. This | 1689 |
section does not apply to disclosures through electronic media of | 1690 |
certificates, explanation of benefit statements, and other | 1691 |
mandated materials under the "Employee Retirement Income Security | 1692 |
Act of 1974," 88 Stat. 829, 29 U.S.C. 1001, as amended, and any | 1693 |
regulation adopted thereunder. | 1694 |
(I) If the consent of an insured to receive certain notices, | 1695 |
documents, or information in an electronic form is on file with an | 1696 |
insurer before the effective date of this section, if the consent | 1697 |
was not accompanied by the details of the automated transaction | 1698 |
described in division (C)(3) of this section, and if, pursuant to | 1699 |
this section, an insurer intends to deliver additional notices, | 1700 |
documents, or information to that insured in an electronic form, | 1701 |
then, prior to delivering or at the time of delivering such | 1702 |
additional notice, documents, or information electronically, the | 1703 |
insurer shall notify the insured of the details of the automated | 1704 |
transaction in compliance with division (C)(3) of this section. | 1705 |
(J) The superintendent of insurance may adopt rules in | 1706 |
accordance with Chapter 119. of the Revised Code as the | 1707 |
superintendent considers necessary to carry out the purposes of | 1708 |
this section. | 1709 |
Sec. 3901.62. (A) Except as provided in sections 3901.63 and | 1710 |
3901.64 of the Revised Code, a domestic ceding insurer that is | 1711 |
authorized to do any insurance business in this state may take | 1712 |
credit for any reinsurance ceded as either an asset or a reduction | 1713 |
of liability only if one of the following applies: | 1714 |
(1) The reinsurance is ceded to an assuming insurer that is | 1715 |
authorized to do any insurance or reinsurance business in this | 1716 |
state. | 1717 |
(2) The reinsurance is ceded to an assuming insurer that is | 1718 |
accredited by the superintendent of insurance as a reinsurer in | 1719 |
this state in accordance with division (B) of this section. | 1720 |
(3) The reinsurance is ceded to an assuming insurer that is | 1721 |
not authorized to do any insurance or reinsurance business in this | 1722 |
state, provided the reinsurance is ceded to a reinsurance pool or | 1723 |
other risk-sharing entity in which participation is required by | 1724 |
law, rule, or regulation of the jurisdiction in which the pool or | 1725 |
entity is located. | 1726 |
| 1727 |
maintains a trust fund in a qualified United States financial | 1728 |
institution, as defined in | 1729 |
the Revised Code, for the payment of the valid claims of its | 1730 |
United States policyholders and ceding insurers, and their assigns | 1731 |
and successors in interest in accordance with division (C) of this | 1732 |
section. | 1733 |
(5) The reinsurance is ceded to an assuming insurer that has | 1734 |
been certified by the superintendent as a reinsurer in this state | 1735 |
and that secures its obligations in accordance with division (D) | 1736 |
of this section. | 1737 |
(B)(1) In order to be eligible for accreditation under | 1738 |
division (A)(2) of this section, the assuming insurer shall do all | 1739 |
of the following: | 1740 |
(a) File with the superintendent evidence of its submission | 1741 |
to this state's jurisdiction; | 1742 |
(b) Submit to this state's authority to examine its books and | 1743 |
records; | 1744 |
(c) Maintain a license to transact insurance or reinsurance | 1745 |
in at least one state or, in the case of a United States branch of | 1746 |
a foreign or alien assuming insurer, be entered through and | 1747 |
licensed to transact insurance or reinsurance in at least one | 1748 |
state; | 1749 |
(d) File annually with the superintendent a copy of its | 1750 |
annual statement filed with the insurance department of its state | 1751 |
of domicile, and a copy of its most recent audited financial | 1752 |
statement; | 1753 |
(e) Demonstrate to the satisfaction of the superintendent | 1754 |
that it has adequate financial capacity to meet its reinsurance | 1755 |
obligations and is otherwise qualified to assume reinsurance from | 1756 |
domestic insurers. | 1757 |
(2) An assuming insurer is considered to meet the requirement | 1758 |
of division (B)(1)(e) of this section as of the time of its | 1759 |
application to the superintendent for accreditation if it | 1760 |
maintains a surplus with regard to policyholders in an amount not | 1761 |
less than twenty million dollars, and the superintendent has not | 1762 |
denied its accreditation within ninety days after submission of | 1763 |
its application. | 1764 |
(C)(1) A trust maintained by an assuming insurer under | 1765 |
division (A) | 1766 |
requirements: | 1767 |
| 1768 |
shall consist of a trusteed account representing the assuming | 1769 |
insurer's liabilities attributable to business underwritten in the | 1770 |
United States. A trusteed surplus of not less than twenty million | 1771 |
dollars shall be maintained by the assuming insurer, except that | 1772 |
at any time after the assuming insurer has permanently | 1773 |
discontinued underwriting new business secured by the trust for at | 1774 |
least three full years, the superintendent with principal | 1775 |
regulatory oversight of the trust may authorize a reduction in the | 1776 |
required trusteed surplus, but only after a finding, based on an | 1777 |
assessment of the risk, that the new required surplus level is | 1778 |
adequate for the protection of ceding insurers within the United | 1779 |
States, policyholders, and claimants in light of reasonably | 1780 |
foreseeable adverse loss development. | 1781 |
The risk assessment may involve an actuarial review, | 1782 |
including an independent analysis of reserves and cash flows, and | 1783 |
shall consider all material risk factors, including when | 1784 |
applicable the lines of business involved, the stability of the | 1785 |
incurred loss estimates, and the effect of the surplus | 1786 |
requirements on the assuming insurer's liquidity or solvency. | 1787 |
The minimum required trusteed surplus shall not be reduced to | 1788 |
an amount less than thirty per cent of the assuming insurer's | 1789 |
liabilities attributable to reinsurance ceded by ceding insurers | 1790 |
within the United States covered by the trust. | 1791 |
| 1792 |
incorporated and individual unincorporated underwriters, the trust | 1793 |
shall consist of a trusteed account representing the group's | 1794 |
liabilities attributable to business written in the United States. | 1795 |
A trusteed surplus shall be maintained by the group, of which | 1796 |
surplus one hundred million dollars shall be held jointly for the | 1797 |
benefit of the United States ceding insurers of any member of the | 1798 |
group. The following requirements apply to the group of assuming | 1799 |
insurers: | 1800 |
| 1801 |
in any business other than underwriting as a member of the group, | 1802 |
and shall be subject to the same level of solvency regulation and | 1803 |
control by the group's domiciliary regulator as are the | 1804 |
unincorporated members. | 1805 |
| 1806 |
of insurance an annual certification of the solvency of each | 1807 |
underwriter in the group. The certification shall be provided by | 1808 |
the group's domiciliary regulator and its independent public | 1809 |
accountants. | 1810 |
| 1811 |
common administration with aggregate policyholders' surplus of ten | 1812 |
billion dollars that has continuously transacted an insurance | 1813 |
business outside the United States for at least three years | 1814 |
immediately prior to assuming reinsurance, the trust shall be in | 1815 |
an amount equal to the group's several liabilities attributable to | 1816 |
business ceded by United States ceding insurers to any member of | 1817 |
the group pursuant to reinsurance contracts issued in the name of | 1818 |
the group. A joint trusteed surplus shall be maintained by the | 1819 |
group, of which surplus one hundred million dollars shall be held | 1820 |
jointly for the benefit of United States ceding insurers of any | 1821 |
member of the group as additional security for any such | 1822 |
liabilities. The following requirements apply to the group of | 1823 |
incorporated insurers: | 1824 |
| 1825 |
contained in this section. | 1826 |
| 1827 |
to examination by the superintendent in the same manner as the | 1828 |
books and records of insurers are subject to examination by the | 1829 |
superintendent in accordance with section 3901.07 of the Revised | 1830 |
Code. The group shall bear the expenses of these examinations in | 1831 |
the manner provided by that section. | 1832 |
| 1833 |
superintendent an annual certification of the member's solvency by | 1834 |
the member's domiciliary regulator and an independent public | 1835 |
accountant. | 1836 |
| 1837 |
division (A) | 1838 |
long as the assuming insurer has outstanding obligations due under | 1839 |
the reinsurance agreements subject to the trust. The trust shall | 1840 |
be in a form approved by the superintendent and shall include the | 1841 |
following: | 1842 |
| 1843 |
claims are valid and enforceable upon the final order of any court | 1844 |
of competent jurisdiction in the United States. | 1845 |
| 1846 |
trustees of the trust for its United States policyholders and | 1847 |
ceding insurers, and their assigns and successors in interest. | 1848 |
| 1849 |
trust, shall allow the superintendent to conduct examinations in | 1850 |
the same manner as the superintendent conducts examinations of | 1851 |
insurers under section 3901.07 of the Revised Code. | 1852 |
| 1853 |
the trustees of a trust maintained by an assuming insurer under | 1854 |
division (A) | 1855 |
superintendent with a written report setting forth the balance of | 1856 |
the trust and listing the trust's investments as of the preceding | 1857 |
thirty-first day of December. The trustees shall certify the date | 1858 |
of the termination of the trust, if termination of the trust is | 1859 |
planned, or shall certify that the trust does not expire prior to | 1860 |
the following thirty-first day of December. | 1861 |
| 1862 |
sufficiency of a trust maintained by an assuming insurer under | 1863 |
division (A) | 1864 |
annually report information on the trust to the superintendent | 1865 |
that is substantially the same as that information licensed | 1866 |
insurers are required to report under sections 3907.19, 3909.06, | 1867 |
and 3929.30 of the Revised Code on forms adopted under section | 1868 |
3901.77 of the Revised Code. | 1869 |
(D)(1) In order to be eligible for certification under | 1870 |
division (A)(5) of this section, the assuming insurer shall do all | 1871 |
of the following: | 1872 |
(a) Be domiciled and licensed to transact insurance or | 1873 |
reinsurance in a qualified jurisdiction as determined by the | 1874 |
superintendent pursuant to division (D)(3) of this section; | 1875 |
(b) Maintain minimum capital and surplus, or its equivalent, | 1876 |
in an amount to be determined by the superintendent in rule or | 1877 |
regulation; | 1878 |
(c) Maintain financial strength ratings from two or more | 1879 |
rating agencies that meet criteria the superintendent sets forth | 1880 |
in rule or regulation; | 1881 |
(d) Agree to submit to the jurisdiction of this state, | 1882 |
appoint the superintendent as its agent for service of process in | 1883 |
this state, and agree to provide security for one hundred per cent | 1884 |
of the assuming insurer's liabilities attributable to reinsurance | 1885 |
ceded by ceding insurers in the United States if it resists | 1886 |
enforcement of a final judgment from the United States; | 1887 |
(e) Agree to meet applicable information filing requirements | 1888 |
as determined by the superintendent with respect to an initial | 1889 |
application for certification and on an ongoing basis; | 1890 |
(f) Satisfy any other requirements for certification | 1891 |
considered relevant by the superintendent. | 1892 |
(2) An association, including incorporated and individual | 1893 |
unincorporated underwriters, may be a certified reinsurer. In | 1894 |
order to be eligible for certification, an association, in | 1895 |
addition to satisfying the requirements of division (D)(1) of this | 1896 |
section, shall also meet the following requirements: | 1897 |
(a) The association shall satisfy its minimum capital and | 1898 |
surplus requirements through the capital and surplus equivalents | 1899 |
(net of liabilities), or the net liabilities, of the association | 1900 |
and its members which shall include a joint central fund that may | 1901 |
be applied to any unsatisfied obligation of the association or any | 1902 |
of its members, in an amount determined by the superintendent in | 1903 |
order to provide adequate protection. | 1904 |
(b) The incorporated members of the association shall not be | 1905 |
engaged in any business other than underwriting as a member of the | 1906 |
association, and shall be subject to the same level of regulation | 1907 |
and solvency control by the association's domiciliary regulator as | 1908 |
the unincorporated members. | 1909 |
(c) The association shall provide the superintendent an | 1910 |
annual certification by the association's domiciliary regulator of | 1911 |
the solvency of each underwriter member within ninety days after | 1912 |
its financial statements are due to be filed with the | 1913 |
association's domiciliary regulator. If a certification is | 1914 |
unavailable, the association shall provide the superintendent with | 1915 |
financial statements prepared by independent public accountants of | 1916 |
each underwriter member of the association. | 1917 |
(3) The superintendent shall create and publish a list of | 1918 |
qualified jurisdictions under which an assuming insurer licensed | 1919 |
and domiciled in such jurisdiction is eligible to be considered by | 1920 |
the superintendent for certification as a certified reinsurer. | 1921 |
(a) The superintendent shall consider the list of qualified | 1922 |
jurisdictions published through the national association of | 1923 |
insurance commissioner's committee process in determining | 1924 |
qualified jurisdictions. If the superintendent approves a | 1925 |
jurisdiction as qualified that does not appear on the list, the | 1926 |
superintendent shall provide justification in accordance with | 1927 |
criteria to be developed by the superintendent under rule or | 1928 |
regulation. | 1929 |
(b) Jurisdictions within the United States that meet the | 1930 |
requirement for accreditation under the national association of | 1931 |
insurance commissioner's financial standards and accreditation | 1932 |
program shall be recognized as qualified. | 1933 |
(c) To determine if a domiciliary jurisdiction not located | 1934 |
within the United States is eligible to be recognized as a | 1935 |
qualified jurisdiction, the superintendent shall evaluate the | 1936 |
appropriateness and effectiveness of the reinsurance supervisory | 1937 |
system of the jurisdiction, both initially and on an ongoing | 1938 |
basis, and consider the rights, benefits, and the extent of | 1939 |
reciprocal recognition afforded by the jurisdiction to reinsurers | 1940 |
licensed and domiciled in the United States. | 1941 |
(d) A qualified jurisdiction shall agree to share information | 1942 |
and cooperate with the superintendent with respect to all | 1943 |
certified reinsurers domiciled within that jurisdiction. | 1944 |
(e) A jurisdiction shall not be recognized as a qualified | 1945 |
jurisdiction if the superintendent has determined that the | 1946 |
jurisdiction does not adequately and promptly enforce final | 1947 |
judgments and arbitration awards from the United States. | 1948 |
(f) If a certified reinsurer's domiciliary jurisdiction | 1949 |
ceases to be a qualified jurisdiction, the superintendent may | 1950 |
revoke the reinsurer's certification or suspend the reinsurer's | 1951 |
certification indefinitely. | 1952 |
(g) The superintendent may consider additional factors as the | 1953 |
superintendent considers appropriate. | 1954 |
(4) The superintendent shall assign a rating to each | 1955 |
certified reinsurer giving due consideration to the financial | 1956 |
strength ratings assigned by rating agencies pursuant to division | 1957 |
(D)(1)(c) of this section. The superintendent shall publish a list | 1958 |
of all certified reinsurers and their ratings. | 1959 |
(5) A certified reinsurer shall secure obligations assumed | 1960 |
from a ceding insurer within the United States at a level | 1961 |
consistent with its rating as specified by the superintendent in | 1962 |
rule or regulation. | 1963 |
(a) Except as otherwise provided in division (D)(5) of this | 1964 |
section, a certified reinsurer shall maintain security in a form | 1965 |
acceptable to the superintendent and consistent with section | 1966 |
3901.63 of the Revised Code, or in a multibeneficiary trust on | 1967 |
behalf of the ceding insurer in accordance with division (A)(4) of | 1968 |
this section, in order for a domestic ceding insurer to qualify | 1969 |
for full financial statement credit for reinsurance ceded to a | 1970 |
certified reinsurer. | 1971 |
(b) If a certified reinsurer chooses to secure its | 1972 |
obligations incurred as a certified reinsurer in the form of a | 1973 |
multibeneficiary trust for the benefit of the ceding insurer, the | 1974 |
certified reinsurer shall maintain separate trust accounts for its | 1975 |
obligations incurred under reinsurance agreements issued or | 1976 |
renewed as a certified reinsurer with reduced security as | 1977 |
permitted by this division or comparable laws of other | 1978 |
jurisdictions within the United States, and for its obligations | 1979 |
subject to division (A)(4) of this section. | 1980 |
(c) Upon termination of any such trust account described in | 1981 |
division (A)(4) of this section, a certified reinsurer shall be | 1982 |
bound by the language of the trust and agreement with the | 1983 |
superintendent that has principal regulatory oversight of each | 1984 |
trust account to fund any deficiency of any other trust account | 1985 |
out of the remaining surplus of such trust as a condition to | 1986 |
certification under division (D)(1) of this section. | 1987 |
(d) The minimum trusteed surplus requirements provided in | 1988 |
division (C) of this section are not applicable with respect to a | 1989 |
multibeneficiary trust maintained by a certified reinsurer for the | 1990 |
purpose of securing obligations incurred under division (A)(5) of | 1991 |
this section, except that such trust shall maintain a minimum | 1992 |
trusteed surplus of ten million dollars. | 1993 |
(e) With respect to obligations incurred by a certified | 1994 |
reinsurer under division (A)(5) of this section, if the security | 1995 |
is insufficient, the superintendent shall reduce the allowable | 1996 |
credit by an amount proportionate to the deficiency, and the | 1997 |
superintendent may impose further reductions in allowable credit | 1998 |
upon finding that there is a material risk that the certified | 1999 |
reinsurer's obligations will not be paid in full when due. | 2000 |
(f) Except as otherwise provided in division (D)(5) of this | 2001 |
section, a reinsurer whose certification has been terminated for | 2002 |
any reason shall be treated under this section as a certified | 2003 |
reinsurer required to secure one hundred per cent of its | 2004 |
obligations. The superintendent may continue to assign a higher | 2005 |
rating to the reinsurer if the reinsurer is in inactive status or | 2006 |
the reinsurer's certification has been suspended. As used in | 2007 |
division (D)(5)(f) of this section, "terminated" means revocation, | 2008 |
suspension, voluntary surrender, or inactive status. | 2009 |
(6) If an applicant for certification has been certified as a | 2010 |
reinsurer in a national association of insurance commissioners | 2011 |
accredited jurisdiction, the superintendent may defer to that | 2012 |
jurisdiction's certification and rating assignment, and the | 2013 |
assuming insurer shall be considered to be a certified reinsurer | 2014 |
in this state. | 2015 |
(7) A certified reinsurer that ceases to assume new business | 2016 |
in this state may request to maintain its certification in | 2017 |
inactive status in order to continue to qualify for a reduction in | 2018 |
security for its in-force business. An inactive certified | 2019 |
reinsurer shall continue to comply with all applicable | 2020 |
requirements of division (A)(5) of this section, and the | 2021 |
superintendent shall assign a rating that takes into account, if | 2022 |
relevant, the reasons why the reinsurer is not assuming new | 2023 |
business. | 2024 |
| 2025 |
appointing an attorney as its agent in this state upon whom all | 2026 |
service of process may be served. Service of process upon this | 2027 |
agent shall bring the assuming insurer within the jurisdiction of | 2028 |
the courts of this state as if served upon an agent pursuant to | 2029 |
section 3927.03 of the Revised Code. | 2030 |
(F) Nothing in this section shall prohibit the parties to a | 2031 |
reinsurance agreement from agreeing to provisions in the agreement | 2032 |
establishing security requirements that exceed the minimum | 2033 |
security requirements established for certified reinsurers under | 2034 |
this section. | 2035 |
(G)(1) In order to facilitate the prompt payment of claims, | 2036 |
the superintendent may permit a certified reinsurer to defer the | 2037 |
posting of security for catastrophe recoverables for a period of | 2038 |
up to one year from the date of the first instance of a liability | 2039 |
reserve entry by the ceding insurer as a result of a loss from a | 2040 |
catastrophic occurrence. | 2041 |
(2) Upon notice by the ceding insurer to the superintendent | 2042 |
that the certified reinsurer has failed to pay claims owed under a | 2043 |
reinsurance agreement in a timely manner, the superintendent shall | 2044 |
notify the certified reinsurer that it is no longer permitted to | 2045 |
defer the posting of security for catastrophe recoverables. | 2046 |
(3) Reinsurance recoverables for only the following lines of | 2047 |
business, as reported on the national association of insurance | 2048 |
commissioners' annual financial statement related specifically to | 2049 |
the catastrophic occurrence, shall be included in the deferral: | 2050 |
(a) Fire; | 2051 |
(b) Allied lines; | 2052 |
(c) Farmowner's multiple peril; | 2053 |
(d) Homeowners multiple peril; | 2054 |
(e) Commercial multiple peril; | 2055 |
(f) Inland marine; | 2056 |
(g) Earthquake; | 2057 |
(h) Auto physical damage. | 2058 |
(4) The superintendent may adopt rules in accordance with | 2059 |
Chapter 119. of the Revised Code to establish the process for a | 2060 |
certified reinsurer to seek a deferral of posting of security for | 2061 |
catastrophe recoverables. | 2062 |
Sec. 3901.621. (A) If a reinsurer accredited pursuant to | 2063 |
division (B)(1) of section 3901.62 of the Revised Code or | 2064 |
certified pursuant to division (D)(1) of that section ceases to | 2065 |
meet the requirements for accreditation or certification, the | 2066 |
superintendent may suspend or revoke the reinsurer's accreditation | 2067 |
or certification after a hearing held pursuant to Chapter 119. of | 2068 |
the Revised Code. The suspension or revocation shall not take | 2069 |
effect until after the superintendent's order or hearing, unless | 2070 |
one of the following applies: | 2071 |
(1) The reinsurer waives its right to a hearing. | 2072 |
(2) The superintendent's order is based on regulatory action | 2073 |
by the reinsurer's domiciliary jurisdiction or the voluntary | 2074 |
surrender or termination of the reinsurer's eligibility to | 2075 |
transact insurance or reinsurance business in its domiciliary | 2076 |
jurisdiction or in the primary certifying state of the reinsurer | 2077 |
under division (D)(6) of section 3901.62 of the Revised Code. | 2078 |
(3) The superintendent finds that an emergency requires | 2079 |
immediate action, and a court of competent jurisdiction has not | 2080 |
stayed the superintendent's action. | 2081 |
(B) While a reinsurer's accreditation or certification is | 2082 |
suspended, no reinsurance contract issued or renewed after the | 2083 |
effective date of the suspension qualifies for credit except to | 2084 |
the extent that the reinsurer's obligations under the contract are | 2085 |
secured in accordance with section 3901.63 of the Revised Code. | 2086 |
(C) If the superintendent revokes a reinsurer's accreditation | 2087 |
or certification, no credit for reinsurance may be granted under | 2088 |
section 3901.62 or 3901.63 of the Revised Code after the effective | 2089 |
date of the revocation except to the extent that the reinsurer's | 2090 |
obligations under the contract are secured in accordance with | 2091 |
division (D)(5) of section 3901.62 or section 3901.63 of the | 2092 |
Revised Code. | 2093 |
Sec. 3901.63. (A) If section 3901.62 of the Revised Code | 2094 |
does not apply to the reinsurance ceded to an assuming insurer by | 2095 |
a domestic ceding insurer that is authorized to do any insurance | 2096 |
business in this state, the ceding insurer may take credit for the | 2097 |
reinsurance ceded as a reduction of liability in an amount not | 2098 |
exceeding the liabilities carried by the ceding insurer, if the | 2099 |
ceding insurer complies with section 3901.64 of the Revised Code, | 2100 |
and if funds are held directly by the ceding insurer or in trust | 2101 |
on behalf of the ceding insurer, in accordance with this section, | 2102 |
as security for the payment of obligations under the reinsurance | 2103 |
contract with the assuming insurer. | 2104 |
(B)(1) If the funds are held directly by the ceding insurer | 2105 |
under division (A) of this section, the funds shall be held in the | 2106 |
United States and shall be under the exclusive control of, and | 2107 |
subject to withdrawal solely by, the ceding insurer. If the funds | 2108 |
are held in trust on behalf of the ceding insurer under division | 2109 |
(A) of this section, the funds shall be held in the United States | 2110 |
in a qualified United States financial institution. | 2111 |
(2) For the purposes of division (B)(1) of this section, a | 2112 |
"United States financial institution" is qualified if both of the | 2113 |
following apply: | 2114 |
(a) The institution is organized under or, in the case of a | 2115 |
United States branch or agency office of a foreign banking | 2116 |
organization, is chartered under the laws of the United States or | 2117 |
any state thereof and has been granted authority to operate with | 2118 |
fiduciary powers. | 2119 |
(b) The institution is regulated, supervised, and examined by | 2120 |
federal or state officials that have regulatory authority over | 2121 |
banks and trust companies. | 2122 |
(C) The funds held directly by the ceding insurer or in trust | 2123 |
on behalf of the ceding insurer shall be in any of the following | 2124 |
forms: | 2125 |
(1) Cash; | 2126 |
(2) Securities that are listed by the securities valuation | 2127 |
office of the national association of insurance commissioners, | 2128 |
including those considered exempt from filing as defined by the | 2129 |
purposes and procedures manual of the securities valuation office, | 2130 |
and that qualify as admitted assets; | 2131 |
(3) Irrevocable, unconditional, and automatically renewable | 2132 |
letters of credit that are issued or confirmed by a qualified | 2133 |
United States financial institution. For purposes of division | 2134 |
(C)(3) of this section, a United States financial institution is | 2135 |
qualified if all of the following apply: | 2136 |
(a) It is organized under or, in the case of a United States | 2137 |
branch or agency office of a foreign banking organization, is | 2138 |
chartered under the laws of the United States or any state | 2139 |
thereof. | 2140 |
(b) It is regulated, supervised, and examined by federal or | 2141 |
state officials that have regulatory authority over banks and | 2142 |
trust companies. | 2143 |
(c) The superintendent of insurance or the securities | 2144 |
valuation office of the national association of insurance | 2145 |
commissioners has determined that it meets such standards of | 2146 |
financial condition and standing as are considered necessary and | 2147 |
appropriate for purposes of ensuring that its letters of credit | 2148 |
will be of a quality that is acceptable to the superintendent. | 2149 |
(4) Any other form of security the superintendent determines | 2150 |
to be acceptable. | 2151 |
(D) Notwithstanding any subsequent failure of an issuing or | 2152 |
confirming financial institution to meet the standards of issuer | 2153 |
acceptability set forth in division (C)(3) of this section, a | 2154 |
letter of credit issued or confirmed by a financial institution | 2155 |
that meets those standards on the date of the issuance or | 2156 |
confirmation shall continue to be acceptable as security until its | 2157 |
expiration, extension, renewal, modification, or amendment, | 2158 |
whichever occurs first. | 2159 |
Sec. 3901.631. (A) A domestic ceding insurer shall take | 2160 |
steps to manage its reinsurance recoverables proportionate to its | 2161 |
own book of business. | 2162 |
(1) A domestic ceding insurer shall notify the superintendent | 2163 |
within thirty days after reinsurance recoverables from any single | 2164 |
assuming insurer, or group of affiliated assuming insurers, exceed | 2165 |
fifty per cent of the domestic ceding insurer's last reported | 2166 |
surplus to policyholders, or after it has determined that | 2167 |
reinsurance recoverables from any single assuming insurer, or | 2168 |
group of affiliated assuming insurers, are likely to exceed this | 2169 |
limit. | 2170 |
(2) The notification required in division (A)(1) of this | 2171 |
section shall demonstrate that the exposure is safely managed by | 2172 |
the domestic ceding insurer. | 2173 |
(B) A domestic ceding insurer shall take steps to diversify | 2174 |
its reinsurance program. | 2175 |
(1) A domestic ceding insurer shall notify the superintendent | 2176 |
within thirty days after ceding to any single assuming insurer, or | 2177 |
group of affiliated assuming insurers, more than twenty per cent | 2178 |
of the ceding insurer's gross written premium in the prior | 2179 |
calendar year, or after it has determined that the reinsurance | 2180 |
ceded to any single assuming insurer, or group of affiliated | 2181 |
assuming insurers, is likely to exceed this limit. | 2182 |
(2) The notification required in division (B)(1) of this | 2183 |
section shall demonstrate that the exposure is safely managed by | 2184 |
the domestic ceding insurer. | 2185 |
Sec. 3901.64. (A) A domestic ceding insurer may take credit | 2186 |
for any reinsurance ceded as provided in sections 3901.61 to | 2187 |
3901.63 of the Revised Code only if the reinsurance agreement | 2188 |
contained in the reinsurance contract, and any agreement that | 2189 |
provides security for the payment of the obligations under the | 2190 |
reinsurance agreement, including any trust agreement, provide, in | 2191 |
substance, for the following: | 2192 |
(1) In the event of the insolvency of the ceding insurer, the | 2193 |
reinsurance, whether paid directly or from trust assets securing | 2194 |
the reinsurance agreement, shall be payable by the assuming | 2195 |
insurer on the basis of the liability of the ceding insurer under | 2196 |
the policy or contract reinsured, without any diminution because | 2197 |
the ceding insurer is insolvent or because the liquidator or | 2198 |
statutory receiver has failed to pay all or any portion of any | 2199 |
claims; | 2200 |
(2) The reinsurance payments, whether paid directly or from | 2201 |
trust assets securing the reinsurance agreement, shall be made by | 2202 |
the assuming insurer directly to the ceding insurer, or in the | 2203 |
event of its insolvency or liquidation, to its liquidator or | 2204 |
statutory receiver except where the reinsurance contract or other | 2205 |
written agreement specifically provides for direct payment of the | 2206 |
reinsurance to the insured or beneficiary of the insurance policy | 2207 |
in the event of the insolvency of the ceding insurer. | 2208 |
(B)(1) The reinsurance agreement may provide that the | 2209 |
domiciliary liquidator or statutory receiver shall give written | 2210 |
notice to the assuming insurer that a claim is pending against the | 2211 |
ceding insurer on the policy or contract reinsured. The notice | 2212 |
shall be given within a reasonable amount of time after the claim | 2213 |
is filed with the liquidator or statutory receiver. During the | 2214 |
pendency of the claim, any assuming insurer may investigate the | 2215 |
claim and interpose, at its own expense, in the proceeding where | 2216 |
the claim is to be adjudicated any defenses which it deems to be | 2217 |
available to the ceding insurer or its liquidator. | 2218 |
(2) The expense may be filed as a claim against the insolvent | 2219 |
ceding insurer to the extent of a proportionate share of the | 2220 |
benefit that may accrue to the ceding insurer solely as a result | 2221 |
of the defense undertaken by the assuming insurer. Where two or | 2222 |
more assuming insurers are involved in the same claim and a | 2223 |
majority in interest elect to interpose a defense to the claim, | 2224 |
the expense shall be apportioned in accordance with the terms of | 2225 |
the reinsurance agreement as though the expense had been incurred | 2226 |
by the ceding insurer. | 2227 |
(C) If the assuming insurer is not licensed, or accredited or | 2228 |
certified to transact insurance or reinsurance in this state, the | 2229 |
credit permitted by division (A)(4) of section 3901.62 of the | 2230 |
Revised Code shall not be allowed unless the assuming insurer | 2231 |
agrees to do both of the following in the reinsurance agreements: | 2232 |
(1)(a) If the assuming insurer fails to perform its | 2233 |
obligations under the terms of the reinsurance agreement, at the | 2234 |
request of the ceding insurer, the assuming insurer shall submit | 2235 |
to the jurisdiction of any court of competent jurisdiction in any | 2236 |
state within the United States, comply with all requirements | 2237 |
necessary to give the court jurisdiction, and abide by the final | 2238 |
decision of the court or of any appellate court in the event of an | 2239 |
appeal. | 2240 |
(b) The assuming insurer shall designate the superintendent | 2241 |
or a designated attorney as its true and lawful attorney upon whom | 2242 |
may be served any lawful process in any action, suit, or | 2243 |
proceeding instituted by or on behalf of the ceding insurer. | 2244 |
(2) This division is not intended to conflict with or | 2245 |
override the obligation of the parties to a reinsurance agreement | 2246 |
to arbitrate their disputes, if this obligation is created in the | 2247 |
agreement. | 2248 |
(D) If the assuming insurer does not meet the requirements of | 2249 |
division (A)(1), (2), or (3) of section 3901.62 of the Revised | 2250 |
Code, the credit permitted by divisions (A)(4) and (5) of that | 2251 |
section shall not be allowed unless the assuming insurer agrees in | 2252 |
the trust agreements to the following conditions: | 2253 |
(1) Notwithstanding any other provisions in the trust | 2254 |
instrument, if the trust fund is inadequate because it contains an | 2255 |
amount less than the amount required by division (C)(1) of section | 2256 |
3901.62 of the Revised Code, or if the grantor of the trust has | 2257 |
been declared insolvent or placed into receivership, | 2258 |
rehabilitation, liquidation, or similar proceedings under the laws | 2259 |
of its state or country of domicile, the trustee shall comply with | 2260 |
