T41CH38
Title 41 > T41CH38
Sections (27)
41-3801
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3801. purpose. The purpose of this chapter is to prevent acquisition or divestiture of control of an insurer or a holding company system of which an insurer is a part where such acquisition would be adverse to the public interest and the interests of policyholders and shareholders. A further purpose of this chapter is to promote the public interest and the interests of policyholders and shareholders by facilitating, consistent with those interests, better use of management skills and services, diversification through acquisitions, free access to capital markets, sound tax planning and open competition. An additional purpose is to monitor and regulate insurance holding company systems. History: [41-3801, added 2013, ch. 266, sec. 2, p. 652.]
41-3802
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3802. definitions. As used in this chapter, the following terms shall have the following meanings: (1) Affiliate of, or a person affiliated with, a specific person, means a person who directly or indirectly through one (1) or more intermediaries controls or is controlled by, or is under common control with, the person specified. (2) Control, including controlling, controlled by and under common control with, means 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 a corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote or holds proxies representing ten percent (10%) or more of the voting securities of any other person. This presumption may be rebutted by a showing made in the manner provided in section 41-3809 (11), Idaho Code, 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 the determination, that control exists in fact, notwithstanding the absence of a presumption to that effect. (3) Enterprise risk means any activity, circumstance, event or series of events involving one (1) or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect on 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 41-5403 , Idaho Code, or would cause the insurer to be in hazardous financial condition as set forth by rule. (4) Group capital calculation instructions means the group capital calculation instructions as adopted and amended by the national association of insurance commissioners (NAIC) effective January 1, 2024, or any subsequent version adopted for use by the director by rule, administrative order, or bulletin, provided that no such instructions shall contradict any section of this chapter. (5) Group-wide supervisor means the regulatory official authorized to engage in conducting and coordinating group-wide supervision activities who is determined or acknowledged by the director under section 41-3815A , Idaho Code, to have sufficient significant contacts with the internationally active insurance group. (6) Insurance holding company system means two (2) or more affiliated persons, one (1) or more of whom is an insurer. (7) Insurer has the same meaning as that set forth in section 41-103 , Idaho Code, excep
41-3803
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3803. Subsidiaries of insurers. (1) A domestic insurer, either by itself or in cooperation with one (1) or more persons, may organize or acquire one (1) or more subsidiaries. The subsidiaries may conduct any kind of business or businesses and their authority to do so shall not be limited by reason of the fact that they are subsidiaries of a domestic insurer. (2) In addition to investments in common stock, preferred stock, debt obligations and other securities permitted under title 41 , Idaho Code, a domestic insurer may also: (a) Invest in common stock, preferred stock, debt obligations and other securities of one (1) or more subsidiaries in amounts that do not exceed the lesser of ten percent (10%) of the insurer’s assets or fifty percent (50%) of the insurer’s surplus regarding policyholders, provided that after making such investments, the insurer’s surplus regarding policyholders will be reasonable in relation to the insurer’s outstanding liabilities and will be adequate to meet its financial needs. In calculating the amount of such investments, investments in domestic or foreign insurance subsidiaries shall be excluded, but the following shall be included: (i) 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 the subsidiary whether or not represented by the purchase of capital stock or issuance of other securities; and (ii) 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. (b) Invest any amount in common stock, preferred stock, debt obligations and other securities of one (1) 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 subsidiary agrees to limit its investment in any asset so that the investment will not cause the amount of the total investment of the insurer to exceed any of the investment limitations specified in paragraph (a) of this subsection or in chapter 7, title 41 , Idaho Code, applicable to the insurer. For the purpose of this section, the total investment of the insurer shall include: (i) Any direct investment by the insurer in an asset; and (ii) 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 the subsidiary. (c) With the approval of the director, invest any greater amount in common stock, preferred stock, debt obligations or other securities of one (1) or more subsidiaries, provided that after making the investment, the insurer
41-3804
