Connecticut General Statutes
Chapter 698 - Insurers
Section 38a-135. (Formerly Sec. 38-39g). - Insurance holding company system member registration. Registration statement. Annual enterprise risk report. Group capital calculation. Liquidity stress test framework. Termination of registration statement....

(a) Every insurance company that is authorized to do business in this state and is a member of an insurance holding company system shall register with the commissioner on a form prescribed by the commissioner. Any insurance company that is subject to registration under this section shall register not later than fifteen days after it becomes subject to registration, and annually thereafter by June first of each year for the previous calendar year, unless the commissioner, for good cause shown, extends the time for registration, in which case it shall register within such extended time.

(b) (1) Every insurance company subject to registration shall file a registration statement that shall contain the following current information:
(A) The capital structure, general financial condition, ownership and management of the insurance company and any person controlling the insurance company;
(B) The identity and relationship of every member of the insurance holding company system;
(C) The following agreements in force, and transactions outstanding or that have occurred during the last calendar year between such insurance company and its affiliates: (i) Loans, other investments, or purchases, sales or exchanges of securities of the affiliates by the insurance company or of the insurance company by its affiliates; (ii) purchases, sales or exchanges of assets; (iii) transactions not in the ordinary course of business; (iv) guarantees or undertakings for the benefit of an affiliate that result in an actual contingent exposure of the insurance company's assets to liability, other than insurance contracts entered into in the ordinary course of the insurance company's business; (v) management agreements, service contracts and cost-sharing arrangements; (vi) reinsurance agreements; (vii) dividends and other distributions to securityholders; and (viii) consolidated tax allocation agreements;
(D) Any pledge of the insurance company's stock, including stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system;
(E) If requested by the commissioner, financial statements of or within an insurance holding company system, including all affiliates. Such statements may include, but are not limited to, annual audited financial statements filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended from time to time, or the Securities Exchange Act of 1934, as amended from time to time. An insurance company required to file financial statements under this subparagraph may provide the commissioner with its parent corporation's financial statements that are most recently filed with said commission;
(F) Statements that the insurance company's board of directors oversees corporate governance and internal controls of such company, and that such company's officers or senior management have approved, implemented and continue to maintain such governance and controls;
(G) Other matters concerning transactions between registered insurance companies and any affiliates as may be included from time to time in any registration forms adopted or approved by the commissioner; and
(H) Any other information required by regulations adopted in accordance with the provisions of chapter 54.
(2) All registration statements shall contain a summary outlining all items in the current registration statement representing changes from the prior registration statement.
(c) No information need be disclosed on the registration statement filed pursuant to subsection (b) of this section if such information is not material for the purposes of this section. Unless the commissioner by regulation or order provides otherwise, sales, purchases, exchanges, loans or extensions of credit, investments, or guarantees involving one-half of one per cent or less of the insurance company's admitted assets as of the thirty-first day of December next preceding shall not be deemed material for purposes of this section.
(d) Subject to subsection (b) of section 38a-136, each registered insurance company shall report to the commissioner all dividends and other distributions to securityholders not later than fifteen business days after the declaration thereof or such other period as the commissioner shall prescribe by regulation.
(e) Any person within an insurance holding company system subject to registration shall be required to provide complete and accurate information to an insurance company, where such information is reasonably necessary to enable the insurance company to comply with the provisions of sections 38a-129 to 38a-140, inclusive.
(f) (1) The ultimate controlling person of each insurance company subject to registration under this section shall file an annual enterprise risk report in a form and manner prescribed by the commissioner. Beginning in 2014 and annually thereafter, the report shall be filed by June first for the previous calendar year. The annual enterprise risk report shall identify, to the best of such person's knowledge and belief, the material risks within the insurance holding company system that could pose enterprise risk to the insurance company. The report shall be filed with the lead state commissioner as determined by the procedures in NAIC's applicable financial analysis handbook. Such report shall (A) be confidential by law and privileged, (B) not be subject to disclosure under section 1-210, (C) not be subject to subpoena, and (D) not be subject to discovery or admissible in any civil action. The commissioner shall not make such report public without the prior written consent of the ultimate controlling person that filed such report unless the commissioner, after giving the ultimate controlling person and the insurance company to which such report pertains and its affiliates within the insurance holding company system who would be affected thereby notice and opportunity to be heard, determines that the interests of policyholders, securityholders or the public will be served by the publication thereof, in which event the commissioner may publish all or any part thereof in such manner as the commissioner may deem appropriate. The commissioner may use such report in the furtherance of any regulatory or legal action brought as part of the commissioner's official duties.