an order of the superintendent with regulatory oversight over the | 2261 |
trust or with an order of a court of competent jurisdiction | 2262 |
directing the trustee to transfer to the superintendent with | 2263 |
regulatory oversight all of the assets of the trust fund. | 2264 |
(2) The assets shall be distributed by, and claims shall be | 2265 |
filed with and valued by, the superintendent with regulatory | 2266 |
oversight in accordance with the laws of the state, in which the | 2267 |
trust is domiciled, that are applicable to the liquidation of | 2268 |
domestic insurance companies. | 2269 |
(3) If the superintendent with regulatory oversight | 2270 |
determines that the assets of the trust fund, or any part thereof, | 2271 |
are not necessary to satisfy the claims of the ceding insurers | 2272 |
within the United States or the grantor of the trust, the | 2273 |
superintendent with regulatory oversight shall return the assets | 2274 |
or part thereof to the trustee for distribution in accordance with | 2275 |
the trust agreement. | 2276 |
(4) The grantor shall waive any right otherwise available to | 2277 |
it under the laws of the United States that are inconsistent with | 2278 |
this division. | 2279 |
Sec. 3903.72. (A) The definitions provided in division (B) | 2280 |
of this section shall apply after the operative date of the | 2281 |
valuation manual. | 2282 |
(B) As used in sections 3903.72 to 3903.7211 of the Revised | 2283 |
Code: | 2284 |
(1) "Accident and health insurance" means a contract that | 2285 |
incorporates morbidity risk and provides protection against | 2286 |
economic loss resulting from accident, sickness, or medical | 2287 |
conditions and as may be specified in the valuation manual. | 2288 |
(2) "Appointed actuary" means a qualified actuary who is | 2289 |
appointed in accordance with the valuation manual to prepare the | 2290 |
actuarial opinion required in section 3903.722 of the Revised | 2291 |
Code. | 2292 |
(3) "Company" means an entity that meets either of the | 2293 |
following criteria: | 2294 |
(a) The entity has written, issued, or reinsured life | 2295 |
insurance contracts, accident and health insurance contracts, or | 2296 |
deposit-type contracts in this state and has at least one such | 2297 |
policy in force or on claim. | 2298 |
(b) The entity has written, issued, or reinsured life | 2299 |
insurance contracts, accident and health insurance contracts, or | 2300 |
deposit-type contracts in any state and is required to hold a | 2301 |
certificate of authority to write life insurance, accident and | 2302 |
health insurance, or deposit-type contracts in this state. | 2303 |
(4) "Deposit-type contract" means a contract that does not | 2304 |
incorporate mortality or morbidity risks and as may be specified | 2305 |
in the valuation manual. | 2306 |
(5) "Life insurance" means a contract that incorporates | 2307 |
mortality risk, including an annuity and pure endowment contract, | 2308 |
and as may be specified in the valuation manual. | 2309 |
(6) "Operative date of the valuation manual" means the date | 2310 |
specified in division (B) of section 3903.728 of the Revised Code. | 2311 |
(7) "Policyholder behavior" means any action a policyholder, | 2312 |
contract holder, or any other person with the right to elect | 2313 |
options under a policy or contract, such as a certificate holder, | 2314 |
may take under a policy or contract subject to this section | 2315 |
including lapse, withdrawal, transfer, deposit, premium payment, | 2316 |
loan, annuitization, or benefit elections prescribed by the policy | 2317 |
or contract. "Policyholder behavior" does not include events of | 2318 |
mortality or morbidity that result in benefits prescribed in the | 2319 |
terms of the policy or contract. | 2320 |
(8) "Principle-based valuation" means a reserve valuation | 2321 |
that uses one or more methods or one or more assumptions | 2322 |
determined by the insurer and that is required to comply with | 2323 |
section 3903.729 of the Revised Code. | 2324 |
(9) "Qualified actuary" means an individual who is qualified | 2325 |
to sign a statement of actuarial opinion in accordance with the | 2326 |
American academy of actuaries qualification standards for | 2327 |
actuaries signing such statements and who meets the requirements | 2328 |
specified in the valuation manual. | 2329 |
(10) "Superintendent" means superintendent of insurance. | 2330 |
(11) "Tail risk" means a risk that occurs either when the | 2331 |
frequency of low probability events is higher than expected under | 2332 |
a normal probability distribution or when there are observed | 2333 |
events of very significant size or magnitude. | 2334 |
(12) "Valuation manual" means the manual of valuation | 2335 |
instructions adopted by the national association of insurance | 2336 |
commissioners or as subsequently amended. | 2337 |
Sec. 3903.721. (A)(1) The superintendent shall annually | 2338 |
value, or cause to be valued, the reserve liabilities, referred to | 2339 |
as reserves, for all outstanding life insurance policies and | 2340 |
annuity and pure endowment contracts of every life insurance | 2341 |
company doing business in this state issued prior to the operative | 2342 |
date of the valuation manual. | 2343 |
In calculating reserves, the superintendent may use group | 2344 |
methods and approximate averages for fractions of a year or | 2345 |
otherwise. The valuation of the reserves of a company organized | 2346 |
under the laws of a foreign government shall be limited to its | 2347 |
United States business. | 2348 |
In lieu of the valuation of the reserves required of a | 2349 |
foreign or alien company, the superintendent may accept a | 2350 |
valuation made, or caused to be made, by the insurance supervisory | 2351 |
official of any state or other jurisdiction when the valuation | 2352 |
complies with the minimum standard provided in sections 3903.72 to | 2353 |
3903.7211 of the Revised Code. | 2354 |
(2) The provisions set forth in sections 3903.723, 3903.724, | 2355 |
3903.725, and 3903.727 of the Revised Code shall apply to all | 2356 |
policies and contracts, as appropriate, issued on or after January | 2357 |
1, 1989, and prior to the operative date of the valuation manual. | 2358 |
The provisions set forth in sections 3903.726, 3903.728, and | 2359 |
3903.729 of the Revised Code shall not apply to any such policies | 2360 |
and contracts. | 2361 |
(3) The minimum standard for the valuation of policies and | 2362 |
contracts issued prior to January 1, 1989, shall be that provided | 2363 |
by the laws in effect immediately prior to that date. | 2364 |
(B)(1) For all outstanding life insurance contracts, annuity | 2365 |
and pure endowment contracts, deposit-type contracts, and accident | 2366 |
and health contracts of every company issued on or after the | 2367 |
operative date of the valuation manual, the superintendent shall | 2368 |
annually value, or cause to be valued, the reserve liabilities for | 2369 |
such contracts according to sections 3903.727, 3903.728, and | 2370 |
3903.729 of the Revised Code. The valuation of the reserves of a | 2371 |
company organized under the laws of a foreign government shall be | 2372 |
limited to its United States business. | 2373 |
In lieu of the valuation of the reserves required of a | 2374 |
foreign or alien company, the superintendent may accept a | 2375 |
valuation made, or caused to be made, by the insurance supervisory | 2376 |
official of any state or other jurisdiction when the valuation | 2377 |
complies with the minimum standard provided in sections 3903.72 to | 2378 |
3903.7211 of the Revised Code. | 2379 |
(2) The provisions set forth in sections 3903.728 and | 2380 |
3903.729 of the Revised Code shall apply to all policies and | 2381 |
contracts issued on or after the operative date of the valuation | 2382 |
manual. | 2383 |
Sec. 3903.722. (A) This section shall apply prior to the | 2384 |
operative date of the valuation manual. | 2385 |
(B) Every life insurance company doing business in this state | 2386 |
shall annually submit to the superintendent the opinion of a | 2387 |
qualified actuary as to whether the reserves and related actuarial | 2388 |
items held in support of the policies and contracts specified by | 2389 |
rule by the superintendent are computed appropriately, are based | 2390 |
on assumptions that satisfy contractual provisions, are consistent | 2391 |
with prior reported amounts, and comply with the applicable laws | 2392 |
of this state. The superintendent shall adopt rules establishing | 2393 |
the form and content of this opinion, and may require the life | 2394 |
insurance company to supply information in addition to that | 2395 |
contained in the actuarial opinion. | 2396 |
(C)(1) Every life insurance company, except as exempted by | 2397 |
rule adopted by the superintendent, shall also include in the | 2398 |
annual opinion required by division (B) of this section an opinion | 2399 |
of the same qualified actuary as to whether the reserves and | 2400 |
related actuarial items held in support of the policies and | 2401 |
contracts specified by rule by the superintendent, when considered | 2402 |
in light of the assets held by the company with respect to the | 2403 |
reserves and related actuarial items, including the investment | 2404 |
earnings on the assets and the considerations anticipated to be | 2405 |
received and retained under the policies and contracts, make | 2406 |
adequate provision for the company's obligations under the | 2407 |
policies and contracts, including the benefits under and the | 2408 |
expenses associated with the policies and contracts. | 2409 |
(2) The superintendent may provide by rule for a transition | 2410 |
period for establishing any higher reserves that the qualified | 2411 |
actuary may consider necessary to render the opinion required by | 2412 |
division (C) of this section. | 2413 |
(D) Each opinion required by division (C)(1) of this section | 2414 |
shall be governed by the following provisions: | 2415 |
(1) The opinion shall be supported by a memorandum prepared | 2416 |
in a form and contain content as specified by rule by the | 2417 |
superintendent. | 2418 |
(2) If a life insurance company fails to provide a supporting | 2419 |
memorandum within the period of time specified by rule by the | 2420 |
superintendent, or if the superintendent determines that a | 2421 |
supporting memorandum fails to meet the standards set out in the | 2422 |
rule, or is otherwise unacceptable to the superintendent, the | 2423 |
superintendent may employ, at the expense of the insurance | 2424 |
company, a qualified actuary to review the opinion and the basis | 2425 |
for the opinion and prepare such supporting memorandum as is | 2426 |
required by the superintendent. | 2427 |
(E) Every opinion required by this section is governed by the | 2428 |
following: | 2429 |
(1) The opinion shall be submitted with the annual statement | 2430 |
reflecting the valuation of the reserve liabilities for each year | 2431 |
ending on or after December 31, 2012. | 2432 |
(2) The opinion shall apply to all business in force | 2433 |
including individual and group health insurance plans in form and | 2434 |
substance as specified in rules adopted by the superintendent. | 2435 |
(3) The opinion shall be based on standards adopted from time | 2436 |
to time by the actuarial standards board of the American academy | 2437 |
of actuaries and on such additional standards as the | 2438 |
superintendent may prescribe by rule. | 2439 |
(4) In the case of an opinion required to be submitted by a | 2440 |
foreign or alien life insurance company, the superintendent may | 2441 |
accept the opinion filed by that company with the insurance | 2442 |
regulatory authority of another state if the superintendent | 2443 |
determines that the opinion reasonably meets the requirements | 2444 |
applicable to a company domiciled in this state. | 2445 |
(5) Except in cases of fraud or willful misconduct, the | 2446 |
qualified actuary is not liable for damages in any civil action to | 2447 |
any person, other than the insurance company and the | 2448 |
superintendent, for any act, error, omission, decision, or conduct | 2449 |
with respect to the actuary's opinion. | 2450 |
(6) The superintendent shall establish by rule penalties for | 2451 |
an insurance company's or qualified actuary's failure to comply | 2452 |
with this section. | 2453 |
(7) Except as provided in divisions (E)(9) and (F) of this | 2454 |
section, documents, materials, or other information in the | 2455 |
possession or control of the department of insurance that are a | 2456 |
memorandum in support of the opinion or other material provided by | 2457 |
the insurance company to the superintendent in connection with the | 2458 |
memorandum shall be confidential by law and privileged, is not a | 2459 |
public record under section 149.43 of the Revised Code, shall not | 2460 |
be subject to subpoena, and shall not be subject to discovery or | 2461 |
admissible in evidence in any private civil action. | 2462 |
(8) Neither the superintendent nor any person who received | 2463 |
documents, materials, or other information while acting under the | 2464 |
authority of the superintendent shall be permitted or required to | 2465 |
testify in any private civil action concerning any confidential | 2466 |
documents, materials, or information subject to division (F) of | 2467 |
this section. | 2468 |
(9) A memorandum in support of the opinion, and any other | 2469 |
associated material, may be subject to subpoena for the purpose of | 2470 |
defending an action seeking damages from the actuary submitting | 2471 |
the memorandum by reason of an action required by this section or | 2472 |
by rules adopted by the superintendent. | 2473 |
(10) If any portion of a confidential and privileged | 2474 |
memorandum is cited by the company in its marketing, is cited | 2475 |
before any governmental agency other than a state insurance | 2476 |
regulatory authority, or is released by the company to the news | 2477 |
media, the entire memorandum shall no longer be confidential and | 2478 |
privileged. | 2479 |
(F) Notwithstanding division (E) of this section, the | 2480 |
superintendent may do any of the following: | 2481 |
(1) Disclose memoranda and other materials described in this | 2482 |
section upon obtaining prior written consent from the insurer to | 2483 |
which the memorandum or other materials pertain; | 2484 |
(2) Disclose memoranda and other materials described in this | 2485 |
section to the American academy of actuaries upon receipt of a | 2486 |
written request from the academy stating that a memorandum or | 2487 |
other material is required for the purpose of professional | 2488 |
disciplinary proceedings. A request from the American academy of | 2489 |
actuaries shall set forth the procedures to be used by the academy | 2490 |
for preserving the confidential and privileged status of the | 2491 |
memorandum or other material. If the procedures set forth are not | 2492 |
satisfactory to the superintendent, the superintendent shall not | 2493 |
release the memorandum or other material to the academy. | 2494 |
(3) Share documents and materials or other information, | 2495 |
including the confidential and privileged documents, materials, or | 2496 |
information subject to division (E) of this section, with other | 2497 |
state, federal, and international regulatory agencies and law | 2498 |
enforcement officials and with the national association of | 2499 |
insurance commissioners and its affiliates and subsidiaries, | 2500 |
provided that the recipient agrees to maintain the confidential or | 2501 |
privileged status of any confidential or privileged memorandum or | 2502 |
other material and has the legal authority to do so; | 2503 |
(4) Use memoranda and other materials described in this | 2504 |
section in the furtherance of any regulatory or legal action | 2505 |
brought by or on behalf of the superintendent or the state, | 2506 |
resulting from the exercise of the superintendent's official | 2507 |
duties. | 2508 |
(G) Notwithstanding divisions (E) and (F) of this section, | 2509 |
the superintendent may authorize the national association of | 2510 |
insurance commissioners and its affiliates and subsidiaries by | 2511 |
agreement to share confidential or privileged memoranda and other | 2512 |
material received pursuant to division (F)(3) of this section with | 2513 |
local, state, federal, and international regulatory and law | 2514 |
enforcement agencies and with local, state, and federal | 2515 |
prosecutors, provided that the recipient agrees to maintain the | 2516 |
confidential or privileged status of the confidential or | 2517 |
privileged memorandum or other material and has authority to do | 2518 |
so. | 2519 |
(H) Nothing in this section shall prohibit the superintendent | 2520 |
from receiving memoranda and other material in accordance with | 2521 |
section 3901.045 of the Revised Code. | 2522 |
(I) The superintendent may enter into agreements governing | 2523 |
the sharing and use of memoranda and materials consistent with the | 2524 |
requirements of this section. | 2525 |
(J) No waiver of any applicable privilege or claim of | 2526 |
confidentiality in the memoranda and materials described in this | 2527 |
section shall occur as a result of sharing or receiving memoranda | 2528 |
and material as authorized in divisions (F)(2) and (3), (G), and | 2529 |
(H) of this section. | 2530 |
| 2531 |
2532 | |
2533 | |
2534 | |
2535 | |
2536 | |
2537 | |
2538 | |
2539 | |
2540 | |
2541 | |
2542 | |
2543 |
| 2544 |
2545 | |
2546 | |
2547 | |
2548 | |
2549 | |
2550 | |
2551 | |
2552 |
| 2553 |
2554 | |
2555 | |
2556 | |
2557 | |
2558 | |
2559 | |
2560 | |
2561 |
| 2562 |
2563 | |
2564 | |
2565 | |
2566 | |
2567 | |
2568 | |
2569 | |
2570 | |
2571 | |
2572 | |
2573 |
| 2574 |
2575 | |
2576 | |
2577 |
| 2578 |
2579 | |
2580 | |
2581 | |
2582 | |
2583 | |
2584 | |
2585 | |
2586 | |
2587 | |
2588 | |
2589 | |
2590 | |
2591 |
| 2592 |
2593 | |
2594 | |
2595 |
| 2596 |
2597 | |
2598 |
| 2599 |
2600 | |
2601 | |
2602 | |
2603 | |
2604 | |
2605 | |
2606 | |
2607 |
| 2608 |
2609 |
| 2610 |
2611 |
| 2612 |
2613 |
| 2614 |
2615 | |
2616 | |
2617 |
| 2618 |
2619 | |
2620 | |
2621 | |
2622 | |
2623 |
| 2624 |
2625 | |
2626 | |
2627 | |
2628 |
| 2629 |
2630 | |
2631 |
| 2632 |
2633 | |
2634 | |
2635 | |
2636 | |
2637 | |
2638 | |
2639 | |
2640 | |
2641 | |
2642 | |
2643 | |
2644 |
| 2645 |
2646 |
| 2647 |
2648 | |
2649 |
| 2650 |
2651 | |
2652 | |
2653 | |
2654 | |
2655 | |
2656 | |
2657 | |
2658 | |
2659 |
| 2660 |
2661 | |
2662 | |
2663 | |
2664 | |
2665 | |
2666 | |
2667 | |
2668 | |
2669 | |
2670 | |
2671 |
| 2672 |
2673 | |
2674 | |
2675 | |
2676 |
| 2677 |
2678 | |
2679 | |
2680 | |
2681 | |
2682 | |
2683 | |
2684 | |
2685 | |
2686 | |
2687 |
| 2688 |
2689 | |
2690 | |
2691 | |
2692 | |
2693 | |
2694 | |
2695 |
| 2696 |
2697 | |
2698 |
| 2699 |
2700 | |
2701 |
| 2702 |
2703 | |
2704 | |
2705 | |
2706 |
| 2707 |
2708 | |
2709 | |
2710 | |
2711 | |
2712 | |
2713 | |
2714 |
| 2715 |
2716 | |
2717 | |
2718 | |
2719 | |
2720 | |
2721 | |
2722 | |
2723 | |
2724 |
| 2725 |
2726 | |
2727 |
| 2728 |
2729 | |
2730 | |
2731 | |
2732 | |
2733 | |
2734 | |
2735 | |
2736 | |
2737 | |
2738 |
| 2739 |
provided in divisions (B) to (H) of this section and in sections | 2740 |
3903.724, 3903.725, and 3903.727 of the Revised Code, the minimum | 2741 |
standard for the valuation of policies and contracts shall be | 2742 |
derived according to the commissioners reserve valuation methods | 2743 |
defined in divisions (I) to (L) and (O) of this section and | 2744 |
section 3903.727 of the Revised Code for policies and contracts | 2745 |
issued on or after January 1, 1989. | 2746 |
(B) For ordinary life insurance policies, excluding | 2747 |
disability and accidental death benefits, issued on the standard | 2748 |
basis | 2749 |
| 2750 |
2751 | |
2752 | |
2753 | |
2754 | |
2755 |
| 2756 |
2757 | |
2758 | |
2759 | |
2760 | |
2761 | |
2762 | |
2763 | |
2764 | |
2765 | |
2766 | |
2767 | |
2768 | |
2769 |
| 2770 |
2771 | |
2772 | |
2773 | |
2774 | |
2775 | |
2776 | |
2777 | |
2778 | |
2779 | |
2780 | |
2781 |
| 2782 |
valuation of policies and contracts shall be derived from the | 2783 |
following: | 2784 |
(1) The commissioners 1980 standard ordinary mortality table; | 2785 |
(2) At the election of the company for any one or more | 2786 |
specified plans of life insurance, the commissioners 1980 standard | 2787 |
ordinary mortality table with ten-year select mortality factors; | 2788 |
(3) Any ordinary mortality table, adopted after 1980 by the | 2789 |
national association of insurance commissioners, that is approved | 2790 |
by rules adopted by the department of insurance for use in | 2791 |
determining the minimum standard of valuation for such policies. | 2792 |
(C) For industrial life insurance policies, excluding | 2793 |
disability and accidental death benefits, issued on the standard | 2794 |
basis | 2795 |
| 2796 |
2797 | |
2798 | |
2799 | |
2800 | |
2801 |
| 2802 |
2803 | |
2804 | |
on or after January 1, 1989, the minimum standard for the | 2805 |
valuation of policies shall be derived from the commissioners 1961 | 2806 |
standard industrial mortality table | 2807 |
2808 | |
2809 | |
2810 | |
2811 | |
2812 | |
2813 | |
2814 | |
2815 | |
2816 | |
2817 | |
2818 | |
2819 | |
2820 | |
2821 | |
2822 | |
mortality table adopted after 1980 by the national association of | 2823 |
insurance commissioners that is approved by rules adopted by the | 2824 |
superintendent for use in determining the minimum standard of | 2825 |
valuation for the policies. | 2826 |
| 2827 |
contracts, excluding disability and accidental death benefits | 2828 |
2829 |
| 2830 |
2831 | |
2832 | |
2833 | |
2834 | |
2835 | |
2836 | |
2837 |
| 2838 |
2839 | |
2840 | |
2841 | |
the valuation of contracts shall be derived from both of the | 2842 |
following: | 2843 |
(1) The valuation interest rates as defined in section | 2844 |
3903.724 of the Revised Code; | 2845 |
(2) The 1971 individual annuity mortality table or any | 2846 |
modification of that table approved by the superintendent | 2847 |
2848 | |
2849 | |
2850 | |
2851 | |
2852 | |
2853 | |
2854 | |
2855 | |
2856 | |
2857 | |
superintendent may approve the use of any individual annuity | 2858 |
mortality table adopted after 1980 by the national association of | 2859 |
insurance commissioners, either as adopted or as modified by the | 2860 |
superintendent, for determining the minimum standard for the | 2861 |
valuation of such contracts. | 2862 |
| 2863 |
excluding disability and accidental death benefits | 2864 |
2865 |
| 2866 |
2867 | |
2868 | |
2869 | |
policies issued on or after January 1, 1989, | 2870 |
2871 | |
2872 | |
2873 | |
2874 | |
2875 |
| 2876 |
2877 | |
2878 | |
the minimum standard for the valuation of contracts shall be | 2879 |
derived from both of the following: | 2880 |
(1) The valuation interest rates as defined in section | 2881 |
3903.724 of the Revised Code; | 2882 |
(2) The 1971 group annuity mortality table, or any | 2883 |
modification of that table approved by the superintendent | 2884 |
2885 | |
2886 | |
2887 | |
2888 | |
2889 | |
any group annuity mortality table adopted after 1980 by the | 2890 |
national association of insurance commissioners, either as adopted | 2891 |
or as modified by the superintendent, for determining the minimum | 2892 |
standard for the valuation of such contracts. | 2893 |
| 2894 |
supplementary to ordinary policies and contracts issued: | 2895 |
| 2896 |
2897 | |
2898 | |
2899 | |
2900 |
| 2901 |
standard for the valuation of policies and contracts shall be | 2902 |
derived from the tables of period 2 disablement rates and the 1930 | 2903 |
to 1950 termination rates of the 1952 disability study of the | 2904 |
society of actuaries, with due regard for the type of benefit | 2905 |
2906 | |
2907 | |
2908 | |
2909 | |
2910 | |
2911 | |
2912 | |
2913 | |
2914 | |
any other table of disablement rates and termination rates adopted | 2915 |
after 1980 by the national association of insurance commissioners | 2916 |
for use in determining the minimum standard for the valuation of | 2917 |
2918 |
Any such table shall, for active lives, be combined with a | 2919 |
mortality table permitted for calculating the reserves for life | 2920 |
insurance policies. | 2921 |
(2) The interest rate to be used in calculating minimum | 2922 |
reserves for such benefits shall not exceed the applicable rate | 2923 |
specified in section 3903.724 of the Revised Code for ordinary | 2924 |
life insurance policies. | 2925 |
| 2926 |
policies issued: | 2927 |
| 2928 |
2929 | |
2930 | |
2931 | |
2932 |
| 2933 |
standard for the valuation of policies shall be derived from the | 2934 |
1959 accidental death benefits table | 2935 |
2936 | |
2937 | |
2938 | |
2939 | |
2940 | |
2941 | |
2942 | |
2943 | |
any accidental death benefits table adopted after 1980 by the | 2944 |
national association of insurance commissioners for use in | 2945 |
determining the minimum standard for the valuation of such | 2946 |
accidental death benefits that is approved in rules adopted by the | 2947 |
superintendent. | 2948 |
The table used shall be combined with a mortality table for | 2949 |
calculating the reserves for life insurance policies. | 2950 |
(2) The interest rate to be used in calculating minimum | 2951 |
reserves for such benefits shall not exceed the applicable rate | 2952 |
specified in section 3903.724 of the Revised Code for ordinary | 2953 |
life insurance policies. | 2954 |
| 2955 |
substandard basis and all other special benefits, such tables as | 2956 |
may be approved by the superintendent | 2957 |
2958 | |
2959 |
| 2960 |
provided in divisions (L) and (O) of this section and in section | 2961 |
3903.727 of the Revised Code, reserves according to the | 2962 |
commissioners reserve valuation method for | 2963 |
2964 | |
endowment benefits | 2965 |
2966 | |
uniform premiums | 2967 |
2968 | |
2969 | |
on the valuation date of the future guaranteed benefits over the | 2970 |
then present value | 2971 |
premiums
therefor. The modified net | 2972 |
policy shall be the uniform percentage of
| 2973 |
contract
| 2974 |
such that the present value, at the date of issue of the policy, | 2975 |
of all modified net premiums shall be equal to the sum of the then | 2976 |
present value | 2977 |
benefits | 2978 |
of division | 2979 |
follows: | 2980 |
(1) A net level annual premium equal to the present value, at | 2981 |
the date of issue, of such benefits provided for after the first | 2982 |
policy year, divided by the present value, at the date of issue, | 2983 |
of an annuity of one per annum payable on the first and each | 2984 |
subsequent anniversary of the policy on which a premium falls due | 2985 |
2986 | |
not exceed the net level annual premium on the nineteen-year | 2987 |
premium whole life plan for insurance of the same amount at an age | 2988 |
one year higher than the age at issue of the policy. | 2989 |
(2) A net one-year term premium for such benefits provided | 2990 |
for in the first policy year. | 2991 |
| 2992 |
valuation method for all life insurance policies issued on or | 2993 |
after January 1, 1989, that have a first year premium in excess of | 2994 |
the premium for the second policy year and for which excess no | 2995 |
comparable benefit is provided in the first year and that provide | 2996 |
either an endowment benefit or cash surrender value, or | 2997 |
combination, in an amount greater than the excess premium. | 2998 |
2999 | |
3000 | |
3001 | |
3002 | |
to the commissioners reserve valuation method as of any policy | 3003 |
anniversary occurring on or before the assumed ending date defined | 3004 |
herein as the first policy anniversary on which the sum of any | 3005 |
endowment benefit and any cash surrender value then available is | 3006 |
greater than the excess premium shall, except as otherwise | 3007 |
provided in division (O) of this section, be the greater of either | 3008 |
of the following: | 3009 |
(1) The reserve as of the policy anniversary, with the policy | 3010 |
anniversary being calculated as described in division (I) of this | 3011 |
section; | 3012 |
(2) The reserve as of the policy anniversary calculated as | 3013 |
described in division (I) of this section, but with: | 3014 |
| 3015 |
section | 3016 |
of such excess first-year premium; | 3017 |
| 3018 |
being determined without reference to premiums and benefits | 3019 |
provided for by the policy after the assumed ending date; | 3020 |
| 3021 |
assumed ending date | 3022 |
3023 | |
3024 | |
3025 | |
3026 |
| 3027 |
3028 | |
3029 |
(d) The cash surrender value provided on the assumed ending | 3030 |
date being considered as an endowment benefit. | 3031 |
In making the above comparison, the mortality and interest | 3032 |
bases stated in this section and in section 3903.724 of the | 3033 |
Revised Code shall be used. | 3034 |
| 3035 |
valuation method shall be calculated by a method consistent with | 3036 |
the principles of divisions (I) and (J) of this section for: | 3037 |
(1) | 3038 |
3039 | |
insurance or requiring payment of varying premiums; | 3040 |
(2) Group annuity and pure endowment contracts purchased | 3041 |
under a retirement plan or plan of deferred compensation, | 3042 |
established or maintained by an employer, including a partnership | 3043 |
or sole proprietorship, or by an employee organization, or by | 3044 |
both, other than a plan providing individual retirement accounts | 3045 |
or individual retirement annuities under section 408 of the | 3046 |
Internal Revenue Code of 1954, as amended; | 3047 |
(3) Disability and accidental death benefits in all policies | 3048 |
and contracts; | 3049 |
(4) All other benefits, except life insurance and endowment | 3050 |
benefits in life insurance policies and benefits provided by all | 3051 |
other annuity and pure endowment contracts | 3052 |
3053 | |
3054 |
| 3055 |
3056 |
| 3057 |
reserve valuation method for all annuity and pure endowment | 3058 |
contracts other than group annuity and pure endowment contracts | 3059 |
purchased under a retirement plan or plan of deferred | 3060 |
compensation, established or maintained by an employer, including | 3061 |
a partnership or sole proprietorship, or by an employee | 3062 |
organization, or by both, other than a plan providing individual | 3063 |
retirement accounts or individual retirement annuities under | 3064 |
section 408 of the Internal Revenue Code of 1954, as amended. | 3065 |
(2) Reserves for benefits under such contracts, excluding | 3066 |
disability and accidental death benefits, shall be the greatest of | 3067 |
the respective excesses of the present values, at the date of | 3068 |
valuation, of the future guaranteed benefits, including guaranteed | 3069 |
nonforfeiture benefits, provided for by such contract at the end | 3070 |
of each respective contract year, over the present value, at the | 3071 |
date of valuation, of any future valuation considerations derived | 3072 |
from future gross considerations required by the terms of the | 3073 |
contract that become payable prior to the end of each such | 3074 |
respective contract year. The future guaranteed benefits shall be | 3075 |
determined by using the mortality table, if any, and the interest | 3076 |
rate, or rates, specified in such contracts for determining | 3077 |
guaranteed benefits. The valuation considerations are the portions | 3078 |
of the respective gross considerations applied under the terms of | 3079 |
such contracts to determine nonforfeiture values. | 3080 |
| 3081 |
for all life insurance policies | 3082 |
3083 | |
benefits issued on or after January 1, 1989, be less than the | 3084 |
aggregate reserves calculated in accordance with the method set | 3085 |
forth in divisions | 3086 |
and (P) of this section and the mortality table or tables and rate | 3087 |
or rates of interest used in calculating nonforfeiture benefits | 3088 |
for such policies. | 3089 |
(2) In no event shall the aggregate reserves for all | 3090 |
policies, contracts, and benefits be less than the aggregate | 3091 |
reserves determined by the | 3092 |
necessary to render the opinion required by | 3093 |
section 3903.722 of the Revised Code. | 3094 |
| 3095 |
January 1, 1989, may be calculated, at the option of the company, | 3096 |
according to any standards that produce greater aggregate reserves | 3097 |
for all such policies and contracts than the minimum reserves | 3098 |
required by the laws in effect immediately prior to that date. | 3099 |
(2) Reserves for any category of policies, contracts, or | 3100 |
benefits as established by the superintendent, issued on or after | 3101 |
January 1, 1989, may be calculated, at the option of the company, | 3102 |
according to any standards | 3103 |
for such category greater than those calculated according to the | 3104 |
minimum standards provided in this section, but the rate or rates | 3105 |
of interest used for policies and contracts, other than annuity | 3106 |
and pure endowment contracts, shall not be higher than the | 3107 |
corresponding rate or rates of interest used in calculating any | 3108 |
nonforfeiture benefits provided for in such standards. | 3109 |
| 3110 |
valuation producing greater aggregate reserves than those | 3111 |
calculated according to the minimum standard provided under | 3112 |
sections 3903.72 to 3903.7211 of the Revised Code, may adopt a | 3113 |
lower standard of valuation with the approval of the | 3114 |
superintendent, but not lower than the minimum provided in these | 3115 |
sections. However, for the purposes of this division, the holding | 3116 |
of additional reserves previously determined by the appointed | 3117 |
actuary to be necessary to render the opinion required by sections | 3118 |
3903.722 and 3903.726 of the Revised Code shall not be considered | 3119 |
to be the adoption of a higher standard of valuation. | 3120 |
(O) If in any contract year the gross premium charged by a | 3121 |
company on a policy or contract is less than the valuation net | 3122 |
premium calculated by the method used in calculating the reserve | 3123 |
for a policy or contract but using the minimum valuation standards | 3124 |
of mortality and rate of interest | 3125 |
3126 | |
policy or contract shall be the greater of either the reserve | 3127 |
calculated according to the mortality table, rate of interest, and | 3128 |
method actually used for such policy or contract, or the reserve | 3129 |
calculated by such method but using the minimum valuation | 3130 |
standards of mortality and rate of interest and replacing the | 3131 |
valuation net premium by the actual gross premium in each contract | 3132 |
year for which the valuation net premium exceeds the actual gross | 3133 |
premium. The minimum valuation standards of mortality and rate of | 3134 |
interest referred to in this division are those required by | 3135 |
3136 | |
3903.724 of the Revised Code. | 3137 |
| 3138 |
3139 | |
3140 | |
after January 1, 1987, for which the gross premium in the first | 3141 |
policy year exceeds that of the second year and for which no | 3142 |
comparable additional benefit is provided in the first year for | 3143 |
the excess and that provides an endowment benefit or a cash | 3144 |
surrender value or a combination in an amount greater than the | 3145 |
excess premium, the provisions of this division shall be applied | 3146 |
as if the method used in calculating the reserve for such policy | 3147 |
were the method defined in division | 3148 |
minimum reserve for such policy, at each policy anniversary, shall | 3149 |
be the greater of the minimum reserve calculated in accordance | 3150 |
with division | 3151 |
division. | 3152 |
| 3153 |
the case of a plan of life insurance that provides for future | 3154 |
premium determination, the amounts of which are to be determined | 3155 |
by the insurance company based on then estimates of future | 3156 |