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3804. Acquisition of control of controlling interest with domestic insurer — acquisition of merger or divestiture of controlling interest with domestic insurer. (1) The following filing requirements shall apply: (a) No person other than the issuer shall make 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, such person 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 or any person controlling a domestic insurer unless, at the time the offer, request or invitation is made or the agreement is entered into, or prior to the acquisition of the securities if no offer or agreement is involved, such person has filed with the director and has sent to the insurer, a statement containing the information required by this section and the offer, request, invitation, agreement or acquisition has been approved by the director in the manner prescribed in this chapter. (b) For purposes of this section, any controlling person of a domestic insurer seeking to divest his controlling interest of the domestic insurer, in any manner, shall file with the director, with a copy to the insurer, confidential notice of his proposed divestiture at least thirty (30) days prior to the cessation of control. The director shall determine those instances in which the party seeking to divest or to acquire a controlling interest in an insurer will be required to file for and obtain approval of the transaction. The information shall remain confidential until the conclusion of the transaction unless the director, in his discretion, determines that confidential treatment will interfere with or impede enforcement of this section. If the statement referred to in paragraph (a) of this subsection is otherwise filed, this section shall not apply. (c) With respect to a transaction subject to this section, the acquiring or divesting person must also file a preacquisition notification with the director that contains the information set forth in section 41-3808 (3)(a), Idaho Code, at least thirty (30) days prior to the proposed effective date of the acquisition. A failure to timely file the notification may subject the acquiring or divesting person to penalties as specified in section 41-3808 (5)(e), Idaho Code. (d) For purposes of this section, a domestic insurer shall include any person controlling a domestic insurer unless the person, as determined by the director, is either directly or through his affiliates primarily engaged in business other than the business of insurance. For the purposes of this section, person sh
41-3805
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3805. Tender offer material. All requests or invitations for tenders or advertisements making a tender offer or requesting or inviting tenders of such voting securities for control of a domestic insurer made by or on behalf of any person shall contain the information specified in section 41-3804 , Idaho Code, as the director may prescribe and shall be filed with the director at least ten (10) days prior to the time such material is first published or sent or provided to security holders. Copies of any additional material soliciting or requesting such tender offers subsequent to the initial solicitation or request shall contain information as the director may prescribe as necessary or appropriate in the public interest or for the protection of policyholders and stockholders and shall be filed with the director at least ten (10) days prior to the time copies of the material are first published or sent or provided to security holders. History: [41-3805, added 2013, ch. 266, sec. 2, p. 657.]
41-3806
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3806. Approval by director — Hearings. (1) The director shall approve any purchase, exchange, merger or other acquisition of control referred to in section 41-3804 (1), Idaho Code, or in section 41-3824 , Idaho Code, unless, after a public hearing, the director finds that: (a) After the change of control, the domestic insurer referenced in section 41-3804 (1), Idaho Code, would be unable to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed; (b) The effect of the purchase, exchange, merger or other acquisition of control would substantially lessen competition in the business of insurance in this state or tend to create a monopoly. In applying the competitive standard in this paragraph: (i) The informational requirements of section 41-3808 (3)(a), Idaho Code, and the standards of section 41-3808 (4)(b), Idaho Code, shall apply; (ii) The merger or other acquisition shall not be disapproved if the director finds that any of the situations meeting the criteria provided by section 41-3808 (4)(c), Idaho Code, exist; and (iii) 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; (c) The financial condition of any acquiring party may jeopardize the financial stability of the insurer or prejudice the interest of its policyholders or, in the case of an acquisition of control, the interest of any remaining stockholders who are unaffiliated with the acquiring person; (d) The plans or proposals of the acquiring party to liquidate the insurer, sell its assets or 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 are not in the public interest; (e) The competence, experience and integrity of the persons who would control the operation of the insurer are such that it would not be in the interest of policyholders and stockholders of the insurer or of the public to permit the merger or other acquisition of control; or (f) The acquisition is likely to be hazardous or prejudicial to the insurance-buying public. (2) The public hearing referenced in subsection (1) of this section shall be held within thirty-five (35) days after the statement required by section 41-3804 (1), Idaho Code, is filed or as otherwise agreed to by the director and the person filing the statement, and at least twenty-one (21) days’ notice of such hearing shall be given by the director to the person filing the statement. Not less than seven (7) days’ notice of the public hearing shall be given by the person filing the statement to the insurer and to such other persons as may be designated by the director. All discovery proceedings to the extent agreed to by the parties or allowed by
41-3807
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3807. Mailing — Payment of expenses. (1) All notices of public hearings held pursuant to section 41-3806 , Idaho Code, shall be mailed by the insurer to its shareholders within five (5) business days after the insurer has received such notices. The expenses of such mailing shall be borne by the person making the filing. As security for the payment of such expenses, such person shall file with the director a bond or other deposit deemed acceptable and in an amount determined by the director. (2) The provisions of this section shall not apply to any offers, requests, invitations, agreements or acquisitions by the person referred to in section 41-3804 , Idaho Code, of any voting security referred to in section 41-3804 , Idaho Code, which, immediately prior to the consummation of such offer, request, invitation, agreement or acquisition, was not issued and outstanding. History: [41-3807, added 2013, ch. 266, sec. 2, p. 659.]
