Chapter Ins 40

Ins 40.08(1)(b) (b) Request information necessary and appropriate to assess enterprise risk from any member of an internationally active insurance group subject to the commissioner’s supervision, including information about the members of the internationally active insurance group regarding the following:

Ins 40.08(1)(b)1. 1. Governance, risk assessment and management.

Ins 40.08(1)(b)2. 2. Capital adequacy.

Ins 40.08(1)(b)3. 3. Material intercompany transactions.

Ins 40.08(1)(c) (c) Coordinate and compel, through the authority of the regulatory officials of the jurisdictions where members of the internationally active insurance group are domiciled, the development and implementation of reasonable measures designed to ensure that the internationally active insurance group is able to timely recognize and mitigate enterprise risks to members of such internationally active insurance group that are engaged in the business of insurance.

Ins 40.08(1)(d) (d) Communicate with other state, federal and international regulatory agencies for members within the internationally active insurance group and share relevant information subject to the confidentiality provisions in s. Ins 40.05, and through supervisory colleges under s. 617.215, Stats.

Ins 40.08(1)(e) (e) Enter into agreements with, or obtain documentation from, any insurer registered under s. Ins 40.03, any member of the internationally active insurance group, and any other state, federal and international regulatory agencies for members of the internationally active insurance group, providing the basis for or otherwise clarifying the commissioner’s role as group-wide supervisor, including provisions for resolving disputes with other regulatory officials. Such agreements or documentation shall not serve as evidence in any proceeding that any insurer or person within an insurance holding company system not domiciled or incorporated in Wisconsin is doing business in Wisconsin or is otherwise subject to the jurisdiction of Wisconsin.

Ins 40.08(1)(f) (f) Other group-wide supervision activities, consistent with the authorities and purposes enumerated above, as considered necessary by the commissioner.

Ins 40.08(2) (2) If the commissioner acknowledges that another regulatory official from a jurisdiction that is not accredited by the NAIC is the group-wide supervisor, the commissioner is authorized to reasonably cooperate, including through supervisory colleges, with group-wide supervision undertaken by the group-wide supervisor, when the following provisions are met:

Ins 40.08(2)(a) (a) The commissioner’s cooperation is in compliance with the laws of Wisconsin.

Ins 40.08(2)(b) (b) The regulatory official acknowledged as the group-wide supervisor also recognizes and cooperates with the commissioner’s activities as a group-wide supervisor for other internationally active insurance groups where applicable. Where such recognition and cooperation is not reasonably reciprocal, the commissioner is authorized to refuse recognition and cooperation.

Ins 40.08(3) (3) The commissioner is authorized to enter into agreements with, or obtain documentation from, any insurer registered as required by s. Ins 40.03, any affiliate of the insurer, and other state, federal and international regulatory agencies for members of the internationally active insurance group that provide the basis for or otherwise clarify a regulatory official’s role as group-wide supervisor.

Ins 40.08 History History: CR 19-013: cr., Register April 2020 No. 772, eff. 5-1-20.

Ins 40.09 Ins 40.09 Insurer’s duty to pay reasonable expenses. An insurer registered under s. Ins 40.03 that is also subject to ss. Ins 40.07 to 40.08 shall pay, pursuant to s. Ins 16.01 (6) (d), the reasonable expenses of the commissioner’s participation in the administration of the internationally active group, including any of the following:

Ins 40.09(1) (1) The commissioner’s expenses from the engagement of attorneys, actuaries and any other professionals.

Ins 40.09(2) (2) The commissioner’s reasonable travel expenses.

Ins 40.09 History History: CR 19-013: cr. Register April 2020 No. 772, eff. 5-1-20; renum. (1) to Ins 40.09 (intro.) under s. 13.92 (4) (b) 1., Stats., and s. 35.17 correction in (intro.) made under s. 35.17, Stats., Register April 2020 No. 772.

subch. II of ch. Ins 40 Subchapter II—Insurance Holding Company Systems—Reporting Forms

Ins 40.11 Ins 40.11 Instructions.

Ins 40.11(1) (1) General. Forms A, B, C, D, E, and F contained in the appendix to this chapter are intended to be guides in the preparation of the statements required by subch. I of this chapter. They are not intended to be blank forms which are to be filled in. The statements filed shall contain the numbers and captions of all items, but the text of the items may be omitted provided the answers are prepared in such a manner as to indicate clearly the scope and coverage of the items. All instructions, whether appearing under the items of the form or elsewhere therein, are to be omitted. Unless expressly provided otherwise, if any item is inapplicable or the answer is in the negative, an appropriate statement to that effect shall be made.

