Missouri Revised Statutes

Chapter 382
Insurance Holding Companies

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Definitions.

382.010. As used in sections 382.010 to 382.300, the following words and terms have the meanings indicated unless the context clearly requires otherwise:

(1) An "affiliate" of, or person "affiliated" with, a specific person, is 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) "Control", "controlling", "controlled by", or "under common control with", 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 power to vote, or holds proxies representing, ten 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 section 382.170 that control does not exist in fact. The director may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support such determination, that control exists in fact, notwithstanding the absence of a presumption to that effect;

(3) "Director", the director of the department of insurance, financial institutions and professional registration, his or her deputies, or the department of insurance, financial institutions and professional registration, as appropriate;

(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 375.1255 or would cause the insurer to be in hazardous financial condition as set forth in section 375.539;

(5) "Insurance holding company system", two or more affiliated persons, one or more of which is an insurer;

(6) "Insurer", an insurance company as defined in section 375.012, including a reciprocal or interinsurance exchange, and which is qualified and licensed by the department of insurance, financial institutions and professional registration of Missouri to transact the business of insurance in this state; but it shall not include any company organized and doing business under chapter 377, 378, or 380, 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;

(7) "Person", an individual, corporation, limited liability company, partnership, association, joint stock company, trust, unincorporated organization, or any similar entity, or any combination of the foregoing acting in concert, but shall not include any joint venture partnership exclusively engaged in owning, managing, leasing, or developing real or tangible personal property;

(8) A "securityholder" of a specified person is one who owns any security of that person, including common stock, preferred stock, debt obligations, and any other security convertible into or evidencing the right to acquire any of the foregoing;

(9) A "subsidiary" of a specified person is an affiliate controlled by that person directly, or indirectly through one or more intermediaries;

(10) The term "voting security" includes any security convertible into or evidencing a right to acquire a voting security.

(L. 1971 S.B. 101 § 1, A.L. 2015 H.B. 50)

Domestic insurers, authorized investments, ownership and managementpractices.

382.020. 1. Any domestic insurer, either by itself or in cooperation with one or more persons, may invest in, otherwise acquire or operate one or more subsidiaries engaged or registered to engage in one or more of the following businesses:

(1) Any kind of insurance business authorized by the laws of the state of Missouri;

(2) Investing, reinvesting or trading in securities for its own account, that of its parent, any subsidiary of its parent, or any affiliate or subsidiary;

(3) Rendering other services including, but not limited to, actuarial, loss prevention, safety engineering, marketing, data processing, accounting, claims, appraisal and collection services, if such services relate to the operations of the insurance business of the insurer; provided, however, that such services shall not include services of salvage of motor vehicles, the mechanical, body or other repair of motor vehicles and the towing or retrieval of motor vehicles;

(4) Ownership and management of the kinds of assets which the parent corporation could itself own or manage;

(5) Acting as administrative agent for a governmental instrumentality which is performing an insurance function;

(6) Financing of insurance premiums;

(7) Any other business activity determined by the director to be reasonably ancillary to the insurance business of the insurer;

(8) Owning a corporation or corporations engaged in or organized to engage exclusively in one or more of the businesses specified in this section;

(9) Acting as an insurance broker or as an insurance agent for its parent or for any of its parent's insurer subsidiaries;

(10) Management of any investment company subject to or registered pursuant to the federal Investment Company Act of 1940, as amended, including related sales and services;

(11) Acting as a broker-dealer subject to or registered pursuant to the federal Securities Exchange Act of 1934, as amended; and

(12) Rendering investment advice to governments, government agencies, corporations or other organizations or groups.

2. In addition, a domestic insurance company may, if it maintains books and records which separately account for such business, engage directly in any business referred to in subdivisions (3), (4), (5), (6) and (7) of subsection 1 of this section, either to the extent necessarily or properly incidental to the insurance business the insurer is authorized to do in this state or to the extent approved by the director and subject to any limitations the director may prescribe for the protection of the interests of the policyholders of the insurer after taking into account the effect of such business on the insurer's existing insurance business and its surplus, the proposed allocation of the estimated costs of such business and the risks inherent in such business as well as the relative advantages to the insurer and its policyholders of conducting such business directly instead of through a subsidiary. Nothing in sections 382.010 to 382.300 shall be deemed to limit the powers of a domestic insurance company existing prior to September 28, 1971.

3. In addition to investments in common stock, preferred stock, debt obligations and other securities permitted domestic insurers, a domestic insurer may also do one or more of the following:

(1) Invest in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries, amounts which do not exceed the lesser of ten percent of such insurer's assets or fifty percent of such insurer's surplus as regards policyholders, if 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 investment, investments in domestic or foreign insurance subsidiaries shall be excluded, and there shall be included:

(a) Total net moneys or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary, including all organizational expenses and contributions to capital and surplus of such subsidiary 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, preferred stock, debt obligations, and other securities and all contributions to the capital or surplus of a subsidiary subsequent to its acquisition or formation;

(2) With the approval of the director, invest any greater amount in common stock, preferred stock, debt obligations, or other securities of one or more subsidiaries, if 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;

(3) 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 other insurance laws applicable to the insurer. For the purpose of this subdivision, the total investment of the insurer shall include:

(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 of the insurer, which shall be calculated by multiplying the amount of the subsidiary's investment by the percentage of the ownership of such subsidiary.

4. Investments in common stock, preferred stock, debt obligations or other securities made pursuant to subsection 3 of this section shall be made as provided by the statutes of this state.

5. Whether any investment pursuant to subsections 3 and 4 of this section meets the applicable requirements thereof is to be determined immediately after such investment is 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 are made.

(L. 1971 S.B. 101 §§ 2, 3, 4, A.L. 1987 S.B. 337, A.L. 1992 H.B. 1574, A.L. 2014 S.B. 794)

CROSS REFERENCES:

Bi-state development agency, bonds of, investment in authorized, 70.377

Multinational banks, securities and obligations of, investment in, when, 409.950

Savings accounts in insured savings and loan associations, investment in authorized, 369.194

Disposal of investment required, when.

382.030. If an insurer ceases to control a subsidiary, it shall dispose of any investment therein made pursuant to sections 382.010 to 382.300 within three years from the time of the cessation of control or within such further time as the director may prescribe, unless at any time after the investment has been made, the investment meets the requirements for investment under any other investment law applicable to the insurer, and the insurer has notified the director thereof.

(L. 1971 S.B. 101 § 5)

Securities of domestic insurers, regulation of trading in--divestmentof a controlling interest, procedure.

382.040. 1. No person other than the issuer shall commence 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 or otherwise, any voting security of a domestic insurer if, after the consummation thereof, he or she would, directly or indirectly, or by conversion or by exercise of any right to acquire, be in control of the insurer, and no person shall enter into an agreement to merge with or otherwise to acquire control of a domestic insurer unless, at the time the offer, request, or invitation is commenced or the agreement is entered into, or prior to the acquisition of the securities if no offer or agreement is involved, he or she has filed with the director and has sent to the insurer a statement containing the information required by section 382.050 and the offer, request, invitation, agreement or acquisition has been approved by the director in the manner prescribed by sections 382.010 to 382.300.

2. For purposes of sections 382.040 to 382.090, any controlling person of a domestic insurer seeking to divest its controlling interest in the domestic insurer in any manner shall file with the director, with a copy to the insurer, confidential notice of its proposed divestiture at least thirty days prior to the cessation of control. The director shall determine those instances in which the party or parties seeking to divest or to acquire a controlling interest in an insurer shall be required to file for and obtain approval of the transaction. The information shall remain confidential until the conclusion of the transaction. If the statement referred to in subsection 1 of this section is otherwise filed, the provisions of this subsection shall not apply.

3. With respect to a transaction subject to this section, the acquiring person shall also file a preacquisition notification with the director which shall contain the information set forth in subsection 3 of section 382.095. A failure to file the notification may be subject to the penalties specified in subsection 7 of section 382.095.

4. For purposes of this section, a domestic insurer shall include any person controlling a domestic insurer unless such person, as determined by the director, is either directly or through its affiliates primarily engaged in business other than the business of insurance; however, such person shall file a preacquisition notification with the director containing the information set forth in section 382.095 thirty days prior to the proposed effective date of the acquisition. Any person who fails to file the preacquisition notification required by this section shall be subject to the penalties provided in subsection 5 of section 382.095. For the purposes of this section and sections 382.050, 382.060, 382.070, 382.080 and 382.090, "person" shall not include any securities broker holding, in the usual and customary broker's function, less than twenty percent of the voting securities of an insurance company or of any person which controls an insurance company.

(L. 1971 S.B. 101 § 6, A.L. 1983 H.B. 633 merged with S.B. 333, A.L. 1992 H.B. 1574, A.L. 2015 H.B. 50)

Statement, contents.

382.050. 1. The statement to be filed with the director shall be made under oath or affirmation and shall contain the following:

(1) The name and address of each person hereinafter called "acquiring party" by whom or on whose behalf the merger or other acquisition of control referred to in section 382.040 is to be effected, and

(a) If that 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 ten years; and

(b) If that person is not an individual, a report of the nature of its business operations during the past five years or for such lesser period as that person and any predecessors thereof have been in existence;

(c) An informative description of the business intended to be done by that person and its subsidiaries; and

(d) A list of all individuals who are or who have been selected to become directors or executive officers of such person, or who perform or will perform functions appropriate to such positions. The list shall include for each such individual the information required by paragraph (a) of subdivision (1) of subsection 1 of this section;

(2) The source, nature and amount of the consideration 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 subsidiaries or controlling affiliates, and the identity of persons furnishing such consideration, but, where a source of the 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 the statement so requests;

(3) 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 ninety days prior to the filing of the statement;

(4) Any plans or proposals which each acquiring party may have to liquidate the insurer, to sell its assets, to merge or consolidate it with any person, or to make any other material change in its business or corporate structure or management;

(5) The number of shares of any security referred to in section 382.040 which each acquiring party proposes to acquire;

(6) The terms of the proposed offer, request, invitation, agreement, or acquisition referred to in section 382.040, and a statement as to the method by which the fairness of the proposal was arrived at;

(7) The amount of each class of any security referred to in section 382.040 which is beneficially owned or concerning which there is a right to acquire beneficial ownership by each acquiring party;

(8) A full description of any contracts, arrangements or understandings with respect to any security referred to in section 382.040 in which any acquiring party proposes to be or 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 or will be entered into;

(9) A description of the purchase of any security referred to in section 382.040 during the twelve 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;

(10) A description of any recommendations to purchase any security referred to in section 382.040 made during the twelve 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;

(11) Copies of the form 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 section 382.040, and of the form of additional soliciting material, if distributed, relating thereto;

(12) 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 section 382.040 for tender, and the amount of any fees, commissions or other compensation to be paid to broker-dealers with regard thereto;

(13) An agreement by the person required to file the statement referred to in section 382.040 that the annual report specified in section 382.175 will be provided for so long as control exists;

(14) An acknowledgment by the person required to file the statement referred to in section 382.040 that such person and all subsidiaries within its control in the insurance holding company system shall provide information to the director upon request as necessary to evaluate enterprise risk to the insurer; and

(15) Such additional information as the director may by rule or regulation prescribe as necessary or appropriate for the protection of policyholders of the insurer or in the public interest.

