Insurance Holding Companies

Utah Code tit. 31A, ch. 31A-16

in effect

Utah Code § 31A-16-101 Scope and purpose of chapter.

31A-16-101. Scope and purpose of chapter. (1) This chapter applies to all persons doing an insurance business in Utah. (2) The purposes of this chapter include: (a) exercising surveillance over the acquisition of a domestic insurer, to ensure that in the process of making it part of an insurance holding company system, the interests of policyholders, shareholders, and the public are not harmed; (b) providing the regulatory monitoring of those intercorporate relationships and transactions among affiliates within an insurance holding company system that may affect the solidity of insurers; (c) controlling the payment of dividends that might affect the solidity of insurers; and (d) providing, in appropriate cases, recoupment of dividends paid. Enacted by Chapter 242, 1985 General Session

Utah Code § 31A-16-102.5 Subsidiaries of insurers.

31A-16-102.5. Subsidiaries of insurers. (1) (a) A domestic insurer may organize or acquire one or more subsidiaries either: (i) by itself; or (ii) in cooperation with one or more persons. (b) A subsidiary of a domestic insurer may conduct any kind of business or businesses and its authority to do so may not be limited by reason of the fact that it is a subsidiary of a domestic insurer. (2) (a) In addition to investments in common stock, preferred stock, debt obligations, and other securities permitted under all other sections of this chapter, a domestic insurer may also invest in the following securities of one or more subsidiaries: (i) common stock; (ii) preferred stock; (iii) debt obligations; or (iv) other securities. (b) Amounts under Subsection (2)(a) that do not exceed the lesser of 10% of the insurer's assets or 50% of the insurer's surplus as regards policyholders are permitted, if after the investments, the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to meet its financial needs. (c) In calculating the amount of the investments described in Subsection (2)(b), investments in domestic or foreign insurance subsidiaries and health organizations shall be excluded, and there shall be included: (i) total net money 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) the 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. (d) (i) A domestic insurer may invest any amount in securities described in Subsection (2)(a) of one or more subsidiaries engaged or organized to engage exclusively in the ownership and management of assets authorized as investments for the insurer if each subsidiary agrees to limit its investments in any asset so that the investments will not cause the amount of the total investment of the insurer to exceed any of the investment limitations specified in Subsection (2)(b) applicable to the insurer. (ii) For purposes of this Subsection (2)(d), "the total investment of the insurer" shall include: (A) a direct investment by the insurer in an asset; and (B) the insurer's proportionate share of an investment in an asset by a 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. (e) With the approval of the commissioner, a domestic insurer may invest any greater amount in securities described in Subsection (2)(a) provided that after the investment the insurer's surplus as regards policyholders will be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs. (3) Investments in securities described in Subsection (2)(a) may not be subject to any of the otherwise applicable restrictions or prohibitions contained in this chapter applicable to the investments of insurers. (4) Whether any investment made pursuant to Subsection (2) meets the applicable requirements of Subsection (2) shall be determined before the investment is made, by calculating the applicable investment limitations as though the investment had already been made, taking into account: (a) the then outstanding principal balance on all previous investments in debt obligations; and (b) the value of all previous investments in equity securities as of the day they were made net of any return of capital invested not including dividends. (5) (a) Subject to Subsection (5)(b), if an insurer ceases to control a subsidiary, it shall dispose of any investment in the subsidiary made pursuant to this section: (i) within three years from the time of the cessation of control; or (ii) within such further time as the commissioner may prescribe. (b) Subsection (5)(a) does not apply if at any time after the investment is made, the investment meets the requirements for investment under any other section of this chapter, and the insurer has so notified the commissioner. Enacted by Chapter 244, 2015 General Session

Utah Code § 31A-16-102.6 Mutual insurance holding companies.

31A-16-102.6. Mutual insurance holding companies. (1) As used in this section: (a) "Intermediate holding company" means a holding company that: (i) is a subsidiary of a mutual insurance holding company; (ii) directly or through a subsidiary of the holding company, holds one or more subsidiary insurers, including a reorganized mutual insurer; and (iii) if the subsidiary insurers were not held by the holding company, a majority of the voting shares of the subsidy insurers' capital stock would be required under this section to be owned by the mutual insurance holding company. (b) "Majority of the voting shares" means the shares of a reorganized mutual insurer's capital stock that carry the right to cast a majority of the votes entitled to be cast by all of the outstanding shares of the reorganized mutual insurer's capital stock for the election of directors and other matters submitted to a vote of the reorganized mutual insurer's shareholders. (2) (a) With the commissioner's approval, a domestic mutual insurer may reorganize by forming a mutual insurance holding company in which: (i) in accordance with the mutual insurance holding company's articles of incorporation and bylaws, the membership interests of the domestic mutual insurer's policyholders become membership interests in the mutual insurance holding company; and (ii) the domestic mutual insurer is reorganized as a domestic stock insurance company. (b) The commissioner may approve a domestic mutual insurer's reorganization under this Subsection (2) if: (i) the domestic mutual insurer's reorganization plan: (A) properly protects the interests of the domestic mutual insurer's policyholders; (B) is fair and equitable to the domestic mutual insurer's policyholders; (C) is approved by a majority of the domestic mutual insurer's policyholders present at any regular or special meeting of the policyholders at which a quorum is present; and (D) satisfies the requirements of Subsections 31A-16-103(8) through (10); (ii) the initial shares of the reorganized domestic mutual insurer's capital stock are issued to the mutual insurance holding company or intermediate holding company; and (iii) at all times, the mutual insurance holding company or intermediate holding company owns a majority of the voting shares of the reorganized domestic mutual insurer's capital stock. (c) With the commissioner's approval, the mutual insurance holding company may allow in the mutual insurance holding company's articles and bylaws that a policyholder of a stock insurer that is or becomes a subsidiary of the mutual insurance holding company to be a member of the mutual insurance holding company. (d) The domestic mutual insurer: (i) shall provide the domestic mutual insurer's policyholders notice of the reorganization plan and the related member meeting by first-class mail; (ii) shall include in a notice described in Subsection (2)(d)(i), a copy of the full reorganization plan and all related plan materials; (iii) may satisfy the requirement in Subsection (2)(d)(ii) by including with the notice of reorganization a URL link at which the policyholders can access the full reorganization plan and any related materials electronically; and (iv) shall provide a physical copy of the reorganization plan and all related plan materials to a policyholder upon request. (3) (a) With the commissioner's approval, a domestic mutual insurer may reorganize by merging the domestic mutual insurer's policyholders' membership interests into an existing domestic mutual insurance holding company formed under Subsection (2), if: (i) in accordance with the mutual insurance holding company's articles of incorporation and bylaws, the membership interests of the domestic mutual insurer's policyholders become membership interests in the mutual insurance holding company; and (ii) the domestic mutual insurer is reorganized as a domestic stock insurance company subsidiary of the existing domestic mutual insurance holding company or intermediate holding company. (b) The commissioner may approve a domestic mutual insurance company's reorganization under this Subsection (3) if: (i) the domestic mutual insurer's reorganization plan: (A) properly protects the interests of the domestic mutual insurer's policyholders; (B) is fair and equitable to the domestic mutual insurer's policyholders; and (C) satisfies the requirements of Subsections 31A-16-103(8) through (10); (ii) all of the initial shares of the capital stock of the reorganized insurance company are issued to the mutual insurance holding company or intermediate holding company; and (iii) at all times, the mutual insurance holding company or intermediate holding company owns a majority of the voting shares of the reorganized domestic mutual insurer's capital stock. (c) The commissioner may require, as a condition of approval, any modifications to the proposed merger the commissioner finds necessary for the protection of the policyholders' interests. (4) (a) With the commissioner's approval, a foreign mutual insurer organized under the laws of any other state that would qualify to become a domestic insurer organized under the laws of this state may reorganize by merging the foreign mutual insurer's policyholders' membership interests into an existing domestic mutual insurance holding company formed under Subsection (2) in which: (i) in accordance with the mutual insurance holding company's articles of incorporation and bylaws, the membership interests of the foreign mutual insurer's policyholders become membership interests in the mutual insurance holding company; and (ii) the foreign mutual insurer is reorganized as a foreign stock insurance company subsidiary of the existing domestic mutual insurance holding company or intermediate holding company. (b) The commissioner may approve a foreign mutual insurer's reorganization under this Subsection (4) if: (i) the foreign mutual insurer's reorganization plan: (A) complies with any other law or rule applicable to the foreign mutual insurer; (B) properly protects the interests of the foreign mutual insurer's policyholders; (C) is fair and equitable to the foreign mutual insurer's policyholders; and (D) satisfies the requirements of Subsections 31A-16-103(8) through (10); (ii) all of the initial shares of the reorganized foreign mutual insurer's capital stock are issued to the mutual insurance holding company or intermediate holding company; and (iii) at all times, the mutual insurance holding company or intermediate holding company owns a majority of the voting shares of the reorganized foreign mutual insurer's capital stock. (c) After a reorganization contemplated by this Subsection (4), the reorganized foreign mutual insurer may: (i) remain a foreign corporation; and (ii) with the commissioner's approval, be admitted to conduct business in this state. (d) A foreign mutual insurer that is a party to a reorganization plan may redomesticate in this state by complying with the applicable requirements of this state and the foreign mutual insurer's state of domicile. (5) (a) As a condition of approval, the commissioner may require a mutual insurer to modify the mutual insurer's reorganization plan to protect the interests of the mutual insurer's policyholders. (b) If the commissioner determines reasonably necessary, at the reorganizing mutual insurer's expense, the commissioner may retain a third-party consultant to assist the commissioner in reviewing the mutual insurer's reorganization plan. (c) The commissioner has jurisdiction over a mutual insurance holding company or intermediate holding company organized in accordance with this section. (d) Subject to the commissioner's approval, a reorganized mutual insurer or a stock insurance subsidiary within a mutual insurance company may issue a dividend or distribution to the mutual insurance holding company or intermediate holding company. (6) (a) Subject to the provisions of this section, a mutual insurance holding company resulting from the reorganization of a domestic mutual insurer shall be incorporated in accordance with and is subject to the provisions of Chapter 5, Domestic Stock and Mutual Insurance Corporations as if it were a mutual insurer. (b) A mutual insurance holding company's articles of incorporation and bylaws are subject to commissioner's approval in the same manner as an insurance company's articles of incorporation and bylaws. (7) (a) A mutual insurance holding company is: (i) subject to Chapter 27a, Insurer Receivership Act; and (ii) a party to any proceeding under Chapter 27a, Insurer Receivership Act, involving an insurer that is a subsidiary of the mutual insurance holding company as a result of a reorganization in accordance with this section. (b) In a proceeding under Chapter 27a, Insurer Receivership Act, involving a reorganized mutual insurer, the assets of the mutual insurance holding company are assets of the estate of the reorganized mutual insurer for the purpose of satisfying the claims of the reorganized mutual insurer's policyholders. (c) A mutual insurance holding company may be dissolved or liquidated only by: (i) prior approval of the commissioner; or (ii) court order in accordance with Chapter 27a, Insurer Receivership Act. (8) (a) Section 31A-5-506 does not apply to a mutual insurer's reorganization or merger under this section. (b) Section 31A-5-506 applies to demutualization of a mutual insurance holding company. (c) The following sections do not apply to a mutual insurance holding company: (i) Sections 31A-5-204 through 31A-5-217.5; (ii) Sections 31A-5-301 through 31A-5-307; (iii) Section 31A-5-505; and (iv) Section 31A-5-509. (d) Notwithstanding Section 31A-5-203, a mutual insurance holding company is not required to include "insurance" in the mutual insurance holding company's name. (9) A membership interest in a domestic mutual insurance holding company is not a security under Utah law. (10) (a) The ownership of a majority of the voting shares of a reorganized mutual insurer's capital stock includes indirect ownership through one or more intermediate holding companies in a corporate structure approved by the commissioner. (b) The indirect ownership described in Subsection (10)(a) may not result in the mutual insurance holding company owning less than the equivalent of the majority of the voting shares of the reorganized mutual insurer's capital stock. (11) (a) A mutual insurance holding company or intermediate holding company may not sell, transfer, assign, pledge, encumber, hypothecate, alienate, or subject to a security interest or lien the majority of the voting shares of the reorganized mutual insurer's capital stock. (b) An act that violates Subsection (11)(a) is void in reverse chronological order of the date the act occurred. (c) The majority of the voting shares of the reorganized mutual insurer's capital stock are not subject to execution and levy under Utah law. (d) The shares of the capital stock of the surviving or new company resulting from a merger or consolidation of two or more reorganized mutual insurers, or two or more intermediate holding companies that were subsidiaries of the same mutual insurance holding company, are subject to the same requirements, restrictions, and limitations described in this section that applied to the shares of the merging or consolidating reorganized mutual insurers or intermediate holding companies before the merger or consolidation. (12) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the commissioner may make rules to implement the provisions of this section. Amended by Chapter 120, 2024 General Session

