Effective 01 Jan 2017, see footnote

375.1287. Notice of transfer, form, contents, filing with director, when — prior approval required, period for approval, factors for director to consider in reviewing request — penalty for violation. — 1. A notice of transfer regarding an assumption reinsurance agreement shall be provided to the policyholders of a transferring insurer in the following manner:

(1) The transferring insurer shall provide or cause to be provided to each policyholder a notice of transfer by first class mail, addressed to the policyholder's last known address or to the address to which premium notices or other policy documents are sent or, with respect to home service business, by personal delivery with acknowledged receipt. A notice of transfer shall also be sent to the transferring insurer's agents and brokers of record on the affected policies;

(2) The notice of transfer shall state or provide:

(a) The date on which the transfer and novation of the policyholder's contract of insurance is proposed to take place;

(b) The name and addresses and telephone numbers of the transferring insurer and assuming insurer;

(c) That the policyholder has the right to either consent to or reject the transfer and novation;

(d) The procedures and time limit for consenting to or rejecting the transfer and novation;

(e) A summary of any effect that consenting to or rejecting the transfer and novation will have on the policyholder's rights;

(f) A statement that the assuming insurer is licensed to write the type of business being assumed in the state where the policyholder resides, or is otherwise authorized, as provided herein, to assume such business;

(g) The name and address of the person at the transferring insurer to whom the policyholder should send its written statement of acceptance or rejection of the transfer and novation;

(h) The address and phone number of the insurance department where the policyholder resides so that the policyholder may write or call its insurance department for further information regarding the financial condition of the assuming insurer; and

(i) The following financial data for both companies:

a. Ratings for the last five years if available or for such lesser period as is available from two nationally recognized insurance rating services acceptable to the director including the rating service's explanation of the rating's meaning. If ratings are unavailable for any year of the five-year period, this shall also be disclosed;

b. A balance sheet as of December thirty-first for the previous three years if available or for such lesser period as is available and as of the date of the most recent quarterly statement;

c. A copy of the management's discussion and analysis that was filed as a supplement to the previous year's annual statement; and

d. An explanation of the reason for the transfer;

(3) Notice in a form identical or substantially similar to the following, or as specified by the director of the department of commerce and insurance by regulation, shall be deemed to comply with the requirements of this subsection:

(4) The notice to transfer shall include a preaddressed, postage-paid response card which a policyholder may return as its written statement of acceptance or rejection of the transfer and novation;

(5) The notice of transfer proposed to be used shall be filed as part of the prior approval requirement set forth below in subdivision (1) of subsection 2 of this section.

2. (1) Prior approval by the director is required for any transaction where an insurer domiciled in this state assumes or transfers obligations or risks on contracts of insurance under an assumption reinsurance agreement. No insurer licensed in this state shall transfer obligations or risks on contracts of insurance owned by policyholders residing in this state to any insurer that is not licensed in this state. An insurer domiciled in this state shall not assume obligations or risks on contracts of insurance owned by policyholders residing in any other state unless it is licensed in the other state, or the insurance regulatory official of that state has approved such assumption in writing.

(2) Any licensed foreign insurer that enters into an assumption reinsurance agreement, which transfers the obligations or risks on contracts of insurance owned by policyholders residing in this state, shall file or cause to be filed the assumption certificate with the director of the department of commerce and insurance of this state, a copy of the notice of transfer, and an affidavit that the transaction is subject to substantially similar requirements in the state of domicile of both the transferring and assuming insurer.

(3) Any licensed foreign insurer that enters into an assumption reinsurance agreement, which transfers the obligations or risks on contracts of insurance owned by policyholders residing in this state, shall obtain the prior approval of the director of the department of commerce and insurance of this state and shall be subject to all other requirements of sections 375.1280 to 375.1295 unless the transferring and assuming insurers are subject to assumption reinsurance requirements adopted by statute or regulation in the jurisdiction of their domicile which are substantially similar to sections 375.1280 to 375.1295.

(4) No insurer required to receive approval of assumption reinsurance transactions under this section shall enter into an assumption reinsurance transaction until:

(a) Thirty days after the director has received a request for approval and has not within such period disapproved such transaction; or

(b) The director shall have approved the transaction within the thirty-day period.

(5) The following factors, along with such other factors as the director deems appropriate under the circumstances, shall be considered by the director in reviewing the request for approval:

(a) The financial condition of the transferring and assuming insurer and the effect the transaction will have on the financial condition of each company;

(b) The competence, experience and integrity of those persons who control the operation of the assuming insurer;

(c) The plans or proposals the assuming party has with respect to the administration of the policies subject to the proposed transfer;

(d) Whether the transfer is fair and reasonable to the policyholders of both companies;

(e) Whether the notice of transfer to be provided by the insurer is fair, adequate and not misleading; and

(f) Whether the transfer lessens competition or restrains trade.

3. Any officer, director or stockholder of any insurer violating or consenting to the violation of any provision of subsection 2 of this section is guilty of a class E felony.

­­--------

(L. 1993 H.B. 709 § 16, A.L. 2014 S.B. 491)

Effective 1-01-17