806 KAR 37:010. Insurance holding company systems.

 

      RELATES TO: KRS 304.24-390, 304.24-410, 304.37-020, 304.37-030, 304.37-110, 304.37-120

      STATUTORY AUTHORITY: KRS 304.2-110.

      NECESSITY, FUNCTION, AND CONFORMITY: KRS 304.2-110 provides that the Executive Director of Insurance may make reasonable administrative regulations necessary for or as an aid to the effectuation of any provision of the Kentucky Insurance Code. This administrative regulation sets forth procedural requirements which the Executive Director of Insurance deems necessary to carry out the provisions of KRS 304.37, insurance holding company systems, and statutes relating to the merger and acquisition of domestic insurers, this information being necessary and appropriate for the public interest and for the protection of policyholders in Kentucky.

 

      Section 1. Definitions. The following definitions apply to this administrative regulation:

      (1) "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.

      (2) "Foreign insurer" shall include an alien insurer except where clearly noted otherwise.

      (3) "Ultimate controlling person" means that person which is not controlled by any other person.

 

      Section 2. Forms - General Requirements. (1) Forms A, B, C, and D are intended to specify the information required to be provided in the preparation of the statements required by KRS 304.37-120, 304.37-020 and 304.37-030. In addition, Form A shall be used as to mergers and acquisitions of domestic insurers referred to in KRS 304.24-390 and 304.24-410. They are not intended to be blank forms which are to be filled in. These statements filed shall contain the numbers and captions of all items, but the text of the items may be omitted if the answers thereto are prepared in 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, shall 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.

      (2) Duplicate originals of each statement including exhibits and all other papers and documents filed as a part thereof, shall be filed with the executive director by personal delivery or mail addressed to: Financial Standards and Examination Division, Kentucky Office of Insurance, P.O. Box 517, Frankfort, Kentucky 40602. A copy of Form C shall be filed in each state in which an insurer is authorized to do business, if the insurance regulatory official of that state has notified the insurer of its request in writing, in which case the insurer has fifteen (15) days from receipt of the notice to file the form. The duplicate original shall be manually 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.

      (3) Statements shall be prepared on paper eight and one-half (8 1/2) inch by eleven (11) inch in size and bound at the top or the top left-hand corner. Exhibits and financial statements, unless specifically prepared for the filing, may be submitted in their original size. All copies of any statement, financial statements, or exhibits shall be clear, easily readable, and suitable for photocopying. Debits in credit categories and credits in debit categories shall be designated so as to be clearly distinguishable 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.

 

      Section 3. Forms - Incorporation by Reference, Summaries and Omissions. (1) Information required by any item of Forms A, B, or D 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 Forms A, B, or D provided the document or paper is filed as an exhibit to the statement. Excerpts of documents may be filed as exhibits if the documents are extensive. Documents currently on file with the executive director 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 the 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.

      (2) 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 executive director which was filed within three (3) years and may be qualified in its entirety by the 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 (1) of such 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.

 

      Section 4. Forms - Information Unknown or Unavailable and Extension of Time to Furnish. (1) Information required need be given only insofar as it is known or reasonably available to the person filing the statement. If any required information is unknown and not reasonably available to the person filing, either because obtaining it would involve unreasonable effort or expense, or because it rests peculiarly within the knowledge of another person not affiliated with the person filing, the information may be omitted, subject to the following conditions:

      (a) The person filing shall give the information on the subject it possesses or can acquire without unreasonable effort or expense, together with the sources thereof; and

      (b) The person filing shall include a statement either showing that unreasonable effort or expense would be involved or indicating the absence of any affiliation with the person within whose knowledge the information rests and stating the result of a request made to the person for the information.

      (2) If it is impractical to furnish any required information, document, or report at the time it is required to be filed, there may be filed with the executive director as a separate document:

      (a) Identifying the information, document, or report in question;

      (b) Stating why its filing at the time required is impractical; and

      (c) 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 executive director within sixty (60) days after receipt thereof enters an order denying the request.

 

      Section 5. Forms - Additional Information and Exhibits. In addition to the information expressly required to be included in Forms A, B, C, and D, there shall be added any further material information 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. These exhibits shall be so marked as to indicate clearly the subject matters to which they refer. Changes to Forms A, B, C, or D shall include on the top of the cover page the phrase: "Change No. (insert number) to" and shall indicate the date of the change and not the date of the original filing.