experience, or in the case of a life insurance or annuity | 3157 |
3158 | |
determined by the methods described in divisions (I), (J), (K), | 3159 |
(L), and (O) of this section | 3160 |
3161 | |
3162 | |
benefits and the pattern of premiums for | 3163 |
shall be computed by | 3164 |
with the principles of this section as determined by rules adopted | 3165 |
by the superintendent. | 3166 |
3167 | |
3168 | |
3169 | |
3170 |
| 3171 |
minimum reserve standards for the valuation of individual and | 3172 |
group health plans. | 3173 |
| 3174 |
the calendar year statutory valuation interest | 3175 |
3176 | |
3177 | |
valuation of all of the following: | 3178 |
(1) Life insurance policies issued on or after January 1, | 3179 |
1989; | 3180 |
(2) Individual annuity and pure endowment contracts issued on | 3181 |
or after January 1, 1989; | 3182 |
(3) Annuities and pure endowments purchased on or after | 3183 |
January 1, 1989, under group annuity and pure endowment contracts; | 3184 |
(4) The net increase, if any, in amounts held under a | 3185 |
guaranteed interest contact in a calendar year after January 1, | 3186 |
1989. | 3187 |
(B) The calendar year statutory valuation interest rates | 3188 |
shall be calculated as follows and the results rounded to the | 3189 |
nearest one-quarter of one per cent: | 3190 |
(1)(a) For | 3191 |
cent to the result of multiplying W (the applicable weighting | 3192 |
factor) by R(sub-1) minus three per cent (where R(sub-1) is the | 3193 |
lesser of the reference interest rate and nine per cent) and also | 3194 |
adding the result of multiplying one-half of the weighting factor | 3195 |
by R(sub-2) minus nine per cent (where R(sub-2) is the greater of | 3196 |
the reference interest rate and nine per cent), expressed as | 3197 |
follows: | 3198 |
3199 | |
(b) Provided that if the calendar year statutory valuation | 3200 |
interest rate for | 3201 |
calendar year determined in accordance with this division does not | 3202 |
differ from the calendar year valuation interest rate for similar | 3203 |
policies issued in the preceding calendar year by at least | 3204 |
one-half of one per cent, the calendar year valuation interest | 3205 |
rate for | 3206 |
year valuation interest rate for the preceding calendar year. | 3207 |
3208 | |
interest rate | 3209 |
3210 | |
operative date of the valuation manual. | 3211 |
(2) For all | 3212 |
premium immediate annuities and for annuity benefits involving | 3213 |
life contingencies arising from other annuities with cash | 3214 |
settlement options and from guaranteed interest contracts with | 3215 |
cash settlement options by adding to three per cent the result of | 3216 |
multiplying W (the applicable weighting factor) by R minus three | 3217 |
per cent (where R is the reference interest rate), expressed as | 3218 |
follows: | 3219 |
3220 | |
3221 | |
(3) Except as provided in division (B)(2) of this section, | 3222 |
for other annuities with cash settlement options and guaranteed | 3223 |
interest contracts with cash settlement options, valued on an | 3224 |
issue year basis, the life insurance formula stated in division | 3225 |
3226 | |
guaranteed interest contracts | 3227 |
3228 | |
ten years
| 3229 |
3230 | |
3231 |
| 3232 |
3233 | |
3234 |
| 3235 |
premium immediate annuities stated in division (B)(2) of this | 3236 |
section shall apply to annuities and guaranteed interest contracts | 3237 |
with guarantee duration of ten years or less. | 3238 |
(4) For other annuities with no cash settlement options and | 3239 |
for guaranteed interest contracts with no cash settlement options, | 3240 |
the formula for single premium immediate annuities stated in | 3241 |
division (B)(2) of this section shall apply. | 3242 |
(5) For other annuities with cash settlement options and | 3243 |
guaranteed interest contracts with cash settlement options, valued | 3244 |
on a change in fund basis, the formula for single premium | 3245 |
immediate annuities stated in division (B)(2) of this section | 3246 |
shall apply. | 3247 |
(C) For life insurance | 3248 |
3249 | |
the maximum number of years the life insurance can remain in force | 3250 |
on a basis guaranteed in the policy or under an option to convert | 3251 |
to a plan of life insurance with premium rates or nonforfeiture | 3252 |
values, or both, guaranteed in the policy. | 3253 |
(D) The weighting factors for the formulas prescribed in | 3254 |
division (B) of this section are shown in the following table: | 3255 |
3256 | |
Guarantee Duration | Weighting | 3257 | |||
(Years) | Factors | 3258 |
10 or less | .50 | 3259 | ||
More than 10, but not more than 20 | .45 | 3260 | ||
More than 20 | .35 | 3261 |
| 3262 |
annuities and for annuity benefits involving life contingencies | 3263 |
arising from other annuity and guaranteed interest contracts with | 3264 |
cash settlement options is | 3265 |
| 3266 |
interest contracts vary with the type of plan and guarantee | 3267 |
duration. The types of plans are as follows: | 3268 |
(1) A plan type A is one in which funds may not be withdrawn | 3269 |
or may be withdrawn in only one of three ways: | 3270 |
(a) With an adjustment to reflect changes in interest rates | 3271 |
or asset values since receipt of the funds by the company; | 3272 |
(b) Without such adjustment but in installments over five or | 3273 |
more years; | 3274 |
(c) As an immediate life annuity. | 3275 |
(2) A plan type B is one in which the funds may not be | 3276 |
withdrawn before the expiration of the interest rate guarantee | 3277 |
unless an adjustment is made to reflect changes in interest rates | 3278 |
or asset values since receipt of the funds by the company or | 3279 |
unless they are withdrawn in installments over five or more years. | 3280 |
At the end of the interest rate guarantee, funds may be withdrawn | 3281 |
in a single sum or in installments over less than five years | 3282 |
without adjustment. | 3283 |
(3) A plan type C is one in which the funds may be withdrawn | 3284 |
before the end of the interest rate guarantee in a single sum or | 3285 |
in installments over less than five years without adjustment to | 3286 |
reflect changes in interest rates or asset values since receipt of | 3287 |
the funds by the company or subject only to a fixed surrender | 3288 |
charge stipulated in the contract as a percentage of the fund. | 3289 |
(4) The guarantee duration for an annuity or guaranteed | 3290 |
interest contract with cash settlement options is the number of | 3291 |
years for which the contract guarantees interest rates in excess | 3292 |
of the calendar year valuation interest rate for life insurance | 3293 |
policies with guarantee duration in excess of twenty years. The | 3294 |
guarantee duration for annuity and guaranteed interest contracts | 3295 |
without cash settlement options is the number of years from the | 3296 |
date of issue or date of purchase to the date annuity benefits are | 3297 |
scheduled to commence. | 3298 |
(5) Annuity and guaranteed interest contracts with cash | 3299 |
settlement options may be valued on an issue year basis or on a | 3300 |
change in fund basis. | 3301 |
3302 | |
3303 | |
3304 | |
3305 | |
3306 | |
3307 | |
Annuity and guaranteed interest contracts without cash settlement | 3308 |
options must be valued on an issue year basis. As used in this | 3309 |
division, an issue year basis of valuation refers to a valuation | 3310 |
basis under which the interest rate used to determine the minimum | 3311 |
valuation standard for the entire duration of the annuity or | 3312 |
guaranteed interest contract is the calendar year valuation | 3313 |
interest rate for the year of issue or year of purchase of the | 3314 |
annuity or guaranteed interest contract, and the change in fund | 3315 |
basis of valuation refers to a valuation basis under which the | 3316 |
interest rate used to determine the minimum valuation standard | 3317 |
applicable to each change in the fund held under the annuity or | 3318 |
guaranteed interest contract is the calendar year valuation | 3319 |
interest rate for the year of the change in the fund. | 3320 |
(6) | 3321 |
for guaranteed interest contracts, except as stated in division | 3322 |
(E) of this section, are specified | 3323 |
below. | 3324 |
(a) For annuity and guaranteed interest contracts valued on | 3325 |
an issue year basis | 3326 |
3327 | |
3328 | |
3329 | |
3330 | |
3331 | |
3332 | |
3333 | |
3334 | |
3335 |
3336 | |
3337 | |
3338 | |
3339 | |
3340 | |
Weighting Factor for | 3341 | ||||
Plan Type | 3342 | ||||
Guarantee Duration (Years) | A | B | C | 3343 | |
5 or less | .80 | .60 | .50 | 3344 | |
More than 5, but not more than 10 | .75 | .60 | .50 | 3345 | |
More than 10, but not more than 20 | .65 | .50 | .45 | 3346 | |
More than 20 | .45 | .35 | .35 | 3347 |
3348 | |
3349 | |
3350 | |
3351 | |||||
3352 | |||||
3353 | |||||
3354 | |||||
3355 | |||||
3356 | |||||
3357 |
3358 | |
3359 | |
3360 | |
3361 | |||||
3362 | |||||
3363 | |||||
3364 | |||||
3365 | |||||
3366 | |||||
3367 |
3368 | |
3369 | |
3370 | |
3371 | |||||
3372 | |||||
3373 | |||||
3374 | |||||
3375 | |||||
3376 | |||||
3377 |
| 3378 |
on a change in fund basis, the factors shown in division (F)(6)(a) | 3379 |
of this section increased by the following amounts: | 3380 |
(i) For plan type A, .15; | 3381 |
(ii) For plan type B, .25; | 3382 |
(iii) For plan type C, .05. | 3383 |
(c) For annuities and guaranteed interest contracts valued on | 3384 |
an issue year basis, other than those with no cash settlement | 3385 |
options, that do not guarantee interest on considerations received | 3386 |
more than one year after issue or purchase and for annuities and | 3387 |
guaranteed interest contracts valued on a change in fund basis | 3388 |
that do not guarantee interest rates on considerations received | 3389 |
more than twelve months beyond the valuation date, the factors | 3390 |
shown in item (F)(6)(a) or derived in item (F)(6)(b) increased by | 3391 |
.05 for all plan types. | 3392 |
(G) The reference interest rate is determined by | 3393 |
comparing the monthly average | 3394 |
3395 | |
3396 | |
corporate bonds, as published by Moody's investors service, inc. | 3397 |
for the applicable time period, as prescribed below: | 3398 |
(1) The reference interest rate for all life insurance is the | 3399 |
lesser of such average over the thirty-six month period and such | 3400 |
average over the twelve-month period ending on the thirtieth day | 3401 |
of June of the calendar year preceding the year of issue. | 3402 |
(2) The reference interest rate for annuity and guaranteed | 3403 |
interest contracts with cash settlement options, except single | 3404 |
premium immediate annuities and annuity benefits involving life | 3405 |
contingencies arising from other annuity and guaranteed interest | 3406 |
contracts with cash settlement options, valued on an issue year | 3407 |
basis with guarantee durations in excess of ten years, is the | 3408 |
lesser of such average over the thirty-six month period and such | 3409 |
average over the twelve-month period ending on the thirtieth day | 3410 |
of June of the calendar year of issue or purchase. | 3411 |
(3) The reference interest rate for other annuities with cash | 3412 |
settlement options and guaranteed interest contracts with cash | 3413 |
settlement options, valued on a year of issue basis, except as | 3414 |
stated in division (G)(6) of this section, with guarantee duration | 3415 |
of ten years or less, such average over the twelve-month period | 3416 |
ending on the thirtieth day of June of the calendar year of issue | 3417 |
or purchase. | 3418 |
(4) The reference interest rate for other annuities with no | 3419 |
cash settlement options and for guaranteed interest contracts with | 3420 |
no cash settlement options, such average over the twelve-month | 3421 |
period ending on the thirtieth day of June of the calendar year of | 3422 |
issue or purchase. | 3423 |
(5) The reference interest rate for all other annuity and | 3424 |
guaranteed interest contracts with cash settlement options valued | 3425 |
on a change in fund basis is such average over the twelve-month | 3426 |
period ending on the thirtieth day of June of the calendar year in | 3427 |
which a change in the fund occurs. | 3428 |
| 3429 |
immediate annuities | 3430 |
contingencies arising from other annuity and guaranteed interest | 3431 |
contracts with cash settlement options | 3432 |
3433 | |
twelve-month period ending on the thirtieth day of June of the | 3434 |
calendar year of issue or purchase. | 3435 |
| 3436 |
published or the national association of insurance commissioners | 3437 |
determines that such average is no longer appropriate, the | 3438 |
superintendent may by rule approve the use of any alternative | 3439 |
method for the determination of the reference interest rate | 3440 |
adopted by the commissioners. | 3441 |
Sec. 3903.725. For individual annuity and pure endowment | 3442 |
contracts issued on or after January 1, 1989, and for annuities | 3443 |
and pure endowments purchased on or after January 1, 1989, under | 3444 |
group annuity and pure endowment contracts, the minimum standard | 3445 |
of valuation shall be the commissioners reserve valuation methods | 3446 |
defined in divisions (I), (J), (K), and (L) of section 3903.723 of | 3447 |
the Revised Code, interest rates defined in section 3903.724 of | 3448 |
the Revised Code, and the following tables: | 3449 |
(A) For individual single premium immediate annuity contracts | 3450 |
issued on or after January 1, 1989, excluding any disability and | 3451 |
accidental death benefits in those contracts, the 1971 individual | 3452 |
annuity mortality table or any individual annuity mortality table | 3453 |
adopted after 1980 by the national association of insurance | 3454 |
commissioners that is approved in rules adopted by the | 3455 |
superintendent for use in determining the minimum standard of | 3456 |
valuation for these contracts, or any modification of these tables | 3457 |
approved by the superintendent; | 3458 |
(B) For individual annuity and pure endowment contracts | 3459 |
issued on or after January 1, 1989, other than single premium | 3460 |
immediate annuity contracts, excluding any disability and | 3461 |
accidental death benefits in those contracts, the 1971 individual | 3462 |
annuity mortality table or any individual annuity mortality table | 3463 |
adopted after 1980 by the national association of insurance | 3464 |
commissioners that is adopted in rules by the superintendent for | 3465 |
use in determining the minimum standard of valuation for those | 3466 |
contracts, or any modification of these tables approved by the | 3467 |
superintendent; | 3468 |
(C) For annuities and pure endowments purchased on or after | 3469 |
January 1, 1989, under group annuity and pure endowment contracts, | 3470 |
excluding any disability and accidental death benefits purchased | 3471 |
under those contracts, the 1971 group annuity mortality table, or | 3472 |
any group annuity mortality table adopted after 1980 by the | 3473 |
national association of insurance commissioners that is approved | 3474 |
in rules adopted by the superintendent for use in determining the | 3475 |
minimum standard of valuation for annuities and pure endowments, | 3476 |
or any modification of these tables approved by the | 3477 |
superintendent. | 3478 |
Sec. 3903.726. (A) This section shall apply on and after the | 3479 |
operative date of the valuation manual. | 3480 |
(B) Every company with an outstanding life insurance | 3481 |
contract, accident and health insurance contract, or deposit-type | 3482 |
contract in this state that is subject to rules adopted by the | 3483 |
superintendent shall annually submit the opinion of an appointed | 3484 |
actuary as to whether the reserves and related actuarial items | 3485 |
held in support of the policies and contracts are computed | 3486 |
appropriately, are based on assumptions that satisfy contractual | 3487 |
provisions, are consistent with prior reported amounts, and comply | 3488 |
with applicable laws of this state. The valuation manual shall | 3489 |
prescribe the specifics of this opinion. | 3490 |
(C) Every company with an outstanding life insurance | 3491 |
contract, accident and health insurance contract, or deposit-type | 3492 |
contract in this state that is subject to rules adopted by the | 3493 |
superintendent, except as exempted in the valuation manual, shall | 3494 |
also annually include in the opinion required by division (B) of | 3495 |
this section, an opinion of the same appointed actuary as to | 3496 |
whether the reserves and related actuarial items held in support | 3497 |
of the policies and contracts specified in the valuation manual, | 3498 |
when considered in light of the assets held by the company with | 3499 |
respect to the reserves and related actuarial items, including the | 3500 |
investment earnings on the assets and the considerations | 3501 |
anticipated to be received and retained under the policies and | 3502 |
contracts, make adequate provision for the company's obligations | 3503 |
under the policies and contracts, including the benefits under and | 3504 |
expenses associated with the policies and contracts. | 3505 |
(D) Each opinion required by divisions (B) and (C) of this | 3506 |
section shall be governed by the following provisions: | 3507 |
(1) The opinion shall be in form and substance as specified | 3508 |
in the valuation manual and acceptable to the superintendent. | 3509 |
(2) The opinion shall be submitted with the annual statement | 3510 |
reflecting the valuation of such reserve liabilities for each year | 3511 |
ending on or after the operative date of the valuation manual. | 3512 |
(3) The opinion shall apply to all policies and contracts | 3513 |
subject to division (C) of this section, plus other actuarial | 3514 |
liabilities as may be specified in the valuation manual. | 3515 |
(4) The opinion shall be based on standards adopted from time | 3516 |
to time by the actuarial standards board or its successor, and on | 3517 |
such additional standards as may be prescribed in the valuation | 3518 |
manual. | 3519 |
(5) In the case of an opinion required to be submitted by a | 3520 |
foreign or alien company, the superintendent may accept the | 3521 |
opinion filed by that company with the insurance supervisory | 3522 |
official of another state if the superintendent determines that | 3523 |
the opinion reasonably meets the requirements applicable to a | 3524 |
company domiciled in this state. | 3525 |
(6) Except in cases of fraud or willful misconduct, the | 3526 |
appointed actuary shall not be liable for damages to any person, | 3527 |
other than the insurance company and the superintendent, for any | 3528 |
act, error, omission, decision, or conduct with respect to the | 3529 |
appointed actuary's opinion. | 3530 |
(7) Disciplinary action by the superintendent against the | 3531 |
company or the appointed actuary shall be defined in rules adopted | 3532 |
by the superintendent. | 3533 |
(E) In addition to the requirements specified in division (D) | 3534 |
of this section, each opinion required by division (C) of this | 3535 |
section shall be governed by the following provisions: | 3536 |
(1) A memorandum, in form and substance as specified in the | 3537 |
valuation manual, and acceptable to the superintendent, shall be | 3538 |
prepared to support each actuarial opinion. | 3539 |
(2) If the insurance company fails to provide a supporting | 3540 |
memorandum at the request of the superintendent within a period | 3541 |
specified in the valuation manual or the superintendent determines | 3542 |
that the supporting memorandum provided by the insurance company | 3543 |
fails to meet the standards prescribed by the valuation manual or | 3544 |
is otherwise unacceptable to the superintendent, the | 3545 |
superintendent may engage a qualified actuary at the expense of | 3546 |
the company to review the opinion and the basis for the opinion | 3547 |
and prepare the supporting memorandum required by the | 3548 |
superintendent. | 3549 |
Sec. 3903.727. For accident and health insurance contracts | 3550 |
issued on or after the operative date of the valuation manual, the | 3551 |
standard prescribed in the valuation manual is the minimum | 3552 |
standard of valuation required under division (B) of section | 3553 |
3903.721 of the Revised Code. For disability, accident and | 3554 |
sickness, accident and health insurance contracts issued on or | 3555 |
after January 1, 1989, and prior to the operative date of the | 3556 |
valuation manual, the minimum standard of valuation is the | 3557 |
standard adopted in rules by the superintendent. | 3558 |
Sec. 3903.728. (A) For policies issued on or after the | 3559 |
operative date of the valuation manual, the standard prescribed in | 3560 |
the valuation manual is the minimum standard of valuation required | 3561 |
under division (B) of section 3903.721 of the Revised Code, except | 3562 |
as provided under divisions (E) and (G) of this section. | 3563 |
(B) The operative date of the valuation manual is January 1 | 3564 |
of the first calendar year following the first July 1 as of which | 3565 |
all of the following have occurred: | 3566 |
(1) The valuation manual has been adopted by the national | 3567 |
association of insurance commissioners by an affirmative vote of | 3568 |
at least forty-two members, or three-fourths of the members | 3569 |
voting, whichever is greater. | 3570 |
(2) The standard valuation law, as amended by the national | 3571 |
association of insurance commissioners in 2009, or legislation | 3572 |
including substantially similar terms and provisions, has been | 3573 |
enacted by states representing greater than seventy-five per cent | 3574 |
of the direct premiums written as reported in one or more of the | 3575 |
following annual statements submitted for 2008: life, accident, | 3576 |
and health annual statements; health annual statements; or | 3577 |
fraternal annual statements. | 3578 |
(3) The standard valuation law, as amended by the national | 3579 |
association of insurance commissioners in 2009, or legislation | 3580 |
including substantially similar terms and provisions, has been | 3581 |
enacted by at least forty-two of the following fifty-five | 3582 |
jurisdictions: the fifty states of the United States, American | 3583 |
Samoa, the American Virgin Islands, the District of Columbia, | 3584 |
Guam, and Puerto Rico. | 3585 |
(C) Unless a change in the valuation manual specifies a later | 3586 |
effective date, changes to the valuation manual shall be effective | 3587 |
on January 1 following the date when all of the following have | 3588 |
occurred: | 3589 |
(1) The change to the valuation manual has been adopted by | 3590 |
the national association of insurance commissioners by an | 3591 |
affirmative vote representing both of the following: | 3592 |
(a) At least three-fourths of the members of the national | 3593 |
association of insurance commissioners voting, but not less than a | 3594 |
majority of the total membership; | 3595 |
(b) Members of the national association of insurance | 3596 |
commissioners representing jurisdictions totaling greater than | 3597 |
seventy-five per cent of the direct premiums written as reported | 3598 |
in one or more of the following annual statements most recently | 3599 |
available prior to the vote in division (C)(1)(a) of this section: | 3600 |
life, accident, and health annual statements; health annual | 3601 |
statements; or fraternal annual statements. | 3602 |
(D) The valuation manual shall specify all of the following: | 3603 |
(1) Minimum valuation standards for and definitions of the | 3604 |
policies or contracts subject to division (B) of section 3903.721 | 3605 |
of the Revised Code. The minimum valuation standards shall be: | 3606 |
(a) The commissioners reserve valuation method for life | 3607 |
insurance contracts, other than annuity contracts, subject to | 3608 |
division (B) of section 3903.721 of the Revised Code; | 3609 |
(b) The commissioners annuity reserve valuation method for | 3610 |
annuity contracts subject to division (B) of section 3903.721 of | 3611 |
the Revised Code; | 3612 |
(c) Minimum reserves for all other policies or contracts | 3613 |
subject to division (B) of section 3903.721 of the Revised Code. | 3614 |
(2) Which policies or contracts or types of policies or | 3615 |
contracts are subject to the requirements of a principle-based | 3616 |
valuation in division (A) of section 3903.729 of the Revised Code | 3617 |
and the minimum valuation standards consistent with those | 3618 |
requirements. | 3619 |
(3) For policies and contracts subject to a principle-based | 3620 |
valuation under section 3903.729 of the Revised Code: | 3621 |
(a) Requirements for the format of reports to the | 3622 |
superintendent under division (B)(3) of section 3903.729 of the | 3623 |
Revised Code that shall include information necessary to determine | 3624 |
if the valuation is appropriate and in compliance with sections | 3625 |
3903.72 to 3903.7211 of the Revised Code. | 3626 |
(b) Assumptions for risks over which the company does not | 3627 |
have significant control or influence. | 3628 |
(c) Procedures for corporate governance and oversight of the | 3629 |
actuarial function, and a process for appropriate waiver or | 3630 |
modification of such procedures. | 3631 |
(4) For policies not subject to a principle-based valuation | 3632 |
under section 3903.729 of the Revised Code, the minimum valuation | 3633 |
standard, which shall be or do either of the following: | 3634 |
(a) Be consistent with the minimum standard of valuation | 3635 |
prior to the operative date of the valuation manual; | 3636 |
(b) Develop reserves that quantify the benefits and | 3637 |
guarantees, and the funding, associated with the contracts and | 3638 |
their risks at a level of conservatism that reflects conditions | 3639 |
that include unfavorable events that have a reasonable probability | 3640 |
of occurring. | 3641 |
(5) Other requirements, including those relating to reserve | 3642 |
methods, models for measuring risk, generation of economic | 3643 |
scenarios, assumptions, margins, use of company experience, risk | 3644 |
measurement, disclosure, certifications, reports, actuarial | 3645 |
opinions and memorandums, transition rules, and internal controls; | 3646 |
(6) The data and form of the data required under section | 3647 |
3903.7210 of the Revised Code, with whom the data must be | 3648 |
submitted, and other requirements specified by the superintendent, | 3649 |
which may include data analyses and reporting of analyses. | 3650 |
(E) In the absence of a specific valuation requirement or if | 3651 |
a specific valuation requirement in the valuation manual is not, | 3652 |
in the opinion of the superintendent, in compliance with sections | 3653 |
3903.72 to 3903.7211 of the Revised Code, then the company shall, | 3654 |
with respect to such requirements, comply with minimum valuation | 3655 |
standards prescribed in rules adopted by the superintendent. | 3656 |
(F) The superintendent may engage a qualified actuary, at the | 3657 |
expense of the company, to perform an actuarial examination of the | 3658 |
company and opine on the appropriateness of any reserve assumption | 3659 |
or method used by the company, or to review and opine on a | 3660 |
company's compliance with any requirement set forth in sections | 3661 |
3903.72 to 3903.7211 of the Revised Code. The superintendent may | 3662 |
rely upon the opinion, regarding provisions contained within | 3663 |
sections 3903.72 to 3903.7211 of the Revised Code, of a qualified | 3664 |
actuary engaged by the insurance commissioner of another state, | 3665 |
district, or territory of the United States. As used in this | 3666 |
division, the term "engage" includes employment and contracting. | 3667 |
(G) The superintendent may require a company to change any | 3668 |
assumption or method that in the opinion of the superintendent is | 3669 |
necessary in order to comply with the requirements of the | 3670 |
valuation manual or sections 3903.72 to 3903.7211 of the Revised | 3671 |
Code, and the company shall adjust the reserves as required by the | 3672 |
superintendent. The superintendent may take other disciplinary | 3673 |
action as permitted under applicable laws. | 3674 |
Sec. 3903.729. (A) A company shall establish reserves using | 3675 |
a principle-based valuation that meets the following conditions | 3676 |
for policies or contracts as specified in the valuation manual: | 3677 |
(1) The principle-based valuation shall quantify the benefits | 3678 |
and guarantees, and the funding, associated with the contracts and | 3679 |
their risks at a level of conservatism that reflects conditions | 3680 |
that include unfavorable events that have a reasonable probability | 3681 |
of occurring during the lifetime of the contracts. | 3682 |
(2) The principle-based valuation shall reflect conditions, | 3683 |
for policies or contracts with significant tail risk, | 3684 |
appropriately adverse to quantify the tail risk. | 3685 |
(3) The principle-based valuation shall incorporate | 3686 |
assumptions, risk analysis methods, and financial models and | 3687 |
management techniques that are consistent with, but not | 3688 |
necessarily identical to, those utilized within the company's | 3689 |
overall risk assessment process, while recognizing potential | 3690 |
differences in financial reporting structures and any prescribed | 3691 |
assumptions or methods. | 3692 |
(4) The principle-based valuation shall incorporate | 3693 |
assumptions that are derived in one of the following manners: | 3694 |
(a) The assumption is prescribed in the valuation manual. | 3695 |
(b) For assumptions that are not prescribed, the assumptions | 3696 |
shall: | 3697 |
(i) Be established utilizing the company's available | 3698 |
experience, to the extent it is relevant and statistically | 3699 |
credible; | 3700 |
(ii) To the extent company data is not available, relevant, | 3701 |
or statistically credible, be established utilizing other relevant | 3702 |
statistically credible experience. | 3703 |
(5) The principle-based valuation shall provide margins for | 3704 |
uncertainty including adverse deviation and estimation error, such | 3705 |
that the greater the uncertainty the larger the margin and | 3706 |
resulting reserve. | 3707 |
(B) A company using a principle-based valuation for one or | 3708 |
more policies or contracts subject to this section as specified in | 3709 |
the valuation manual shall do all of the following: | 3710 |
(1) Establish procedures for corporate governance and | 3711 |
oversight of the actuarial valuation function consistent with | 3712 |
those described in the valuation manual; | 3713 |
(2) Provide to the superintendent and the company's board of | 3714 |
directors an annual certification of the effectiveness of the | 3715 |
internal controls with respect to the principle-based valuation. | 3716 |
Such controls shall be designed to assure that all material risks | 3717 |
inherent in the liabilities and associated assets subject to such | 3718 |
valuation are included in the valuation, and that valuations are | 3719 |
made in accordance with the valuation manual. The certification | 3720 |
shall be based on the controls in place as of the end of the | 3721 |
preceding calendar year. | 3722 |
(3) Develop, and file with the superintendent upon request, a | 3723 |
principle-based valuation report that complies with standards | 3724 |
prescribed in the valuation manual. | 3725 |
Sec. 3903.7210. A company shall submit mortality, morbidity, | 3726 |
policyholder behavior, or expense experience and other data as | 3727 |
prescribed in the valuation manual for policies it has issued that | 3728 |
are in force on or after the operative date of the valuation | 3729 |
manual. | 3730 |
Sec. 3903.7211. (A) As used in this section: | 3731 |
(1) "Confidential information" means all of the following: | 3732 |
(a) A memorandum in support of an opinion submitted under | 3733 |
sections 3903.722 and 3903.726 of the Revised Code and any other | 3734 |
documents, materials, and other information, including all working | 3735 |
papers, and copies thereof, created, produced, or obtained by or | 3736 |
disclosed to the superintendent or any other person in connection | 3737 |
with such memorandum. | 3738 |
(b)(i) Except as provided in division (A)(1)(b)(ii) of this | 3739 |
section, all documents, materials, and other information, | 3740 |
including all working papers, and copies thereof, created, | 3741 |
produced, or obtained by or disclosed to the superintendent or any | 3742 |
other person in the course of an examination made under division | 3743 |
(F) of section 3903.728 of the Revised Code. | 3744 |
(ii) If an examination report or other material prepared in | 3745 |
connection with an examination made under section 3901.07 of the | 3746 |
Revised Code is not held as private and confidential information | 3747 |
under that section, an examination report or other material | 3748 |
prepared in connection with an examination made under division (F) | 3749 |
of section 3903.728 of the Revised Code shall not be considered | 3750 |
confidential information to the same extent as if such examination | 3751 |
report or other material had been prepared under section 3901.07 | 3752 |
of the Revised Code. | 3753 |
(c) Any reports, documents, materials, and other information | 3754 |
developed by a company in support of, or in connection with, an | 3755 |
annual certification by the company under division (B)(2) of | 3756 |
section 3903.729 of the Revised Code evaluating the effectiveness | 3757 |
of the company's internal controls with respect to a | 3758 |
principle-based valuation and any other documents, materials, and | 3759 |
other information, including all working papers, and copies | 3760 |
thereof, created, produced, or obtained by or disclosed to the | 3761 |
superintendent or any other person in connection with such | 3762 |
reports, documents, materials, and other information; | 3763 |
(d) Any principle-based valuation report developed under | 3764 |
division (B)(3) of section 3903.729 of the Revised Code and any | 3765 |
other documents, materials, and other information, including all | 3766 |
working papers, and copies thereof, created, produced, or obtained | 3767 |
by or disclosed to the superintendent or any other person in | 3768 |
connection with such report; | 3769 |
(e) Any documents, materials, data, and other information | 3770 |
submitted by a company under section 3903.7210 of the Revised | 3771 |
Code, referred to collectively as "experience data," and any other | 3772 |
documents, materials, data, and other information, including all | 3773 |
working papers, and copies thereof, created or produced in | 3774 |
connection with such experience data, in each case that include | 3775 |
any potentially company-identifying or personally identifiable | 3776 |
information, that is provided to or obtained by the | 3777 |
superintendent, which when combined with any experience data is | 3778 |
referred to as "experience materials," and any other documents, | 3779 |
materials, data, and other information, including all working | 3780 |
papers, and copies thereof, created, produced, or obtained by or | 3781 |
disclosed to the superintendent or any other person in connection | 3782 |
with such experience materials. | 3783 |
(2) "Regulatory agency," "law enforcement agency," and the | 3784 |
"national association of insurance commissioners" includes their | 3785 |
employees, agents, consultants, and contractors. | 3786 |
(B)(1) Except as provided in division (B)(2) of this section | 3787 |
and as otherwise provided in this section, a company's | 3788 |
confidential information is confidential by law and privileged, is | 3789 |
not a public record under section 149.43 of the Revised Code, | 3790 |
shall not be subject to subpoena, and shall not be subject to | 3791 |