Utah Code § 31A-16-103 Acquisition of control of, divestiture of control of, or merger with domestic insurer.

31A-16-103. Acquisition of control of, divestiture of control of, or merger with domestic insurer. (1) (a) A person may not take the actions described in Subsection (1)(b) or (c) unless, at the time any offer, request, or invitation is made or any such agreement is entered into, or prior to the acquisition of securities if no offer or agreement is involved: (i) the person files with the commissioner a statement containing the information required by this section; (ii) the person provides a copy of the statement described in Subsection (1)(a)(i) to the insurer; and (iii) the commissioner approves the offer, request, invitation, agreement, or acquisition. (b) Unless the person complies with Subsection (1)(a), a person other than the issuer may not make a tender offer for, a request or invitation for tenders of, or enter into any agreement to exchange securities, or seek to acquire or acquire in the open market or otherwise, any voting security of a domestic insurer if after the acquisition, the person would directly, indirectly, by conversion, or by exercise of any right to acquire be in control of the insurer. (c) Unless the person complies with Subsection (1)(a), a person may not enter into an agreement to merge with or otherwise to acquire control of: (i) a domestic insurer; or (ii) any person controlling a domestic insurer. (d) For purposes of this section, a controlling person of a domestic insurer seeking to divest its controlling interest in the domestic insurer, in any manner, shall file with the commissioner, with a copy to the insurer, confidential notice of its proposed divestiture at least 30 days before the cessation of control. The commissioner shall determine those instances in which the one or more persons 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 commissioner, in the commissioner's discretion, determines that confidential treatment will interfere with enforcement of this section. If the statement referred to in Subsection (1)(a) is otherwise filed, this Subsection (1)(d) does not apply. (e) With respect to a transaction subject to this section, the acquiring person shall also file a pre-acquisition notification with the commissioner, which shall contain the information set forth in Section 31A-16-104.5. A failure to file the notification may be subject to penalties specified in Section 31A-16-104.5. (f) (i) For purposes of this section, a domestic insurer includes any person controlling a domestic insurer unless the person as determined by the commissioner is either directly or through its affiliates primarily engaged in business other than the business of insurance. (ii) The controlling person described in Subsection (1)(f)(i) shall file with the commissioner a preacquisition notification containing the information required in Subsection (2) 30 calendar days before the proposed effective date of the acquisition. (iii) For the purposes of this section, "person" does not include any securities broker that in the usual and customary brokers function holds less than 20% of: (A) the voting securities of an insurance company; or (B) any person that controls an insurance company. (iv) This section applies to all domestic insurers and other entities licensed under: (A) Chapter 5, Domestic Stock and Mutual Insurance Corporations; (B) Chapter 7, Nonprofit Health Service Insurance Corporations; (C) Chapter 8, Health Maintenance Organizations and Limited Health Plans; (D) Chapter 9, Insurance Fraternals; and (E) Chapter 11, Motor Clubs. (g) (i) An agreement for acquisition of control or merger as contemplated by this Subsection (1) is not valid or enforceable unless the agreement: (A) is in writing; and (B) includes a provision that the agreement is subject to the approval of the commissioner upon the filing of any applicable statement required under this chapter. (ii) A written agreement for acquisition or control that includes the provision described in Subsection (1)(g)(i) satisfies the requirements of this Subsection (1). (2) The statement to be filed with the commissioner under Subsection (1) shall be made under oath or affirmation and shall contain the following information: (a) the name and address of the "acquiring party," which means each person by whom or on whose behalf the merger or other acquisition of control referred to in Subsection (1) is to be effected; and (i) if the person is an individual: (A) the person's principal occupation; (B) a listing of all offices and positions held by the person during the past five years; and (C) any conviction of crimes other than minor traffic violations during the past 10 years; and (ii) if the person is not an individual: (A) a report of the nature of its business operations during: (I) the past five years; or (II) for any lesser period as the person and any of its predecessors has been in existence; (B) an informative description of the business intended to be done by the person and the person's subsidiaries; (C) a list of all individuals who are or who have been selected to become directors or executive officers of the person, or individuals who perform, or who will perform functions appropriate to such positions; and (D) for each individual described in Subsection (2)(a)(ii)(C), the information required by Subsection (2)(a)(i) for each individual; (b) (i) the source, nature, and amount of the consideration used or to be used in effecting the merger or acquisition of control; (ii) a description of any transaction in which funds were or are to be obtained for the purpose of effecting the merger or acquisition of control, including any pledge of: (A) the insurer's stock; or (B) the stock of any of the insurer's subsidiaries or controlling affiliates; and (iii) the identity of persons furnishing the consideration; (c) (i) fully audited financial information, or other financial information considered acceptable by the commissioner, of the earnings and financial condition of each acquiring party for: (A) the preceding five fiscal years of each acquiring party; or (B) any lesser period the acquiring party and any of its predecessors shall have been in existence; and (ii) unaudited information: (A) similar to the information described in Subsection (2)(c)(i); and (B) prepared within the 90 days prior to the filing of the statement; (d) any plans or proposals which each acquiring party may have to: (i) liquidate the insurer; (ii) sell its assets; (iii) merge or consolidate the insurer with any person; or (iv) make any other material change in the insurer's: (A) business; (B) corporate structure; or (C) management; (e) (i) the number of shares of any security referred to in Subsection (1) that each acquiring party proposes to acquire; (ii) the terms of the offer, request, invitation, agreement, or acquisition referred to in Subsection (1); and (iii) a statement as to the method by which the fairness of the proposal was arrived at; (f) the amount of each class of any security referred to in Subsection (1) that: (i) is beneficially owned; or (ii) concerning which there is a right to acquire beneficial ownership by each acquiring party; (g) a full description of any contract, arrangement, or understanding with respect to any security referred to in Subsection (1) in which any acquiring party is involved, including: (i) the transfer of any of the securities; (ii) joint ventures; (iii) loan or option arrangements; (iv) puts or calls; (v) guarantees of loans; (vi) guarantees against loss or guarantees of profits; (vii) division of losses or profits; or (viii) the giving or withholding of proxies; (h) a description of the purchase by any acquiring party of any security referred to in Subsection (1) during the 12 calendar months preceding the filing of the statement including: (i) the dates of purchase; (ii) the names of the purchasers; and (iii) the consideration paid or agreed to be paid for the purchase; (i) a description of: (i) any recommendations to purchase by any acquiring party any security referred to in Subsection (1) made during the 12 calendar months preceding the filing of the statement; or (ii) any recommendations made by anyone based upon interviews or at the suggestion of the acquiring party; (j) (i) copies of all tender offers for, requests for, or invitations for tenders of, exchange offers for, and agreements to acquire or exchange any securities referred to in Subsection (1); and (ii) if distributed, copies of additional soliciting material relating to the transactions described in Subsection (2)(j)(i); (k) (i) the term of any agreement, contract, or understanding made with, or proposed to be made with, any broker-dealer as to solicitation of securities referred to in Subsection (1) for tender; and (ii) the amount of any fees, commissions, or other compensation to be paid to broker-dealers with regard to any agreement, contract, or understanding described in Subsection (2)(k)(i); (l) an agreement by the person required to file the statement referred to in Subsection (1) that it will provide the annual report, specified in Section 31A-16-105, for so long as control exists; (m) an acknowledgment by the person required to file the statement referred to in Subsection (1) that the person and all subsidiaries within its control in the insurance holding company system will provide information to the commissioner upon request as necessary to evaluate enterprise risk to the insurer; and (n) any additional information the commissioner requires by rule, which the commissioner determines to be: (i) necessary or appropriate for the protection of policyholders of the insurer; or (ii) in the public interest. (3) (a) The department may request: (i) criminal background information maintained pursuant to Title 53, Chapter 10, Part 2, Bureau of Criminal Identification, from the Bureau of Criminal Identification; and (ii) complete Federal Bureau of Investigation criminal background checks through the national criminal history system. (b) Information obtained by the department from the review of criminal history records received under Subsection (3)(a) shall be used by the department for the purpose of: (i) verifying the information in Subsection (2)(a)(i); (ii) determining the integrity of persons who would control the operation of an insurer; and (iii) preventing persons who violate 18 U.S.C. Sec. 1033 from engaging in the business of insurance in the state. (c) If the department requests the criminal background information, the department shall: (i) pay to the Department of Public Safety the costs incurred by the Department of Public Safety in providing the department criminal background information under Subsection (3)(a)(i); (ii) pay to the Federal Bureau of Investigation the costs incurred by the Federal Bureau of Investigation in providing the department criminal background information under Subsection (3)(a)(ii); and (iii) charge the person required to file the statement referred to in Subsection (1) a fee equal to the aggregate of Subsections (3)(c)(i) and (ii). (4) (a) If the source of the consideration under Subsection (2)(b)(i) is a loan made in the lender's ordinary course of business, the identity of the lender shall remain confidential, if the person filing the statement so requests. (b) (i) Under Subsection (2)(e), the commissioner may require a statement of the adjusted book value assigned by the acquiring party to each security in arriving at the terms of the offer. (ii) For purposes of this Subsection (4)(b), "adjusted book value" means each security's proportional interest in the capital and surplus of the insurer with adjustments that reflect: (A) market conditions; (B) business in force; and (C) other intangible assets or liabilities of