2. If the person required to file the statement referred to in section 382.040 is a partnership, limited partnership, syndicate or other group, the director may require that the information called for by subdivisions (1) to (15) of subsection 1 of this section 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 section 382.040 is a corporation, the director may require that the information called for by subdivisions (1) to (15) of subsection 1 of this section shall 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 ten percent of the outstanding voting securities of the corporation.

3. If any material change occurs in the facts set forth in the statement filed with the director and sent to the insurer pursuant to this section, an amendment setting forth the change, together with copies of all documents and other material relevant to the change, shall be filed with the director and shall be sent to the insurer within two business days after the person learns of the change.

4. If any offer, request, invitation, agreement or acquisition referred to in section 382.040 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 section 382.040 may utilize such documents in furnishing the information called for by that statement.

(L. 1971 S.B. 101 § 7, A.L. 1983 H.B. 633 merged with S.B. 333, A.L. 1992 H.B. 1574, A.L. 2015 H.B. 50)

Approval of merger or acquisition of control, when--hearing,notice--consolidated hearing, when--change of control,restoration of capital, when.

382.060. 1. The director shall approve any merger or other acquisition of control referred to in section 382.040 unless after a public hearing the director finds that:

(1) After the change of control the domestic insurer referred to in section 382.040 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;

(2) 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 subdivision:

(a) The informational requirements of subsection 3 of section 382.095 and the standards of subsection 4 of section 382.095 shall apply;

(b) The merger or other acquisition of control shall not be disapproved if the director finds that any of the situations meeting the criteria provided by subsection 4 of section 382.095 exist; and

(c) The director may condition the approval of the merger or other acquisition on the removal of the basis of disapproval within a specified period of time;

(3) 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;

(4) 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 contrary to the public interest;

(5) The competence, experience or integrity of those persons who would control the operation of the insurer are such that it would be contrary to the interest of policyholders of the insurer and of the public to permit the merger or other acquisition of control; or

(6) The acquisition is likely to be hazardous or prejudicial to the insurance buying public.

2. Any disapproval made by the director shall be in writing and shall contain specific findings of fact supporting it.

3. The public hearing referred to above in this section shall be held within thirty days after the statement required by section 382.040 is filed, and at least twenty days' notice thereof shall be given by the director to the person filing the statement. Not less than seven days' notice of the public hearing shall be given by the person filing the statement to the insurer and to such other persons and in such manner as may be designated by the director. The director shall make a determination within thirty days after the conclusion of the hearing. At the hearing, the person filing the statement, the insurer, any person to whom notice of hearing was sent, and any other person whose interests 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 may 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 three days prior to the commencement of the public hearing.

4. If the proposed acquisition of control requires the approval of more than one state insurance commissioner, the public hearing referred to in subsection 3 of this section may be held on a consolidated basis upon request of the person filing the statement referred to in section 382.040. Such person shall file the statement referred to in section 382.040 with the National Association of Insurance Commissioners within five days of making the request for a public hearing. A state insurance commissioner may opt out of a consolidated hearing and shall provide notice to the applicant of the opt out within ten days of the receipt of the statement referred to in section 382.040. A hearing conducted on a consolidated basis shall be public and shall be held within the United States before the insurance commissioners of the states in which the insurers are domiciled. Such commissioners shall hear and receive evidence. A state insurance commissioner may attend such hearing in person or by telecommunication.

5. In connection with a change of control of a domestic insurer, any determination by the director 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 sixty days after the date of notification of the change of control submitted under subsection 1 of section 382.040.

6. The director may retain at the acquiring party's expense any attorneys, actuaries, accountants and other experts not otherwise a part of the director's staff as may be reasonably necessary to assist the director in reviewing the proposed acquisition of control.

(L. 1971 S.B. 101 § 8, A.L. 1983 H.B. 633 merged with S.B. 333, A.L. 1992 H.B. 1574, A.L. 2015 H.B. 50)

Excepted transactions.

382.070. The provisions of sections 382.040, 382.050 and 382.060 shall not apply to:

(1) Any transaction which is subject to the provisions of section 375.355 or 375.861; or

(2) Any offer, request, invitation, agreement or acquisition which the director by order shall exempt therefrom as 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 as otherwise not comprehended within the purposes of sections 382.010 to 382.300.

(L. 1971 S.B. 101 § 9, A.L. 1983 H.B. 633 merged with S.B. 333, A.L. 1992 H.B. 1574, A.L. 1993 H.B. 709)

Prohibited acts.

382.080. The following shall be violations of sections 382.040 to 382.090:

(1) The failure to file any statement, amendment, or other material required to be filed pursuant to section 382.040 or 382.050; or

(2) The effectuation or any attempt to effectuate an acquisition of control of, divestiture of, or merger with a domestic insurer covered by sections 382.040 to 382.090, unless the director has given approval.

(L. 1971 S.B. 101 § 10, A.L. 2015 H.B. 50)

Jurisdiction, acceptance of--service, how had.

382.090. 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 director under sections 382.010 to 382.300, and over all actions involving such person arising out of violations of sections 382.010 to 382.300, and each such person shall be deemed to have performed acts equivalent to and constituting an appointment by him of the director to be his true and lawful attorney upon whom may be served all lawful process in any action, suit or proceeding arising out of violations of sections 382.010 to 382.300. Copies of all such lawful process shall be served on the director and transmitted by registered or certified mail by the director to such person at his last known address.

(L. 1971 S.B. 101 § 11)

Acquisitions where change of control of insurer, subject to order,when--contents, requirements--violations, penalties.

382.095. 1. As used in this section, the following terms mean:

(1) "Acquisition", any agreement, arrangement or activity the consummation of which results in a person acquiring directly or indirectly the control of another person, and includes but is not limited to the acquisition of voting securities, the acquisition of assets, bulk reinsurance and mergers;

(2) "Involved insurer" includes an insurer which either acquires or is acquired, is affiliated with an acquirer or acquired or is the result of a merger.

2. Except as provided in this subsection, this section applies to any acquisition in which there is a change in control of an insurer authorized to do business in this state. This section shall not apply to the following:

(1) A purchase of securities solely for investment purposes so long as such 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 subdivision (2) of section 382.010, it is not solely for investment purposes unless the commissioner of insurance or other appropriate person of the insurer's state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist and such disclaimer action or affirmative finding is communicated by such person to the director;

(2) 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 preacquisition notification is filed with the director in accordance with subsection 3 of this section thirty days prior to the proposed effective date of the acquisition; however, such preacquisition notification is not required for exclusion from this section if the acquisition would otherwise be excluded from this section by any other subdivision of this subsection;

(3) The acquisition of already affiliated persons;

(4) An acquisition if, as an immediate result of the acquisition:

(a) In no market would the combined market share of the involved insurers exceed five percent of the total market;

(b) There would be no increase in any market share; or

(c) In no market would the combined market share of the involved insurers exceed twelve percent of the total market, and the market share of the involved insurer after the acquisition would increase by two percent of the total market or less.

For the purpose of this subdivision, a "market" means direct written insurance premium in this state for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this state;

(5) An acquisition for which a preacquisition notification would be required pursuant to this section due solely to the resulting effect on the ocean marine insurance line of business;

(6) An acquisition of an insurer whose domiciliary commissioner or other appropriate person affirmatively finds that such insurer is in failing condition; there is a lack of feasible alternative to improving such condition; the public benefits of improving such insurer's condition through the acquisition exceed the public benefits that would arise from not lessening competition; and such findings are communicated by such person to the director.

3. An acquisition covered by subsection 2 of this section may be subject to an order pursuant to subsection 5 of this section, unless the acquiring person files a preacquisition notification and the waiting period described in this subsection has expired. The acquired person or acquiring person may file a preacquisition notification. The director shall give confidential treatment to information submitted under this subsection. The preacquisition notification shall be in such form and contain such information as prescribed by the National Association of Insurance Commissioners relating to those markets which, under subdivision (4) of subsection 2 of this section cause the acquisition not to be exempted from the provisions of this section. The director may require such additional material and information as he or she deems necessary to determine whether the proposed acquisition, if consummated, would violate the competitive standard of subsection 4 of this section. The required information may include an opinion of an economist as to the competitive impact of the acquisition in this state accompanied by a summary of the education and experience of such person indicating his or her ability to render an informed opinion. The waiting period required shall begin on the date of receipt by the director of a preacquisition notification and shall end on the earlier of the thirtieth day after the date of such receipt, or termination of the waiting period by the director. Prior to the end of the waiting period, the director on a one-time basis may require the submission of additional needed information relevant to the proposed acquisition, in which event the waiting period shall end on the earlier of the thirtieth day after receipt of such additional information by the director or termination of the waiting period by the director.