 

      Section 6. Subsidiaries of Domestic Insurers. The authority to invest in subsidiaries under KRS 304.37-110 is in addition to any authority to invest in subsidiaries which may be contained in any other provision of the Insurance Code.

 

      Section 7. Acquisition of Control - Statement Filing. A person required to file a statement pursuant to KRS 304.24-410 or 304.37-120, shall furnish the required information on Form A.

 

      Section 8. Amendments to Form A. The applicant shall promptly advise the executive director of any changes in the information so furnished on Form A arising subsequent to the date upon which the information was furnished but prior to the executive director’s disposition of the application.

 

      Section 9. Acquisition of Certain Insurers. (1) If the person being acquired is deemed to be a "domestic insurer" solely because of the provisions of KRS 304.37-(1)(a), the name of the domestic insurer on the cover page shall be indicated as follows: "ABC Insurance Company, a subsidiary of XYZ Holding Company".

      (2) Where an insurer referred to in subsection (1) of this section is being acquired, references to "the insurer" contained in Form A shall refer to both the domestic subsidiary insurer and the person being acquired.

 

      Section 10. Annual Registration of Insurers - Statement Filing. An insurer required to file an annual registration statement pursuant to KRS 304.37-020 shall furnish the required information on Form B.

 

      Section 11. Summary of Registration - Statement Filing. An insurer required to file an annual registration statement pursuant to KRS 304.37-020 shall also furnish information required on Form C. An insurer shall file a copy of Form C in each state in which the insurer is authorized to do business, if requested by the insurance regulatory official of that state.

 

      Section 12. Alternative and Consolidated Registrations. (1) Any authorized insurer may file a registration statement on behalf of any affiliated insurer or insurers which are required to register under KRS 304.37-020. A registration statement may include information not required by KRS Chapter 304.37 regarding any insurer in the insurance holding company system even if the insurer is not authorized to do business in Kentucky. 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 if:

      (a) The statement or report contains substantially similar information required to be furnished on Form B; and

      (b) The filing insurer is the principal insurance company in the insurance holding company system.

      (2) 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 is the principal insurer in the insurance holding company system.

      (3) With the prior approval of the executive director, an unauthorized insurer may follow any of the procedures which could be done by an authorized insurer under subsection (1) of this section.

      (4) Any insurer may take advantage of the provisions of KRS 304.37-020(9) or (10) without obtaining the prior approval of the executive director. However, the executive director reserves the right to require individual filings if he deems them necessary in the interest of clarity, ease of administration, or the public good.

 

      Section 13. Disclaimers and Termination of Registration. (1) 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 (the "subject") shall contain the following information:

      (a) The number of authorized, issued, and outstanding voting securities of the subject;

      (b) With respect to the person whose control is denied and all affiliates of this person, the number and percentage of shares of the subject's voting securities which are held of record or known to be owned beneficially, and the number of these shares concerning which there is a right to acquire, directly or indirectly;

      (c) All material relationships and bases for affiliation between the subject and the person whose control is denied and all affiliates of this person;

      (d) A statement explaining why the person should not be considered to control the subject.

      (2) A request for termination of registration shall be deemed to have been granted unless the executive director, within thirty (30) days after he receives the request, notifies the registrant otherwise.

 

      Section 14. Transactions Subject to Prior Notice - Notice Filing. An insurer required to give notice of a proposed transaction pursuant to KRS 304.37-030 shall furnish the required information on Form D.

 

      Section 15. Extraordinary Dividends and Other Distributions. (1) Requests for approval of extraordinary dividends or any other extraordinary distribution to shareholders shall include the following:

      (a) The amount of the proposed dividend;

      (b) The date established for payment of the dividend;

      (c) 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;

      (d) A copy of the calculations determining that the proposed dividend is extraordinary. The work paper shall include the following information:

      1. The amounts, dates, and form of payment of all dividends or distributions (including regular dividends but excluding distributions of the insurers 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 commencing on the day after the same day of the same month in the last preceding year.