Ins 40.11(2) (2) Filing format and procedure.

Ins 40.11(2)(a) (a) One complete copy of each statement, including exhibits and all other papers and documents filed as a part of the statement, shall be filed with the commissioner. At least one of the copies 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.

Ins 40.11(2)(b) (b) Statements shall be prepared on paper 8 1/2x 11 in size and preferably 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 as such on photocopies. Statements shall be in the English language and monetary values shall be stated in United States currency. If any exhibit or other paper or document filed with the statement is in a foreign language, it shall be accompanied by a translation into the English language and any monetary value shown in a foreign currency shall be converted into United States currency.

Ins 40.11 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93; CR 14-071: am. (1), (2) (a) Register August 2015 No. 716, eff. 9-1-15.

Ins 40.12 Ins 40.12 Forms—incorporation by reference, summaries and omissions.

Ins 40.12(1) (1) Incorporation by reference. Information required by any item of form A, form B, form D, form E, or form F may be incorporated by reference in answer or partial answer to any other item. Information contained in any financial statement, annual report, proxy statement, statement filed with a governmental authority, or any other document may be incorporated by reference in answer or partial answer to any item of form A, form B, form D, Form E, or form F provided the document 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 commissioner which were filed within 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.

Ins 40.12(2) (2) Summary. Where an item requires a summary or outline of the provisions of any document, only a brief statement shall be made as to the pertinent provisions of the document. In addition to the statement, the summary or outline may incorporate by reference particular parts of any exhibit or document currently on file with the commissioner which was filed within 3 years and may be incorporated in its entirety by the reference. In any case where 2 or more documents required to be filed as exhibits are substantially identical in all material respects except as to the parties to the documents, the dates of execution, or other details, a copy of only one of the documents need be filed with a schedule identifying the omitted documents and setting forth the material details in which such documents differ from the documents, a copy of which is filed.

Ins 40.12 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93; CR 14-071: am. (1) Register August 2015 No. 716, eff. 9-1-15.

Ins 40.13 Ins 40.13 Forms—extension of time to furnish.

Ins 40.13(1) (1) Extension. If it is impractical to furnish any required information, document or report at the time it is required to be filed, the person required to file shall file with the commissioner a separate document:

Ins 40.13(1)(a) (a) Identifying the information, document or report in question;

Ins 40.13(1)(b) (b) Stating why the filing at the time required is impractical; and

Ins 40.13(1)(c) (c) Requesting an extension of time for filing the information, document or report to a specified date.

Ins 40.13(2) (2) Time to allow. A request for extension shall be deemed granted unless the commissioner within 60 days after receipt of a complete request enters an order denying the request.

Ins 40.13 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93; CR 140-071: am. (title), r. (1), renum. (2), (3) to be (1), (2) and am. (1) (intro.) Register August 2015 No. 716, ef. 9-1-16.

Ins 40.14 Ins 40.14 Forms—additional information and exhibits.

Ins 40.14(1) (1) Supplemental information. In addition to the information expressly required to be included in form A, form B, form C, form D, form E, and form F contained in the appendix to this chapter, the person required to file shall add the further material information, if any, which is necessary to make the information contained in the statements accompanying the forms not misleading. The person filing may also file such exhibits as it may desire in addition to those expressly required by the statement. Those exhibits shall be so marked as to indicate clearly the subject matters to which they refer.

Ins 40.14(2) (2) Changes. Changes to forms A, B, C, D, E, or F shall be submitted as required under ss. Ins 40.02 (4), 40.04 (2) and 40.13 (1) and shall include on the top of the cover page the phrase: “Change No. to” and indicate the date of the change and not the date of the original filing.

Ins 40.14 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93; CR 14-071: am. Register August 2015 No. 716, eff. 9-1-165.

Ins 40.15 Ins 40.15 Registration form. A person required to file a registration statement under this chapter shall furnish the required information on form B and on form C contained in the appendix to this chapter.

Ins 40.15 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93; CR 14-071: am. Register August 2015 No. 716, eff. 9-1-15.

Ins 40.16 Ins 40.16 Alternative and consolidated registrations.

Ins 40.16(1) (1) Filing for affiliate insurer. If an authorized insurer files a registration statement on behalf of an insurer which is its affiliate and which is required to register under this chapter, the registration statement may include information which is not required by this chapter regarding any insurer in the insurance holding company system even if the insurer is not authorized to do business in this state. 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:

Ins 40.16(1)(a) (a) The statement or report contains substantially similar information required to be furnished on form B; and

Ins 40.16(1)(b) (b) The filing insurer is the principal insurer in the insurance holding company system.

