For the purpose of
this chapter, unless the context otherwise requires:
1. “Affiliate of”, or a person affiliated with, a specific person, shall mean a person who directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the person specified.
2. The term “commissioner” shall mean the insurance commissioner, the commissioner’s deputies, or the insurance division, as appropriate.
3. “Control”, including “controlling”, “controlled by”, and “under common control with”, shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies
of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or
nonmanagement services, or otherwise, unless the power is solely the result of an official position with or a corporate office
held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the
power to vote, or holds proxies representing, ten percent or more of the voting securities of any other person. This presumption
may be rebutted by a showing made in the manner provided in section 521A.3, subsections 1 through 5, inclusive, or section 521A.4, subsection 11, whichever is applicable, that control does not exist in fact. The commissioner may determine, after furnishing all persons
in interest notice and opportunity to be heard and making specific findings of fact to support the determination, that control
exists in fact, notwithstanding the absence of a presumption to that effect.
4. “Domestic insurer” means an insurer organized or created under the laws of this state except an insurer excluded under subsection 8.
5. “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 a company-action-level event as set forth in section 521E.3 for insurers or section 521F.4 for health organizations, or would cause the insurer to be in hazardous financial condition pursuant to 191 IAC ch. 110.
6. “Group-wide supervisor” means a regulatory official who is authorized, and who is determined or acknowledged by the commissioner pursuant to section 521A.6B to have sufficient significant contacts with an internationally active insurance group, to engage in conducting and coordinating
group-wide supervision of the internationally active insurance group.
7. “Insurance holding company system” shall consist of two or more affiliated persons, one or more of which is an insurer.
8. “Insurer” means a company qualified and licensed by the insurance division to transact the business of insurance in this state by certificate
issued pursuant to chapters 508, 512B, 514, 514B, 515, 515E, and 520, 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.
9. “Internationally active insurance group” means an insurance holding company system that includes an insurer registered under section 521A.4 and that meets all of the following criteria: a. The insurance holding company system has premiums written in at least three countries.
b. The percentage of gross premiums written outside the United States is at least ten percent of the insurance holding company
system’s total gross written premiums.
c. Based on a three-year rolling average, the total assets of the insurance holding company system are at least fifty billion
dollars or the total gross written premiums of the insurance holding company system are at least ten billion dollars.
10. A “person” is an individual, a corporation, 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 does not include a joint venture partnership
exclusively engaged in owning, managing, leasing, or developing real or tangible personal property.
11. A “securityholder” of a specified person is one who owns any security of such person, including common stock, preferred stock, debt obligations,
and any other security convertible into or evidencing the right to acquire any of the foregoing.
12. A “subsidiary” of a specified person is an affiliate controlled by such person directly, or indirectly through one or more intermediaries.
13. “Supervisory college” means a temporary or permanent forum for communication and cooperation between regulators charged with supervision of an
insurer or its affiliates.
14. The term “voting security” shall include any security convertible into or evidencing a right to acquire a voting security.
[C71, 73, 75, 77, 79, 81, §521A.1]
86 Acts, ch 1102, §1, 2; 90 Acts, ch 1234, §72; 97 Acts, ch 186, §25; 2006 Acts, ch 1117, §112; 2014 Acts, ch 1018, §1, 2; 2016 Acts, ch 1122, §7
Referred to in
§507C.2, 508.33A, 510A.2, 511.8(22)(b), 515.125, 515.128, 515B.2, 515G.1, 518C.3, 521.16, 521H.2, 521H.6, 522.2
521A.2 Subsidiaries of insurers.
1. Authorization.
Any domestic insurer, either by itself or in cooperation with one or more persons, subject to the limitations set forth herein
or elsewhere in this chapter, may organize or acquire one or more subsidiaries engaged or registered to engage in one or more of the following businesses
or activities: a. Any kind of insurance business authorized by the jurisdiction in which it is incorporated.
b. Acting as an insurance producer for its parent or for any of its parent’s insurer subsidiaries or intermediate insurer subsidiaries.
c. Investing, reinvesting, or trading in securities and financial instruments as defined in section 511.8, subsection 22, for its own account, that of its parent, any subsidiary of its parent, or any affiliate or subsidiary.
d. Management of any investment company subject to or registered pursuant to the Investment Company Act of 1940, as amended,
including related sales and services.
e. Acting as a broker dealer subject to or registered pursuant to the Securities Exchange Act of 1934 as amended.
f. Rendering financial services or advice to individuals, governments, government agencies, corporations, or other organizations
or groups.
g. Rendering other services related to the operations of an insurance business including but not limited to actuarial, loss prevention,
safety engineering, data processing, accounting, claims, appraisal, and collection services.
h. Ownership and management of assets which the parent corporation could itself own and manage. However, the aggregate investment
by the insurer and its subsidiaries acquired or organized pursuant to this paragraph shall not exceed the limitations applicable
to the investments by the insurer.
i. Acting as administrative agent for a government instrumentality which is performing an insurance function.
j. Financing of insurance premiums, agents and other forms of consumer financing.
k. Any other business or service activity reasonably ancillary to an insurance business.
l. Owning a corporation or corporations engaged or organized to engage exclusively in one or more of the businesses specified
in paragraphs “a” to “k” inclusive.
2. Exception.
Nothing contained in subsection 1 of this section shall prohibit a domestic insurer, either by itself or in cooperation with one or more persons, from investing amounts up
to a total of ten percent of surplus in one or more subsidiaries or affiliates organized to do any lawful business.
3. Additional investment authority.
In addition to investments in common stock, preferred stock, debt obligations and other securities permitted under all other
sections of this subtitle, a domestic insurer may also: a. Invest, in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries, amounts which
do not exceed the lesser of ten percent of the insurer’s assets or fifty percent of the insurer’s surplus as regards policyholders,
if after the investments the insurer’s surplus as regards policyholders will be reasonable in relation to the insurer’s outstanding
liabilities and adequate to its financial needs. In calculating the amount of the investments, investments in domestic or
foreign insurance subsidiaries shall be excluded and both of the following shall be included: (1) Total net moneys or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary,
including all organizational expenses and contributions to capital and surplus of such subsidiary whether or not represented
by the purchase of capital stock or issuance of other securities.
