Virginia Administrative Code › Title 14 - INSURANCE › Agency 5 - STATE CORPORATION COMMISSION, BUREAU OF INSURANCE › Chapter 270 - RULES GOVERNING ANNUAL FINANCIAL REPORTING › Section 14VAC5-270-40 - Definitions

Current through Register Vol. 40, No. 24, July 15, 2024
The following words and terms when used in this chapter shall
				  have the following meanings, unless the context clearly indicates
				  otherwise:
"Accountant" or "independent certified public accountant"
				  means an independent certified public accountant or accounting firm in good
				  standing with the American Institute of Certified Public Accountants (AICPA)
				  and in all states in which the accountant or firm is licensed to practice; for
				  Canadian and British companies, it means a Canadian-chartered or
				  British-chartered accountant.
"Affiliate" of a specific person or a person "affiliated"
				  with a specific person means a person that directly or indirectly through one
				  or more intermediaries, controls, is controlled by, or is under common control
				  with the specific person.
"Audit Committee" means a committee (or equivalent body)
				  established by the board of directors of an entity for the purpose of
				  overseeing the accounting and financial reporting processes of an insurer or
				  group of insurers, the internal audit function of an insurer or group of
				  insurers (if applicable), and external audits of financial statements of the
				  insurer or group of insurers. The Audit Committee of an entity that controls a
				  group of insurers may be deemed to be the Audit Committee for one or more of
				  these controlled insurers solely for the purposes of this chapter at the
				  election of the controlling person. If an Audit Committee is not designated by
				  the insurer, the insurer's entire board of directors shall constitute the Audit
				  Committee.
"Audited Financial Report" means and includes those items
				  specified in
				  14VAC5-270-60.
"Commission" means the State Corporation Commission when
				  acting pursuant to or in accordance with Title 38.2 of the Code of
				  Virginia.
"Due date" means
(i)  June 1 for all domestic insurers;
(ii)  June 30 for all foreign or alien companies domiciled or
				  entered through a state in which similar law, regulation, or administrative
				  practice provides for a June 30 filing date; and
(iii)  for all other insurers, the earlier of June 30 or the
				  date established by the insurer's state of domicile or entry for filing similar
				  audited financial reports.
"Group of insurers" means those licensed insurers included in
				  the reporting requirements of Article 5 (§ 38.2-1322 et
				  seq
.
) of Chapter 13 of Title 38.2 of the Code of Virginia, or
				  a set of insurers as identified by an entity's management, for the purpose of
				  assessing the effectiveness of internal control over financial
				  reporting.
"Indemnification" means an agreement of indemnity or a
				  release from liability where the intent or effect is to shift or limit in any
				  manner the potential liability of the person or firm for failure to adhere to
				  applicable auditing or professional standards, whether or not resulting in part
				  from knowing or other misrepresentations made by the insurer or its
				  representatives.
"Internal audit function" means a person or persons that
				  provide independent, objective, and reasonable assurance designed to add value
				  and improve an organization's operations and accomplish its objectives by
				  bringing a systematic, disciplined approach to evaluate and improve the
				  effectiveness of risk management, control and governance processes.
"Internal control over financial reporting" means a process
				  effected by an entity's board of directors, management, and other personnel
				  designed to provide reasonable assurance regarding the reliability of the
				  financial statements and includes those policies and procedures that:
1.  Pertain to the maintenance of records that in reasonable
				  detail accurately and fairly reflect the transactions and dispositions of
				  assets;
2.  Provide reasonable assurance that transactions are
				  recorded as necessary to permit preparation of the financial statements and
				  that receipts and expenditures are being made only in accordance with
				  authorizations of management and directors; and
3.  Provide reasonable assurance regarding prevention or
				  timely detection of unauthorized acquisition, use, or disposition of assets
				  that could have a material effect on the financial statements.
"NAIC" means the National Association of Insurance
				  Commissioners.
"RBC" means risk-based capital.
"RBC Level" means a licensee's Company Action Level RBC,
				  Regulatory Action Level RBC, Authorized Control Level RBC, or Mandatory Control
				  Level RBC where:
1.  "Company Action Level RBC" means, with respect to any
				  licensee, the product of 2.0 and its Authorized Control Level RBC;
2.  "Regulatory Action Level RBC" means the product of 1.5 and
				  its Authorized Control Level RBC;
3.  "Authorized Control Level RBC" means the number determined
				  under the risk-based capital formula in accordance with the RBC Instructions;
				  and
4.  "Mandatory Control Level RBC" means the product of 0.70
				  and the Authorized Control Level RBC.
"SEC" means the U.S. Securities and Exchange Commission.