Subchapter II—Insurance Holding Company Systems—Reporting Forms
Ins 40.12 Forms—incorporation by reference, summaries and omissions.
Ins 40.13 Forms—information unknown or unavailable and extension of time to furnish.
Ins 40.14 Forms—additional information and exhibits.
Ins 40.15 Registration form.
Ins 40.16 Alternative and consolidated registrations.
Ins 40.17 Transactions subject to prior notice—notice filing.
Ins 40.18 Extraordinary dividends and other distributions.
Ins 40.19 Consent to jurisdiction.
Ch. Ins 40 Note
Note: The annual registration requirements under this chapter first apply after December 31, 1993.
Ins 40.01
Ins 40.01
Definitions. In this chapter, unless the context otherwise requires:
Ins 40.01(1)
(1) "Acquiring person" means each person by whom or on whose behalf a merger or other acquisition of control is to be effected.
Ins 40.01(3)
(3) "Commissioner" means the commissioner of insurance of this state, the deputy commissioner, or the office of the commissioner of insurance of this state, as appropriate.
Ins 40.01(5)
(5) "Executive officer" means chief executive officer, chief operating officer, chief financial officer, treasurer, secretary, controller, and any other individual performing functions corresponding to those performed by one of those positions under whatever title.
Ins 40.01(6)
(6) "Insurance holding company system" means 2 or more persons who are affiliates, one or more of which is an insurer.
Ins 40.01(8)
(8) "Policyholder surplus" means capital and surplus.
Ins 40.01(9)
(9) "Security holder" means a person who owns any security of a person, including, but not limited to, common stock, preferred stock, debt obligations or any other security convertible into or evidencing the right to acquire stock or debt obligations.
Ins 40.01(10)
(10) "State of domicile" means the state where an insurer is domiciled or, for an alien insurer, its port of entry state.
Ins 40.01(11)
(11) "Subsidiary" of a person means a person which is controlled, directly or indirectly through one or more intermediaries, by the first person.
Ins 40.01(12)
(12) "Ultimate controlling person" means a person who is not controlled by any other person.
Ins 40.01(13)
(13) "Voting security" includes, but is not limited to, any security convertible into or evidencing a right to acquire a voting security.
Ins 40.01 History
History: Cr.
Register, July, 1993, No. 451, eff. 8-1-93; correction in (12) made under s. 13.93 (2m) (b) 12., Stats.,
Register, June, 1997, No. 498.
Ins 40.02
Ins 40.02
Acquisition of control of or merger with domestic insurer. Ins 40.02(1)(a)(a) Except as provided under
par. (b), no person, other than the insurer, may:
Ins 40.02(1)(a)1.
1. Make a tender offer for, request or invitation for, tenders of, or enter into any agreement to exchange securities for, seek to acquire, or acquire, in the open market or otherwise, any voting security of a domestic insurer if after the consummation of the offer, request, invitation, agreement or acquisition, the person would, directly or indirectly, or by conversion or by exercise of any right to acquire, be in control of the insurer; or
Ins 40.02(1)(a)2.
2. Enter into an agreement to merge with or otherwise to acquire or attempt to acquire control of a domestic insurer or any person having control of a domestic insurer.
Ins 40.02(1)(b)1.
1. The person first files the information required under
sub. (2) with the commissioner and sends a copy of the information to the domestic insurer; and
Ins 40.02(1)(b)2.
2. The offer, request, invitation, agreement or acquisition has been approved by the commissioner under ss.
611.72,
611.73,
612.21,
612.22,
613.72, or
614.73, Stats., and s.
617.21, Stats.
Ins 40.02(1)(c)
(c) For purposes of this section "domestic insurer" includes any person having control of a domestic insurer. This section does not apply to a person who is a securities broker holding, in the usual and customary securities broker's function, less than 20% of the voting securities of an insurer or of any person which controls an insurer.
Ins 40.02(2)
(2) Content of statement. Except as provided under
sub. (5), a person required to file under
sub. (1) shall file the following information, using form A in the appendix to this chapter, in a sworn statement:
Ins 40.02(2)(a)2.
2. If the acquiring person is an individual, his or her principal occupation and all offices and positions held during the past 5 years, any conviction of crimes other than traffic violations not involving death or injury during the past 10 years and all relevant information regarding any occupational license or registration; and
Ins 40.02(2)(a)3.
3. If the acquiring person is not an individual, a report of the nature of its business operations during the past 5 years or for the lesser period that the acquiring person and any predecessors of the acquiring person have been in existence, if shorter, an informative description of the business intended to be done by the acquiring person and the acquiring person's subsidiaries, and a list of all individuals who are or who have been selected to become directors or executive officers of the acquiring person, or who perform or will perform functions similar to those positions. The list shall include for each individual the information required by
subds. 1. and
2.
Ins 40.02(2)(b)
(b) The source, nature and amount of the consideration used or to be used in effecting the merger or other acquisition of control, a description of any transaction from which funds were or are to be obtained for that purpose, including any pledge of the insurer's stock, or the stock of any of its subsidiaries or affiliates which control the insurer, the criteria used in determining the nature and amount of consideration and the identity of persons furnishing the consideration.
