HB56 Alabama 2014 Session

Sponsors

Session

Regular Session 2014

Title

Insurance Department, insurance holding companies, regulation further provided for, purpose to conform with National Association of Insurance Commissioners, model act, Secs. 10A-20-6.16, 27-21A-23, 27-29-1 to 27-29-7, inclusive, 27-29-10, 27-34-54 am'd.; Secs. 27-29-3.1, 27-29-6.1, 27-29-11.1 added

Description

<p class="bill_description"> Under existing law, members of an insurance holding company system are required to meet certain requirements deemed appropriate to protect the solvency of the insurers within the system</p><p class="bill_description"> Under existing law, the commissioner is required to hold a public hearing to consider a proposed acquisition of control of an Alabama-domiciled insurer</p><p class="bill_description"> Under existing law, domestic insurers are required to give 30 days' notice to the commissioner prior to paying any extraordinary dividend, defined as a distribution in an amount exceeding the greater of 10 percent of the insurer's surplus or the net gain from operations for the calendar year preceding the payment</p><p class="bill_description"> Under existing law, insurers or officers, directors, employees, or agents thereof willfully violating the holding company act can be criminally prosecuted and, upon conviction, fined up to ten thousand dollars ($10,000) for an insurer and up to one thousand dollars ($1,000) for an individual, or up to two years in prison, or both</p><p class="bill_description"> This bill, which would state the purpose of the bill is to make Alabama's law substantially similar to the current version of the model Insurance Holding Company System Regulatory Act developed by the National Association of Commissioners, would add requirements to the insurance holding company system law for assessing the "enterprise risk" within the entire holding company system, including the risk caused by non-insurance affiliates</p><p class="bill_description"> The bill would permit the commissioner to hold the public hearing required to consider a proposed acquisition of control of an Alabama-domiciled insurer on a consolidated basis with other commissioners if the approval of commissioner from other states is also required</p><p class="bill_description"> The bill would require, in certain circumstances, a pre-acquisition notification to the commissioner, and give the commissioner authority to order the acquisition not occur under certain circumstances and according to certain requirements</p><p class="bill_description"> The bill would define extraordinary dividend to be a distribution in an amount exceeding the lesser of 10 percent of the insurer's surplus or the net gain from operations for the calendar year preceding the payment</p><p class="bill_description"> The bill would authorize the commissioner to participate in a supervisory college with other regulators for any domestic insurer that is part of a holding company with international operations in order to determine compliance by the insurer with this law</p><p class="bill_description"> The bill would add additional penalties for certain violations of the act, including a daily fine of up to ($1,000) for failure to file any registration required to be filed under the act, up to a maximum of ($50,000); a civil forfeiture of up to ($10,000) per violation for any officers or directors of an insurance holding company system who knowingly violate, participate in, or assent to, or who knowingly permit the officers or agents of the insurer to engage in transactions or investments not properly reported or submitted pursuant to the act; and a criminal penalty of up to five years in prison or a fine of up to ($50,000), or both, for any officer, director, or employee of an insurance holding company system who willfully and knowingly subscribes to or makes or causes to be made any false statement or false reports or false filings with the intent to deceive the commissioner in the performance of the commissioner's duties under this act</p><p class="bill_description"> The bill would provide certain recovery rights to a receiver appointed to liquidate or rehabilitate a domestic insurer from any parent corporation or holding company or person or affiliate who otherwise controlled the insurer the amounts of distributions paid by the insurer on its capital stock or in the form of a bonus, termination settlement, or extraordinary lump sum salary adjustment to a director, officer, or employee made at any time during the one year preceding the petition for liquidation, conservation, or rehabilitation, with certain limitations and exceptions</p><p class="bill_description"> Amendment 621 of the Constitution of Alabama of 1901, now appearing as Section 111.05 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, prohibits a general law whose purpose or effect would be to require a new or increased expenditure of local funds from becoming effective with regard to a local governmental entity without enactment by a 2/3 vote unless: it comes within one of a number of specified exceptions; it is approved by the affected entity; or the Legislature appropriates funds, or provides a local source of revenue, to the entity for the purpose</p><p class="bill_description"> The purpose or effect of this bill would be to require a new or increased expenditure of local funds within the meaning of the amendment. However, the bill does not require approval of a local governmental entity or enactment by a 2/3 vote to become effective because it comes within one of the specified exceptions contained in the amendment</p><p class="bill_entitled_an_act"> Relating to insurance; to revise the Alabama Insurance Holding Company System Regulatory Act; to require assessment of enterprise risk within the insurance holding company system; to provide for public hearings; to require pre-acquisition notice to the Commissioner of Insurance and give the commissioner the power to disapprove acquisitions; to define extraordinary dividends to be a distribution in an amount exceeding the lesser of a certain percent of the insurer's surplus or the net gain from operations for the calendar year preceding the payment; to authorize the commissioner to enter into supervisory colleges with other regulators for a domestic insurer that is part of an international holding company; to add additional penalties; and to grant additional recovery rights to receivers for a domestic insurer and in connection, would amend Sections 10A-20-6.16 and 27-21A-23, as amended by Act 2012-429, 2012 Regular Session, Code of Alabama 1975, and Sections 27-29-1, 27-29-2, 27-29-3, 27-29-4, 27-29-5, 27-29-6, 27-29-7, 27-29-10, and 27-34-54, Code of Alabama 1975, and to add Sections 27-29-3.1, 27-29-6.1, and 27-29-11.1 to the Code of Alabama 1975; and in connection therewith would have as its purpose or effect the requirement of a new or increased expenditure of local funds within the meaning of Amendment 621 of the Constitution of Alabama of 1901, now appearing as Section 111.05 of the Official Recompilation of the Constitution of Alabama of 1901, as amended. BE IT ENACTED BY THE LEGISLATURE OF ALABAMA: Section 1. The purpose of this act is to