Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 7 - CORPORATE AND FINANCIAL REGULATION › Subchapter B - INSURANCE HOLDING COMPANY SYSTEMS › Section 7.202 - Definitions

Current through Reg. 49, No. 28; July 12, 2024
(a) The following words and terms, when used
				  in this subchapter, have the following meanings, unless the context clearly
				  indicates otherwise.
(1) Act--The Insurance
				  Code, Chapter 823.
(2)
				  Affiliate--An affiliate of, or person affiliated with, a specific person is a
				  person that directly, or indirectly through one or more intermediaries,
				  controls, or is controlled by, or is under common control with, the person
				  specified. If the controlling person includes a member of the immediate family
				  of a person, any other person that is an affiliate of the family member is
				  deemed to be an affiliate of the controlling person.
(3) Commercially domiciled insurer--A foreign
				  or alien insurer authorized to do business in this state, that during its three
				  preceding fiscal years taken together, or any lesser period if it has been
				  licensed to transact business in this state only for that lesser period, has
				  written an average of more gross premiums in this state than it has written in
				  its state of domicile during the same period, and such gross premiums
				  constitute 30 percent or more of its total gross premiums everywhere in the
				  United States for that three-year or lesser period, as reported in its three
				  most recent annual statements. To determine if an insurer is a commercially
				  domiciled insurer, the annual average ratio for premium receipts addressed in
				  subparagraphs (A) and (B) of this paragraph must be calculated, as follows:
(A) total Texas premium for the preceding
				  three fiscal years (or any lesser period if licensed in Texas less than three
				  years) divided by total premium countrywide for the preceding three years; and
(B) total premium in the state of
				  domicile for the preceding three years divided by total premium countrywide for
				  the preceding three years.
(4) Commissioner--The commissioner of
				  insurance of the State of Texas, the commissioner's associates or deputies, or
				  their designees, as appropriate.
(5) Control--The term "control," including
				  the terms "controlling," "controlled by," and "under common control with,"
				  means the power, direct or indirect, to direct or cause the direction of the
				  management and policies of a person, whether through the ownership of voting
				  securities, by contract other than a commercial contract for goods or
				  nonmanagement services, or otherwise, unless the power is the result of an
				  official position with or corporate office held by the person. Control is
				  presumed to exist if any person, directly or indirectly, or with members of the
				  person's immediate family, owns, controls, or holds the power to vote, or if
				  any person other than a corporate officer or director of a person holds proxies
				  representing 10 percent or more of the voting securities or authority of any
				  other person, or if any person by contract or agreement is designated as an
				  attorney-in-fact for a Lloyd's plan insurer under Insurance Code Chapter 941,
				  or for a reciprocal or interinsurance exchange under Insurance Code Chapter
				  942. This presumption may be rebutted by a showing made in the manner provided
				  by Insurance Code §823.005,
				  that control does not exist in fact. The commissioner may determine, after
				  furnishing all persons in interest with notice and opportunity to be heard and
				  making specific findings of fact to support the determination, that control
				  exists in fact, notwithstanding the absence of a presumption to that effect,
				  where a person exercises, directly or indirectly, either alone or under an
				  agreement with one or more other persons such a controlling influence over the
				  management or policies of an authorized insurer as to make it necessary or
				  appropriate in the public interest or for the protection of the policyholders
				  of the insurer that the person be deemed to control the insurer.
(6) Controlled insurer--An insurer controlled
				  directly or indirectly by a holding company (as a holding company is defined in
				  this section).
(7) Controlled
				  person--Any person, other than a controlled insurer, who is controlled directly
				  or indirectly by a holding company (as a holding company is defined in this
				  section).
(8) Controlling
				  producer--An insurance broker or brokers or any person, firm, association, or
				  corporation domiciled, licensed, or operating in a state other than Texas,
				  when, for any compensation, commission, or other thing of value, the person,
				  firm, association, or corporation acts or aids in any manner in soliciting,
				  negotiating, or procuring the making of any insurance contract on behalf of an
				  insured other than the person, firm, association, or corporation, and who,
				  directly or indirectly:
(A) controls or seeks
				  to control a property and casualty insurer as the term control is defined in
				  paragraph (5) of this subsection; and
(B) writes or places, in any calendar year,
				  an aggregate amount of gross written premiums with the controlled property and
				  casualty insurer which is equal to or greater than 5.0 percent of the admitted
				  assets of the insurer as reported in the insurer's quarterly statement filed as
				  of September 30 of the prior year. The term "producer" or "controlling
				  producer" as used in these sections is not intended to include an agent or any
				  independent agent acting on behalf of the controlled insurer, licensed under
				  Insurance Code Chapter 4001, Subchapter A, and any subagent or representative
				  of the agent, who acts in the solicitation of, negotiation for, or procurement
				  or making of an insurance contract, if the agent is not also acting on behalf
				  of an insured as set forth in this paragraph, in the transaction in question.