Ins 40.16(2) (2) Principal insurer statement. The question of whether the filing insurer is the principal insurer in the insurance holding company system is a question of fact. An insurer filing a registration statement or report in lieu of form B on behalf of an insurer which is its affiliate, shall set forth a brief statement of facts which will substantiate the filing insurer’s claim that it, in fact, is the principal insurer in the insurance holding company system.

Ins 40.16(3) (3) Unauthorized insurer. With the prior approval of the commissioner, an unauthorized insurer may follow any of the procedures which could be done by an authorized insurer under sub. (1).

Ins 40.16 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93.

Ins 40.17 Ins 40.17 Transactions subject to prior notice—notice filing. A person required to give notice of a proposed transaction under this chapter shall furnish the required information on form D.

Ins 40.17 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93.

Ins 40.18 Ins 40.18 Extraordinary dividends and other distributions. Requests for approval of extraordinary dividends or any other extraordinary distribution to shareholders shall include the following:

Ins 40.18(1) (1) The amount of the proposed dividend;

Ins 40.18(2) (2) The date established for payment of the dividend;

Ins 40.18(3) (3) A statement as to whether the dividend is to be in cash or other property and, if in property, a description of the property, its cost, and its fair market value together with an explanation of the basis for valuation;

Ins 40.18(4) (4) A copy of the calculations determining that the proposed dividend is extraordinary. The calculations shall include the following information:

Ins 40.18(4)(a) (a) The amounts, dates and form of payment of all dividends or distributions, including regular dividends but excluding distributions of the insurer’s own securities, paid within the period of 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 previous calendar year;

Ins 40.18(4)(b) (b) Policyholder surplus as of the 31st day of December of the immediately preceding calendar year;

Ins 40.18(4)(c) (c) If the insurer is a life insurer, the net income less realized capital gains for the previous calendar year;

Ins 40.18(4)(d) (d) If the insurer is not a life insurer, the net income less realized capital gains for the previous calendar year and the 2 calendar years preceding that calendar year; and

Ins 40.18(4)(e) (e) If the insurer is not a life insurer, the dividends paid to stockholders excluding distributions of the insurer’s own securities in the preceding 3 calendar years.

Ins 40.18(5) (5) A balance sheet and statement of income for the period intervening from the last annual statement filed with the commissioner and the end of the month preceding the month in which the request for dividend approval is submitted.

Ins 40.18(6) (6) A brief statement as to the effect of the proposed dividend upon the insurer’s policyholder surplus and the reasonableness of policyholder surplus in relation to the insurer’s outstanding liabilities and the adequacy of policyholder surplus relative to the insurer’s financial needs.

Ins 40.18 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93.

Ins 40.19 Ins 40.19 Consent to jurisdiction. Any person required to file consent to jurisdiction under s. 617.11 (5), Stats., shall do so using form AA contained in the appendix to this chapter.

Ins 40.19 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93; CR14-071: am. Register August 2015 No. 716, eff. 9-1-15.

Ins 40.20 Ins 40.20 Enterprise Risk Report. The ultimate controlling person of an insurer required to file an enterprise risk report pursuant to s. Ins 40.03 (9), shall furnish the required information on Form F in the appendix.

Ins 40.20 History History: CR 14-071: am. Register August 2015 No. 716, eff. 9-1-15.

Ins 40.21 Ins 40.21 Group capital calculation.

Ins 40.21(1) (1) Discretionary annual filing exemption. Where an insurance holding company system has previously filed the annual group capital calculation at least once, the lead state commissioner has the discretion to exempt the ultimate controlling person from filing the annual group capital calculation if the lead state commissioner makes a determination based upon that filing that the insurance holding company system meets all of the following criteria:

Ins 40.21(1)(a) (a) The insurance holding company system has annual direct written and unaffiliated assumed premium including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of less than $1,000,000,000.

Ins 40.21(1)(b) (b) The insurance holding company system has no insurers within its holding company structure that are domiciled outside of the United States or one of its territories.

Ins 40.21(1)(c) (c) The insurance holding company system has no banking, depository or other financial entity that is subject to an identified regulatory capital framework within its holding company structure.

Ins 40.21(1)(d) (d) The insurance holding company system attests that there are no material changes in the transactions between insurers and non-insurers in the group that have occurred since the last filing of the annual group capital.