4. (1) The director may enter an order under subsection 5 of this section with respect to an acquisition if there is substantial evidence that the effect of the acquisition may be substantially to lessen competition in any line of insurance in this state or tend to create a monopoly therein or if the insurer fails to file adequate information in compliance with subsection 3 of this section.

(2) In determining whether a proposed acquisition would violate the competitive standard of subdivision (1) of this subsection, the director shall consider the following:

(a) Any acquisition covered under subsection 2 of this section involving two or more insurers competing in the same market is prima facie evidence of violation of the competitive standards:

a. If the market is highly concentrated and the involved insurers possess the following share of the market:

Insurer A Insurer B

4% 4% or more

10% 2% or more

15% 1% or more; or

b. If the market is not highly concentrated and the involved insurers possess the following share of the market:

Insurer A Insurer B

5% 5% or more

10% 4% or more

15% 3% or more

19% 1% or more

A highly concentrated market is one in which the share of the four largest insurers is seventy-five percent or more of the market. Percentages not shown in the tables are to be interpolated proportionately to the percentages that are shown. If more than two insurers are involved, exceeding the total of the two columns in the table is prima facie evidence of violation of the competitive standard in subdivision (1) of this subsection. For the purpose of this subdivision, the insurer with the largest share of the market shall be deemed to be insurer A;

(b) There is a significant trend toward increased concentration when the aggregate market share of any grouping of the largest insurers in the market, from the two largest to the eight largest, has increased by seven percent or more of the market over a period of time extending from any base year five to ten years prior to the acquisition up to the time of the acquisition. Any acquisition or merger covered under subsection 2 of this section involving two or more insurers competing in the same market is prima facie evidence of violation of the competitive standard in subdivision (1) of this subsection if:

a. There is a significant trend toward increased concentration in the market;

b. One of the insurers involved is one of the insurers in a grouping of such large insurers showing the requisite seven percent or more increase in the market share; and

c. Another involved insurer's market is two percent or more.

(3) For the purposes of subdivision (2) of this subsection:

(a) The term "insurer" includes any company or group of companies under common management, ownership or control;

(b) The term "market" means the relevant product and geographical markets. In determining the relevant product and geographical markets, the director shall give due consideration to, among other things, the definitions or guidelines, if any, promulgated by the National Association of Insurance Commissioners and to information, if any, submitted by parties to the acquisition. In the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premium for a line of business, such line being that used in the annual statement required to be filed by insurers doing business in this state, and the relevant geographical market is assumed to be this state;

(c) The burden of showing prima facie evidence of violation of the competitive standard rests upon the director.

(4) Even though an acquisition is not prima facie violative of the competitive standard under subdivision (2) of this subsection, the director may establish that the requisite anticompetitive effect exists based upon other substantial evidence. Even though an acquisition is prima facie violative of the competitive standard under subdivision (2) of this subsection, a party may establish the absence of the requisite anticompetitive effect, based upon other substantial evidence. Relevant factors in making a determination under this subdivision include, but are not limited to, the following: market shares, volatility of ranking of market leaders, number of competitors, concentration, trend of concentration in the industry, and ease of entry and exit into the market.

(5) An order shall not be entered under subsection 5 of this section if:

(a) The acquisition will yield substantial economies of scale or economies in resource use that cannot be feasibly achieved in any other way, and the public benefits which would arise from such economies exceed the public benefits which would arise from not lessening competition; or

(b) The acquisition will substantially increase the availability of insurance, and the public benefits of such increase exceed the public benefits which would arise from not lessening competition.

5. If an acquisition violates the standards of this section, the director may enter an order:

(1) Requiring an involved insurer to cease and desist from doing business in this state with respect to the line or lines of insurance involved in the violation; or

(2) Denying the application of an acquired or acquiring insurer for a license to do business in this state.

Such an order shall not be entered unless there is a hearing, notice of such hearing is issued prior to the end of the waiting period and not less than fifteen days prior to the hearing, and the hearing is concluded and the order is issued no later than sixty days after the end of the waiting period. Every order shall be accompanied by a written decision of the director setting forth his or her findings of fact and conclusions of law. An order entered under this subsection shall not become final earlier than thirty days after it is issued, during which time any involved insurer may submit a plan to remedy the anticompetitive impact of the acquisition within a reasonable time. Based upon such plan or other information, the director shall specify the conditions, if any, under the time period during which the aspects of the acquisition causing a violation of the standards of this section would be remedied and the order vacated or modified. An order issued pursuant to this subsection shall not apply if the acquisition is not consummated.

6. Any person who violates a cease and desist order of the director under subsection 5 of this section, and while such order is in effect, may, after notice and hearing and upon order of the director, be subject at the discretion of the director to any one or more of the following:

(1) A monetary penalty of not more than ten thousand dollars for every day of violation; or

(2) Suspension or revocation of such person's license.

7. Any insurer or other person who fails to make any filing required by this section and who also fails to demonstrate a good faith effort to comply with any such filing requirement shall be subject to a fine of not more than fifty thousand dollars.

8. Sections 382.260 and 382.280 do not apply to acquisitions covered by subsection 2 of this section.

(L. 1991 H.B. 385, et al., A.L. 1992 H.B. 1574, A.L. 2015 H.B. 50)

Registration required.

382.100. Every insurer which is authorized to do business in this state and which is a member of an insurance holding company system, except a foreign insurer subject to disclosure requirements and standards adopted by statute or regulation in the jurisdiction of its domicile which are substantially similar to those contained in sections 382.010 to 382.300, shall register with the director. Every insurer which is subject to registration under sections 382.010 to 382.300 shall register within sixty days after September 28, 1971, or fifteen days after it becomes subject to registration, whichever is later, and annually thereafter by March first of each year for the previous calendar year, unless the director for good cause shown extends the time for registration, and then within such extended time. The director may require any authorized insurer which is a member of a 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 2 of section 382.110, or other information filed by it with the insurance regulatory authority of its state of domicile.

(L. 1971 S.B. 101 § 12, A.L. 1992 H.B. 1574)

Registration, form, contents, exempted matter.

382.110. 1. Every insurer subject to registration shall file a registration statement on a form provided by the director containing 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 between the 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 and service contracts and all cost-sharing arrangements; and

(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) Financial statements of or within an insurance holding company system, including all affiliates, if requested by the director. Financial statements may include, but are not limited to, annual audited financial statements filed with the United States Securities and Exchange Commission (SEC) under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. An insurer required to file financial statements under this subdivision may satisfy such requirement by providing the director with the most recently filed parent corporation financial statements that have been filed with the SEC;

(6) 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;

(7) 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 director; and

(8) Any other information required by the director by rule.

2. All registration statements shall contain a summary outlining all items in the current registration statement representing changes from the prior registration statement.

3. No information need be disclosed on the registration statement filed pursuant to subsection 1 of this section if such information is not material for the purposes of that subsection. Unless the director 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 the thirty-first day of December next preceding shall not be deemed material for purposes of subsection 1 of this section.

4. Any person within an insurance holding company system subject to registration shall be required to provide complete and accurate information to an insurer, where such information is reasonably necessary to enable the insurer to comply with the provisions of sections 382.010 to 382.300.

(L. 1971 S.B. 101 §§ 13, 14, A.L. 1992 H.B. 1574, A.L. 2015 H.B. 50)

Information to be kept current, when changes reported.

382.120. 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 director within fifteen days after the end of the month in which it learns of each such change or addition, but, subject to section 382.210, each registered insurer shall so report all dividends and other distributions to shareholders promptly on the declaration thereof. No life or title insurer subject to registration under section 382.100 shall pay any dividend unless it has reported the dividend to the director:

(1) Within five days of its being declared; and

(2) At least ten days before it is paid.

(L. 1971 S.B. 101 § 15, A.L. 1993 H.B. 709)

Termination of registration, when.

382.130. The director shall terminate the registration of any insurer which demonstrates that it no longer is a member of an insurance holding company system.

(L. 1971 S.B. 101 § 16)

Consolidated registration statements or amendments, when.

382.140. The director may require or allow two or more affiliated insurers subject to registration under the provisions of sections 382.010 to 382.300 to file a consolidated registration statement or consolidated reports amending their consolidated registration statement or their individual registration statements.

(L. 1971 S.B. 101 § 17)

Registration for affiliates authorized.

382.150. The director 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 section 382.100 and to file all information and material required to be filed under section 382.110.

(L. 1971 S.B. 101 § 18)

Exemption from registration and reports, how and when.

382.160. The provisions of sections 382.100 to 382.180 shall not apply to any insurer, information or transaction if and to the extent that the director by rule, regulation, or order shall exempt the same from such provisions.

(L. 1971 S.B. 101 § 19, A.L. 2015 H.B. 50)

Disclaimer of affiliation, effect of.

382.170. Any person may file with the director a disclaimer of affiliation with any authorized insurer or the disclaimer may be filed by 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 person and such insurer as well as the basis for disclaiming such affiliation. A disclaimer of affiliation shall be deemed to have been granted unless the director, within thirty days following receipt of a complete disclaimer, notifies the filing party that 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 director or if the disclaimer is deemed to have been approved.

(L. 1971 S.B. 101 § 20, A.L. 2015 H.B. 50)

Enterprise risk report, contents, filing of, due date.

382.175. Upon request of the director, the ultimate controlling person of every insurer subject to registration shall file an annual enterprise risk report. The report shall be appropriate to the nature, scale, and complexity of the operations of the insurance holding company and shall, to the best of the ultimate controlling person's knowledge and belief, identify the material risks within the insurance holding company system, if any, that could pose enterprise risk to the insurer. The report shall be filed with the lead state insurance commissioner of the insurance holding company system as determined by procedures within the Financial Analysis Handbook adopted by the National Association of Insurance Commissioners. The first enterprise risk report shall be due and filed no later than May 1, 2016, and annually thereafter by the first day of May each year, unless the lead state insurance commissioner extends the time for filing for good cause shown.

(L. 2015 H.B. 50)

Failure to file registration statement, summary, or enterprise riskreport a violation.

382.180. The failure to file a registration statement, summary of the registration statement, or enterprise risk filing required under sections 382.100 to 382.180 within the time specified for the filing is a violation of sections 382.100 to 382.180.