(2) The commissioner may share the enterprise risk report only with the insurance regulatory official of another state with laws or regulations substantially similar to subsection (a) of section 38a-137 and who has agreed, in writing, to maintain the confidentiality and privileged status of such report.
(g) (1) Except as provided in subdivision (2) of this subsection, the ultimate controlling person of every insurer subject to registration shall concurrently file with such registration an annual group capital calculation not later than June first of each year, with the lead state commissioner. The report shall be completed in accordance with the NAIC group capital calculation instructions, which may permit the lead state commissioner to allow a controlling person that is not the ultimate controlling person to file the group capital calculation. The report shall be filed with the lead state commissioner of the insurance holding company system as determined by the lead state commissioner in accordance with the procedures contained in the Financial Analysis Handbook adopted by the NAIC.
(2) An insurance holding company system shall be exempt from filing the group capital calculation if it is:
(A) An insurance holding company system that has only one insurer within its holding company structure, that only writes business and is only licensed in its domestic state and assumes no business from any other insurer;
(B) An insurance holding company system that is subject to the group capital requirements applicable to an insurance group that owns a depository institution or institutions by the United States Federal Reserve Board. The lead state commissioner shall request such group capital requirements applicable to the insurance group from the United States Federal Reserve Board under the terms of information sharing agreements in effect. If the United States Federal Reserve Board cannot share the calculation with the lead state commissioner, the insurance holding company system shall not be exempt from the group capital calculation filing;
(C) An insurance holding company system whose non-United States group-wide supervisor is located within a reciprocal jurisdiction as described in section 38a-85 that recognizes the United States regulatory approach to group supervision and group capital; or
(D) An insurance holding company system:
(i) That provides information to the lead state commissioner that meets the requirements for accreditation under the NAIC financial standards and accreditation program, either directly or indirectly through the group-wide supervisor, who has determined such information is satisfactory to allow the lead state commissioner to comply with the NAIC group supervision approach, as detailed in the NAIC Financial Analysis Handbook; and
(ii) Whose non-United States group-wide supervisor that is not in a reciprocal jurisdiction recognizes and accepts, as specified by the lead state commissioner in regulation, the group capital calculation as the world-wide group capital assessment for United States insurance groups who operate in that jurisdiction.
(3) Notwithstanding subparagraphs (C) and (D) of subdivision (2) of this subsection, a lead state commissioner shall require the group capital calculation for the United States operations of any non-United States based insurance holding company system where, after any necessary consultation with other supervisors or officials, it is determined appropriate by the lead state commissioner for prudential oversight and solvency monitoring purposes or for ensuring competitiveness of the insurance marketplace.
(4) Notwithstanding subparagraphs (A) and (D) of subdivision (2) of this subsection, the lead state commissioner shall have the discretion to exempt the ultimate controlling person from filing the annual group capital calculation or to accept a limited group capital filing or report in accordance with criteria as specified by the lead state commissioner in regulation.
(5) If the lead state commissioner determines that an insurance holding company system no longer meets one or more of the requirements for an exemption for filing the group capital calculation under subdivision (2) of this subsection, the insurance holding company system shall file the group capital calculation at the next annual filing date unless given an extension by the lead state commissioner based on reasonable grounds shown.
(6) The information reported and provided to the lead state commissioner by an insurance holding company, including an insurance holding company supervised by the United States Federal Reserve Board pursuant to this subsection, shall:
(A) Be confidential by law and privileged;
(B) Not be subject to disclosure under section 1-210;
(C) Not be subject to subpoena; and
(D) Not be subject to discovery or admissible in any civil action.
(7) The group capital calculation and resulting group capital ratio required pursuant to this subsection are regulatory tools for assessing group risks and capital adequacy and are not intended as a means to rank insurers or insurance holding company systems generally.