				  The term "producer" or "controlling producer" as used in these sections is not
				  intended to include an attorney-in-fact acting on behalf of a licensed Lloyd's
				  or licensed reciprocal or interinsurance exchange.
(9) Director--A person elected or appointed
				  as a member of a board of directors responsible for the management of an
				  insurer. The term must also include an attorney-in-fact of a Lloyds or
				  reciprocal or interinsurance exchange who is charged with responsibility for
				  the management of an insurer.
(10)
				  Divesting person--A person who has control of a domestic insurer and who
				  intends to divest control of the domestic insurer.
(11) Divestiture--An abandonment of control
				  of a domestic insurer by a divesting person that does not result in the
				  transfer of control to another person.
(12) Enterprise risk--Any activity,
				  circumstance, event, or series of events involving one or more affiliates of an
				  insurer that, if not remedied promptly, is likely to have a material adverse
				  effect on the financial condition or liquidity of the insurer or its insurance
				  holding company system as a whole, including anything:
(A) that would cause the insurer's risk-based
				  capital to fall into company action level; or
(B) that would cause the insurer to be in
				  hazardous financial condition.
(13) Executive officer--The chairman of the
				  board of directors, the president, any vice-president of an applicant in charge
				  of a principal business unit, division, or function (such as sales,
				  administration, finance, or underwriting), any other officer who performs a
				  policy-making function, or any other person who performs similar policy-making
				  functions for an applicant. Executive officers of subsidiaries may be deemed
				  executive officers of an applicant if they perform policy-making functions for
				  an applicant.
(14) Foreign
				  insurer--Includes an alien insurer.
(15) Holding company--Any person who directly
				  or indirectly controls any insurer, but not including any agency, authority, or
				  instrumentality of the United States, its possessions and territories, the
				  Commonwealth of Puerto Rico, the District of Columbia, or a state or political
				  subdivision of a state or any corporation which is wholly owned, directly or
				  indirectly, by any of them.
(16)
				  Immediate family--A person's spouse, father, mother, children, brothers,
				  sisters, and grandchildren, the father, mother, brothers, and sisters of the
				  person's spouse, and the spouse of the person's child, brother, sister, mother,
				  father, or grandparent.
(17)
				  Insurance holding company system--Two or more affiliated persons, one or more
				  of which is an insurer.
(18)
				  Insurer--Includes all insurance companies organized or chartered under the laws
				  of this state, commercially domiciled insurers, or insurers licensed to do
				  business in this state, including capital stock companies, mutual companies,
				  farm mutual insurance companies, title insurance companies, fraternal benefit
				  societies, local mutual aid associations, local mutual burial associations,
				  statewide mutual assessment companies, county mutual insurance companies,
				  Lloyds' plan companies, reciprocal or interinsurance exchanges, stipulated
				  premium insurance companies, group hospital service companies and health
				  maintenance organizations, and any other entity which is subject to Insurance
				  Code Chapter 823 by applicable law, but does not include agencies, authorities,
				  or instrumentalities of the United States, its possessions and territories, the
				  Commonwealth of Puerto Rico, the District of Columbia, or a state or political
				  subdivision of a state.
(19)
				  Person--An individual, corporation, partnership, association, joint stock
				  company, trust, unincorporated organization, or similar entity or combination
				  of them acting in concert, but not a securities broker performing only the
				  usual and customary broker's function.
(20) Security holder of a specified
				  person--One who owns any security of the person, including common stock,
				  preferred stock, debt obligations, and any other security convertible into or
				  evidencing the right to acquire any of the foregoing. The term "debt
				  obligation" does not include trade, commercial, or open accounts, matured
				  claims, or agents' commissions.
(21) Subsidiary of a specified person--An
				  affiliate controlled by the person directly or indirectly through one or more
				  intermediaries.
(22) Ultimate
				  controlling person--That person which is not controlled by another person (as
				  defined in this subsection).
(23)
				  Voting security--Any security or other instrument giving or granting to the
				  holder the power to vote at a meeting of shareholders, for or against the
				  election of directors, or any other matter involving the direction of the
				  management and policies of the person, or any other security or instrument the
				  department deems to be of similar nature including, but not limited to, those
				  described in the rules and regulations the department may prescribe in the
				  public interest as a voting security.