      2. Surplus as regards policyholders (total capital and surplus) as of the 31st day of December next preceding;

      3. If the insurer is a life insurer, the net gain from operations for the twelve (12) month period ending the 31st day of December next preceding;

      4. If the insurer is not a life insurer, the net income less realized capital gains for the twelve (12) month period ending the 31st day of December next preceding and the two (2) preceding twelve (12) month periods; and

      5. 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.

      (e) A balance sheet and statement of income for the period intervening from the last annual statement filed with the executive director and the end of the month preceding the month in which the request for dividend approval is submitted; and

      (f) 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.

      (2) Subject to KRS 304.37-030(2), each registered insurer shall report to the executive director all dividends and other distributions to shareholders within fifteen (15) business days following the declaration thereof, including the same information required by subsection (1)(d) of this section.

 

      Section 16. Adequacy of Surplus. The factors set forth in KRS 304.37-030(4) 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 executive director shall 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 executive director shall consider the extent to which each of these factors varies from insurer to insurer and in determining the quality and liquidity of investments in subsidiaries, the executive director shall consider the individual subsidiary and may discount or disallow its valuation to the extent that the individual investments so warrant.

 

APPENDIX A

FORM A

STATEMENT REGARDING THE ACQUISITION OF CONTROL OF OR MERGER WITH A DOMESTIC INSURER

 

Name of Domestic Insurer:

 

BY

 

Name of Acquiring Person (Applicant):

 

Filed with the Kentucky Office of Insurance

 

State of domicile of insurer being acquired:

 

Dated:__________________, 19_____

Name, Title, address, and telephone number of Individual to Whom Notices and Correspondence Concerning this Statement Shall be Addressed:

 

ITEM 1. INSURER AND METHOD OF ACQUISITION

State the name and address of the domestic insurer to which this application relates and a brief description of how control is to be acquired.

ITEM 2. IDENTITY AND BACKGROUND OF THE APPLICANT

      (1) State the name and address of the applicant seeking to acquire control over the insurer.

      (2) If the applicant is not an individual, state the nature of its business operations for the past five (5) years or for any lesser period as the person and any predecessors thereof shall have been in existence. Briefly describe the business intended to be done by the applicant and the applicant's subsidiaries.

      (3) Furnish a chart or listing clearly presenting the identities of the interrelationships among the applicant and all affiliates of the applicant. No affiliate need be identified if its total assets are equal to less than one-half of one (0.5) percent of the total assets of the ultimate controlling person affiliated with the applicant. Indicate in the chart or listing the percentage of voting securities of each person which is owned or controlled by the applicant or by any other person. If control of any person is maintained other than by the ownership or control of voting securities, indicate the basis of such control. As to each person specified in such chart or listing indicate the type of organization (e.g., corporation, trust, partnership) and the state or other jurisdiction of domicile. If court proceedings involving a reorganization or liquidation are pending with respect to any person, indicate which person, and set forth the title of the court, nature of proceedings, and the date when commenced.

ITEM 3. IDENTITY AND BACKGROUND OF INDIVIDUALS ASSOCIATED WITH THE APPLICANT

State the following with respect to the applicant if he is an individual or all persons who are directors, executive officers, or owners of ten (10) percent or more of the voting securities of the applicant if the applicant is not an individual.

      (1) Name and business address;

      (2) Present principal business activity, occupation, or employment including position and office held and the name, principal business, and address of any corporation or other organization in which such employment is carried on;

      (3) Material occupations, positions, offices, or employment during the last five (5) years, giving the starting and ending dates of each and the name, principal business, and address of any business corporation or other organization in which each occupation, position, office, or employment was carried on; if any occupation, position, office, or employment required licensing by or registration with any federal, state, or municipal governmental agency, indicate this fact, the current status of such licensing or registration, and an explanation of any surrender, revocation, suspension, or disciplinary proceedings in connection therewith.

      (4) Whether or not the person has ever been convicted in a criminal proceeding (excluding minor traffic violations) and, if so, give the date, nature of conviction, name, and location of court, and penalty imposed or other disposition of the case.

ITEM 4. NATURE, SOURCE, AND AMOUNT OF CONSIDERATION

      (1) Describe the nature, source, and amount of funds or other considerations used or to be used in effecting the merger or other acquisition of control. If any part of the same is represented or is to be represented by funds or other consideration borrowed or otherwise obtained for the purpose of acquiring, holding, or trading securities, furnish a description of the transaction, the names of the parties thereto, the relationship (if any) between the borrower and the lender, the amounts borrowed or to be borrowed, and copies of all agreements, promissory notes, and security arrangements relating thereto.

