Section 3.21.185. Transactions subject to prior notice; required or voluntary requests for approval or pre-approval; notice filing; Form D.

	(a)  An insurer required to give notice of a proposed transaction under AS 21.22.080 - 21.22.105 or desiring voluntary approval or pre-approval of a transaction under AS 21  shall furnish the required information on Form D, made a part of this section in substantially the following form:  
FORM D   
PRIOR NOTICE OF A TRANSACTION  
Filed with the Insurance Division/Department of the State of ____________  
By   
__________________ 
			(Name of Registrant)  
On Behalf of the Following Insurance Companies  
Name 	Address  
________________________
________________________
________________________
________________________
Date: _____________, 20____  
Name, Title, Address, Electronic Mail Address, and Telephone Number of Individual to Whom Notices and Correspondence Concerning This Statement Should be Addressed:  
________________________
________________________
________________________
________________________
ITEM 1. IDENTITY OF PARTIES TO TRANSACTION  
Furnish the following information for each party to the transaction:  
	(a)  name:  
	(b)  home office address;  
	(c)  principal executive office address;  
	(d)  the organizational structure (i.e., corporation, partnership, individual, trust, etc.);  
	(e)  a description of the nature of the party's business operations;  
	(f)  relationship, if any, the insurer filing the notice or requesting the approval of pre-approval may have with another party to the transaction, including any ownership or debtor/creditor interest another party to the transaction may have in the insurer or the insurer may have in another party to the transaction; and  
	(g)  where the transaction is with a non-affiliate, the name of an affiliate that will receive, in whole or substantial part, the proceeds of the transaction.  
ITEM 2. DESCRIPTION OF THE TRANSACTION  
Furnish the following information for each transaction for which notice is being given:  
	(a)  citation of the statute section, subsection, or paragraph under which the notice is being given or the request for approval or pre-approval, either required or voluntary, is being made;  
	(b)  a list of any other statutes applicable to the transaction;  
	(c)  a statement of the nature of the transaction;   
	(d)  a statement of how the transaction meets the "fair and reasonable" standard of AS 21.22.080(1); and.  
	(e)  the proposed effective date of the transaction.  
ITEM 3. SALES, PURCHASES, EXCHANGES, LOANS, EXTENSIONS OF CREDIT, GUARANTEES, OR INVESTMENTS  
Furnish a brief description of the amount and source of funds, securities, property, or other consideration involved in the sale, purchase, exchange, loan, extension of credit, guarantee, or investment related to the transaction, a statement of whether a provision exists for purchase by the insurer filing notice, by any party to the transaction, or by any affiliate of the insurer filing notice; a description of the terms of any securities being received; and a description of any other agreements relating to the transaction such as service contracts or consulting agreements. If the transaction involves consideration other than cash, furnish a description of the consideration, its cost, its fair market value, and an explanation of the basis for evaluation.  
If the transaction involves a loan, extension of credit, or a guarantee, furnish a description of the maximum amount that the insurer will be obligated to make available under the loan, extension of credit, or guarantee; the date on which the credit or guarantee will terminate; and any provision for the accrual or deferral of interest.  
If the transaction involves an investment, guarantee, or other arrangement, state the time period during which the investment, guarantee, or other arrangement will remain in effect, including any provision for an extension or renewal. Furnish a brief statement regarding the effect of the transaction upon the insurer's surplus.  
Unless otherwise required by the director or required by statute, a notice is not required if, as of the last December 31st, the maximum amount that can be outstanding or for which the insurer can be legally obligated under the loan, extension of credit, or guarantee is less than   
	(a)  for non-life insurers, either three percent of the insurer's admitted assets or 25 percent of surplus as regards policyholders, whichever is less, or   
	(b)  for life insurers, three percent of the insurer's admitted assets.  
ITEM 4. LOANS OR EXTENSIONS OF CREDIT TO A NON-AFFILIATE  