discovery or admissible in evidence in any private civil action. | 3792 |
Except as otherwise provided in this section, neither the | 3793 |
superintendent nor any person who received confidential | 3794 |
information while acting under the superintendent's authority | 3795 |
shall be permitted or required to testify in any private civil | 3796 |
action concerning that confidential information. | 3797 |
(2) The superintendent is authorized to use the confidential | 3798 |
information in the furtherance of any regulatory or legal action | 3799 |
brought against the company as a part of the superintendent's | 3800 |
official duties. | 3801 |
(C)(1) In order to assist in the performance of the | 3802 |
superintendent's duties, the superintendent may share confidential | 3803 |
information with all of the following: | 3804 |
(a) Other state, federal, and international regulatory | 3805 |
agencies; | 3806 |
(b) The national association of insurance commissioners and | 3807 |
its affiliates and subsidiaries; | 3808 |
(c) The actuarial board for counseling and discipline, or its | 3809 |
successor, in the case of confidential information specified in | 3810 |
divisions (A)(1)(a) and (d) of this section only, upon a request | 3811 |
stating that the confidential information is required for the | 3812 |
purpose of professional disciplinary proceedings; | 3813 |
(d) State, federal, and international law enforcement | 3814 |
officials. | 3815 |
(2) The superintendent may share confidential information as | 3816 |
specified in divisions (C)(1)(a) through (d) of this section only | 3817 |
if the recipient agrees, and has the legal authority to agree, to | 3818 |
maintain the confidentiality and privileged status of such | 3819 |
documents, materials, data, and other information in the same | 3820 |
manner and to the same extent as required for the superintendent. | 3821 |
(D) The superintendent may receive documents, materials, | 3822 |
data, and other information, including otherwise confidential and | 3823 |
privileged documents, materials, data, or information, from the | 3824 |
national association of insurance commissioners and its affiliates | 3825 |
and subsidiaries, from regulatory or law enforcement officials of | 3826 |
other foreign or domestic jurisdictions, and from the actuarial | 3827 |
board for counseling and discipline or its successor. The | 3828 |
superintendent shall maintain as confidential or privileged any | 3829 |
document, material, data, or other information received with | 3830 |
notice or the understanding that it is confidential or privileged | 3831 |
under the laws of the jurisdiction that is the source of the | 3832 |
document, material, data, or other information. | 3833 |
(E) The superintendent may enter into agreements governing | 3834 |
sharing and use of information consistent with this section. | 3835 |
(F) No waiver of any applicable privilege or claim of | 3836 |
confidentiality in the confidential information shall occur as a | 3837 |
result of disclosure to the superintendent under this section or | 3838 |
as a result of sharing as authorized in division (C) of this | 3839 |
section. | 3840 |
(G) A privilege established under the law of any state or | 3841 |
jurisdiction that is substantially similar to the privilege | 3842 |
established under this section shall be available and enforced in | 3843 |
any proceeding in, and in any court of, this state. | 3844 |
(H) Notwithstanding divisions (B) to (G) of this section, any | 3845 |
confidential information specified in divisions (A)(1)(a) and (d) | 3846 |
of this section are subject to all of the following: | 3847 |
(1) The confidential information may be subject to subpoena | 3848 |
for the purpose of defending an action seeking damages from the | 3849 |
appointed actuary submitting the related memorandum in support of | 3850 |
an opinion submitted under sections 3903.722 and 3903.726 of the | 3851 |
Revised Code or principle-based valuation report developed under | 3852 |
division (B)(3) of section 3903.729 of the Revised Code by reason | 3853 |
of an action required by sections 3903.72 to 3903.7211 of the | 3854 |
Revised Code or by rules adopted pursuant to those sections. | 3855 |
(2) The confidential information may otherwise be released by | 3856 |
the superintendent with the written consent of the company. | 3857 |
(3) Once any portion of a memorandum in support of an opinion | 3858 |
submitted under section 3903.722 and 3903.726 of the Revised Code | 3859 |
or a principle-based valuation report developed under division | 3860 |
(B)(3) of section 3903.729 of the Revised Code is cited by the | 3861 |
company in its marketing or is publicly volunteered to or before a | 3862 |
governmental agency other than a state insurance department or is | 3863 |
released by the company to the news media, all portions of that | 3864 |
memorandum or report shall no longer be confidential. | 3865 |
Sec. 3903.83. (A) For purposes of sections 3903.81 to | 3866 |
3903.93 of the Revised Code, a "company action level event" is any | 3867 |
of the following events: | 3868 |
(1) A domestic or foreign insurer's filing of an RBC report | 3869 |
that indicates that the insurer's total adjusted capital is | 3870 |
greater than or equal to its regulatory action level RBC but less | 3871 |
than its company action level RBC; | 3872 |
(2) A life or health insurer's filing of an RBC report that | 3873 |
indicates that the insurer's total adjusted capital is greater | 3874 |
than or equal to its company action level RBC but less than the | 3875 |
product of | 3876 |
indicates a negative trend; | 3877 |
(3) A property and casualty insurer's filing of an RBC report | 3878 |
that indicates that the insurer's total adjusted capital is | 3879 |
greater than or equal to its company action level RBC but less | 3880 |
than the product of its authorized control level RBC and 3.0, and | 3881 |
that triggers the trend test determined in accordance with the | 3882 |
trend test calculation included in the property and casualty RBC | 3883 |
instructions; | 3884 |
(4) The notification by the superintendent of insurance to an | 3885 |
insurer of an adjustment to the insurer's RBC report, which | 3886 |
adjusted RBC report shows the insurer's total adjusted capital | 3887 |
within the range described in either division (A)(1) or (2) of | 3888 |
this section, provided that the insurer does not challenge the | 3889 |
adjusted RBC report under section 3903.87 of the Revised Code; | 3890 |
(5) The superintendent's notification to an insurer, | 3891 |
following the hearing required under section 3903.87 of the | 3892 |
Revised Code, that the superintendent has rejected the insurer's | 3893 |
challenge to an adjusted RBC report showing the insurer's total | 3894 |
adjusted capital within the range described in either division | 3895 |
(A)(1) or (2) of this section. | 3896 |
(B) In the case of a company action level event, the insurer | 3897 |
shall prepare and submit to the superintendent an RBC plan that | 3898 |
shall: | 3899 |
(1) Identify the conditions that contributed to the company | 3900 |
action level event; | 3901 |
(2) Contain proposals of corrective actions that the insurer | 3902 |
intends to take to eliminate the conditions leading to the company | 3903 |
action level event; | 3904 |
(3) Provide projections of the insurer's financial results in | 3905 |
the current year and at least the four succeeding years, both in | 3906 |
the absence of the proposed corrective actions and giving effect | 3907 |
to the proposed corrective actions. The projections shall include | 3908 |
projections of statutory operating income, net income, capital, | 3909 |
and surplus. Projections for both new and renewal business may | 3910 |
include separate projections for each major line of business, and | 3911 |
may separately identify each significant income, expense, and | 3912 |
benefit component of the projection. | 3913 |
(4) Identify the key assumptions impacting the insurer's | 3914 |
projections made pursuant to division (B)(3) of this section, and | 3915 |
describe the sensitivity of the projections to the assumptions; | 3916 |
(5) Identify the quality of, and problems associated with, | 3917 |
the insurer's business, including, but not limited to, its assets, | 3918 |
anticipated business growth and associated surplus strain, | 3919 |
extraordinary exposure to risk, mix of business, and use of | 3920 |
reinsurance. | 3921 |
(C) The RBC plan shall be submitted within forty-five days | 3922 |
after a company action level event. However, if an insurer has | 3923 |
challenged an adjusted RBC report pursuant to section 3903.87 of | 3924 |
the Revised Code, the RBC plan need not be submitted until after | 3925 |
the hearing required under section 3903.87 of the Revised Code. If | 3926 |
the superintendent rejects the insurer's challenge, the RBC plan | 3927 |
shall be submitted within forty-five days after the | 3928 |
superintendent's notification to the insurer of the rejection of | 3929 |
the challenge. | 3930 |
(D)(1) Within sixty days after an insurer submits an RBC plan | 3931 |
to the superintendent, the superintendent shall either require the | 3932 |
insurer to implement the RBC plan or shall notify the insurer that | 3933 |
the RBC plan is unsatisfactory in the judgment of the | 3934 |
superintendent. If the superintendent has determined that the RBC | 3935 |
plan is unsatisfactory, the notification to the insurer shall set | 3936 |
forth the reasons for the determination, and may set forth | 3937 |
proposed revisions that will render the RBC plan satisfactory in | 3938 |
the judgment of the superintendent. Upon such notification from | 3939 |
the superintendent, the insurer shall prepare and submit a revised | 3940 |
RBC plan, which may incorporate by reference any revisions | 3941 |
proposed by the superintendent. | 3942 |
(2) If an insurer challenges, under section 3903.87 of the | 3943 |
Revised Code, a notification from the Superintendent that the | 3944 |
insurer's RBC plan or a revised RBC plan is unsatisfactory, | 3945 |
submission of a revised RBC plan need not be made unless the | 3946 |
superintendent rejects the insurer's challenge following the | 3947 |
hearing required by section 3903.87 of the Revised Code and then | 3948 |
notifies the insurer of this rejection. | 3949 |
(3) An insurer shall submit a revised RBC plan to the | 3950 |
superintendent within forty-five days after receiving notification | 3951 |
from the superintendent that its RBC plan is unsatisfactory, or, | 3952 |
that its challenge to a notification made under division (D)(1) of | 3953 |
this section has been rejected, as applicable. | 3954 |
(E) Notwithstanding division (D) of this section, if the | 3955 |
superintendent notifies an insurer that its RBC plan or revised | 3956 |
RBC plan is unsatisfactory, the superintendent may, at the | 3957 |
superintendent's discretion, but subject to the insurer's right to | 3958 |
a hearing under section 3903.87 of the Revised Code, specify in | 3959 |
the notification that the notification constitutes a regulatory | 3960 |
action level event. | 3961 |
(F) Every domestic insurer that submits an RBC plan or | 3962 |
revised RBC plan to the superintendent shall file a copy of the | 3963 |
RBC plan or revised RBC plan with the insurance regulatory | 3964 |
authority of every state in which the insurer is authorized to do | 3965 |
business upon receiving the insurance regulatory authority's | 3966 |
written request for a copy of the plan, if the state has a | 3967 |
confidentiality law with provisions substantially similar to those | 3968 |
set forth in divisions (A) and (B) of section 3903.88 of the | 3969 |
Revised Code. The insurer shall file the copy in that state no | 3970 |
later than the later of: | 3971 |
(1) Fifteen days after receiving the request for a copy of | 3972 |
the plan; | 3973 |
(2) The date on which the RBC plan or revised RBC plan is | 3974 |
filed pursuant to division (C) or (D) of this section. | 3975 |
Sec. 3906.01. As used in this chapter: | 3976 |
(A) "Annual financial statement" means an insurer's | 3977 |
statutorily required financial statement under the insurer's | 3978 |
respective authorizing chapter of the Revised Code. | 3979 |
(B) "Authorized control level risked-based capital" means | 3980 |
authorized control level RBC as defined in sections 1753.31 and | 3981 |
3903.81 of the Revised Code. | 3982 |
(C) "Cash equivalent" means a short-term, highly liquid | 3983 |
investment that is both readily convertible to known amounts of | 3984 |
cash and so near its maturity that it presents an insignificant | 3985 |
risk of change in value because of changes in interest rates, and | 3986 |
that has an original maturity date, to the entity holding the | 3987 |
investment, of three months or less. | 3988 |
(D) "Covered" means that an insurer owns, or can immediately | 3989 |
acquire through the exercise of options, warrants, or conversion | 3990 |
rights already owned, the underlying interest in order to fulfill | 3991 |
or secure its obligation under the option, cap, or floor it has | 3992 |
written. | 3993 |
(E)(1) "Derivative instrument" means an agreement, option, | 3994 |
instrument, or a series or a combination thereof of either of the | 3995 |
following types: | 3996 |
(a) To make or take delivery of, or assume or relinquish, a | 3997 |
specified amount of one or more underlying interest, or to make a | 3998 |
cash settlement in lieu thereof; | 3999 |
(b) That has a price, performance, value, or cash flow based | 4000 |
primarily upon the actual or expected price, level, performance, | 4001 |
value, or cash flow of one or more underlying interests. | 4002 |
(2) "Derivative instrument" includes options, warrants, caps, | 4003 |
floors, collars, swaps, forwards, futures, and any other | 4004 |
agreements, options, or instruments substantially similar thereto | 4005 |
or any series or combination thereof. | 4006 |
(F) "Derivative transaction" means a transaction involving | 4007 |
the use of one or more derivative instruments. | 4008 |
(G) "Hedging transaction" means a derivative transaction that | 4009 |
is entered into and maintained to reduce either of the following: | 4010 |
(1) The risk of economic loss due to a change in the value, | 4011 |
yield, price, cash flow, or quantity of assets or liabilities that | 4012 |
the insurer has acquired or incurred or anticipates acquiring or | 4013 |
incurring; | 4014 |
(2) The currency exchange rate risk or the degree of exposure | 4015 |
as to assets or liabilities that an insurer has acquired or | 4016 |
incurred or anticipates acquiring or incurring. | 4017 |
(H) "Income generation" means a derivative transaction | 4018 |
involving the writing of covered options, caps, or floors that is | 4019 |
intended to generate income or enhance return. | 4020 |
(I) "Lower-grade investment" means a rated credit instrument | 4021 |
or debt-like preferred stock rated 4, 5, or 6 by the securities | 4022 |
valuation office. | 4023 |
(J) "Medium-grade investment" means a rated credit instrument | 4024 |
or debt-like preferred stock rated 3 by the securities valuation | 4025 |
office. | 4026 |
(K) "Minimum asset requirement" is the requirement that an | 4027 |
insurer maintain assets in an amount equal to the sum of the | 4028 |
insurer's liabilities and its minimum financial security | 4029 |
benchmark, as required by division (A) of section 3906.11 of the | 4030 |
Revised Code. | 4031 |
(L) "Minimum financial security benchmark" is the amount an | 4032 |
insurer is required to have under section 3906.03 of the Revised | 4033 |
Code. | 4034 |
(M) "Replication transaction" means a derivative transaction | 4035 |
that is intended to replicate the performance of one or more | 4036 |
assets that an insurer is authorized to acquire under this | 4037 |
chapter. "Replication transaction" does not include a derivative | 4038 |
transaction that is entered into as a hedging transaction. | 4039 |
(N) "Securities valuation office" means the securities | 4040 |
valuation office of the national association of insurance | 4041 |
commissioners or any successor office. | 4042 |
(O) "Securities valuation office listed mutual fund" means a | 4043 |
money market mutual fund or short-term bond fund that is | 4044 |
registered with the United States securities and exchange | 4045 |
commission under the "Investment Company Act of 1940," 54 Stat. | 4046 |
789, 15 U.S.C. 80a-1 to 80a-64, and that has been determined by | 4047 |
the securities valuation office to be eligible for special reserve | 4048 |
and reporting treatment, rather than as common stock. | 4049 |
(P) "Securities valuation office listed exchange traded fund" | 4050 |
means a bond or preferred stock exchange traded fund that is | 4051 |
registered with the United States securities and exchange | 4052 |
commission under the "Investment Company Act of 1940," 54 Stat. | 4053 |
789, 15 U.S.C. 80a-1 to 80a-64, and that has been rated 1 or 2 by | 4054 |
the securities valuation office and determined by the office to be | 4055 |
eligible for special reserve and reporting treatment, rather than | 4056 |
as common stock. | 4057 |
(Q) "Superintendent" means the superintendent of insurance. | 4058 |
Sec. 3906.02. (A) This chapter, and any rules adopted under | 4059 |
it, apply to entities organized under Chapters 1731., 1751., | 4060 |
3907., 3919., 3921., 3925., 3931., 3939., 3941., and 3953. of the | 4061 |
Revised Code. | 4062 |
(B) An insurer may apply to the superintendent for permission | 4063 |
to make investments under this chapter, in lieu of making | 4064 |
investments under any other section of the Revised Code. | 4065 |
(C) In determining whether to permit an entity to invest | 4066 |
pursuant to this chapter, the superintendent shall consider all of | 4067 |
the following: | 4068 |
(1) The character, reputation, and financial standing of the | 4069 |
officers of the entity; | 4070 |
(2) The character, reputation, and financial condition of the | 4071 |
entity; | 4072 |
(3) The adequacy of the expertise, experience, character, and | 4073 |
reputation of the person or persons who will manage the | 4074 |
investments on behalf of the entity; | 4075 |
(4) The quality of the enterprise risk management program | 4076 |
implemented by the entity to identify, assess, monitor, manage, | 4077 |
and report on its key investment and related risks; | 4078 |
(5) Any other factor the superintendent considers relevant. | 4079 |
(D) Separate accounts established in accordance with section | 4080 |
3907.15 of the Revised Code shall continue to be governed by that | 4081 |
section. | 4082 |
Sec. 3906.03. (A)(1) Unless otherwise established in | 4083 |
accordance with divisions (A)(2) and (3) of this section, the | 4084 |
amount of the minimum financial security benchmark for an insurer | 4085 |
shall be the greatest of the following: | 4086 |
(a) The authorized control level risk-based capital | 4087 |
applicable to the insurer, as defined and set forth by sections | 4088 |
1753.31 to 1753.43 or 3903.81 to 3903.93 of the Revised Code, less | 4089 |
the asset valuation reserve as defined in the risk-based capital | 4090 |
instructions defined in division (M) of section 3903.81 of the | 4091 |
Revised Code; | 4092 |
(b) The minimum capital or minimum surplus required by | 4093 |
statute or rule for maintenance of an insurer's certificate of | 4094 |
authority in this state; | 4095 |
(c) All invested assets of an entity organized under Chapter | 4096 |
3919. or 3939. of the Revised Code; | 4097 |
(d) For title insurers, the quotient of annualized net earned | 4098 |
premiums divided by eight; | 4099 |
(e) For multiple employer welfare arrangements, the greater | 4100 |
of three hundred per cent of the risk-based capital amount | 4101 |
reported in the annual statement or the quotient of annualized net | 4102 |
earned premiums divided by twelve. | 4103 |
(2) The superintendent may, in accordance with division (B) | 4104 |
of this section, establish by order a minimum financial security | 4105 |
benchmark to apply to a specific insurer that exceeds the amount | 4106 |
arrived at under division (A)(1) of this section. | 4107 |
(3) The superintendent may by rule change the minimum | 4108 |
financial security benchmark that is a multiple of authorized | 4109 |
control level risk-based capital, or equivalent risk-based capital | 4110 |
calculation, to apply to any class of insurers provided the amount | 4111 |
established by the rule is not less than the amount arrived at | 4112 |
under division (A)(1) of this section. | 4113 |
(B) The superintendent shall determine the amount of minimum | 4114 |
capital or minimum surplus as specified in division (A)(1)(b) of | 4115 |
this section to determine an insurer's minimum financial security | 4116 |
benchmark. The amount shall be sufficient to provide reasonable | 4117 |
security against contingencies affecting the insurer's financial | 4118 |
position that are not fully covered by reserves or by reinsurance. | 4119 |
(1) In determining this amount, the superintendent shall | 4120 |
consider all of the following risks: | 4121 |
(a) Increases in the frequency or severity of losses beyond | 4122 |
the levels contemplated by the premium rates charged; | 4123 |
(b) Increases in expenses beyond those contemplated by the | 4124 |
premium rates charged; | 4125 |
(c) Decreases in the value of assets, or the return on | 4126 |
invested assets below those planned on; | 4127 |
(d) Changes in economic conditions that would make liquidity | 4128 |
more important than contemplated and would force untimely sale of | 4129 |
assets or prevent timely investments; | 4130 |
(e) Currency devaluation to which the insurer may be subject; | 4131 |
(f) Any other contingencies the superintendent identifies | 4132 |
that may affect the insurer's operations. | 4133 |
(2) In determining the minimum financial security benchmark | 4134 |
under division (A)(2) of this section, the superintendent shall | 4135 |
also take into account the following factors: | 4136 |
(a) The most reliable information available as to the | 4137 |
magnitude of the various risks under division (B)(1) of this | 4138 |
section; | 4139 |
(b) The extent to which the risks in division (B)(1) of this | 4140 |
section are independent of each other or are related, and whether | 4141 |
any dependency is direct or inverse; | 4142 |
(c) The insurer's recent history of profits or losses; | 4143 |
(d) The extent to which the insurer has provided protection | 4144 |
against adverse contingencies in ways other than the establishment | 4145 |
of surplus, including redundancy of premiums, adjustability of | 4146 |
contracts under their terms, investment valuation reserves, | 4147 |
whether voluntary or mandatory, appropriate reinsurance, the use | 4148 |
of conservative actuarial assumptions to provide a margin of | 4149 |
security, reserve adjustments in recognition of previous rate | 4150 |
inadequacies, contingency or catastrophe reserves, diversification | 4151 |
of assets, and underwriting risks; | 4152 |
(e) Independent judgments on the soundness of the insurer's | 4153 |
operations, as evidenced by the ratings of reliable professional | 4154 |
financial reporting services; | 4155 |
(f) Any other factor the superintendent considers relevant. | 4156 |
Sec. 3906.04. (A) Subject to this chapter, an insurer making | 4157 |
investments under this chapter may loan or invest its funds, and | 4158 |
may buy, sell, hold title to, possess, occupy, pledge, convey, | 4159 |
manage, protect, insure, and deal with its investments, property, | 4160 |
and other assets to the same extent as any other person or | 4161 |
corporation under the laws of this state and of the United States. | 4162 |
(B) With respect to all of the insurer's investments, the | 4163 |
board of directors of an insurer making investments under this | 4164 |
chapter shall exercise the judgment and care, under the | 4165 |
circumstances then prevailing, that persons of reasonable | 4166 |
prudence, discretion, and intelligence would exercise in the | 4167 |
management of a like enterprise, not in regard to speculating but | 4168 |
in regard to the permanent disposition of their funds, considering | 4169 |
the probable income as well as the probable safety of their | 4170 |
capital. Investments shall be of sufficient value, liquidity, and | 4171 |
diversity to assure the insurer's ability to meet its outstanding | 4172 |
obligations based on reasonable assumptions as to new business | 4173 |
production for current lines of business. As part of its exercise | 4174 |
of judgment and care, the board of directors shall take into | 4175 |
account the prudence evaluation criteria of division (C) of | 4176 |
section 3906.05 of the Revised Code. The exercise of judgment and | 4177 |
care by the board of directors under this section shall also be | 4178 |
governed by sections 1701.59 and 1702.30 of the Revised Code, as | 4179 |
applicable. | 4180 |
(C) An insurer making investments under this chapter shall | 4181 |
establish and implement internal controls and procedures to assure | 4182 |
compliance with investment policies and procedures to assure that | 4183 |
all of the following are met: | 4184 |
(1) The insurer's investment staff and any consultants used | 4185 |
are reputable and capable. | 4186 |
(2) A periodic evaluation and monitoring process occurs for | 4187 |
assessing the effectiveness of investment policy and strategies. | 4188 |
(3) Management's performance is assessed in meeting the | 4189 |
stated objectives within the investment policy through periodic | 4190 |
presentations to the board of directors. | 4191 |
(4) Appropriate analyses are undertaken on the degree to | 4192 |
which asset cash flows are adequate to meet liability cash flows | 4193 |
under different economic environments. These analyses shall be | 4194 |
conducted at least annually and make specific reference to the | 4195 |
economic conditions considered. | 4196 |
Sec. 3906.05. (A) An insurer making investments under this | 4197 |
chapter shall consider the factors listed in division (C) of this | 4198 |
section along with its business in determining whether an | 4199 |
investment portfolio or investment policy is prudent. | 4200 |
(B) The superintendent shall consider the factors listed in | 4201 |
division (C) of this section prior to making a determination that | 4202 |
an insurer's investment portfolio or investment policy is not | 4203 |
prudent. | 4204 |
(C) Insurers and the superintendent shall consider the | 4205 |
following factors according to divisions (A) and (B) of this | 4206 |
section: | 4207 |
(1) General economic conditions; | 4208 |
(2) The possible effect of inflation or deflation; | 4209 |
(3) The expected tax consequences of investment decisions or | 4210 |
strategies; | 4211 |
(4) The fairness and reasonableness of the terms of an | 4212 |
investment considering its probable risk and reward | 4213 |
characteristics and relationship to the investment portfolio as a | 4214 |
whole; | 4215 |
(5) The extent of the diversification of the insurer's | 4216 |
investments among all of the following: | 4217 |
(a) Individual investments; | 4218 |
(b) Classes of investments; | 4219 |
(c) Industry concentrations; | 4220 |
(d) Dates of maturity; | 4221 |
(e) Geographic areas. | 4222 |
(6) The quality and liquidity of investments in affiliates; | 4223 |
(7) The investment exposure to all of the following risks, | 4224 |
quantified in a manner consistent with the insurer's acceptable | 4225 |
risk level as described in the insurer's written investment | 4226 |
policy, required under division (H) of section 3906.06 of the | 4227 |
Revised Code: | 4228 |
(a) Liquidity; | 4229 |
(b) Credit and default; | 4230 |
(c) Systemic or market; | 4231 |
(d) Interest rate; | 4232 |
(e) Call, prepayment, and extension; | 4233 |
(f) Currency; | 4234 |
(g) Foreign sovereign. | 4235 |
(8) The amount of the insurer's assets, capital and surplus, | 4236 |
premium writings, insurance in force, and other appropriate | 4237 |
characteristics; | 4238 |
(9) The amount and adequacy of the insurer's reported | 4239 |
liabilities; | 4240 |
(10) The relationship of the expected cash flows of the | 4241 |
insurer's assets and liabilities, and the risk of adverse changes | 4242 |
in the insurer's assets and liabilities; | 4243 |
(11) The adequacy of the insurer's capital and surplus to | 4244 |
secure the risks and liabilities of the insurer; | 4245 |
(12) Any other factors relevant to whether an investment is | 4246 |
prudent. | 4247 |
Sec. 3906.06. In acquiring, investing, exchanging, holding, | 4248 |
selling, and managing investments under this chapter, an insurer | 4249 |
shall establish and follow a written investment policy that shall | 4250 |
be reviewed and approved by the insurer's board of directors on at | 4251 |
least an annual basis. The content and format of an insurer's | 4252 |
investment policy are at the insurer's discretion, but shall | 4253 |
include written guidelines appropriate to the insurer's business | 4254 |
with regard to all of the following: | 4255 |
(A) The general investment policy of the insurer, containing | 4256 |
policies, procedures, and controls covering all aspects of the | 4257 |
investing function; | 4258 |
(B) Quantified goals and objectives regarding the composition | 4259 |
of classes of investments, including maximum internal limits; | 4260 |
(C) Periodic evaluations of the investment portfolio as to | 4261 |
its risk and reward characteristics; | 4262 |
(D) Professional standards for the individuals making | 4263 |
day-to-day investment decisions to assure that investments are | 4264 |
managed in an ethical, prudent, and capable manner; | 4265 |
(E) The types of investments that are allowed and that are | 4266 |
prohibited, based on their risk and reward characteristics and the | 4267 |
insurer's level of experience with the investments; | 4268 |
(F) The relationship of classes of investments to the | 4269 |
insurer's insurance products and liabilities; | 4270 |
(G) The manner in which the insurer intends to implement | 4271 |
section 3906.05 of the Revised Code; | 4272 |
(H) The level of risk, based on quantitative measures, | 4273 |
appropriate for the insurer given the level of capitalization and | 4274 |
expertise available to the insurer. | 4275 |
Sec. 3906.07. All of the following classes of investments | 4276 |
may be counted for the purposes specified in section 3906.11 of | 4277 |
the Revised Code, whether they are made directly or as a | 4278 |
participant in a partnership, joint venture, or limited liability | 4279 |
company: | 4280 |
(A) Cash, and cash equivalents, in the direct possession of | 4281 |
the insurer or on deposit with a financial institution regulated | 4282 |
by any federal or state agency of the United States; | 4283 |
(B) Bonds, debt-like preferred stock, and other evidences of | 4284 |
indebtedness of governmental units in the United States or Canada, | 4285 |
or the instrumentalities of the governmental units, or private | 4286 |
business entities domiciled in the United States or Canada, | 4287 |
including asset-backed securities, securities valuation office | 4288 |
listed mutual funds, and securities valuation office listed | 4289 |
exchange traded funds; | 4290 |
(C) Loans with a loan to value ratio of no greater than | 4291 |
eighty per cent that are secured by mortgages, trust deeds, or | 4292 |
other security interests in real property located in the United | 4293 |
States or Canada, or secured by insurance against default issued | 4294 |
by a government insurance corporation of the United States or | 4295 |
Canada or by an insurer authorized to do business in this state; | 4296 |
(D) Unaffiliated common stock, or equity-like preferred | 4297 |
stock, or equity interests in any business entity organized under | 4298 |
the United States, any state thereof, the District of Columbia, | 4299 |
the Commonwealth of Puerto Rico, Canada, or any province or | 4300 |
territory of Canada, or shares of mutual funds or exchange traded | 4301 |
funds registered with the securities and exchange commission of | 4302 |
the United States under the "Investment Company Act of 1940," 54 | 4303 |
Stat. 789, 15 U.S.C. 80a-1 to 80a-64, other than securities | 4304 |
valuation office listed mutual funds and securities valuation | 4305 |
office listed exchange traded funds; | 4306 |
(E) Real property necessary for the convenient transaction of | 4307 |
the insurer's business; | 4308 |
(F) Real property, together with the fixtures, furniture, | 4309 |
furnishings, and equipment pertaining thereto in the United States | 4310 |
or Canada, which produces, or after suitable improvement can | 4311 |
reasonably be expected to produce, substantial income; | 4312 |
(G) Loans, securities, or other investments of the types | 4313 |
described in divisions (A) to (F) of this section in countries | 4314 |
other than the United States and Canada; | 4315 |
(H) Bonds or other evidences of indebtedness of international | 4316 |
development organizations of which the United States is a member; | 4317 |
(I) Loans upon the security of the insurer's own policies in | 4318 |
amounts that are adequately secured by the policies and that in no | 4319 |
case exceed the surrender values of the policies; | 4320 |
(J) Subsidiary or affiliate equity investments, including | 4321 |
common stock, equity-like preferred stock, limited liability | 4322 |
partnerships, or limited liability membership interests, of | 4323 |
entities that are engaged exclusively in insurance, finance, or | 4324 |
investments, and investment management companies that are | 4325 |
registered with the securities and exchange commission under the | 4326 |
"Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a-1 to | 4327 |
80a-64, as amended; | 4328 |
(K) Investments not otherwise permitted by this section, not | 4329 |
specifically prohibited by statute, to which both of the following | 4330 |
apply: | 4331 |
(1) The assets do not exceed five per cent of the first five | 4332 |
hundred million dollars of the insurer's admitted assets plus ten | 4333 |
per cent of the insurer's admitted assets exceeding five hundred | 4334 |
million dollars. | 4335 |
(2) The assets qualified to meet the minimum asset | 4336 |
requirement at the time they were acquired. | 4337 |
Sec. 3906.08. (A) For the purposes of determining an | 4338 |
insurer's minimum asset requirement under section 3906.11 of the | 4339 |
Revised Code, the following limitations on classes of investments | 4340 |
shall apply: | 4341 |
(1) For investments authorized by division (B) of section | 4342 |
3906.07 of the Revised Code and investments authorized by division | 4343 |
(G) of section 3906.07 of the Revised Code that are of the types | 4344 |
described in division (B) of section 3906.07 of the Revised Code | 4345 |
the following limitations shall apply: | 4346 |
(a) The aggregate amount of medium- and lower-grade | 4347 |
investments shall be not more than twenty per cent of an insurer's | 4348 |
admitted assets. | 4349 |
(b) The aggregate amount of lower-grade investments shall be | 4350 |
not more than ten per cent of an insurer's admitted assets. | 4351 |
(c) The aggregate amount of investments rated 5 or 6 by the | 4352 |
securities valuation office shall be not more than five per cent | 4353 |
of the insurer's admitted assets. | 4354 |
(d) The aggregate amount of investments rated 6 by the | 4355 |
securities valuation office shall be not more than one per cent of | 4356 |
an insurer's admitted assets. | 4357 |
(e) The aggregate amount of medium- and lower-grade | 4358 |
investments that receive as cash income less than the yield for | 4359 |
treasury issues with a comparative average life shall be not more | 4360 |
than one per cent of an insurer's admitted assets. | 4361 |
(2) Investments authorized by division (C) of section 3906.07 | 4362 |
of the Revised Code shall be not more than forty-five per cent of | 4363 |