      (2) Explain the criteria used in determining the nature and amount of such consideration.

      (3) If the source of the consideration is a loan made in the lender's ordinary course of business and if the applicant wishes the identity of the lender to remain confidential, he must specifically request that the identity be kept confidential.

ITEM 5. FUTURE PLANS OF INSURER

Describe any plans or proposals which the applicant may have to declare an extraordinary dividend, to liquidate the insurer, to sell its assets to or merge it with any person or persons or to make any other material change in its business operations or corporate structure or management.

ITEM 6. VOTING SECURITIES TO BE ACQUIRED

State the number of shares of the insurer's voting securities which the applicant, its affiliates and any person listed in Item 3 plan to acquire, and the terms of the offer, request, invitation, agreement or acquisition, and a statement as to the method by which the fairness of the proposal was determined.

ITEM 7. OWNERSHIP OF VOTING SECURITIES

State the amount of each class of any voting security of the insurer which is beneficially owned or concerning which there is a right to acquire beneficial ownership by the applicant, its affiliates, or any person listed in Item 3.

ITEM 8. CONTRACTS, ARRANGEMENTS, OR UNDERSTANDINGS WITH RESPECT TO VOTING SECURITIES OF THE INSURER

Give a full description of any contracts, arrangements, or understandings with respect to any voting security of the insurer in which the applicant, its affiliates, or any person listed in Item 3 is involved, such as 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. The description shall identify the persons with whom these contracts, arrangements, or understandings have been entered into.

ITEM 9. RECENT PURCHASES OF VOTING SECURITIES

Describe any purchases of any voting securities of the insurer by the applicant, its affiliates, or any person listed in Item 3 during the twelve (12) calendar months preceding the filing of this statement. Include in the description the dates of purchase, the names of the purchasers, and the consideration paid or agreed to be paid. State whether any shares so purchased are hypothecated.

ITEM 10. RECENT RECOMMENDATIONS TO PURCHASE

Describe any recommendations to purchase any voting security of the insurer made by the applicant, its affiliates, any person listed in Item 3, or by anyone based upon interviews or at the suggestion of the applicant, its affiliates, or any person listed in Item 3 during the twelve (12) calendar months preceding the filing of this statement.

ITEM 11. AGREEMENTS WITH BROKER-DEALERS

Describe the terms of any agreement, contract, or understanding made with any broker-dealer as to solicitation of voting securities of the insurer for tender and the amount of any fees, commissions, or other compensation to be paid to broker-dealers with regard thereto.

ITEM 12. FINANCIAL STATEMENTS AND EXHIBITS

      (1) Financial statements and exhibits shall be attached to this statement as an appendix, but list under this item the financial statements and exhibits attached.

      (2) The financial statements shall include the annual financial statements of the persons identified in Item 2(3) for the preceding five (5) fiscal years (or for such lesser period as such applicant and its affiliates and any predecessors thereof shall have been in existence), and similar information covering the period from the end of the person's last fiscal year, if the information is available. Statements may be prepared on either an individual basis, or, unless the executive director otherwise requires, on a consolidated basis if the consolidated statements are prepared in the usual course of business.

      (3) The annual financial statements of the applicant shall be accompanied by the certificate of an independent public accountant to the effect that such statements present fairly the financial position of the applicant and the results of its operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the applicant is an insurer which is actively engaged in the business of insurance, the financial statements need not be certified, provided they are based on the annual statement of the person filed with the insurance regulatory official of the person's domiciliary state and are in accordance with the requirements of insurance or other accounting principles prescribed or permitted under the law and administrative regulations of the state.

      (4) File as exhibits copies of all tender offers for, requests or invitations for, tenders of, exchange offers for, and agreements to acquire or exchange any voting securities of the insurer, and (if distributed) of additional soliciting material relating thereto, any proposed employment, consultation, advisory or management contracts concerning the insurer, annual reports to the stockholders of the insurer and the applicant for the last two (2) fiscal years, and any additional documents or papers required by Form A or Sections 2 and 4 of this administrative regulation.