(L. 1971 S.B. 101 § 21, A.L. 2015 H.B. 50)

Transactions with affiliates, how conducted.

382.190. Material transactions by registered insurers with their affiliates are subject to the following standards:

(1) The terms shall be fair and reasonable;

(2) Charges or fees for services shall be reasonable;

(3) Expenses incurred and payment received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied;

(4) The books, accounts and records of each party shall be maintained so as to clearly and accurately disclose the precise nature and details of the transactions including such accounting information as is necessary to support the reasonableness of the charges or fees to the respective parties;

(5) 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; and

(6) Agreements for cost-sharing services and management shall include such provisions as required by the director by rule.

(L. 1971 S.B. 101 § 22, A.L. 1992 H.B. 1574, A.L. 2015 H.B. 50)

Prohibited transactions, exceptions.

382.195. 1. The following transactions involving a domestic insurer and any person in its holding company system, including amendments or modifications of affiliate agreements previously filed under this section that are subject to any materiality standards contained in subdivisions (1) to (7) of this subsection, shall not be entered into unless the insurer has notified the director in writing of its intention to enter into such transaction at least thirty days prior thereto, or such shorter period as the director may permit, and the director has not disapproved it within such period:

(1) Sales, purchases, exchanges, loans, extensions of credit, or investments if such transactions are equal to or exceed, with respect to nonlife insurers, the lesser of three percent of the insurer's admitted assets or twenty-five percent of surplus as regards policyholders, or with respect to life insurers, three percent of the insurer's admitted assets, each as of the thirty-first day of December of the preceding year;

(2) Loans or extensions of credit to any person who is not an affiliate, where the insurer makes such loans or extensions of credit with agreement or understanding that the proceeds of such 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 such loans or extensions of credit provided such transactions are equal to or exceed, with respect to nonlife insurers, the lesser of three percent of the insurer's admitted assets or twenty-five percent of surplus as regards policyholders, or with respect to life insurers, three percent of the insurer's admitted assets; each as of the thirty-first day of December of the preceding year;

(3) Reinsurance agreements or modifications thereto, including:

(a) All reinsurance pooling agreements;

(b) 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 thirty-first day of December of the preceding year, 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 assets will be transferred to one or more affiliates of the insurer;

(4) All management agreements, tax allocation agreements, service contracts, and all cost-sharing arrangements;

(5) 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 subdivision unless it exceeds the lesser of one-half of one percent of the insurer's admitted assets or ten percent of surplus as regards policyholders as of the thirty-first day of December next preceding. Further, all guarantees which are not quantifiable as to amount are subject to the notice requirements of this subdivision;

(6) 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 holding 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 under section 382.020 or authorized under any other provision of this chapter or in nonsubsidiary insurance affiliates that are subject to the provisions of this chapter are exempt from such requirement; and

(7) Any material transactions, specified by regulation, which the director determines may adversely affect the interests of the insurer's policyholders.

The notice for amendments or modifications shall include the reasons for the change and the financial impact on the domestic insurer.

2. The provisions of subsection 1 of this section shall not 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.

3. A domestic insurer shall 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 director determines that such separate transactions were entered into over any twelve-month period for such purpose, the director may exercise his or her authority under section 382.265.

4. In reviewing transactions under subsection 1 of this section, the director shall consider whether the transactions comply with the standards set forth in section 382.190 and whether they may adversely affect the interest of policyholders.

5. The director shall be notified within thirty days of any investment of the domestic insurer in any one corporation if the total investment in the corporation by the insurance holding company system exceeds ten percent of the corporation's voting securities.

(L. 1992 H.B. 1574, A.L. 2015 H.B. 50)

Reasonable surplus, how determined.

382.200. For the purposes of sections 382.010 to 382.300 in determining whether an insurer's surplus as regards policyholders is reasonable in relation to the insurer's outstanding liabilities and adequate to 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 investment portfolio;

(8) The surplus as regards policyholders maintained by other comparable insurers;

(9) The adequacy of the insurer's reserves; and

(10) The quality and liquidity of investments in subsidiaries made pursuant to sections 382.010 to 382.300. The director may treat any such investment as a disallowed asset for purposes of determining the adequacy of surplus as regards policyholders whenever in his judgment such investment so warrants.

(L. 1971 S.B. 101 § 23, A.L. 1992 H.B. 1574)

Extraordinary dividend, notice of--payment from earned surplus,when--allowed, when.

382.210. 1. No insurer subject to registration under section 382.100 shall pay any extraordinary dividend or make any other extraordinary distribution to its shareholders until thirty days after the director has received notice of the declaration thereof and has not within such period disapproved such payment, or the director has approved the payment within such thirty-day period. For purposes of this section, net income excludes net realized capital gains to the extent that realized capital gains exceed realized capital losses, and an extraordinary dividend or distribution includes any dividend or distribution of cash or other property, whose fair market value together with that of dividends or distributions made within the period of twelve consecutive months ending on the date on which the proposed dividends are scheduled for payment or distribution:

(1) For life, title, and property and casualty insurance companies, such amount exceeds the greater of ten percent of the insurer's surplus as regards policyholders as of the thirty-first day of December next preceding, or the net gain from operations of the insurer, if the insurer is a life insurer, or the net investment income, if the insurer is a title insurer, or the net income, if the insurer is a property and casualty insurer, for the twelve-month period ending the thirty-first day of December next preceding, but shall not include pro rata distributions of any class of the insurer's own securities;

(2) For all other insurers, such amount exceeds the lesser of ten percent of the insurer's surplus as regards policyholders as of the thirty-first day of December next preceding, or the net investment income for the twelve-month period ending the thirty-first day of December next preceding, but shall not include pro rata distributions of any class of the insurer's own securities.

2. A life, title, or property and casualty insurer subject to registration under section 382.100 may only pay a shareholder dividend from earned surplus. With the prior approval of the director, a dividend may be declared from other than earned surplus.

3. No life, title, or property and casualty insurer subject to registration under section 382.100 shall pay any extraordinary dividend unless, after the transaction is completed, the company's surplus as regards policyholders is reasonable in relation to the company's outstanding liabilities and adequate to its financial needs. In making this determination, the director shall use the factors found in section 382.200 and may consider:

(1) The quality of the company's earnings and the extent to which the reported earnings include extraordinary items; or

(2) The recent past and projected future trend in the company's surplus as regards policyholders.

4. Notwithstanding any other provision of law, an insurer may declare an extraordinary dividend or distribution which is conditional upon the director's approval thereof, and the declaration shall confer no rights upon shareholders until the director has approved the payment of the dividend or distribution, or the director has not disapproved the payment within the thirty-day period referred to above.

(L. 1971 S.B. 101 § 24, A.L. 1992 H.B. 1574, A.L. 1993 H.B. 709, A.L. 2004 H.B. 1198 merged with S.B. 1078)

Director, powers of--insurer liable for examination costs.

382.220. 1. Subject to the limitation contained in this section and in addition to all the other powers with which the director is vested by law relating to the examination of insurers, the director may examine any insurer registered under the provisions of sections 382.100 to 382.180 and its affiliates to ascertain the financial condition of the insurer 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 company system on a consolidated basis.

2. The director may order any insurer registered under sections 382.100 to 382.180 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 chapter.

3. To determine compliance with this chapter, the director may order any insurer registered under sections 382.100 to 382.180 to produce information not in the possession of the insurer if the insurer is able to obtain access to such information under contractual relationships, statutory obligations, or other methods. In the event the insurer is unable to obtain the information requested by the director, the insurer shall provide the director with a detailed explanation of the reason that the insurer is unable to obtain the information and the identity of the holder of such information. Whenever it appears to the director that the detailed explanation is without merit, the director shall have the power to examine the insurer to determine compliance with this section pursuant to the director's authority under section 374.205 and this section.

4. The director may retain at the registered insurer's expense such attorneys, actuaries, accountants and other experts not otherwise a part of the director's staff as shall be reasonably necessary to assist in the conduct of the examination under this section. Any persons so retained shall be under the direction and control of the director and shall act in a purely advisory capacity.

5. Each registered insurer producing for examination records, books and papers pursuant to this section shall be liable for and shall pay the expense of such examination in accordance with the provisions of section 374.220.

6. In the event the insurer fails to comply with an order, the director shall have the power to examine the affiliates to obtain the information. The director shall have the power to issue subpoenas, administer oaths, and 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 director 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 obligated 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 section 491.280, which fees, mileage, and actual expense, if any, necessarily incurred in securing the attendance of witnesses and their testimony, shall be itemized, charged against, and paid by the company being examined.

(L. 1971 S.B. 101 § 25, A.L. 1992 H.B. 1574, A.L. 2015 H.B. 50)

Supervisory college, powers of director--insurer liable for expensesof director's participation in supervisory college.

382.225. 1. With respect to any insurer registered under sections 382.100 to 382.180 and in accordance with subsection 3 of this section, the director shall also have the power to participate in a supervisory college for any domestic insurer that is part of an insurance holding company system with international operations in order to determine compliance by the insurer with this chapter. The powers of the director with respect to supervisory colleges include, but are not limited to, the following:

(1) Initiating the establishment of a supervisory college;

(2) Clarifying the membership and participation of other supervisors in the supervisory college;

(3) Clarifying the functions of the supervisory college and the role of other regulators including the establishment of a groupwide supervisor or host, who may be the director;

(4) Coordinating the ongoing activities of the supervisory college, including planning meetings, supervisory activities, and processes for information sharing; and

(5) Establishing a crisis management plan.

2. Each registered insurer subject to this section shall be liable for and shall pay the reasonable expenses of the director's participation in a supervisory college in accordance with subsection 3 of this section including reasonable travel expenses. For purposes of this section, a supervisory college may be convened as either a temporary or permanent forum for communication and cooperation between the regulators charged with the supervision of the insurer or its affiliates, and the director may establish a regular assessment to the insurer for the payment of such expenses.