41-3808
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3808. Acquisitions involving insurers not otherwise covered. (1) The following definitions shall apply for the purposes of this section only: (a) Acquisition means any agreement, arrangement or activity, the consummation of which results in a person acquiring directly or indirectly the control of another person, and includes, but is not limited to, the acquisition of voting securities, the acquisition of assets, bulk reinsurance and mergers; (b) Involved insurer means an insurer that either acquires or is acquired, is affiliated with an acquirer or acquired, or is the result of a merger. (2) 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: (a) An acquisition subject to approval or disapproval by the director pursuant to sections 41-3804 and 41-3806 , Idaho Code; (b) A purchase of securities solely for investment purposes, so long as the securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in any insurance market in this state. If a purchase of securities results in a presumption of control under the provisions of section 41-3802 (2), Idaho Code, it is not solely for investment purposes unless the commissioner of the insurer’s state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist, and the disclaimer action or affirmative finding is communicated by the domiciliary commissioner to the director; (c) 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)(a) of this section thirty (30) 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 subsection of this section; (d) The acquisition of already affiliated persons; (e) An acquisition if, as an immediate result of the acquisition: (i) In no market would the combined market share of the involved insurers exceeds five percent (5%) of the total market; (ii) There would be no increase in any market share; or (iii) In no market would: 1. The combined market share of the involved insurers exceeds twelve percent (12%) of the total market; and 2. The market share increases by more than two percent (2%) of the total market. For the purpose of paragraph (e) of this subsection, 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; (f) An acquisition for which a preacquisition notific
41-3809
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3809. Registration of holding company system insurers. (1)(a) Every insurer authorized to do business in this state and that is a member of an insurance holding company system shall register with the director, except a foreign insurer subject to registration requirements and standards adopted by statute or regulation in the jurisdiction of its domicile, which are substantially similar to those contained in this section and in: (i) Sections 41-3810 (1), 41-3811 and 41-3812 , Idaho Code; and (ii) The provisions of section 41-3810 (2), Idaho Code, or a provision such as the following: each registered insurer shall keep current the information required to be disclosed in its registration statement by reporting all material changes or additions within fifteen (15) days after the end of the month in which it learns of each change or addition. (b) Any insurer that is subject to registration under this section shall register within fifteen (15) days after it becomes subject to registration, and annually thereafter for the year ending December 31 immediately preceding, on the due date provided for filing of audited financial reports, or, if the insurer is not subject to filing of audited financial reports, on June 1, unless the director, for good cause shown, extends the time for registration, and then within the extended time. The director may require any insurer authorized to do business in the state that is a member of an insurance holding company system and that is not subject to registration under this section to furnish a copy of the registration statement, the summary specified in subsection (3) of this section or other information filed by the insurance company with the insurance regulatory authority of its domiciliary jurisdiction. Upon request of the insurer or of the insurance regulatory authority of another jurisdiction in which the insurer is authorized to transact insurance, the director at the insurer’s expense shall furnish a copy of the registration statement or other information filed by a domestic insurer with the director pursuant to this chapter. (2) Every insurer subject to registration under this chapter shall file the registration statement with the director on a form and in a manner prescribed by the director. The registration statement shall contain the following current information: (a) The capital structure, general financial condition, ownership and management of the insurer and any person controlling the insurer; (b) The identity and relationship of every member of the insurance holding company system; (c) The following agreements in force and transactions currently outstanding or that have occurred during the last calendar year between the insurer and its affiliates: (i) Loans, other investments or purchases, sales or exchanges of securities of the affiliates by the insurer or of the insurer by its affiliates; (ii) Purchases, sales
41-3809A