revise the Alabama Insurance Holding Company System Regulatory Act to be substantially similar as the most recent version of the Model Insurance Holding Company System Regulatory Act developed by the National Association of Insurance Commissioners. Section 2. Sections 10A-20-6.16 and 27-21A-23, as amended by Act 2012-429, 2012 Regular Session, Code of Alabama 1975, and Sections 27-29-1, 27-29-2, 27-29-3, 27-29-4, 27-29-5, 27-29-6, 27-29-7, 27-29-10, and 27-34-54, Code of Alabama 1975, are amended to read as follows: "§10A-20-6.16. "(a) No statute of this state applying to insurance companies shall be applicable to any corporation organized under this article and amendments thereto or to any contract made by the corporation unless expressly mentioned in this article and made applicable; except as follows the corporation shall be subject to the following: "(1) The corporation shall be subject to the provisions regarding annual premium tax to be paid by insurers on insurance premiums. "(2) The corporation shall be subject to the provisions of Chapter 55, Chapters 12A, 29, 54, 54A, 55, 56, 57, 58, and 59, Section 27-1-17, and Articles 2 and 3 of Chapter 19 Title 27, regarding the prohibition of unfair discriminatory acts by insurers on the basis of an applicant's or insured's abuse status. "(3) The corporation shall be subject to the provisions regarding Medicare Supplement Minimum Standards set forth in Article 2 of Chapter 19 of Title 27, and Long-Term Care Insurance Policy Minimum Standards set forth in Articleof Chapter 19 of Title 27. "(4) The corporation shall be subject to Section 27-1-17 , requiring insurers and health plans to pay health care providers in a timely manner. "(5) The corporation shall be subject to the provisions of Chapter 56 of Title 27, regarding the Access to Eye Care Act. "(6)(3) The corporation shall be subject to the regulations rules promulgated by the Commissioner of Insurance pursuant to Sections 27-7-43 and 27-7-44. "(7) The corporation shall be subject to the provisions of Chapter 54 of Title 27. "(8) The corporation shall be subject to the provisions of Chapter 57 of Title 27, requiring coverage to be offered for the payment of colorectal cancer examinations for covered persons who are 50 years of age or older, or for covered persons who are less than 50 years of age and at high risk for colorectal cancer according to current American Cancer Society colorectal cancer screening guidelines. "(9) The corporation shall be subject to Chapter 58 of Title 27, requiring that policies and contracts including coverage for prostate cancer early detection be offered, together with identification of associated costs. "(10) The corporation shall be subject to Chapter 59 of Title 27 requiring that policies and contracts including coverage for chiropractic be offered, together with identification of associated costs. "(11) The corporation shall be subject to Chapter 54A of Title 27 requiring that policies and contracts to offer coverage for certain treatment for Autism Spectrum Disorder under certain conditions. "(12) The corporation shall be subject to Chapter 12A of Title 27. "(b) The provisions in subsection (a) that require specific types of coverage to be offered or provided shall not apply when the corporation is administering a self-funded benefit plan or similar plan, fund, or program that it does not insure. "§27-21A-23. "(a) Except as otherwise provided in this chapter, provisions of the insurance law and provisions of health care service plan laws shall not be applicable to any health maintenance organization granted a certificate of authority under this chapter. This provision shall not apply to an insurer or health care service plan licensed and regulated pursuant to the insurance law or the health care service plan laws of this state except with respect to its health maintenance organization activities authorized and regulated pursuant to this chapter. "(b) Solicitation of enrollees by a health maintenance organization granted a certificate of authority shall not be construed to violate any provision of law relating to solicitation or advertising by health professionals. "(c) Any health maintenance organization authorized under this chapter shall not be deemed to be practicing medicine and shall be exempt from the provisions of Section 34-24-310, et seq., relating to the practice of medicine. "(d) No person participating in the arrangements of a health maintenance organization other than the actual provider of health care services or supplies directly to enrollees and their families shall be liable for negligence, misfeasance, nonfeasance, or malpractice in connection with the furnishing of such services and supplies. "(e) Nothing in this chapter shall be construed in any way to repeal or conflict with any provision of the certificate of need law. "(f) Notwithstanding the provisions of subsection (a), a health maintenance organization shall be subject to all of the following: "(1) Section 27-1-17. "(g)(2) Notwithstanding the provisions of subsection (a), a health maintenance organization shall be subject to the provisions of Chapter 56 of this title, regarding the Access to Eye Care Act Chapters 12A, 29, 54, 54A, 55, 56, 57, 58, and 59. "(h) Notwithstanding the provisions of subsection (a), a health maintenance organization shall be subject to the provisions of Chapter 54 of this title. "(i) Notwithstanding the provisions of subsection (a), a health maintenance organization shall be subject to the provisions of Chapter 57 of this title, requiring coverage to be offered for the payment of colorectal cancer examinations for covered persons who are 50 years of age or older, or for covered persons who are less than 50 years of age and at high risk for colorectal cancer according to current American Cancer Society colorectal cancer screening guidelines. "(j) Notwithstanding the provisions of subsection (a), a health maintenance organization shall be subject to Chapter 58 of Title 27, requiring that policies and contracts including coverage for prostate cancer early detection be offered, together with identification of associated costs. "(k) Notwithstanding the provisions of subsection (a), a health maintenance organization shall be subject to Chapter 59 of this title, requiring that policies and contracts including coverage for chiropractic be offered, together with identification of associated costs. "(l)(3) Notwithstanding the provisions of subsection (a), a health maintenance organization shall be subject to regulations Rules promulgated by the Commissioner of Insurance pursuant to Sections 27-7-43 and 27-7-44. "(m) Notwithstanding the provisions of subsection (a), a health maintenance organization shall be subject to Chapter 12A. "(n) Notwithstanding the provisions of subsection (a), a health maintenance organization shall be subject to Chapter 54A of this title requiring policies and contracts to offer coverage for certain treatment for Autism Spectrum Disorder under certain conditions. "§27-29-1. "For purposes of this chapter, unless otherwise stated, the following terms shall have the meanings respectively ascribed to them by this section: "(1) AFFILIATE. The term shall include an "affiliate" of, or person "affiliated" with, a specific person, and shall mean a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. "(2) COMMISSIONER. The Commissioner of Insurance, his or her deputies, or the Insurance Department as appropriate. "(3) CONTROL. The term shall include "controlling," "controlled by," or "under common control with" and 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 the result of an official position with or 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 five percent or more of the voting securities of any other person. This presumption may be rebutted by a showing made in the manner provided by subsection (i) (k) of Section 27-29-4 that control does not exist in fact. Such "control" as used in this section shall not be deemed to exist where proxies have been obtained by management of such insurer solely in connection with voting at an annual or other regular meeting of the shareholders of such insurer. The commissioner may determine, after furnishing all persons in interest notice and opportunity to be heard and making a specific finding of fact to support such determination, that control exists in fact, notwithstanding the absence of a presumption to that effect. "(4) ENTERPRISE RISK. Any activity, circumstance, event, or series of events involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole, including, but not limited to, anything that would cause the insurer's risk-based capital to fall into company action level as set forth in Section 27-2B-4 or would cause the insurer to be in hazardous financial condition. "(4)(5) INSURANCE HOLDING COMPANY SYSTEM. A system which consists of two or more affiliated persons, one or more of which is an insurer. "(5)(6) INSURER. An insurance company as set forth in Section 27-1-2, 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. "a. 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; "b. Fraternal benefit societies; or "c. Nonprofit medical and hospital service associations. "Notwithstanding the foregoing, for purposes of Section 27-29-3, a domestic insurer shall include any other person controlling a domestic insurer unless such other person is either directly or through its affiliates primarily engaged in business other than the business of insurance. "(6)(7) PERSON. An individual, a corporation, a limited liability company, a partnership, a limited partnership, an association, a joint-stock company, a trust, an unincorporated organization, or any similar entity or any combination of the foregoing acting in concert, but shall not include any securities broker performing no more than the usual and customary broker's function joint venture partnership exclusively engaged in owning, managing, leasing, or developing real or tangible personal property. "(7)(8) SECURITYHOLDER. One who owns any security of such person, including common stock, preferred stock, debt obligations, and other security convertible into, or evidencing, the right to acquire any of the foregoing. "(8)(9) SUBSIDIARY. An affiliate controlled by such person, directly or indirectly, through one or more intermediaries. "(9)(10) VOTING SECURITY. The term shall include any security convertible into, or evidencing, a right to acquire a voting security. "§27-29-2. "(a) Authorization. Any A domestic insurer, either by itself or in cooperation with one or more persons, may organize or acquire one or more subsidiaries or affiliates in accordance with the provisions contained in this section. Such The subsidiaries or affiliates may conduct any kind of business, or businesses, permitted by the Constitution and the laws of this state, and their authority to do so shall not be limited by reason of the fact that they are subsidiaries or affiliates of a domestic insurer. "(b) Additional investment authority. In addition to investments in common stock, preferred stock, debt obligations, and other securities permitted under all other sections of this title, a domestic insurer may also: "(1) Invest, in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries or affiliates, including, without limitation, domestic or foreign insurance subsidiaries or affiliates, amounts which do not exceed the lesser of 10 percent of such insurer's assets or 50 percent of the total of the insurer's capital and surplus as shown in the latest annual report of the insurer filed pursuant to subsection (a) of Section 27-3-26, less the minimum capital and surplus required of said insurer for authority to transact insurance by Sections 27-3-7 and 27-3-8 as regards policyholders, provided that after such 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 such investments, investments in domestic and foreign insurance subsidiaries and health maintenance organizations shall be excluded, and there shall be included both of the following: "a. Total net moneys or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary or affiliate, including all organizational expenses and contributions to capital and surplus of such subsidiary or affiliate, whether or not represented by the purchase of capital stock or issuance of other securities; and. "b. All amounts expended in acquiring additional common stock, debt obligations, and other securities and all contributions to the capital or surplus of a subsidiary or affiliate subsequent to its acquisition or formation;. "(2) Invest any amount in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries engaged or organized to engage exclusively in the ownership and management of assets authorized as investments for the insurer 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 subdivision (1) of this subsection or in Sections 27-41-15 through 27-41-18 and 27-41-35. For the purpose of this subdivision, "the total investment of the insurer" shall include both of the following: "a. Any direct investment by the insurer in an asset; and. "b. The insurer's proportionate share of any investment in an asset by any subsidiary or affiliate 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 or affiliate;. "(3) 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 or affiliates, provided that after such investment the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs. "(c) Exemption from investment restrictions. Investments in common stock, preferred stock, debt obligations, or other securities of subsidiaries or affiliates made pursuant to subsection (b) of this section shall not be subject to any of the otherwise applicable restrictions or prohibitions contained in this title applicable to such investments of insurers. "(d) Qualification of investment; when determined. Whether any investment pursuant to subsection (b) of this section meets the applicable requirements thereof is to be determined immediately after before such 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 date they were made, net of any return of capital invested, not including dividends. "(e) 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 this title, and the insurer has notified the commissioner. "§27-29-3. "(a)(1) Filing and approval requirements. 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 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, or any person controlling a domestic insurer unless, at the time any such offer, request, or invitation is made or any such agreement is entered into, or prior to the acquisition of such securities if no offer or agreement is involved or within 15 days after any such offer, request, or invitation is made or any such agreement is entered into, such person has 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 either: has been approved by the commissioner in the manner prescribed in this section. "(1) Has been approved by the commissioner in the manner prescribed in this section; or "(2) Expressly states that it is subject to approval by the commissioner in the manner prescribed in this section. "An offer, request, invitation, agreement, or acquisition which contains such a condition and which is approved by the commissioner in the manner so prescribed shall be effective and binding according to its terms from the date on which it was made. "(2) 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 30 days prior to the cessation of control. The commissioner shall determine those instances in which the party or parties seeking to divest or to acquire a controlling interest in an insurer, will 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 his or her discretion, determines that confidential treatment will interfere with enforcement of this section. If the statement referred to in subdivision (1) is otherwise filed, this subdivision shall not apply. "(3) With respect to a transaction subject to this section, the acquiring person must also file a pre-acquisition notification with the commissioner, which shall contain the information set forth in subdivision (1) of subsection (c) of Section 27-29-3.1. A failure to file the notification may be subject to penalty specified in subdivision of (3) of subsection (e) of Section 27-29-3.1. "(4) For purposes of this section: "a. A domestic insurer includes any person controlling a domestic insurer unless the person, as determined by the commissioner, is either directly or through its affiliates primarily engaged in business other than the business of insurance. "b. Person does not include any securities broker holding, in the usual and customary broker's function, less than 20 percent of the voting securities of an insurance company or of any person which controls an insurance company. "(b) Content of statement. "(1) The statement to be filed with the commissioner under this section shall be made under oath or affirmation and shall contain all of the following information: "(1)a. The name and address of each person by whom, or on whose behalf, the merger or other acquisition of control referred to in subsection (a) of this section is to be effected (hereinafter called "acquiring party"), and either of the following: "a.1. If such the person is an individual, his or her 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 10 years; or. "b.2. If such the person is not an individual, a report of the nature of its business operations during the past five years or for such the 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 the person and such the person's subsidiaries; and a list of all individuals who are, or who have been selected to become, directors or executive officers of such the person or who perform, or will perform, functions appropriate to such the positions. Such The list shall include for each such individual the information required by paragraph a. of this subdivision; subparagraph 1. "(2)b. 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 wherein funds were, or are to be, obtained for any such purpose, including any pledge of the insurer's stock, or the stock of any of its subsidiaries or controlling affiliates, and the identity of persons furnishing such consideration; provided, however, that where a source of such 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 such statement so requests;. "(3)c. 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 90 days prior to the filing of the statement; provided, however, that in the case of an acquiring party which is an insurer actively engaged in the business of insurance, the financial statements of such insurer need not be audited, except such audit may be required if the need therefor is determined by the commissioner;. "(4)d. Any plans or proposals which each acquiring party may have to liquidate such insurer, to sell its assets, or to merge or consolidate it with any person or to make any other material change in its business or corporate structure or management;. "(5)e. The number of shares of any security referred to in subsection (a) of this section which each acquiring party proposes to acquire, the terms of the offer, request, invitation, agreement, or acquisition referred to in subsection (a) of this section, and a statement as to the method by which the fairness of the proposal was arrived at;. "(6)f. The amount of each class of any security referred to in subsection (a) of this section which is beneficially owned or concerning which there is a right to acquire beneficial ownership by each acquiring party;. "(7)g. A full description of any contracts, arrangements, or understandings with respect to any security referred to in subsection (a) of this section 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)h. A description of the purchase of any security referred to in subsection (a) of this section during the 12 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)i. A description of any recommendations to purchase any security referred to in subsection (a) of this section made during the 12 calendar months preceding the filing of the statement by any acquiring party or by anyone based upon interviews or at the suggestion of such acquiring party;. "(10)j. 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 (a) of this section and, if distributed, of additional soliciting material relating thereto;. "(11)k. The terms of any agreement, contract, or understanding made with or proposed to be made with any broker-dealer as to solicitation of securities referred to in subsection (a) of this section for tender and the amount of any fees, commissions, or other compensation to be paid to broker-dealers with regard thereto; and. "l. An agreement by the person required to file the statement referred to in subsection (a) that it will provide the annual report, specified in subsection (l) of Section 27-29-4, for so long as control exists. "m. An acknowledgement by the person required to file the statement referred to in subsection (a) 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. "(12)n. Such additional information as the commissioner may, by rule or regulation, prescribe as necessary or appropriate for the protection of policyholders and securityholders of the insurer or in the public interest. "(2) If the person required to file the statement referred to in subsection (a) of this section is a partnership, limited partnership, syndicate, or other group, the commissioner may require that the information called for by subdivisions (1) paragraphs a. through (12) n. of this subsection 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 (a) of this section is a corporation, the commissioner may require that the information