Ins 40.21(1)(e) (e) The non-insurers within the insurance holding company system do not pose a material financial risk to the insurer’s ability to honor policyholder obligations.

Ins 40.21(2) (2) Discretionary limited filing. Where an insurance holding company system has previously filed the annual group capital calculation at least once, the lead state commissioner has the discretion to accept a limited group capital filing in lieu of the group capital calculation if the insurance holding company system has annual direct written and unaffiliated assumed premium including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of less than $1,000,000,000; and all of the following additional criteria are met:

Ins 40.21(2)(a) (a) The insurance holding company system has no insurers within its holding company structure that are domiciled outside of the United States or one of its territories.

Ins 40.21(2)(b) (b) The insurance holding company system does not include a banking, depository or other financial entity that is subject to an identified regulatory capital framework.

Ins 40.21(2)(c) (c) The insurance holding company system attests that there are no material changes in transactions between insurers and non-insurers in the group that have occurred since the last filing of the report to the lead state commissioner and the non-insurers within the insurance holding company system do not pose a material financial risk to the insurers ability to honor policyholder obligations.

Ins 40.21(3) (3) Periodic filing request. For an insurance holding company system that has previously met an exemption with respect to the group capital calculation pursuant to sub. (1) or (2), the lead state commissioner may require at any time the ultimate controlling person to file an annual group capital calculation, completed in accordance with the NAIC group capital calculation instructions, if any of the following criteria are met:

Ins 40.21(3)(a) (a) Any insurer within the insurance holding company system is in a risk-based capital action level event as set forth in ch. Ins 51, or a similar standard for a non-U.S. insurer.

Ins 40.21(3)(b) (b) Any insurer within the insurance holding company system meets one or more of the standards of an insurer deemed to be in hazardous financial condition as described in s. 623.11, 645.31, or 645.41, Stats.

Ins 40.21(3)(c) (c) Any insurer within the insurance holding company system otherwise exhibits qualities of a troubled insurer as determined by the lead state commissioner based on unique circumstances including, but not limited to, the type and volume of business written, ownership and organizational structure, federal agency requests, and international supervisor requests.

Ins 40.21(4) (4) Non-U.S. jurisdiction. A non-U.S. jurisdiction is considered to recognize and accept the group capital calculation if it satisfies the following criteria:

Ins 40.21(4)(a) (a) With respect to s. Ins 40.03 (9) (d) 4.:

Ins 40.21(4)(a)1. 1. The non-U.S. jurisdiction recognizes the U.S. state regulatory approach to group supervision and group capital, by providing confirmation by a competent regulatory authority, in such jurisdiction, that insurers and insurance groups whose lead state is accredited by the NAIC under the NAIC accreditation program shall be subject only to worldwide prudential insurance group supervision including worldwide group governance, solvency and capital, and reporting, as applicable, by the lead state and will not be subject to group supervision, including worldwide group governance, solvency and capital, and reporting, at the level of the worldwide parent undertaking of the insurance or reinsurance group by the non-U.S. jurisdiction; or

Ins 40.21(4)(a)2. 2. Where no U.S. insurance groups operate in the non-U.S. jurisdiction, that non-U.S. jurisdiction indicates formally in writing to the lead state with a copy to the international association of insurance supervisors that the group capital calculation is an acceptable international capital standard. This will serve as the documentation otherwise required in subd. 1.

Ins 40.21(4)(b) (b) The non-U.S. jurisdiction provides confirmation by a competent regulatory authority in such jurisdiction that information regarding insurers and their parent, subsidiary, or affiliated entities, if applicable, shall be provided to the lead state commissioner in accordance with a memorandum of understanding or similar document between the commissioner and such jurisdiction, including the International Association of Insurance Supervisors Multilateral Memorandum of Understanding or other multilateral memoranda of understanding coordinated by the NAIC. The commissioner shall determine, in consultation with the NAIC committee process, if the requirements of the information sharing agreements are in force.

Ins 40.21(5) (5) Published non-U.S. jurisdictions. A list of non-U.S. jurisdictions that recognize and accept the group capital calculation will be published through the NAIC committee process.

Ins 40.21(6) (6) Published jurisdictions. A list of jurisdictions that recognize and accept the group capital calculation pursuant to s. Ins 40.03 (9) (d) 4., is published through the NAIC committee process to assist the lead state commissioner in determining which insurers shall file an annual group capital calculation. The list will clarify those situations in which a jurisdiction is exempted from filing under s. Ins 40.03 (9) (d) 4.