(h) The ultimate controlling person of every insurer subject to registration and also scoped into the NAIC liquidity stress test framework shall file the results of a specific year's liquidity stress test to the lead state insurance commissioner of the insurance holding company system as determined by procedures within the Financial Analysis Handbook adopted by the NAIC.
(1) The NAIC liquidity stress test framework includes scope criteria applicable to a specific data year. These scope criteria are reviewed at least annually by the NAIC Financial Stability Task Force or its successor. Any change to the NAIC liquidity stress test framework or to the data year for which the scope criteria are to be measured shall be effective on January first of the year following the calendar year when such changes are adopted. Insurers meeting at least one threshold of the scope criteria shall be considered scoped into the NAIC liquidity stress test framework for the specified data year unless the lead state commissioner, in consultation with the NAIC Financial Stability Task Force or its successor, determines the insurer should not be scoped into the NAIC liquidity stress test framework for that data year. Insurers that do not trigger at least one threshold of the scope criteria shall be considered scoped out of the NAIC liquidity stress test framework for the specified data year, unless the lead state insurance commissioner, in consultation with the NAIC Financial Stability Task Force or its successor, determines the insurer should be scoped into the NAIC liquidity stress test framework for that data year.
(2) The performance of, and filing of the results from, a specific year's liquidity stress test shall comply with the NAIC liquidity stress test framework's instructions and reporting templates for that year and any lead state insurance commissioner determinations, in conjunction with the NAIC Financial Stability Task Force or its successor, provided within the NAIC liquidity stress test framework.
(3) The information reported and provided to the lead state commissioner by an insurance holding company, including an insurance holding company supervised by the United States Federal Reserve Board pursuant to this subsection, shall:
(A) Be confidential by law and privileged;
(B) Not be subject to disclosure under section 1-210;
(C) Not be subject to subpoena; and
(D) Not be subject to discovery or admissible in any civil action.
(4) The liquidity stress test along with its results and supporting disclosures required pursuant to this subsection are regulatory tools for assessing group liquidity risks and are not intended as a means to rank insurers or insurance holding company systems generally.
(i) The commissioner shall terminate the registration of any insurance company that demonstrates that it no longer is a member of an insurance holding company system.
(j) The commissioner may require or allow two or more affiliated insurance companies subject to registration hereunder to file a consolidated registration statement.
(k) The commissioner may allow an insurance company that is authorized to do business in this state and is part of an insurance holding company system to register on behalf of any affiliated insurer that is required to register under subsection (a) of this section and to file all information and materials required to be filed under this section.
(l) Any person may file with the commissioner a disclaimer of affiliation with any insurance company and any insurance company may file a disclaimer of affiliation with any other person. The disclaimer shall fully disclose all material relationships and bases for affiliation between such person and such insurance company as well as the basis for disclaiming such affiliation. After a disclaimer has been filed, the insurance company shall be relieved of any duty to register or report under this section that may arise out of the insurance company's relationship with such person unless the commissioner disallows such disclaimer. The commissioner shall disallow such disclaimer only after furnishing all parties in interest with notice and an opportunity to be heard, and after making specific findings of fact to support such disallowance.
(m) The failure to file a registration statement or any amendment, addition thereto or summary or an enterprise risk report required by this section within the time specified for such filing shall be a violation of sections 38a-129 to 38a-140, inclusive.
(n) The commissioner may by regulation or order exempt any insurance company or class of insurance companies from registration under this section if, in the commissioner's judgment, registration by such company or class of companies is not necessary to effectuate the purposes of said sections.
(o) A foreign or alien insurer shall not be required to register pursuant to this section if it is (1) subject to disclosure requirements and standards adopted by statute or regulation in the jurisdiction of its domicile that are substantially similar to those contained in this section and subsections (a), (b), (f) and (g) of section 38a-136, or (2) admitted in the domiciliary jurisdiction of the principal insurer in its holding company system and in said jurisdiction is subject to disclosure requirements and standards adopted by statute or regulation that are substantially similar to those contained in this section and subsections (a), (b), (f) and (g) of section 38a-136. The commissioner may require any authorized insurer that is a member of a holding company system not subject to registration under this section to furnish a copy of the registration statement or other information filed by such insurance company with the insurance regulatory authority of its domicile or the domicile of the principal insurer in its holding company system, as the case may be.
