Register April 2020 No. 772
Chapter Ins 40
INSURANCE HOLDING COMPANY SYSTEM REGULATION
Subchapter I—Insurance Holding Company Standards
Acquisition of control of or merger with domestic insurer or divestiture of the shares of a domestic insurer.
Acquisitions Involving Insurers Not Otherwise Covered.
Standards for transactions within an insurance holding company system.
Designation of the group-wide supervisor of internationally active insurance groups.
Duties of the group-wide supervisor.
Insurer's duty to pay reasonable expenses.
Subchapter II—Insurance Holding Company Systems—Reporting Forms
Forms—incorporation by reference, summaries and omissions.
Forms—extension of time to furnish.
Forms—additional information and exhibits.
Alternative and consolidated registrations.
Transactions subject to prior notice—notice filing.
Extraordinary dividends and other distributions.
Consent to jurisdiction.
Enterprise Risk Report.
Ch. Ins 40 Note
Note: The annual registration requirements under this chapter first apply after December 31, 1993.
In this chapter, unless the context otherwise requires:
“Acquiring person" means each person by whom or on whose behalf a merger or other acquisition of control is to be effected.
“Commissioner" means the commissioner of insurance of this state, the deputy commissioner, or the office of the commissioner of insurance of this state, as appropriate.
“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 one of those positions under whatever title.
Group-wide supervisor” means the regulatory official who is authorized to conduct and coordinate group-wide supervision activities and who is determined or acknowledged by the commissioner to have sufficient significant contacts with the internationally active insurance group.
“Insurance holding company system" means 2 or more persons who are affiliates, one or more of which is an insurer.
“Insurer" has the meaning provided under s. 600.03 (27)
, Stats., except that it does 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.
Internationally active insurance group” means an insurance holding company system that includes an insurer registered consistent with s. Ins 40.03
and all the following:
The percentage of gross premiums written outside the United States is at least 10 percent of the insurance holding company's total gross written premiums.
Based on a 3-year rolling average, either the total assets of the insurance holding company system are at least $50 billion, or the total gross written premiums of the insurance holding company system are at least $10 billion.
“Policyholder surplus" means capital and surplus.
“Security holder" means a person who owns any security of a person, including, but not limited to, common stock, preferred stock, debt obligations or any other security convertible into or evidencing the right to acquire stock or debt obligations.
“State of domicile" means the state where an insurer is domiciled or, for an alien insurer, its port of entry state.
“Subsidiary" of a person means a person which is controlled, directly or indirectly through one or more intermediaries, by the first person.
“Ultimate controlling person" means a person who is not controlled by any other person.
“Voting security" includes, but is not limited to, any security convertible into or evidencing a right to acquire a voting security.
Ins 40.01 History
Cr. Register, July, 1993, No. 451
, eff. 8-1-93; correction in (12) made under s. 13.93 (2m) (b) 12., Stats., Register, June, 1997, No. 498
; CR 14-071
: cr. (4m), am. (7) Register August 2015 No. 716
, eff. 9-1-15; CR 19-013: cr. (5m), (7m) Register April 2020 No. 772, eff. 5-1-20; correction in (7m) (c) made under s. 35.17, Stats., Register April 2020 No. 772.
Acquisition of control of or merger with domestic insurer or divestiture of the shares of a domestic insurer. Ins 40.02(1)(a)(a)
Except as provided under par. (b)
, no person, other than the insurer, may:
Make a tender offer for, request or invitation for, tenders of, divestiture of, or enter into any agreement to exchange securities for, seek to acquire, or acquire, in the open market or otherwise, any voting security of a domestic insurer if after the consummation of the offer, request, invitation, agreement or acquisition, the person would, directly or indirectly, or by conversion or by exercise of any right to acquire, be in control of the insurer; or
Enter into an agreement to merge with or otherwise to acquire or attempt to acquire control of a domestic insurer or any person having control of a domestic insurer.
The person first files the information required under sub. (2)
and, if applicable, the person files a pre-acquisition notification, which shall contain the information set forth in s. Ins 40.025
with the commissioner and sends a copy of the information to the domestic insurer; and
The offer, request, invitation, agreement or acquisition has been approved by the commissioner under ss. 611.72
, or 614.73
, and 617.21
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 sub. (2)
is otherwise filed, this paragraph shall not apply.
For purposes of this section “domestic insurer" includes any person having control of a domestic insurer. This section does not apply to a person who is a securities broker holding, in the usual and customary securities broker's function, less than 20% of the voting securities of an insurer or of any person which controls an insurer.
(2) Content of statement.
Except as provided under sub. (5)
, a person required to file under sub. (1)
shall file the following information, using form A in the appendix to this chapter, in a sworn statement:
If the acquiring person is an individual, his or her principal occupation and all offices and positions held during the past 5 years, any conviction of crimes other than traffic violations not involving death or injury during the past 10 years and all relevant information regarding any occupational license or registration; and
If the acquiring person is not an individual, a report of the nature of its business operations during the past 5 years or for the lesser period that the acquiring person and any predecessors of the acquiring person have been in existence, if shorter, an informative description of the business intended to be done by the acquiring person and the acquiring person's subsidiaries, and a list of all individuals who are or who have been selected to become directors or executive officers of the acquiring person, or who perform or will perform functions similar to those positions. The list shall include for each individual the information required by subds. 1.