(2) All amounts expended in acquiring additional common stock, preferred stock, debt obligations, and other securities and all
contributions to the capital or surplus, of a subsidiary subsequent to its acquisition or formation.
b. Invest any amount in common stock, preferred stock, debt obligations and other securities of one or more subsidiaries provided
that each such subsidiary agrees to limit its investments in any asset so that such investments will not cause the amount
of the total investment of the insurer to exceed any of the investment limitations specified in paragraph “a” of this subsection or in chapters 511, 515, 518A, and 520 applicable to the insurer. For the purpose of this paragraph, “total investment of the insurer” shall include both: (1) Any direct investment by the insurer in an asset.
(2) The insurer’s proportionate share of any investment in an asset by any subsidiary of the insurer, which shall be calculated
by multiplying the amount of the subsidiary’s investment by the percentage of the insurer’s ownership of such subsidiary.
c. With the approval of the commissioner, invest any greater amount in common stock, preferred stock, debt obligations, or other
securities of one or more subsidiaries, if after the investment the insurer’s surplus as regards policyholders is reasonable
in relation to the insurer’s outstanding liabilities and adequate to its financial needs.
d. Invest, reinvest, and trade in financial instruments as defined in section 511.8, subsection 22, for its own account, that of its parent, any subsidiary of its parent, or any affiliate or subsidiary.
4. Exemption from investment restrictions.
Investments in common stock, preferred stock, debt obligations or other securities of subsidiaries made pursuant to subsection 3 of this section hereof shall not be subject to any of the otherwise applicable restrictions or prohibitions contained in the Code applicable
to such investments of insurers.
5. Qualification of investment — when determined.
Whether any investment pursuant to subsection 3 meets the applicable requirements of the subsection is to be determined before the investment is made by calculating the
applicable investment limitations as though the investment had already been made, taking into account the then outstanding
principal balance on all previous investments in debt obligations, and the value of all previous investments in equity securities
as of the day they were made, net of any return of capital invested, excluding dividends.
6. Cessation of control.
If an insurer ceases to control a subsidiary, it shall dispose of any investment therein made pursuant to this section within three years from the time of the cessation of control or within such further time as the commissioner may prescribe,
unless at any time after such investment shall have been made, such investment shall have met the requirements for investment
under any other section of the Code, and the insurer has notified the commissioner thereof.
86 Acts, ch 1102, §3 – 8;
87 Acts, ch 115, §65;
91 Acts, ch 26, §48;
2001 Acts, ch 16, §11, 37;
2006 Acts, ch 1117, §113, 114
521A.3 Acquisition of control of or merger with domestic insurer.
1. Filing requirements.
a. No person other than the issuer shall make a tender offer for or a request or invitation for tenders of, or enter into any
agreement to exchange securities for, seek to acquire, or acquire, in the open market or otherwise, any voting security of
a domestic insurer if, after the consummation thereof, such person would, directly or indirectly, or by conversion or by exercise
of any right to acquire, be in control of such insurer, and no person shall enter into an agreement to merge with or otherwise
to acquire control of a domestic insurer unless, at the time any such offer, request, or invitation is first made or any such
agreement is entered into, or prior to the acquisition of such securities if no offer or agreement is involved, such person
has first filed with the commissioner and has sent to such insurer, a statement containing the information required by this section and such offer, request, invitation, agreement, or acquisition has been approved by the commissioner in the manner hereinafter
prescribed.
b. For purposes of this section, any controlling person of a domestic insurer seeking to divest its controlling interest in the domestic insurer, in any
manner, shall file with the commissioner, with a copy to the insurer, confidential notice of its proposed divestiture at least
thirty days prior to the cessation of control. The commissioner shall determine those instances in which the party seeking
to divest or to acquire a controlling interest in an insurer, shall be required to file for and obtain approval of the transaction.
The information shall remain confidential until the conclusion of the transaction unless the commissioner, in the commissioner’s
discretion, determines that confidential treatment will interfere with enforcement of this section. If the statement referred to in paragraph “a” is otherwise filed, this paragraph “b” shall not apply.
c. For purposes of this section a “domestic insurer” shall include any other person controlling a domestic insurer unless the other person is either directly or through its affiliates
primarily engaged in business other than the business of insurance. However, for purposes of this section “person” does not include a securities broker holding, in the usual and customary broker’s function, less than twenty percent of the
voting securities of an insurance company or of a person which controls an insurance company.
2. Content of statement.
a. The statement to be filed with the commissioner hereunder shall be made under oath or affirmation and shall contain the following: (1) The name and address of each person by whom or on whose behalf the merger or other acquisition of control referred to in subsection 1 is to be effected, hereinafter called “acquiring party”. (a) If such person is an individual, the individual’s principal occupation and all offices and positions held during the past
five years, and any conviction of crimes other than minor traffic violations during the past ten years.
(b) If such person is not an individual, a report of the nature of its business operations during the past five years or for such
lesser period as such person and any predecessors thereof shall have been in existence; an informative description of the
business intended to be done by such person and such person’s subsidiaries; and a list of all individuals who are or who have
been selected to become directors or executive officers of such person, or who perform or will perform functions appropriate
to such positions. Such list shall include for each such individual the information required by subparagraph division (a).
(2) The source, nature, and amount of the consideration used or to be used in effecting the merger or other acquisition of control,
a description of any transaction in which funds were or are to be obtained for any such purpose including a pledge of the
insurer’s stock, or the stock of any of its subsidiaries or controlling affiliates, and the identity of persons furnishing
the consideration. However, if a source of the consideration is a loan made in the lender’s ordinary course of business, the
identity of the lender shall remain confidential, if the person filing the statement so requests.
(3) Fully audited financial information as to the earnings and financial condition of each acquiring party for the preceding five
fiscal years of each such acquiring party, or for such lesser period as such acquiring party and any predecessors thereof
shall have been in existence, and similar unaudited information as of a date not earlier than ninety days prior to the filing
of the statement.
(4) Any plans or proposals which each acquiring party may have to liquidate such insurer, to sell its assets or merge or consolidate
it with any person, or to make any other material change in its business or corporate structure or management.
(5) The number of shares of any security referred to in subsection 1 which each acquiring party proposes to acquire, and the terms of the offer, request, invitation, agreement, or acquisition
referred to in subsection 1, and a statement as to the method by which the fairness of the proposal was arrived at.
(6) The amount of each class of any security referred to in subsection 1 which is beneficially owned or concerning which there is a right to acquire beneficial ownership by each acquiring party.
(7) A full description of any contracts, arrangements or understandings with respect to any security referred to in subsection 1 in which any acquiring party is involved, including but not limited to transfer of any of the securities, joint ventures,
loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division
of losses or profits, or the giving or withholding of proxies. Such description shall identify the persons with whom such
contracts, arrangements or understandings have been entered into.
(8) A description of the purchase of any security referred to in subsection 1 during the twelve calendar months preceding the filing of the statement, by any acquiring party, including the dates of purchase,
names of the purchasers, and consideration paid or agreed to be paid therefor.
(9) A description of any recommendations to purchase any security referred to in subsection 1 made during the twelve calendar months preceding the filing of the statement, by any acquiring party, or by anyone based
upon interview or at the suggestion of such acquiring party.
(10) Copies of all tender offers for, requests or invitations for tenders of, exchange offers for, and agreements to acquire or
exchange any securities referred to in subsection 1, and, if distributed, of additional soliciting material relating thereto.
(11) The terms of any agreement, contract or understanding made with any broker-dealer as to solicitation of securities referred
to in subsection 1 for tender, and the amount of any fees, commissions, or other compensation to be paid to broker-dealers with regard thereto.
(12) An agreement by the person required to file the statement referred to in subsection 1 that the person will provide the annual report specified in section 521A.4, subsection 12 for so long as control exists.
(13) An acknowledgment by the person required to file the statement referred to in subsection 1 that the person and all subsidiaries within its control in the insurance holding company system will provide information
to the commissioner upon request as necessary to evaluate enterprise risk to the insurer.
(14) Additional information as the commissioner may by rule prescribe as necessary or appropriate for the protection of policyholders
of the insurer or in the public interest.
b. If the person required to file the statement referred to in subsection 1 is a partnership, limited partnership, syndicate or other group, the commissioner may require that the information called
for by paragraph “a”, subparagraphs (1) through (14) shall be given with respect to each partner of such partnership or limited partnership, each
member of such syndicate or group, and each person who controls such partner or member. If any such partner, member, or person
is a corporation or the person required to file the statement referred to in subsection 1 is a corporation, the commissioner may require that the information called for by paragraph “a”, subparagraphs (1) through (14) shall be given with respect to such corporation, each officer and director of such corporation,
and each person who is directly or indirectly the beneficial owner of more than ten percent of the outstanding voting securities
of such corporation. If any material change occurs in the facts set forth in the statement filed with the commissioner and
sent to such insurer pursuant to this section, an amendment setting forth such change, together with copies of all documents and other material relevant to such change,
shall be filed with the commissioner and sent to such insurer within two business days after the person learns of such change.
Such insurer shall send such amendment to its shareholders.
3. Alternative filing materials.
If any offer, request, invitation, agreement, or acquisition referred to in subsection 1 of this section is proposed to be made by means of a registration statement under the Securities Act of 1933 or in circumstances requiring
the disclosure of similar information under the Securities Exchange Act of 1934, or under a state law requiring similar registration,
or disclosure, the person required to file the statement referred to in subsection 1 of this section may utilize such documents in furnishing the information called for by that statement.
4. Approval by the commissioner — hearings.
a. The commissioner shall approve any merger or other acquisition of control referred to in subsection 1 if, after a public hearing on such merger or acquisition, the applicant has demonstrated to the commissioner all of the following: (1) After the change of control the domestic insurer referred to in subsection 1 will be able to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which
it is presently licensed.
(2) The effect of the merger or other acquisition of control will not substantially lessen competition in insurance in this state.
(3) The financial condition of any acquiring party will not jeopardize the financial stability of the insurer, or prejudice the
interest of its policyholders.
(4) The plans or proposals which the acquiring party has to liquidate the insurer, sell its assets or consolidate or merge it
with any person, or to make any other material change in its business or corporate structure or management, are not unfair
or unreasonable to policyholders of the insurer and are not contrary to the public interest.
(5) The competence, experience, and integrity of those persons who would control the operation of the insurer are sufficient to
indicate that the interests of policyholders of the insurer and of the public will not be jeopardized by the merger or other
acquisition of control.
(6) The merger or other acquisition of control is not likely to be hazardous or prejudicial to the insurance-buying public.
b. The public hearing referred to in paragraph “a” shall be held within thirty days after the commissioner has determined that the statement required by subsection 1 has been completed and contains all the required information set forth in subsection 2, and at least twenty days’ notice of the public hearing shall be given by the commissioner to the person filing the statement
and to the domestic insurer. Not less than seven days’ notice of the public hearing shall be given by the person filing the
statement to the insurer and to such other persons as may be designated by the commissioner. The commissioner shall make a
determination within thirty days after the conclusion of the hearing. At the hearing, the person filing the statement, the
insurer, any person to whom notice of hearing was sent, and any other person whose interests may be affected shall have the
right to present evidence, examine and cross-examine witnesses, and offer oral and written arguments and in connection therewith
shall be entitled to conduct discovery proceedings in the same manner as is presently allowed in the district court of this
state. All discovery proceedings shall be concluded not later than three days prior to the commencement of the public hearing.
c. If the proposed merger or other acquisition of control will require the approval of more than one commissioner, the public
hearing referred to in paragraph “a” may be held on a consolidated basis upon request of the person filing the statement referred to in subsection 1. Such person may file the statement referred to in subsection 1 with the national association of insurance commissioners within five days of making the request for a public hearing. The
commissioner may opt out of a consolidated hearing, and shall provide notice to the applicant of the opt-out within ten days
of the receipt of the statement referred to in subsection 1. A hearing conducted on a consolidated basis shall be public and shall be held within the United States before the commissioners
of the states in which the insurers are domiciled. Such commissioners shall hear and receive evidence. The commissioner may
attend such hearing in person or by telecommunication.
d. The commissioner may retain any attorneys, actuaries, accountants, and other experts not otherwise a part of the commissioner’s
staff as may be reasonably necessary to assist the commissioner in reviewing the proposed merger or acquisition of control,
the reasonable cost of which shall be paid by the acquiring party.
5. Exemptions.
The provisions of this section shall not apply to any offer, request, invitation, agreement, or acquisition which the commissioner by order shall exempt
therefrom for one of the following reasons: a. It has not been made or entered into for the purpose and does not have the effect of changing or influencing the control of
a domestic insurer.
b. It is otherwise not comprehended within the purposes of this section.
6. Violations.
The following shall be violations of this section:
b. The effectuation or any attempt to effectuate an acquisition of control of, or merger with, a domestic insurer unless the
commissioner has given approval thereto.
7. Jurisdiction — consent to service of process.
The district court is hereby vested with jurisdiction over a person that is not a resident, is not domiciled, or is not authorized
to do business in this state that files a statement with the commissioner under this section, and over all actions involving the person arising out of violations of this section, and the person shall be deemed to have performed acts equivalent to and constituting an appointment by the person of the
commissioner to be the person’s true and lawful attorney upon whom may be made all lawful process, notice, or demand in any
action, suit, or proceeding arising out of a violation of this section. A copy of all such lawful process, notice, or demand shall be made on the commissioner as the attorney for service of process
as provided in section 505.30.
86 Acts, ch 1102, §9 – 11; 91 Acts, ch 26, §49, 50; 93 Acts, ch 88, §26; 97 Acts, ch 186, §26; 2012 Acts, ch 1023, §129; 2014 Acts, ch 1018, §3 – 9; 2018 Acts, ch 1018, §12
521A.4 Registration of insurers — enterprise risk report.
1. Registration.
An insurer which is authorized to do business in this state and which is a member of an insurance holding company system shall
register with the commissioner, except a foreign insurer subject to registration requirements and standards which are substantially
similar to those contained in this section and section 521A.5, subsection 1, paragraph “a”, and are adopted by statute or regulation in the jurisdiction of its domicile. The insurer shall also file a copy of the
summary of its registration statement as required by subsection 4 in each state in which that insurer is authorized to do business if requested to do so by the commissioner of that state.
An insurer which is subject to registration under this section shall register within fifteen days after it becomes subject to registration and annually thereafter by March 31 of each year
for the previous calendar year unless the commissioner for good cause shown extends the time for registration, and then within
the extended time. The commissioner may require any authorized insurer which is a member of a holding company system which
is not subject to registration under this section to furnish a copy of the registration statement or other information filed by the insurance company with the insurance regulatory
authority of the company’s domiciliary jurisdiction.
2. Information and form required.
Every insurer subject to registration shall file a registration statement on a form prescribed by the commissioner, which
may be a form provided by the national association of insurance commissioners, which shall contain current information about: a. The capital structure, general financial condition, ownership and management of the insurer and any person controlling the
insurer.
b. The identity and relationship of every member of the insurance holding company system.
c. The following agreements in force, relationships subsisting, and transactions currently outstanding or which have occurred
during the last calendar year between the insurer and its affiliates: (1) Loans, other investments, or purchases, sales, or exchanges of securities of the affiliates by the insurer or of the insurer
by its affiliates.
(2) Purchases, sales, or exchanges of assets.
(3) Transactions not in the ordinary course of business.
(4) Guarantees or undertakings for the benefit of an affiliate which result in an actual contingent exposure of the insurer’s
assets to liability, other than insurance contracts entered into in the ordinary course of the insurer’s business.
(5) All management and service contracts and all cost-sharing arrangements, other than cost allocation arrangements based upon
generally accepted accounting principles.
(6) Reinsurance agreements.
(7) Dividends and other distributions to shareholders.
(8) Consolidated tax allocation agreements.
d. A pledge of the insurer’s stock, including stock of a subsidiary or controlling affiliate, for a loan made to a member of
the insurance holding company system.
e. If requested by the commissioner, the insurer shall include financial statements of or within an insurance holding company
system, including all affiliates. Financial statements may include but are not limited to annual audited financial statements
filed with the United States securities and exchange commission pursuant to the federal Securities Act of 1933, as amended, or the federal Securities Exchange Act of 1934, as amended. An insurer required to file financial statements pursuant to this paragraph may satisfy the request by providing the commissioner
with the most recently filed financial statements of the parent corporation that have been filed with the United States securities
and exchange commission.
f. Statements that the insurer’s board of directors oversees corporate governance and internal controls and that the insurer’s
officers or senior management have approved, implemented, and continue to maintain and monitor corporate governance and internal
control procedures.
g. Other matters concerning transactions between registered insurers and any affiliates as may be included from time to time
in any registration forms adopted or approved by the commissioner.
h. Any other information required by the commissioner by rule or by regulation.
3. Materiality.
Information need not be disclosed on the registration statement filed pursuant to subsection 2 if the information is not material for the purposes of this section. Unless the commissioner by rule or order provides otherwise, sales, purchases, exchanges, loans or extensions of credit,
or investments or guarantees involving one-half of one percent or less of an insurer’s admitted assets as of the next preceding
December 31 are not material for purposes of this section.
4. Reporting of dividends to shareholders.
Subject to section 521A.5, subsection 3, a registered insurer shall report to the commissioner all dividends and other distributions to shareholders within fifteen
days following the declaration of the dividends or distributions.
5. Summary of registration statement.
All registration statements shall contain a summary outlining all items in the current registration statement representing
changes from the next preceding registration statement.