the insurer. (c) The description required by Subsection (2)(g) shall identify the persons with whom the contracts, arrangements, or understandings have been entered into. (5) (a) If the person required to file the statement referred to in Subsection (1) is a partnership, limited partnership, syndicate, or other group, the commissioner may require that all the information called for by Subsection (2), (3), or (4) shall be given with respect to each: (i) partner of the partnership or limited partnership; (ii) member of the syndicate or group; and (iii) person who controls the partner or member. (b) If any partner, member, or person referred to in Subsection (5)(a) is a corporation, or if the person required to file the statement referred to in Subsection (1) is a corporation, the commissioner may require that the information called for by Subsection (2) shall be given with respect to: (i) the corporation; (ii) each officer and director of the corporation; and (iii) each person who is directly or indirectly the beneficial owner of more than 10% of the outstanding voting securities of the corporation. (6) If any material change occurs in the facts set forth in the statement filed with the commissioner and sent to the insurer pursuant to Subsection (2), an amendment setting forth the change, together with copies of all documents and other material relevant to the change, shall be filed with the commissioner and sent to the insurer within two business days after the filing person learns of such change. (7) If any offer, request, invitation, agreement, or acquisition referred to in Subsection (1) is proposed to be made by means of a registration statement under the Securities Act of 1933, or under circumstances requiring the disclosure of similar information under the Securities Exchange Act of 1934, or under a state law requiring similar registration or disclosure, a person required to file the statement referred to in Subsection (1) may use copies of any registration or disclosure documents in furnishing the information called for by the statement. (8) (a) The commissioner shall approve any merger or other acquisition of control referred to in Subsection (1), unless the commissioner finds that: (i) after the change of control, the domestic insurer referred to in Subsection (1) would not be able to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed; (ii) the effect of the merger or other acquisition of control would: (A) substantially lessen competition in insurance in this state; or (B) tend to create a monopoly in insurance; (iii) the financial condition of any acquiring party might: (A) jeopardize the financial stability of the insurer; or (B) prejudice the interest of: (I) its policyholders; or (II) any remaining securityholders who are unaffiliated with the acquiring party; (iv) the terms of the offer, request, invitation, agreement, or acquisition referred to in Subsection (1) are unfair and unreasonable to the securityholders of the insurer; (v) the plans or proposals which the acquiring party has 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: (A) unfair and unreasonable to policyholders of the insurer; and (B) not in the public interest; or (vi) the competence, experience, and integrity of those persons who would control the operation of the insurer are such that it would not be in the interest of the policyholders of the insurer and the public to permit the merger or other acquisition of control. (b) For purposes of Subsection (8)(a)(iv), the offering price for each security may not be considered unfair if the adjusted book values under Subsection (2)(e): (i) are disclosed to the securityholders; and (ii) determined by the commissioner to be reasonable. (9) For a merger or other acquisition of control described in Subsection (1), the commissioner: (a) may hold a public hearing on the merger or other acquisition at the commissioner's discretion; and (b) shall hold a public hearing on the merger or other acquisition upon request by the acquiring party, the insurer, or an interested party. (10) (a) If the commissioner does not hold a hearing described in Subsection (9), the commissioner shall approve or deny the merger or other acquisition within 30 days after the day on which the department deems the statement required under Subsection (1) complete. (b) (i) The commissioner shall give at least 20 days' notice of a hearing described in Subsection (9) to the person filing the statement described in Subsection (1). (ii) The commissioner shall hold a hearing described in Subsection (9) within 30 days after the day on which the department deems the statement required under Subsection (1) complete. (iii) Not less than seven days' notice of the hearing shall be given by the person filing the statement under Subsection (1) to: (A) the insurer; and (B) any person designated by the commissioner. (iv) Affected parties may waive the notice required under this Subsection (10)(b). (v) At the hearing, the person filing the statement under Subsection (1), the insurer, any person to whom notice of hearing was sent, and any person whose interest may be affected by the hearing may: (A) present evidence; (B) examine and cross-examine witnesses; and (C) offer oral and written arguments. (vi) (A) A person or insurer described in Subsection (10)(b)(v) may conduct discovery in the same manner as is allowed in the district courts of this state. (B) All discovery shall be concluded not later than three days before the commencement of the hearing. (11) If the proposed acquisition of control will require the approval of more than one commissioner, the public hearing described in Subsection (9) may be held on a consolidated basis upon request of the person filing the statement referred to in Subsection (1). The person shall file the statement referred to in Subsection (1) with the National Association of Insurance Commissioners within five days of making the request for a public hearing. A commissioner may opt out of a consolidated hearing and shall provide notice to the applicant of the opt-out within 10 days of the receipt of the statement referred to in Subsection (1). A hearing conducted on a consolidated basis shall be public and shall be held within the United States before the commissioners of the states in which the insurers are domiciled. The commissioners shall hear and receive evidence. A commissioner may attend a hearing under this Subsection (11) in person or by telecommunication. (12) In connection with a change of control of a domestic insurer, any determination by the commissioner that the person acquiring control of the insurer shall be required to maintain or restore the capital of the insurer to the level required by the laws and regulations of this state shall be made not later than 60 days after the date of notification of the change in control submitted pursuant to Subsection (1). (13) (a) The commissioner may retain technical experts to assist in reviewing all, or a portion of, information filed in connection with a proposed merger or other acquisition of control referred to in Subsection (1). (b) In determining whether any of the conditions in Subsection (8) exist, the commissioner may consider the findings of technical experts employed to review applicable filings. (c) (i) A technical expert employed under Subsection (13)(a) shall present to the commissioner a statement of all expenses incurred by the technical expert in conjunction with the technical expert's review of a proposed merger or other acquisition of control. (ii) At the commissioner's direction the acquiring person shall compensate the technical expert at customary rates for time and expenses: (A) necessarily incurred; and (B) approved by the commissioner. (iii) The acquiring person shall: (A) certify the consolidated account of all charges and expenses incurred for the review by technical experts; (B) retain a copy of the consolidated account described in Subsection (13)(c)(iii)(A); and (C) file with the department as a public record a copy of the consolidated account described in Subsection (13)(c)(iii)(A). (14) (a) (i) If a domestic insurer proposes to merge into another insurer, any securityholder electing to exercise a right of dissent may file with the insurer a written request for payment of the adjusted book value given in the statement required by Subsection (1) and approved under Subsection (8), in return for the surrender of the security holder's securities. (ii) The request described in Subsection (14)(a)(i) shall be filed not later than 10 days after the day of the securityholders' meeting where the corporate action is approved. (b) The dissenting securityholder is entitled to and the insurer is required to pay to the dissenting securityholder the specified value within 60 days of receipt of the dissenting security holder's security. (c) Persons electing under this Subsection (14) to receive cash for their securities waive the dissenting shareholder and appraisal rights otherwise applicable under Title 16, Chapter 10a, Part 13, Dissenters' Rights. (d) (i) This Subsection (14) provides an elective procedure for dissenting securityholders to resolve their objections to the plan of merger. (ii) This section does not restrict the rights of dissenting securityholders under Title 16, Chapter 10a, Utah Revised Business Corporation Act, unless this election is made under this Subsection (14). (15) (a) All statements, amendments, or other material filed under Subsection (1), and all notices of public hearings held under Subsection (10), shall be mailed by the insurer to its securityholders within five business days after the insurer has received the statements, amendments, other material, or notices. (b) (i) Mailing expenses shall be paid by the person making the filing. (ii) As security for the payment of mailing expenses, that person shall file with the commissioner an acceptable bond or other deposit in an amount determined by the commissioner. (16) This section does not apply to any offer, request, invitation, agreement, or acquisition that the commissioner by order exempts from the requirements of this section as: (a) not having been made or entered into for the purpose of, and not having the effect of, changing or influencing the control of a domestic insurer; or (b) otherwise not comprehended within the purposes of this section. (17) The following are violations of this section: (a) the failure to file any statement, amendment, or other material required to be filed pursuant to Subsections (1), (2), and (5); or (b) the effectuation, or any attempt to effectuate, an acquisition of control of, divestiture of, or merger with a domestic insurer unless the commissioner has given the commissioner's approval to the acquisition or merger. (18) (a) The courts of this state are vested with jurisdiction over: (i) a person who: (A) files a statement with the commissioner under this section; and (B) is not resident, domiciled, or authorized to do business in this state; and (ii) overall actions involving persons described in Subsection (18)(a)(i) arising out of a violation of this section. (b) A person described in Subsection (18)(a) is considered to have performed acts equivalent to and constituting an appointment of the commissioner by that person, to be that person's lawful agent upon whom may be served all lawful process in any action, suit, or proceeding arising out of a violation of this section. (c) A copy of a lawful process described in Subsection (18)(b) shall be: (i) served on the commissioner; and (ii) transmitted by registered or certified mail by the commissioner to the person at that person's last-known address. Amended by Chapter 194, 2023 General Session

Utah Code § 31A-16-104.5 Acquisitions involving insurers not otherwise covered.