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 from which funds were or are to be obtained for that purpose, including any pledge of the insurer's stock, or the stock of any of its subsidiaries or affiliates which control the insurer, the criteria used in determining the nature and amount of consideration and the identity of persons furnishing the consideration.
Fully audited financial information as to the earnings and financial condition of each acquiring person for the preceding 5 fiscal years of each acquiring person or for the period the acquiring person and any predecessors of the acquiring person have been in existence, if shorter, and similar unaudited information as of a date not earlier than 90 days prior to the filing of the statement.
Any plans or proposals which any acquiring person is considering to liquidate, to sell assets of, or to merge or consolidate the insurer or to make any other material change in the insurer's business or corporate structure or management.
The number of shares of any security which each acquiring person proposes to acquire; 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.
The amount of each class of any security which is beneficially owned or concerning which there is a right to acquire beneficial ownership by any acquiring person.
A full description of any contracts, arrangements, or understandings with respect to any security in which any acquiring person 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. The description shall identify the persons with whom the contracts, arrangements or understandings have been entered into.
A description of the purchase of any security of the entity to be acquired during the 12 calendar months preceding the filing of the statement by any acquiring person, including the dates of purchase, names of the purchasers, and consideration paid or agreed to be paid.
A description of any recommendations to purchase any security made during the 12 calendar months preceding the filing of the statement by any acquiring person, or by anyone at the suggestion of the acquiring person.
Copies of all tender offers for, requests or invitations for, tenders of, exchange offers for, or agreements to acquire or exchange any securities, and, if distributed, of additional soliciting material relating to those offers, requests, invitations, or agreements.
The term of any agreement, contract or understanding made with or proposed to be made with any broker-dealer as to solicitation of securities for tender, and the amount of any fees, commissions or other compensation to be paid to broker-dealers relating to the solicitation.
An agreement by the person required to file the statement referred to in sub. (1)
that it will provide the annual report specified in s. Ins 40.03 (9)
for so long as control exists.
An acknowledgement by the person required to file the statement referred to in sub. (1)
that the person and all subsidiaries within its control in the insurance holding company system will provide information to the commissioner upon request as necessary to evaluate enterprise risk to the insurer.
Whenever it appears to the commissioner that any person has committed a violation of this chapter which prevents the full understanding of the enterprise risk to the insurer by affiliates or by the insurance holding company system, the violation may serve as an independent basis for disapproving dividends or distributions and for placing the insurer under summary orders in accordance with s. 645.21
(3) Partners and stockholders.
If the person required to file under sub. (1)
is a partnership, limited partnership, syndicate, or other group, the commissioner may require that the information required under sub. (2)
be given with respect to each partner of the partnership or limited partnership, each member of the syndicate or group, and each person who controls the partner or member. If any partner, member, or person is a corporation or the person required to file under sub. (1)
is a corporation, the commissioner may require that the information required under sub. (2)
be given with respect to the corporation, each officer and director of the corporation, and each person who is directly or indirectly the beneficial owner of more than 10% of the outstanding voting securities of the corporation.
(4) Material changes.
A person required to file under sub. (1)
shall file an amendment to the filing if any material change occurs in the facts set forth in a statement previously filed with the commissioner. The person shall include in the amendment a description of the change and copies of all documents and other material relevant to the change. The amendment shall be filed with the commissioner and sent to the insurer within 2 business days after the person learns of the change.
(5) Alternative filing materials.
If any offer, request, invitation, agreement, or acquisition is proposed to be made by means of a registration statement under the Securities Act of 1933 or in circumstances requiring the disclosure of information under the Securities Exchange Act of 1934, or under a state law requiring similar registration or disclosure, the person required to file information under sub. (1)
may utilize those documents to furnish the information required to be filed under sub. (2)
(6) Consolidated hearing.
If an applicant requests a hearing on a consolidated basis under s. 611.72
, Stats., and the commissioner approves a hearing on a consolidated basis, in addition to filing the form A with the commissioner, the applicant shall file a copy of form A with the National Association of Insurance Commissioners in electronic form.
Ins 40.02 History
Cr. Register, July, 1993, No. 451
, eff. 8-1-93; CR 14-071
: r. and recr. Register August 2015 No. 716
, eff. 9-1-15; s. 35.17
correction in (6) Register August 2015 No. 716
Acquisitions Involving Insurers Not Otherwise Covered. Ins 40.025(1)(1)
In this section. “acquisition" means any agreement, arrangement, or activity the consummation of which results in a person acquiring directly or indirectly the control of another person, and includes the acquisition of voting securities and the acquisition of assets, bulk reinsurance, and mergers.
This section shall apply to any acquisition in which there is a change in control of an insurer authorized to do business in this state, except for the following:
A purchase of securities solely for investment purposes so long as the securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in any insurance market in this state. If a purchase of securities results in a presumption of control under s. 600.03 (13)
, Stats., it is not solely for investment purposes unless the commissioner of the insurer's state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist and the disclaimer action or affirmative finding is communicated by the domiciliary commissioner to the commissioner of this state.
The acquisition of a person by another person when both persons are neither directly nor through affiliates primarily engaged in the business of insurance, if pre-acquisition notification is filed with the commissioner in accordance with sub. (3)
30 days prior to the proposed effective date of the acquisition. However, such pre-acquisition notification is not required if the acquisition would be otherwise excluded under sub. (2)
An acquisition if, as an immediate result of the acquisition any of the following apply: