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ACTNO.9 07 3 BILL NO. 36-0184 THIRTY-SIXTH LEGISLATURE OF THE VIRGIN ISLANDS Regular Session 2026 An act amending title 22 Virgin Islands Code, chapter 14, The Virgin Islands Insurance Holding Company System Regulatory Act to implement revisions that were made to the National Association of Insurance Commissioners ---()--- WHEREAS, it is imperative that all United States jurisdictions, including the Virgin Islands, periodically update their insurance laws commensurate with the ever-evolving insurance industry to strengthen the solvency regulation of insurance companies doing business in the United States; and WHEREAS, the National Association of Insurance Commissioners (“NAIC”) is a nonprofit organization comprised of all insurance regulators in the United States, has established and continues to establish core accreditation standards and a comprehensive set of laws, known as Model Laws and Regulations, to assist United States jurisdictions in their regulation of their multi-state domestic insurance industry; WHEREAS, jurisdictions in the United States that are accredited by the NAIC have been required to adopt, and to continue to adopt, NAIC Model Laws and Regulations, to achieve and maintain accreditation status with the NAIC; WHEREAS, on December 6, 2019, the Virgin Islands, through the Office of the Lieutenant Governor, Division of Banking, Insurance and Financial Regulation (“Division”), was unanimously accredited by the NAIC and on November 16, 2024, was unanimously re- accredited by the NAIC, an achievement of immeasurable significance, which requires the Virgin Islands to enact certain NAIC Model Laws, and to promulgate related NAIC regulations, to maintain its accreditation status; WHEREAS, on July 20, 2017, Act No. 8003, also known as “The Virgin Islands Insurance Holding Company System Regulatory Act”, which is an NAIC Model Law, was signed into law, and was later codified as title 22 Virgin Islands Code, chapter 14; WHEREAS, in 2020 and 2021, the NAIC revised provisions of the Insurance Holding Company System Regulatory Act Model Law, to include provisions that are related to a group capital calculation, liquidity stress test and receivership; 2 WHEREAS, as of February 21, 2025, the provisions that are related to the group capital calculation and liquidity stress test have been adopted as amendments to law in 35 United States jurisdictions, and are currently under consideration in another 10 United States jurisdictions, and the provisions that are related to receivership have been adopted as amendments to law in 19 United States jurisdictions, and are currently under consideration in another seven United States jurisdictions; WHEREAS, the amendments to the NAIC’s Insurance Holding Company System Regulatory Act Model Law include provisions that are an NAIC accreditation requirement, and as such, the Virgin Islands, as an NAIC accredited jurisdiction, must adopt these provisions for the Virgin Islands to maintain its NAIC accreditation; and WHEREAS, the revisions to the NAIC’s Insurance Holding Company System Regulatory Act Model Law will: (1) _ enhance the supervision of an insurance group; (2) provide key financial information on an insurance group; (3) quantify risk across an insurance group; (4) support transparency into how capital is allocated in an insurance group; and (5) ensure the continuation of essential services that are provided by affiliates of insurers that may be transitioning to a receivership, to mitigate potential disruptions in insurance operations and protect policyholders; Now, therefore, Be it enacted by the Legislature of the Virgin Islands: SECTION 1. Title 22 Virgin Islands Code, chapter 14 is amended as follows: (a} Section 321 is amended by striking “(1), (2), and (3)” of subsection (h), and inserting “(A), (B) and (C)”, respectively; redesignating the subsections as paragraphs (1) through (16), respectively; and by inserting the following definitions in their respective alphabetical order: “Group Capital Calculation Instructions” means the group capital calculation instructions as adopted by the NAIC and as amended by the NAIC from time to time in accordance with the procedures adopted by the NAIC.” “NAIC Liquidity Stress Test Framework” means a separate NAIC publication which includes a history of the NAIC’s development of regulatory liquidity stress testing, the scope criteria applicable for a specific data year, and the liquidity stress test instructions and reporting templates for a specific data year, such scope criteria, instructions and reporting template being as adopted by the NAIC and as amended by the NAIC from time to time in accordance with the procedures adopted by the NAIC.” 3 “Scope Criteria” means, as detailed in the NAIC liquidity stress test framework, the designated exposure bases along with minimum magnitudes thereof for the specified data year, used to establish a preliminary list of insurers considered scoped into the NAIC liquidity stress test framework for that data year.” (b) Section 323, subsection (b), paragraph (12) is amended by inserting “(1)” after “section 325(/)”. (c) Section 325 is amended as follows: (1) In subsection (d) by adding a sentence immediately following the last sentence that reads: “The definition of materiality provided in this subsection is not applicable to the group capital calculation or the liquidity stress test framework.” (2) In subsection (/), by designating the existing language paragraph (1) and adding the following paragraphs (2) and (3): “(2) Except as provided below, the ultimate controlling person of every insurer subject to registration shall concurrently file with the registration an annual group capital calculation as directed by the lead