3. In order to assess the business strategy, financial position, legal and regulatory position, risk exposure, risk management and governance processes, and as part of the examination of individual insurers in accordance with section 382.220, the director may participate in a supervisory college with other regulators charged with supervision of the insurer or its affiliates including other state, federal, and international regulatory agencies. The director may enter into agreements in accordance with subsection 3 of section 382.230 providing the basis for cooperation between the director and the other regulatory agencies and the activities of the supervisory college. Nothing in this section shall delegate to the supervisory college the authority of the director to regulate or supervise the insurer or its affiliates within the director's jurisdiction.

(L. 2015 H.B. 50)

Certain information confidential, exception--private civil action,director not required to testify--permissible acts of thedirector.

382.230. 1. All information, documents and copies thereof in the possession or control of the director that are obtained by or disclosed to the director or any other person in the course of an examination or investigation made under section 382.220 and all information reported under subdivisions (13) and (14) of subsection 1 of section 382.050 and sections 382.100 to 382.210 shall be given confidential treatment and privileges; shall not be subject to the provisions of chapter 610; shall not be subject to subpoena; shall not be made public by the director, the National Association of Insurance Commissioners, or any other person, except to the chief insurance regulatory official of other states; and shall not be subject to discovery or admissible as evidence in any private civil action. However, the director is authorized to use the documents, materials, or other information in furtherance of any regulatory or legal action brought as a part of the director's official duties. The director shall not otherwise make the documents, materials, or other information public without the prior written consent of the insurer to which it pertains unless the director, after giving the insurer and its affiliates who would be affected thereby, notice and opportunity to be heard, determines that the interests of policyholders, shareholders or the public will be served by the publication thereof, in which event the director may publish all or any part thereof in such manner as he or she may deem appropriate.

2. Neither the director nor any person who receives documents, materials, or other information while acting under the authority of the director or with whom such documents, materials, or other information is shared under sections 382.010 to 382.300 shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or other information subject to subsection 1 of this section.

3. In order to assist in the performance of the director's duties, the director:

(1) May share documents, materials, or other information including the confidential and privileged documents, materials, or other information subject to subsection 1 of this section with other state, federal, and international financial regulatory agencies, with the National Association of Insurance Commissioners and its affiliates and subsidiaries, and with state, federal, and international law enforcement authorities including members of any supervisory college described in section 382.225; provided that the recipient agrees in writing to maintain the confidentiality and privileged status of such documents, materials, or other information, and has verified in writing the legal authority to maintain confidentiality;

(2) Notwithstanding the provisions of subsection 1 of this section and subdivision (1) of this subsection, may share confidential and privileged documents, materials, or other information reported under section 382.175 only with the directors of states having statutes or regulations substantially similar to subsection 1 of this section and who have agreed in writing not to disclose such information;

(3) May receive documents, materials, or other information including otherwise confidential and privileged documents, materials, or information from the National Association of Insurance Commissioners and its affiliates and subsidiaries and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any documents, materials, or other information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or other information; and

(4) Shall enter into a written agreement with the National Association of Insurance Commissioners governing sharing and use of information provided under sections 382.010 to 382.300 consistent with this subsection that shall:

(a) Specify procedures and protocols regarding the confidentiality and security of information shared with the National Association of Insurance Commissioners and its affiliates and subsidiaries under sections 382.010 to 382.300 including procedures and protocols for sharing by the National Association of Insurance Commissioners with other state, federal, and international regulators;

(b) Specify that ownership of information shared with the National Association of Insurance Commissioners and its affiliates and subsidiaries under sections 382.010 to 382.300 remains with the director and that the National Association of Insurance Commissioners'* use of such information is subject to the direction of the director;

(c) Require prompt notice to be given to an insurer whose confidential information in the possession of the National Association of Insurance Commissioners under sections 382.010 to 382.300 is subject to a request or subpoena to the National Association of Insurance Commissioners for disclosure or production; and

(d) Require the National Association of Insurance Commissioners and its affiliates and subsidiaries to consent to intervention by an insurer in any judicial or administrative action in which the National Association of Insurance Commissioners and its affiliates and subsidiaries may be required to disclose confidential information about the insurer shared with the National Association of Insurance Commissioners and its affiliates and subsidiaries under sections 382.010 to 382.300.

4. The sharing of information by the director under sections 382.010 to 382.300 shall not constitute a delegation of regulatory or rulemaking authority, and the director is solely responsible for the administration, execution, and enforcement of the provisions of sections 382.010 to 382.300.

5. No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or other information shall occur as a result of disclosure of such documents, materials, or other information to the director under this section or as a result of sharing as authorized in sections 382.010 to 382.300.

6. Documents, materials, or other information in the possession or control of the National Association of Insurance Commissioners under sections 382.010 to 382.300 shall be confidential by law and privileged, shall not be subject to disclosure under chapter 610, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action.

(L. 1971 S.B. 101 § 26, A.L. 1992 H.B. 1574, A.L. 2015 H.B. 50)

*Word "Commissioner's" appears in original rolls.

Rules and regulations, how issued.

382.240. The director may, upon notice and opportunity for all interested persons to be heard, issue such rules, regulations, and orders as are necessary to carry out the provisions of sections 382.010 to 382.300.

(L. 1971 S.B. 101 § 27)

Injunction, when authorized.

382.250. Whenever it appears to the director that any insurer or any director, officer, employee or agent thereof has committed or has threatened to commit a violation of sections 382.010 to 382.300 or of any rule, regulation, or order issued by the director pursuant to sections 382.010 to 382.300, the director may apply to the circuit court for the county in which the principal office of the insurer is located or to the circuit court for Cole County for an order enjoining the insurer or the director, officer, employee or agent thereof from violating or continuing to violate sections 382.010 to 382.300 or any such rule, regulation or order, and for such other equitable relief as the nature of the case and the interests of the insurer's policyholders, creditors, shareholders, or the public may require.

(L. 1971 S.B. 101 § 28)

Illegally acquired securities, how treated--impending illegalacquisitions, injunctive relief--ownership of securities, where.

382.260. 1. No security which is the subject of any agreement or arrangement regarding acquisition, or which is acquired or to be acquired, in contravention of the provisions of sections 382.010 to 382.300 or of any rule, regulation or order issued by the director pursuant to sections 382.010 to 382.300 may be voted at any shareholders' meeting, or may be counted for quorum purposes, and any action of shareholders requiring the affirmative vote of a percentage of shares may be taken as though such securities were not issued and outstanding; but no action taken at any such meeting shall be invalidated by the voting of such securities, unless the action would materially affect control of the insurer or unless the courts of this state have so ordered. If an insurer or the director has reason to believe that any security of the insurer has been or is about to be acquired in contravention of the provisions of sections 382.010 to 382.300 or of any rule, regulation or order issued by the director pursuant to sections 382.010 to 382.300, the insurer or the director may apply to the circuit court for Cole County or to the circuit court for the county in which the insurer has its principal place of business to enjoin any offer, request, invitation, agreement or acquisition made in contravention of sections 382.010 to 382.300, or any rule, regulation, or order issued by the director under the provisions of sections 382.010 to 382.300, to enjoin the voting of any security so acquired, to void any vote of such security already cast at any meeting of shareholders, and for such other equitable relief as the nature of the case and the interests of the insurer's policyholders, creditors and shareholders or the public may require.

2. In any case where a person has acquired or is proposing to acquire any voting securities in violation of sections 382.010 to 382.300 or any rule, regulation or order issued by the director pursuant to sections 382.010 to 382.300, the circuit court for Cole County or the circuit court for the county in which the insurer has its principal place of business may on such notice as the court deems appropriate upon the application of the insurer or the director, seize or sequester any voting securities of the insurer owned directly or indirectly by such person, and may issue such orders with respect thereto as may be appropriate to effectuate the provisions of sections 382.010 to 382.300.

3. Notwithstanding any other provisions of law, for the purposes of sections 382.010 to 382.300 the situs of the ownership of the securities of domestic insurers shall be deemed to be in this state.

(L. 1971 S.B. 101 § 29, A.L. 1983 H.B. 633 merged with S.B. 333)

Penalties, certain actions.

382.265. 1. Any insurer failing, without just cause, to file any registration statement as required in this section shall be required, after notice and hearing, to pay an administrative penalty of five hundred dollars for each day's delay, to be recovered by the director, and the penalty so recovered shall be paid to the state treasurer for deposit to the general revenue fund of this state. The maximum penalty under this section is fifty thousand dollars. The director may reduce the penalty if the insurer demonstrates to the director that the imposition of the penalty would constitute a financial hardship to the insurer.

2. Every director or officer of an insurance holding company system who knowingly violates, participates in, or assents to, or who knowingly shall permit any of the officers or agents of the insurer to engage in transactions or make investments which have not been properly reported or submitted pursuant to section 382.100, 382.195, or 382.210, or which violate this section, shall pay, in their individual capacity, an administrative penalty of not more than one hundred dollars per violation, after notice and hearing before the director. In determining the amount of the administrative penalty, the director shall take into account the appropriateness of the forfeiture with respect to the gravity of the violation, the history of previous violations, and such other matters as justice may require.

3. Whenever it appears to the director that any insurer subject to sections 382.010 to 382.300 or any director, officer, employee or agent thereof has engaged in any transaction or entered into a contract which is subject to section 382.190, 382.195, 382.200 or 382.210 and which would not have been approved had such approval been requested, the director may order the insurer to cease and desist immediately any further activity under that transaction or contract. After notice and hearing the director may also order the insurer to void any such contracts and restore the status quo if such action is in the best interest of the policyholders, creditors or the public.

(L. 1992 H.B. 1574)

Criminal proceedings, when and where commenced, penalty.

382.270. Whenever it appears to the director that any insurer or any director, officer, employee or agent thereof has committed a willful violation of sections 382.010 to 382.300, the director may cause criminal proceedings to be instituted in the circuit court for the county in which the principal office of the insurer is located or if such insurer has no such office in the state, then by the attorney general against such insurer or the responsible director, officer, employee or agent thereof. Any insurer which is convicted of willfully violating sections 382.010 to 382.300 may be fined not more than ten thousand dollars. Any individual who is convicted of willfully violating sections 382.010 to 382.300 may be fined not more than three thousand dollars, or if such willful violation involves the deliberate perpetration of a fraud upon the director, he may be imprisoned for not more than two years or by both such fine and imprisonment.