6. Information of insurers.
Any person within an insurance holding company system subject to registration is required to provide complete and accurate
information to an insurer if the information is reasonably necessary to enable the insurer to comply with this chapter.
7. Termination of registration.
The commissioner shall terminate the registration of any insurer which demonstrates that it no longer is a member of an insurance
holding company system.
8. Consolidated filing.
The commissioner may require or allow two or more affiliated insurers subject to registration hereunder to file a consolidated
registration statement or consolidated reports amending their consolidated registration statement or their individual registration
statements.
9. Alternative registration.
The commissioner may allow an insurer which is authorized to do business in this state and which is part of an insurance holding
company system to register on behalf of any affiliated insurer which is required to register under subsection 1 of this section and to file all information and material required to be filed under this section.
10. Exemptions.
The provisions of this section shall not apply to any insurer, information, or transaction if and to the extent that the commissioner by rule, regulation,
or order shall exempt the same from the provisions of this section.
11. Disclaimer.
Any person may file with the commissioner a disclaimer of affiliation with any authorized insurer or such a disclaimer may
be filed by such insurer or any member of an insurance holding company system. The disclaimer shall fully disclose all material
relationships and basis for affiliation between such person and such insurer as well as the basis for disclaiming such affiliation.
A disclaimer of affiliation shall be deemed to have been granted unless the commissioner, within thirty days following receipt
of a complete disclaimer, notifies the filing party that the disclaimer is disallowed. In the event of disallowance, the disclaiming
party may request an administrative hearing, which shall be granted. The disclaiming party shall be relieved of its duty to
register under this section if approval of the disclaimer has been granted by the commissioner, or if the disclaimer is deemed to have been granted.
12. Enterprise risk report.
The ultimate controlling person of every insurer subject to registration shall also file an annual enterprise risk report.
The report shall, to the best of the ultimate controlling person’s knowledge and belief, identify the material risks within
the insurance holding company system that could pose enterprise risk to the insurer. The report shall be filed with the lead
state commissioner of the insurance holding company system as determined by the procedures within the financial analysis handbook
adopted by the national association of insurance commissioners.
13. Violations.
The failure to file a registration statement or a summary of the registration statement or an enterprise risk report required
by this section within the time specified for the filing is a violation of this section.
[C71, 73, 75, 77, 79, 81, §521A.4]
1. Transactions within a holding company system affecting domestic insurers.
a. Material transactions by registered insurers with their affiliates are subject to the following standards: (1) The terms shall be fair and reasonable.
(2) Agreements for cost-sharing services and management shall include such provisions as required by rule issued by the commissioner.
(3) Charges or fees for services performed shall be reasonable.
(4) Expenses incurred and payment received shall be allocated to the insurer in conformity with customary and consistently applied
insurance accounting practices.
(5) The books, accounts, and records of each party shall be so maintained as to clearly and accurately disclose the precise nature
and details of the transactions.
(6) After any material transaction with an affiliate and after any dividends or distributions to shareholder affiliates, the insurer’s
surplus as regards policyholders shall be reasonable in relation to the insurer’s outstanding liabilities and adequate to
its financial needs.
b. A domestic insurer and a person in its holding company system shall not enter into any of the following transactions between
each other involving amounts equal to or exceeding the lesser of three percent of a nonlife insurer’s admitted assets or twenty-five
percent of the surplus as regards policyholders with respect to nonlife insurers, and equal to or exceeding three percent
of the insurer’s admitted assets with respect to life insurers, each as of the next preceding December 31, unless the domestic
insurer notifies the commissioner in writing of its intention to enter into the transaction at least thirty days prior to
entering into the transaction or within a shorter time permitted by the commissioner and the commissioner has not disapproved
of the transaction within the time period: (1) Sales.
(2) Purchases.
(3) Exchanges.
(4) Loans or extensions of credit.
(5) Investments.
(6) Loans or extensions of credit to a person who is not an affiliate, if the domestic insurer makes the loans or extensions of
credit with the agreement or understanding that the proceeds of the transactions, in whole or in substantial part, are to
be used to make loans or extensions of credit to, to purchase assets of, or to make investments in, an affiliate of the domestic
insurer making the loans or extensions of credit.
c. A domestic insurer and a person in its holding company system shall not enter into any of the following transactions, unless
the domestic insurer notifies the commissioner in writing of its intention to enter into the transaction at least thirty days
prior to entering into the transaction or within a shorter time permitted by the commissioner and the commissioner has not
disapproved of the transaction within the time period: (1) All reinsurance pooling agreements.
(2) All reinsurance agreements or modifications to such agreements in which the reinsurance premium or a change in the insurer’s
liabilities, or the projected reinsurance premium or a change in the insurer’s liabilities in any of the next three years,
equals or exceeds five percent of the insurer’s surplus as regards policyholders, as of the next preceding December 31, including
those agreements which may require as consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement
or understanding exists between the insurer and nonaffiliate that any portion of such assets will be transferred to one or
more affiliates of the insurer.
(3) All management agreements, service contracts, tax allocation agreements, guarantees, and all other cost-sharing arrangements.
A guarantee which is quantifiable as to amount is not subject to the notice requirements of this paragraph “c” unless it exceeds the lesser of one-half of one percent of the insurer’s admitted assets or ten percent of surplus as regards
policyholders as of the next preceding December 31. Further, all guarantees which are not quantifiable as to amount are subject
to the notice requirements of this paragraph “c”.
(4) Direct or indirect acquisitions or investments in a person that controls the insurer or in an affiliate of the insurer in
an amount which, together with its present holdings in such investments, exceeds two and one-half percent of the insurer’s
surplus to policyholders. Direct or indirect acquisitions or investments in subsidiaries acquired pursuant to section 521A.2 or authorized under any other section of this chapter, or in nonsubsidiary insurance affiliates that are subject to the provisions of this chapter, are exempt from this subparagraph.