ITEM 13. SIGNATURE AND CERTIFICATION

Signature and certification required as follows:

SIGNATURE

      Pursuant to the requirements of KRS 304.24-390, 304.24-410, or 199 and KRS 304.37-120, as applicable, ____________ has caused this application to be duly signed on its behalf in the City of __________________ and State of __________on the ____ day of ____, 19 ____.

 

(SEAL)

 

Name of Applicant:

BY

 

(Name), (Title):

Attest:

 

Signature of Officer:

Title:

CERTIFICATION

 

      The undersigned deposes and says that he has duly executed the attached application dated ____, 19____, for and on behalf of _______ (Name of Applicant); that he is the ______________ (Title of Officer) of the company and that he is authorized to execute and file the instrument. Deponent further says that he is familiar with the instrument and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.

Signature:

(Type or print name beneath)

 

APPENDIX B

FORM B

INSURANCE HOLDING COMPANY SYSTEM ANNUAL

REGISTRATION STATEMENT

 

Filed with the Kentucky Office of Insurance

BY

 

Name of Registrant:

 

On Behalf of Following Insurance Companies

 

Name:

Address:

 

Date: ____, 19_____

Name, Title, Address, and telephone number of Individual to Whom Notices and Correspondence Concerning This Statement Shall Be Addressed:

 

ITEM 1. IDENTITY AND CONTROL OF REGISTRANT

Furnish the exact name of each insurer registering or being registered ("the registrant"), the home office address and principal executive offices of each, the date on which each registrant became part of the insurance holding company system, and the method(s) by which control of each registrant was acquired and is maintained.

ITEM 2. ORGANIZATIONAL CHART

Furnish a chart or listing clearly presenting the identities of and interrelationships among all affiliated persons within the insurance holding company system. No affiliate need be shown if its total assets are equal to less than one-half of one (0.5) percent of the total assets of the ultimate controlling person within the insurance holding company system unless it has assets valued at or exceeding $1,000,000.00. The chart or listing should show the percentage of each class of voting securities of each affiliate which is owned, directly or indirectly, by another affiliate. If control of any person within the system is maintained other than by the ownership or control of voting securities, indicate the basis of control. As to each person specified in such chart or listing indicate the type of organization (e.g., - corporation, trust, partnership) and the state or other jurisdiction of domicile.

ITEM 3. THE ULTIMATE CONTROLLING PERSON

As to the ultimate controlling person in the insurance holding company system furnish the following information:

      (1) Name;

      (2) Home office address;

      (3) Principal executive office address;

      (4) The organizational structure of the person (i.e., corporation, partnership, individual, trust, etc.);

      (5) The principal business of the person;

      (6) The name and address of any person who holds or owns ten (10) percent or more of any class of voting security, the class of the security, the number of shares held of record or known to be beneficially owned, and the percentage of class so held or owned; and

      (7) If court proceedings involving a reorganization or liquidation are pending, indicate the title and location of the court, the nature of proceedings, and the date commenced.

ITEM 4. BIOGRAPHICAL INFORMATION

Furnish the following information for the directors and executive officers of the ultimate controlling person: the individual's name and address, his principal occupation and all offices and positions held during the past five (5) years, and any conviction of crimes other than minor traffic violations.

ITEM 5. TRANSACTIONS AND AGREEMENTS

      (1) Briefly describe the following agreements in force, and transactions currently outstanding or which have occurred during the last calendar year between the registrant and its affiliates:

      (a) Loans, other investments, or purchases, sales or exchanges of securities of the affiliates by the registrant or of the registrant by its affiliates;

      (b) Purchases, sales or exchanges of assets;

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

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

      (e) All management agreements, service contracts, and all cost-sharing arrangements;

      (f) Reinsurance agreements;

      (g) Dividends and other distributions to shareholders;

      (h) Consolidated tax allocation agreements; and

      (i) Any pledge of the registrant's stock or of the stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system.

      (2) No information need be disclosed if it is not material for purposes of KRS 304.37-020.

      (3) Sales, purchases, exchanges, loans or extensions of credit, investments, or guarantees involving one-half of one (0.5) percent or less of the registrant's admitted assets as of the 31st day of December next preceding shall not be deemed material.

