Pennsylvania Code › Title 31 - INSURANCE › Part I - General Provisions › Subpart B - Securities and Stock Transactions › Chapter 25 - RULES AND PROCEDURAL REQUIREMENTS FOR INSURANCE HOLDING COMPANY SYSTEMS › Section 25.21 - Transactions subject to prior notice-notice filing

Current through Register Vol. 54, No. 28, July 13, 2024
(a) An insurer required to give notice of a
				  proposed transaction under section 1405(a)(2) of the act (40 P. S. §
											991.1405(a)(2)) shall
				  furnish the required information on Form D located in Appendix A as prescribed
				  by this chapter.
(b) The insurer
				  shall file an amendment to Form B reporting changes in the information
				  furnished on Form D, including a change in the effective date of the
				  transaction, within 15 days after the end of a month in which the transaction
				  is effectuated.
(c) An insurer may
				  not enter into a proposed transaction if a material change occurs in the
				  information furnished on Form D unless the insurer has filed an amended Form D
				  with the Department at least 30 days prior to entering into the transaction, or
				  a shorter period the Department may permit, and the Department has not
				  disapproved the amended transaction within that time period.
(d) New or amended management agreements,
				  service contracts, tax allocation agreements, guarantees and cost-sharing
				  arrangements (including leases), involving a domestic insurer and a person in
				  its insurance holding company system must:
(1) Be filed for prior approval under section
				  1405(a)(2)(v) of the act.
(2) At a
				  minimum and as applicable:
(i) Identify the
				  person providing services and the nature of the services.
(ii) Set forth the methods to allocate
				  costs.
(iii) Require timely
				  settlement, not less frequently than on a quarterly basis, and compliance with
				  the NAIC Accounting Practices and Procedures Manual.
(iv) Prohibit advancement of funds by the
				  insurer to the affiliate except to pay for services defined in the
				  agreement.
(v) State that the
				  insurer shall maintain oversight for functions provided to the insurer by the
				  affiliate and that the insurer shall monitor services annually for quality
				  assurance.
(vi) Define books and
				  records of the insurer to include the books and records developed or maintained
				  under or related to the agreement.
(vii) Specify that the books and records of
				  the insurer are the exclusive property of the insurer, held for the benefit of
				  the insurer and are subject to the control of the insurer.
(viii) Include standards for termination of
				  the agreement with and without cause.
(ix) Include provisions for indemnification
				  of the insurer in the event of gross negligence or willful misconduct on the
				  part of the affiliate providing the services.
(x) Specify that, if the insurer is placed in
				  receivership or seized by the Commissioner under Article V of The Insurance
				  Department Act of 1921 (40 P. S. §§
													221.1-221.63):
(A) The rights of the insurer under the
				  agreement extend to the receiver or Commissioner.
(B) The books and records shall immediately
				  be made available to the receiver or Commissioner immediately upon the receiver
				  or the Commissioner's request.
(xi) Specify that the affiliate does not have
				  an automatic right to terminate the agreement if the insurer is placed in
				  receivership under Article V of The Insurance Department Act of 1921.
(xii) Specify that the affiliate will
				  continue to maintain systems, programs or other infrastructure notwithstanding
				  a seizure by the Commissioner under Article V of The Insurance Department Act
				  of 1921 and shall make them available to the receiver for as long as the
				  affiliate continues to receive timely payment for services rendered.