(L. 1971 S.B. 101 § 30)

False reports, filing of, penalty.

382.275. Any officer, director, or employee of an insurance holding company system who knowingly subscribes to or makes or causes to be made any false statements or false reports or false filings with the intent to deceive the director in the performance of his duties under this chapter, upon conviction thereof, shall be guilty of a class E felony. Any fines imposed shall be paid by the officer, director, or employee in his individual capacity.

(L. 1992 H.B. 1574, A.L. 2014 S.B. 491)

Effective 1-01-17

Violation, basis for disapproving dividends or distributions andplacing insurer under order of suspension.

382.277. Whenever it appears to the director that any person has committed a violation of sections 382.040 to 382.090 and the violation 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 an order of suspension in accordance with section 375.1160.

(L. 2015 H.B. 50)

Inapplicability of certain provisions to certain holding companies.

382.278. The provisions of subdivisions (13) and (14) of subsection 1 of section 382.050, subdivision (5) of subsection 1 of section 382.110, and sections 382.175 and 382.220 shall not apply to an insurance holding company or its affiliates if the insurance company affiliates of such insurance holding company had total premiums, direct and ceded, of less than one hundred fifty million dollars in the preceding year and such insurance holding company certifies in writing to the director that more than twenty-five percent of the employees of its affiliates, not including insurance affiliates or the holding company itself, are engaged in agricultural operations.

(L. 2015 H.B. 50)

Director to take possession, when.

382.280. Whenever it appears to the director that any person has committed a violation of sections 382.010 to 382.300 which so impairs the financial condition of a domestic insurer as to threaten insolvency or make the further transaction of business by it hazardous to its policyholders, creditors, shareholders or the public, then the director may proceed as provided by law to take possession of the property of such domestic insurer and to conduct the business thereof.

(L. 1971 S.B. 101 § 31)

Liquidation or rehabilitation, effects--maximum amountrecoverable--liability, parent company, when.

382.285. 1. If an order for liquidation or rehabilitation of a domestic insurer has been entered, the receiver appointed under such order shall have a right to recover on behalf of the insurer, from any parent corporation or holding company or person or affiliate who otherwise controlled the insurer, the amount of distributions, other than distributions of shares of the same class of stock, paid by the insurer on its capital stock, or any payment in the form of a bonus, termination settlement or extraordinary lump sum salary adjustment made by the insurer or its subsidiary to a director, officer or employee, where the distribution or payment is made at any time during the one year preceding the petition for liquidation, conservation or rehabilitation, as the case may be, subject to the limitations of subsections 2, 3, and 4 of this section.

2. No such distribution shall be recoverable if the parent or affiliate shows that when paid such distribution was lawful and reasonable, and that the insurer did not know and could not have reasonably known that such distribution might adversely affect the ability of the insurer to fulfill its contractual obligations.

3. Any person who was a parent corporation or holding company or a person who otherwise controlled the insurer or affiliate at the time such distributions were paid shall be liable up to the amount of distributions or payments under subsection 1 of this section such person received. Any person who otherwise controlled the insurer at the time such distributions were declared shall be liable up to the amount of distributions he would have received if they had been paid immediately. If two or more persons are liable with respect to the same distributions, they shall be jointly and severally liable.

4. The maximum amount recoverable under this subsection shall be the amount needed in excess of all other available assets of the impaired or insolvent insurer to pay the contractual obligations of the impaired or insolvent insurer and to reimburse any guaranty funds.

5. To the extent that any person liable under subsection 3 of this section is insolvent or otherwise fails to pay claims due from it pursuant to such subsection, its parent corporation or holding company or person who otherwise controlled it at the time the distribution was paid shall be jointly and severally liable for any resulting deficiency in the amount recovered from such parent corporation or holding company or person who otherwise controlled it.

(L. 1992 H.B. 1574)

Revocation of insurer's license, when.

382.290. Whenever it appears to the director that any person has committed a violation of sections 382.010 to 382.300 which makes the continued operation of an insurer contrary to the interests of policyholders or the public, the director may, after giving notice and an opportunity to be heard, determine to suspend, revoke or refuse to renew such insurer's license or authority to do business in this state for such period as he finds is required for the protection of policyholders or the public. Any such determination shall be accompanied by specific findings of fact and conclusions of law.

(L. 1971 S.B. 101 § 32)

Appeals from director's action, procedure.

382.300. 1. Any person aggrieved by any act, determination, rule, regulation, order or any other action of the director pursuant to sections 382.010 to 382.300 may appeal therefrom to the circuit court for Cole County. The court shall conduct its review without a jury and by trial de novo, but if all parties, including the director, so stipulate, the review shall be confined to the record. Portions of the records may be introduced by stipulation into evidence in a trial de novo as to those parties so stipulating.

2. The filing of an appeal pursuant to this section shall stay the application of any rule, regulation, order or other action of the director to the appealing party unless the court, after giving such party notice and an opportunity to be heard, determines that such a stay would be detrimental to the interests of policyholders, shareholders, creditors or the public.

3. Any person aggrieved by any failure of the director to act or make a determination required by sections 382.010 to 382.300 may petition the circuit court for Cole County for a writ in the nature of a mandamus or a peremptory mandamus directing the director to act or make the determination forthwith.

(L. 1971 S.B. 101 § 33)

Disposal of assets or insurer, notice to director--powers ofdirector--voidable when--effect.

382.302. 1. The language and terms used in this section shall be interpreted subject to the definitions contained in section 382.010, unless otherwise indicated. The terms "insolvent", "insolvency" and "receiver" shall be interpreted subject to the definitions contained in section 375.1152.

2. No person who controls any insurer shall transfer, convey or dispose of such insurer or of all or a substantial portion of his other assets without notifying the director prior to such disposition of his intention to dispose of such insurer or such assets and until the insurer has been examined pursuant to this section and the director approves such transfer, conveyance or disposal. Upon such notification, the director shall cause an examination to be made of the insurer and its affiliates to ascertain the financial condition of the insurer. The director shall review the records, books and other papers of the insurer and shall consider, at minimum, the factors contained in section 382.200, when determining the financial condition of the insurer. The director may petition any court of competent jurisdiction to enjoin any activity of any person or the insurer or its affiliates which impedes or interferes with the authority of the director to conduct the examination required by this subsection, prior to the transfer, conveyance or disposition of the assets. As used in this subsection, the term "substantial" shall refer to a transfer, conveyance or disposition of any assets of the person, after which the person will own assets of a total value which equals or is less than the total value of the assets of the insurer and the insurer's subsidiaries prior to the time of the intended transfer, conveyance or disposition.

3. A transfer, conveyance or disposal of an insurer or of assets which is made in derogation of subsection 2 of this section is voidable, at the election of the director, by an action brought in any court of competent jurisdiction or the circuit court of Cole County within five years of the date that the transaction was completed. Any person who receives any assets of the insurer as a result of such transfer, conveyance or disposal shall be personally liable to any receiver for the value of the assets received and the costs of recovering such assets.

4. No insurer subject to registration pursuant to section 382.100, or any person who controls any insurer, shall pay any dividend in cash, in property, or in shares of stock of the person, the insurer, or any other affiliate of the person or insurer, at any time that the insurer or any subsidiary of the insurer which is authorized to do an insurance business in this or any other state, is insolvent. Any person who receives a dividend paid in violation of this subsection shall be personally liable to any receiver appointed pursuant to this section and sections 375.1150 to 375.1246 and sections 374.216 and 374.217, with respect to the insurer, for benefit of the receivership, and to the insurer, for the full amount of the dividend unlawfully paid to that person, with interest thereon from the time that the dividend was unlawfully paid. If a dividend is distributed to the shareholders of a corporation which in turn had received a dividend from the insurer, the persons who received a dividend from the corporation shall be liable in the place and stead of the corporation. Any action pursuant to this subsection may be brought at any time within ten years of the payment of the dividend.

(L. 1991 H.B. 385, et al. § 110)

Definitions.

382.400. As used in sections 382.400 to 382.409, the following terms mean:

(1) "Accredited state", a state in which the insurance department or regulatory agency has qualified as meeting the minimum financial regulatory standards promulgated and established from time to time by the National Association of Insurance Commissioners;

(2) "Control" or "controlled" has the meaning prescribed by section 382.010;

(3) "Controlled insurer", a licensed insurer which is controlled, directly or indirectly, by a producer;

(4) "Controlling producer", a producer who, directly or indirectly, controls an insurer;

(5) "Licensed insurer" or "insurer", any person, firm, association or corporation duly licensed to transact a property or casualty insurance business in this state. The following are not licensed insurers for the purposes of sections 382.400 to 382.410*:

(a) All risk retention groups as defined in the federal Superfund Amendments Reauthorization Act of 1986, as amended, and the federal Risk Retention Act, 15 U.S.C. Section 3901, et seq., as amended, and sections 375.1080 to 375.1105;

(b) All residual market pools and joint underwriting authorities or associations; and

(c) All captive insurers. For the purposes of sections 382.400 to 382.410*, "captive insurers" are insurance companies owned by another organization whose exclusive purpose is to insure risks of the parent organization and affiliated companies or, in the case of groups and associations, insurance organizations owned by the insureds whose exclusive purpose is to insure risks to member organizations and group members and their affiliates;

(6) "Producer", an insurance broker or brokers or any other person, firm, association, or corporation, when, for any compensation, commission, or other thing of value, the person, firm, association, or corporation acts or aids in any manner in soliciting, negotiating, or procuring the making of an insurance contract on behalf of an insured other than the person, firm, association, or corporation.

(L. 1992 H.B. 1574 § 7, A.L. 2009 H.B. 577)

*Section 382.410 was repealed by S.B. 613 Revision § A, 2007.

Applicability of law.