(5) Any material transactions specified by rule which the commissioner determines may adversely affect the interests of the domestic
insurer’s policyholders.
d. This subsection does not authorize or permit any transactions which in the case of an insurer would be otherwise contrary to law.
e. A domestic insurer shall not enter into transactions which are part of a plan or series of like transactions with a person
or persons within the holding company system if the purpose of those separate transactions is to avoid the statutory threshold
amount and thus avoid the review that would occur otherwise. If the commissioner determines that such separate transactions
were entered into over a twelve-month period for that purpose, the commissioner may exercise the authority under section 521A.10.
f. The commissioner, in reviewing transactions pursuant to paragraphs “b” and “c”, shall consider whether the transactions comply with the standards set forth in paragraph “a”.
g. A domestic insurer shall notify the commissioner within thirty days of an investment of the insurer in a corporation if the
total investment in the corporation by the insurance holding company system exceeds ten percent of the corporation’s voting
securities.
2. Adequacy of surplus.
For purposes of this chapter in determining whether an insurer’s surplus as regards policyholders is reasonable in relation to the insurer’s outstanding
liabilities and adequate to its financial needs, the following factors, among others, shall be considered: a. The size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force and
other appropriate criteria.
b. The extent to which the insurer’s business is diversified among the several lines of insurance.
c. The number and size of risks insured in each line of business.
d. The extent of the geographical dispersion of the insurer’s insured risks.
e. The nature and extent of the insurer’s reinsurance program.
f. The quality, diversification, and liquidity of the insurer’s investment portfolio.
g. The recent past and projected future trend in the size of the insurer’s surplus as regards policyholders.
h. The surplus as regards policyholders maintained by other comparable insurers.
i. The adequacy of the insurer’s reserves.
j. The quality and liquidity of investments in subsidiaries made pursuant to section 521A.2. The commissioner may treat any such investment as a disallowed asset for purposes of determining the adequacy of surplus
as regards policyholders whenever in the commissioner’s judgment such investment so warrants.
k. The quality of the company’s earnings and the extent to which the reported earnings include extraordinary items.
3. Dividends and other distributions.
a. (1) A domestic insurer may declare and pay dividends to its shareholders only from earned surplus. (2) For the purposes of this paragraph, “earned surplus” means surplus as regards policyholders less paid-in and contributed surplus, and may include a fair revaluation of assets
by the board of directors that is reasonable under the circumstances. Assets revalued by the board of directors cannot be
included in earned surplus until thirty days after the commissioner has received notice of the revaluation and has approved
the revaluation. The commissioner shall approve or disapprove the revaluation within thirty days after receiving notice of
the revaluation unless for good cause the commissioner extends the approval period for an additional thirty days.
b. (1) A domestic insurer shall not pay any extraordinary dividend or make any other extraordinary distribution to its shareholders
until thirty days after the commissioner has received notice of the declaration of the dividend or distribution and has not
disapproved such payment within the period, or until the time the commissioner has approved the payment within the thirty-day
period. (2) For purposes of this paragraph, an “extraordinary dividend or distribution” includes any dividend or distribution of cash or other property, whose fair market value together with that of other dividends
or distributions made within the preceding twelve months exceeds the greater of the following: (a) Ten percent of insurer’s surplus as regards policyholders as of the thirty-first day of December next preceding.
(b) The net gain from operations of the insurer, if the insurer is a life insurer, or the net income, if the insurer is not a
life insurer, for the twelve-month period ending the thirty-first day of December next preceding.
(3) An extraordinary dividend or distribution does not include pro rata distributions of any class of the insurer’s own securities.
c. A domestic insurer subject to registration under section 521A.4 shall report to the commissioner all dividends to shareholders within five business days following the declaration of the
dividends and not less than fourteen days prior to the payment of the dividends. This report shall also include a schedule
setting forth all dividends or other distributions made within the previous twelve months.
d. Notwithstanding any other provision of law, a domestic insurer may declare an extraordinary dividend or distribution which
is conditional upon the commissioner’s approval of the dividend or distribution. Such declaration does not confer any rights
upon shareholders until the commissioner has approved the payment of the dividend or distribution or the commissioner has
not disapproved the payment within the thirty-day period as provided in paragraph “b”.
4. Management of domestic insurers subject to registration.
a. Notwithstanding the control of a domestic insurer by any person, the officers and directors of the insurer shall not thereby
be relieved of any obligation or liability to which they would otherwise be subject by law, and the insurer shall be managed
so as to assure its separate operating identity consistent with this chapter.
b. Nothing in this section shall preclude a domestic insurer from having or sharing a common management, or cooperative or joint use of personnel, property,
or services with one or more other persons under arrangements meeting the standards of this section.
c. Not less than one-third of the directors of a domestic insurer, and not less than one-third of the members of each committee
of the board of directors of any domestic insurer, shall be persons who are not officers or employees of the insurer or of
any entity controlling, controlled by, or under common control with the insurer and who are not beneficial owners of a controlling
interest in the voting stock of the insurer or entity. At least one such person must be included in any quorum for the transaction
of business at any meeting of the board of directors or any committee of the board of directors.
d. The board of directors of a domestic insurer shall establish one or more committees comprised solely of directors or other
persons appointed by the board, the majority of whom are not officers or employees of the insurer or of any entity controlling,
controlled by, or under common control with the insurer and are not beneficial owners of a controlling interest in the voting
stock of the insurer or any such entity. The committee or committees shall have responsibility for recommending or nominating
candidates for director for election by shareholders or policyholders, evaluating the performance of officers deemed to be
principal officers of the insurer, and recommending to the board of directors the selection and compensation of the principal
officers.
e. The provisions of paragraphs “c” and “d” shall not apply to a domestic insurer if the person controlling the insurer, such as an insurer, a mutual insurance holding
company, or a publicly held corporation, has a board of directors and committees of the board of directors that meet the requirements
of paragraphs “c” and “d” with respect to such controlling entity.
f. An insurer may make application to the commissioner for a waiver from the requirements of this subsection if the insurer’s annual direct written and assumed premium, excluding premiums reinsured with the federal crop insurance
corporation and federal flood program, is less than three hundred million dollars. An insurer may also make application to
the commissioner for a waiver from the requirements of this subsection based upon unique circumstances. The commissioner may consider various factors including but not limited to the type of business
entity, volume of business written, availability of qualified board members, or the ownership or organizational structure
of the entity.