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3809A. group capital calculation reporting. (1) If an insurance holding company system under section 41-3809 (13), Idaho Code, has previously filed the annual group capital calculation at least once, the lead state director may exempt the ultimate controlling person from filing the annual group capital calculation if: (a) Annual direct written and unaffiliated assumed premiums, including international direct and assumed premiums but excluding premiums reinsured with the federal crop insurance corporation and federal flood program, are less than one billion dollars (1,000,000,000) and: (a) No insurers within the holding company structure are domiciled outside of the United States or one (1) of its territories; (b) No banking, depository, or other financial entity that is subject to an identified regulatory capital framework is included; and (c) The holding company system attests that there are no material changes in transactions between insurers and non-insurers in the group that have occurred since the last filing of the report and the non-insurers within the holding company system do not pose a material financial risk to the insurer’s ability to honor policyholder obligations. (3) No exemption under this section may prevent the lead state director from requiring the ultimate controlling person to file an annual group capital calculation, at any time, if: (a) Any insurer within the insurance holding company system is in a risk-based capital action level event as set forth in chapter 54, title 41 , Idaho Code, or a similar standard for a non-United States insurer; (b) Any insurer within the insurance holding company system meets one (1) or more of the standards of an insurer deemed to be in ha
41-3810
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3810. Standards and management of an insurer within an insurance holding company system. (1) Transactions within an insurance holding company system to which an insurer subject to registration is a party shall be subject to the following standards: (a) The terms shall be fair and reasonable; (b) Agreements for cost-sharing services and management shall include such provisions as required by this chapter or rule promulgated by the director; (c) Charges or fees for services performed shall be reasonable; (d) Expenses incurred and payment received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied; (e) The books, accounts and records of each party to all such transactions shall be so maintained 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; (f) The insurer’s surplus regarding policyholders following any dividends or distributions to shareholder affiliates shall be reasonable in relation to the insurer’s outstanding liabilities and adequate to meet its financial needs; (g) All records and data of the insurer held by an affiliate shall be and shall remain the property of the insurer, shall be subject to control of the insurer, shall be identifiable, and shall be segregated or readily capable of segregation, at no additional cost to the insurer, from all other persons’ records and data. This includes all records and data that are otherwise the property of the insurer, in whatever form maintained, including but not limited to claims and claim files, policyholder lists, application files, litigation files, premium records, rate books, underwriting manuals, personnel records, financial records, or similar records within the possession, custody, or control of the affiliate. At the request of the insurer, the affiliate shall provide access to such records and data such that the director can: obtain a complete set of all records of any type that pertain to the insurer’s business; obtain access to the operating systems on which the data is maintained; obtain the software that runs those systems either through assumption of licensing agreements or otherwise; and restrict the use of the data by the affiliate if it is not operating the insurer’s business. The affiliate shall provide a waiver of any landlord lien or other encumbrance to give the insurer access to all records and data in the event of the affiliate’s default under a lease or other agreement; and (h) Premiums or other funds belonging to the insurer that are collected by or held by an affiliate shall be the exclusive property of the insurer and shall be subject to the control of the insurer. Any right of offset in the event an insurer is placed into receivership shall be
41-3811
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3811. Adequacy of surplus. For purposes of this chapter, in determining whether an insurer’s surplus regarding policyholders is reasonable in relation to the insurer’s outstanding liabilities and adequate to meet 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 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 regarding policyholders maintained by other comparable insurers; (9) The adequacy of the insurer’s reserves; (10) The quality and liquidity of investments in affiliates; the director may treat any investment in an affiliate as a disallowed asset for purposes of determining the adequacy of surplus regarding policyholders whenever in the judgment of the director the investment so warrants; and (11) The quality of the insurer’s earnings and the extent to which the reported earnings include extraordinary items. History: [41-3811, added 2013, ch. 266, sec. 2, p. 668.]