an insurer's admitted assets in the case of life insurers and not | 4364 |
more than twenty-five per cent of an insurer's admitted assets in | 4365 |
the case of insurers that are not life insurers. | 4366 |
(3) Investments authorized by division (D) of section 3906.07 | 4367 |
of the Revised Code shall be not more than twenty per cent of an | 4368 |
insurer's admitted assets in the case of life insurers and not | 4369 |
more than twenty-five per cent of an insurer's admitted assets in | 4370 |
the case of insurers that are not life insurers. | 4371 |
(4) Investments authorized by division (E) of section 3906.07 | 4372 |
of the Revised Code shall be not more than ten per cent of an | 4373 |
insurer's admitted assets. | 4374 |
(5) Investments authorized by division (F) of section 3906.07 | 4375 |
of the Revised Code shall be not more than ten per cent of an | 4376 |
insurer's admitted assets. | 4377 |
(6) Investments authorized by division (G) of section 3906.07 | 4378 |
of the Revised Code shall be not more than twenty per cent of an | 4379 |
insurer's admitted assets. | 4380 |
(7) Investments authorized by division (H) of section 3906.07 | 4381 |
of the Revised Code shall be not more than two per cent of an | 4382 |
insurer's admitted assets. | 4383 |
(8) Investments authorized by division (J) of section 3906.07 | 4384 |
of the Revised Code shall be not more than ten per cent of an | 4385 |
insurer's admitted assets in the case of life insurers and not | 4386 |
more than three per cent of an insurer's admitted assets in the | 4387 |
case of insurers that are not life insurers. An insurer may exceed | 4388 |
the limits described in division (A)(8) of this section with | 4389 |
investments in a wholly owned domestic insurer, or in a | 4390 |
corporation, or similar business entity organized under the laws | 4391 |
of the United States, any state thereof, or any other jurisdiction | 4392 |
approved by the superintendent, that is formed and maintained to | 4393 |
acquire or hold shares of an insurer, with the prior written | 4394 |
consent of the superintendent. | 4395 |
(B)(1) For purposes of determining compliance with section | 4396 |
3906.11 of the Revised Code, securities issued by a single entity | 4397 |
and its affiliates, other than the government of the United | 4398 |
States, or agencies whose securities are backed by the full faith | 4399 |
and credit of the United States, and subsidiaries authorized under | 4400 |
division (J) of section 3906.07 of the Revised Code, shall be not | 4401 |
more than five per cent of an insurer's admitted assets in the | 4402 |
case of life insurers and shall be not more than five per cent of | 4403 |
an insurer's admitted assets in the case of insurers that are | 4404 |
non-life insurers. | 4405 |
(2) Notwithstanding division (B)(1) of this section, | 4406 |
investments in the voting securities of a depository institution, | 4407 |
or any company that controls a depository institution, shall not | 4408 |
exceed five per cent of an insurer's admitted assets. | 4409 |
(C) For purposes of determining compliance with this section, | 4410 |
the admitted portion of assets of subsidiaries of an insurer | 4411 |
invested in under division (J) of section 3906.07 of the Revised | 4412 |
Code shall be deemed to be owned directly by the insurer and any | 4413 |
other investors in proportion to the market value of their | 4414 |
interest in the subsidiaries. If interest in the subsidiary has no | 4415 |
market value, then the asset allocation proportion shall be | 4416 |
determined by the reasonable value of interest in the subsidiary | 4417 |
as determined under the national association of insurance | 4418 |
commissioners' accounting practices and procedures manual. | 4419 |
(D) If the superintendent considers it necessary to get a | 4420 |
proper evaluation of the investment portfolio of an insurer, the | 4421 |
superintendent may require that investments in mutual funds, | 4422 |
exchange traded funds, pooled investment vehicles, or other | 4423 |
investment companies be treated for purposes of this chapter as if | 4424 |
the investor owned directly its proportional share of the assets | 4425 |
owned by the mutual fund, exchange traded fund, pooled investment | 4426 |
vehicle, or investment company. | 4427 |
(E) Unless otherwise specified in this chapter, an insurer's | 4428 |
investment limitations shall be computed using the insurer's | 4429 |
general account admitted assets, capital, or surplus as reported | 4430 |
in the insurer's most recent annual financial statement required | 4431 |
to be filed with the superintendent. | 4432 |
Sec. 3906.09. An insurer investing under this chapter that | 4433 |
is doing business that requires the insurer to make payment in | 4434 |
different currencies shall have investments in securities in each | 4435 |
of these currencies in an amount that, independent of all other | 4436 |
investments, meets the requirements of this chapter, as applied | 4437 |
separately to the insurer's obligations in each currency. The | 4438 |
superintendent may, by order, exempt an insurer, or, by rule, a | 4439 |
class of insurers, from this requirement if the obligations in | 4440 |
other currencies are small enough that no significant problem for | 4441 |
financial solidity would be created by substantial fluctuations in | 4442 |
relative currency values. | 4443 |
Sec. 3906.10. (A) An insurer investing under this chapter | 4444 |
shall not invest in investments that are prohibited for an insurer | 4445 |
by statute or rules of this state. | 4446 |
(B) An insurer investing under this chapter shall not invest | 4447 |
in a partnership as a general partner. | 4448 |
(C) The superintendent shall set a reasonable amount of time, | 4449 |
not to exceed five years, for disposal of a prohibited investment | 4450 |
in hardship cases if the insurer demonstrates that the investment | 4451 |
was legal when made or the result of a mistake made in good faith, | 4452 |
or if the superintendent determines that the sale of the asset | 4453 |
would be contrary to the interests of insureds, creditors, or the | 4454 |
general public. | 4455 |
(D) Violation of division (A) of this section may be grounds | 4456 |
for regulatory action pursuant to divisions (A) and (I) of section | 4457 |
3903.12 of the Revised Code. | 4458 |
Sec. 3906.11. (A) An insurer investing under this chapter | 4459 |
shall maintain assets in an amount equivalent to the sum of its | 4460 |
liabilities and its minimum financial security benchmark at all | 4461 |
times. | 4462 |
(B) Assets invested under this chapter may be counted toward | 4463 |
satisfaction of the minimum asset requirement only so far as they | 4464 |
are invested in compliance with this chapter and any applicable | 4465 |
rules adopted, or orders issued, by the superintendent pursuant to | 4466 |
this chapter. | 4467 |
(C) The amount of admitted assets used to calculate the | 4468 |
minimum asset requirement shall be reduced by the amount of the | 4469 |
liability recorded on an insurer's statutory balance sheet for all | 4470 |
of the following: | 4471 |
(1) The return of acceptable collateral received in a reverse | 4472 |
repurchase transaction or a securities lending transaction; | 4473 |
(2) Cash received in a dollar roll transaction; | 4474 |
(3) Other amounts reported as borrowed money. | 4475 |
(D) Assets other than invested assets may be counted toward | 4476 |
satisfaction of the minimum asset requirement at admitted annual | 4477 |
financial statement value. However, loans to officers or directors | 4478 |
or their immediate families shall not be counted toward the | 4479 |
satisfaction of the minimum asset requirement. | 4480 |
(E) An investment held as an admitted asset by an insurer on | 4481 |
the effective date of this section that qualified under the | 4482 |
applicable insurance investment law of this state shall remain | 4483 |
qualified as an admitted asset under this chapter. | 4484 |
(F) Notwithstanding any provision of this chapter to the | 4485 |
contrary, an asset acquired in the bona fide enforcement of | 4486 |
creditors' rights or in bona fide workouts or settlements of | 4487 |
disputed claims may be counted toward the minimum asset | 4488 |
requirement for five years if the asset is real property and three | 4489 |
years if the asset is not real property. | 4490 |
(G) The superintendent may determine an insurer to be | 4491 |
financially hazardous under section 3903.09 of the Revised Code if | 4492 |
either of the following apply: | 4493 |
(1) The insurer does not own the amount of assets needed to | 4494 |
meet its minimum asset requirement. | 4495 |
(2) The insurer is unable to apply the amount of assets | 4496 |
needed to meet its minimum asset requirement toward compliance | 4497 |
with this chapter. | 4498 |
Sec. 3906.12. (A) Prior to an insurer entering into | 4499 |
derivative transactions, the board of directors of the insurer | 4500 |
investing under this chapter shall approve a derivative use plan. | 4501 |
(B) An insurer shall notify the superintendent of insurance | 4502 |
in writing within three days after identifying either of the | 4503 |
following: | 4504 |
(1) Any event or occurrence related to an insurer's | 4505 |
derivatives use that may lead to a material change to the | 4506 |
insurer's policyholder surplus; | 4507 |
(2) Any event or occurrence related to an insurer's | 4508 |
derivatives use that, with the passage of time, may lead to a | 4509 |
material change to the insurer's policyholder surplus. | 4510 |
(C) Prior to entering into derivative transactions, an | 4511 |
insurer shall file with the superintendent a copy of its | 4512 |
derivative use plan and internal controls, for informational | 4513 |
purposes. The insurer shall keep current the copy of its | 4514 |
derivative use plan and internal controls filed with the | 4515 |
superintendent. The insurer shall not enter into derivative | 4516 |
transactions until thirty calendar days after the date on which | 4517 |
the derivative use plan and internal controls is filed with the | 4518 |
superintendent. This thirty-calendar-day period is to begin on the | 4519 |
date that the superintendent receives the derivative use plan and | 4520 |
internal controls. | 4521 |
(D) The superintendent may adopt rules prescribing the form | 4522 |
and content of derivative use plans, as well as any internal | 4523 |
controls the superintendent considers necessary. | 4524 |
(E) An insurer that engages in hedging transactions or | 4525 |
replication transactions shall do both of the following: | 4526 |
(1) Maintain its position in any outstanding derivative | 4527 |
instrument used as part of a hedging transaction or replication | 4528 |
transaction for as long as the hedging transaction or replication | 4529 |
transaction continues to be effective; | 4530 |
(2) Demonstrate to the superintendent, upon request, that any | 4531 |
derivative transaction entered into and involving hedging | 4532 |
transaction or replication transaction is an effective hedging | 4533 |
transaction or replication transaction. The insurer must be able | 4534 |
to demonstrate this at the time the derivative transaction is | 4535 |
entered into, and for as long as the transaction continues to be | 4536 |
in place. | 4537 |
(F) An insurer may not invest, or use, a derivative | 4538 |
instrument for any purpose other than a hedging transaction, | 4539 |
income generation, or replication. | 4540 |
(G) All documents provided to the superintendent under this | 4541 |
section shall be deemed trade secrets and shall be provided with | 4542 |
trade secret protection. Such documents shall also be considered | 4543 |
work papers of the superintendent that are subject to section | 4544 |
3901.48 of the Revised Code and are confidential and privileged | 4545 |
and shall not be considered a public record, as defined in section | 4546 |
149.43 of the Revised Code. The original documents and any copies | 4547 |
of them shall not be subject to subpoena and shall not be made | 4548 |
public by the superintendent or any other person, except as | 4549 |
otherwise provided in section 3901.48 of the Revised Code. | 4550 |
Sec. 3906.13. (A) If the superintendent determines that an | 4551 |
insurer's investment practices do not meet the requirements of | 4552 |
this chapter, the superintendent may, after notification to the | 4553 |
insurer of the superintendent's findings, order the insurer to | 4554 |
make changes necessary to comply with this chapter. | 4555 |
(B) If the superintendent determines that the financial | 4556 |
condition, current investment practice, or current investment plan | 4557 |
of an insurer are or may endanger the interests of insureds, | 4558 |
creditors, or the general public, the superintendent may impose | 4559 |
reasonable additional restrictions upon the admissibility or | 4560 |
valuation of investments and may impose restrictions on the | 4561 |
investment practices of the insurer, including prohibiting an | 4562 |
investment or requiring the divestment of an investment. | 4563 |
(C) The superintendent may count toward satisfaction of the | 4564 |
minimum asset requirement any assets that an insurer is required | 4565 |
to invest under the laws of a country other than the United States | 4566 |
as a condition for doing business in that country if the | 4567 |
superintendent finds that counting them does not endanger the | 4568 |
interests of the insurer's insureds or creditors, or the general | 4569 |
public. | 4570 |
(D) If the superintendent is satisfied by evidence of the | 4571 |
solidity of an insurer and the competence of management and its | 4572 |
investment advisors, the superintendent, after a hearing, may, by | 4573 |
order, adjust the class limitations prescribed in section 3906.08 | 4574 |
of the Revised Code for that insurer, to the extent that the | 4575 |
superintendent is satisfied that the interests of the insurer's | 4576 |
insureds and creditors and the general public are sufficiently | 4577 |
protected. Such adjustments, in aggregate, shall be limited to an | 4578 |
amount equal to ten per cent of the insurer's liabilities. | 4579 |
Sec. 3906.14. (A) An insurer subject to an order of the | 4580 |
superintendent under section 3906.03 or 3906.13 of the Revised | 4581 |
Code may request a hearing within thirty days of the date of the | 4582 |
order. The hearing shall be held in compliance with Chapter 119. | 4583 |
of the Revised Code. | 4584 |
(B) The superintendent shall hold hearings required under | 4585 |
this section privately unless the insurer requests a public | 4586 |
hearing, in which case the hearing shall be public. | 4587 |
Sec. 3906.15. (A) The superintendent may, in accordance with | 4588 |
section 119.03 of the Revised Code, adopt rules interpreting and | 4589 |
implementing the provisions of this chapter. | 4590 |
(B) The superintendent may, in accordance with section 119.03 | 4591 |
of the Revised Code, adopt one or more of the following | 4592 |
restrictions on investments in rules: | 4593 |
(1) The superintendent may prescribe for defined classes of | 4594 |
insurers special procedural requirements, including special | 4595 |
reports and prior approval on investments, as well as disapproval | 4596 |
of investments subsequent to either. | 4597 |
(2) The superintendent may prescribe substantive restrictions | 4598 |
on investments of defined classes of insurers, including all of | 4599 |
the following: | 4600 |
(a) Specification of classes of assets that may not be | 4601 |
counted toward satisfaction of the minimum asset requirement even | 4602 |
though the assets may be counted for unrestricted insurers; | 4603 |
(b) Specification of maximum amounts of assets that an | 4604 |
insurer may invest in a single investment, issue, or class or | 4605 |
group of classes of investments that shall be expressed as | 4606 |
percentages of total assets, capital, surplus, legal reserves, or | 4607 |
other variables; | 4608 |
(c) Prescription of qualitative tests for investments and | 4609 |
conditions under which investments may be made, including | 4610 |
requirements of specified ratings from investment advisory | 4611 |
services, listing on specified stock exchanges, collateral, | 4612 |
marketability, currency matching, and the financial and legal | 4613 |
status of the issuer and its earnings capacity. | 4614 |
(C) If the superintendent is satisfied by evidence of the | 4615 |
solidity of an insurer and the competence of management and its | 4616 |
investment advisors, the superintendent, after a hearing, may by | 4617 |
order grant an exemption to that insurer from any restriction made | 4618 |
under division (B) of this section to the extent that the | 4619 |
superintendent is satisfied that the interests of the insurer's | 4620 |
insureds and creditors, as well as the general public, are | 4621 |
protected. | 4622 |
Sec. 3907.14. The capital, surplus, and all accumulations of | 4623 |
every domestic life insurance company shall be invested as | 4624 |
follows: | 4625 |
(A) A domestic company may acquire, hold, and convey real | 4626 |
estate: | 4627 |
(1) Which has been acquired or is acquired for its principal | 4628 |
offices, or which is used in connection therewith, provided that | 4629 |
it shall not invest more than five per cent of its admitted assets | 4630 |
on the preceding thirty-first day of December in such real estate; | 4631 |
(2) Which has been mortgaged to it in good faith by way of | 4632 |
security for loans previously contracted or for money due; | 4633 |
(3) Which has been conveyed to it in satisfaction of debts | 4634 |
previously contracted in the course of its dealings, or which it | 4635 |
may receive in or on account of an exchange for real estate | 4636 |
acquired in its operations; | 4637 |
(4) Which it has purchased at sales under mortgages and on | 4638 |
any legal process in connection with its investments or under | 4639 |
decrees obtained or made for such debts; | 4640 |
(5) Which is acquired, owned, or held for the purpose of | 4641 |
developing, improving, or otherwise utilizing such real estate for | 4642 |
the production of income, without restriction or limitation as to | 4643 |
time, and may acquire, lease, hold, and manage personal property | 4644 |
used in connection therewith. No investments in real estate to be | 4645 |
used primarily for recreational, agricultural, or mining purposes | 4646 |
shall be made under authority of division (A)(5) of this section | 4647 |
and except for investments authorized under divisions (A)(1), (2), | 4648 |
(3), and (4) of this section, no domestic life insurance company | 4649 |
shall invest in real estate under divisions (A)(5) and (R) of this | 4650 |
section a sum exceeding in the aggregate ten per cent of its | 4651 |
admitted assets on the preceding thirty-first day of December. | 4652 |
All real estate specified in divisions (A)(3) and (4) of this | 4653 |
section, which is not necessary for its accommodation in the | 4654 |
convenient transaction of its business, shall be sold by the | 4655 |
company and disposed of within five years after it has acquired | 4656 |
the title to such real estate or within five years after such real | 4657 |
estate has ceased to be necessary for the accommodation of its | 4658 |
business, unless the company procures the certificate of the | 4659 |
superintendent of insurance that its interests will suffer | 4660 |
materially by a forced sale of the real estate, in which event the | 4661 |
time for the sale may be extended to such time as the | 4662 |
superintendent directs in such certificate. | 4663 |
(B) A domestic company may acquire, hold, and convey tangible | 4664 |
personal property or interests therein for the production of | 4665 |
income, provided no domestic company shall invest in excess of two | 4666 |
per cent of its admitted assets as of the preceding thirty-first | 4667 |
day of December under this division. | 4668 |
(C) In loans and liens upon the security of its own policies, | 4669 |
not exceeding the reserve or present value of the policies, | 4670 |
computed according to any standard authorized by law or according | 4671 |
to such higher standard as the company has adopted and maintains | 4672 |
on the policy, the reserve being the amount of debts of the life | 4673 |
insurance company by reason of its outstanding policies in gross, | 4674 |
which may be so treated in the returns for taxation made by it; | 4675 |
(D) In bankers' acceptances and bills of exchange of the | 4676 |
kinds and maturities made eligible by law for rediscount with | 4677 |
federal reserve banks, provided that such acceptances and bills of | 4678 |
exchange are accepted by a bank or trust company incorporated | 4679 |
under the laws of the United States or of this state or any other | 4680 |
bank or trust company which is a member of the federal reserve | 4681 |
system; | 4682 |
(E) In equipment trust obligations or certificates, security | 4683 |
agreements, or other evidences of indebtedness entered into | 4684 |
directly or guaranteed by any company operating wholly or partly | 4685 |
within the United States or Canada, provided that the debt | 4686 |
obligation is secured by a first lien on tangible personal | 4687 |
property which is purchased or secured for payment thereof and the | 4688 |
debt obligation is repayable within twenty years from the date of | 4689 |
issue in annual, semiannual, or more frequent installments | 4690 |
beginning not later than the first year after such date; | 4691 |
(F) In bonds issued by or for federal land banks and any | 4692 |
debentures issued by or for federal intermediate credit banks | 4693 |
under the "Federal Farm Loan Act of 1916," 39 Stat. 360, 12 | 4694 |
U.S.C.A. 641 as amended; any debentures issued by or for banks for | 4695 |
cooperatives under the "Farm Credit Act of 1933," 48 Stat. 257, 12 | 4696 |
U.S.C.A. 131 as amended; | 4697 |
(G) In bonds issued under the "Home Owners' Loan Act of | 4698 |
1933," 48 Stat. 128, 12 U.S.C.A. 1461; | 4699 |
(H) In notes, bonds, debentures, or other such obligations | 4700 |
issued by the federal housing administrator; | 4701 |
(I)(1)(a) In bonds or other evidences of indebtedness, not in | 4702 |
default as to principal or interest, which are valid obligations | 4703 |
issued, assumed or guaranteed by the United States, by any state | 4704 |
thereof, by the Commonwealth of Puerto Rico, by any territory or | 4705 |
insular possession of the United States, or by the District of | 4706 |
Columbia, or which are valid obligations issued, assumed, or | 4707 |
guaranteed by any county, municipal corporation, district, or | 4708 |
political subdivision, or by any civil division or public | 4709 |
instrumentality of such governmental units, if by statutory or | 4710 |
other legal requirements such obligations are payable, as to both | 4711 |
principal and interest, from taxes levied upon all taxable | 4712 |
property within the jurisdiction of such governmental unit; | 4713 |
(b) In bonds or other obligations issued by or for account of | 4714 |
any such governmental unit having a population of five thousand or | 4715 |
more by the latest official federal or state census, which are | 4716 |
payable as to both principal and interest from revenues or | 4717 |
earnings from the whole or any part of a publicly owned utility | 4718 |
supplying water, gas, sewage disposal facility, or electricity, or | 4719 |
any or all of them, provided that by statute or other applicable | 4720 |
legal requirements, rates from the service or operation of such | 4721 |
utility must be fixed, maintained, and collected at all times so | 4722 |
as to produce sufficient revenues or earnings to pay both | 4723 |
principal and interest of such bonds or obligations as they become | 4724 |
due; | 4725 |
(c) In any bonds or obligations payable from and secured by | 4726 |
revenues of the United States, the Commonwealth of Puerto Rico, or | 4727 |
any state or instrumentality of any of them, or of the District of | 4728 |
Columbia or of any commission, board, or other instrumentality of | 4729 |
one or more of them, provided there is a specific pledge of | 4730 |
revenues, and provided that there is adequate provision for | 4731 |
payment of interest prior to completion of construction and that | 4732 |
rates, fees, tolls, or charges fixed are, after completion of | 4733 |
construction, sufficient to pay all expenses of operation and | 4734 |
maintenance and the principal and interest when due. | 4735 |
(2) In legally authorized and executed bonds, notes, | 4736 |
warrants, and securities which are the direct obligation of or are | 4737 |
guaranteed by Canada, or which are the direct obligation of or are | 4738 |
guaranteed as to both principal and interest by any province of | 4739 |
Canada, or which are the direct obligation of or are guaranteed as | 4740 |
to both principal and interest by any municipality of Canada | 4741 |
having a population of fifty thousand or more by the latest | 4742 |
official census, and which are not in default as to principal or | 4743 |
interest; | 4744 |
(3) In bonds or other evidence of indebtedness, not in | 4745 |
default as to principal or interest, which are valid obligations | 4746 |
issued, assumed, or guaranteed by the United States, by any state | 4747 |
thereof, the Commonwealth of Puerto Rico, or by the District of | 4748 |
Columbia, if by statutory or other legal requirements such | 4749 |
obligations are payable, as to both principal and interest, from | 4750 |
selective taxes levied by such governmental unit. | 4751 |
(J)(1) In mortgage bonds which are the direct obligation of a | 4752 |
railroad, and which are the first lien on a substantial portion of | 4753 |
its property, situated wholly in the United States or partly in | 4754 |
the United States and partly in Canada, the average net yearly | 4755 |
earnings of which, after deducting proper charges for maintenance | 4756 |
of way and equipment, for the five fiscal years preceding such | 4757 |
investments, have been at least one and one-half times the average | 4758 |
yearly interest for the same period on its mortgages, bonds, and | 4759 |
funded debts, and in the junior mortgage bond issues of such | 4760 |
railroad corporations of the same character and under the same | 4761 |
conditions where the average net yearly earnings for the five | 4762 |
fiscal years preceding such investment, after deducting proper | 4763 |
charges for maintenance of way and equipment, have been at least | 4764 |
three times the average yearly interest charges on such issues and | 4765 |
all prior liens; or in the mortgage bonds of any incorporated | 4766 |
railroad company which have been assumed or guaranteed, both as to | 4767 |
principal and interest, by any incorporated railroad company whose | 4768 |
bonds constitute a legal investment under division (J)(1) of this | 4769 |
section. In applying the earnings test to any issuing, assuming, | 4770 |
or guaranteeing company, whether or not in legal existence during | 4771 |
the whole of such five years next preceding the date of investment | 4772 |
by such insurer, which has at any time during such five-year | 4773 |
period acquired the assets of any other company by purchase, | 4774 |
merger, consolidation, or otherwise, substantially as an entirety, | 4775 |
or has been reorganized pursuant to the bankruptcy law, the | 4776 |
earnings of such other predecessor or constituent companies, or of | 4777 |
the company so reorganized, available for interest for such | 4778 |
portion of such period that has preceded such acquisition, or such | 4779 |
reorganization, may be included in the earnings of such issuing, | 4780 |
assuming, or guaranteeing company for such portion of such period | 4781 |
as is determined in accordance with adjusted or pro forma | 4782 |
consolidated earnings statements covering such portion of such | 4783 |
period. In such cases the requirements as to earnings shall be | 4784 |
based upon the mortgages, bonds, and funded debts as they exist | 4785 |
immediately after such acquisitions or such reorganizations. | 4786 |
(2) In mortgage bonds or other interest-bearing obligations | 4787 |
of terminal companies organized under the laws of the United | 4788 |
States or any state thereof, provided such bonds or obligations | 4789 |
have been assumed or guaranteed jointly or severally by two or | 4790 |
more railroad corporations whose bonds constitute legal | 4791 |
investments under division (J)(1) of this section; | 4792 |
(3) In loans to veterans guaranteed in whole or in part by | 4793 |
the United States pursuant to Title III of the "Servicemen's | 4794 |
Readjustment Act of 1944," 58 Stat. 284, 38 U.S.C.A. 693, as | 4795 |
amended, provided such guaranteed loans are liens upon real | 4796 |
estate; | 4797 |
(4) In mortgage bonds which are the direct obligation of and | 4798 |
first lien upon the property of a corporation engaged directly and | 4799 |
primarily in the production and sale of, or in the purchase and | 4800 |
sale of electricity or gas, or in the operation of telephone or | 4801 |
telegraph systems or waterworks, or in some combination of them, | 4802 |
and situated wholly in the United States, or the Commonwealth of | 4803 |
Puerto Rico, or partly in the United States and partly in Canada, | 4804 |
the average net yearly earnings of which, after deducting proper | 4805 |
charges for replacements, depreciation, and obsolescence, for the | 4806 |
five fiscal years preceding such investment, have been at least | 4807 |
one and one-half times the average yearly interest for the same | 4808 |
period on its mortgages, bonds, and funded debts; | 4809 |
(5) Any such corporation, or any of its predecessors, | 4810 |
constituent, or successor corporations, must have been in business | 4811 |
not less than ten years prior to the date of the purchase of such | 4812 |
bonds, and must not have defaulted on the interest or principal of | 4813 |
any of its bonds or funded debts outstanding during the five years | 4814 |
immediately preceding the date of purchase, provided that division | 4815 |
(J)(5) of this section does not preclude investments in mortgage | 4816 |
bonds of railroads reorganized through purchase of assets, merger, | 4817 |
consolidation, bankruptcy proceedings, or otherwise if such bonds | 4818 |
are eligible for investment under division (J)(1) of this section; | 4819 |
(6) No investment shall be made under division (J)(1), (2), | 4820 |
(4), or (5) of this section if such railroad or other utility | 4821 |
corporation and its business, and its issue of bonds, funded | 4822 |
debts, and stocks are not under the supervision and control of an | 4823 |
authorized state or federal official or commission, provided that | 4824 |
division (J)(6) of this section does not apply to the mortgage | 4825 |
bonds or other interest-bearing obligations of companies engaged | 4826 |
in the operation of telephone or telegraph systems. | 4827 |
(K)(1) In bonds or notes secured by mortgages or deeds of | 4828 |
trust which are a first lien upon unencumbered fee simple real | 4829 |
estate in any state, the Commonwealth of Puerto Rico, the District | 4830 |
of Columbia, or Canada, provided the amount loaned does not exceed | 4831 |
eighty per cent of the actual market value of such property. | 4832 |
The actual market value of any such property shall be shown | 4833 |
by a valuation and appraisement in writing by a qualified land | 4834 |
appraiser. | 4835 |
In the event the amount loaned under division (K)(1) of this | 4836 |
section exceeds eighty per cent of the actual market value of the | 4837 |
land, the structures on the land must be insured by an authorized | 4838 |
fire insurance company or covered by other comparable | 4839 |
indemnification, and the policies or indemnifications shall be | 4840 |
payable or assigned to the mortgagee or to a trustee in its behalf | 4841 |
and shall be held by the mortgagee or an agent of the mortgagee or | 4842 |
by such trustee; or in lieu of holding such policies or | 4843 |
indemnifications, the mortgagee may purchase a policy or policies | 4844 |
of mortgage protection insurance, payable to the mortgagee or a | 4845 |
trustee in its behalf, insuring the mortgagee against loss | 4846 |
resulting from the failure of the mortgagor to acquire and | 4847 |
maintain, from such an authorized fire insurance company or other | 4848 |
comparable source, insurance or indemnification. | 4849 |
(2) In bonds or notes secured by mortgages insured by the | 4850 |
federal housing administrator; | 4851 |
(3) In bonds or notes secured by mortgages or deeds of trust | 4852 |
which are a first lien on leasehold estates in wholly or partly | 4853 |
improved real property, unencumbered, except rentals accruing from | 4854 |
the property to the owner of the fee, provided that any loan | 4855 |
secured by a leasehold estate must provide for amortization by | 4856 |
repayment of principal at least once in each year in amounts | 4857 |
sufficient to repay the loan within a period of four-fifths of the | 4858 |
unexpired term of the leasehold but within a period of not more | 4859 |
than thirty years, and further provided that the amount loaned on | 4860 |
the leasehold estate does not exceed seventy-five per cent of | 4861 |
total market value of the leasehold estate determined by | 4862 |
appraisements in writing made under oath by two real estate | 4863 |
owners, residents of the county or local district in which the | 4864 |
real estate is located, or by a qualified land appraiser; if the | 4865 |
amount loaned exceeds seventy-five per cent of the value of that | 4866 |
portion of the leasehold estate represented by the value of the | 4867 |
land, exclusive of improvements on the land, such improvements | 4868 |
shall be insured against fire for the benefit of the mortgagee in | 4869 |
an amount not less than the difference between seventy-five per | 4870 |
cent of the value of such land, exclusive of buildings, and the | 4871 |
amount loaned; the policies for such amount shall be payable to | 4872 |
and held by the mortgagee or a trustee named in the lease who | 4873 |
shall be required by the terms of said lease to use and apply the | 4874 |
proceeds of such insurance for repairing, restoring, or rebuilding | 4875 |
such buildings; | 4876 |
(4) The following shall not be considered as prior liens or | 4877 |
encumbrances in the construction and application of this section: | 4878 |
leasehold estates of any duration, rights-of-way, servitudes, | 4879 |
joint driveways, easements, party wall agreements, current taxes | 4880 |
and assessments not delinquent, and restrictions as to building, | 4881 |
use, and occupancy. | 4882 |
(5) This section does not prohibit a domestic life insurance | 4883 |
company from renewing or extending a loan for the original or a | 4884 |
lesser amount nor does it prohibit a company from accepting as | 4885 |
part payment for real estate sold by it a mortgage on the real | 4886 |
estate for a greater percentage of the purchase price of the real | 4887 |
estate than is otherwise permitted by this section. | 4888 |
(L) In bonds, notes, or other evidences of indebtedness of | 4889 |
corporations, trusts, partnerships, or similar business entities | 4890 |
organized under the laws of the United States, or any state | 4891 |
thereof, the Commonwealth of Puerto Rico, the District of | 4892 |
Columbia, or Canada or any province of Canada, secured by | 4893 |
assignment of lease or leases or the rentals payable under such | 4894 |
leases, of real or personal property or both to (1) the United | 4895 |
States or any instrumentality thereof, or any state of the United | 4896 |
States, the Commonwealth of Puerto Rico, or the District of | 4897 |
Columbia, or any county, city, town, school, or water district, | 4898 |
authority, or other political subdivision in any such government, | 4899 |
or Canada, any province of Canada, or any municipal corporation of | 4900 |
Canada that has a population of fifty thousand or more by the | 4901 |