called for by subdivisions (1) paragraphs a. through (12) n. of this subsection subdivision (1) 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 15 10 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 materials 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. "(c) Alternative filing materials. If any offer, request, invitation, agreement, or acquisition referred to in subsection (a) 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 (a) of this section may utilize such documents in furnishing the information called for by that statement. "(d) Approval by commissioner; hearings. "(1) The commissioner shall approve any merger or other acquisition of control referred to in subsection (a) of this section unless, after a public hearing thereon, he or she finds that any of the following: "a. After the change of control, the domestic insurer referred to in subsection (a) of this section would not 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;. "b. The effect of the merger or other acquisition of control would be substantially to lessen competition in insurance in this state or tend to create a monopoly therein;. In applying the competitive standard in this paragraph: "1. The informational requirements of subdivision (1) of subsection (c) of Section 27-29-3.1 and the standards of subdivision (2) of subsection (d) of Section 27-29-3.1 shall apply. "2. The merger or other acquisition shall not be disapproved if the commissioner finds that any of the situations meeting the criteria provided by subdivision (3) of subsection (d) of Section 27-29-3.1 exist. "3. The commissioner may condition the approval of the merger or other acquisition on the removal of the basis of disapproval within a specified period of time. "c. The financial condition of any acquiring party is such as might jeopardize the financial stability of the insurer or prejudice the interest of its policyholders;. "d. The plans or proposals which the acquiring party has to liquidate the insurer, to sell its assets, or to consolidate or merge it with any person or to make any other material change in its business or corporate structure or management are unfair and unreasonable to policyholders of the insurer and not in the public interest; or. "e. The competence, experience, and integrity of those persons who would control the operation of the insurer are such that it would not be in the interest of policyholders of the insurer and of the public to permit the merger or other acquisition of control. "f. The acquisition is likely to be hazardous or prejudicial to the insurance-buying public. "(2) The public hearing referred to in subdivision (1) of this subsection shall be held within 45 30 days after the statement required by subsection (a) of this section is filed, and at least 20 days' notice thereof shall be given by the commissioner to the person filing the statement. Not less than 15 seven days' notice of such 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 insurer shall give such notice to its securityholders. The commissioner shall make a determination within 30 days after the conclusion of such hearing the 60-day period preceding the effective date of the proposed transaction. At such hearing, the person filing the statement, the insurer, any person to whom notice of hearing was sent, and any other person whose interest may be affected thereby 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 circuit courts of this state. All discovery proceedings shall be concluded not later than five three days prior to the commencement of the public hearing. "(3) If the proposed acquisition of control will require the approval of more than one commissioner, the public hearing referred to in subdivision (2) may be held on a consolidated basis upon request of the person filing the statement referred to in subsection (a). The person shall file the statement referred to in subsection (a) with the National Association of Insurance Commissioners within five days of making the request for a public hearing. A commissioner may opt out of a consolidated hearing, and shall provide notice to the applicant of the opt-out within 10 days of the receipt of the statement referred to in subsection (a). 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. The commissioners shall hear and receive evidence. A commissioner may attend the hearing, in person or by telecommunication. "(4) In connection with a change of control of a domestic insurer, any determination by the commissioner that the person acquiring control of the insurer shall be required to maintain or restore the capital of the insurer to the level required by the laws and regulations of this state shall be made not later than 60 days after the date of notification of the change in control submitted pursuant to subdivision (1) of subsection (a). "(5) The commissioner may retain at the acquiring person's expense 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 acquisition of control. "(e) Mailings to stockholders; payments of expenses. All statements, amendments, or other material filed pursuant to subsections (a) or (b) of this section and all notices of public hearings held pursuant to subsection (d) of this section shall be mailed by the insurer to its stockholders within 10 business days after the insurer has received such statements, amendments, other material, or notices. The expenses of mailing shall be borne by the person making the filing. As security for the payment of such expenses, such person shall file with the commissioner an acceptable bond or other deposit in an amount to be determined by the commissioner. "(f)(e) 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 as: "(1) Any transaction which is subject to the provisions of Sections 27-27-45 and 27-27-46, dealing with the merger or consolidation of two or more insurers. "(2) Any offer, request, invitation, agreement, or acquisition which the commissioner by order shall exempt therefrom as either of the following: "(1)a. Not having been made or entered into for the purpose and not having the effect of changing or influencing the control of a domestic insurer; or "(2)b. As otherwise not comprehended within the purposes of this section. "(g)(f) Violations. The following shall be violations of this section: "(1) The failure to file any statement, amendment, or other material required to be filed pursuant to subsections (a) or (b) of this section; or. "(2) The effectuation, or any attempt to effectuate, an acquisition of control of, or merger with, a domestic insurer unless the commissioner has given his or her approval thereto. "(h)(g) Jurisdiction; consent to service of process. The courts of this state are hereby vested with jurisdiction over every person not resident, domiciled, or authorized to do business in this state who files a statement with the commissioner under this section and over all actions involving such person arising out of violations of this section, and each such person shall be deemed to have performed acts equivalent to and constituting an appointment by such a person of the commissioner to be his or her true and lawful attorney upon whom may be served all lawful process in any action or proceeding