state commissioner. The report must be completed in accordance with the NAIC group capital calculation instructions, which may permit the lead state commissioner to allow a controlling person who is not the ultimate controlling person to file the group capital calculation. The report must be filed with the lead state commissioner of the insurance holding company system as determined by the commissioner in accordance with the procedures in the Financial Analysis Handbook adopted by the NAIC. Insurance holding company systems described below are exempt from filing the group capital calculation. (A) An insurance holding company system that has only one insurer in its holding company structure, that only writes business and is only licensed in its domestic state and assumes no business from any other insurer. (B) An insurance holding company system that must perform a group capital calculation specified by the United States Federal Reserve Board. The lead state commissioner shall request the calculation from the Federal Reserve Board under the terms of information sharing agreements in effect. If the Federal Reserve Board cannot share the calculation with the lead state commissioner, the insurance holding company system is not exempt from the group capital calculation filing. (C) An insurance holding company system whose non-United States group-wide supervisor is in a reciprocal jurisdiction as described in section 1443(h) that recognizes the United States state regulatory approach to group supervision and group capital. (D) An insurance holding company system: 4 (i) | that provides information to the lead state that meets the requirements for accreditation under the NAIC financial standards and accreditation program, either directly or indirectly through the group- wide supervisor, who has determined that the information is satisfactory to allow the lead state to comply with the NAIC group supervision approach, as detailed in the NAIC Financial Analysis Handbook, and (ii) whose non-United States group-wide supervisor who is not in a reciprocal jurisdiction recognizes and accepts, as specified by the Commissioner in regulation, the group capital calculation as the world- wide group capital assessment for United States insurance groups that operate in that jurisdiction. (E) Notwithstanding the provisions of subsection (/), paragraph (2), subparagraphs (C) and (D), a lead state commissioner shall require the group capital calculation for United States operations of any non-United States based insurance holding company system where, after any necessary consultation with other supervisors or officials, it is considered appropriate by the lead state commissioner for prudential oversight and solvency monitoring purposes or for ensuring the competitiveness of the insurance marketplace. (F) Notwithstanding the exemptions from filing the group capital calculation stated in subsection (1), paragraph (2), subparagraphs (A) through (D), the lead state commissioner has the discretion to exempt the ultimate controlling person from filing the annual group capital calculation or to accept a limited group capital filing or report in accordance with criteria as specified by the commissioner in regulation. (G) If the lead state commissioner determines that an insurance holding company system no longer meets one or more of the requirements for an exemption from filing the group capital calculation under this section, the insurance holding company system shall file the group capital calculation at the next annual filing date unless given an extension by the lead state commissioner based on reasonable grounds shown. (3) The ultimate controlling person of every insurer subject to registration and scoped into the NAIC liquidity stress test framework shall file the results of a specific year’s liquidity stress test. The filing must be made to the lead state insurance commissioner of the insurance holding company system as determined by the procedures within the Financial Analysis Handbook adopted by the NAIC. (A) The NAIC liquidity stress test framework includes scope criteria applicable to a specific data year. These scope criteria are reviewed at least annually by the NAIC financial stability task force or its successor. Any change to the NAIC liquidity stress test framework or to the data year for which the scope criteria are to be measured is effective on January | of the (d) year following the calendar year when the changes are adopted. Insurers meeting at least one threshold of the scope criteria are considered scoped into the NAIC liquidity stress test framework for the specified data year unless the lead state insurance commissioner, in consultation with the NAIC financial stability task force or its successor, determines the insurer should not be scoped into the framework for that data year. Similarly, insurers that do not trigger at least one threshold of the scope criteria are considered scoped out of the NAIC liquidity stress test framework for the specified data year, unless the lead state insurance commissioner, in consultation with the NAIC financial stability task force or its successor, determines the insurer should be scoped into the framework for that data year. Regulators wish to avoid having insurers scoped in and out of the NAIC liquidity stress test framework on a frequent basis. The lead state insurance commissioner, in consultation with the NAIC financial stability task force or its successor, shall assess this concern as part of the determination for an insurer. (B) The performance of, and filing of the results from, a specific year’s liquidity stress test must comply with the NAIC liquidity stress test framework’s instructions and reporting templates for that year and any lead state insurance commissioner