USVI Public Records

Document text

Office of the Lieutenant Governor Division of Banking, Insurance and Financial Regulation #5049 Kongens Gade, Charlotte Amalie, St. Thomas, USVI 00802-6487 @ (340) 774-7166 @ Fax (340) 774-9458 1131 King Street, Sute 101, Christiansted, St. Croix, USVI 00820 @ (340) 773-6459 @ Fax (340) 719-3801 www. ltg.gov.vi BULLETIN 2019-01 TO: Insurance Companies Doing Business in the U.S. Virgin Islands RE: Instructions and Forms Necessary for Compliance with the “Virgin Islands Insurance Holding Company System Regulatory Act” On July 20, 2017, the Honorable Governor Kenneth E. Mapp signed into law Act Number 8003 also known as the Virgin Islands Insurance Holding Company System Regulatory Act (“ACT”), encoded in Chapter 14 of Title 22 of the Virgin Islands Code. The requirements under the Act became effective 90 days after its enactment. Under the Act, insurance companies doing business in the Territory that are members of insurance holding company systems are required to report on, provide notifications and obtain approval from the Commissioner of Insurance to engage in transactions within the holding company system that may have a material adverse effect on the financial condition of the insurer. The Division of Banking, Insurance and Financial Regulation (“Division”) within the Office of the Lieutenant Governor of the Virgin Islands is in the process of adopting the Rules and Regulations that accompany the Act to include the templates for the forms that must be filed with the Division. In the interim, this Bulletin is being issued to provide guidance to insurers of this Territory regarding the implementation of the Act and the corresponding rules and regulations. _—_ All forms referenced herein may be obtained from the Division’s website at www.ltg.gov.vi. DEFINITIONS For the purposes of this Bulletin: A. “Act” means the Insurance Holding Company System Regulatory Act encoded at Chapter 14, Title 22 of the Virgin Islands Insurance Code. B. “Commissioner” shall mean the Commissioner of Insurance of the U.S. Virgin Islands or his duly appointed designee. Bulletin 2019-01 C. “Director” means the Director of Banking, Insurance and Financial Regulation within the office of the Lieutenant Governor. D. “Enterprise risk” means any activity, circumstance, event or series of events involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole, including, but not limited to, anything that would cause the insurer’s Risk-Based Capital to fall into company action level as set forth in Section 473 of Chapter 20 of Title 22 or would cause the insurer to be in hazardous financial condition as set forth in Section 519 of Chapter 21 of Title 22. E. “Executive officer” means chief executive officer, chief operating officer, chief financial officer, treasurer, secretary, controller, and any other individual performing functions corresponding to those performed by the foregoing officers under whatever title. F, An “insurance holding company system” consists of two (2) or more affiliated persons, one or more of which is an insurer. G. The term “insurer” shall have the same meaning as set forth in Chapter 1, Section 4 of Title 22, except that it shall not include agencies, authorities or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a State or political subdivision of a state. H. A “person” is an individual, a corporation, a limited liability company, a partnership, an association, a joint stock company, a trust, an unincorporated organization, any similar entity or any combination of the foregoing acting in concert, but shall not include any joint venture partnership exclusively engaged in owning, managing, leasing or developing real or tangible personal property. I The term “State” as used in the attached Forms A, B, C, D, E and F refers to any of the 50 United States and the possessions and territories of the United States. J. A “subsidiary” of a specified person is an affiliate controlled by such person directly or indirectly through one or more intermediaries. K. “Ultimate controlling person” means that person which is not controlled by any other person. | Bs Unless the context otherwise requires, other terms found in these regulations are used as defined in Section 321 of the Act. Other nomenclature or terminology is according to the Insurance Code, or industry usage if not defined by the Code. FORMS —- GENERAL REQUIREMENTS Bulletin 2019-01 A. Forms A, B, C, D, E and F are standard forms created by the National Association of Insurance Commissioners. These forms and any amendments thereto are intended to be guides in the preparation of the statements required by Sections 323, 324, 325, and 326 of the Act. They are not intended to be blank forms which are to be filled in. The statements filed shall contain the numbers and captions of all items appearing in the forms provided, but the text of the items may be omitted provided the answers thereto are prepared in such a manner as to indicate clearly the scope and coverage of the items. All instructions, whether appearing under the items of the form or elsewhere therein, are to be omitted. Unless expressly provided otherwise, if any item is inapplicable or the answer thereto is in the negative, an appropriate statement to that effect shall be made. Two (2) complete copies of each statement including exhibits and all other papers and documents filed as a part thereof, shall be filed with the Commissioner by personal delivery or mail addressed to: Commissioner of Insurance of the United States Virgin Islands at 5049 Kongens Gade, St. Thomas, Virgin Islands 00802- 6487, Attention: [insert name and title of Director of Banking, Insurance and Financial Regulation]. At least one of the copies shall be signed in the manner prescribed on the form. Unsigned copies shall be conformed. If the signature of any person is affixed pursuant to a power of