[C71, 73, 75, 77, 79, 81, §521A.5]
86 Acts, ch 1102, §19, 20; 91 Acts, ch 26, §54; 92 Acts, ch 1117, §40, 43; 93 Acts, ch 88, §27 – 30; 94 Acts, ch 1006, §1; 94 Acts, ch 1023, §125; 2012 Acts, ch 1023, §157; 2014 Acts, ch 1018, §14 – 17; 2015 Acts, ch 128, §25, 50, 51; 2016 Acts, ch 1073, §157
521A.6A Supervisory colleges — assessment of insurers.
1. Power of commissioner.
With respect to any insurer registered under section 521A.4 and in accordance with this section, the commissioner shall have the power to participate in a supervisory college for any domestic insurer that is part of an
insurance holding company system with international operations in order to determine compliance by the insurer with this chapter. The powers of the commissioner with respect to supervisory colleges include but are not limited to the following: a. Initiating the establishment of a supervisory college.
b. Clarifying the membership and participation of other supervisors in the supervisory college.
c. Clarifying the functions of the supervisory college and the role of other regulators, including the establishment of a group-wide
supervisor.
d. Coordinating the ongoing activities of the supervisory college, including planning meetings, supervisory activities, and processes
for information sharing.
e. Establishing a crisis management plan.
2. Expenses — assessment.
Each registered insurer subject to this section shall be liable for and shall pay the reasonable expenses of the commissioner’s participation in a supervisory college in
accordance with subsection 3, including reasonable travel expenses. For purposes of this section, a supervisory college may be convened as either a temporary or permanent forum for communication and cooperation between
the regulators charged with the supervision of the insurer or its affiliates, and the commissioner may establish a regular
assessment to the insurer for the payment of these expenses.
3. Supervisory college.
In order to assess the business strategy, financial position, legal and regulatory position, risk exposure, risk management
and governance processes, and as part of the examination of individual insurers in accordance with section 521A.6, the commissioner may participate in a supervisory college with other regulators charged with supervision of an insurer or
its affiliates, including other state, federal, and international regulatory agencies. The commissioner may enter into agreements
in accordance with section 521A.7, subsection 3, providing the basis for cooperation between the commissioner and the other regulatory agencies, and the activities of the
supervisory college. Nothing in this section shall delegate to the supervisory college the authority of the commissioner to regulate or supervise the insurer or its affiliates
within the commissioner’s jurisdiction.
521A.6B Group-wide supervision of internationally active insurance groups.
1. a. The commissioner may act as the group-wide supervisor of an internationally active insurance group in accordance with the
provisions of this section. However, the commissioner may authorize another regulatory official to act as the group-wide supervisor where the internationally
active insurance group meets any of the following conditions: (1) Does not have substantial insurance operations in the United States.
(2) Has substantial insurance operations in the United States, but not in Iowa.
(3) Has substantial insurance operations in the United States and in Iowa, but the commissioner has determined pursuant to the
factors set forth in subsections 2 and 6 that another regulatory official is the appropriate group-wide supervisor. b. In response to a request from an insurance holding company system that does not otherwise qualify as an internationally active
insurance group, the commissioner may make a determination of or acknowledge a group-wide supervisor for such an insurance
holding company system pursuant to this section.
2. a. In cooperation with other state, federal, and international regulatory agencies, the commissioner shall identify a single
group-wide supervisor for an internationally active insurance group. The commissioner may determine that the commissioner
is the appropriate group-wide supervisor for an internationally active insurance group that conducts substantial insurance
operations concentrated in this state, or the commissioner may acknowledge that a regulatory official from another jurisdiction
is the appropriate group-wide supervisor for the internationally active insurance group. In making a determination or acknowledgment
under this paragraph “a”, the commissioner shall consider the following factors: (1) The place of domicile of the insurers within the internationally active insurance group that hold the largest share of the
group’s written premiums, assets, or liabilities.
(2) The place of domicile of the top-tiered insurers in the insurance holding company system of the internationally active insurance
group.
(3) The location of the executive offices or largest operational offices of the internationally active insurance group.
(4) Whether another regulatory official is acting as or is seeking to act as the group-wide supervisor of the internationally
active insurance group under a regulatory system that the commissioner determines to be either of the following: (a) Substantially similar to the system of regulation provided under the laws of this state.
(b) Otherwise sufficient in terms of providing for group-wide supervision, enterprise risk analysis, and cooperation with other
regulatory officials.
(5) Whether another regulatory official acting as or seeking to act as the group-wide supervisor for the internationally active
insurance group provides the commissioner with reasonably reciprocal recognition and cooperation.
b. Notwithstanding paragraph “a”, even if the commissioner is identified pursuant to this subsection as the group-wide supervisor of an internationally active insurance group, the commissioner may determine that it is appropriate
to acknowledge another regulatory official to serve as the group-wide supervisor of the internationally active insurance group.
c. The acknowledgment of a group-wide supervisor pursuant to this subsection shall be made after consideration of the factors listed in paragraph “a”, subparagraphs (1) through (5), and shall be made in cooperation with and subject to the acknowledgment of other regulatory
officials involved with supervision of members of the internationally active insurance group, and in consultation with the
internationally active insurance group.
3. Notwithstanding any other provision of law, when another regulatory official is acting as the group-wide supervisor of an
internationally active insurance group, the commissioner shall acknowledge that regulatory official as the group-wide supervisor
of the internationally active insurance group. However, the commissioner shall make a new determination or acknowledgment
as to the appropriate group-wide supervisor for the internationally active insurance group in the event that a material change
in the internationally active insurance group results in either of the following: a. The internationally active insurance group’s insurers domiciled in Iowa holding the largest share of the group’s premiums,
assets, or liabilities.
b. Iowa being the place of domicile of the top-tiered insurers in the insurance holding company system of the internationally
active insurance group.