Ins 40.02(2)(c)
(c) Fully audited financial information as to the earnings and financial condition of each acquiring person for the preceding 5 fiscal years of each acquiring person or for the period the acquiring person and any predecessors of the acquiring person have been in existence, if shorter, and similar unaudited information as of a date not earlier than 90 days prior to the filing of the statement.
Ins 40.02(2)(d)
(d) Any plans or proposals which any acquiring person is considering to liquidate, to sell assets of, or to merge or consolidate the insurer or to make any other material change in the insurer's business or corporate structure or management.
Ins 40.02(2)(e)
(e) The number of shares of any security which each acquiring person proposes to acquire; the terms of the offer, request, invitation, agreement or acquisition; and a statement as to the method by which the fairness of the proposal was determined.
Ins 40.02(2)(f)
(f) The amount of each class of any security which is beneficially owned or concerning which there is a right to acquire beneficial ownership by any acquiring person.
Ins 40.02(2)(g)
(g) A full description of any contracts, arrangements or understandings with respect to any security in which any acquiring person is involved, including, but not limited to, transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. The description shall identify the persons with whom the contracts, arrangements or understandings have been entered into.
Ins 40.02(2)(h)
(h) A description of the purchase of any security of the entity to be acquired during the 12 calendar months preceding the filing of the statement by any acquiring person, including the dates of purchase, names of the purchasers and consideration paid or agreed to be paid.
Ins 40.02(2)(i)
(i) A description of any recommendations to purchase any security made during the 12 calendar months preceding the filing of the statement by any acquiring person, or by anyone at the suggestion of the acquiring person.
Ins 40.02(2)(j)
(j) Copies of all tender offers for, requests or invitations for, tenders of, exchange offers for, or agreements to acquire or exchange any securities, and, if distributed, of additional soliciting material relating to those offers, requests, invitations or agreements.
Ins 40.02(2)(k)
(k) The term of any agreement, contract or understanding made with or proposed to be made with any broker-dealer as to solicitation of securities for tender, and the amount of any fees, commissions or other compensation to be paid to broker-dealers relating to the solicitation.
Ins 40.02(3)
(3) Partners and stockholders. If the person required to file under
sub. (1) is a partnership, limited partnership, syndicate or other group, the commissioner may require that the information required under
sub. (2) be given with respect to each partner of the partnership or limited partnership, each member of the syndicate or group, and each person who controls the partner or member. If any partner, member or person is a corporation or the person required to file under
sub. (1) is a corporation, the commissioner may require that the information required under
sub. (2) be given with respect to the corporation, each officer and director of the corporation, and each person who is directly or indirectly the beneficial owner of more than 10% of the outstanding voting securities of the corporation.
Ins 40.02(4)
(4) Material changes. A person required to file under
sub. (1) shall file an amendment to the filing if any material change occurs in the facts set forth in a statement previously filed with the commissioner. The person shall include in the amendment a description of the change and copies of all documents and other material relevant to the change. The amendment shall be filed with the commissioner and sent to the insurer within 2 business days after the person learns of the change.
Ins 40.02(5)
(5) Alternative filing materials. If any offer, request, invitation, agreement or acquisition is proposed to be made by means of a registration statement under the Securities Act of 1933 or in circumstances requiring the disclosure of information under the Securities Exchange Act of 1934, or under a state law requiring similar registration or disclosure, the person required to file information under
sub. (1) may utilize those documents to furnish the information required to be filed under
sub. (2).
Ins 40.02 History
History: Cr.
Register, July, 1993, No. 451, eff. 8-1-93.
Ins 40.03(1)(a)(a) Except as provided under
par. (b), every insurer which is authorized to do business in this state and which is a member of an insurance holding company system, and every person having or attempting to acquire control of such an insurer, shall register with the commissioner.
Ins 40.03(1)(b)
(b) This subsection does not apply to a person, foreign insurer or alien insurer which is exempt from registration under s.
617.11 (2), Stats., unless otherwise ordered by the commissioner. An insurer may register on behalf of a person having or attempting to acquire control of the insurer or on behalf of an insurer which is an affiliate of the insurer. Lack of knowledge that an insurer has not registered on behalf of the person or affiliate or that the registration is incomplete or inaccurate is not a defense for the person or affiliate.
Ins 40.03(2)
(2) Time for filing. Any person which is subject to registration under this section shall register within 15 days after it becomes subject to registration, and annually by June 1 of each subsequent year for the immediately preceding calendar year, unless the commissioner for good cause shown extends the time for registration, and then within the extended time.
Ins 40.03(3)
(3) Information and form required. Every person subject to registration shall file the registration statement on the forms prescribed under
s. Ins 40.15, and it shall contain the following information which is current on the date of filing:
Ins 40.03(3)(a)
(a) The capital structure, general financial condition, ownership and management of the insurer and any person having control of the insurer;
Ins 40.03(3)(b)
(b) The identity and relationship of every member of the insurance holding company system except affiliates whose total assets are less than the lesser of .5% of the total assets of the ultimate controlling person or $10 million;
Ins 40.03(3)(c)
(c) The following agreements in force, and transactions currently outstanding or which have occurred during the immediately preceding calendar year between the insurer and its affiliates:
Ins 40.03(3)(c)1.