31A-16-104.5. Acquisitions involving insurers not otherwise covered. (1) The following definitions apply for the purposes of this section only: (a) "Acquisition" means an agreement, arrangement, or activity the consummation of which results in a person acquiring directly or indirectly the control of another person and includes the acquisition of voting securities, the acquisition of assets, bulk reinsurance, and mergers. (b) "Insurer" includes any company or group of companies under common management, ownership, or control. (c) "Involved insurer" includes an insurer that either acquires or is acquired, is affiliated with an acquirer or acquired, or is the result of a merger. (d) (i) "Market" means the relevant product and geographical markets. In determining the relevant product and geographical markets, the commissioner shall give due consideration to, among other things, the definitions or guidelines, if any, promulgated by the National Association of Insurance Commissioners and to information, if any, submitted by parties to the acquisition. In the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premium for a line of business, such line being that used in the annual statement required to be filed by insurers doing business in this state, and the relevant geographical market is assumed to be this state. (ii) Notwithstanding Subsection (1)(d)(i), for purposes of Subsection (2)(b), "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. (2) (a) This section applies to any acquisition in which there is a change in control of an insurer authorized to do business in Utah. (b) This section does not apply to the following: (i) securities purchased 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; (ii) if a purchase of securities results in a presumption of control under Subsection 31A-1-301(29)(d), 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 commissioner of this state; (iii) 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 pre-acquisition notification is filed with the commissioner in accordance with Subsection (3)(a) 30 days before the proposed effective date of the acquisition; (iv) the acquisition of an already affiliated person; (v) an acquisition if, as an immediate result of the acquisition: (A) in no market would the combined market share of the involved insurers exceed 5% of the total market; (B) there would be no increase in any market share; or (C) in no market would the combined market share of the involved insurers exceeds 12% of the total market, and the market share increase by more than 2% of the total market; (vi) an acquisition for which a pre-acquisition notification would be required pursuant to this section due solely to the resulting effect on the ocean marine insurance line of business; or (vii) an acquisition of an insurer whose domiciliary commissioner affirmatively finds that the insurer is in failing condition, and: (A) there is a lack of feasible alternative to improving such condition; (B) the public benefits of improving the insurer's condition through the acquisition exceed the public benefits that would arise from not lessening competition; and (C) the findings are communicated by the domiciliary commissioner to the commissioner of this state. (3) An acquisition covered by Subsection (2) may be subject to an order pursuant to Subsection (5) unless the acquiring person files a pre-acquisition notification and the waiting period has expired. The acquired person may file a pre-acquisition notification. The commissioner shall give confidential treatment to information submitted under this Subsection (3) in the same manner as provided in Section 31A-16-109. (a) The pre-acquisition notification shall be in the form and contain such information as prescribed by the National Association of Insurance Commissioners relating to those markets that, under Subsection (2)(b)(v), cause the acquisition not to be exempted from this section. The commissioner may require additional material and information as considered necessary to determine whether the proposed acquisition, if consummated, would violate the competitive standard of Subsection (4). The required information may include an opinion of an economist as to the competitive impact of the acquisition in this state accompanied by a summary of the education and experience of the economist indicating the economist's ability to render an informed opinion. (b) The waiting period required shall begin on the date of receipt of the commissioner of a pre-acquisition notification and shall end on the earlier of the 30th day after the date of receipt, or termination of the waiting period by the commissioner. Before the end of the waiting period, the commissioner on a one-time basis may require the submission of additional needed information relevant to the proposed acquisition, in which event the waiting period shall end on the earlier of the 30th day after receipt of the additional information by the commissioner or termination of the waiting period by the commissioner. (4) (a) The commissioner may enter an order under Subsection (5)(a) with respect to an acquisition if there is substantial evidence that the effect of the acquisition may be substantially to lessen competition in any line of insurance in this state, tend to create a monopoly, or if the insurer fails to file adequate information in compliance with this section. (b) In determining whether a proposed acquisition would violate the competitive standard of Subsection (4)(a), the commissioner shall consider the following: (i) Any acquisition covered under this Subsection (4) involving two or more insurers competing in the same market is prima facie evidence of violation of the competitive standards if: (A) the market is highly concentrated and the involved insurers possess the following shares of the market:Insurer AInsurer B4%4% or more10%2% or more15%1% or more; or (B) the market is not highly concentrated and the involved insurers possess the following shares of the market:Insurer AInsurer B5%5% or more10%4% or more15%3% or more19%1% or more. (ii) For purposes of this section, a highly concentrated market is one in which the share of the four largest insurers is 75% or more of the market. Percentages not shown in the tables are interpolated proportionately to the percentages that are shown. If more than two insurers are involved, exceeding the total of the two columns in the table is prima facie evidence of violation of the competitive standard in Subsection (4)(a). (iii) For purposes of this section, the insurer with the largest share of the market shall be considered to be Insurer A. (c) There is a significant trend toward increased concentration when the aggregate market share of any grouping of the largest insurers in the market, from the two largest to the eight largest, has increased by 7% or more of the market over a period of time extending from any base year 5 to 10 years before the acquisition up to the time of the acquisition. Any acquisition or merger covered under Subsection (1) involving two or more insurers competing in the same market is prima facie evidence of violation of the competitive standard in Subsection (4)(a) if: (i) there is a significant trend toward increased concentration in the market; (ii) one of the insurers involved is one of the insurers in a grouping of large insurers showing the requisite increase in the market share; and (iii) another involved insurer's market is 2% or more. (d) The burden of showing prima facie evidence of violation of the competitive standard rests upon the commissioner. (e) Even though an acquisition is not prima facie violative of the competitive standard under Subsections (4)(b) and (4)(c), the commissioner may establish the requisite anticompetitive effect based upon other substantial evidence. (f) Even though an acquisition is prima facie violative of the competitive standard under Subsections (4)(b) and (4)(c), a party may establish the absence of the requisite anticompetitive effect based upon other substantial evidence. Relevant factors in making a determination under this Subsection (4)(f) include the following: (i) market shares; (ii) volatility of ranking of market leaders; (iii) number of competitors; (iv) concentration or trend of concentration in the industry; and (v) ease of entry and exit into the market. (g) An order may not be entered under Subsection (5) if: (i) the acquisition will yield substantial economies of scale or economies in resource use that cannot be feasibly achieved in any other way, and the public benefits that would arise from the economies exceed the public benefits that would arise from not lessening competition; or (ii) the acquisition will substantially increase the availability of insurance, and the public benefits of the increase exceed the public benefits that would arise from not lessening competition. (5) (a) Subject to Title 63G, Chapter 4, Administrative Procedures Act, if an acquisition violates the standards of this section, the commissioner may enter an order: (i) requiring an involved insurer to cease and desist from doing business in this state with respect to the line or lines of insurance involved in the violation; or (ii) denying the application of an acquired or acquiring insurer for a license to do business in this state. (b) The commissioner shall accompany an order issued under this Subsection (5) with a written decision of the commissioner setting forth findings of fact and conclusions of law. (c) An order pursuant to this section may not apply if the acquisition is not consummated. (d) A person who violates a cease and desist order of the commissioner under Subsection (5)(a)(i) and while the order is in effect may after notice and hearing and upon order of the commissioner be subject at the discretion of the commissioner to one or more of the following: (i) notwithstanding Section 31A-2-308, a monetary penalty of not more than $10,000 for every day of violation; or (ii) suspension or revocation of the person's license. (e) An insurer or other person who fails to make any filing required by this section, and who fails to demonstrate a good faith effort to comply with a filing requirement, is subject to a fine of not more than $50,000 notwithstanding Section 31A-2-308. Enacted by Chapter 244, 2015 General Session

Utah Code § 31A-16-105 Registration of insurers.