41-3812
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3812. Dividends and other distributions. (1) No domestic insurer shall pay any extraordinary dividend or make any other extraordinary distribution to its shareholders until thirty (30) days after the director has received notice of the declaration thereof and has not within that period disapproved the payment, or until the director has approved the payment within the thirty (30) day period. For purposes of this section, an extraordinary dividend or distribution includes any dividend or distribution of cash or other property, whose fair market value together with that of other dividends or distributions made within the preceding twelve (12) months exceeds the greater of: (a) Ten percent (10%) of the insurer’s surplus regarding policyholders as of December 31 of the year immediately preceding; or (b) The net gain from operations of the insurer, if the insurer is a life insurer, or the net income, if the insurer is not a life insurer, not including net realized capital gains or losses, for the twelve (12) month period ending December 31 of the year immediately preceding, but shall not include pro rata distributions of any class of the insurer’s own securities. Notwithstanding any other provision of law, an insurer may declare an extraordinary dividend or distribution that is conditional upon the director’s approval, and the declaration shall confer no rights upon shareholders until the director has approved the payment of the dividend or distribution or until the director has not disapproved payment within the thirty (30) day period referred to in this subsection. (2) Except as provided in this subsection, a domestic insurer shall not make any dividends except from earned surplus. A domestic insurer may declare and distribute a dividend from other than earned surplus if: (a) The director has given approval for the dividend prior to payment; and (b) Following payment of the dividend, the insurer’s surplus regarding policyholders is: (i) Reasonable in relation to its outstanding liabilities; and (ii) Adequate to meet its financial needs. (3) For purposes of subsection (2) of this section, earned surplus means unassigned funds as required to be reported on the insurer’s annual statement. (4) A domestic insurer that is a member of a holding company system shall notify the director in writing of any nonextraordinary dividends to be paid or other distributions to be made to shareholders within five (5) business days following the declaration of the dividend or distribution, and shall notify the director in writing at least ten (10) days, commencing from the date of receipt by the director, prior to the payment of any dividends or the making of any other distribution. History: [41-3812, added 2013, ch. 266, sec. 2, p. 668; am. 2017, ch. 95, sec. 1, p. 244; am. 2018, ch. 89, sec. 1, p. 194.]
41-3813
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3813. Management of domestic insurers subject to registration. (1) Notwithstanding the control of a domestic insurer by any person, the officers and directors of the insurer shall not thereby be relieved of any obligation or liability to which they would otherwise be subject by law, and the insurer shall be managed so as to assure its separate operating identity consistent with this chapter. (2) Nothing in this section shall preclude a domestic insurer from having or sharing a common management or cooperative or joint use of personnel, property or services with one (1) or more other persons under arrangements meeting the standards of section 41-3810 (1), Idaho Code. (3) Not less than one-third (1/3) of the directors of a domestic insurer, and not less than one-third (1/3) of the members of each committee of the board of directors of any domestic insurer, shall be persons who are not officers or employees of the insurer or of any entity controlling, controlled by or under common control with the insurer and who are not beneficial owners of a controlling interest in the voting stock of the insurer or entity. At least one (1) person must be included in any quorum for the transaction of business at any meeting of the board of directors or any committee thereof. (4) The board of directors of a domestic insurer shall establish one (1) or more committees comprised solely of directors who are not officers or employees of the insurer or of any entity controlling, controlled by or under common control with the insurer and who are not beneficial owners of a controlling interest in the voting stock of the insurer or any such entity. The committee or committees shall have responsibility for nominating candidates for director for election by shareholders or policyholders, evaluating the performance of officers deemed to be principal officers of the insurer and recommending to the board of directors the selection and compensation of the principal officers. (5) The provisions of subsections (3) and (4) of this section shall not apply to a domestic insurer if the person controlling the insurer, such as an insurer, a mutual insurance holding company or a publicly held corporation, has a board of directors and committees thereof that meet the requirements of subsections (3) and (4) of this section with respect to such controlling entity. (6) An insurer may make application to the director for a waiver from the requirements of this section, if the insurer’s annual direct written and assumed premium, excluding premiums reinsured with the federal crop insurance corporation and national flood insurance program, is less than three hundred million dollars ($300,000,000). An insurer may also make application to the director for a waiver from the requirements of this section based upon unique circumstances. The director may consider various factors including, but not limited to,
41-3814
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3814. Examination. (1) Power of director. Subject to the limitation contained in this section and in addition to the authority the director has under chapter 2, title 41 , Idaho Code, relating to the examination of insurers, the director shall have the power to examine any insurer registered under section 41-3809 , Idaho Code, and its affiliates to ascertain the financial condition of the insurer, including the enterprise risk to the insurer by the ultimate controlling party, or by any entity or combination of entities within the insurance holding company system, or by the insurance holding company system on a consolidated basis. (2) The director may order any insurer registered under section 41-3809 , Idaho Code, to produce such records, books or other information in the possession or control of the insurer or its affiliates as are reasonably necessary to determine compliance with this chapter. For such purpose, the director may order any insurer registered under section 41-3809 , Idaho Code, to produce information not in the possession of the insurer if the insurer can obtain access to such information pursuant to contractual relationships, statutory obligations or other method. In the event the insurer cannot obtain the information requested by the director, the insurer shall provide the director with a detailed explanation of the reason that the insurer cannot obtain the information and the identity of the holder of information. Whenever it appears to the director that the detailed explanation is without merit, the director may require, after notice and the opportunity for a hearing, that the insurer pay a penalty in the amount and in the manner provided in section 41-3819 (1), Idaho Code, and may suspend or revoke the insurer’s license. (3) 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 referenced in subsection (1) of this section. Persons so retained shall be under the direction and control of the director for the purposes stated herein and shall act in a purely advisory capacity. (4) Each registered insurer producing for examination records, books and papers pursuant to subsection (1) of this section shall be liable for and shall pay the expense of examination in accordance with the provisions of section 41-228 , Idaho Code, and applicable rules promulgated by the director. (5) In the event the insurer fails to comply with an order issued by the director, the director shall have the power to examine the insurer’s affiliates to obtain the information. The director shall also have the power to issue subpoenas, to administer oaths and to examine under oath any person for purposes of determining compliance with the provisions of this section. Upon the failure or