arising out of violations of this section. Copies of all such lawful process shall be served on the commissioner and transmitted by registered or certified mail by the commissioner to such person at his or her last known address. "§27-29-4. "(a) Registration. "(1) Every 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 adopted by statute or regulation in the jurisdiction of its domicile which are substantially similar to those contained in this section and Section 27-29-5. both of the following: "a. Subdivision (1) of subsection (a) of Section 27-29-5, and subsections (b) and (d) of Section 27-29-5. "b. Either subdivision (2) of subsection (a) of Section 27-29-5 or a provision such as the following: Each registered insurer shall keep current the information required to be disclosed in its registration statement by reporting all material changes or additions within 15 days after the end of the month in which it learns of each change or addition. "(2) Any insurer which is subject to registration under this section shall register within 60 days after September 3, 1973, or 15 days after it becomes subject to registration, and annually thereafter by June 1 of each year for the previous calendar year, unless the commissioner for good cause shown extends the time for registration and, then, within such extended time. The commissioner may require any authorized insurer which is a member of a an insurance holding company system which is not subject to registration under this section to furnish a copy of the registration statement, the summary specified in subsection (c) or other information filed by such insurance company with the insurance regulatory authority of domiciliary jurisdiction. "(b) Information and form required. Every insurer subject to registration shall file a registration statement on a form provided by the commissioner and in a format prescribed by the National Association of Insurance Commissioners, which shall contain the following current information about: "(1) The capital structure, general financial condition, ownership, and management of the insurer and any person controlling the insurer;. "(2) The identity of every member of the insurance holding company system;. "(3) The following agreements in force, relationships subsisting, and transactions currently outstanding or which have occurred during the last calendar year between such insurer and its affiliates: "a. Loans, other investments or purchases, sales or exchanges of securities of the affiliates by the insurer or of the insurer 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 insurer's assets to liability, other than insurance contracts entered into in the ordinary course of the insurer's business;. "e. All management agreements and service contracts and all cost-sharing arrangements;. "f. Reinsurance agreements;. "g. Dividends and other distributions to shareholders; and. "h. Consolidated tax allocation agreements; "(4) Any pledge of the insurer's stock, including stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system;. "(5) 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 U.S. Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. An insurer required to file financial statements pursuant to this subdivision may satisfy the request by providing the commissioner with the most recently filed parent corporation financial statements that have been filed with the Securities Exchange Commission. "(5)(6) 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. "(7) 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. "(8) Any other information required by the commissioner by rule. "(c) All registration statements shall contain a summary outlining all items in the current registration statement representing changes from the prior registration statement. "(c)(d) Materiality. No information need be disclosed on the registration statement filed pursuant to subsection (b) of this section if such information is not material for the purposes of this section. Unless the commissioner by rule, regulation, or order provides otherwise, sales, purchases, exchanges, loans, or extensions of credit or investments involving one-half of one percent or less of an insurer's admitted assets as of December 31, next preceding, shall not be deemed material for purposes of this section. "(d)(e) Amendments to registration statements. Each registered insurer shall keep current the information required to be disclosed in its registration statement by reporting all material changes or additions on amendment forms provided by the commissioner within 15 days after the end of the month in which it learns of each such change or addition, but at least annually, as provided in subsection (a); provided, however, that subject Subject to subsection (b) of Section 27-29-5, each registered insurer shall so report all dividends and other distributions to shareholders within five 15 business days following the declaration thereof. "(f) Any person within an insurance holding company system subject to registration shall be required to provide complete and accurate information to an insurer, where the information is reasonably necessary to enable the insurer to comply with the provisions of this chapter. "(e)(g) Termination of registration. The commissioner shall terminate the registration of any insurer which demonstrated that it no longer is a member of an insurance holding company system. "(f)(h) Consolidated filing. The commissioner may require or allow two or more affiliated insurers subject to registration under this section to file a consolidated registration statement or consolidated reports amending their consolidated registration statement or their individual registration statements. "(g)(i) 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 (a) of this section and to file all information and material required to be filed under this section. "(h)(j) 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. "(i)(k) 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 the insurer or any member of an insurance holding company system. The disclaimer shall fully disclose all material relationships and bases for affiliation between such the person and such the insurer as well as the basis for disclaiming such affiliation. After a disclaimer has been filed, the insurer shall be relieved of any duty to register or report under this section which may arise out of the insurer's relationship with such person, unless and until the commissioner disallows such a disclaimer. The commissioner shall disallow such a disclaimer only after furnishing all parties in interest with notice and opportunity to be heard and after making specific findings of fact to support such disallowance. A disclaimer of affiliation shall be deemed to have been granted unless the commissioner, within 30 days following receipt of a complete disclaimer, notifies the filing party 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 approved. "(l) 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. "(j)(m) Violations. The failure to file a registration statement or any amendment thereto summary of the registration statement or enterprise risk filing required by this section within the time specified for