      (4) The description shall be in a manner as to permit the proper evaluation thereof by the executive director, and shall include at least the following: the nature and purpose of the transaction, the nature and amounts of any payments or transfers of assets between the parties, the identity of all parties to the transaction, and relationship of the affiliated parties to the registrant.

ITEM 6. LITIGATION OR ADMINISTRATIVE PROCEEDINGS

A brief description of any litigation or administrative proceedings of the following types, either then pending or concluded within the preceding fiscal year, to which the ultimate controlling person or any of its directors or executive officers was a party or of which the property of any persons is or was the subject. Give the names of the parties and the court or agency in which the litigation or proceeding is or was pending:

      (1) Criminal prosecutions or administrative proceedings by any government agency or authority which may be relevant to the trustworthiness of any party thereto; and

      (2) Proceedings which may have a material effect upon the solvency or capital structure of the ultimate holding company such as bankruptcy, receivership, or other corporate reorganizations.

ITEM 7. STATEMENT REGARDING PLAN OR SERIES OF TRANSACTIONS

The insurer shall furnish a statement that transactions entered into since the filing of the prior year's annual registration statement are not part of a plan or series of like transactions, the purpose of which is to avoid statutory threshold amounts and the review that might otherwise occur.

ITEM 8. FINANCIAL STATEMENTS AND EXHIBITS

      (1) Financial statements and exhibits shall be attached to this statement as an appendix, but list under this item the financial statements and exhibits attached.

      (2) The financial statements shall include the annual financial statements of the ultimate controlling person in the insurance holding company system as of the end of the person's latest fiscal year.

      (3) If at the time of the initial registration, the annual financial statements for the latest fiscal year are not available, annual statements for the previous fiscal year may be filed and similar financial information shall be filed for any subsequent period to the extent the information is available. The financial statements may be prepared on either an individual basis, or unless the executive director otherwise requires, on a consolidated basis if the consolidated statements are prepared in the usual course of business.

      (4) Unless the executive director otherwise permits, the annual financial statements shall be accompanied by the certificate of an independent public accountant to the effect that the statements present fairly the financial position of the ultimate controlling person and the results of its operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the ultimate controlling person is an insurer which is actively engaged in the business of insurance, the annual financial statements need not be certified, provided they are based on the annual statement of the insurer filed with the insurance regulatory official of the insurer's domiciliary state and are in accordance with requirements of insurance or other accounting principles prescribed or permitted under the law and administrative regulations of such state.

      (5) Exhibits shall include copies of the latest annual reports to shareholders of the ultimate controlling person and proxy material used by the ultimate controlling person, and any additional documents or papers required by Form B or Sections 2 and 4 of this administrative regulation.

ITEM 9. FORM C REQUIRED

A Form C, Summary of Registration Statement, shall be prepared and filed with this Form B.

ITEM 10. SIGNATURE AND CERTIFICATION

Signature and certification required as follows:

SIGNATURE

      Pursuant to the requirements of KRS 304.37-020, the Registrant has caused this annual registration statement to be duly signed on its behalf in the City of _____________ and State of _____________ on the ____ day of ____, 19____.

 

                                                (SEAL)______________________

                                                                Name of Applicant

                                                BY_________________________

                                                                (Name) (Title)

Attest:

________________________

(Signature of Officer)

________________________

(Title)

CERTIFICATION

The undersigned deposes and says that he has duly executed the attached annual registration statement dated______, 19___, for and on behalf of __________________________ (Name of Company); that he is the ____________________ (Title of Officer) of the company and that he is authorized to execute and file such instrument. Deponent further says that he is familiar with the instrument and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.

Signature:

Type or print name beneath:

 

APPENDIX C

FORM C

SUMMARY OF REGISTRATION STATEMENT

 

Filed with the Kentucky Office of Insurance

By

 

Name of Registrant:

 

On Behalf of Following Insurance Companies

 

Name:

Address:

 

Date: ____________, 19_____

Name, Title, Address, and telephone number of Individual to Whom Notices and Correspondence Concerning This Statement Shall Be Addressed:

 

Furnish a brief description of all items in the current annual registration statement which represent changes from the prior year's annual registration statement. The description shall be in a manner as to permit the proper evaluation thereof by the executive director, and shall include specific references to item numbers in the annual registration statement and to the terms contained therein.