41-3815
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3815. Supervisory colleges. (1) With respect to any insurer registered under section 41-3809 , Idaho Code, and in accordance with subsection (3) of this section, the director is authorized 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: (a) Initiating the establishment of a supervisory college; (b) Clarifying the membership and participation of other supervisors in the supervisory college; (c) Clarifying the functions of the supervisory college and the role of other regulators, including the establishment of a group-wide supervisor; (d) Coordinating the ongoing activities of the supervisory college, including planning meetings, supervisory activities and processes for information sharing; and (e) 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 these 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 41-3813 , Idaho Code, 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 section 41-3816 (3), Idaho Code, providing the basis for cooperation among 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 its jurisdiction. History: [41-3815, added 2013, ch. 266, sec. 2, p. 670.]
41-3815A
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3815A. group-wide supervision of internationally active insurance groups. (1) The director is authorized to act as the group-wide supervisor for any internationally active insurance group in accordance with the provisions of this section. However, the director may otherwise acknowledge another regulatory official as the group-wide supervisor where the internationally active insurance group: (a) Does not have substantial insurance operations in the United States; (b) Has substantial insurance operations in the United States, but not in this state; or (c) Has substantial insurance operations in the United States and in this state, but the director has determined pursuant to the factors set forth in subsections (2) and (6) of this section that the other regulatory official is the appropriate group-wide supervisor. An insurance holding company system that does not otherwise qualify as an internationally active insurance group may request that the director make a determination or acknowledgment as to a group-wide supervisor pursuant to this section. (2) In cooperation with other state, federal, and international regulatory agencies, the director will identify a single group-wide supervisor for an internationally active insurance group. The director may determine that the director is the appropriate group-wide supervisor for an internationally active insurance group that conducts substantial insurance operations concentrated in this state. However, the director may acknowledge that a regulatory official from another jurisdiction is the appropriate group-wide supervisor for the internationally active insurance group. The director shall consider the following factors when making a determination or acknowledgment under this subsection: (a) The place of domicile of the insurers within the internationally active insurance group who hold the largest share of the group’s written premiums, assets, or liabilities; (b) The place of domicile of the top-tiered insurer(s) in the insurance holding company system of the internationally active insurance group; (c) The location of the executive offices or largest operational offices of the internationally active insurance group; (d) Whether another regulatory official is acting or is seeking to act as the group-wide supervisor under a regulatory system that the director determines to be: (i) Substantially similar to the system of regulation provided under the laws of this state; or (ii) Otherwise sufficient in terms of providing for group-wide supervision, enterprise risk analysis, and cooperation with other regulatory officials; and (e) Whether another regulatory official acting or seeking to act as the group-wide supervisor provides the director with reasonably reciprocal recognition and cooperation. However, a director or regulatory official from another jurisdiction identified under this section as the group-wide supervis
41-3816
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3816. Confidential treatment. (1) Documents, materials or other information in the possession or control of the department that are obtained by or disclosed to the director or any other person in the course of an examination or investigation made pursuant to section 41-3814 , Idaho Code, and all information reported or provided to the department pursuant to sections 41-3804 (2), 41-3809 , 41-3810 , and 41-3815A , Idaho Code, shall be confidential by law and privileged, shall be exempt from public disclosure, shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action. However, 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 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 notice and opportunity to be heard, determines that the interest of policyholders, shareholders or the public will be served by the publication, in which event the director may publish all or any part in such manner as may be deemed appropriate. (a) For purposes of the information reported and provided to the department pursuant to section 41-3809 (13), Idaho Code, the director shall maintain the confidentiality of the group capital calculation and group capital ratio produced within the calculation and any group capital information received from an insurance holding company supervised by the federal reserve board or any United States group-wide supervisor. (b) For purposes of the information reported and provided to the department pursuant to section 41-3809 (14), Idaho Code, the director shall maintain the confidentiality of the liquidity stress test results and supporting disclosures and any liquidity stress test information received from an insurance holding company supervised by the federal reserve board or non-United States group-wide supervisors. (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 pursuant to this chapter shall be permitted or required to testify in any private civil action concerning any confidential documents, materials or information subject to subsection (1) of this section. (3) In order to assist in the performance of the director’s duties under title 41 , Idaho Code, the director: (a) May share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subsection (1) of this section, with other state, federal and international re
41-3817
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3817. Rules. The director may promulgate rules and issue orders as shall be necessary to carry out the provisions of this chapter. History: [41-3817, added 2013, ch. 266, sec. 2, p. 673.]