If the transaction involves a loan or extension of credit to a person that is not an affiliate, furnish a brief description of the agreement or understanding in which the proceeds of the proposed transaction, in whole or substantial part, are to be used to make a loan or extension of credit to, purchase the assets of, or make an investment in, an affiliate of the insurer making the loan or extension of credit. Specify in what manner the proceeds are to be used to loan to, extend credit to, purchase assets of, or make investments in an affiliate. Describe the amount and source of funds, securities, property, or other consideration for the loan or extension of credit and, if the transaction involves consideration other than cash, furnish a description of the consideration, its cost, its fair market value, and an explanation of the basis for evaluation. Furnish a brief statement regarding the effect of the transaction upon the insurer's surplus..  
Unless otherwise required by the director or required by statute, a notice is not required if, as of the last December 31st, the loan or extension of credit is less than  
	(a)  for non-life insurers, either three percent of the insurer's admitted assets or 25 percent of surplus as regards policyholders, whichever is less, or  
	(b)  for life insurers, three percent of the insurer's admitted assets.  
ITEM 5. REINSURANCE  
If the transaction is a reinsurance agreement or modification of it under AS 21.22.085(a)(3)(B) or a reinsurance pooling agreement or modification to it as described under AS 21.22.085(a)(3)(A), furnish a description of the known and estimated amounts of liability to be ceded or assumed in a calendar year, the period of time during which the agreement is in effect, and a statement regarding whether an agreement or understanding exists between the insurer and non-affiliate that provides that a portion of the assets serving as consideration for the agreement will be transferred to one or more of the insurer's affiliates. Furnish a brief description of the consideration involved in the transaction and a brief statement regarding the effect of the transaction upon the insurer's surplus.  
Unless otherwise required by the director or required by statute, a notice is not required for a reinsurance agreement or modification to it if, as of the last December 31st, the reinsurance premium or a change in the insurer's liabilities or the projected reinsurance premium or change in the insurer's liabilities in any of the next three years, in connection with a reinsurance agreement or modification to it is less than five percent of the insurer's surplus as regards policyholders. Notice must be given for all reinsurance pooling agreements including modifications to it.  
ITEM 6. MANAGEMENT AGREEMENTS, SERVICE CONTRACTS, AND COST SHARING ARRANGEMENTS  
For a management agreement or service contract, furnish a brief description of the agreement, or contract including its duration, the managerial responsibilities or services to be performed, and the basis for and terms of payment of compensation.  
For a cost-sharing arrangement, furnish.  
	(a)  a brief description of the purpose of the agreement;  
	(b)  a description of the period of time during which the agreement is to be in effect;  
	(c)  a brief description of each party's expenses or costs covered by the agreement;  
	(d)  a brief description of the accounting basis to be used in calculating each person's costs under the agreement;  
	(e)  a brief statement as to the effect of the transaction upon the insurer's policyholder surplus;  
	(f)  a statement regarding the cost allocation methods that specifies whether the proposed charges are based on "cost or market." If the proposed charges are market based, provide rationale for using market instead of cost, including justification for the company's determination that amounts are fair and reasonable; and  
	(g)  a statement regarding compliance with the most recently adopted Accounting Practices and Procedure Manual issued by the National Association of Insurance Commissioners regarding expense allocation.  
ITEM 7. OTHER APPROVALS OR PRE-APPROVALS  
Furnish a brief description of the transaction and the circumstances under which it was or will be accomplished. Furnish information regarding valuation and pricing of the transaction and any other applicable information. If the transaction is an investment, provide the current purchase price, carrying value on the records of the holder of the investment, and current market value of the investment, along with information on how each value was determined.  
Describe the action requested of the director. Provide a brief discussion concerning approval or disapproval of the requested action citing applicable law and alternate actions that may be taken if approval is not received.  
ITEM 8. EXTRAORDINARY DIVIDENDS OR DISTRIBUTIONS  