 

Changes occurring under Item 2 of Form B, insofar as changes in the percentage of each class of voting securities held by each affiliate is concerned, need only be included where the changes are ones which result in ownership or holdings of ten (10) percent or more of voting securities, loss or transfer of control, or acquisition or loss of partnership interest.

 

Changes occurring under Item 4 of Form B need only be included where an individual is, for the first time, made a director or executive officer of the ultimate controlling person, a director or executive officer terminates his responsibilities with the ultimate controlling person, or in the event an individual is named president of the ultimate controlling person.

 

If a transaction disclosed on the prior year's annual registration statement has been changed, the nature of such change shall be included. If a transaction disclosed on the prior year's annual registration statement has been effectuated, furnish the mode of completion, and any flow of funds between affiliates resulting from the transaction.

 

The insurer shall furnish a statement that transactions entered into since the filing of the prior year's annual registration statement are not part of a plan or series of like transactions whose purpose it is to avoid statutory threshold amounts and the review that might otherwise occur.

 

SIGNATURE AND CERTIFICATION

Signature and certification required as follows:

SIGNATURE

      Pursuant to the requirements of KRS 304.37-020, the Registrant has caused this summary of registration statement to be duly signed on its behalf in the City of __________________ and State of _____________on the ______day of___________, 19_____.

(SEAL)

 

Name of Applicant:

BY

 

(Name), (Title):

 

Attest:

__________________________

(Signature of Officer)

__________________________

(Title)

CERTIFICATION

 

      The undersigned deposes and says that he has duly executed the attached summary of registration statement dated _____________, 19_____, for and on behalf of __________________________ (Name of Company); that he is the ____________________ (Title of Officer) of the company and that he is authorized to execute and file the instrument. Deponent further says that he is familiar with the instrument and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information, and belief.

 

Signature:

Type or print name beneath:

 

APPENDIX D

FORM D

PRIOR NOTICE OF A TRANSACTION

 

Filed with the Kentucky Office of Insurance

By

 

Name of Registrant:

 

On Behalf of Following Insurance Companies

 

Name:

Address:

 

Date:___________, 19_____

Name, Title, Address, and telephone number of Individual to Whom Notices and Correspondence Concerning This Statement Shall Be Addressed:

 

ITEM 1. IDENTITY OF PARTIES TO TRANSACTION

Furnish the following information for each of the parties to the transaction:

      (1) Name;

      (2) Home office address;

      (3) Principal executive office address;

      (4) The organizational structure (i.e., corporation, partnership, individual, trust, etc.);

      (5) A description of the nature of the parties' business operations;

      (6) Relationship, if any, of other parties to the transaction to the insurer filing the notice, including any ownership or debtor/creditor interest by any other parties to the transaction in the insurer seeking approval, or by the insurer filing the notice in the affiliated parties; and

      (7) Where the transaction is with a nonaffiliate, the name(s) of the affiliate(s) which will receive, in whole or in substantial part, the proceeds of the transaction.

ITEM 2. DESCRIPTION OF THE TRANSACTION

Furnish the following information for each transaction for which notice is being given:

      (1) A statement as to whether notice is being given under KRS 304.37-030(2)(a)1, 2, 3, 4, or 5;

      (2) A statement of the nature of the transaction; and

      (3) The proposed effective date of the transaction.

ITEM 3. SALES, PURCHASES, EXCHANGES, LOANS, EXTENSIONS OF CREDIT, GUARANTEES OR INVESTMENTS

      (1) Furnish a brief description of the amount and source of funds, securities, property, or other consideration for the sale, purchase, exchange, loan, extension of credit, guarantee, or investment, whether any provision exists for purchase by the insurer filing notice, by any party to the transaction, or by any affiliate of the insurer filing notice, a description of the terms of any securities being received, if any, and a description of any other agreements relating to the transaction such as contracts or agreements for services, consulting agreements and the like. If the transaction involves other than cash, furnish a description of the consideration, its cost and its fair market value, together with an explanation of the basis for evaluation.

      (2) If the transaction involves a loan, extension of credit or a guarantee, furnish a description of the maximum amount which the insurer will be obligated to make available under the loan, extension of credit or guarantee, the date on which the credit or guarantee will terminate, and any provisions for the accrual of or deferral of interest.