1. Loans, extensions of credit, other investments, or purchases, sales or exchanges of securities of the affiliates by the insurer or of the insurer by its affiliates;
Ins 40.03(3)(c)4.
4. Guarantees or undertakings for the benefit of an affiliate which result in an actual contingent exposure of the insurer's assets to liability, other than insurance contracts entered into in the ordinary course of the insurer's business;
Ins 40.03(3)(c)5.
5. All management agreements, exclusive agent agreements, service contracts and all cost-sharing arrangements;
Ins 40.03(3)(d)
(d) Any pledge of the insurer's stock, including stock of any subsidiary or affiliate having control of the insurer, for a loan made to any member of the insurance holding company system;
Ins 40.03(3)(e)
(e) Other matters concerning transactions between registered insurers and any affiliates as may be included from time to time in any registration forms adopted or approved by the commissioner.
Ins 40.03(4)
(4) Summary of registration statement. All registration statements shall contain a summary on form C contained in the appendix to this chapter outlining all items in the current registration statement representing changes from the prior registration statement.
Ins 40.03(5)
(5) Materiality. No information need be disclosed on the registration statement required under this section if the information is not material for the purposes of this section. Any transaction related to a management, exclusive agency or similar agreement or which is a service contract or cost-sharing arrangement is a material transaction. Any other transaction subject to
sub. (3) is a material transaction if it involves or exposes to risk in a single transaction or group or series of related transactions an amount which is more than .5% of the insurer's admitted assets as of the 31st day of December of the immediately preceding calendar year, unless the commissioner by order provides otherwise.
Ins 40.03(6)
(6) Affiliate to provide information. A person within an insurance holding company system which includes an insurer subject to registration shall provide to the insurer any information which is reasonably necessary to enable the insurer to comply with this chapter and
ch. 617, Stats. The person shall provide complete and accurate information.
Ins 40.03(7)
(7) Consolidated filing. The commissioner may require or allow 2 or more insurers which are affiliates subject to registration to file a consolidated registration statement.
Ins 40.03 History
History: Cr.
Register, July, 1993, No. 451, eff. 8-1-93.
Ins 40.04
Ins 40.04
Standards for transactions within a holding company system. Ins 40.04(1)(1)
Transactions within a holding company system. An insurer, or affiliate of an insurer, which is required to register under
s. Ins 40.03 may not enter directly or indirectly into a transaction between the insurer and the affiliate unless the insurer and affiliate:
Ins 40.04(1)(b)
(b) Expenses incurred and payment received for the transaction are allocated to the insurer in conformity with customary insurance accounting practices consistently applied; and
Ins 40.04(1)(c)
(c) The books, accounts and records of each party to the transaction clearly and accurately disclose the nature and details of the transaction including the accounting information which is necessary to support the reasonableness of the charges or fees to the respective parties.
Ins 40.04(2)
(2) Transactions required to be reported and subject to disapproval. A domestic insurer, and a person attempting to acquire control of a domestic insurer, or an affiliate of a domestic insurer, which directly or indirectly is involved in or benefits from, a transaction, shall report, under s.
617.21 (2), Stats., each of the following transactions to the commissioner in writing at least 30 days before the domestic insurer enters into the transaction, unless the commissioner in writing approves a shorter period:
Ins 40.04(2)(a)
(a) Sales, purchases, exchanges, loans, extensions of credit, guarantees, or investments involving the domestic insurer and an affiliate or a person attempting to acquire control of the domestic insurer if the transactions are equal to or exceed the lesser of 2% of the domestic insurer's admitted assets or 10% of policyholder surplus as of the 31st day of December of the immediately preceding calendar year;
Ins 40.04(2)(b)
(b) Loans or extensions of credit or guarantees to any person who is not an affiliate, where the domestic insurer makes loans, extensions of credit or guarantees with the agreement or understanding that the proceeds of the transactions or benefit of the guarantees, in whole or in significant part, directly or indirectly, are to be used to make loans or extensions of credit to, to purchase assets of, or to make investments in, any affiliate of the domestic insurer making the loans, extensions of credit, or guarantee, or any person attempting to acquire control of the insurer, if the transactions are equal to or exceed the lesser of 2% of the domestic insurer's admitted assets or 10% of policyholder surplus as of the 31st day of December of the immediately preceding calendar year;
Ins 40.04(2)(c)
(c) Reinsurance agreements, or modifications to reinsurance agreements, which involve a domestic insurer and either an affiliate or a person attempting to acquire control of the domestic insurer in which the reinsurance premium or a change in the insurer's liabilities equals or exceeds 5% of the insurer's policyholder surplus, as of the 31st day of December of the immediately preceding calendar year, including, but not limited to, those agreements which may require as consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement or understanding exists between the insurer and nonaffiliate that any portion of the assets will be transferred to one or more affiliates of the insurer;