attorney or other similar authority, a copy of the power of attorney or other authority shall also be filed with the statement. If an applicant requests a hearing on a consolidated basis under Section 323(f)(3) of the Act, in addition to filing the Form A with the Commissioner, the applicant shall file a copy of Form A with the National Association of Insurance Commissioners (NAIC) in electronic form. Statements should be prepared electronically. Statements shall be easily readable and suitable for review and reproduction. Debits in credit categories and credits in debit categories shall be designated so as to be clearly distinguishable as such on photocopies. Statements shall be in the English language and monetary values shall be stated in United States currency. If any exhibit or other paper or document filed with the statement is in a foreign language, it shall be accompanied by a translation into the English language and any monetary value shown in a foreign currency normally shall be converted into United States currency. FORMS - INCORPORATION BY REFERENCE, SUMMARIES AND OMISSIONS A. Information required by any item of Form A, Form B, Form D, Form E or Form F may be incorporated by reference in answer or partial answer to any other item. Information contained in any financial statement, annual report, proxy statement, statement filed with a governmental authority, or any other document may be incorporated by reference in answer or partial answer to any item of Form A, Form B, Form D, Form E or Form F provided the document is filed as an exhibit to the Bulletin 2019-01 statement. Excerpts of documents may be filed as exhibits if the documents are extensive. Documents currently on file with the Commissioner which were filed within three (3) years need not be attached as exhibits. References to information contained in exhibits or in documents already on file shall clearly identify the material and shall specifically indicate that such material is to be incorporated by reference in answer to the item. Matter shall not be incorporated by reference in any case where the incorporation would render the statement incomplete, unclear or confusing. B. Where an item requires a summary or outline of the provisions of any document, only a brief statement shall be made as to the pertinent provisions of the document. In addition to the statement, the summary or outline may incorporate by reference particular parts of any exhibit or document currently on file with the Commissioner which was filed within three (3) years and may be qualified in its entirety by such reference. In any case where two (2) or more documents required to be filed as exhibits are substantially identical in all material respects except as to the parties thereto, the dates of execution, or other details, a copy of only one of the documents need be filed with a schedule identifying the omitted documents and setting forth the material details in which the documents differ from the documents, a copy of which is filed. FORMS-INFORMATION UNKNOWN OR UNAVAILABLE AND EXTENSION OF TIME TO FURNISH If it is impractical to furnish any required information, document or report at the time it is required to be filed, there shall be filed with the Commissioner a separate document: A. Identifying the information, document or report in question; B. Stating why the filing thereof at the time required is impractical; and Cc. Requesting an extension of time for filing the information, document or report to a specified date. The request for extension shall be deemed granted unless the Commissioner within 15 days after receipt thereof enters an order denying the request. FORMS - ADDITIONAL INFORMATION AND EXHIBITS In addition to the information expressly required to be included in Form A, Form B, Form C, Form D, Form E and Form F, the Commissioner may request such further material information, if any, as may be necessary to make the information contained therein not misleading. The person filing may also file such exhibits as it may desire in addition to those expressly required by the statement. The exhibits shall be so marked as to indicate clearly the subject matters to which they refer. Changes to Forms A, B, C, D, E or F shall include on the top of the cover page the phrase: “Change Bulletin 2019-01 No. [insert number] to” and shall indicate the date of the change and not the date of the original filing. SUBSIDIARIES OF DOMESTIC INSURERS The authority to invest in subsidiaries under Section 322(c) of the Act is in addition to any authority to invest in subsidiaries which may be contained in any other provision of the Insurance Code. ACQUISITION OF CONTROL - STATEMENT FILING A person required to file a statement pursuant to Section 323 of the Act shall furnish the required information on Form A, hereby made a part of this regulation. Such person shall also furnish the required information on Form E, hereby made a part of this regulation and described in Section 323-4 of this regulation. AMENDMENTS TO FORM A The applicant shall promptly advise the Commissioner of any changes in the information furnished on Form A arising subsequent to the date upon which the information was furnished but prior to the Commissioner’s disposition of the application. ACQUISITION OF SECTION 323(a)(4) INSURERS A. If the person being acquired is deemed to be a “domestic insurer” solely because of the provisions of Section 323(a)(4) of the Act, the name of the domestic insurer on the cover page should be indicated as follows: “ABC Insurance Company, a subsidiary of XYZ Holding Company.” B. Where a Section 323(a)(4) insurer is being acquired, references to “the insurer” contained in Form A shall refer to both the domestic subsidiary insurer and the person being acquired. PRE-ACQUISITION NOTIFICATION INVOLVING A DOMESTIC INSURER If a domestic insurer, including any person controlling a domestic