      (3) If the transaction involves an investment, guarantee or other arrangement, state the time period during which the investment, guarantee or other arrangement will remain in effect, together with any provisions for extensions or renewals of such investments, guarantees or arrangements. Furnish a brief statement as to the effect of the transaction upon the insurer's surplus.

      (4) No notice need be given if the maximum amount which can at any time be outstanding or for which the insurer can be legally obligated under the loan, extension of credit, or guarantee is less than:

       (a) In the case of nonlife insurers, the lesser of three (3) percent of the insurer's admitted assets or twenty-five (25) percent of surplus as regards policyholders; or

      (b) In the case of life insurers, three (3) percent of the insurer's admitted assets, each as of the 31st day of December next preceding.

ITEM 4. LOANS OR EXTENSIONS OF CREDIT TO A NONAFFILIATE

      (1) If the transaction involves a loan or extension of credit to any person who is not an affiliate, furnish a brief description of the agreement or understanding whereby the proceeds of the proposed transaction, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase the assets of, or to make investments in, any affiliate of the insurer making such loans or extensions of credit, and specify in what manner the proceeds are to be used to loan to, extend credit to, purchase assets of, or make investments in any affiliate. Describe the amount and source of duns, securities, property, or other consideration for the loan or extension of credit and, if the transaction is one involving consideration other than cash, a description of its cost and its fair market value together with an explanation of the basis for evaluation. Furnish a brief statement as to the effect of the transaction upon the insurer's surplus.

      (2) No notice need be given if the loan or extension of credit is one which equals less than, in the case of nonlife insurers, the lesser of three (3) percent of the insurer's admitted assets or twenty-five (25) percent of surplus as regards policyholders or, with respect to life insurers, three (3) percent of the insurer's admitted assets, each as of the 31st day of December next preceding.

ITEM 5. REINSURANCE

      (1) If the transaction is a reinsurance agreement or modification thereto, as described by KRS 304.37-030(2)(a)3, furnish a description of the known or estimated amount of liability to be ceded or assumed in each calendar year, the period of time during which the agreement will be in effect, and a statement whether an agreement or understanding exists between the insurer and nonaffiliate to the effect that any portion of the assets constituting the consideration for the agreement will be transferred to one (1) or more of the insurer's affiliates. Furnish a brief description of the consideration involved in the transaction, and a brief statement as to the effect of the transaction upon the insurer's surplus.

      (2) No notice need be given for reinsurance agreements or modifications thereto if the reinsurance premium or a change in the insurer's liabilities in connection with the reinsurance agreement or modification thereto is less than five (5) percent of the insurer's surplus as regards policyholders, as of the 31st day of December next preceding.

ITEM 6. MANAGEMENT AGREEMENTS, SERVICE AGREEMENTS AND COST-SHARING ARRANGEMENTS.

      (1) For management and service agreements, furnish:

      (a) A brief description of the managerial responsibilities, or services to be performed; and

      (b) A brief description of the agreement, including a statement of its duration, together with brief descriptions of the basis for compensation and the terms under which payment or compensation is to be made.

      (2) For cost-sharing arrangements, furnish:

      (a) A brief description of the purpose of the agreement;

      (b) A description of the period of time during which the agreement is to be in effect;

      (c) A brief description of each party's expenses or costs covered by the agreement; and

      (d) A brief description of the accounting basis to be used in calculating each party's costs under the agreement.

ITEM 7. SIGNATURE AND CERTIFICATION

Signature and certification required as follows:

SIGNATURE

      Pursuant to the requirements of KRS 304.37-030, ____________ has caused this notice to be duly signed on its behalf in the City of ___________ and State of ______________ on the ____ day of ____, 19____.

(SEAL)

 

Name of Applicant:

BY

(Name), (Title):

 

Attest:

__________________________

(Signature of Officer)

__________________________

(Title)

CERTIFICATION

 

      The undersigned deposes and says that he has duly executed the attached notice dated ___________, 19___, for and on behalf of _____________ (Name of Applicant); that he is the _____________ (Title of Officer) of the company and that he is authorized to execute and file the instrument. Deponent further says that he is familiar with the instrument and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information, and belief.

 

Signature:

Type or print name beneath:

      (19 Ky.R. 343; Am. 722; eff. 9-10-92; TAm eff. 8-9-2007.)