such filing shall be a violation of this section. "§27-29-5. "(a) Transactions with affiliates. Material transactions by registered insurers with their affiliates Transactions within an insurance holding company system to which an insurer subject to registration is a party shall be subject to all of 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 and regulation issued by the commissioner. "(2)(3) Charges or fees for services performed shall be reasonable;. "(3)(4) Expenses incurred and payment received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied;. "(4)(5) The books, accounts, and records of each party will to all such transactions shall be so maintained as to clearly and accurately disclose the precise nature and details of the transactions; and including such accounting information as is necessary to support the reasonableness of the charges or fees to the respective parties. "(5)(6) The insurer's surplus as regards policyholders following any dividends or distributions to shareholder affiliates shall be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs. "(b)(1) The following transactions involving a domestic insurer and any person in its insurance holding company system, including amendments or modifications of affiliate agreements previously filed pursuant to this section which are subject to any materiality standards contained in paragraphs a. through g., may not be entered into unless the insurer has notified the commissioner in writing of its intention to enter into such the transaction at least 30 days prior thereto, or such shorter period as the commissioner may permit, and the commissioner has not disapproved it within that period. The notice for amendments or modifications shall include the reasons for the change and the financial impact on the domestic insurer. Informal notice shall be reported, within 30 days after a termination of a previously filed agreement, to the commissioner for determination of the type of filing required, if any. "(1)a. Sales, purchases, exchanges, loans or extensions of credit, guarantees, or investments provided the transactions are equal to or exceed the following: "a.1. With respect to nonlife insurers, the lesser of three percent of the insurer's admitted assets or 25 percent of surplus as regards policyholders as of the 31st day of December next preceding;. "b.2. With respect to life insurers, three percent of the insurer's admitted assets as of the 31st day of December next preceding;. "(2)b. Loans or extensions of credit to any person who is not an affiliate, where the insurer makes 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, any affiliate of the insurer making the loans or extensions of credit provided the transactions are equal to or exceed the following: "a.1. With respect to nonlife insurers, the lesser of three percent of the insurer's admitted assets or 25 percent of surplus as regards policyholders as of the 31st day of December next preceding;. "b.2. With respect to life insurers, three percent of the insurer's admitted assets as of the 31st day of December next preceding;. "(3)c. Reinsurance agreements or modifications thereto, including: "1. All reinsurance pooling agreements. "2. 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 31st day of December next preceding, 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 the assets will be transferred to one or more affiliates of the insurer;. "(4)d. All management agreements, service contracts, tax allocation agreements, guarantees and all cost-sharing arrangements; and. "e. Guarantees when made by a domestic insurer; provided, however, that a guarantee which is quantifiable as to amount is not subject to the notice requirements of this paragraph unless it exceeds the lesser of one-half of one percent of the insurer's admitted assets or 10 percent of surplus as regards policyholders as of the 31st day of December next preceding. Further, all guarantees which are not quantifiable as to amount are subject to the notice requirements of this paragraph. "f. 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 27-29-2, or authorized under any other section of this title, or in non-subsidiary insurance affiliates that are subject to this chapter, are exempt from this requirement. "(5)g. Any material transactions, specified by regulation, which the commissioner determines may adversely affect the interests of the insurer's policyholders. "(2) Nothing herein contained in this subsection shall be deemed to authorize or permit any transactions which, in the case of an insurer not a member of the same holding company system, would be otherwise contrary to law. "(c) A domestic insurer may not enter into transactions which are part of a plan or series of like transactions with persons within the insurance 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 any 12-month period for that purpose, he or she the commissioner may exercise his or her authority under Section 27-29-10. "(d) The commissioner, in reviewing transactions pursuant to subsection (b), shall consider whether the transactions comply with the standards set forth in subsection (a) and whether they may adversely affect the interests of policyholders. "(e) The commissioner shall be notified within 30 days of any investment of the domestic insurer in any one corporation if the total investment in such the corporation by the insurance holding company system exceeds 10 percent of the corporation's voting securities. "(f) 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 meet its financial needs, the following factors, among others, shall be considered: "(1) The size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force, and other appropriate criteria;. "(2) The extent to which the insurer's business is diversified among the several lines of insurance;. "(3) The number and size of risks insured in each line of business;. "(4) The extent of the geographical dispersion of the insurer's insured risks;. "(5) The nature and extent of the insurer's reinsurance program;. "(6) The quality, diversification, and liquidity of the insurer's investment portfolio;. "(7) The recent past and projected future trend in the size of the insurer's surplus as regards policyholders; investment portfolio. "(8) The surplus as regards policyholders maintained by other comparable insurers;. "(9) The adequacy of the insurer's reserves;. "(10) The quality and liquidity of investments in subsidiaries made pursuant to Section 27-29-2 affiliates. The commissioner may treat any such investment as a disallowed asset for purposes of determining the adequacy of surplus as regards policyholders whenever, in his or her the judgment such of the commissioner, the investment so warrants; and. "(11) The quality of the company's earnings and the extent to which the reported earnings include extraordinary items. "(g) Dividends and other distributions. "(1)a. A domestic insurer shall not pay any extraordinary dividend or make any other extraordinary distribution to its shareholders until 30 days after the commissioner has received notice of the declaration of the dividend or distribution thereof and has not disapproved such payment within the period, or until the time the commissioner has approved the payment within the 30-day period. "b. For purposes of this paragraph section, 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 12 months exceeds the greater lesser of the following: "a.1. Ten percent of the insurer's surplus as regards policyholders as of the 31st day of December next preceding; or. "b.2. 