31A-16-105. Registration of insurers. (1) (a) An insurer that is authorized to do business in this state and that is a member of an insurance holding company system shall register with the commissioner, except a foreign insurer subject to registration requirements and standards adopted by statute or regulation in the jurisdiction of its domicile, if the requirements and standards are substantially similar to those contained in this section, Subsections 31A-16-106(1)(a) and (2) and either Subsection 31A-16-106(1)(b) or a statutory provision similar to 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 15 days after the end of the month in which it learns of each change or addition." (b) An insurer that is subject to registration under this section shall register within 15 days after it becomes subject to registration, and annually thereafter by June 30 of each year for the previous calendar year, unless the commissioner for good cause extends the time for registration and then at the end of the extended time period. The commissioner may require any insurer authorized to do business in the state, which is a member of a holding company system, and which is not subject to registration under this section, to furnish a copy of the registration statement, the summary specified in Subsection (3), or any other information filed by the insurer with the insurance regulatory authority of domiciliary jurisdiction. (2) An insurer subject to registration shall file the registration statement with the commissioner on a form and in a format prescribed by the NAIC, which shall contain the following current information: (a) the capital structure, general financial condition, and 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) any of the following agreements in force, and transactions currently outstanding or which 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 securities of the insurer by its affiliates; (ii) purchases, sales, or exchanges of assets; (iii) transactions not in the ordinary course of business; (iv) guarantees or undertakings for the benefit of an affiliate 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; (v) all management agreements, service contracts, and all cost-sharing arrangements; (vi) reinsurance agreements; (vii) dividends and other distributions to shareholders; and (viii) consolidated tax allocation agreements; (d) any pledge of the insurer's stock, including stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system; (e) if requested by the commissioner, financial statements of or within an insurance holding company system, including all affiliates: (i) which may include annual audited financial statements filed with the United States Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended; and (ii) which request is satisfied by providing the commissioner with the most recently filed parent corporation financial statements that have been filed with the United States Securities and Exchange Commission; (f) any other matters concerning transactions between registered insurers and any affiliates as may be included in any subsequent registration forms adopted or approved by the commissioner; (g) statements that the insurer's board of directors oversees corporate governance and internal controls and that the insurer's officers or senior management have approved, implemented, and continue to maintain and monitor corporate governance and internal control procedures; and (h) any other information required by rule made by the commissioner in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act. (3) All registration statements shall contain a summary outlining all items in the current registration statement representing changes from the prior registration statement. (4) (a) No information need be disclosed on the registration statement filed pursuant to Subsection (2) if the information is not material for the purposes of this section. (b) Unless the commissioner by rule or order provides otherwise, sales, purchases, exchanges, loans or extensions of credit, investments, or guarantees involving one-half of 1%, or less, of an insurer's admitted assets as of the next preceding December 31 may not be considered material for purposes of Subsection (2). (5) Subject to Section 31A-16-106, each registered insurer shall report to the commissioner a dividend or other distribution to shareholders within 15 business days following the declaration of the dividend or distribution. (6) Any person within an insurance holding company system subject to registration shall provide complete and accurate information to an insurer if the information is reasonably necessary to enable the insurer to comply with the provisions of this chapter. (7) The commissioner shall terminate the registration of any insurer which demonstrates that it no longer is a member of an insurance holding company system. (8) The commissioner may require or allow two or more affiliated insurers subject to registration under this section to file a consolidated registration statement. (9) The commissioner may allow an insurer which is authorized to do business in this state, and which is part of an insurance holding company system, to register on behalf of any affiliated insurer which is required to register under Subsection (1) and to file all information and material required to be filed under this section. (10) This section does not apply to any insurer, information, or transaction if, and to the extent that, the commissioner by rule or order exempts the insurer from this section. (11) Any person may file with the commissioner a disclaimer of affiliation with any authorized insurer, or a disclaimer of affiliation may be filed by any insurer or any member of an insurance holding company system. The disclaimer shall fully disclose all material relationships and bases for affiliation between the person and the insurer as well as the basis for disclaiming the affiliation. A disclaimer of affiliation is considered to have been granted unless the commissioner, within 30 days following receipt of a complete disclaimer, notifies the filing party the disclaimer is disallowed. If disallowed, the disclaiming party may request an administrative hearing, which shall be granted. The disclaiming party shall be relieved of its duty to register under this section if approval of the disclaimer is granted by the commissioner, or if the disclaimer is considered to have been approved. (12) The ultimate controlling person of an insurer subject to registration shall also file an annual enterprise risk report. The annual enterprise risk report shall, to the best of the ultimate controlling person's knowledge and belief, identify the material risks within the insurance holding company that could pose enterprise risk to the insurer. The annual enterprise risk report shall be filed with the lead state commissioner of the insurance holding company system as determined by the procedures within the Financial Analysis Handbook adopted by the NAIC. (13) (a) The ultimate controlling person of an insurer subject to registration shall concurrently file with the registration an annual group capital calculation report as directed by the lead state commissioner. (b) The annual group capital calculation report described in Subsection (13)(a) shall be filed with the lead state commissioner of the insurance holding company system as determined by the commissioner in accordance with the procedures within the Financial Analysis Handbook adopted by the NAIC. (c) Subject to Subsections (13)(d) and (e), the following insurance holding company systems are exempt from filing the annual group capital calculation report described in Subsection (13)(a): (i) an insurance holding company system that: (A) has only one insurer within the insurance holding company's structure; (B) writes business and is licensed only in the insurance holding company system's domestic state; and (C) assumes no business from any other insurer; (ii) an insurance holding company system that is required to perform a group capital calculation specified by the United States Federal Reserve Board unless: (A) the lead state commissioner requests the calculation from the Federal Reserve Board under the terms of information sharing agreements in effect; and (B) the Federal Reserve Board cannot share the calculation with the lead state commissioner; (iii) an insurance holding company system whose non-United States group-wide supervisor is located within a reciprocal jurisdiction as described in Subsection 31A-17-404(8) that recognizes the United States' state regulatory approach to group supervision and group capital; and (iv) an insurance holding company system: (A) that provides information to the lead state that meets the requirements for accreditation under the NAIC financial standards and accreditation program, either directly or indirectly through the group-wide supervisor, who has determined the information is satisfactory to allow the lead state to comply with the NAIC group supervision approach, as detailed in the NAIC Financial Analysis Handbook; and (B) whose non-United States group-wide supervisor that is not located in a reciprocal jurisdiction recognizes and accepts, as specified by the lead state commissioner in regulation, the group capital calculation as the world-wide group capital assessment for United States insurance groups that operate in that jurisdiction. (d) If, after consultation with other supervisors or officials, the lead state commissioner determines appropriate for prudential oversight and solvency monitoring purposes or for ensuring the competitiveness of the insurance marketplace, the lead state commissioner shall require the group capital calculation for United States operations of any non-United States based insurance holding company system. (e) The lead state commissioner may: (i) exempt the ultimate controlling person from filing the annual group capital calculation; or (ii) accept a limited group capital filing or report in accordance with criteria as specified by the lead state commissioner in regulation. (f) If the lead state commissioner determines that an insurance holding company system no longer meets one or more of the requirements for an exemption from filing the group capital calculation under this section, the insurance holding company system shall file the group capital calculation at the next annual filing date unless the lead state commissioner gives an extension based on reasonable grounds. (14) (a) The ultimate controlling person of every insurer subject to registration and also scoped into the NAIC liquidity stress test framework shall file the results of a specific year's liquidity stress test. (b) The filing described in Subsection (14)(a) shall be made to the lead state insurance commissioner of the insurance holding company system as determined by the procedures within the Financial Analysis Handbook adopted by the NAIC. (c) Any change to the NAIC liquidity stress test framework or to the data year for which the scope criteria are to be measured shall be effective on January 1 of the year following the calendar year in which the change is adopted. (d) Insurers meeting at least one threshold of the NAIC liquidity stress test framework's scope criteria are scoped into the NAIC liquidity stress test framework for the specified data year unless the lead state insurance commissioner, in consultation with the NAIC Financial Stability Task Force or the NAIC Financial Stability Task Force's successor, determines the insurer should not be scoped into the NAIC liquidity stress test framework for that data year. (e) Insurers that do not meet at least one threshold of the NAIC liquidity stress test framework's scope criteria are scoped out of the NAIC liquidity stress test framework for the specified data year, unless the lead state insurance commissioner, in consultation with the NAIC Financial Stability Task Force or the NAIC Financial Stability Task Force's successor, determines the insurer should be scoped into the NAIC liquidity stress test framework for that data year. (f) To avoid having insurers scoped in and out of the NAIC liquidity stress test framework on a frequent basis, the lead state insurance commissioner, in consultation with the Financial Stability Task Force or the NAIC Financial Stability Task Force's successor, shall assess this concern as part of the lead state insurance commissioner's determination of whether an insurer is scoped into the NAIC liquidity stress test framework for a specified data year. (g) The performance of, and filing of the results from, a specific year's liquidity stress test shall comply with: (i) the NAIC liquidity stress test framework instructions and reporting templates for that year; and (ii) lead state insurance commissioner determinations made in conjunction with the NAIC Financial Stability Task Force or the NAIC Financial Stability Task Force's successor, provided within the NAIC liquidity stress test framework. (15) The failure to file a registration statement or any summary of the registration statement or enterprise risk filing required by this section within the time specified for the filing is a violation of this section. Amended by Chapter 198, 2022 General Session

Utah Code § 31A-16-106 Standards and management of an insurer within a holding company system.