As required under 3 AAC 21.140, provide a description of the extraordinary dividend or distribution for which approval is requested. Provide a brief discussion concerning approval or disapproval giving consideration to AS 21.22.080(5) and 21.22.090.  
ITEM 9. INVESTMENT IN SUBSIDIARIES AND INSURER ACQUISITIONS  
Use this section if approval under 3 AAC 21.281(g) for a life and health insurer or under 3 AAC 21.370(g) for a property and casualty insurer is being sought.  
Furnish the calculations required to determine that the thresholds under 3 AAC 21.28l(g) or 3 AAC 21.370(g) are met. Furnish discussion concerning the reason why, after the investment, the resultant policyholder surplus will be reasonable in relation to the organization's outstanding liabilities and adequate to the organization's financial need.  
Furnish a schedule showing the effect on the surplus of the parties to the transaction and a discussion concerning the reason why, under AS 21.22.080, the resultant policyholder surplus will be reasonable in relation to the organization's outstanding liabilities and adequate to the organization's financial needs, giving consideration to AS 21.22.090.  
Furnish a description of the material transaction in which the parties intend to engage, including the amount of fees to be charged and support for the reasonableness of those fees. Provide a statement affirming that the parties to the proposed transaction will comply with AS 21.22.080.  
Furnish other information pertinent to the approval or pre-approval sought. If a Form A, an application for a certificate of authority, or another filing for the company or affiliate of the company is pending before the director, identify and describe the associated filing.  
ITEM 10. SIGNATURE AND CERTIFICATION  
Signature and certification are required as follows:  
SIGNATURE  
Under the requirements of AS 21.22.080 - 21.22.105, ____________ has caused this notice to be signed on its behalf in the City or Community of ____________ and State of ____________ on the day of ______, 20____.  
			(SEAL)  
________________________
			(Name of Applicant)  
________________________
			(Name) 	(Title)  
Attest:  
________________________
			(Signature of Officer)  
________________________
			(Title)  
CERTIFICATION  
________________________
			(Signature)  
________________________
			(Type or print name below)  
________________________
	(b)  Agreements for cost sharing services and management services must at a minimum and as applicable  
		(1) identify the person providing services and the nature of the services;  
		(2) set out the methods to allocate costs;  
		(3) require timely settlement, not less frequently than on a quarterly basis, and compliance with the requirements in the most recently adopted Accounting Practices and Procedures Manual issued by the National Association of Insurance Commissioners;  
		(4) prohibit advancement of funds by the insurer to the affiliate except to pay for services defined in the agreement;  
		(5) state that the insurer will maintain oversight for functions that the affiliate provides to the insurer and that the insurer will monitor services annually for quality assurance;  
		(6) define books and records of the insurer to include all books and records developed or maintained under or related to the agreement;  
		(7) specify that all books and records of the insurer are and remain the property of the insurer and are subject to control of the insurer;  
		(8) state that all funds and invested assets of the insurer are the exclusive property of the insurer, held for the benefit of the insurer, and subject to the control of the insurer;  
		(9) include standards for termination of the agreement with and without cause;  
		(10) 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;  
		(11) specify that, if the insurer is placed in receivership or seized by the director under AS 21.78,   
			(A) all of the rights of the insurer under the agreement extend to the receiver or director; and  
			(B) all books and records shall immediately be made available to the receiver or the director, and shall be turned over to the receiver or director immediately upon the receiver or the director's request;  
		(12) specify that the affiliate has no automatic right to terminate the agreement if the insurer is placed in receivership under AS 21.78; and  
		(13) specify that the affiliate will continue to maintain any systems, programs, or other infrastructure notwithstanding a seizure by the director under AS 21.78,  and will make them available to the receiver, for so long as the affiliate continues to receive timely payment for services rendered.  

Authorities

21.06.090;21.22.070;21.22.080;21.22.130

Notes

Reference

3 AAC 21.140

Authority

AS 21.06.090 AS 21.22.070 AS 21.22.080 AS 21.22.130

History

Eff. 10/21/92, Register 124; am 1/12/95, Register 133; am 6/11/2006, Register 178; am 11/26/2015, Register 216