latest official census; or (2) one or more corporations, trusts, | 4902 |
partnerships, or similar business entities organized under the | 4903 |
laws of the United States, any state thereof, the Commonwealth of | 4904 |
Puerto Rico, the District of Columbia, or Canada or any province | 4905 |
of Canada, provided that (a) the fixed rentals assigned shall be | 4906 |
sufficient to repay the indebtedness within the unexpired term of | 4907 |
the lease, exclusive of the term which may be provided by an | 4908 |
enforceable option of renewal; (b) such lessee has not defaulted | 4909 |
in payment of interest or principal on any of its bonds, notes, | 4910 |
debentures, or other evidences of indebtedness during the five | 4911 |
years immediately preceding the date of the investment, and | 4912 |
provided the average net earnings available for fixed charges of | 4913 |
such lessee under division (L)(2) of this section for not less | 4914 |
than five fiscal years preceding such investment have been at | 4915 |
least one and one-half times average fixed charges for that period | 4916 |
and during either of the last two years of such period, the net | 4917 |
earnings available for fixed charges shall have been not less than | 4918 |
one and one-half times fixed charges for such year, except that | 4919 |
railroad companies and utility companies may qualify as lessees | 4920 |
herein by application of the earnings test provided for railroads | 4921 |
under division (J)(1) of this section and for utilities under | 4922 |
division (J)(4) of this section; and (c) a first lien on the | 4923 |
interest of the lessor in the unencumbered property so leased | 4924 |
shall be obtained as additional security for the indebtedness; | 4925 |
(M) In ground rents, land trust certificates, or fee | 4926 |
ownership certificates representing or evidencing beneficial | 4927 |
ownership of or interest in improved real estate under lease for | 4928 |
not less than twenty-five years from the date of such lease, in | 4929 |
which it must be provided that the lessee shall pay all taxes and | 4930 |
assessments levied on or assessed against said real estate, shall | 4931 |
maintain the improvements on the real estate in good repair, and | 4932 |
shall provide and maintain fire insurance in an amount equal to | 4933 |
the insurable value of the building on the real estate; provided: | 4934 |
(1) The value of the land and improvements shall be evidenced | 4935 |
by an appraisement made under oath by a disinterested appraiser | 4936 |
resident in and the owner of real estate in the city in which the | 4937 |
property is situated, and such appraisement shall not be less than | 4938 |
one and sixty-seven hundredths times the amount of such land trust | 4939 |
certificates, which amount shall be not less than twenty times the | 4940 |
net annual rental distributable to holders of outstanding | 4941 |
certificates; | 4942 |
(2) Such beneficial interests shall only be in properties on | 4943 |
which actual earning records for five years immediately preceding | 4944 |
are available; | 4945 |
(3) Such declaration of trust or other trust instrument shall | 4946 |
provide for a depreciation or other similar fund, in an amount | 4947 |
which is not less than nine per cent of the net annual | 4948 |
distributable rental, for the benefit of the holders of | 4949 |
outstanding certificates. | 4950 |
(N)(1) In certificates of deposit or other evidence of | 4951 |
indebtedness of a savings and loan association provided the | 4952 |
certificates or other evidence of deposit are insured pursuant to | 4953 |
the "Financial Institutions Reform, Recovery, and Enforcement Act | 4954 |
of 1989," 103 Stat. 183, 12 U.S.C.A. 1811, as amended; | 4955 |
(2) In interest-bearing obligations, including savings | 4956 |
accounts and time certificates of deposit of a national bank or | 4957 |
state bank provided such bank is a member of the federal deposit | 4958 |
insurance corporation created pursuant to the "Banking Act of | 4959 |
1933," 92 Stat. 624, 12 U.S.C.A. 624, as amended. | 4960 |
(O) In obligations issued, assumed, or guaranteed by the | 4961 |
international finance corporation or by the international bank for | 4962 |
reconstruction and development, the Asian development bank, the | 4963 |
inter-American development bank, the African development bank, or | 4964 |
other similar development bank in which the president, as | 4965 |
authorized by congress and on behalf of the United States, has | 4966 |
accepted membership; | 4967 |
(P)(1) In the preferred stocks of any company organized under | 4968 |
the laws of the United States or of any state thereof engaged | 4969 |
directly and primarily in the production and sale of, or in the | 4970 |
purchase and sale of electricity or gas, or in the operation of | 4971 |
telephone or telegraph systems or water works, or in some | 4972 |
combination of them, if the average annual net earnings of such | 4973 |
company, for not less than five fiscal years preceding purchase | 4974 |
thereof, after deduction of interest on all mortgages, bonds, | 4975 |
debentures, and funded debts and after deduction of the proper | 4976 |
charges for replacements, depreciation, and obsolescence, have | 4977 |
been at least two times the average yearly amount which is | 4978 |
required to pay the dividends or distributions on all preferred | 4979 |
stocks; and in which the mortgages, bonds, debentures, funded | 4980 |
debts, and preferred stocks shall not in the aggregate exceed | 4981 |
seventy per cent of the total capitalization of such company, | 4982 |
including mortgages, bonds, debentures, funded debts, and | 4983 |
preferred and common stocks; | 4984 |
(2) In the preferred stocks of any other company organized | 4985 |
under the laws of the United States, or of any state thereof if | 4986 |
the average annual net earnings of such company for a period of | 4987 |
not less than five fiscal years preceding purchase thereof, after | 4988 |
deduction of interest on all mortgages, bonds, debentures, and | 4989 |
funded debts and after deduction of the proper charges for | 4990 |
replacements, depreciation, and obsolescence, have been at least | 4991 |
four times the amount which is required to pay the dividends or | 4992 |
distributions on all preferred stocks, and in which the mortgages, | 4993 |
bonds, debentures, funded debts, and preferred stocks shall not in | 4994 |
the aggregate exceed sixty per cent of the total capitalization of | 4995 |
such company, including mortgages, bonds, debentures, funded | 4996 |
debts, and preferred and common stocks; | 4997 |
(3) A domestic life insurance company shall not purchase any | 4998 |
preferred stocks when the total market values of such stocks then | 4999 |
owned with those purchased exceed in the aggregate of book values | 5000 |
and purchase price the capital, surplus, and contingency funds, | 5001 |
excluding all reserves required by law, of such company on the | 5002 |
thirty-first day of December preceding the date of such purchase, | 5003 |
or contemplated purchase, provided that in case of appreciations | 5004 |
in values of stocks owned the cost rather than the market values | 5005 |
shall be used in arriving at such aggregate; the purpose being to | 5006 |
restrict the investments of such company in all preferred stocks | 5007 |
to capital, surplus, and contingency funds. | 5008 |
(4) In the bonds, notes, debentures, or other evidences of | 5009 |
indebtedness of a solvent corporation, trust, partnership, or | 5010 |
similar business entity existing under the laws of the United | 5011 |
States, of any state thereof, the Commonwealth of Puerto Rico, or | 5012 |
Canada or any province of Canada, provided that either: | 5013 |
(a) The bonds, notes, debentures, or other evidences of | 5014 |
indebtedness of such corporation, trust, partnership, or similar | 5015 |
business entity are rated 1 or 2 by the securities valuation | 5016 |
office of the national association of insurance commissioners; | 5017 |
(b) The corporation, trust, partnership, or similar business | 5018 |
entity has not defaulted in payment of interest or principal on | 5019 |
any of its bonds, notes, debentures, or other evidences of | 5020 |
indebtedness during the five years immediately preceding the date | 5021 |
of purchase, and the average annual net earnings of such | 5022 |
corporation, trust, partnership, or similar business entity that | 5023 |
are available for fixed charges for not less than five fiscal | 5024 |
years preceding such purchase have been at least one and one-half | 5025 |
times the average fixed charges of such corporation, trust, | 5026 |
partnership, or similar business entity for that period and during | 5027 |
either of the last two years of such period, the net earnings | 5028 |
available for fixed charges shall have been not less than one and | 5029 |
one-half times the fixed charges of such corporation, trust, | 5030 |
partnership, or similar business entity for such year. | 5031 |
(5) In common stocks or shares of any solvent incorporated | 5032 |
company organized under the laws of the United States, or of any | 5033 |
state, district, or territory thereof, or the Commonwealth of | 5034 |
Puerto Rico, provided that a dividend or distribution has been | 5035 |
paid by the corporation in the preceding twelve months upon such | 5036 |
stock to be purchased, or that such corporation, together with its | 5037 |
predecessor corporation or corporations, has been in existence for | 5038 |
a period of at least five years. No domestic company shall invest | 5039 |
in common stock or shares under divisions (P)(5) and (R) of this | 5040 |
section a sum exceeding in the aggregate ten per cent of its | 5041 |
admitted assets on the preceding thirty-first day of December. | 5042 |
(6) In the stocks, limited liability company membership | 5043 |
interests, limited partnership interests, or limited liability | 5044 |
partnership interests of insurance, financial, investment, and | 5045 |
investment management companies, which investment management | 5046 |
companies are registered with the securities and exchange | 5047 |
commission under the "Investment Company Act of 1940," 54 Stat. | 5048 |
789, 15 80a-1, as amended, or the stocks, limited liability | 5049 |
company membership interests, limited partnership interests, or | 5050 |
limited liability partnership interests in an entity wholly owned | 5051 |
by a domestic company or by a domestic company and its affiliates, | 5052 |
that is formed and maintained to acquire or hold specific assets | 5053 |
or liabilities for bankruptcy remoteness or limitation of | 5054 |
liability purposes, except its own stock, but no domestic life | 5055 |
insurance company shall invest in such stocks, limited liability | 5056 |
company membership interests, or limited liability partnership | 5057 |
interests under division (P)(6) of this section, exclusive of its | 5058 |
investments in stocks or limited liability company membership | 5059 |
interests of insurance company subsidiaries or subsidiaries | 5060 |
engaged exclusively in the ownership of insurance company | 5061 |
subsidiaries, a sum exceeding the lesser of fifty per cent of its | 5062 |
policyholder surplus or ten per cent of its admitted assets as of | 5063 |
the preceding thirty-first day of December unless the approval of | 5064 |
the superintendent of insurance is first obtained. Whenever the | 5065 |
superintendent has reason to believe that the retention, | 5066 |
investment, or acquisition of the stock, limited liability company | 5067 |
membership interest, limited partnership interest, or limited | 5068 |
liability partnership interest of any such company substantially | 5069 |
lessens competition generally in the business of insurance or | 5070 |
creates a monopoly therein the superintendent shall proceed under | 5071 |
section 3901.13 of the Revised Code to cause such domestic | 5072 |
insurance company to divest itself of such stock, limited | 5073 |
liability company membership interest, limited partnership | 5074 |
interest, or limited liability partnership interest. | 5075 |
(7)(a) In bonds, notes, debentures, or other evidences of | 5076 |
indebtedness issued, assumed, or guaranteed by a solvent | 5077 |
corporation, trust, or partnership formed or existing under the | 5078 |
laws of a foreign jurisdiction, provided each such foreign | 5079 |
investment is of the same kind and quality as United States | 5080 |
investments authorized under this section; or in common or | 5081 |
preferred stock, shares, membership interest, or partnership | 5082 |
interest of any solvent business entity formed or existing under | 5083 |
the laws of a foreign jurisdiction provided each such foreign | 5084 |
investment is of the same kind and quality as United States | 5085 |
investments authorized under this section; or in bonds or other | 5086 |
evidences of indebtedness issued, assumed, or guaranteed by a | 5087 |
foreign jurisdiction. | 5088 |
An insurer shall not invest in foreign investments under | 5089 |
division (P)(7) of this section, including investments denominated | 5090 |
in foreign currency, a sum exceeding in the aggregate fifteen per | 5091 |
cent of its admitted assets as of the preceding thirty-first day | 5092 |
of December. The aggregate amount of investments held by an | 5093 |
insurer in a single foreign jurisdiction shall not exceed three | 5094 |
per cent of its admitted assets as of the preceding thirty-first | 5095 |
day of December. | 5096 |
As used in division (P)(7)(a) of this section, "foreign | 5097 |
jurisdiction" means a jurisdiction outside the United States, | 5098 |
Puerto Rico, or | 5099 |
securities valuation office of the national association of | 5100 |
insurance commissioners. | 5101 |
(b) An insurer may acquire investments denominated in foreign | 5102 |
currency whether or not they are foreign investments. | 5103 |
An insurer shall not invest in investments denominated in | 5104 |
foreign currency a sum exceeding in the aggregate ten per cent of | 5105 |
its admitted assets as of the preceding thirty-first day of | 5106 |
December. The aggregate amount of investments denominated in a | 5107 |
single foreign currency held by an insurer shall not exceed three | 5108 |
per cent of an insurer's admitted assets as of the preceding | 5109 |
thirty-first day of December. | 5110 |
(c) As used in division (P)(7) of this section, "foreign | 5111 |
currency" means a currency other than that of the United States. | 5112 |
(8) An insurer may invest without limitation in investments | 5113 |
of government money market funds. As used in division (P)(8) of | 5114 |
this section, "government money market fund" means a mutual fund | 5115 |
that at all times invests in obligations issued, guaranteed, or | 5116 |
insured by the federal government of the United States, or | 5117 |
collateralized repurchase agreements comprised of these | 5118 |
obligations, and that qualifies for investment without a reserve | 5119 |
pursuant to the purposes and procedures of the securities | 5120 |
valuation office of the national association of insurance | 5121 |
commissioners. | 5122 |
(Q) In loans upon the pledge of any securities in which such | 5123 |
companies are authorized by this section to invest, provided that | 5124 |
any loan upon such a pledge shall not exceed eighty per cent of | 5125 |
the cash market value of the collateral at the time of the making | 5126 |
of such loan and at the end of each twelve-month period | 5127 |
thereafter, and such company, through the collateral pledged to | 5128 |
it, shall not exceed the amounts which it may, under this section, | 5129 |
invest in one corporation so that, in the stocks and securities | 5130 |
which may be owned and those which are pledged to it, the | 5131 |
limitations in this section might be indirectly evaded; | 5132 |
(R)(1) Any domestic legal reserve life insurance company may | 5133 |
loan or invest its funds, to an extent not exceeding in the | 5134 |
aggregate five per cent of its total admitted assets, in loans or | 5135 |
investments not permitted under this section. Any such company may | 5136 |
also invest up to an additional five per cent of its total | 5137 |
admitted assets, in loans or investments in small businesses | 5138 |
having more than half of their assets or employees in this state | 5139 |
and in venture capital firms having an office within this state, | 5140 |
provided that, as a condition of a company making an investment in | 5141 |
a venture capital firm, the firm must agree to use its best | 5142 |
efforts to make investments, in an aggregate amount at least equal | 5143 |
to the investment to be made by the company in that venture | 5144 |
capital firm, in small businesses having their principal offices | 5145 |
within this state and having either more than one-half of their | 5146 |
assets within this state or more than one-half of their employees | 5147 |
employed within this state. | 5148 |
As used in division (R) of this section: | 5149 |
(a) "Small businesses" means any corporation, partnership, | 5150 |
proprietorship, or other entity that either does not have more | 5151 |
than four hundred employees, or would qualify as a small business | 5152 |
for the purpose of receiving financial assistance from small | 5153 |
business investment companies licensed under the "Small Business | 5154 |
Investment Act of 1958," 72 Stat. 689, 15 U.S.C.A. 661, as | 5155 |
amended, and rules of the small business administration. | 5156 |
(b) "Venture capital firms" means any corporation, | 5157 |
partnership, proprietorship, or other entity, the principal | 5158 |
business of which is or will be the making of investments in small | 5159 |
businesses. | 5160 |
(c) "Investments" means any equity investment, including | 5161 |
limited partnership interests and other equity interests in which | 5162 |
liability is limited to the amount of the investment, but does not | 5163 |
include general partnership interests or other interests involving | 5164 |
general liability. | 5165 |
(2) In the event that, subsequent to being made under | 5166 |
provisions of division (R) of this section, an investment is | 5167 |
determined to have become qualified as an investment for a | 5168 |
domestic life insurance company as provided for in this section, | 5169 |
the company may consider such investment as held under the | 5170 |
applicable provisions of the foregoing divisions (A) to (Q) of | 5171 |
this section and such investment shall no longer be considered as | 5172 |
having been made under the provisions of this division. | 5173 |
(S)(1) No domestic life insurance company shall subscribe to | 5174 |
or participate in any underwriting for the purchase or sale of | 5175 |
securities or property, nor shall it enter into any such | 5176 |
transaction for purchase or sale on account of said company | 5177 |
jointly with any other person, nor shall any such company enter | 5178 |
into any agreement to withhold from sale any of its property, but | 5179 |
the disposition of its property shall be at all times within the | 5180 |
control of its board of directors. Nothing contained in division | 5181 |
(S)(1) of this section shall be construed to invalidate or | 5182 |
prohibit an agreement by an insurance company for the purchase for | 5183 |
its own account of an entire issue of the securities of a | 5184 |
corporation or to invalidate or prohibit an agreement by an | 5185 |
insurance company and one or more other investors to join and | 5186 |
share in the purchase of investments for their individual accounts | 5187 |
and for bona fide investment purposes. | 5188 |
(2) In the determination of capitalization in this section | 5189 |
the value of all bonds, debentures, and funded debts, and | 5190 |
nonconvertible or nonparticipating preferred stocks shall be | 5191 |
figured at par. Participating or convertible preferred shares | 5192 |
shall be figured at par or market on the preceding thirty-first | 5193 |
day of December, whichever is higher, and the value of all common | 5194 |
shares shall be figured at the market on the preceding | 5195 |
thirty-first day of December. | 5196 |
(3) As used in this section: | 5197 |
(a) "Funded debt" means all interest-bearing obligations | 5198 |
maturing in more than one year from their issuance and all | 5199 |
guaranteed or assumed interest-bearing obligations or stock. | 5200 |
Securities or stock of a corporation pledged to secure other | 5201 |
funded debt of the corporation are not included in the funded | 5202 |
debt. | 5203 |
(b) "Fixed charges" include actual interest incurred in each | 5204 |
year on funded and unfunded debt and annual apportionment of debt | 5205 |
discount or premium. Where interest is partially or entirely | 5206 |
contingent upon earnings, "fixed charges" include contingent | 5207 |
interest payments. | 5208 |
(c) "Net earnings available for fixed charges" means income | 5209 |
after deducting operating and maintenance expenses, taxes other | 5210 |
than income taxes, depreciation, and depletion. Extraordinary, | 5211 |
nonrecurring items of income or expense shall be excluded. | 5212 |
(4) Except as provided in a plan of mutualization adopted | 5213 |
pursuant to the provisions of sections 3913.01 to 3913.10 of the | 5214 |
Revised Code, no domestic life insurance company may invest in or | 5215 |
loan upon its own stock, either directly or indirectly. | 5216 |
(5) If the investments of any domestic life insurance company | 5217 |
are at the time of the making thereof or on October 13, 1953, | 5218 |
otherwise than as authorized in this section, such investments | 5219 |
shall not be admitted or accepted as authorized investments for | 5220 |
such company. | 5221 |
(6) Any earnings test provided for in this section shall be | 5222 |
deemed to have been met if the requirements of such earnings test | 5223 |
are met by any company which assumes or guarantees the investment | 5224 |
or which assumes or guarantees the performance of any lease which | 5225 |
is the security for the investment. In applying any such earnings | 5226 |
test, the operations of a company's predecessor companies, if any, | 5227 |
for the stipulated period shall be included. | 5228 |
(7) No domestic life insurance company shall at any time have | 5229 |
invested in or loaned upon the security of the obligations, | 5230 |
property, or securities of a particular corporation, trust, | 5231 |
partnership, or similar business entity a sum exceeding the | 5232 |
greater of two per cent of its admitted assets as of the preceding | 5233 |
thirty-first day of December or twenty-five per cent of that | 5234 |
portion of its capital and surplus, or its surplus in the case of | 5235 |
a mutual company, that exceeds the minimum required capital and | 5236 |
surplus under section 3907.05 of the Revised Code unless the | 5237 |
approval of the superintendent of insurance is first obtained. The | 5238 |
restrictions of division (S)(7) of this section do not apply to | 5239 |
divisions (C), (F), (G), (H), (P)(6), and (R) of this section or | 5240 |
to any valid obligation issued, assumed, or guaranteed by the | 5241 |
United States, or any state thereof, the Commonwealth of Puerto | 5242 |
Rico, the District of Columbia, or Canada or any province of | 5243 |
Canada. For purposes of division (S)(7) of this section, such | 5244 |
company may, at its option, consider either the lessor or the | 5245 |
lessee under division (L) of this section to be the person to whom | 5246 |
any such investment or loan is made. | 5247 |
(8) This section does not affect the propriety or legality of | 5248 |
an investment made by a domestic life insurance company which was | 5249 |
in accordance with the laws in force at the time of the making of | 5250 |
the investment. | 5251 |
(T) A domestic life insurance company may seek permission | 5252 |
from the superintendent of insurance to invest funds under Chapter | 5253 |
3906. of the Revised Code and may invest funds under that chapter | 5254 |
if such permission is granted. | 5255 |
(U) As used in divisions (U) and (V) of this section: | 5256 |
(1) "Covered" means that an insurer owns, or can immediately | 5257 |
acquire through the exercise of options, warrants, or conversion | 5258 |
rights already owned, the underlying interest in order to fulfill | 5259 |
or secure its obligation under the option, cap, or floor it has | 5260 |
written. | 5261 |
(2)(a) "Derivative instrument" means an agreement, option, | 5262 |
instrument, or a series or combination thereof of either of the | 5263 |
following types: | 5264 |
(i) To make or take delivery of, or assume or relinquish, a | 5265 |
specified amount of one or more underlying interests, or to make a | 5266 |
cash settlement in lieu thereof; | 5267 |
(ii) That has a price, performance, value, or cash flow based | 5268 |
primarily upon the actual or expected price, level, performance, | 5269 |
value, or cash flow of one or more underlying interests. | 5270 |
(b) Derivative instruments include options, warrants, caps, | 5271 |
floors, collars, swaps, forwards, futures, and any other | 5272 |
agreements, options, or instruments substantially similar thereto | 5273 |
or any series or combination thereof. | 5274 |
(3) "Derivative transaction" means a transaction involving | 5275 |
the use of one or more derivative instruments. | 5276 |
(4) "Hedging transaction" means a derivative transaction that | 5277 |
is entered into and maintained to reduce either of the following: | 5278 |
(a) The risk of economic loss due to a change in the value, | 5279 |
yield, price, cash flow, or quantity of assets or liabilities that | 5280 |
the insurer has acquired or incurred or anticipates acquiring or | 5281 |
incurring; | 5282 |
(b) The currency exchange rate risk or the degree of exposure | 5283 |
as to assets or liabilities that an insurer has acquired or | 5284 |
incurred or anticipates acquiring or incurring. | 5285 |
(5) "Income generation" means a derivative transaction | 5286 |
involving the writing of covered options, caps, or floors that is | 5287 |
intended to generate income or enhance return. | 5288 |
(6) "Replication transaction" means a derivative transaction | 5289 |
that is intended to replicate the performance of one or more | 5290 |
assets that an insurer is authorized to acquire under this | 5291 |
chapter. "Replication transaction" does not include a derivative | 5292 |
transaction that is entered into as a hedging transaction. | 5293 |
(V)(1) Prior to an insurer entering into derivative | 5294 |
transactions, the board of directors of the insurer shall approve | 5295 |
a derivative use plan. | 5296 |
(2) An insurer shall notify the superintendent of insurance | 5297 |
in writing within three days after identifying either of the | 5298 |
following: | 5299 |
(a) Any event or occurrence related to an insurer's | 5300 |
derivatives use that may lead to a material change to the | 5301 |
insurer's policyholder surplus; | 5302 |
(b) Any event or occurrence related to an insurer's | 5303 |
derivatives use that, with the passage of time, may lead to a | 5304 |
material change to the insurer's policyholder surplus. | 5305 |
(3) Prior to entering into derivative transactions, an | 5306 |
insurer shall file with the superintendent a copy of its | 5307 |
derivative use plan and internal controls, for informational | 5308 |
purposes. The insurer shall keep current the copy of its | 5309 |
derivative use plan and internal controls filed with the | 5310 |
superintendent. The insurer shall not enter into derivative | 5311 |
transactions until thirty calendar days after the date on which | 5312 |
the derivative use plan and internal controls is filed with the | 5313 |
superintendent. This thirty-calendar-day period is to begin on the | 5314 |
date that the superintendent receives the derivative use plan and | 5315 |
internal controls. | 5316 |
(4) The superintendent may adopt rules prescribing the form | 5317 |
and content of derivative use plans, as well as any internal | 5318 |
controls the superintendent considers necessary. | 5319 |
(5) An insurer that engages in hedging transactions or | 5320 |
replication transactions shall do both of the following: | 5321 |
(a) Maintain its position in any outstanding derivative | 5322 |
instrument used as part of a hedging transaction or replication | 5323 |
transaction for as long as the hedging transaction or replication | 5324 |
transaction continues to be effective; | 5325 |
(b) Demonstrate to the superintendent, upon request, that any | 5326 |
derivative transaction entered into and involving hedging | 5327 |
transaction or replication transaction is an effective hedging | 5328 |
transaction or replication transaction. The insurer must be able | 5329 |
to demonstrate this at the time the derivative transaction is | 5330 |
entered into, and for as long as the transaction continues to be | 5331 |
in place. | 5332 |
(6) An insurer may not invest in, or use, a derivative | 5333 |
instrument for any purpose other than a hedging transaction, | 5334 |
income generation, or replication. | 5335 |
(7) An insurer shall not invest in, or use a derivative | 5336 |
instrument for purposes of income generation in a sum exceeding in | 5337 |
the aggregate five per cent of its admitted assets, as of the | 5338 |
preceding thirty-first day of December. | 5339 |
(8) All documents provided to the superintendent under | 5340 |
division (V) of this section shall be deemed trade secrets and | 5341 |
shall be provided with trade secret protection. Such documents | 5342 |
shall also be considered work papers of the superintendent that | 5343 |
are subject to section 3901.48 of the Revised Code and are | 5344 |
confidential and privileged and shall not be considered a public | 5345 |
record, as defined in section 149.43 of the Revised Code. The | 5346 |
original documents and any copies of them shall not be subject to | 5347 |
subpoena and shall not be made public by the superintendent or any | 5348 |
other person, except as otherwise provided in section 3901.48 of | 5349 |
the Revised Code. | 5350 |
Sec. 3913.01. Any domestic stock life insurance corporation, | 5351 |
incorporated under a general law, may become a mutual life | 5352 |
insurance corporation, and to that end may carry out a plan for | 5353 |
the acquisition of shares of its capital stock, provided such | 5354 |
plan: | 5355 |
(A) Has been adopted by a vote of a majority of the directors | 5356 |
of such corporation; | 5357 |
(B) Has been approved by a vote of stockholders representing | 5358 |
a majority of the capital stock then outstanding at a meeting of | 5359 |
stockholders called for the purpose; | 5360 |
(C) Has been approved by a majority of the policyholders | 5361 |
voting at a meeting of policyholders called for the purpose, each | 5362 |
of whom is insured in a sum of at least one thousand dollars and | 5363 |
whose insurance shall then be in force and shall have been in | 5364 |
force for at least one year prior to such meeting. | 5365 |
As used in this section, "policyholder" means the person | 5366 |
insured under an individual policy of life insurance, and the | 5367 |
person to whom any annuity or pure endowment is presently or | 5368 |
prospectively payable by the terms of an individual annuity or | 5369 |
pure endowment contract, except where the policy or contract | 5370 |
declares some other person to be the owner or holder thereof, in | 5371 |
which case such owner or policyholder shall be deemed the | 5372 |
policyholder, and except in cases of assignment. In the case of | 5373 |
any individual policy or contract insuring two or more persons | 5374 |
jointly or in case the policy or contract declares two or more | 5375 |
persons to be the owner, the persons insured or declared to be the | 5376 |
owner are considered as one policyholder for the purposes of this | 5377 |
section. In case any such policy or contract has been assigned by | 5378 |
an assignment absolute on its face to an assignee other than the | 5379 |
corporation, and such assignment has been filed at the principal | 5380 |
office of the corporation at least thirty days prior to the date | 5381 |
of the meeting of policyholders, then such assignee shall be | 5382 |
deemed a policyholder. Except as provided in this section, an | 5383 |
assignee of a policy or contract shall not be deemed a | 5384 |
policyholder. The reference in division (C) of this section to | 5385 |
insurance in the amount of one thousand dollars or more is deemed | 5386 |
to include any annuity contract, the commuted value of which is | 5387 |
one thousand dollars or more on the date of said meeting, and any | 5388 |
pure endowment contract for the principal sum of one thousand | 5389 |
dollars or more. | 5390 |
Notice of the meeting of policyholders shall be given by | 5391 |
mailing such notice from the home office of the corporation at | 5392 |
least thirty days prior to such meeting in a sealed envelope, | 5393 |
postage prepaid, addressed to such policyholders at their last | 5394 |
known post-office addresses, provided that personal delivery of | 5395 |
such written notice to any policyholder evidenced by written | 5396 |
receipt therefor may be substituted for mailing the same. The | 5397 |
meeting shall be otherwise provided for and conducted in such | 5398 |
manner as is provided in the mutualization plan, provided that | 5399 |
policyholders may vote in person, by proxy, or by mail, and that | 5400 |
all votes shall be cast by ballot on a uniform ballot furnished by | 5401 |
the corporation. The superintendent of insurance shall supervise | 5402 |
and direct the method and procedure of said meeting and shall | 5403 |
appoint an adequate number of inspectors to conduct the voting at | 5404 |
said meeting who may determine all questions concerning the | 5405 |
verification of the ballots, the ascertainment of the validity of | 5406 |
such ballots, the qualifications of the voters, and the canvass of | 5407 |
the vote, and who shall certify to the superintendent and to the | 5408 |
corporation the result of such proceedings, which shall be | 5409 |
supervised by said inspectors in accordance with such rules as are | 5410 |
prescribed by the superintendent. All necessary expenses incurred | 5411 |
by the superintendent shall be paid by the corporation, as | 5412 |
certified to by | 5413 |
Before such a plan can be carried out, it must be submitted | 5414 |
to the superintendent and must be approved by | 5415 |
superintendent in writing; provided that every payment for the | 5416 |
acquisition of any shares of the capital stock of such | 5417 |
corporation, the purchase price of which is not fixed by such | 5418 |
plan, shall be subject to the approval of the superintendent, and | 5419 |
provided that neither such plan, nor any such payment, shall be | 5420 |
approved by the superintendent unless at the time of such | 5421 |
approvals, respectively, the corporation, after deducting the | 5422 |
aggregate sum appropriated by such plan for the acquisition of any | 5423 |
part or all of its capital stock, and, in the case of any payment | 5424 |
not fixed by such plan and subject to separate approval by the | 5425 |
superintendent, after deducting also the amount of such payment, | 5426 |
shall be possessed of net assets of not less than two hundred | 5427 |
thousand dollars from which it shall maintain its deposit made | 5428 |
previously with the superintendent, and such assets shall be not | 5429 |
less than the entire liabilities of the corporation, including the | 5430 |
net values of its outstanding contracts computed according to the | 5431 |
standard adopted by the corporation under | 5432 |
to 3903.7211 of the Revised Code and including all funds, | 5433 |
contingent reserves, and surplus, except for such surplus as has | 5434 |
been appropriated or paid under such plan. | 5435 |
Sec. 3913.34. (A) Sections 3913.11 to 3913.13 and 3913.20 to | 5436 |
3913.23 of the Revised Code shall apply to a mutual insurance | 5437 |