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, not including realized capital gains or the pro rata distribution of any class of the insurer's own securities, for the 12-month period ending the 31st day of December next preceding . An extraordinary dividend or distribution does not include pro rata distributions of any class of the insurer's own securities. "(2) A domestic insurer subject to registration under Section 27-29-4 shall report to the commissioner all dividends to shareholders within five business days following the declaration of the dividends and not less than 10 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 12 months. "(3) In determining whether a dividend or distribution is extraordinary, an insurer other than a life insurer may carry forward net income from the previous two calendar years that has not already been paid out as dividends. This carryforward shall be computed by taking the net income from the second and third preceding calendar years, not including realized capital gains, less dividends paid in the second and immediate preceding calendar years. "(3)(4) Notwithstanding any other provision of law, a domestic an insurer may declare an extraordinary dividend or distribution which is conditional upon the commissioner's approval of the dividend or distribution. Such The declaration does not shall confer any no 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 30-day period as provided in subdivision (1). "(4)(5) The commissioner shall assess such reasonable charges as he or she deems necessary for the review conducted pursuant to this section. All funds received shall be deposited in the State Treasury to the credit of the Special Examination Revolving Fund, from which the expenses incurred shall be paid. "(h)(1) 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. "(2) 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 set forth in subsection (a). "(3) 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 thereof. "(4) The board of directors of a domestic insurer shall establish one or more committees comprised solely of directors 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 any such entity. The committee or committees shall have responsibility for 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. "(5) The provisions of subdivisions (3) and (4) 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 thereof that meet the requirements of subdivisions (3) and (4) with respect to the controlling entity. "(6) 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 ($300,000,000). 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. "§27-29-6. "(a) Power of commissioner. Subject to the limitation contained in this section and in addition to the powers which the commissioner has under Sections 27-2-7, 27-2-21, 27-2-23, and 27-2-26, relating to the examination of insurers, the commissioner shall also have the power to order examine any insurer registered under Section 27-29-4 to produce such records, books, or other information papers in the possession of the insurer, or its affiliates, as shall be necessary and its affiliates to ascertain the financial condition or legality of conduct of such the insurer, and to verify the information required to be contained in the insurer's registration statement and any additional information pertinent to transactions between the insurer and its affiliates. In the event such insurer fails to comply with such order, the commissioner shall have the power to examine such affiliates to obtain such information including the enterprise risk to the insurer by the ultimate controlling party, by any entity or combination of entities within the insurance holding company system, or by the insurance holding company system on a consolidated basis. "(b) Purpose and limitation of examination. The commissioner shall exercise his power under subsection (a) of this section only if the examination of the insurer under Sections 27-2-7, 27-2-21, 27-2-23, and 27-2-26 is inadequate or the interests of the policyholders of such insurer may be adversely affected. "(b)(1) The commissioner may order any insurer registered under Section 27-29-4 to produce such records, books, or other information papers in the possession of the insurer or its affiliates as are reasonably necessary to determine compliance with this title. "(2) To determine compliance with this title, the commissioner may order any insurer registered under Section 27-29-4 to produce information not in the possession of the insurer if the insurer can obtain access to such information pursuant to contractual relationships, statutory obligations, or other methods. In the event the insurer cannot obtain the information requested by the commissioner, the insurer shall provide the commissioner a detailed explanation of the reason that the insurer cannot obtain the information and the identity of the holder of information. Whenever it appears to the commissioner that the detailed explanation is without merit, the commissioner may require, after notice and hearing, the insurer to pay a penalty of up to one thousand dollars ($1,000) for each day's delay, or may suspend or revoke the insurer's license. "(c) Use of consultants. The commissioner may retain at the registered insurer's expense such attorneys, actuaries, accountants, and other experts not otherwise a part of the commissioner's staff as shall be reasonably necessary to assist in the conduct of the examination under subsection (a) of this section. Any persons so retained shall be under the direction and control of the commissioner and shall act in a purely advisory capacity. "(d) Expenses. Each registered insurer producing for examination records, books, and papers pursuant to subsection (a) of this section shall be liable for and shall pay the expense of such examination as provided in Section 27-2-25. "(e) In the event the insurer fails to comply with an order, the commissioner shall have the power to examine the affiliates to obtain the information. The commissioner shall also have the power to issue subpoenas, to administer oaths, and to examine under oath any person for purposes of determining compliance with this section. Upon the failure or refusal of any person to obey a subpoena, the commissioner may petition a court of competent jurisdiction, and upon proper showing, the court may enter an order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order shall be punishable as contempt of court. Every person shall be obliged to attend as a witness at the place specified in the subpoena, when subpoenaed, anywhere within the state. He or she shall be entitled to the same fees and mileage, if claimed, as a witness in circuit court, which fees, mileage, and actual expense, if any, necessarily incurred in securing the attendance of witnesses, and their testimony, shall </p>

Subjects

Insurance