(p) (1) To assess the business strategy, financial, legal or regulatory position risk exposure, risk management or governance processes of a domestic insurance company registered under this section that is part of an insurance holding company system that has international operations, and as part of the examination pursuant to section 38a-14a of such insurance company, the commissioner may initiate, be a member of or participate in a supervisory college, which shall be a temporary or permanent forum for communication between and cooperation among state, federal and international regulatory officials.
(2) If the commissioner initiates a supervisory college, the commissioner shall (A) establish the membership of, and participation by state, federal or international regulatory officials in, such supervisory college, (B) establish the functions of the supervisory college and the role of members and participants, and select a chairperson for such supervisory college, (C) coordinate the activities of the supervisory college, including meeting planning and processes for information sharing that comply with the applicable confidentiality provisions set forth in section 38a-137, and (D) establish a crisis management plan for such supervisory college.
(3) The commissioner may enter into written agreements with state, federal or international regulatory officials for the governing of the activities of a supervisory college. Any such agreements shall maintain the confidentiality requirements under section 38a-137.
(4) Each insurance company subject to registration under this section shall be assessed for and shall pay to the commissioner its share of the reasonable costs, including reasonable travel expenses, of the commissioner's participation in a supervisory college. Such payment shall be in addition to any other taxes, fees and moneys otherwise payable to the state. The commissioner shall establish the assessment method for such costs and provide reasonable notice to each insurance company subject to any such assessment.
(5) Nothing in this subsection shall be construed to limit the authority of the commissioner to regulate an insurance company or its affiliate under the commissioner's jurisdiction or to delegate any regulatory authority of the commissioner to a supervisory college.
(q) (1) As used in this subsection: (A) “Group-wide supervisor” means the regulatory official (i) authorized by such official's jurisdiction to conduct and coordinate group-wide supervisory activities, and (ii) who is determined or acknowledged to be the group-wide supervisor of an internationally active insurance group pursuant to this subsection; and (B) “internationally active insurance group” means any insurance holding company system that (i) includes an insurance company registered pursuant to this section, and (ii) meets the following criteria: (I) Premiums are written in at least three countries; (II) the percentage of gross premiums written, including, for purposes of this subsection, administrative service fees, associated expenses and claims payments, without such amounts transacted in the United States is at least ten per cent of the insurance holding company system's total gross written premiums; and (III) based on a three-year rolling average, the total assets of the insurance holding company system are at least fifty billion dollars or the total gross written premiums of the insurance holding company system are at least ten billion dollars.
(2) (A) The commissioner, in cooperation with other state, federal and international regulatory agencies of the jurisdictions where members of the internationally active insurance group are domiciled, shall determine a single group-wide supervisor for an internationally active insurance group. An insurance holding company system that does not qualify as an internationally active insurance group may request that the commissioner make a determination or acknowledgment of a group-wide supervisor as set forth in this subsection.
(B) The commissioner may determine that the commissioner is the appropriate group-wide supervisor for an internationally active insurance group that conducts substantial insurance business operations in this state and may act as a group-wide supervisor for any internationally active insurance group in accordance with the provisions of this subsection.
(C) The commissioner may acknowledge that the regulatory official of another jurisdiction is an appropriate group-wide supervisor for an internationally active insurance group that (i) does not conduct substantial insurance business operations in the United States, (ii) conducts substantial insurance business operations in the United States but not in this state, or (iii) conducts substantial insurance business operations in the United States and in this state but the commissioner has determined, pursuant to the factors set forth in subdivision (3) of this subsection, that the regulatory official of another jurisdiction is the appropriate group-wide supervisor.
(D) When another regulatory official is acting as the group-wide supervisor of an internationally active insurance group, the commissioner shall acknowledge such official as the group-wide supervisor, except that the commissioner shall make a determination or acknowledgment of a group-wide supervisor for such insurance group if a material change in such insurance group results in (i) the largest share of such insurance group's premiums, assets or liabilities being held by member insurance companies domiciled in this state, or (ii) this state being the place of domicile of the top-tiered insurance company or companies in such insurance group.