insurer, is proposing a merger or acquisition pursuant to Section 323(a)(1) of the Act, that person shall file a pre-acquisition notification form, Form E, which was developed pursuant to Section 324(c)(1) of the Act. In addition to the information required by Form E, the Commissioner may require an expert opinion as to the competitive impact of the proposed acquisition. PRE-ACQUISITION NOTIFICATION INVOLVING A NON-DOMICILIARY INSURER Bulletin 2019-01 If a non-domiciliary insurer licensed to do business in this territory is proposing a merger or acquisition pursuant to Section 324 of the Act, that person shall file a pre-acquisition notification form, Form E. No pre-acquisition notification form need be filed if the acquisition is beyond the scope of Section 324 as set forth in Section 324(b)(2). In addition to the information required by Form E, the Commissioner may require an expert opinion as to the competitive impact of the proposed acquisition. ANNUAL REGISTRATION OF INSURERS - STATEMENT FILING An insurer required to file an annual registration statement pursuant to Section 325 of the Act shall furnish the required information on Form B, hereby made a part of these regulations. SUMMARY OF REGISTRATION - STATEMENT FILING An insurer required to file an annual registration statement pursuant to Section 325 of the Act is also required to furnish information required on Form C, hereby made a part of these regulations. AMENDMENTS TO FORM B A. An amendment to Form B shall be filed within fifteen (15) days after the end of any month in which there is a material change to the information provided in the annual registration statement. B. Amendments shall be filed in the Form B format with only those items which are being amended reported. Each amendment shall include at the top of the cover page “Amendment No. [insert number] to Form B for [insert year]” and shall indicate the date of the change and not the date of the original filings. ALTERNATIVE AND CONSOLIDATED REGISTRATIONS A. Any authorized insurer may file a registration statement on behalf of any affiliated insurer or insurers which are required to register under Section 325 of the Act. A registration statement may include information not required by the Act regarding any insurer in the insurance holding company system even if the insurer is not authorized to do business in this Territory. In lieu of filing a registration statement on Form B, the authorized insurer may file a copy of the registration statement or similar report which it is required to file in its State of domicile, provided: (1) The statement or report contains substantially similar information required to be furnished on Form B; and (2) The filing insurer is the principal insurance company in the insurance holding company system. Bulletin 2019-01 B. The question of whether the filing insurer is the principal insurance company in the insurance holding company system is a question of fact and an insurer filing a registration statement or report in lieu of Form B on behalf of an affiliated insurer, shall set forth a brief statement of facts which will substantiate the filing insurer’s claim that it, in fact, is the principal insurer in the insurance holding company system. With the prior approval of the Commissioner, an unauthorized insurer may follow any of the procedures which could be done by an authorized insurer under Subsection A above. Any insurer may take advantage of the provisions of Section 325(h) or (i) of the Act without obtaining the prior approval of the Commissioner. The Commissioner, however, reserves the right to require individual filings if he or she deems such filings necessary in the interest of clarity, ease of administration or the public good. DISCLAIMERS AND TERMINATION OF REGISTRATION A. A disclaimer of affiliation or a request for termination of registration claiming that a person does not, or will not upon the taking of some proposed action, control another person (hereinafter referred to as the “subject”) shall contain the following information: (1) The number of authorized, issued and outstanding voting securities of the subject; (2) With respect to the person whose control is denied and all affiliates of such person, the number and percentage of shares of the subject’s voting securities which are held of record or known to be beneficially owned, and the number of shares concerning which there is a right to acquire, directly or indirectly; (3) All material relationships and bases for affiliation between the subject and the person whose control is denied and all affiliates of such person; (4) A statement explaining why the person should not be considered to control the subject. A request for termination of registration shall be deemed to have been granted unless the Commissioner, within thirty (30) days after receipt of the request, notifies the registrant otherwise. ENTERPRISE RISK REPORT Bulletin 2019-01 The ultimate controlling person of an insurer required to file an enterprise risk report pursuant to Section 325(1) of the Act shall furnish the required information on Form F, hereby made a part of these regulations. TRANSACTIONS SUBJECT TO PRIOR NOTICE - NOTICE FILING A. — An insurer required to give notice of a proposed transaction pursuant to Section 326 of the Act shall furnish the required information on Form D, hereby made a part of these regulations. B. Agreements for cost sharing services and management services shall at a minimum and as applicable: (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Identify the person providing services and the nature of such services; Set forth the methods to allocate costs; Require timely settlement, not less frequently than on a quarterly basis, and compliance with the requirements in the Accounting Practices and Procedures Manual; Prohibit advancement of funds by the insurer to the affiliate except to