31A-16-106. Standards and management of an insurer within a holding company system. (1) (a) Transactions within an insurance holding company system to which an insurer subject to registration is a party are subject to the following standards: (i) the terms shall be fair and reasonable; (ii) agreements for cost sharing services and management shall include the provisions required by rule made by the commissioner in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act; (iii) charges or fees for services performed shall be reasonable; (iv) expenses incurred and payment received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied; (v) the books, accounts, and records of each party to all transactions shall be so maintained as to clearly and accurately disclose the nature and details of the transactions, including the accounting information necessary to support the reasonableness of the charges or fees to the respective parties; (vi) the insurer's surplus held for policyholders, following any dividends or distributions to shareholder affiliates, shall be reasonable in relation to the insurer's outstanding liabilities and shall be adequate to its financial needs; (vii) the commissioner may require the insurer to secure and maintain a deposit held by the commissioner or a bond, as determined by the insurer at the insurer's discretion, in an amount determined by the commissioner not to exceed the value of the agreement in any one year, if the commissioner: (A) determines that the insurer is in a hazardous financial condition under Title 31A, Chapter 27a, Insurer Receivership Act, or a condition that would warrant a delinquency proceeding under Title 31A, Chapter 27a, Insurer Receivership Act; and (B) believes that the insurers' affiliate may be unable to fulfill an agreement with the insurer if the insurer were put into liquidation; (viii) all insurer records and data held by an affiliate: (A) are the insurer's property; (B) are subject to the insurer's control; (C) are identifiable; (D) are segregated or readily capable of segregation, at no additional cost to the insurer, from all other records and data; (E) shall be provided to a receiver, at the insurer's request, including any information, software, licensing agreement, release, waiver, or any other thing required to access the records and data; and (F) may be restricted in use by the affiliate if the affiliate is not operating the insurer's business; and (ix) (A) all funds belonging to the insurer that an affiliate collects or holds are the exclusive property of the insurer and subject to the control of the insurer; and (B) if the insurer is placed into receivership, any right of offset against the funds is subject to Title 31A, Chapter 27a, Insurance Receivership Act. (b) The following transactions involving a domestic insurer and any person in its insurance holding company system, including amendments or modifications of affiliate agreements previously filed pursuant to this section, which are subject to any materiality standards contained in Subsections (1)(a)(i) through (vi), may not be entered into unless the insurer has notified the commissioner in writing of its intention to enter into the transaction at least 30 days before entering into the transaction, or within any shorter period the commissioner may permit, if the commissioner has not disapproved the transaction within the period. The notice for an amendment or modification shall include the reasons for the change and financial impact on the domestic insurer. Informal notice shall be reported, within 30 days after a termination of a previously filed agreement, to the commissioner for determination of the type of filing required, if any: (i) sales, purchases, exchanges, loans or extensions of credit, guarantees, or investments if the transactions are equal to, or exceed as of the next preceding December 31: (A) for nonlife insurers, the lesser of 3% of the insurer's admitted assets or 25% of surplus held for policyholders; (B) for life insurers, 3% of the insurer's admitted assets; (ii) loans or extensions of credit made to any person who is not an affiliate, if the insurer makes the loans or extensions of credit with the agreement or understanding that the proceeds of the transactions, in whole or in substantial part, 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 insurer making the loans or extensions of credit if the transactions are equal to, or exceed as of the next preceding December 31: (A) for nonlife insurers, the lesser of 3% of the insurer's admitted assets or 25% of surplus held for policyholders; (B) for life insurers, 3% of the insurer's admitted assets; (iii) reinsurance agreements or modifications to reinsurance agreements, including an agreement in which the reinsurance premium, a change in the insurer's liabilities, or the projected reinsurance premium or a change in the insurer's liabilities in any of the current and succeeding three years, equals or exceeds 5% of the insurer's surplus held for policyholders, as of the next preceding December 31, including those agreements that may require as consideration the transfer of assets from an insurer to a non-affiliate, if an agreement or understanding exists between the insurer and the non-affiliate that any portion of the assets will be transferred to one or more affiliates of the reinsurer; (iv) all management agreements, service contracts, tax allocation agreements, and all cost-sharing arrangements; (v) guarantees when made by a domestic insurer, except that: (A) a guarantee that is quantifiable as to amount is not subject to the notice requirements of this Subsection (1) unless it exceeds the lesser of .5% of the insurer's admitted assets or 10% of surplus held for policyholders, as of the next preceding December 31; and (B) a guarantee that is not quantifiable as to amount is subject to the notice requirements of this Subsection (1); (vi) direct or indirect acquisitions or investments in a person that controls the insurer or in an affiliate of the insurer in an amount that, together with its present holdings in the investments, exceeds 2.5% of the insurer's surplus to policyholders, except that a direct or indirect acquisition or investment in a subsidiary acquired pursuant to Section 31A-16-102.5, or in a non-subsidiary insurance affiliate that is subject to this chapter, is exempt from this Subsection (1)(b)(vi); (vii) any material transactions, specified by rule, which the commissioner determines may adversely affect the interests of the insurer's policyholders; and (viii) this Subsection (1) may not be interpreted to authorize or permit any transactions which would be otherwise contrary to law in the case of an insurer not a member of the same holding company system. (c) A domestic insurer may not enter into transactions which are part of a plan or series of like transactions with persons within the holding company system if the purpose of the separate transactions is to avoid the statutory threshold amount and thus to avoid the review by the commissioner that would occur otherwise. If the commissioner determines that the separate transactions were entered into over any 12 month period for such a purpose, the commissioner may exercise the commissioner's authority under Section 31A-16-110. (d) The commissioner, in reviewing transactions pursuant to Subsection (1)(b), shall consider whether the transactions comply with the standards set forth in Subsection (1)(a) and whether they may adversely affect the interests of policyholders. (e) The commissioner shall be notified within 30 days of any investment of the domestic insurer in any one corporation, if the total investment in the corporation by the insurance holding company system exceeds 10% of the corporation's voting securities. (2) (a) A domestic insurer may not pay any extraordinary dividend or make any other extraordinary distribution to its shareholders until: (i) 30 days after the commissioner has received notice of the declaration of the dividend and has not within the 30-day period disapproved the payment; or (ii) the commissioner has approved the payment within the 30-day period. (b) For purposes of this Subsection (2), an extraordinary dividend or distribution includes any dividend or distribution of cash or other property, fair market value of which, together with that of other dividends or distributions made within the preceding 12 months, exceeds the lesser of: (i) 10% of the insurer's surplus held for policyholders as of the next preceding December 31; (ii) 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 realized capital gains, for the 12-month period ending the next preceding December 31; or (iii) an extraordinary dividend does not include pro rata distributions of any class of the insurer's own securities. (c) In determining whether a dividend or distribution is extraordinary, an insurer other than a life insurer may carry forward net income from the previous two calendar years that has not already been paid out as dividends. This carry-forward shall be computed by taking the net income from the second and third preceding calendar years, not including realized capital gains, less dividends paid in the second and immediate preceding calendar years. (d) Notwithstanding any other provision of law, an insurer may declare an extraordinary dividend or distribution, which is conditioned upon the commissioner's approval of the dividend or distribution, and the declaration shall confer no rights upon shareholders until: (i) the commissioner has approved the payment of the dividend or distribution; or (ii) the commissioner has not disapproved the payment within the 30-day period referred to in Subsection (2)(a). (3) (a) Notwithstanding the control of a domestic insurer by any person, the officers and directors of the insurer may not 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. (b) Nothing in this section precludes a domestic insurer from having or sharing a common management or cooperative or joint use of personnel, property, or services with one or more other persons under arrangements meeting the standards of Subsection (1)(a). (c) (i) Not less than one-third of the directors of a domestic insurer, and not less than one-third of the members of each committee of the board of directors of a 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. (ii) At least one person described in Subsection (3)(c)(i) shall be included in a quorum for the transaction of business at a meeting of the board of directors or a committee of the board of directors. (d) Subsection (3)(c) does 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 of the board of directors that meet the requirements of Subsection (3)(c) with respect to the controlling entity. (e) An insurer may make application to the commissioner for a waiver from the requirements of this Subsection (3) if the insurer's annual direct written and assumed premium, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, is less than $300,000,000. An insurer may also make application to the commissioner for a waiver from the requirements of this Subsection (3) based upon unique circumstances. The commissioner may consider various factors, including: (i) the type of business entity; (ii) the volume of business written; (iii) the availability of qualified board members; or (iv) the ownership or organizational structure of the entity. (4) (a) For purposes of this chapter, in determining whether an insurer's surplus as regards 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: (i) the size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force, and other appropriate criteria; (ii) the extent to which the insurer's business is diversified among several lines of insurance; (iii) the number and size of risks insured in each line of business; (iv) the extent of the geographical dispersion of the insurer's insured risks; (v) the nature and extent of the insurer's reinsurance program; (vi) the quality, diversification, and liquidity of the insurer's investment portfolio; (vii) the recent past and projected future trend in the size of the insurer's investment portfolio; (viii) the surplus as regards policyholders maintained by other comparable insurers; (ix) the adequacy of the insurer's reserves; and (x) the quality and liquidity of investments in affiliates. (b) The commissioner may treat an investment described in Subsection (4)(a)(x) as a disallowed asset for purposes of determining the adequacy of surplus as regards policyholders whenever in the judgment of the commissioner the investment so warrants. Amended by Chapter 198, 2022 General Session

Utah Code § 31A-16-107.5 Examination of registered insurers.

31A-16-107.5. Examination of registered insurers. (1) Subject to the limitation contained in this section and the powers which the commissioner has under Chapter 2, Administration of the Insurance Laws, relating to the examination of insurers, the commissioner has the power to examine an insurer registered under Section 31A-16-105 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 the insurance holding company system on a consolidated basis. (2) (a) The commissioner may order an insurer registered under Section 31A-16-105 to produce the records, books, or other information papers in the possession of the insurer or its affiliates as are reasonably necessary to determine compliance with this chapter. (b) To determine compliance with this chapter, the commissioner may order an insurer registered under Section 31A-16-105 to produce information not in the possession of the insurer if the insurer can obtain access to the information pursuant to contractual relationships, statutory obligations, or other methods. (c) If an insurer cannot obtain the information requested by the commissioner, the insurer shall provide the commissioner a detailed explanation of the reason that the insurer cannot obtain the information and the identity of the holder of the information. (d) Whenever it appears to the commissioner that the detailed explanation is without merit, the commissioner may require, after notice and hearing, the insurer to pay a penalty of $5,000 for each day's delay, or may suspend or revoke the insurer's license. (3) The commissioner may retain, at the registered insurer's expense, attorneys, actuaries, accountants, and other experts not otherwise a part of the commissioner's staff, if they are necessary to assist in the conduct of the examination under Subsection (1). Any persons so retained are under the direction and control of the commissioner and shall act in a purely advisory capacity. (4) A registered insurer who produces records, books, and papers under Subsection (2) for examination is liable for and shall pay the expense of the examination under Section 31A-2-205. (5) If an insurer fails to comply with an order issued under this section, the commissioner may: (a) examine the affiliates to obtain the information; or (b) issue subpoenas, administer oaths, and examine under oath any person for purposes of determining compliance with this section. (6) (a) Upon the failure or refusal of any person to obey a subpoena under Subsection (5), the commissioner may petition a court to enter an order compelling the witness to appear and testify or produce documentary evidence. (b) A person shall be obliged to attend as a witness at the place specified in the subpoena, when subpoenaed, anywhere within the state. (c) A person subpoenaed is entitled to the same fees and mileage as a witness under Section 78B-1-119. (d) Fees, mileage, and actual expense, if any, necessarily incurred in securing the attendance of witnesses, and the witness's testimony, shall be itemized and charged against, and be paid by, the company being examined. Amended by Chapter 401, 2023 General Session

Utah Code § 31A-16-108.5 Supervisory colleges.

31A-16-108.5. Supervisory colleges. (1) For an insurer registered under Section 31A-16-105 and in accordance with Subsection (3), the commissioner may participate in a supervisory college for a domestic insurer that is part of an insurance holding company system with international operations to determine compliance by the insurer with this chapter. The powers of the commissioner with respect to supervisory colleges include 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: (i) planning meetings; (ii) supervisory activities; and (iii) processes for information sharing; and (e) establishing a crisis management plan. (2) (a) A registered insurer subject to this section is liable for and shall pay the reasonable expenses of the commissioner's participation in a supervisory college in accordance with Subsection (3), including reasonable travel expenses. (b) 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 supervision of the insurer or its affiliates and the commissioner may establish a regular assessment to the insurer for the payment of these expenses. (3) (a) The commissioner may participate in a supervisory college with other regulators charged with supervision of the insurer or its affiliates, including: (i) other state regulatory agencies; (ii) federal regulatory agencies; or (iii) international regulatory agencies. (b) The commissioner may enter into agreements in accordance with Section 31A-16-109 providing the basis for cooperation between the commissioner and other regulatory agencies, and the activities of the supervisory college, in order to assess: (i) the business strategy; (ii) financial position; (iii) legal and regulatory position; (iv) risk exposure; and (v) management and governance processes. (c) Nothing in this section shall delegate to the supervisory college the authority of the commissioner to regulate or supervise the insurer or its affiliates within its jurisdiction. Enacted by Chapter 244, 2015 General Session

Utah Code § 31A-16-108.6 Supervision of internationally active insurance groups.