41-3818
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3818. Injunctions, prohibitions against voting securities, sequestration of voting securities. (1) Whenever it appears to the director that any insurer or any director, officer, employee or agent thereof has committed or is about to commit a violation of the provisions of this chapter or of any rule or order issued by the director hereunder, the director may apply to the district court, fourth judicial district for Ada county, for an order enjoining the insurer or director, officer, employee or agent thereof from violating or continuing to violate the provisions of this chapter or any rule or order thereunder, 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) No security that is the subject of any agreement or arrangement regarding acquisition, or that is acquired or to be acquired, in contravention of the provisions of this chapter or of any rule or order issued by the director hereunder, 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 the securities were not issued and outstanding; however, 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 so order. 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 this chapter or of any rule or order issued by the director hereunder, the insurer or the director may apply to the fourth judicial district court for Ada county to enjoin any offer, request, invitation, agreement or acquisition made in contravention of section 41-3804 , Idaho Code, or any rule or order issued by the director to enjoin the voting of any security so acquired, to void any vote of the security already cast at any meeting of shareholders, and for such other equitable relief as the nature of the case and the interest of the insurer’s policyholders, creditors and shareholders or the public may require. (3) In any case where a person has acquired or is proposing to acquire any voting securities in violation of the provisions of this chapter or any rule or order issued by the director hereunder, the fourth judicial district court for Ada county, on such notice as the court deems appropriate, upon the application of the insurer or the director, shall seize or sequester any voting securities of the insurer owned directly or indirectly by the person, and issue such order as may be appropriate to effectuate the provisions of this chapter. (4) Notwithstanding any other provisions of law, for the purposes of this chapter, the situs of the ownership
41-3819
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3819. Sanctions. (1) Any insurer failing, without just cause, to file any registration statement as required in this chapter shall be required, after notice and the opportunity for a hearing, to pay a penalty of two hundred dollars (10,000). 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 permits any of the officers or agents of the insurer to engage in transactions or make investments that have not been properly reported or submitted pursuant to section 41-3809 (1), 41-3810 (2) or 41-3812 , Idaho Code, or who violates the provisions of this chapter shall pay, in their individual capacity, an administrative penalty of not more than five thousand dollars (5,000). Any individual who willfully violates the provisions of this chapter shall
41-3820
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3820. Receivership. Whenever it appears to the director that any person has committed a violation of the provisions of this chapter that so impairs the financial condition of a domestic insurer as to threaten insolvency or make its further transaction of business hazardous to its policyholders, creditors, shareholders or the public, the director may proceed as provided in chapter 33, title 41 , Idaho Code, to take possession of the property of the domestic insurer and to conduct its business in the capacity of a receiver. History: [41-3820, added 2013, ch. 266, sec. 2, p. 674.]
41-3821
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3821. Recovery. (1) If an order for liquidation or rehabilitation of a domestic insurer has been entered, the receiver appointed under the order shall be authorized to recover on behalf of the insurer: (a) 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 (b) 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 pursuant to this subsection is made at any time during the one (1) year period 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 distribution shall be recoverable if the parent or affiliate of such domestic insurer shows that when paid the distribution was lawful and reasonable, and that the insurer did not know and could not reasonably have known that the 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 the distributions were paid shall be liable up to the amount of distributions or payments under subsection (1) of this section, that the person received. Any person who otherwise controlled the insurer at the time the distributions were declared shall be liable up to the amount of distributions that would have been received if they had been paid immediately. If two (2) or more persons are liable with respect to the same distributions, they shall be jointly and severally liable. (4) The maximum amount recoverable pursuant to this section 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 pursuant to subsection (3) of this section, 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 the parent corporation or holding company or person who otherwise controlled it. History: [41-3821, added 2013, ch. 266, sec. 2, p. 675.]