382.402. Sections 382.400 to 382.409 shall apply to licensed insurers either domiciled in this state or domiciled in a state that is not an accredited state having in effect laws substantially similar to the provisions of sections 382.400 to 382.409. All provisions of this chapter, to the extent they are not superseded by sections 382.400 to 382.409, shall continue to apply to all parties within holding company systems subject to sections 382.400 to 382.409.

(L. 1992 H.B. 1574 § 8, A.L. 2009 H.B. 577)

Degree of control required, provisions applicable,exemptions--contract between producer and insurer,requirements--insurer to have audit committee, members,purpose--loss ratios, report to director, contents.

382.405. 1. (1) The provisions of this section shall apply if in any calendar year the aggregate amount of gross written premium on business placed with a controlled insurer by controlling producer is equal to or greater than five percent of the admitted assets of the controlled insurer, as reported in the controlled insurer's quarterly statement filed as of September thirtieth of the prior year.

(2) Notwithstanding the provisions of subdivision (1) of this subsection, the provisions of this section shall not apply if:

(a) The controlling producer:

a. Places insurance only with the controlled insurer, or only with the controlled insurer and a number of members of the controlled insurer's holding company system, or the controlled insurer's parent, affiliate or subsidiary and receives no compensation based upon the amount of premiums written in connection with such insurance; and

b. Accepts insurance placements only from nonaffiliated subproducers, and not directly from insureds; and

(b) The controlled insurer, except for insurance business written through a residual market facility such as the joint underwriting association prescribed by section 303.200, accepts insurance business only from a controlling producer, a producer controlled by the controlled insurer, or a producer that is a subsidiary of the controlled insurer.

2. A controlled insurer shall not accept business from a controlling producer and a controlling producer shall not place business with a controlled insurer unless there is a written contract between the controlling producer and the insurer specifying the responsibilities of each party, which contract has been approved by the board of directors of the insurer and contains the following minimum provisions:

(1) The controlled insurer may terminate the contract for cause, upon written notice to the controlling producer. The controlled insurer shall suspend the authority of the controlling producer to write business during the pendency of any dispute regarding the cause for the termination;

(2) The controlling producer shall render accounts to the controlled insurer detailing all material transactions, including information necessary to support all commissions, charges and other fees received by, or owing to, the controlling producer;

(3) The controlling producer shall remit all funds due under the terms of the contract to the controlled insurer on at least a monthly basis. The due date shall be fixed so that premiums or installments thereof collected shall be remitted no later than ninety days after the effective date of any policy placed with the controlled insurer under the contract;

(4) All funds collected for the controlled insurer's account shall be held by the controlling producer in a fiduciary capacity, in one or more appropriately identified bank accounts in banks that are members of the Federal Reserve System, in accordance with the provisions of applicable insurance law; however, funds of a controlling producer not required to be licensed in this state shall be maintained in compliance with the requirements of the controlling producer's domiciliary jurisdiction;

(5) The controlling producer shall maintain separately identifiable records of business written for the controlled insurer;

(6) The contract shall not be assigned in whole or in part by the controlling producer;

(7) The controlled insurer shall provide the controlling producer with its underwriting standards, rules and procedures, manuals setting forth the rates to be charged, and the conditions for the acceptance or rejection of risks. The controlling producer shall adhere to the standards, rules, procedures, rates and conditions. The standards, rules, procedures, rates and conditions shall be the same as those applicable to comparable business placed with the controlled insurer by a producer other than the controlling producer;

(8) The rates and terms of the controlling producer's commissions, charges or other fees and the purposes for those charges or fees. The rates of the commissions, charges and other fees shall be no greater than those applicable to comparable business placed with the controlled insurer by producers other than controlling producers. For purposes of this subdivision and subdivision (7) of this subsection, examples of comparable business includes the same lines of insurance, same kinds of insurance, same kinds of risks, similar policy limits, and similar quality of business;

(9) If the contract provides that the controlling producer, on insurance business placed with the insurer, is to be compensated contingent upon the insurer's profits on that business, then such compensation shall not be determined and paid until at least five years after the premiums on liability insurance are earned and at least one year after the premiums are earned on any other insurance. In no event shall the commissions be paid until the adequacy of the controlled insurer's reserves on remaining claims has been independently verified pursuant to subsection 1 of this section;

(10) A limit on the controlling producer's writings in relation to the controlled insurer's surplus and total writings. The insurer may establish a different limit for each line or subline of business. The controlled insurer shall notify the controlling producer when the applicable limit is approached and shall not accept business from the controlling producer if the limit is reached. The controlling producer shall not place business with the controlled insurer if it has been notified by the controlled insurer that the limit has been reached; and

(11) The controlling producer may negotiate but shall not bind reinsurance on behalf of the controlled insurer, except that the controlling producer may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the controlled insurer contains underwriting guidelines including, but both reinsurance assumed and ceded, a list of reinsurers with which such automatic agreements are in effect, the coverages and amounts or percentages that may be reinsured and commission schedules.

3. Every controlled insurer shall have an audit committee of the board of directors composed of independent directors. The audit committee shall annually meet with management, the insurer's independent certified public accountants, and an independent casualty actuary or other independent loss reserve specialist acceptable to the director to review the adequacy of the insurer's loss reserves.

4. (1) In addition to any other required loss reserve certification, the controlled insurer shall annually, on April first of each year, file with the director an opinion of an independent casualty actuary, or such other independent loss reserve specialist acceptable to the director, reporting loss ratios for each line of business written and attesting to the adequacy of loss reserves established for losses incurred and outstanding as of year-end, including incurred but not reported, on business placed by the producer; and

(2) The controlled insurer shall annually report to the director the amount of commissions paid to the producer, the percentage such amount represents of the net premiums written and comparable amounts and percentage paid to noncontrolling producers for placements of the same kinds of insurance.

(L. 1992 H.B. 1574 § 9, A.L. 2009 H.B. 577)

Notice to insured, producer to provide, contents.

382.407. The producer, prior to the effective date of the policy, shall deliver written notice to the prospective insured disclosing the relationship between the producer and the controlled insurer, except that if the business is placed through a subproducer who is not a controlling producer, the controlling producer shall retain in his records a signed commitment from the subproducer that the subproducer is aware of the relationship between the insurer and the producer and that the subproducer has or will notify the insured.

(L. 1992 H.B. 1574 § 10, A.L. 2009 H.B. 577)

Noncompliance with law, powers of director--receiver in liquidation,powers.

382.409. 1. (1) If the director believes that the controlling producer or any other person has not materially complied with sections 382.400 to 382.410*, or any regulation or order promulgated hereunder, after notice and opportunity to be heard, the director may order the controlling producer to cease placing business with the controlled insurer; and

(2) If it was found that because of such material noncompliance that the controlled insurer or any policyholder thereof has suffered any loss or damage, the director may maintain a civil action or intervene in an action brought by or on behalf of the insurer or policyholder for recovery of compensatory damages for the benefit of the insurer or policyholder or other appropriate relief.

2. If an order of liquidation or rehabilitation of the controlled insurer has been entered pursuant to sections 375.1150 to 375.1246, and the receiver appointed under that order believes that the controlling producer or any other person has not materially complied with sections 382.400 to 382.410*, or any regulation or order promulgated hereunder, and the insurer suffered any loss or damage therefrom, the receiver may maintain a civil action for recovery of damages or other appropriate sanctions for the benefit of the insurer.

3. Nothing contained in this section shall affect the right of the director to impose any other penalties provided for by law.

4. Nothing contained in this section is intended to or shall in any manner alter or affect the rights of policyholders, claimants, creditors or other third parties.

(L. 1992 H.B. 1574 § 11, A.L. 2009 H.B. 577)

*Section 382.410 was repealed by S.B. 613 Revision § A, 2007.

Applicability--findings of general assembly.

382.500. 1. The provisions of sections 382.500 to 382.550 shall apply to all insurers domiciled in this state that are not exempt under section 382.525.

2. The general assembly finds and declares that an own risk and solvency assessment (ORSA) summary report contains confidential and sensitive information related to an insurer or insurance group's identification of risks material and relevant to the insurer or insurance group filing such report. Such information includes proprietary and trade secret information that has the potential for harm and competitive disadvantage to the insurer or insurance group if such information is made public. An ORSA summary report shall be a confidential document filed with the director, shall be shared only as stated in sections 382.500 to 382.550 to assist the director in the performance of the director's duties, and shall not be subject to public disclosure.

(L. 2015 H.B. 50)

Effective 1-01-16

Definitions.

382.505. As used in sections 382.500 to 382.550, the following terms shall mean:

(1) "Director", the director of the department of insurance, financial institutions and professional registration;

(2) "Insurance group", those insurers and affiliates included within an insurance holding company system as defined in sections 382.010 to 382.300;

(3) "Insurer", the same meaning as such term is defined in section 382.010; except that, insurer 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;

(4) "NAIC", the National Association of Insurance Commissioners;

(5) "Own risk and solvency assessment" or "ORSA", a confidential internal assessment appropriate to the nature, scale, and complexity of an insurer or insurance group conducted by such insurer or insurance group of the material and relevant risks associated with the insurer's or insurance group's current business plan, and the sufficiency of capital resources to support such risks;

(6) "ORSA guidance manual", the current version of the Own Risk and Solvency Assessment Guidance Manual developed and adopted by the National Association of Insurance Commissioners (NAIC), as amended. A change in the ORSA guidance manual shall be effective on January first following the calendar year in which the changes have been adopted by the NAIC;

(7) "ORSA summary report", a confidential high-level summary of an insurer's or insurance group's own risk and solvency assessment.

(L. 2015 H.B. 50)

Effective 1-01-16

Risk management framework to be maintained.

382.510. An insurer shall maintain a risk management framework to assist the insurer with identifying, assessing, monitoring, managing, and reporting on its material and relevant risks. Such requirement may be satisfied if the insurance group of which the insurer is a member maintains a risk management framework applicable to the operations of the insurer.

(L. 2015 H.B. 50)

Effective 1-01-16

ORSA to be conducted, when.