(E) A regulatory official determined or acknowledged to be a group-wide supervisor of an internationally active insurance group may determine, after considering the factors set forth in subdivision (3) of this subsection, that it is appropriate to acknowledge another regulatory official to serve as the group-wide supervisor of such insurance group. Such acknowledgment shall be made (i) in cooperation with and subject to the acknowledgment of other regulatory officials of the jurisdictions where members of such insurance group are domiciled, and (ii) in consultation with such insurance group.
(3) The commissioner shall consider the following factors in making a determination or acknowledgment under subdivision (2) of this subsection:
(A) The place of domicile of the member insurance companies of the internationally active insurance group that holds the largest share of such insurance group's premiums, assets or liabilities;
(B) The place of domicile of the top-tiered insurance company or companies in the internationally active insurance group;
(C) The locations of the executive offices or the largest operational offices of the internationally active insurance group; and
(D) Whether (i) a regulatory official of another jurisdiction is acting or seeking to act as the group-wide supervisor under a regulatory system the commissioner determines to be substantially similar to that provided under the laws of this state or is otherwise sufficient in terms of group-wide supervision, enterprise risk analysis and cooperation with other regulatory officials, and (ii) such regulatory official acting or seeking to act as the group-wide supervisor provides the commissioner with reasonably reciprocal recognition and cooperation.
(4) The commissioner may collect, pursuant to section 38a-14a, from any insurance company registered pursuant to this section any information necessary for the commissioner to determine whether the commissioner may act as the group-wide supervisor of an internationally active insurance group of which such company is a member or whether the commissioner may acknowledge that a regulatory official of another jurisdiction should act as the group-wide supervisor of such insurance group.
(5) Prior to issuing any determination or acknowledgment under this subsection, the commissioner shall notify the member insurance company registered pursuant to this section and the ultimate controlling person of the internationally active insurance group of such pending determination or acknowledgment. The commissioner shall provide the internationally active insurance group at least thirty calendar days to submit any additional information pertinent to such determination or acknowledgment that is requested by the commissioner or that such insurance group chooses to submit. The commissioner shall publish in the Connecticut Law Journal and post on the Insurance Department's Internet web site a current list of internationally active insurance groups that the commissioner has determined are subject to group-wide supervision by the commissioner.
(6) The commissioner may conduct and coordinate the following group-wide supervision activities for an internationally active insurance group for which the commissioner is determined to be the group-wide supervisor:
(A) Assess the enterprise risks within the internationally active insurance group to ensure that material financial conditions of and liquidity risks to the members of such insurance group that are engaged in the business of insurance are identified by management and that reasonable and effective mitigation measures are in place;
(B) Request from members of such insurance group information necessary and appropriate to assess enterprise risk, including, but not limited to, information about governance, risk assessment and management, capital adequacy and material intercompany transactions;
(C) Coordinate and, through the authority of the regulatory officials of the jurisdictions where members of the internationally active insurance group are domiciled, compel the development and implementation of reasonable measures designed to ensure the internationally active insurance group is able to timely recognize and mitigate material enterprise risks to the members of such insurance group that are engaged in the business of insurance;
(D) Communicate with other state, federal and international regulatory agencies of the jurisdictions where members of the internationally active insurance group are domiciled and share relevant information, subject to the confidentiality provisions of section 38a-137, through a supervisory college, as set forth in subsection (p) of this section;
(E) Enter into agreements with or obtain documentation from any member insurance company registered under this section, any other member of the internationally active insurance group and any other state, federal and international regulatory agencies of the jurisdictions where members of the internationally active insurance group are domiciled, to establish or clarify the commissioner's role as group-wide supervisor and that may include provisions for resolving disputes with other regulatory officials. No such agreement or documentation shall serve as evidence that an insurance company or person within an insurance company holding system that is not domiciled or incorporated in this state is doing business in this state or is otherwise subject to the jurisdiction of this state; and
(F) Other activities necessary to effectuate the group-wide supervisory purposes of this section and sections 38a-129 to 38a-140, inclusive, and within the authority granted in said sections.