41-3822
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3822. Revocation, suspension or nonrenewal of insurer’s license. Whenever it appears to the director that any person has committed a violation of the provisions of this chapter that makes the continued operation of an insurer contrary to the interests of policyholders or the public, the director may, after giving notice and the opportunity for a hearing, suspend, revoke or refuse to renew the insurer’s license or certificate of authority to do business in this state for such period as the director 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. History: [41-3822, added 2013, ch. 266, sec. 2, p. 675.]
41-3823
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3823. Judicial review — mandamus. (1) Any person aggrieved by any act, determination, rule or order or any other action of the director pursuant to this chapter may appeal to the fourth judicial district court for Ada county, Idaho. The court shall conduct its review in accordance with the provisions of chapter 52, title 67 , Idaho Code, or other applicable provisions of law. (2) The filing of an appeal pursuant to this section shall stay the application of any rule, order or other action of the director to the party pursuing such appeal, unless the court, after providing the party with notice and the opportunity for a hearing, determines that a stay would be detrimental to the interest 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 this chapter may petition the fourth judicial district court for Ada county for a writ in the nature of a mandamus or a peremptory mandamus directing the director to act or make a determination. History: [41-3823, added 2013, ch. 266, sec. 2, p. 675.]
41-3824
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3824. Mutual insurance holding companies. (1) (a) A domestic mutual insurer, upon approval of the director, may reorganize by forming an insurance holding company system, which shall be designated as a mutual insurance holding company, based upon a mutual insurance company plan and continuing the corporate existence of the reorganizing insurer as a stock insurer. The director, after a public hearing as provided in section 41-3806 , Idaho Code, if satisfied that the interests of the policyholders are properly protected and that the plan of reorganization is fair and equitable to the policyholders, may approve the proposed plan of reorganization and may require as a condition of approval such modifications of the proposed plan of reorganization as the director finds necessary for the protection of the policyholders’ interests. The director may retain consultants for this purpose as provided in section 41-3806 (5), Idaho Code. A reorganization pursuant to this section is subject to the requirements of sections 41-3804 and 41-3805 , Idaho Code. The director shall retain jurisdiction over a mutual insurance holding company organized pursuant to this section to assure that policyholder interests are protected. (b) All of the initial shares of the capital stock of the reorganized insurer shall be issued to the mutual insurance holding company. The membership interests of the policyholders of the reorganized insurer shall become membership interests in the mutual insurance holding company. Policyholders of the reorganized insurer shall be members of the mutual insurance holding company in accordance with the articles of incorporation and bylaws of the mutual insurance holding company. The mutual insurance holding company shall at all times own a majority of the voting shares of the capital stock of the reorganized insurer. (2) (a) A domestic mutual insurer, upon the approval of the director, may reorganize by merging its policyholders’ membership interests into a mutual insurance holding company formed pursuant to subsection (1) of this section and continuing the corporate existence of the reorganizing insurer as a stock insurer subsidiary of the mutual insurance holding company. The director, after a public hearing as provided in section 41-3806 , Idaho Code, if satisfied that the interests of the policyholders are properly protected and that the merger is fair and equitable to the policyholders, may approve the proposed merger and may require as a condition of approval such modifications of the proposed merger as the director finds necessary for the protection of the policyholders’ interests. For this purpose, the director may retain consultants as provided in section 41-3806 (5), Idaho Code. A merger pursuant to this subsection is subject to sections 41-3804 and 41-3805 , Idaho Code. The director shall retain jurisdiction over the mutual insurance holding co
41-3825
TITLE 41 INSURANCE CHAPTER 38 ACQUISITIONS OF CONTROL AND INSURANCE HOLDING COMPANY SYSTEMS 41-3825. Severability. The provisions of this chapter are hereby declared to be severable and if any provision of this chapter or the application of such provision to any person or circumstance is declared invalid for any reason, such declaration shall not affect the validity of the remaining portions of this chapter. History: [41-3825, added 2013, ch. 266, sec. 2, p. 679.]