382.515. Subject to the provisions of section 382.525, an insurer or the insurance group of which the insurer is a member shall conduct an ORSA consistent with a process comparable to the ORSA guidance manual. An ORSA shall be conducted no less than annually and additionally at any time when there are significant changes to the risk profile of the insurer or the insurance group of which the insurer is a member, as determined by the insurer or the insurance group.

(L. 2015 H.B. 50)

Effective 1-01-16

ORSA summary report required, when, contents.

382.520. 1. Upon the director's request and no more than once each year, an insurer shall submit to the director an ORSA summary report or any combination of reports that together contain the information described in the ORSA guidance manual applicable to the insurer and to the insurance group of which the insurer is a member. Notwithstanding any request from the director, if the insurer is a member of an insurance group, the insurer shall submit the report or reports required under this subsection if the director is the lead state regulator of the insurance group as determined by the procedures within the Financial Analysis Handbook adopted by the National Association of Insurance Commissioners.

2. The report or reports shall include a signature of the insurer's or insurance group's chief risk officer or other executive having responsibility for the oversight of the insurer's enterprise risk management process attesting to the best of his or her belief and knowledge that the insurer applies the enterprise risk management process described in the ORSA summary report and that a copy of the report has been provided to the insurer's board of directors or the appropriate committee thereof.

3. An insurer may comply with subsection 1 of this section by providing the most recent and substantially similar report or reports provided by the insurer or another member of an insurance group of which the insurer is a member to the director of another state or to a supervisor or regulator of a foreign jurisdiction if such report or reports provide information that is comparable to the information described in the ORSA guidance manual. Any such report or reports in a language other than English shall be accompanied by a translation of such report or reports into the English language.

(L. 2015 H.B. 50)

Effective 1-01-16

Exemptions--waiver--ORSA required, when.

382.525. 1. An insurer shall be exempt from the requirements of sections 382.500 to 382.550 if:

(1) The insurer 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 five hundred million dollars; and

(2) The insurance group of which the insurer is a member 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 the Federal Flood Program, of less than one billion dollars.

2. If an insurer qualifies for exemption under subdivision (1) of subsection 1 of this section, but the insurance group of which the insurer is a member does not qualify for exemption under subdivision (2) of subsection 1 of this section, the ORSA summary report that may be required under section 382.520 shall include every insurer within the insurance group. Such requirement may be satisfied by the submission of more than one ORSA summary report for any combination of insurers, provided any combination of reports includes every insurer within the insurance group.

3. If an insurer does not qualify for exemption under subdivision (1) of subsection 1 of this section, but the insurance group of which the insurer is a member qualifies for exemption under subdivision (2) of subsection 1 of this section, the only ORSA summary report that may be required under section 382.520 is the report applicable to such insurer.

4. An insurer that does not qualify for exemption under subsection 1 of this section may apply to the director for a waiver from the requirements of sections 382.500 to 382.550 based upon unique circumstances. In deciding whether to grant the insurer's request for waiver, the director may consider the type and volume of business written, ownership and organizational structure, and any other factor the director considers relevant to the insurer or insurance group of which the insurer is a member. If the insurer is part of an insurance group with insurers domiciled in more than one state, the director shall coordinate with the lead state director or regulator and with the other domiciliary state directors or regulators in considering whether to grant the insurer's request for a waiver.

5. Notwithstanding the exemptions in this section, the director may require that an insurer maintain a risk management framework, conduct an ORSA, and file an ORSA summary report:

(1) Based on unique circumstances, including but not limited to the type and volume of business written, ownership and organization structure, federal agency requests, and international supervisor requests;

(2) If the insurer has risk-based capital for company action level event as set forth in section 375.1255 or other applicable risk-based capital law, meets one or more of the standards of an insurer deemed to be in hazardous financial condition as defined in section 375.539, or otherwise exhibits qualities of a troubled insurer as determined by the director.

6. If an insurer that qualifies for an exemption under subsection 1 of this section subsequently no longer qualifies for such exemption due to changes in premium as reflected in the insurer's most recent annual statement or in the most recent annual statements of the insurers within the insurance group of which the insurer is a member, the insurer shall have one year following the year in which the threshold is exceeded to comply with the requirements of sections 382.500 to 382.550.

(L. 2015 H.B. 50)

Effective 1-01-16

ORSA summary report to be prepared consistent with ORSA guidancemanual--review, procedures.

382.530. 1. An ORSA summary report shall be prepared consistent with the ORSA guidance manual, subject to the requirements of subsection 2 of this section. Documentation and supporting information shall be maintained and made available upon examination or upon request of the director.

2. The review of an ORSA summary report and any additional requests for information shall be made using similar procedures currently used in the analysis and examination of multistate or global insurers and insurance groups.

(L. 2015 H.B. 50)

Effective 1-01-16

Information and ORSA summary report is proprietary and contains tradesecrets, confidentiality--permissible acts by director--no waiverof confidentiality or privilege.

382.535. 1. Documents, materials, or other information, including the ORSA summary report, in the possession of or control of the department of insurance, financial institutions and professional registration that are obtained by, created by, or disclosed to the director or any other person under sections 382.500 to 382.550 are* recognized by this state as being proprietary and to contain trade secrets. All such documents, materials, or other information shall be confidential by law and privileged, shall not be subject to disclosure under chapter 610, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action; except that, the director is authorized to use such documents, materials, or other information in the furtherance of any regulatory or legal action brought as a part of the director's official duties. The director shall not otherwise make such documents, materials, or other information public without the prior written consent of the insurer.

2. Neither the director nor any person who receives documents, materials, or other ORSA-related information, through examination or otherwise, while acting under the authority of the director or with whom such documents, materials, or other ORSA-related information are shared under sections 382.500 to 382.550 shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or other ORSA-related information subject to subsection 1 of this section.

3. In order to assist in the performance of the director's regulatory duties, the director:

(1) May, upon request, share documents, materials, or other ORSA-related information, including the confidential and privileged documents, materials, or other ORSA-related information subject to subsection 1 of this section, including proprietary and trade secret documents and materials with other state, federal, and international financial regulatory agencies, including members of any supervisory college authorized under this chapter, with the NAIC, and with any third-party consultants designated by the director; provided that, the recipient agrees in writing prior to receiving any such documents, materials, or other ORSA-related information to maintain the confidentiality and privileged status of such documents, materials, or other ORSA-related information and has verified in writing the legal authority to maintain confidentiality; and

(2) May receive documents, materials, or other ORSA-related information, including otherwise confidential and privileged documents, materials, or information, including proprietary and trade secret information or documents, from regulatory officials of other foreign or domestic jurisdictions, including members of any supervisory college authorized under this chapter, and from the NAIC, and shall maintain as confidential or privileged any documents, materials, or other ORSA-related information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or other ORSA-related information; and

(3) Shall enter into a written agreement with the NAIC or a third-party consultant governing sharing and use of ORSA-related information provided under sections 382.500 to 382.550 that is consistent with this subsection and that shall:

(a) Specify procedures and protocols regarding the confidentiality and security of information shared with the NAIC or a third-party consultant under sections 382.500 to 382.550, including procedures and protocols for sharing by the NAIC with other state regulators from states in which the insurance group has domiciled insurers. The agreement shall provide that the recipient agrees in writing to maintain the confidentiality and privileged status of ORSA-related documents, materials, or other ORSA-related information and has verified in writing the legal authority to maintain confidentiality;

(b) Specify that ownership of information shared with the NAIC or third-party consultant under sections 382.500 to 382.550 remains with the director and that the NAIC's or a third-party consultant's use of such information is subject to the direction of the director;

(c) Prohibit the NAIC or third-party consultant from storing any information shared under sections 382.500 to 382.550 in a permanent database after the underlying analysis is completed;

(d) Require prompt notice to be given to an insurer whose confidential information in the possession of the NAIC or a third-party consultant under sections 382.500 to 382.550 is subject to a request or subpoena to the NAIC or a third-party consultant for disclosure or production;

(e) Require the NAIC or a third-party consultant to consent to intervention by an insurer in any judicial or administrative action in which the NAIC or a third-party consultant may be required to disclose confidential information about the insurer shared with the NAIC or a third-party consultant under sections 382.500 to 382.550; and

(f) In the case of an agreement involving a third-party consultant, provide for the insurer's written consent.

4. The sharing of information and documents by the director under sections 382.500 to 382.550 shall not constitute a delegation of regulatory or rulemaking authority, and the director is solely responsible for the administration, execution, and enforcement of the provisions of sections 382.500 to 382.550.

5. No waiver of any applicable privilege or claim of confidentiality in the documents, proprietary and trade secret materials, or other ORSA-related information shall occur as a result of disclosure of such documents, materials, or ORSA-related information to the director under this section or as a result of sharing as authorized in sections 382.500 to 382.550.

6. Documents, materials, or other ORSA-related information in the possession or control of the NAIC or third-party consultants under sections 382.500 to 382.550 shall be confidential by law and privileged, shall not be subject to disclosure under chapter 610, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action.

(L. 2015 H.B. 50)

Effective 1-01-16

*Word "is" appears in original rolls.

Violation, failure to file ORSA summary report.

382.540. 1. Subject to subsection 1 of section 374.215, any insurer failing without just cause to timely file an ORSA summary report as required in sections 382.500 to 382.550 commits a level two violation under section 374.049 with respect to each day's delay.

2. The director may enforce the provisions of sections 382.500 to 382.550 under sections 374.046 to 374.049.

(L. 2015 H.B. 50)

Effective 1-01-16

Severability clause.

382.545. If any provision of sections 382.500 to 382.550 or the application thereof to any person or circumstance is held invalid, such determination shall not affect the provisions or applications of sections 382.500 to 382.550 which may be given effect without the invalid provision or application, and to that end the provisions of sections 382.500 to 382.550 are severable.

(L. 2015 H.B. 50)

Effective 1-01-16

Effective date--first filing date.

382.550. Sections 382.500 to 382.550 shall become effective January 1, 2016. The first filing of ORSA summary reports shall be in 2016 in accordance with section 382.520.

(L. 2015 H.B. 50)

Effective 1-01-16


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