31A-16-108.6. Supervision of internationally active insurance groups. (1) (a) Except as otherwise provided in this section, the commissioner shall act as the group-wide supervisor for each internationally active insurance group. (b) In lieu of acting as the group-wide supervisor for an internationally active insurance company, the commissioner may acknowledge a regulatory official from another jurisdiction as the internationally active insurance group's group-wide supervisor, if the internationally active insurance group: (i) does not have substantial insurance operations in the United States; (ii) has substantial insurance operations in the United States, but does not have substantial insurance operations in the state; or (iii) has substantial insurance operations in the United States and in the state, but in accordance with the provisions of this section, the commissioner determines that a regulatory official from another jurisdiction is an appropriate group-wide supervisor. (2) In deciding whether to acknowledge another regulatory official as an internationally active insurance group's group-wide supervisor in lieu of acting as the group-wide supervisor, the commissioner shall: (a) consult and cooperate with other state, federal, and international regulatory agencies; and (b) consider: (i) the domicile of the insurer or insurers within the internationally active insurance group that hold the largest share of the group's written premiums, assets, or liabilities; (ii) the domicile of the top-tiered insurer or insurers in the insurance holding company system of the internationally active insurance group; (iii) the location of the executive office or largest operational office of the internationally active insurance group; (iv) whether another regulatory official acts or seeks to act as the group-wide supervisor under a regulatory system that the commissioner determines to be: (A) substantially similar to the system of regulation provided under the laws of this state; or (B) sufficient in terms of providing for group-wide supervision, enterprise risk analysis, and cooperation with other regulatory officials; and (v) whether another regulatory official acting or seeking to act as the group-wide supervisor provides the commissioner with reasonably reciprocal recognition and cooperation. (3) (a) Before acting as the group-wide supervisor for an internationally active insurance group, the commissioner shall notify: (i) the insurer registered under Section 31A-16-105; and (ii) the ultimate controlling person within the internationally active insurance group. (b) Within 30 days after the day on which an internationally active insurance group receives a notification described in Subsection (3)(a), the internationally active insurance group may provide the commissioner additional information relevant to whether the commissioner should act as the internationally active insurance group's group-wide supervisor. (4) If the commissioner acts as the group-wide supervisor for an internationally active insurance group, the commissioner may later acknowledge a regulatory official from another jurisdiction as the group-wide supervisor for the internationally active insurance group if the commissioner: (a) considers the factors described in Subsection (2)(b); (b) cooperates with other regulatory officials involved with the supervision of the members of the internationally active insurance group; and (c) consults with the internationally active insurance group. (5) Notwithstanding any other provision of law, when a regulatory official from another jurisdiction is acting as the group-wide supervisor for an internationally active insurance group, the commissioner shall: (a) acknowledge the regulatory official as the group-wide supervisor; and (b) in accordance with Subsection (2), reevaluate whether it is appropriate to acknowledge a regulatory official from another jurisdiction as the group-wide supervisor if a change in circumstances results in: (i) the insurer or insurers within the internationally active insurance group that hold the largest share of the group's written premiums, assets, or liabilities being domiciled in the state; or (ii) the top-tiered insurer or insurers in the insurance holding company system of the internationally active insurance group being domiciled in the state. (6) In accordance with Section 31A-16-107.5, upon request from the commissioner, an insurer subject to this chapter shall provide the commissioner any information necessary to determine the appropriate group-wide supervisor for an internationally active insurance group. (7) The commissioner shall publish on the department's website the identity of each internationally active insurance group for which the commissioner acts as the group-wide supervisor. (8) If the commissioner is the group-wide supervisor of an internationally active insurance group, the commissioner may: (a) assess the enterprise risks within the internationally active insurance group to ensure that: (i) management of the internationally active insurance group identifies the material financial condition and liquidity risks to the members of the internationally active insurance group that are engaged in the business of insurance; and (ii) reasonable and effective mitigation measures are in place; (b) request, from any member of the internationally active insurance group, subject to the commissioner's supervision, information necessary and appropriate to assess enterprise risk, including information about the members of the internationally active insurance group regarding: (i) governance, risk assessment, and management; (ii) capital adequacy; or (iii) material intercompany transactions; (c) coordinate and, through the authority of the regulatory officials of the jurisdictions where members of the internationally active insurance group are domiciled, compel development and implementation of reasonable measures designed to ensure that the internationally active insurance group is able to timely recognize and mitigate enterprise risks to members of the internationally active insurance group that are engaged in the business of insurance; (d) communicate with other state, federal, and international regulatory agencies for members within the internationally active insurance group; (e) subject to the confidentiality provisions of Section 31A-16-109, share relevant information: (i) through a supervisory college in accordance with Section 31A-16-108.5; or (ii) by entering into an agreement or obtaining documentation: (A) with or from an insurer registered under Section 31A-16-105, a member of the internationally active insurance group, or a state, federal, or international regulatory agency for members of the internationally active insurance group; and (B) that provides the basis for or otherwise clarifies the commissioner's role as group-wide supervisor, including a provision for resolving disputes with another regulatory official; and (f) engage in any other group-wide supervision activity, consistent with an authority and purpose enumerated in this section, as the commissioner determines necessary. (9) An agreement or documentation described in Subsection (8)(e) may not serve as evidence in any proceeding that an insurer or person within an insurance holding company system not domiciled or incorporated in the state: (a) is doing business in the state; or (b) is subject to jurisdiction in the state. (10) (a) If the commissioner acknowledges as a group-wide supervisor another regulatory official from a jurisdiction that the NAIC does not accredit as a group-wide supervisor, the commissioner may reasonably cooperate, through supervisory colleges or otherwise, with the group-wide supervision undertaken by the group-wide supervisor, provided that: (i) the commissioner's cooperation is in compliance with the laws of this state; and (ii) the group-wide supervisor also recognizes and cooperates with the commissioner's activities as the group-wide supervisor for other internationally active insurance groups where applicable. (b) Where the recognition and cooperation described in Subsection (10)(a)(ii) is not reasonably reciprocal, the commissioner may refuse recognition and cooperation. (11) The commissioner may in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, make rules necessary for the administration of this section. (12) An insurer subject to this section is liable for and shall pay the reasonable expenses of the commissioner's participation in the administration of this section, including: (a) the engagement of an attorney, actuary, or other professional; and (b) all reasonable travel expenses. Enacted by Chapter 193, 2019 General Session

Utah Code § 31A-16-109 Confidentiality of information obtained by commissioner.

31A-16-109. Confidentiality of information obtained by commissioner. (1) (a) Documents, materials, or information obtained by or disclosed to the commissioner or any other person in the course of an examination or investigation made under Section 31A-16-107.5, and all information reported or provided to the department under Section 31A-16-105 or 31A-16-108.6, is proprietary, contains trade secrets, and is confidential. (b) Any confidential document, material, or information described in Subsection (1)(a) is not subject to subpoena and may not be made public by the commissioner or any other person without the permission of the insurer, except the confidential document, material, or information may be provided to the insurance departments of other states, without the prior written consent of the insurer to which the confidential document, material, or information pertains. (c) The commissioner shall maintain the confidentiality of the following received in accordance with Section 31A-16-105 from an insurance holding company supervised by the Federal Reserve Board or any United States group-wide supervisor: (i) a group capital calculation; (ii) a group capital ratio produced within the group capital calculation; or (iii) group capital information. (d) The commissioner shall maintain the confidentiality of the liquidity stress test results, supporting disclosures, and any liquidity stress test information received in accordance with Section 31A-16-105 from an insurance holding company supervised by the Federal Reserve Board and non-United States group-wide supervisors. (2) The commissioner and any person who receives documents, materials, or other information while acting under the authority of the commissioner or with whom the documents, materials, or other information are shared pursuant to this chapter shall keep confidential any confidential documents, materials, or information subject to Subsection (1). (3) To assist in the performance of the commissioner's duties, the commissioner: (a) may share documents, materials, proprietary and trade secret documents, or other information, including the confidential documents, materials, or information subject to Subsection (1), with the following if the recipient agrees in writing to maintain the confidentiality status of the document, material, or other information, and has verified in writing the legal authority to maintain confidentiality: (i) a state, federal, or international regulatory agency; (ii) the NAIC; (iii) a third-party consultant designated by the commissioner; or (iv) a state, federal, or international law enforcement authority, including a member of a supervisory college described in Section 31A-16-108.5; (b) notwithstanding Subsection (1), may only share confidential documents, material, or information reported pursuant to Section 31A-16-105 or 31A-16-108.6 with a commissioner of a state having statutes or regulations substantially similar to Subsection (1) and who has agreed in writing not to disclose the documents, material, or information; (c) may receive documents, materials, proprietary and trade secret information, or other information, including otherwise confidential documents, materials, or information from: (i) the NAIC or an NAIC affiliate or subsidiary; or (ii) a regulatory or law enforcement official of a foreign or domestic jurisdiction; (d) shall maintain as confidential any document, material, or information received under this section with notice or the understanding that it is confidential under the laws of the jurisdiction that is the source of the document, material, or information; and (e) shall enter into written agreements with the NAIC or a third-party consultant designated by the commissioner governing sharing and use of information provided pursuant to this chapter consistent with this Subsection (3) that shall: (i) specify procedures and protocols regarding the confidentiality and security of information shared with the NAIC and NAIC affiliates and subsidiaries pursuant to this chapter, including procedures and protocols for sharing by the NAIC with other state, federal, or international regulators; (ii) specify that ownership of information shared with the NAIC and NAIC affiliates and subsidiaries pursuant to this chapter remains with the commissioner and the NAIC's use of the information is subject to the direction of the commissioner; (iii) require prompt notice to be given to an insurer whose confidential information in the possession of the NAIC pursuant to this chapter is subject to a request or subpoena to the NAIC for disclosure or production; and (iv) require the NAIC and NAIC affiliates and subsidiaries to consent to intervention by an insurer in any judicial or administrative action in which the NAIC and NAIC affiliates and subsidiaries may be required to disclose confidential information about the insurer shared with the NAIC and NAIC affiliates and subsidiaries pursuant to this chapter. (4) The sharing of information by the commissioner pursuant to this chapter does not constitute a delegation of regulatory authority or rulemaking, and the commissioner is solely responsible for the administration, execution, and enforcement of this chapter. (5) A waiver of any applicable claim of confidentiality in the documents, materials, or information does not occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in Subsection (3). (6) Documents, materials, or other information in the possession or control of the NAIC pursuant to this chapter are: (a) confidential, not public records, and not open to public inspection; and (b) not subject to Title 63G, Chapter 2, Government Records Access and Management Act. (7) (a) The group capital calculation, including the resulting group capital ratio, and the liquidity stress test, including the liquidity stress test results and supporting disclosures, are: (i) regulatory tools for assessing risk and capital adequacy; and (ii) not a method to rank insurers or insurance holding company systems generally. (b) Except as provided in Subsection (7)(c), an insurer, broker, or other person engaged in the business of insurance may not make, disseminate, or circulate to the public a materially false or misleading statement relating to an insurer's or insurer group's, or a component of an insurer's or insurer group's: (i) group capital calculation; (ii) group capital ratio; (iii) liquidity stress test results; or (iv) liquidity stress test supporting disclosures. (c) If an insurer provides to the commissioner substantial proof that a statement described in Subsection (7)(b) is materially false or misleading, the insurer may publish an announcement in a written publication for the sole purpose of rebutting the materially false or misleading statement. Amended by Chapter 198, 2022 General Session

Utah Code § 31A-16-110 Enjoining violations -- Voting securities acquired in violation of law or rule.