determinations, in consultation with the NAIC financial stability task force or its successor, provided within the framework.” Section 326, subsection (a) is amended as follows: (1) In paragraph (1), by adding the following subparagraphs (G) and (H): “(G)(i) If the Commissioner determines that an insurer is in a hazardous financial condition as set forth in sections 519 and 520 of this title, or a condition that is grounds for supervision, conservation or a delinquency proceeding as set forth in chapter 51 of this title, the Commissioner may require the insurer to secure and maintain either a deposit, held by the Commissioner, or a bond, as determined by the insurer at the insurer’s discretion, for the protection of the insurer for the duration of the contract or agreement, or the existence of the condition for which the Commissioner required the deposit or the bond. In determining whether a deposit or a bond is required, the Commissioner shall consider whether concerns exist regarding the affiliated person’s ability to fulfill the contract or agreement if the insurer were to be put into liquidation. (ii) When the insurer is determined to be in a hazardous financial condition or a condition that is grounds for supervision, conservation or a delinquency proceeding, and a deposit or bond is necessary, the Commissioner shall determine the amount of the deposit or bond, not to exceed the value of the contract or agreement in any one year, and whether the deposit or bond is required for a single contract, multiple contracts or a contract with a specific person. (H)(i) All records and data of the insurer held by an affiliate are and remain the property of the insurer, are subject to control of the insurer, are identifiable, and (e) 6 are segregated or readily capable of segregation, at no additional cost to the insurer, from all other persons’ records and data. This includes all records and data that are otherwise the property of the insurer, in whatever form maintained, including, but not limited to, claims and claim files, policyholder lists, application files, litigation files, premium records, rate books, underwriting manuals, personnel records, financial records or similar records within the possession, custody or control of the affiliate. (ii) At the request of the insurer, the affiliate shall provide that the receiver can obtain a complete set of all records of any type that pertain to the insurer’s business; obtain access to the operating systems on which the data is maintained; obtain the software that runs those systems either through assumption of licensing agreements or otherwise; and restrict the use of the data by the affiliate if it is not operating the insurer’s business. The affiliate shall provide a waiver of any landlord lien or other encumbrance to give the insurer access to all records and data in the event of the affiliate’s default under a lease or other agreement. (iii) Premiums or other funds belonging to the insurer that are collected by or held by an affiliate are the exclusive property of the insurer and are subject to the control of the insurer. Any right of offset if an insurer is placed into receivership is subject to chapter 51 of this title.”; and (2) By adding the following paragraph (6): ‘“(6)(A) Any affiliate that is party to an agreement or contract with a domestic insurer that is subject to subsection (a)(2)(D) is subject to the jurisdiction of any supervision, seizure, conservatorship, receivership or delinquency proceeding set forth in chapter 51 of this title against the insurer, and to the authority of any supervisor, conservator, rehabilitator, liquidator or receiver for the insurer appointed pursuant to chapter 51, for the purpose of interpreting, enforcing and overseeing the affiliate’s obligations under the agreement or contract to perform services for the insurer that: (i) Are an integral part of the insurer’s operations, including, but not limited to management, administrative, accounting, data processing, marketing, underwriting, claims handling, investment or any other similar functions; or (ii) Are essential! to the insurer’s ability to fulfill its obligations under insurance policies. (B) The Commissioner may require that an agreement or contract under subsection (a)(2)(D) for the provision of services described in (i) and (11) of this paragraph, specify that the affiliate consents to the jurisdiction as set forth in this paragraph.” Section 330 is amended as follows: 7 (1) In subsection (a), by inserting “are recognized by the Virgin Islands as proprietary and contain trade secrets, and” after “section 329”, and by adding paragraphs (1) and (2) that read as follows: “(1) For purposes of the information reported and provided to the Division of Banking, Insurance and Financial Regulation under section 325()(2), the Commissioner shall maintain the confidentiality of the group capital calculation and group capital ratio produced in the calculation and any group capital information received from an insurance holding company supervised by the Federal Reserve Board or any United States group wide supervisor. (2) For purposes of the information reported and provided to the Division of Banking, Insurance and Financial Regulation pursuant to section 325(/)(3), the Commissioner shall maintain the confidentiality of the liquidity stress test results and supporting disclosures and any liquidity stress test information received from an insurance holding company supervised by the Federal Reserve Board and non- United States group wide supervisors.” (2) In subsection (c) by striking paragraph (1) in its entirety and inserting the following new paragraph (1): “(1) The Commissioner may share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subsection (a), including