4. Pursuant to section 521A.6, the commissioner is authorized to collect from any insurer registered pursuant to section 521A.4 all information necessary to determine whether it is appropriate for the commissioner to act as the group-wide supervisor
of an internationally active insurance group or to acknowledge another regulatory official to act as the group-wide supervisor
of the internationally active insurance group. Prior to issuing a determination or acknowledgment pursuant to this section, the commissioner shall notify the insurer registered pursuant to section 521A.4 and the ultimate controlling person within the internationally active insurance group of the pending determination or acknowledgment.
The insurer and the internationally active insurance group shall have not less than thirty days to provide the commissioner
with additional information pertinent to the commissioner’s pending determination or acknowledgment. The commissioner shall
publish the identity of the internationally active insurance groups that the commissioner has determined are subject to group-wide
supervision by the commissioner.
5. If a determination is made that the commissioner is the appropriate group-wide supervisor for an internationally active insurance
group, the commissioner is authorized to engage in any of the following group-wide supervision activities: a. Assessing the enterprise risks within the internationally active insurance group to ensure all of the following: (1) That the material financial condition and liquidity risks to members of the internationally active insurance group that are
engaged in the business of insurance are identified by management.
(2) That reasonable and effective mitigation measures are in place.
b. Requesting, from any member of an internationally active insurance group subject to the commissioner’s group-wide supervision,
information necessary and appropriate to assess enterprise risk, including but not limited to information about the members
of the internationally active insurance group regarding all of the following: (1) Governance, risk assessment, and management.
(2) Capital adequacy.
(3) Material intercompany transactions.
c. Coordinating and, through the authority of the regulatory officials of the jurisdictions where members of the internationally
active insurance group are domiciled, compelling the development and implementation of reasonable measures designed to ensure
that the internationally active insurance group is able to timely recognize and mitigate enterprise risks to members of the
internationally active insurance group that are engaged in the business of insurance.
d. Communicating with other state, federal, and international regulatory agencies for members within the internationally active
insurance group and sharing relevant information, subject to the confidentiality provisions of section 521A.7, through supervisory colleges as set forth in section 521A.6A or otherwise.
e. Entering into agreements with or obtaining documentation from any insurer registered under section 521A.4, any member of an internationally active insurance group, and any other state, federal, or international regulatory agency
for members of the internationally active insurance group, that provides the basis for or otherwise clarifies the commissioner’s
role as group-wide supervisor of an internationally active insurance group, including provisions for resolving disputes with
other regulatory officials. Such agreements or documentation shall not serve as evidence in any proceeding that any insurer
or person within an insurance holding company system not domiciled or incorporated in this state is doing business in this
state or is otherwise subject to jurisdiction in this state.
f. Other activities of group-wide supervision, consistent with the authority and purposes set forth in this section, as considered necessary by the commissioner.
6. If the commissioner acknowledges that another regulatory official from a jurisdiction that is not accredited by the national
association of insurance commissioners is the group-wide supervisor of an internationally active insurance group, the commissioner
may reasonably cooperate through a supervisory college or otherwise, with group-wide supervision undertaken by that regulatory
official provided that all of the following occur: a. The commissioner’s cooperation is in compliance with the laws of this state.
b. The regulatory official acknowledged as the group-wide supervisor of the internationally active insurance group also recognizes
and cooperates with the commissioner’s activities as a group-wide supervisor for other internationally active insurance groups,
where applicable. If such recognition and cooperation is not reasonably reciprocal, the commissioner may refuse recognition
and cooperation to that regulatory official.
7. The commissioner is authorized to enter into agreements with or obtain documentation from any insurer registered under section 521A.4, any affiliate of the insurer, and any other state, federal, or international regulatory agency for members of the internationally
active insurance group, that provides the basis for or otherwise clarifies another regulatory official’s role as group-wide
supervisor of an internationally active insurance group.
8. An insurer registered under section 521A.4 that is subject to this section shall be liable for and shall pay the reasonable expenses of the commissioner’s participation in the administration of this section, including the engagement of attorneys, actuaries, accountants, and other experts not otherwise a part of the commissioner’s
staff and all reasonable travel expenses. Any persons so retained shall be under the direction and control of the commissioner
and shall act in a purely advisory capacity.
1. Subject to subsections 2 through 4, if an order for liquidation, conservation, or rehabilitation of a domestic insurer has been entered, the receiver appointed
under the order may recover on behalf of the insurer either of the following if made within one year preceding the filing
of the petition for liquidation, conservation, or rehabilitation: a. From a parent corporation, holding company, affiliate, or other person who otherwise controlled the insurer, the amount of
distributions, other than distributions of shares of the same class of stock, paid by the insurer on its capital stock.
b. Any payment in the form of a bonus, termination settlement, or extraordinary lump sum salary adjustment made by the insurer
or a subsidiary of the insurer to a director, officer, agent, or employee.
2. A distribution is not recoverable if the parent holding company, affiliate, or other person shows that when the distribution
was paid it was lawful and reasonable, and that the insurer did not know and could not reasonably have known that the distribution
might adversely affect the ability of the insurer to fulfill its contractual obligations.
3. A parent corporation, holding company, affiliate, or other person who otherwise controlled the insurer or affiliate at the
time the distributions were paid is liable only up to the amount of distributions or payments under subsection 1 that the person received. A person who otherwise controlled the insurer at the time the distributions were declared is liable
only up to the amount of distributions the person would have received if the person had been paid immediately. If two or more
persons are liable with respect to the same distributions, each shall be separately liable for their distributive share.
4. The maximum amount recoverable under this section shall be the amount needed in excess of all other available assets of the impaired or insolvent insurer to pay the contractual
obligations of the impaired or insolvent insurer and to reimburse any guaranty funds.
5. To the extent that a person liable under subsection 3 is insolvent or otherwise fails to pay claims due from the person pursuant to this section, the person’s parent corporation, holding company, affiliate, or other person who otherwise controlled it at the time the
distribution was paid, is separately liable for its share of any resulting deficiency in the amount recovered from the parent
corporation, holding company, affiliate, or other person who otherwise controlled it.