(7) If the commissioner acknowledges that a regulatory official of a jurisdiction not accredited by NAIC is the group-wide supervisor of an internationally active insurance group, the commissioner shall reasonably cooperate through a supervisory college or otherwise with group supervision undertaken by such group-wide supervisor, provided such cooperation is in compliance with the laws of this state and such group-wide supervisor recognizes and cooperates with the commissioner's activities as a group-wide supervisor for other internationally active insurance groups, where applicable. The commissioner may refuse to cooperate if the commissioner determines such recognition and cooperation are not reasonably reciprocated. The commissioner may enter into agreements with or obtain documentation from any member insurance company registered pursuant to this section, any affiliate of such insurance company and any other state, federal and international regulatory agencies of the jurisdictions where members of the internationally active insurance group are domiciled, to establish or clarify such official's role as group-wide supervisor.
(8) The commissioner may adopt regulations, in accordance with the provisions of chapter 54, to carry out the provisions of this subsection.
(9) Each insurance company registered pursuant to this section shall be liable for and shall pay the reasonable expenses of the commissioner's administration of this subsection, including the engagement of the services of attorneys, actuaries and other professionals and all reasonable travel expenses.
(1969, P.A. 444, S. 7; 1971, P.A. 368, S. 1; P.A. 92-112, S. 18, 35; P.A. 93-239, S. 23; June 12 Sp. Sess. P.A. 12-2, S. 126, 127; P.A. 13-147, S. 1; June Sp. Sess. P.A. 15-5, S. 51; P.A. 17-15, S. 9; P.A. 22-118, S. 213.)
History: 1971 act deleted Subsec. (d)(1) which authorized exemption for company or class of companies “subject to adequate regulation where domiciled or elsewhere” and inserted new Subsec. (e) in its stead; Sec. 38-39g transferred to Sec. 38a-135 in 1991; P.A. 92-112 amended Subsec. (a) to change registration deadline from 90 days to 15 days and to require annual registration, added new Subsec. (b) re filing of registration statement by insurers, added new Subsec. (c) re contents of the registration statements, added new Subsec. (d) re disclosure of information deemed immaterial, added new Subsec. (e) re reporting to the commissioner all dividends and other distributions to securityholders, added new Subsec. (f) requiring those subject to register within the insurance holding company system to provide complete and accurate information to insurance companies where necessary, added new Subsec. (g) re termination of registration if no longer a member of the insurance holding company system, added new Subsec. (h) re consolidated registration statement, added new Subsec. (i) allowing registration on behalf of an affiliate and relettered the remaining Subsecs. accordingly; P.A. 93-239 in Subsec. (m) added reference to relevant Subsecs. of Sec. 38a-136 for statutory consistency; June 12 Sp. Sess. P.A. 12-2 added Subsec. (n) re supervisory colleges, effective July 1, 2012, and amended Subsec. (b) to redesignate existing provisions as new Subdiv. (1), redesignate existing Subdivs. (1) to (5) as Subparas. (A) to (D) and (G), add Subpara. (E) re financial statements to be provided to commissioner on request, add Subpara. (F) re statement of corporate governance and internal controls, and add Subpara. (H) re provision of other information required by regulations, redesignated existing Subsecs. (c) to (f) as Subsecs. (b)(2) and (c) to (e), added new Subsec. (f) re annual enterprise risk report, amended Subsec. (k) to add provision re failure to file summary or enterprise risk report as violations, and made technical changes, effective October 1, 2012; P.A. 13-147 amended Subsec. (f)(1) by changing reporting date of annual enterprise risk report from June 1, 2013, and annually thereafter to June first beginning in 2014 and annually thereafter for the previous calendar year, and by making a technical change, effective June 21, 2013; June Sp. Sess. P.A. 15-5 added Subsec. (o) re group-wide supervision of members of internationally active insurance group; P.A. 17-15 made a technical change in Subsec. (o)(3)(A); P.A. 22-118 added new Subsec. (g) re criteria for filing annual group capital calculation and exemptions, added new Subsec. (h) re criteria for filing liquidity stress test results, redesignated existing Subsecs. (g) as (i), (h) as (j), (i) as (k), (j) as (l), (k) as (m), (l) as (n), (m) as (o), (n) as (p) and (o) as (q) and in same redefined “internationally active insurance group” re percentage of gross premiums includes administrative fees, associated expenses and claims payments, without such amounts transacted in the United States, effective July 1, 2022.
Annotation to former section 38-39g:
Cited. 184 C. 352.

Structure Connecticut General Statutes