holding company as if the mutual insurance holding company were a | 5438 |
domestic mutual insurance company. The members of the mutual | 5439 |
insurance holding company are deemed to be members of a domestic | 5440 |
mutual insurance company for all purposes of such sections. | 5441 |
(B) A reorganization of a domestic mutual life insurance | 5442 |
company subject to sections 3913.25 to 3913.38 of the Revised Code | 5443 |
5444 | |
5445 | |
3901.323 of the Revised Code. | 5446 |
(C) Notwithstanding division (B) of this section, for a | 5447 |
period of five years following the effective date of a | 5448 |
reorganization under sections 3913.25 to 3913.38 of the Revised | 5449 |
Code, no person shall acquire control of a reorganized stock | 5450 |
company without compliance with sections 3901.32 to 3901.323 of | 5451 |
the Revised Code. For purposes of this division, "control" has the | 5452 |
same meaning as in division (B) of section 3901.32 of the Revised | 5453 |
Code, except that control is presumed to exist if any person, | 5454 |
directly or indirectly, owns, controls, holds with the power to | 5455 |
vote, or holds proxies representing five per cent or more of the | 5456 |
voting securities of any other person. | 5457 |
(D) An intermediate holding company or, if there is no such | 5458 |
company, a reorganized stock company shall not issue shares of | 5459 |
stock, in addition to the shares issued pursuant to the | 5460 |
reorganization plan under which the company was formed, without | 5461 |
the prior approval of the mutual insurance holding company as its | 5462 |
majority shareholder. The prior approval of the mutual insurance | 5463 |
holding company must be evidenced by a resolution of the board of | 5464 |
directors of the mutual insurance holding company delivered to the | 5465 |
board of directors of the intermediate holding company or the | 5466 |
reorganized stock company prior to the issuance of the additional | 5467 |
shares. | 5468 |
(E) A mutual insurance holding company, and an intermediate | 5469 |
holding company, if any, are deemed to be insurers subject to | 5470 |
sections 3901.07, 3901.071, and 3901.48 of the Revised Code. | 5471 |
Sec. 3915.04. Life insurance policies may provide for not | 5472 |
more than one year preliminary term insurance by incorporation | 5473 |
therein of the following clause immediately preceding the "change | 5474 |
of beneficiary" clause: | 5475 |
"The first year's insurance under this policy is term | 5476 |
insurance." | 5477 |
If the premium charged for term insurance under a limited | 5478 |
payment life or endowment preliminary term policy, providing for | 5479 |
the payment of all premiums thereon in less than twenty years from | 5480 |
the date of the policy, exceeds that charged for like insurance | 5481 |
under whole life preliminary term policies of the same company, | 5482 |
the reserve thereon at the end of any year, including the first, | 5483 |
shall not be less than the reserve on a whole life preliminary | 5484 |
term policy issued in the same year and at the same age together | 5485 |
with an amount equivalent to the accumulation of a net level | 5486 |
premium sufficient to provide for a pure endowment at the end of | 5487 |
the premium-payment period equal to the difference between the | 5488 |
value at the end of such period of such a whole life preliminary | 5489 |
term policy and the full reserve at such time of such limited | 5490 |
payment life or endowment policy. This section does not apply to | 5491 |
any policy issued under section 3915.07 of the Revised Code on or | 5492 |
after the operative date for such policy as authorized by division | 5493 |
(H) of such section. | 5494 |
This section is applicable to any preliminary term policies, | 5495 |
except in the case of | 5496 |
5497 | |
annuity and pure endowment contracts issued between July 17, 1947, | 5498 |
and November 5, 1959, that are subject to valuation under section | 5499 |
5500 |
Sec. 3915.071. (A) As used in this section, "operative date | 5501 |
of the valuation manual" means the January 1 of the first calendar | 5502 |
year that the valuation manual, as defined in section 3903.72 of | 5503 |
the Revised Code, is effective. | 5504 |
(B) No policy of life insurance shall be delivered or issued | 5505 |
for delivery in this state, on or after January 1, 1989, or the | 5506 |
operative date (not before January 1, 1983) applicable to such | 5507 |
policy, as permitted by division (P) of this section, unless it | 5508 |
contains in substance the provisions set out in this division | 5509 |
which are applicable to the plan of insurance or corresponding | 5510 |
provisions which, in the opinion of the superintendent of | 5511 |
insurance, are at least as favorable to the policyholder: | 5512 |
(1) That the company will, upon proper request within sixty | 5513 |
days after the due date of a premium in default, grant a paid-up | 5514 |
nonforfeiture benefit on a plan stated in the policy. The | 5515 |
effective date of the benefit shall be the due date of the unpaid | 5516 |
premium. The benefit shall be in the amount specified in this | 5517 |
section. | 5518 |
(2) That upon proper request, within the same sixty-day | 5519 |
period, the company may substitute an alternative nonforfeiture | 5520 |
benefit of an actuarially equivalent value. The amount may be | 5521 |
greater or the death benefit may be for a longer period. If the | 5522 |
benefit is an endowment benefit, the amount may be greater or | 5523 |
payment may be made earlier. | 5524 |
(3) That after premiums have been paid for at least three | 5525 |
full years for ordinary insurance or for at least five full years | 5526 |
for industrial insurance, the company will, upon surrender of the | 5527 |
policy within sixty days after the due date of an unpaid premium, | 5528 |
pay a cash surrender value in the amount specified in this section | 5529 |
in lieu of any paid-up nonforfeiture benefits. | 5530 |
(4) That if another available nonforfeiture benefit is not | 5531 |
elected within sixty days after the due date of an unpaid premium, | 5532 |
the paid-up nonforfeiture benefit specified in the policy shall | 5533 |
become effective. | 5534 |
(5) That if all premiums for the policy have been paid, the | 5535 |
company will pay the cash surrender value, upon surrender of the | 5536 |
policy within thirty days after a policy anniversary, in the | 5537 |
amount specified in this section. That value will also be | 5538 |
available within any such thirty-day period if the policy is | 5539 |
continuing under any nonforfeiture benefit which became effective | 5540 |
on or after the third policy anniversary in the case of ordinary | 5541 |
insurance or the fifth policy anniversary in the case of | 5542 |
industrial insurance. | 5543 |
(6) A statement of the mortality table, interest rate, and | 5544 |
method used in calculating cash surrender values and paid-up | 5545 |
nonforfeiture benefits available under policies which guarantee | 5546 |
unscheduled changes in benefits or premiums upon the happening of | 5547 |
specified events or upon the exercise of an option without change | 5548 |
to a new policy. | 5549 |
For all other policies, a statement of the mortality table | 5550 |
and interest rate used in calculating the cash surrender values | 5551 |
and paid-up nonforfeiture benefits, together with a table showing | 5552 |
such values and benefits on each policy anniversary during the | 5553 |
first twenty policy years, or the term of the policy, if shorter. | 5554 |
Values and benefits are to be calculated on the assumption that | 5555 |
there are no dividends or paid-up additions credited to the policy | 5556 |
and that there is no indebtedness to the company on the policy. | 5557 |
(7) A statement that the cash surrender values and paid-up | 5558 |
nonforfeiture benefits are not less than those required by the law | 5559 |
of the state in which the policy is delivered. | 5560 |
(8) An explanation of the manner in which cash surrender | 5561 |
values and paid-up nonforfeiture benefits are increased by any | 5562 |
paid-up additions to the policy and decreased by any indebtedness | 5563 |
to the company on the policy. | 5564 |
(9) A statement that a detailed statement of the method of | 5565 |
computation of values and benefits has been filed with the | 5566 |
insurance supervisory official of the state in which the policy is | 5567 |
delivered if such a detailed statement is not included in the | 5568 |
policy. | 5569 |
(10) A statement of the method used in calculating the cash | 5570 |
surrender value and paid-up nonforfeiture benefit available on any | 5571 |
policy anniversary beyond the last anniversary for which values | 5572 |
and benefits are consecutively shown in the policy. | 5573 |
The company shall reserve the right to defer the payment of | 5574 |
any cash surrender value for a period of six months after demand | 5575 |
and surrender of the policy. | 5576 |
| 5577 |
anniversary, any cash surrender value shall be determined as of | 5578 |
the due date. The value shall be not less than the present value | 5579 |
on the anniversary of the future guaranteed benefits which would | 5580 |
have been provided for by the policy, including any existing | 5581 |
paid-up additions, had default not occurred, less the present | 5582 |
value on the anniversary of the adjusted premiums corresponding to | 5583 |
the premiums which would have fallen due on and after such | 5584 |
anniversary and less any indebtedness to the company on the | 5585 |
policy. Any cash surrender value provided for by the policy shall | 5586 |
be in substantial compliance with section 3915.072 of the Revised | 5587 |
Code. | 5588 |
If supplemental life insurance or annuity benefits are added | 5589 |
at issue, at the option of the insured, to a policy by rider or | 5590 |
supplemental policy provision and for an identifiable additional | 5591 |
premium, the cash surrender values for the basic insurance and for | 5592 |
the supplemental insurance or benefits shall be determined as if | 5593 |
each had been issued as a separate policy. The cash surrender | 5594 |
value of the policy shall be the sum of the cash surrender value | 5595 |
of the basic insurance and of the supplemental insurance or | 5596 |
benefits. | 5597 |
The cash surrender value for a family policy, which defines a | 5598 |
primary insured and which provides term insurance on the life of | 5599 |
the spouse of the primary insured expiring before the spouse's age | 5600 |
seventy-one, is the sum of the cash surrender value of the | 5601 |
insurance on the primary insured and the cash surrender value of | 5602 |
the term insurance on the spouse, determined as if the insurance | 5603 |
on each had been issued as a separate policy. | 5604 |
Any cash surrender value available within thirty days after a | 5605 |
policy anniversary, under a policy paid up by completion of all | 5606 |
premium payments or continued under any paid-up nonforfeiture | 5607 |
benefit, shall be not less than the present value, on the | 5608 |
anniversary, of the future guaranteed benefits provided by the | 5609 |
policy, including any paid-up additions, and decreased by any | 5610 |
indebtedness to the company on the policy. | 5611 |
Any paid-up nonforfeiture benefit available upon default in | 5612 |
payment of the premium due on a policy anniversary shall have a | 5613 |
present value as of the anniversary at least equal to the policy's | 5614 |
cash surrender value on that date or, if none is provided for, the | 5615 |
cash surrender value which would have been required by this | 5616 |
section in the absence of the condition that premiums shall have | 5617 |
been paid for the requisite number of years. | 5618 |
| 5619 |
impairments or special hazards and uniform annual contract charges | 5620 |
or policy fees specified in the policy statement of the method to | 5621 |
be used in calculating cash surrender values and paid-up | 5622 |
nonforfeiture benefits are excluded in calculating adjusted | 5623 |
premiums and recalculated future adjusted premiums. | 5624 |
A policy issued on a substandard basis but similar to one | 5625 |
issued on a standard basis may be considered the same as the | 5626 |
standard policy in calculating adjusted premiums and present | 5627 |
values if tabular mortality costs in each policy year are the same | 5628 |
as those in the standard policy and if the policies differ only in | 5629 |
that the substandard policy provides reduced graded amounts of | 5630 |
insurance and the standard policy provides higher uniform amounts | 5631 |
of insurance. | 5632 |
(2) The adjusted premiums for any policy are calculated on an | 5633 |
annual basis and shall be a uniform per cent of the respective | 5634 |
premiums specified in the policy for each policy year such that | 5635 |
the present value, at the date of issue, of all such adjusted | 5636 |
premiums is equal to the sum of the following: | 5637 |
(a) The present value at the date of issue of the future | 5638 |
guaranteed benefits; | 5639 |
(b) One per cent of either the amount of insurance, if | 5640 |
uniform in amount, or the average amount of insurance at the | 5641 |
beginning of each of the first ten policy years; and | 5642 |
(c) One hundred twenty-five per cent of the nonforfeiture net | 5643 |
level premium, as defined in division | 5644 |
provided that for the purposes of this division | 5645 |
nonforfeiture net level premium shall not be deemed to exceed four | 5646 |
per cent of either the amount of insurance, if uniform in amount, | 5647 |
or the average amount of insurance at the beginning of each of the | 5648 |
first ten policy years. | 5649 |
The date of issue, as used in this division, is the date as | 5650 |
of which the rated age of the insured is determined. | 5651 |
(3) The nonforfeiture net level premium is equal to the | 5652 |
present value, at the date of issue, of the guaranteed benefits | 5653 |
provided for by the policy divided by the present value, at the | 5654 |
date of issue, of an annuity of one per annum payable on the date | 5655 |
of issue and on each anniversary of the policy on which a premium | 5656 |
falls due. | 5657 |
(4) Adjusted premiums, present values, additional expense | 5658 |
allowances, and nonforfeiture net level premiums for policies | 5659 |
which guarantee unscheduled changes in benefits or premiums upon | 5660 |
the happening of specified events or upon the exercise of an | 5661 |
option without change to a new policy are determined as follows: | 5662 |
(a) At the date of issue, adjusted premiums, nonforfeiture | 5663 |
net level premiums, and present values are calculated on the | 5664 |
assumption that there will be no change in future benefits or | 5665 |
premiums; | 5666 |
(b) At the time of a change in benefits or premiums, future | 5667 |
adjusted premiums, nonforfeiture net level premiums and present | 5668 |
values are recalculated on the assumption that there will be no | 5669 |
other change in future benefits or premiums; | 5670 |
(c) These recalculated future adjusted premiums are a uniform | 5671 |
percentage of the respective future premiums specified in the | 5672 |
policy for each policy year after the change such that the present | 5673 |
value, at the time of change, of the future adjusted premiums is | 5674 |
equal to the sum of: | 5675 |
(i) The present value at the time of change of all future | 5676 |
guaranteed benefits provided for by the policy; | 5677 |
(ii) Any additional expense allowance less the cash surrender | 5678 |
value at that time or, if none, the value of any paid-up | 5679 |
nonforfeiture benefit. | 5680 |
(d) The additional expense allowance, at the time of change, | 5681 |
is the sum of one per cent of any increase in the average amount | 5682 |
of insurance and one hundred twenty-five per cent of any increase | 5683 |
in the nonforfeiture net level premium. The average amount of | 5684 |
insurance after the change is the average amount of insurance at | 5685 |
the beginning of the first ten policy years following the change. | 5686 |
The average amount of insurance before the change is the average | 5687 |
amount of insurance at the beginning of each of the first ten | 5688 |
policy years starting with the date of the most recent previous | 5689 |
change or, if there has been no change, the date of issue. | 5690 |
(e) The recalculated nonforfeiture net level premium is the | 5691 |
quotient of (i) the present value of the increase in future | 5692 |
guaranteed benefits provided by the policy plus (ii) the | 5693 |
nonforfeiture net level premium before the change times the | 5694 |
present value of an annuity of one per annum payable on each | 5695 |
anniversary of the policy on and after the date of change on which | 5696 |
a premium would, except for the change, have fallen due divided by | 5697 |
(iii) the present value of an annuity of one per annum payable on | 5698 |
each anniversary on or after the date of change on which a premium | 5699 |
falls due. | 5700 |
| 5701 |
valuation manual: | 5702 |
(1) For all policies of ordinary insurance issued on the | 5703 |
standard basis, all adjusted premiums and present values referred | 5704 |
to in this section shall be calculated on the basis of the | 5705 |
commissioners 1980 standard ordinary mortality table and a rate of | 5706 |
interest not exceeding the nonforfeiture interest rate provided | 5707 |
for by division | 5708 |
company, a rate not exceeding the nonforfeiture interest rate for | 5709 |
policies issued in the preceding calendar year. The company may | 5710 |
elect to use the commissioners 1980 standard ordinary mortality | 5711 |
table with ten-year select mortality factors for any specified | 5712 |
plan of life insurance. The superintendent may approve the use of | 5713 |
any ordinary mortality table adopted after 1980 by the national | 5714 |
association of insurance commissioners in determining the minimum | 5715 |
nonforfeiture standard for such policies. | 5716 |
| 5717 |
standard basis, all adjusted premiums and present values referred | 5718 |
to in this section shall be calculated on the basis of the | 5719 |
commissioners 1961 standard industrial mortality table and a rate | 5720 |
of interest not exceeding the nonforfeiture interest rate provided | 5721 |
for by division | 5722 |
company, a rate not exceeding the nonforfeiture interest rate for | 5723 |
policies issued in the preceding calendar year. The superintendent | 5724 |
may approve the use of any industrial mortality table adopted | 5725 |
after 1980 by the national association of insurance commissioners | 5726 |
in determining the minimum nonforfeiture standard for such | 5727 |
policies. | 5728 |
| 5729 |
any calendar year is equal to one hundred twenty-five per cent of | 5730 |
the valuation interest rate for the policy as defined in section | 5731 |
5732 | |
one-quarter of one per cent, provided, however, that the | 5733 |
nonforfeiture interest rate shall not be less than four per cent. | 5734 |
(F) For all policies issued on or after the operative date of | 5735 |
the valuation manual: | 5736 |
(1) For all policies of ordinary insurance, the valuation | 5737 |
manual shall provide the commissioners standard mortality table | 5738 |
for use in determining the minimum nonforfeiture standard that may | 5739 |
be substituted for the commissioners 1980 standard ordinary | 5740 |
mortality table, with or without ten-year select mortality | 5741 |
factors, or for the commissioners 1980 extended term insurance | 5742 |
table. If the superintendent approves by rule any commissioners | 5743 |
standard ordinary mortality table adopted by the national | 5744 |
association of insurance commissioners for use in determining the | 5745 |
minimum nonforfeiture standard for policies issued on or after the | 5746 |
operative date of the valuation manual, then that minimum | 5747 |
nonforfeiture standard supersedes the minimum nonforfeiture | 5748 |
standard provided by the valuation manual. | 5749 |
(2) For all policies of industrial insurance, the valuation | 5750 |
manual shall provide the commissioners standard mortality table | 5751 |
for use in determining the minimum nonforfeiture standard that may | 5752 |
be substituted for the commissioners 1961 standard industrial | 5753 |
mortality table or the commissioners 1961 industrial extended term | 5754 |
insurance table. If the superintendent approves by rule any | 5755 |
commissioners standard industrial mortality table adopted by the | 5756 |
national association of insurance commissioners for use in | 5757 |
determining the minimum nonforfeiture standard for policies issued | 5758 |
on or after the operative date of the valuation manual, then that | 5759 |
minimum nonforfeiture standard supersedes the minimum | 5760 |
nonforfeiture standard provided by the valuation manual. | 5761 |
(3) The nonforfeiture interest rate per annum for any policy | 5762 |
issued in a particular calendar year shall be provided by the | 5763 |
valuation manual. | 5764 |
(G) Any cash surrender value for any paid-up nonforfeiture | 5765 |
benefit including any paid-up dividend additions shall be | 5766 |
calculated on the basis of the mortality table and rate of | 5767 |
interest used in determining the amount of such benefit and | 5768 |
paid-up dividend additions. | 5769 |
(H) Guaranteed paid-up nonforfeiture benefits, including any | 5770 |
paid-up additions, shall be calculated on the basis of an interest | 5771 |
rate no lower than that specified in the policy when calculating | 5772 |
cash surrender values. | 5773 |
(I) Present values, for any paid-up term insurance or any | 5774 |
paid-up term insurance with accompanying pure endowment offered as | 5775 |
a nonforfeiture benefit, shall be calculated using rates of | 5776 |
mortality not to exceed those shown in the commissioners 1980 | 5777 |
extended term insurance table for policies of ordinary insurance | 5778 |
and those shown in the commissioners 1961 industrial extended term | 5779 |
insurance table for policies of industrial insurance. The | 5780 |
superintendent may approve the use of any extended term insurance | 5781 |
table adopted after 1980 by the national association of insurance | 5782 |
commissioners in determining such present values. | 5783 |
(J) Adjusted premiums and present values for policies that | 5784 |
are issued on a substandard basis may be calculated on the basis | 5785 |
of such table of mortality as may be specified by the company and | 5786 |
approved by the superintendent. | 5787 |
(K) The superintendent of insurance may by rule adopt methods | 5788 |
for computing cash surrender values and paid-up nonforfeiture | 5789 |
benefits for plans of life insurance which are of such a nature | 5790 |
that values cannot be determined by any method described in this | 5791 |
section, provided the superintendent is satisfied that the | 5792 |
benefits provided in any such plan are substantially as favorable | 5793 |
to policyholders and insureds as the minimum benefits otherwise | 5794 |
required by this section and that the benefits and patterns of | 5795 |
premiums for the plan will not mislead prospective policyholders | 5796 |
or insureds. Such methods must be consistent with the principles | 5797 |
of this section. This division shall apply to any plan of life | 5798 |
insurance which provides for future premium determination, the | 5799 |
amounts of which are to be determined by the company on the basis | 5800 |
of estimates of future experience made at the time of any such | 5801 |
determination. | 5802 |
(L) Any cash surrender value and any paid-up nonforfeiture | 5803 |
benefit, available upon default in payment of a premium due at any | 5804 |
time other than on a policy anniversary, shall be calculated with | 5805 |
allowance for lapse of time and payment of fractional premiums | 5806 |
beyond the preceding policy anniversary. All values referred to in | 5807 |
this section may be calculated upon the assumption that any death | 5808 |
benefit is payable at the end of the policy year of death. The net | 5809 |
value of any paid-up addition, other than paid-up term additions, | 5810 |
shall be not less than the amount used to provide such additions. | 5811 |
(M) All other policy benefits additional to life insurance | 5812 |
and endowment benefits shall be disregarded, and premiums for all | 5813 |
such additional benefits and any extra premiums to cover | 5814 |
impairments or special hazards shall be disregarded, in | 5815 |
ascertaining the cash surrender values and nonforfeiture benefits | 5816 |
required by this section. No such additional benefits shall be | 5817 |
required to be included in any paid-up nonforfeiture benefit. Such | 5818 |
benefits include additional benefits payable: | 5819 |
(1) For death or dismemberment by accident or accidental | 5820 |
means; | 5821 |
(2) For total and permanent disability; | 5822 |
(3) As reversionary annuity or deferred reversionary annuity | 5823 |
benefits; | 5824 |
(4) As term insurance benefits provided by rider or | 5825 |
supplemental policy provisions to which, issued as a separate | 5826 |
policy, this section would not apply; | 5827 |
(5) As term insurance on the life of a child or lives of | 5828 |
children provided in a policy on the life of a parent, if such | 5829 |
term insurance expires before the child's age is twenty-six, is | 5830 |
uniform in amount after the child's age is one, and has not become | 5831 |
paid-up by reason of the death of a parent. | 5832 |
(N) This section does not apply to any reinsurance, group | 5833 |
insurance, pure endowment or annuity or reversionary annuity | 5834 |
contract nor to any: | 5835 |
(1) Term policy, or renewal thereof, of uniform amount and | 5836 |
for twenty years or less expiring before age seventy-one which | 5837 |
provides no guaranteed nonforfeiture or endowment benefit and for | 5838 |
which uniform premiums are payable during the entire term and any | 5839 |
renewal of the policy; | 5840 |
(2) Term policy of decreasing amount, which provides no | 5841 |
guaranteed nonforfeiture or endowment benefits, and for which each | 5842 |
adjusted premium is less than the adjusted premium for a term | 5843 |
policy described in division (N)(1) of this section issued at the | 5844 |
same age and for the same initial amount of insurance; | 5845 |
(3) Policy, which provides no guaranteed nonforfeiture or | 5846 |
endowment benefits, and for which the cash surrender value or | 5847 |
present value of any paid-up nonforfeiture benefit for any policy | 5848 |
year calculated according to this section as of the beginning of | 5849 |
such policy year, does not exceed two and one-half per cent of the | 5850 |
amount of insurance at the beginning of the same policy year; | 5851 |
(4) Policy which is delivered outside this state through an | 5852 |
agent or other representative of the company issuing the policy. | 5853 |
For purposes of determining the applicability of this | 5854 |
division to a joint-term life insurance policy, the age at expiry | 5855 |
shall be the age at expiry of the oldest life. | 5856 |
(O) No approved policy form need be refiled if nonforfeiture | 5857 |
values or methods for computing such values for it are refiled and | 5858 |
the only change is in the interest rate or the mortality table. | 5859 |
(P) The operative date of this section shall be January 1, | 5860 |
1989, except that an earlier operative date may be elected as | 5861 |
provided in this division. A company may, by written notice filed | 5862 |
with the superintendent, elect to issue all, or one or more, of | 5863 |
its policy forms pursuant to this section on and after a date | 5864 |
specified in the notice. The date specified may be any date on or | 5865 |
after January 1, 1983, and before January 1, 1989. The date | 5866 |
specified shall be the operative date of this section for the | 5867 |
policy form or forms specified in the notice. | 5868 |
No other statute shall be construed to prohibit any life | 5869 |
insurance company from classifying its policies and electing to | 5870 |
issue specified forms of policies pursuant to the plan set forth | 5871 |
in this section, while using other legal basis as to reserve | 5872 |
calculations and nonforfeiture values for other of its policies, | 5873 |
nor shall it be construed to prohibit any life insurance company | 5874 |
from adopting other reasonable classifications of policies or | 5875 |
policyholders. | 5876 |
Sec. 3915.072. This section applies to all policies of life | 5877 |
insurance, not excluded by division (N) of section 3915.071 of the | 5878 |
Revised Code, that are delivered, or issued for delivery, in this | 5879 |
state on or after January 1, 1989. | 5880 |
(A) Upon default in payment of the premium due on a policy | 5881 |
anniversary, the cash surrender value shall not differ by more | 5882 |
than two-tenths of one per cent of the amount of insurance from | 5883 |
the sum of the greater of zero or the basic cash value, as defined | 5884 |
in division (B) of this section, and the present value of any | 5885 |
paid-up additions less any indebtedness to the company on the | 5886 |
policy. If the amount of insurance is not uniform, the amount is | 5887 |
the average amount of insurance in force at the beginning of each | 5888 |
of the first ten policy years. | 5889 |
(B) The basic cash value is equal to the present value on the | 5890 |
anniversary of the future guaranteed benefits which would have | 5891 |
been provided for by the policy had default not occurred less the | 5892 |
present value on the anniversary of the nonforfeiture factors | 5893 |
corresponding to the premiums which would have fallen due on and | 5894 |
after the anniversary. The basic cash value may not be less than | 5895 |
the value obtained by substituting the adjusted premiums, as | 5896 |
defined in division | 5897 |
Code, for the nonforfeiture factors. Paid-up additions and | 5898 |
indebtedness to the company on the policy are not taken into | 5899 |
consideration in determining basic cash value. Basic cash values | 5900 |
for policies having supplemental life insurance or annuity | 5901 |
benefits or for a family policy as described in division (B) of | 5902 |
section 3915.071 of the Revised Code shall be determined in the | 5903 |
manner provided in division (B) of that section for cash surrender | 5904 |
values. | 5905 |
(C) The nonforfeiture factor is a percentage of the adjusted | 5906 |
premium, as defined in division | 5907 |
the Revised Code, for each policy year. The percentage must be the | 5908 |
same for each policy year after the second until the later of the | 5909 |
fifth policy anniversary and the first policy anniversary after | 5910 |
the second on which the cash surrender value, before including any | 5911 |
paid-up additions and before deducting any indebtedness, is at | 5912 |
least equal to two-tenths of one per cent of the amount of | 5913 |
insurance. Any change in percentage after the fifth policy | 5914 |
anniversary must apply to no fewer than five consecutive policy | 5915 |
years before a different percentage can be adopted. If the amount | 5916 |
of insurance is not uniform, the amount is the average amount of | 5917 |
insurance in force at the beginning of each of the first ten | 5918 |
policy years. | 5919 |
(D) Adjusted premiums and present values shall be calculated | 5920 |
using the same mortality table and interest rate used to | 5921 |
demonstrate the policy's compliance with section 3915.071 of the | 5922 |
Revised Code. The cash surrender values referred to in this | 5923 |
section include any endowment benefit provided for by the policy. | 5924 |
(E) Any cash surrender value available upon default in a | 5925 |
premium payment due at any time other than on a policy | 5926 |
anniversary, and the amount of any paid-up nonforfeiture benefit | 5927 |
available upon default in a premium at any time shall be | 5928 |
calculated in accordance with the requirements for determining | 5929 |
analogous minimum amounts in section 3915.071 of the Revised Code. | 5930 |
The amounts of any cash surrender values and paid-up nonforfeiture | 5931 |
benefits granted in connection with additional benefits such as | 5932 |
those listed in division (M) of section 3915.071 of the Revised | 5933 |
Code shall conform with the principles of this section. | 5934 |
Sec. 3921.21. | 5935 |
this section, a fraternal benefit society shall invest its funds | 5936 |
only in such investments as are authorized by section 3907.14 of | 5937 |
the Revised Code for the investment of assets of life insurers and | 5938 |
subject to the limitations thereon. Any foreign or alien society | 5939 |
permitted or seeking to do business in this state that invests its | 5940 |
funds in accordance with the laws of the state, district, | 5941 |
territory, country, or province in which it is incorporated, is | 5942 |
held to meet the requirements of this section for the investment | 5943 |
of funds. | 5944 |
(B) A fraternal benefit society may seek permission from the | 5945 |
superintendent of insurance to invest funds under Chapter 3906. of | 5946 |
the Revised Code and may invest funds under that chapter if such | 5947 |
permission is granted. | 5948 |
Sec. 3925.08. Funds accumulated in the course of business, | 5949 |
or surplus money above the capital stock, of any company organized | 5950 |
under any law of this state, for the purpose provided in section | 5951 |
3925.01 of the Revised Code, shall only be loaned or invested in | 5952 |
the securities listed in sections 3925.05 and 3925.06 of the | 5953 |
Revised Code, or in the following: | 5954 |
(A)(1) Bonds and mortgages on unencumbered real estate within | 5955 |
this or any other state worth twenty-five per cent more than the | 5956 |
sum loaned thereon, exclusive of buildings, unless such buildings | 5957 |
are insured in some company authorized to do business in this | 5958 |
state, and the policy is transferred to the company making the | 5959 |
investment; or, in lieu of transferring such policies, the | 5960 |
mortgagee may purchase a policy or policies of mortgage protection | 5961 |
insurance, payable to the mortgagee or a trustee in its behalf, | 5962 |
insuring the mortgagee against loss resulting from the failure of | 5963 |
the mortgagor to acquire and maintain, from such an authorized | 5964 |
insurance company, insurance in the amount required by this | 5965 |
section; | 5966 |
(2) Bonds or notes secured by mortgages insured by the | 5967 |
federal housing administrator; | 5968 |
(3) Loans to veterans guaranteed in whole or in part by the | 5969 |
United States pursuant to Title III of the "Servicemen's | 5970 |
Readjustment Act of 1944," 58 Stat. 284, 38 U.S.C. 693, as | 5971 |
amended, provided such guaranteed loans are liens upon real | 5972 |
estate. | 5973 |
(B)(1) Legally authorized and executed bonds, notes, | 5974 |
warrants, and securities which are the direct obligation of or are | 5975 |
guaranteed as to both principal and interest by Canada, or which | 5976 |
are the direct obligation of or are guaranteed as to both | 5977 |
principal and interest by any province of Canada, or which are the | 5978 |
direct obligation of or are guaranteed as to both principal and | 5979 |
interest by any municipal corporation of Canada having a | 5980 |
population of one hundred thousand or more by the latest official | 5981 |
census, and which are not in default as to principal or interest; | 5982 |
(2) Obligations issued, assumed, or guaranteed by the | 5983 |
international finance corporation or by the international bank for | 5984 |
reconstruction and development, the Asian development bank, the | 5985 |
inter-American development bank, the African development bank, or | 5986 |
similar development bank in which the president, as authorized by | 5987 |
congress and on behalf of the United States, has accepted | 5988 |
membership. | 5989 |
(C) Bonds or other evidences of indebtedness, not in default | 5990 |