pay for services defined in the agreement; State that the insurer will maintain oversight for functions provided to the insurer by the affiliate and that the insurer will monitor services annually for quality assurance; Define books and records of the insurer to include all books and records developed or maintained under or related to the agreement; Specify that all books and records of the insurer are and remain the property of the insurer and are subject to control of the insurer; State that all funds and invested assets of the insurer are the exclusive property of the insurer, held for the benefit of the insurer and are subject to the control of the insurer; Include standards for termination of the agreement with and without cause; Include provisions for indemnification of the insurer in the event of gross negligence or wilful misconduct on the part of the affiliate providing the services; Bulletin 2019-01 (11) (12) (13) Specify that, if the insurer is placed in receivership or seized by the Commissioner under the Uniform Insurers Liquidation Act as enacted as part of Chapter 51 of Title 22 of the Virgin Islands Code: (a) all of the rights of the insurer under the agreement extend to the receiver or Commissioner; and, (b) all books and records will immediately be made available to the receiver or the Commissioner, and shall be turned over to the receiver or Commissioner immediately upon the receiver or the Commissioner’s request; Specify that the affiliate has no automatic right to terminate the agreement if the insurer is placed in receivership pursuant to the Uniform Insurers Liquidation Act as enacted as part of Chapter 51 of Title 22 of the Virgin Islands Code; and Specify that the affiliate will continue to maintain any systems, programs, or other infrastructure notwithstanding a seizure by the Commissioner under the Uniform Insurers Liquidation Act as enacted as part of Chapter 51 of Title 22 of the Virgin Islands Code, and will make them available to the receiver, for so long as the affiliate continues to receive timely payment for services rendered. EXTRAORDINARY DIVIDENDS AND OTHER DISTRIBUTIONS A. Requests for approval of extraordinary dividends or any other extraordinary distribution to shareholders shall include the following: (1) (2) (3) (4) The amount of the proposed dividend; The date established for payment of the dividend; A statement as to whether the dividend is to be in cash or other property and, if in property, a description thereof, its cost, and its fair market value together with an explanation of the basis for valuation; A copy of the calculations determining that the proposed dividend is extraordinary. The work paper shall include the following information: (a) The amounts, dates and form of payment of all dividends or distributions (including regular dividends but excluding distributions of the insurer’s own securities) paid within the period of twelve (12) consecutive months ending on the date fixed for payment of the proposed dividend for which approval is sought and Bulletin 2019-01 commencing on the day after the same day of the same month in the last preceding year; (b) Surplus as regards policyholders (total capital and surplus) as of the 31st day of December next preceding; (c) If the insurer is not a life insurer, the net income for the 12-month period ending the 31st day of December next preceding and the two preceding 12-month periods; and (d) If the insurer is not a life insurer, the dividends paid to stockholders excluding distributions of the insurer’s own securities in the preceding two (2) calendar years; (5) A balance sheet and statement of income for the period intervening from the last annual statement filed with the Commissioner and the end of the month preceding the month in which the request for dividend approval is submitted; and (6) A brief statement as to the effect of the proposed dividend upon the insurer’s surplus and the reasonableness of surplus in relation to the insurer’s outstanding liabilities and the adequacy of surplus relative to the insurer’s financial needs. B. Subject to Section 326(b) of the Act, each registered insurer shall report to the Commissioner all dividends and other distributions to shareholders within fifteen (15) business days following the declaration thereof, including the same information required by Subsection A(4) above. ADEQUACY OF SURPLUS The factors set forth in Section 326(d) of the Act are not intended to be an exhaustive list. In determining the adequacy and reasonableness of an insurer’s surplus no single factor is necessarily controlling. The Commissioner instead will consider the net effect of all of these factors plus other factors bearing on the financial condition of the insurer. In comparing the surplus maintained by other insurers, the Commissioner will consider the extent to which each of these factors varies from company to company and in determining the quality and liquidity of investments in subsidiaries, the Commissioner will consider the individual subsidiary and may discount or disallow its valuation to the extent that the individual investments so warrant. JUDICIAL REVIEW Any person aggrieved by any act, determination, rule, regulation or order or any action of the Commissioner under the provisions of the Act may appeal such act, determination, rule, regulation, order or action in accordance with the procedures set forth in Chapter 7 of Title 22 of the Virgin Islands Code. Bulletin 2019-01 Questions regarding this Bulletin may be directed to the Division of Banking, Insurance and Financial Regulation by calling Director Gwendolyn Hall Brady at (340) 773-6459 (St. Croix) or Chief Financial Services Examiner Cheryl Charleswell at (340) 774-7166 (St. Thomas). ee tv Dated this 32 day of pn n19 at St. Thomas, U.S. Virgin Islands. Va Legged a2 Treggpea ‘ Roach Lieutenant Governor/Commissioner of Insurance