proprietary and trade secret documents and materials, with other state, federal and international regulatory agencies, with the NAIC, with any third-party consultants designated by the Commissioner, and with local, state, federal, and international law enforcement authorities, including members of any supervisory college described in section 328, if the recipient agrees in writing to maintain the confidentiality and privileged status of the document, material or other information, and has verified in writing the legal authority to maintain confidentiality.” (3) Insubsection (c), paragraph (2), by inserting “(1)” after “section 325(/)” and by striking paragraphs (3) and (4) in their entirety and inserting the following new paragraphs (3) and (4): “(3) The Commissioner may receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, including propriety and trade-secret information from the NAIC and its affiliates and subsidiaries and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shal! maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and (4) The Commissioner shall enter into written agreements with the NAIC, and any third-party consultant designated by the Commissioner governing sharing —= 8 and use of information provided under this chapter consistent with this subsection that must: (A) specify procedures and protocols regarding the confidentiality and security of information shared with the NAIC or a third-party consultant designated by the Commissioner, including procedures and protocols for sharing by the NAIC with other state, federal or international regulators. The agreement must provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the documents, materials or other information and has verified in writing the legal authority to maintain such confidentiality; (B) specify that ownership of information shared with the NAIC, or a third-party consultant remains with the Commissioner and the NAIJC’s or a third-party consultant’s, as designated by the Commissioner, use of the information is subject to the direction of the Commissioner; (C) excluding documents, material or information reported under | section 325(/)(3), prohibit the NAIC or third-party consultant from storing the information shared in a permanent database after the underlying analysis is completed; (D) require prompt notice to be given to an insurer whose confidential information in the possession of the NAIC or a third-party consultant is subject to a request or subpoena to the NAIC or a third-party consultant for disclosure or production; (E) require the NAIC or a third-party consultant to consent to intervention by an insurer in any judicial or administrative action in which the NAIC or a third-party consultant may be required to disclose confidential information about the insurer shared with the NAIC or a third-party consultant; and (F) for documents, material or information reporting under section 325(/(3), in the case of an agreement involving a third-party consultant, provide for notification of the identity of the consultant to the applicable insurers.” (4) In subsection (f) by inserting “or a third-party consultant designated by the Commissioner” after “NAIC”, (5) By adding the following subsection (g): “(g) The group capital calculation and resulting group capital ratio required under section 325(/)(2) and the liquidity stress test along with its results and supporting disclosures required under section 325(/)(3) are regulatory tools for assessing group risks and capital 9 adequacy and group liquidity risks, respectively, and are not intended to rank insurers or insurance holding company systems generally. Therefore, except as otherwise provided under this chapter, the making, publishing, disseminating, circulating or placing before the public, or causing directly or indirectly to be made, published, disseminated, circulated or placed before the public in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station or any electronic means of communication available to the public, or in any other way as an advertisement, announcement or statement containing a representation or statement with regard to the group capital calculation, group capital ratio, the liquidity stress test results, or supporting disclosures for the liquidity stress test of any insurer or any insurer group, or of any component derived in the calculation by any insurer, broker, or other person engaged in any manner in the insurance business is misleading and is therefore prohibited; provided, however, that if any materially false statement with respect to the group capital calculation, resulting group capital ratio, an inappropriate comparison of any amount to an insurer’s or insurance group’s group capital calculation or resulting group capital ratio, liquidity stress test result, supporting disclosures for the liquidity stress test, or an inappropriate comparison of any amount to an insurer’s or insurance group’s liquidity stress test result or supporting disclosures is published in any written publication and the insurer is able to demonstrate to the Commissioner with substantial proof the falsity of the statement or the inappropriateness, as the case may be, then the insurer may publish announcements in a written publication if the sole purpose of the announcement is to rebut the materially false statement.” Thus passed by the Legislature of the Virgin Islands on January 12, 2026. 2t4 Witness our Hands and Seal of the Legislature of the Virgin Islands this / 3 day of January, A.D., 2026. Milton E. Potter President Ps cretary ey Gti ye Yd meh wl Bill No. 36- 0184 is hereby approved. Witness my hand and the Seal of the Government of the United States Virgin Islands at Charlotte Amalie, St. Thomas, this day of January, 2026 A.D. Governor