|(a) The ultimate controlling person of an insurer in
an insurance holding company system for which Texas is the lead state
and that is described by paragraphs (1) or (2) of this subsection
must annually file a group capital calculation report:
(1) an insurance holding company system that is subject
to a covered agreement, defined by Insurance Code Chapter 493, Subchapter
C, concerning Credit for Reinsurance; or
(2) an insurance holding company system that is required
by the United States Federal Reserve Board to perform a group capital
assessment, unless the Federal Reserve Board shares that group capital
assessment with the Texas Department of Insurance and under terms
of an information sharing agreement.
(b) Except as provided by subsection (e) of this section,
the Commissioner may require the ultimate controlling person of an
insurer in an insurance holding company system for which Texas is
the lead state and that is not subject to subsection (a) of this section
to annually file a group capital calculation. In exercising this discretion,
the Commissioner will consider the following factors:
(1) whether any insurer in the insurance holding company
system is in a risk-based capital action-level event described by §7.402
of this title (relating to Risk-Based Capital and Surplus Requirements
for Insurers and HMOs) or a similar standard for a non-U.S. insurer;
(2) whether any insurer in the insurance holding company
system meets one or more of the standards of an insurer found to be
in hazardous financial condition under §8.3 of this title (relating
to Hazardous Conditions and Remedy of Hazardous Conditions);
(3) whether the Commissioner finds that any insurer
in the insurance holding company system otherwise exhibits qualities
of a troubled insurer on the basis of any unique circumstances, including
the type and volume of business written, ownership and organizational
structure, federal agency requests, and international supervisor requests;
(4) whether the insurance holding company system's
annual direct written and unaffiliated assumed premium, excluding
premiums reinsured with the Federal Crop Insurance Corporation and
Federal Flood Program, exceeded $1,000,000,000 in its last filed financial
(5) whether the insurance holding company system has
any insurers within its holding company structure that are domiciled
outside of the United States or one of its territories;
(6) whether the insurance holding company system has
any banking, depository, or other financial entity that is subject
to an identified regulatory capital framework within its holding company
(7) whether the insurance holding company system attests
that there are no material changes in the transactions between insurers
and non-insurers in the group; and
(8) whether any of the non-insurers in the insurance
holding company system pose a material financial risk to the insurer's
ability to honor policyholder obligations.
(c) The group capital calculation filing must be made
concurrently with the registration statement, unless given an extension
by the Commissioner on the basis of reasonable grounds shown. The
person submitting the group capital calculation must confirm that
it was completed in accordance with the latest version of the Group
Capital Calculation Instructions published by the National Association
of Insurance Commissioners (NAIC) and available on the NAIC website.
The Commissioner may allow a controlling person who is not the ultimate
controlling person to file the group capital calculation.
(d) The Commissioner may accept an annual limited group
capital filing in lieu of the group capital calculation described
in subsection (c) of this section if the factors listed in subsection
(b)(4) - (8) of this section are present.
(e) The ultimate controlling person of an insurer in
an insurance holding company system for which Texas is the insurer's
lead state is exempt from filing a group capital calculation if the
insurance holding company system meets any of the following criteria:
(1) an insurance holding company system that has in
its holding company structure only one insurer that:
(A) writes business in Texas only; and
(B) assumes no business from any other insurer;
(2) an insurance holding company system whose non-U.S.
group-wide supervisor is located in a reciprocal jurisdiction under
Insurance Code Chapter 493, Subchapter C, that recognizes the U.S.
state regulatory approach to group supervision and group capital;
(3) an insurance holding company system whose non-U.S.
jurisdiction provides confirmation by a competent regulatory authority
in that jurisdiction that information about the insurer and any parent,
subsidiary, or affiliated entity, if applicable, will be provided
in accordance with a memorandum of understanding or similar document;
(4) an insurance holding company system:
(A) that provides information to its lead state commissioner
and that meets the requirements for accreditation under the NAIC financial
standards and accreditation program, directly or indirectly, through
the group-wide supervisor, who has determined the information is satisfactory
to allow the lead state to comply with group supervision requirements;
(B) whose non-U.S. group-wide supervisor that is not
in a reciprocal jurisdiction under Insurance Code Chapter 493, Subchapter
C, recognizes and accepts the group capital calculation as the worldwide
group capital assessment for U.S. insurance groups that operate in
that jurisdiction. A non-U.S. jurisdiction is considered to recognize
and accept the group capital calculation if:
(i) the non-U.S. jurisdiction recognizes the U.S. state
regulatory approach to group supervision and group capital by providing
confirmation by a competent regulatory authority in that jurisdiction
that insurers and insurance groups whose lead state is accredited
by the NAIC under the NAIC Accreditation Program:
(I) will be subject only to worldwide prudential insurance
group supervision, including worldwide group governance, solvency
and capital, and reporting, as applicable, by the lead state; and
(II) will not be subject to group supervision, including
worldwide group governance, solvency and capital, and reporting at
the level of the worldwide parent undertaking of the insurance or
reinsurance group by the non-U.S. jurisdiction; or
(ii) where no U.S. insurance groups operate in the
non-U.S. jurisdiction, that non-U.S. jurisdiction notifies in writing
to the lead state with a copy to the International Association of
Insurance Supervisors that the group capital calculation is an acceptable
international capital standard.
(f) Notwithstanding subsection (e) of this section,
the Commissioner, after consultation with other supervisors or officials,
may require the group capital calculation filing for the U.S. operations
of a non-U.S.-based insurance holding company system for which Texas
is the lead state if the Commissioner finds the filing appropriate
for prudential oversight and solvency monitoring purposes.
(g) The Commissioner may consult a list of non-U.S.
jurisdictions that recognize and accept the group capital calculation
published through the NAIC Committee Process (NAIC List) to determine
whether the ultimate controlling person of an insurer is exempt under
subsection (e)(4) of this section.
(h) The Commissioner may recommend to the NAIC that
a non-U.S. jurisdiction where no U.S. insurance groups operate be
included on the NAIC List if that jurisdiction provides to the Commissioner
confirmation under subsection (e)(4) of this section.
(i) If the Commissioner's determination under subsection
(e)(4) of this section differs from the NAIC List, the Commissioner
will provide thoroughly documented justification for the determination
to the NAIC and other states.
(j) If the Commissioner determines that a non-U.S.
jurisdiction no longer meets one or more of the requirements to recognize
and accept the group capital calculation, the Commissioner may recommend
to the NAIC that the non-U.S. jurisdiction be removed from the NAIC
(k) Nothing in this section precludes an insurer from
voluntarily providing the Commissioner with information related to
Insurance Code Chapter 823, Subchapter B, concerning Registration.