Chapter Ins 40

Chapter Ins 40

INSURANCE HOLDING COMPANY SYSTEM REGULATION

Subchapter I—Insurance Holding Company Standards

Ins 40.01   Definitions.

Ins 40.02   Acquisition of control of or merger with domestic insurer or divestiture of the shares of a domestic insurer.

Ins 40.025   Acquisitions Involving Insurers Not Otherwise Covered.

Ins 40.03   Registration.

Ins 40.04   Standards for transactions within an insurance holding company system.

Ins 40.05   Privileged information.

Ins 40.07   Designation of the group-wide supervisor of internationally active insurance groups.

Ins 40.08   Duties of the group-wide supervisor.

Ins 40.09   Insurer’s duty to pay reasonable expenses.

Subchapter II—Insurance Holding Company Systems—Reporting Forms

Ins 40.11   Instructions.

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

Ins 40.13   Forms—extension of time to furnish.

Ins 40.14   Forms—additional information and exhibits.

Ins 40.15   Registration form.

Ins 40.16   Alternative and consolidated registrations.

Ins 40.17   Transactions subject to prior notice—notice filing.

Ins 40.18   Extraordinary dividends and other distributions.

Ins 40.19   Consent to jurisdiction.

Ins 40.20   Enterprise Risk Report.

Ins 40.21   Group capital calculation.

Ch. Ins 40 Note Note: The annual registration requirements under this chapter first apply after December 31, 1993.

subch. I of ch. Ins 40 Subchapter I—Insurance Holding Company Standards

Ins 40.01 Ins 40.01 Definitions. In this chapter, unless the context otherwise requires:

Ins 40.01(1) (1) “Acquiring person” means each person by whom or on whose behalf a merger or other acquisition of control is to be effected.

Ins 40.01(2) (2) “Affiliate” has the meaning provided under s. 600.03 (1), Stats.

Ins 40.01(3) (3) “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.

Ins 40.01(4) (4) “Control” has the meaning provided under s. 600.03 (13), Stats.

Ins 40.01(4m) (4m) “Enterprise risk” has the meaning provided under s. 617.12 (1), Stats.

Ins 40.01(5) (5) “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.

Ins 40.01(5g) (5g) “Group capital calculation instructions” means the group capital calculation instructions as adopted by the NAIC and as amended by the NAIC in accordance with the procedures adopted by the NAIC.

Ins 40.01(5m) (5m) “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.

Ins 40.01(6) (6) “Insurance holding company system” means 2 or more persons who are affiliates, one or more of which is an insurer.

Ins 40.01(7) (7) “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.

Ins 40.01(7m) (7m) “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:

Ins 40.01(7m)(a) (a) Premiums written in at least three countries.

Ins 40.01(7m)(b) (b) 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.

Ins 40.01(7m)(c) (c) 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.

Ins 40.01(7p) (7p) “Lead state” means the state as determined by state insurance regulators pursuant to the procedures within the Financial Analysis Handbook adopted by the NAIC.

Ins 40.01(7s) (7s) “NAIC” means the national association of insurance commissioners.

Ins 40.01(7w) (7w) “NAIC liquidity stress test framework” or “framework” means a NAIC publication which includes a history of the NAIC’s development of regulatory liquidity stress testing, the scope criteria applicable for a specific data year, and the liquidity stress test instructions and reporting templates for a specific data year, such scope criteria, instructions, and reporting template as adopted by the NAIC and as amended by the NAIC in accordance with the procedures adopted by the NAIC.

Ins 40.01(7y) (7y) “Person” means an individual, a corporation, a limited liability company, a partnership, an association, a joint stock company, a trust, an unincorporated organization, any similar entity, or any combination of the foregoing acting in concert, but does not include any joint venture partnership exclusively engaged in owning, managing, leasing, or developing real or tangible personal property.

Ins 40.01(8) (8) “Policyholder surplus” means capital and surplus.

Ins 40.01(8m) (8m) “Scope criteria” means the designated exposure bases along with minimum magnitudes thereof for the specified data year that is used to establish a preliminary list of insurers that are considered scoped into the NAIC liquidity stress test framework for that data year, as detailed in the NAIC liquidity stress test framework.

Ins 40.01(9) (9) “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.

Ins 40.01(10) (10) “State of domicile” means the state where an insurer is domiciled or, for an alien insurer, its port of entry state.

Ins 40.01(11) (11) “Subsidiary” of a person means a person which is controlled, directly or indirectly through one or more intermediaries, by the first person.

Ins 40.01(12) (12) “Ultimate controlling person” means a person who is not controlled by any other person. 

Ins 40.01(13) (13) “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 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; CR 21-106: cr. (5g), (7p), (7s), (7w), (7y), (8m) Register July 2022 No. 799, eff. 8-1-22.

Ins 40.02 Ins 40.02 Acquisition of control of or merger with domestic insurer or divestiture of the shares of a domestic insurer.

Ins 40.02(1) (1) Filing requirements.

Ins 40.02(1)(a) (a) Except as provided under par. (b), no person, other than the insurer, may:

Ins 40.02(1)(a)1. 1. 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

Ins 40.02(1)(a)2. 2. 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.

Ins 40.02(1)(b) (b) A person is not subject to par. (a), only if:

Ins 40.02(1)(b)1. 1. 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

Ins 40.02(1)(b)2. 2. The offer, request, invitation, agreement or acquisition has been approved by the commissioner under ss. 611.72, 611.73, 612.21, 612.22, 613.72, or 614.73, and 617.21, Stats.

Ins 40.02(1)(c) (c) 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.

Ins 40.02(1)(d) (d) 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.

Ins 40.02(2) (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:

Ins 40.02(2)(a) (a) For each acquiring person:

Ins 40.02(2)(a)1. 1. The acquiring person’s name and address;

Ins 40.02(2)(a)2. 2. 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

Ins 40.02(2)(a)3. 3. 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. and 2.

Ins 40.02(2)(b) (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 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.

Ins 40.02(2)(c) (c) 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.

Ins 40.02(2)(d) (d) 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.

Ins 40.02(2)(e) (e) 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.