as to principal or interest, which are valid obligations issued, | 5991 |
assumed, or guaranteed by the United States, by any state thereof, | 5992 |
the Commonwealth of Puerto Rico, by any territory or insular | 5993 |
possession of the United States, or by the District of Columbia, | 5994 |
or which are valid obligations issued, assumed, or guaranteed by | 5995 |
any county, municipal corporation, district, or political | 5996 |
subdivision, or by any civil division or public instrumentality of | 5997 |
such governmental units, if by statutory or other legal | 5998 |
requirements such obligations are payable, as to both principal | 5999 |
and interest, from taxes levied upon all taxable property within | 6000 |
the jurisdiction of such governmental unit, or in bonds or other | 6001 |
obligations issued by or for account of any such governmental unit | 6002 |
having a population of five thousand or more by the latest | 6003 |
official federal or state census, which are payable as to both | 6004 |
principal and interest from revenues or earnings from the whole or | 6005 |
any part of a publicly owned utility, provided that by statute or | 6006 |
other applicable legal requirements, rates from the service or | 6007 |
operation of such utility must be fixed, maintained, and collected | 6008 |
at all times so as to produce sufficient revenues or earnings to | 6009 |
pay both principal and interest of such bonds or obligations as | 6010 |
they become due, and in any bonds or obligations issued or | 6011 |
guaranteed by the United States, any state, the District of | 6012 |
Columbia, the Commonwealth of Puerto Rico, any county, municipal | 6013 |
corporation, district, political subdivision, civil division, | 6014 |
commission, board, authority, agency, or other instrumentality of | 6015 |
one or more of them, provided there is a specific pledge of | 6016 |
revenues, earnings, or other adequate security and provided that | 6017 |
no prior or parity obligation of the same issuer, payable from | 6018 |
revenues or earnings from the same source, has been in default as | 6019 |
to principal or interest during the five years next preceding the | 6020 |
date of such investment, but such issuer need not have been in | 6021 |
existence for that period, and obligations acquired under this | 6022 |
section may be newly issued, and further provided that there is | 6023 |
adequate provision for payment of expenses of operation and | 6024 |
maintenance and the principal and interest on all obligations when | 6025 |
due; | 6026 |
(D)(1) Bonds or other evidences of indebtedness, bearing or | 6027 |
accruing interest, issued, assumed, or guaranteed by any solvent | 6028 |
corporation, trust, partnership, or similar business entity | 6029 |
organized and existing under the laws of this or any other state, | 6030 |
or of the United States, the Commonwealth of Puerto Rico, or of | 6031 |
the District of Columbia, or of Canada or any province of Canada, | 6032 |
upon which there is no existing interest or principal default, | 6033 |
provided that either: | 6034 |
(a) The bonds or other evidences of indebtedness are rated 1 | 6035 |
or 2 by the securities valuation office of the national | 6036 |
association of insurance commissioners; | 6037 |
(b) The corporation, together with its predecessor | 6038 |
corporation or corporations, or the trust, partnership, or similar | 6039 |
business entity, has been in existence for a period of at least | 6040 |
five years. | 6041 |
(2) Stocks, limited liability company membership interests, | 6042 |
limited partnership interests, or limited liability partnership | 6043 |
interests of any insurance, financial, investment, or investment | 6044 |
management companies, which investment management companies are | 6045 |
registered with the securities and exchange commission under the | 6046 |
"Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a-1, | 6047 |
as amended, or the stocks, limited liability company membership | 6048 |
interests, limited partnership interests, or limited liability | 6049 |
partnership interests in an entity wholly owned by a domestic | 6050 |
company or by a domestic company and its affiliates, that is | 6051 |
formed and maintained to acquire or hold specific assets or | 6052 |
liabilities for bankruptcy remoteness or limitation of liability | 6053 |
purposes, except its own stock, and stocks, limited liability | 6054 |
company membership interests, limited partnership interests, | 6055 |
limited liability partnership interests, bonds, notes, and | 6056 |
debentures of any company which is organized for, and limited in | 6057 |
its operations to, the financing of insurance premiums, upon | 6058 |
approval of such investments by the superintendent of insurance; | 6059 |
except that approval shall not be required for the purchase of the | 6060 |
outstanding stocks, limited liability company membership | 6061 |
interests, limited partnership interests, or limited liability | 6062 |
partnership interests of any such company, if investment in each | 6063 |
such company does not exceed in the aggregate two and one-half per | 6064 |
cent of the total admitted assets of the company making the | 6065 |
investment as of the preceding thirty-first day of December. | 6066 |
Whenever the superintendent has reason to believe that the | 6067 |
retention, investment, or acquisition of the stock, limited | 6068 |
liability company membership interest, limited partnership | 6069 |
interest, or limited liability partnership interest of any such | 6070 |
company substantially lessens competition generally in the | 6071 |
business of insurance or creates a monopoly therein the | 6072 |
superintendent shall proceed under section 3901.13 of the Revised | 6073 |
Code to cause such domestic insurance company to divest itself of | 6074 |
such stock, limited liability company membership interest, limited | 6075 |
partnership interest, or limited liability partnership interest. | 6076 |
(3) Other stocks, limited liability company membership | 6077 |
interests, or limited partnership interests, or limited liability | 6078 |
partnership interests of any solvent corporation organized under | 6079 |
the laws of this or any other state, or of the United States, or | 6080 |
of the District of Columbia, or of Canada or any province of | 6081 |
Canada, provided that a dividend or distribution has been paid by | 6082 |
the business entity in the preceding twelve months upon the stock, | 6083 |
membership interest, or partnership interest to be purchased or | 6084 |
such business entity, together with its predecessor entity or | 6085 |
entities, has been in existence for a period of at least five | 6086 |
years. | 6087 |
(4) A domestic company may acquire, hold, and convey tangible | 6088 |
personal property or interests therein for the production of | 6089 |
income, provided no domestic company shall invest in excess of two | 6090 |
per cent of its admitted assets as of the preceding thirty-first | 6091 |
day of December under this division. | 6092 |
(5) In equipment trust obligations or certificates, security | 6093 |
agreements, or other evidences of indebtedness entered into | 6094 |
directly or guaranteed by any company operating wholly or partly | 6095 |
within the United States or Canada, provided that such debt | 6096 |
obligation is secured by a first lien on tangible personal | 6097 |
property which is purchased or secured for payment thereof and | 6098 |
such debt obligation is repayable within twenty years from the | 6099 |
date of issue in annual, semiannual, or more frequent installments | 6100 |
beginning not later than the first year after such date. | 6101 |
(6) An insurer may invest without limitation in investments | 6102 |
of government money market funds. As used in division (D)(6) of | 6103 |
this section, "government money market fund" means a fund that at | 6104 |
all times invests in obligations issued, guaranteed, or insured by | 6105 |
the federal government of the United States or collateralized | 6106 |
repurchase agreements comprised of such obligations, and that | 6107 |
qualifies for investment without a reserve pursuant to the | 6108 |
purposes and procedures of the securities valuation office of the | 6109 |
national association of insurance commissioners. | 6110 |
(E) Negotiable promissory notes maturing in not more than six | 6111 |
months from the date thereof, secured by collateral security | 6112 |
through the transfer of any of the classes of securities described | 6113 |
in this section or in sections 3925.05 and 3925.06 of the Revised | 6114 |
Code, with absolute power of sale within twenty days after default | 6115 |
in payment at maturity; | 6116 |
(F)(1) Repurchase agreements with, and interest-bearing | 6117 |
obligations, including savings accounts and time certificates of | 6118 |
deposit of, a national bank of the United States, a commonwealth | 6119 |
bank of Puerto Rico, a chartered bank of Canada, or a state bank, | 6120 |
provided such bank is either a member of the federal deposit | 6121 |
insurance corporation created pursuant to the "Banking Act of | 6122 |
1933," as amended, or the Canada deposit insurance corporation | 6123 |
created pursuant to the act of parliament known as the "Canada | 6124 |
Deposit Insurance Corporation Act," as amended. | 6125 |
(2) Certificates of deposit, savings share accounts, | 6126 |
investment share accounts, stock deposits, stock certificates, or | 6127 |
other evidences of indebtedness of a savings and loan association, | 6128 |
provided all such evidences of indebtedness are insured pursuant | 6129 |
to the "Financial Institutions Reform, Recovery, and Enforcement | 6130 |
Act of 1989," 103 Stat. 183, 12 U.S.C.A. 1811, as amended; | 6131 |
(3) Bankers' acceptances and bills of exchange of the kinds | 6132 |
and maturities made eligible by law for rediscount with the | 6133 |
federal reserve banks, provided that the same are accepted by a | 6134 |
bank or trust company incorporated under the laws of the United | 6135 |
States or of this state or any other bank or trust company which | 6136 |
is a member of the federal reserve system. | 6137 |
(G) Any securities issued as a result of any reorganization, | 6138 |
or capital or debt adjustment, in whole or in part, in exchange | 6139 |
for securities acquired by it prior to such reorganization, or | 6140 |
capital or debt adjustment; | 6141 |
(H)(1) In bonds, notes, debentures, or other evidences of | 6142 |
indebtedness issued, assumed, or guaranteed by a solvent | 6143 |
corporation, trust, or partnership formed or existing under the | 6144 |
laws of a foreign jurisdiction, provided each such foreign | 6145 |
investment is of the same kind and quality as United States | 6146 |
investments authorized under this section; or in common or | 6147 |
preferred stock, shares, membership interests, or partnership | 6148 |
interests of any solvent business entity formed or existing under | 6149 |
the laws of a foreign jurisdiction, provided each such foreign | 6150 |
investment is of the same kind and quality as United States | 6151 |
investments authorized under this section; or in bonds or other | 6152 |
evidences of indebtedness issued, assumed, or guaranteed by a | 6153 |
foreign jurisdiction. | 6154 |
An insurer shall not invest in foreign investments under | 6155 |
division (H) of this section, including investments denominated in | 6156 |
foreign currency, a sum exceeding in the aggregate fifteen per | 6157 |
cent of its admitted assets as of the preceding thirty-first day | 6158 |
of December. The aggregate amount of investments held by an | 6159 |
insurer in a single foreign jurisdiction shall not exceed three | 6160 |
per cent of its admitted assets as of the preceding thirty-first | 6161 |
day of December. | 6162 |
As used in division (H)(1) of this section, "foreign | 6163 |
jurisdiction" means a jurisdiction outside the United States, | 6164 |
Puerto Rico, or Canada whose bonds are rated 1 by the securities | 6165 |
valuation office of the national association of insurance | 6166 |
commissioners. | 6167 |
(2) An insurer may acquire investments denominated in foreign | 6168 |
currency whether or not they are foreign investments. | 6169 |
An insurer shall not invest in investments denominated in | 6170 |
foreign currency a sum exceeding in the aggregate fifteen per cent | 6171 |
of its admitted assets as of the preceding thirty-first day of | 6172 |
December. The aggregate amount of investments denominated in a | 6173 |
single foreign currency held by an insurer shall not exceed three | 6174 |
per cent of an insurer's admitted assets as of the preceding | 6175 |
thirty-first day of December. | 6176 |
(3) As used in division (H) of this section, "foreign | 6177 |
currency" means a currency other than that of the United States. | 6178 |
(I)(1) Any securities or other property not permitted under | 6179 |
section 3925.05, 3925.06, 3925.08, or 3925.20 of the Revised Code | 6180 |
to an extent not exceeding in the aggregate six per cent of the | 6181 |
total admitted assets of such company on the preceding | 6182 |
thirty-first day of December, within the limitations prescribed in | 6183 |
division (J) of this section. Any such company may also invest up | 6184 |
to an additional five per cent of the total admitted assets of | 6185 |
such company on the preceding thirty-first day of December, within | 6186 |
the limitations prescribed in division (J) of this section, in | 6187 |
loans or investments in small businesses having more than half of | 6188 |
their assets or employees in this state and in venture capital | 6189 |
firms having an office within this state, provided that, as a | 6190 |
condition of a company making an investment in a venture capital | 6191 |
firm, the firm must agree to use its best efforts to make | 6192 |
investments, in an aggregate amount at least equal to the | 6193 |
investment to be made by the company in that venture capital firm, | 6194 |
in small businesses having their principal offices within this | 6195 |
state and having either more than one-half of their assets within | 6196 |
this state or more than one-half of their employees employed | 6197 |
within this state. | 6198 |
As used in division (I) of this section: | 6199 |
(a) "Small businesses" means any corporation, partnership, | 6200 |
proprietorship, or other entity that either does not have more | 6201 |
than four hundred employees, or would qualify as a small business | 6202 |
for the purpose of receiving financial assistance from small | 6203 |
business investment companies licensed under the "Small Business | 6204 |
Investment Act of 1958," 72 Stat. 689, 15 U.S.C.A. 661, as | 6205 |
amended, and rules of the small business administration. | 6206 |
(b) "Venture capital firms" means any corporation, | 6207 |
partnership, proprietorship, or other entity, the principal | 6208 |
business of which is or will be the making of investments in small | 6209 |
businesses. | 6210 |
(c) "Investments" means any equity investment, including | 6211 |
limited partnership interests and other equity interests in which | 6212 |
liability is limited to the amount of the investment, but does not | 6213 |
include general partnership interests or other interests involving | 6214 |
general liability. | 6215 |
(2) In the event that, subsequent to being made under this | 6216 |
division, a loan or investment is determined to have become | 6217 |
qualified as a loan or investment under any of the divisions (A) | 6218 |
to (F) of this section or under section 3925.05, 3925.06, or | 6219 |
3925.20 of the Revised Code, the company may consider such loan or | 6220 |
investment as held under such other statutory provision and such | 6221 |
loan or investment shall no longer be considered as having been | 6222 |
made under this division. | 6223 |
(J) No domestic insurance company shall at any time have | 6224 |
invested a sum exceeding five per cent of its admitted assets as | 6225 |
of the preceding thirty-first day of December in the bonds, notes, | 6226 |
debentures, other evidences of indebtedness, and stocks of a | 6227 |
particular corporation, trust, partnership, or similar business | 6228 |
entity, except for investments authorized under divisions (A) and | 6229 |
(D)(2) of this section, and no domestic insurance company together | 6230 |
with its subsidiary, if any, shall at any time own directly or | 6231 |
indirectly more than twenty-five per cent of the outstanding | 6232 |
bonds, notes, debentures, other evidences of indebtedness, and | 6233 |
stocks of any corporation, except for investments authorized under | 6234 |
divisions (A) and (D)(2) of this section. | 6235 |
This section does not affect the propriety or legality of an | 6236 |
investment made by such domestic insurance company which was in | 6237 |
accordance with the laws in force at the time of the making of the | 6238 |
investment. | 6239 |
A business entity organized for the purpose provided in | 6240 |
section 3925.01 of the Revised Code may seek permission from the | 6241 |
superintendent of insurance to invest funds under Chapter 3906. of | 6242 |
the Revised Code and may invest funds under that chapter if such | 6243 |
permission is granted. | 6244 |
(K) As used in divisions (K) and (L) of this section: | 6245 |
(1) "Covered" means that an insurer owns, or can immediately | 6246 |
acquire through the exercise of options, warrants, or conversion | 6247 |
rights already owned, the underlying interest in order to fulfill | 6248 |
or secure its obligation under the option, cap, or floor it has | 6249 |
written. | 6250 |
(2)(a) "Derivative instrument" means an agreement, option, | 6251 |
instrument, or a series or combination thereof of either of the | 6252 |
following types: | 6253 |
(i) To make or take delivery of, or assume or relinquish, a | 6254 |
specified amount of one or more underlying interest, or to make a | 6255 |
cash settlement in lieu thereof; | 6256 |
(ii) That has a price, performance, value, or cash flow based | 6257 |
primarily upon the actual or expected price, level, performance, | 6258 |
value, or cash flow of one or more underlying interests. | 6259 |
(b) Derivative instruments include options, warrants, caps, | 6260 |
floors, collars, swaps, forwards, futures, and any other | 6261 |
agreements, options, or instruments substantially similar thereto | 6262 |
or any series or combination thereof. | 6263 |
(3) "Derivative transaction" means a transaction involving | 6264 |
the use of one or more derivative instruments. | 6265 |
(4) "Hedging transaction" means a derivative transaction that | 6266 |
is entered into and maintained to reduce either of the following: | 6267 |
(a) The risk of economic loss due to a change in the value, | 6268 |
yield, price, cash flow, or quantity of assets or liabilities that | 6269 |
the insurer has acquired or incurred or anticipates acquiring or | 6270 |
incurring; | 6271 |
(b) The currency exchange rate risk or the degree of exposure | 6272 |
as to assets or liabilities that an insurer has acquired or | 6273 |
incurred or anticipates acquiring or incurring. | 6274 |
(5) "Income generation" means a derivative transaction | 6275 |
involving the writing of covered options, caps, or floors that is | 6276 |
intended to generate income or enhance return. | 6277 |
(6) "Replication transaction" means a derivative transaction | 6278 |
that is intended to replicate the performance of one or more | 6279 |
assets that an insurer is authorized to acquire under this | 6280 |
chapter. "Replication transaction" does not include a derivative | 6281 |
transaction that is entered into as a hedging transaction. | 6282 |
(L)(1) Prior to an insurer entering into derivative | 6283 |
transactions, the board of directors of the insurer shall approve | 6284 |
a derivative use plan. | 6285 |
(2) An insurer shall notify the superintendent of insurance | 6286 |
in writing within three days after identifying either of the | 6287 |
following: | 6288 |
(a) Any event or occurrence related to an insurer's | 6289 |
derivatives use that may lead to a material change to the | 6290 |
insurer's policyholder surplus; | 6291 |
(b) Any event or occurrence related to an insurer's | 6292 |
derivatives use that, with the passage of time, may lead to a | 6293 |
material change to the insurer's policyholder surplus. | 6294 |
(3) Prior to entering into derivative transactions, an | 6295 |
insurer shall file with the superintendent a copy of its | 6296 |
derivative use plan and internal controls, for informational | 6297 |
purposes. The insurer shall keep current the copy of its | 6298 |
derivative use plan and internal controls filed with the | 6299 |
superintendent. The insurer shall not enter into derivative | 6300 |
transactions until thirty calendar days after the date on which | 6301 |
the derivative use plan and internal controls is filed with the | 6302 |
superintendent. This thirty-calendar-day period is to begin on the | 6303 |
date that the superintendent receives the derivative use plan and | 6304 |
internal controls. | 6305 |
(4) The superintendent may adopt rules prescribing the form | 6306 |
and content of derivative use plans, as well as any internal | 6307 |
controls the superintendent considers necessary. | 6308 |
(5) An insurer that engages in hedging transactions or | 6309 |
replication transactions shall do both of the following: | 6310 |
(a) Maintain its position in any outstanding derivative | 6311 |
instrument used as part of a hedging transaction or replication | 6312 |
transaction for as long as the hedging transaction or replication | 6313 |
transaction continues to be effective; | 6314 |
(b) Demonstrate to the superintendent, upon request, that any | 6315 |
derivative transaction entered into and involving hedging | 6316 |
transaction or replication transaction is an effective hedging | 6317 |
transaction or replication transaction. The insurer must be able | 6318 |
to demonstrate this at the time the derivative transaction is | 6319 |
entered into, and for as long as the transaction continues to be | 6320 |
in place. | 6321 |
(6) An insurer may not invest in, or use, a derivative | 6322 |
instrument for any purpose other than a hedging transaction, | 6323 |
income generation, or replication. | 6324 |
(7) An insurer shall not invest in, or use a derivative | 6325 |
instrument for purposes of income generation a sum exceeding in | 6326 |
the aggregate five per cent of its admitted assets, as of the | 6327 |
preceding thirty-first day of December. | 6328 |
(8) All documents provided to the superintendent under | 6329 |
division (L) of this section shall be deemed trade secrets and | 6330 |
shall be provided with trade secret protection. Such documents | 6331 |
shall also be considered work papers of the superintendent that | 6332 |
are subject to section 3901.48 of the Revised Code and are | 6333 |
confidential and privileged and shall not be considered a public | 6334 |
record, as defined in section 149.43 of the Revised Code. The | 6335 |
original documents and any copies of them shall not be subject to | 6336 |
subpoena and shall not be made public by the superintendent or any | 6337 |
other person, except as otherwise provided in section 3901.48 of | 6338 |
the Revised Code. | 6339 |
Sec. 3937.19. (A) As used in this section: | 6340 |
(1) "Personal lines policy of insurance" means a policy of | 6341 |
property and casualty insurance issued to a natural person | 6342 |
primarily for personal or family protection for personal | 6343 |
automobile, homeowner's, tenant's, mobile-homeowner's, | 6344 |
non-commercial dwelling fire or personal umbrella coverage. | 6345 |
(2) "Customer" has the same meaning as in section 3901.19 of | 6346 |
the Revised Code. | 6347 |
(B)(1) An insurer may, but is not required to, provide or | 6348 |
make a policy summary of material coverages and exclusions in a | 6349 |
personal lines policy of insurance available to a customer. If an | 6350 |
insurer chooses to provide or make any such policy summary | 6351 |
available, the summary shall include at a minimum all of the | 6352 |
following: | 6353 |
(a) A brief description of the principal benefits provided | 6354 |
under the policy for which a premium is charged; | 6355 |
(b) A brief description of the principal exclusions, provided | 6356 |
under the policy; | 6357 |
(c) A statement of the loss valuation methods provided under | 6358 |
the policy; | 6359 |
(d) The following notice, or a substantially similar notice, | 6360 |
prominently displayed in conjunction with the policy summary: | 6361 |
"You should read your insurance policy and get assistance in | 6362 |
understanding the coverages and any exclusions directly from your | 6363 |
agent or the insurance company issuing your policy. This policy | 6364 |
summary is for informational purposes only and is designed to | 6365 |
provide a basic description of insurance coverages and exclusions | 6366 |
in your policy. This summary does not reflect all the coverages | 6367 |
and exclusions contained in your policy and is qualified in its | 6368 |
entirety to the policy terms. | 6369 |
State law prohibits this policy summary from replacing, | 6370 |
modifying, altering, amending, or changing any of the terms or | 6371 |
provisions of the insurance policy that is the subject of this | 6372 |
summary." | 6373 |
(2) A policy summary, as described in division (B)(1) of this | 6374 |
section, does not include the policy declarations page and any | 6375 |
notations contained therein. | 6376 |
(C) Nothing contained in this section shall be construed to | 6377 |
prohibit an insurer from providing information related to an | 6378 |
insurance policy that does not meet the requirements prescribed in | 6379 |
division (B) of this section. | 6380 |
(D) An insurer may display sections of a policy summary | 6381 |
individually, in any combination or in any order, as long as the | 6382 |
summary meets the requirements prescribed in division (B) of this | 6383 |
section and the notice contained in division (B)(1)(d) of this | 6384 |
section appears in each section of the policy summary. If the | 6385 |
policy summary is paginated, then the notice contained in division | 6386 |
(B)(1)(d) of this section shall appear on each page. | 6387 |
(E) An insurer's election to provide or make a policy summary | 6388 |
available to a customer does not obligate the insurer to provide a | 6389 |
policy summary upon the renewal of the policy or for any other | 6390 |
policies issued to the same customer. | 6391 |
(F) If an insurer elects to provide or make a policy summary | 6392 |
available for a personal lines policy of insurance, the insurer | 6393 |
shall provide a policy summary for the named insured under a | 6394 |
policy for that product. | 6395 |
(G) A policy summary provided or made available under this | 6396 |
section shall not be considered a replacement for the terms of the | 6397 |
policy of insurance, shall not have the effect of altering the | 6398 |
coverage afforded by the policy, and shall not confer new or | 6399 |
additional rights beyond those expressly provided for in the | 6400 |
policy. Nothing in this section shall be construed to create or | 6401 |
imply a private cause of action for a violation of this section. A | 6402 |
policy summary provided or made available pursuant to this section | 6403 |
shall not be admissible in court or in any other legal or | 6404 |
administrative proceeding, except to enforce division (H) of this | 6405 |
section. | 6406 |
(H) No person doing the business of insurance in this state | 6407 |
shall provide or use a policy summary that contains any false, | 6408 |
misleading, or deceptive representation or statement. | 6409 |
(I) Any violation of this section is an unfair and deceptive | 6410 |
act or practice in the business of insurance under sections | 6411 |
3901.19 to 3901.26 of the Revised Code. If the superintendent, by | 6412 |
written order, finds that any person is about to engage, is | 6413 |
engaging, or has engaged in a violation of this section, the | 6414 |
superintendent may impose any or all of the administrative | 6415 |
remedies set forth in divisions (D)(1) to (5) of section 3901.22 | 6416 |
of the Revised Code. If the superintendent finds that the | 6417 |
violation was due to gross or willful misconduct, the | 6418 |
superintendent may order that person to reimburse any customer | 6419 |
harmed by the violation or violations, including reimbursement or | 6420 |
payment of insurance claims for which a loss occurred as a result | 6421 |
of a customer's reliance upon a policy summary containing any | 6422 |
false, misleading, or deceptive representation or statement. | 6423 |
Sec. 3939.01. (A) Any number of persons of lawful age, not | 6424 |
less than ten in number, owning insurable property in this state, | 6425 |
may associate themselves together for the purpose of insuring each | 6426 |
other against the risk of direct physical loss or damage to | 6427 |
property in this state, including theft of property in this state, | 6428 |
except loss or damage to motor vehicles caused by collision. Any | 6429 |
association organized under this section shall file with the | 6430 |
department of insurance all policy forms currently in use by the | 6431 |
association and all additions, deletions, or amendments to the | 6432 |
policy forms at least thirty days prior to the use of the policy | 6433 |
forms, additions, deletions, or amendments. Each filing under this | 6434 |
division is deemed approved thirty days after the filing is | 6435 |
received by the superintendent of insurance, unless the filing is | 6436 |
disapproved by the superintendent during that thirty-day period. | 6437 |
(B) Any association organized under this section, from time | 6438 |
to time, may assess upon and collect from its members or other | 6439 |
responsible parties sums of money that are necessary to pay | 6440 |
expenses and losses that occur, or are anticipated to occur, from | 6441 |
those covered perils. The assessment and collection of those sums | 6442 |
of money shall be regulated by the constitution of the association | 6443 |
adopted under section 3939.06 of the Revised Code. The | 6444 |
constitution shall require the assessments to be made directly and | 6445 |
specifically upon the members or other responsible parties, and to | 6446 |
be paid by them out of any funds paid to or deposited with the | 6447 |
association in anticipation of assessments. Any association | 6448 |
organized under this section may borrow money for the payment of | 6449 |
losses and associated expenses, but those loans shall not be made | 6450 |
for a period of time that extends beyond the collection of the | 6451 |
association's next assessment. | 6452 |
(C) Any association organized under this section may | 6453 |
accumulate a surplus from its assessments. | 6454 |
in division (D) of this section, that surplus and all other funds | 6455 |
received or accumulated in the course of business shall be | 6456 |
invested under sections 3925.05 and 3925.08 of the Revised Code. | 6457 |
Upon prior approval of the superintendent of insurance, the | 6458 |
association may invest that surplus and those other funds in real | 6459 |
estate for the association's convenient accommodation in the | 6460 |
transaction of its business. The association shall not have at any | 6461 |
one time more than ten per cent of its admitted assets invested in | 6462 |
real estate. | 6463 |
(D) An association organized under this section may seek | 6464 |
permission from the superintendent of insurance to invest funds | 6465 |
under Chapter 3906. of the Revised Code and may invest funds under | 6466 |
that chapter if such permission is granted. | 6467 |
(E) Any association organized under this section may insure | 6468 |
farm buildings, residential and detached dwellings, outbuildings, | 6469 |
churches, township buildings, grange buildings, farm machinery, | 6470 |
equipment, and other farm personal property, household goods and | 6471 |
personal effects, pleasure and utility vehicles, and other similar | 6472 |
property, except motor vehicles titled or capable of being titled | 6473 |
for use on public roads and property used exclusively for | 6474 |
commercial or industrial purposes. | 6475 |
The property described in this division may be classified | 6476 |
only for the purpose of determining and levying assessments, and | 6477 |
that property may be located within or without the limits of any | 6478 |
municipal corporation. | 6479 |
| 6480 |
collect a charge on each contract of insurance in accordance with | 6481 |
its constitution adopted under section 3939.06 of the Revised | 6482 |
Code. | 6483 |
| 6484 |
contracts of reinsurance for the kinds of insurance authorized by | 6485 |
sections 3939.01 to 3939.11 of the Revised Code or accept | 6486 |
reinsurance on any portion of that insurance. | 6487 |
Sec. 3953.15. | 6488 |
this section, the unearned premium reserve of a title insurance | 6489 |
company shall be invested in accordance with sections 3925.05 to | 6490 |
3925.08, inclusive, of the Revised Code. | 6491 |
(B) A title insurance company may seek permission from the | 6492 |
superintendent of insurance to invest funds under Chapter 3906. of | 6493 |
the Revised Code and may invest funds under that chapter if such | 6494 |
permission is granted. | 6495 |
Section 2. That existing sections 1751.25, 3901.043, | 6496 |
3901.045, 3901.17, 3901.32, 3901.321, 3901.33, 3901.34, 3901.341, | 6497 |
3901.35, 3901.36, 3901.62, 3901.63, 3901.64, 3903.72, 3903.721, | 6498 |
3903.83, 3907.14, 3913.01, 3913.34, 3915.04, 3915.071, 3915.072, | 6499 |
3921.21, 3925.08, 3939.01, and 3953.15, and sections 3907.09, | 6500 |
3907.10, 3907.11, and 3907.13 of the Revised Code are hereby | 6501 |
repealed. | 6502 |
Section 3. Sections 3901.371 to 3907.378 of the Revised | 6503 |
Code, as enacted in this act, shall take effect on January 1, | 6504 |
2015. The first filing of the own risk and solvency assessment | 6505 |
summary report, as required by section 3901.375 of the Revised | 6506 |
Code, shall be in 2015. | 6507 |
Section 4. The intent of the General Assembly, in enacting | 6508 |
this act is to protect and to further the interests of insureds, | 6509 |
creditors, and the general public by providing, with minimum | 6510 |
interference with management initiative and judgment, prudent | 6511 |
standards for the development and administration of insurer | 6512 |
investment programs. | 6513 |
Section 5. This act shall be known as the "Ohio Insurer | 6514 |
Investment Act." | 6515 |
Section 6. The Superintendent of Insurance shall adopt rules | 6516 |
in accordance with Chapter 119. of the Revised Code to implement | 6517 |
the amendments to sections 3901.62, 3901.63, and 3901.64 of the | 6518 |
Revised Code as enacted in this act and to implement new sections | 6519 |
3901.621 and 3901.631 of the Revised Code as enacted in this act. | 6520 |
It is the intent of the General Assembly in mandating the adoption | 6521 |
of these rules that the Superintendent adopt rules that are | 6522 |
substantially similar to those portions of the Credit for | 6523 |
Reinsurance Model Regulation, #786, as approved by the National | 6524 |
Association of Insurance Commissioners on November 6, 2011, that | 6525 |
the Reinsurance Task Force of the National Association of | 6526 |
Insurance Commissioners approved on May 4, 2012, as key elements | 6527 |
for purposes of accreditation. | 6528 |
Section 7. Notwithstanding division (V)(3) of section | 6529 |
3907.14 and division (L)(3) of section 3925.08 of the Revised | 6530 |
Code, an insurer that is engaged in derivative transactions, | 6531 |
pursuant to a derivative use plan approved by that insurer's board | 6532 |
of directors, prior to the effective date of this act, may | 6533 |
continue to engage in derivative transactions pursuant to that | 6534 |
derivative use plan for a period of no longer than one hundred | 6535 |
twenty days after the effective date of this act. | 6536 |