31A-16-110. Enjoining violations -- Voting securities acquired in violation of law or rule. (1) (a) Whenever it appears to the commissioner that any insurer or any director, officer, employee, or agent of an insurer has committed or is about to commit a violation of this chapter or any rule or order issued by the commissioner under this chapter, the commissioner may petition a court for an order enjoining the insurer or a director, officer, employee, or agent of the insurer from the violation. (b) The commissioner may also request other equitable relief which the nature of the case and the interest of the insurer's policyholders, creditors, and shareholders or the public require. (2) (a) No security which is the subject of any agreement or arrangement regarding acquisition, or which is acquired or to be acquired, in contravention of the provisions of this chapter or any rule or order issued by the commissioner under this chapter, may be voted at any shareholders' meeting, or may be counted for quorum purposes. (b) Any action of shareholders requiring the affirmative vote of a percentage of shares may be taken as though those securities were not issued and outstanding. (c) However, no action taken at that shareholders' meeting is invalidated by the voting of those securities, unless the action would materially affect control of the insurer or unless the court has ordered that voting invalidates the action. (d) If an insurer or the commissioner 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 any rule or order issued by the commissioner under this chapter, the insurer or the commissioner may petition a court to enjoin any offer, request, invitation, or agreement of acquisition which is made in contravention of Section 31A-16-103 or any rule or order issued by the commissioner under this chapter to enjoin the voting of that acquired security. (e) On a petition under Subsection (2)(d), a court may: (i) void any vote of that security if the vote has already been cast at any meeting of shareholders; and (ii) grant other equitable relief which the nature of the case and the interests of the insurer's policyholders, creditors, and shareholders or the public require. (3) (a) If a person has acquired or is proposing to acquire any voting securities in violation of this chapter or in violation of a rule or order issued by the commissioner under this chapter, the insurer or the commissioner may petition a court with jurisdiction under Title 78A, Judiciary and Judicial Administration. (b) If a petition is filed under Subsection (3)(a), a court may: (i) seize or sequester any voting securities of the insurer owned directly or indirectly by that person; and (ii) issue orders with respect to that person and those securities which the court considers appropriate to effectuate the provisions of this chapter. (c) A petitioner under Subsection (3)(a) shall provide notice that the court deems appropriate. (4) For the purposes of this chapter, the situs of the ownership of the securities of domestic insurers is considered to be in this state. Amended by Chapter 401, 2023 General Session

Utah Code § 31A-16-111 Required sale of improperly acquired stock -- Penalties.

31A-16-111. Required sale of improperly acquired stock -- Penalties. (1) If the commissioner finds that the acquiring person has not substantially complied with the requirements of this chapter in acquiring control of a domestic insurer, the commissioner may require the acquiring person to sell the acquiring person's stock of the domestic insurer in the manner specified in Subsection (2). (2) (a) The commissioner shall effect the sale required by Subsection (1) in the manner that, under the particular circumstances, appears most likely to result in the payment of the full market value for the stock by persons who have the collective competence, experience, financial resources, and integrity to obtain approval under Subsection 31A-16-103(8). (b) Sales made under this section are subject to approval by a court with jurisdiction under Title 78A, Judiciary and Judicial Administration, which court has the authority to effect the terms of the sale. (3) (a) The proceeds from sales a person makes under this section shall be distributed first to the person required by this section to sell the stock, but only up to the amount the person originally paid for the securities. (b) Additional sale proceeds shall be deposited into the General Fund. (4) The person required to sell and persons related to or affiliated with the seller may not purchase the stock at the sale conducted under this section. (5) A director or officer of an insurance holding company system violates this chapter if the director or officer knowingly: (a) participates in or assents to a transaction or investment that: (i) has not been properly reported or submitted in accordance with: (A) Subsections 31A-16-105(1) and (2); or (B) Subsection 31A-16-106(1)(b); or (ii) otherwise violates this chapter; or (b) permits any of the officers or agents of the insurer to engage in a transaction or investment described in Subsection (5)(a). (6) (a) When the commissioner suspects that any insurer or any director, officer, employee, or agent of the insurer, has committed a willful violation of this chapter, the commissioner may refer the violation to the appropriate prosecutor. (b) (i) An insurer that willfully violates this chapter may be fined not more than $20,000. (ii) Any individual who willfully violates this chapter is guilty of a third degree felony, and upon conviction may be: (A) fined in that person's individual capacity not more than $5,000; (B) imprisoned; or (C) both fined and imprisoned. (7) This section does not limit the other sanctions applicable to violations of this title under Section 31A-2-308. Amended by Chapter 45, 2026 General Session

Utah Code § 31A-16-112 Sanctions.

31A-16-112. Sanctions. (1) (a) Notwithstanding Section 31A-2-308, the following sanctions apply: (i) An insurer failing, without just cause, to file a registration statement required by this chapter is required, after notice and hearing, to pay a penalty of $10,000 for each day's delay, to be recovered by the commissioner and the penalty so recovered shall be paid into the General Fund. (ii) The maximum penalty under this section is $250,000. (b) The commissioner may reduce the penalty if the insurer demonstrates to the commissioner that the imposition of the penalty would constitute a financial hardship to the insurer. (2) (a) A director or officer of an insurance holding company system who knowingly violates, participates in, or assents to, or who knowingly shall permit 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 Subsection 31A-16-105(1), 31A-16-106(1)(b), or 31A-16-106(2), or that violates this chapter, shall pay, in the director's or officer's individual capacity, a civil forfeiture of not more than $10,000 per violation, notwithstanding Section 31A-2-308, after notice and hearing before the commissioner. (b) In determining the amount of the civil forfeiture, the commissioner shall take into account the appropriateness of the forfeiture with respect to the gravity of the violation, the history of previous violations, and such other matters as justice may require. (3) (a) Whenever it appears to the commissioner that any insurer subject to this chapter or a director, officer, employee, or agent of the insurer has engaged in any transaction or entered into a contract that is subject to Section 31A-16-106 and that would not have been approved had the approval been requested, the commissioner may order the insurer to cease and desist immediately any further activity under that transaction or contract. (b) After notice and hearing, the commissioner may also order the insurer to void any contract and restore the status quo if the action is in the best interest of the policyholders, creditors, or the public. (4) (a) Whenever it appears to the commissioner that an insurer or any director, officer, employee, or agent of the insurer has committed a willful violation of this chapter, the commissioner may refer the violation to the appropriate prosecutor. (b) An insurer that willfully violates this chapter may be fined not more than $250,000 notwithstanding Section 31A-2-308. (c) An individual who willfully violates this chapter may be fined in the individual's individual capacity not more than $100,000 notwithstanding Section 31A-2-308 and is guilty of a third-degree felony. (5) (a) An officer, director, or employee of an insurance holding company system who willfully and knowingly subscribes to or makes or causes to be made any false statements, false reports, or false filings with the intent to deceive the commissioner in the performances of the commissioner's duties under this chapter, is guilty of a third-degree felony. (b) Any fines imposed shall be paid by the officer, director, or employee in the officer's, director's, or employee's individual capacity. (6) Whenever it appears to the commissioner that a person has committed a violation of Section 31A-16-103 and that prevents the full understanding of the enterprise risk to the insurer by affiliates or by the insurance holding company system, the violation may serve as an independent basis for disapproving dividends or distributions and for placing the insurer under an order of supervision in accordance with Section 31A-27-503. Amended by Chapter 401, 2023 General Session

Utah Code § 31A-16-113 Receivership.

31A-16-113. Receivership. Whenever it appears to the commissioner that a person has committed a violation of this chapter that so impairs the financial condition of a domestic insurer as to threaten insolvency or make the further transaction of business by it hazardous to its policyholders, creditors, shareholders, or the public, then the commissioner may proceed as provided in Section 31A-16-114 to take possession of the property of the domestic insurer and to conduct its business. Enacted by Chapter 244, 2015 General Session

Utah Code § 31A-16-114 Recovery.

31A-16-114. Recovery. (1) If an order for liquidation or rehabilitation of a domestic insurer is entered, the receiver appointed under the order shall have a right to recover on behalf of the insurer: (a) from any parent corporation, 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, when the distribution or payment pursuant to Subsection (1)(a) or this Subsection (1)(b) is made at any time during the one year preceding the petition for liquidation, conservation, or rehabilitation, as the case may be, subject to the limitations of Subsections (2), (3), and (4). (2) A distribution may not be recovered if the parent or affiliate 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) A 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) that the person received. A person who otherwise controlled the insurer at the time the distributions were declared is liable up to the amount of distributions that would have been received if they had been paid immediately. If two or more persons are liable with respect to the same distributions, they shall be jointly and severally liable. (4) The maximum amount recoverable under 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) is insolvent or otherwise fails to pay claims due from the person, its parent corporation, holding company, or person who otherwise controlled it at the time the distribution was paid, are 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. Enacted by Chapter 244, 2015 General Session

Utah Code § 31A-16-115 Revocation, suspension, or nonrenewal of insurer's license.

31A-16-115. Revocation, suspension, or nonrenewal of insurer's license. Whenever it appears to the commissioner that a person has committed a violation of this chapter that makes the continued operation of an insurer contrary to the interests of policyholders or the public, the commissioner may, after giving notice and an opportunity to be heard, suspend, revoke, or refuse to renew the insurer's license or authority to do business in this state for such period as the commissioner 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. Enacted by Chapter 244, 2015 General Session

Utah Code § 31A-16-116 Rules and orders.

31A-16-116. Rules and orders. The commissioner in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, may make rules necessary to carry out this chapter. The commissioner may issue orders as is necessary to carry out this chapter. Enacted by Chapter 244, 2015 General Session

Utah Code § 31A-16-117 Judicial review -- Mandamus.

31A-16-117. Judicial review -- Mandamus. (1) A person aggrieved by an act, determination, rule, or order or any other action of the commissioner pursuant to this chapter may seek judicial review in accordance with Title 63G, Chapter 4, Administrative Procedures Act. (2) The filing of an appeal pursuant to this section shall stay the application of any rule, order, or other action of the commissioner to the appealing party unless the court, after giving party notice and an opportunity to be heard, determines that a stay would be detrimental to the interest of policyholders, shareholders, creditors, or the public. (3) A person aggrieved by a failure of the commissioner to act or make a determination required by this chapter may petition the district court in Salt Lake County for writ in the nature of a mandamus or a peremptory mandamus directing the commissioner to act or make a determination. Amended by Chapter 401, 2023 General Session

Utah Code § 31A-16-118 Conflict with other laws.

31A-16-118. Conflict with other laws. If any law or part of a law of this state is inconsistent with this chapter, this chapter governs. Enacted by Chapter 244, 2015 General Session

Utah Code § 31A-16-119 Severability.

31A-16-119. Severability. If any chapter, section, or subsection of this chapter or the application of any chapter, section, or subsection to any person or circumstance is held invalid, the remainder of the provisions of this chapter shall be given effect without the invalid provision or application. The provisions of this chapter are severable. Enacted by Chapter 244, 2015 General Session

Source: Utah Office of Legislative Research and General Counsel (le.utah.gov)URL: https://le.utah.gov/xcode/Title31A/Chapter16/31A-16.html?v=C31A-16_2017050920170509Fetched: 10/26/2026