85R11358 BEE-F     By: Phillips H.B. No. 3220       A BILL TO BE ENTITLED   AN ACT   relating to the regulation of insurance holding company systems,   including internationally active insurance groups; authorizing a   fee.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 823.002, Insurance Code, is amended by   adding Subdivisions (4-b) and (6-a) to read as follows:                (4-b)  "Group-wide supervisor" means the regulatory   official authorized to engage in conducting and coordinating   group-wide supervision activities who is determined or   acknowledged by the commissioner under Section 823.0147 to have   sufficient significant contacts with the internationally active   insurance group.                (6-a)  "Internationally active insurance group" means   an insurance holding company system that:                      (A)  includes an insurer registered under   Subchapter B; and                      (B)  meets the following criteria:                             (i)  has premiums written in at least three   countries;                            (ii)  has a percentage of gross premiums   written outside the United States of at least 10 percent of the   insurance holding company system's total gross written premiums;   and                            (iii)  based on a three-year rolling   average, has total assets of at least $50 billion or total gross   written premiums of at least $10 billion.          SECTION 2.  Sections 823.011(a), (d), and (d-1), Insurance   Code, are amended to read as follows:          (a)  This section applies only to information, including   documents and copies of documents, that is:                (1)  reported or otherwise provided under Subchapter B   or C or Section 823.201(d) or (e) or Section 823.0147;                (2)  disclosed to the commissioner under Section   823.010; or                (3)  obtained by or disclosed to the commissioner or   another person in the course of an examination or investigation   under Subchapter H or Chapter 401.          (d)  Except as provided by Subsection (e), if the recipient   of documents or other information described by Subsection (a)   agrees in writing to maintain the confidential and privileged   status of the documents or other information, and verifies in   writing the legal authority to maintain the confidential and   privileged status of the documents or information, the commissioner   or another person may disclose the information to any of the   following entities functioning in an official capacity:                (1)  a commissioner of insurance or an insurance   department of another state;                (2)  an authorized law enforcement official;                (3)  a district attorney of this state;                (4)  the attorney general;                (5)  a grand jury;                (6)  members of a supervisory college described by   Section 823.0145;                (7)  the National Association of Insurance   Commissioners and its affiliates and subsidiaries; or                (8)  another state, federal, or international   regulatory agency.          (d-1)  The commissioner may receive documents or   information, including otherwise confidential and privileged   documents or information, from the entities listed in Subsection   (d)[,] and shall maintain as confidential or privileged any   document or information received by the commissioner with notice or   an understanding that the document or information is confidential   or privileged under the laws of the jurisdiction of the entity that   provides the document or information.          SECTION 3.  Subchapter A, Chapter 823, Insurance Code, is   amended by adding Section 823.0147 to read as follows:          Sec. 823.0147.  GROUP-WIDE SUPERVISION OF INTERNATIONALLY   ACTIVE INSURANCE GROUPS. (a) The commissioner is authorized to act   as the group-wide supervisor for any internationally active   insurance group under the provisions of this section.          (b)  The commissioner may otherwise acknowledge another   regulatory official as the group-wide supervisor where the   internationally active insurance group:                (1)  does not have substantial insurance operations in   the United States;                (2)  has substantial insurance operations in the United   States, but not in this state; or                (3)  has substantial insurance operations in the United   States and this state, but the commissioner has determined under   the factors in Subsections (e) and (k) that the other regulatory   official is the appropriate group-wide supervisor.          (c)  An insurance holding company system that does not   otherwise qualify as an internationally active insurance group may   request that the commissioner make a determination or   acknowledgment as to a group-wide supervisor under this section.          (d)  In cooperation with other state, federal, and   international regulatory agencies, the commissioner will identify   a single group-wide supervisor for an internationally active   insurance group.  The commissioner may determine that the   commissioner is the appropriate group-wide supervisor for an   internationally active insurance group that conducts substantial   insurance operations concentrated in this state. The commissioner   may acknowledge that a regulatory official from another   jurisdiction is the appropriate group-wide supervisor for the   internationally active insurance group.          (e)  The commissioner shall consider the following factors   when making a determination or acknowledgment under Subsection (d):                (1)  the place of domicile of the insurers within the   internationally active insurance group that hold the largest share   of the group's written premiums, assets, or liabilities;                (2)  the place of domicile of the top-tiered insurers   in the insurance holding company system of the internationally   active insurance group;                (3)  the location of the executive offices or largest   operational offices of the internationally active insurance group;                (4)  whether another regulatory official is acting or   is seeking 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)  otherwise sufficient in terms of providing   for group-wide supervision, enterprise risk analysis, and   cooperation with other regulatory officials; and                (5)  whether another regulatory official acting or   seeking to act as the group-wide supervisor provides the   commissioner with reasonably reciprocal recognition and   cooperation.          (f)  A commissioner identified under this section as the   group-wide supervisor may determine that it is appropriate to   acknowledge another supervisor to serve as the group-wide   supervisor. The acknowledgment of the group-wide supervisor shall   be made after consideration of the factors listed in Subsection   (e), and shall be made in cooperation with and subject to the   acknowledgment of other regulatory officials involved with   supervision of members of the internationally active insurance   group, and in consultation with the internationally active   insurance group.          (g)  Notwithstanding any other provision of law, when   another regulatory official is acting as the group-wide supervisor   of an internationally active insurance group, the commissioner   shall acknowledge that regulatory official as the group-wide   supervisor.          (h)  The commissioner shall make a determination or   acknowledgment as to the appropriate group-wide supervisor for an   internationally active insurance group under Subsection (d) or (f)   in the event of a material change in the internationally active   insurance group that results in:                (1)  the internationally active insurance group's   insurers domiciled in this state holding the largest share of the   group's premiums, assets, or liabilities; or                (2)  this state being the place of domicile of the   top-tiered insurers in the insurance holding company system of the   internationally active insurance group.          (i)  Under Subchapter H, the commissioner is authorized to   collect from any insurer registered under Subchapter B all   information necessary to determine whether the commissioner may act   as the group-wide supervisor of an internationally active insurance   group or if the commissioner may acknowledge another regulatory   official to act as the group-wide supervisor. Prior to issuing a   determination that an internationally active insurance group is   subject to group-wide supervision by the commissioner, the   commissioner shall notify the insurer registered under Subchapter B   and the ultimate controlling person within the internationally   active insurance group. The internationally active insurance group   shall have not less than 30 days to provide the commissioner with   additional information pertinent to the pending determination. The   commissioner may publish on the department's website the identity   of internationally active insurance groups that the commissioner   has determined are subject to group-wide supervision by the   commissioner.          (j)  If the commissioner is the group-wide supervisor for an   internationally active insurance group, the commissioner is   authorized to engage in any of the following group-wide supervision   activities:                (1)  assess the enterprise risks within the   internationally active insurance group to ensure that:                      (A)  the material financial condition and   liquidity risks to the members of the internationally active   insurance group that are engaged in the business of insurance are   identified by management; and                      (B)  reasonable and effective mitigation measures   are in place;                (2)  request, from any member of an 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:                      (A)  governance, risk assessment, and management;                      (B)  capital adequacy; and                      (C)  material intercompany transactions;                (3)  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;                (4)  communicate with other state, federal, and   international regulatory agencies for members within the   internationally active insurance group and share relevant   information, subject to the confidentiality provisions of Section   823.011, through supervisory colleges in Section 823.0145 or   otherwise;                (5)  enter into agreements with or obtain documentation   from any insurer registered under Subchapter B, any member of the   internationally active insurance group, and any other state,   federal, and international regulatory agencies for members of the   internationally active insurance group, providing the basis for or   otherwise clarifying the commissioner's role as group-wide   supervisor, including provisions for resolving disputes with other   regulatory officials, provided that such agreements or   documentation may not serve as evidence in any proceeding to show   that any insurer or person within an insurance holding company   system not domiciled or incorporated in this state is doing   business in this state or is otherwise subject to jurisdiction in   this state; and                (6)  other group-wide supervision activities,   consistent with the authorities and purposes enumerated above, as   considered necessary by the commissioner.          (k)  If the commissioner acknowledges that another   regulatory official from a jurisdiction that is not accredited by   the National Association of Insurance Commissioners is the   group-wide supervisor, the commissioner is authorized to   reasonably cooperate, through supervisory colleges or otherwise,   with group-wide supervision undertaken by the group-wide   supervisor, provided that:                (1)  the commissioner's cooperation is in compliance   with the laws of this state; and                (2)  the regulatory official acknowledged as the   group-wide supervisor also recognizes and cooperates with the   commissioner's activities as a group-wide supervisor for other   internationally active insurance groups where applicable.          (l)  Where recognition and cooperation are not reasonably   reciprocal under Subsection (k)(2), the commissioner is authorized   to refuse recognition and cooperation.          (m)  The commissioner is authorized to enter into agreements   with or obtain documentation from any insurer registered under   Subchapter B, any affiliate of the insurer, and other state,   federal, and international regulatory agencies for members of the   internationally active insurance group that provides the basis for   or otherwise clarifies a regulatory official's role as group-wide   supervisor.          (n)  The commissioner may adopt rules necessary for the   administration of this section.          (o)  A registered insurer subject to this section shall be   liable for and shall pay the reasonable expenses of the   commissioner's participation in the administration of this   section, including the engagement of attorneys, actuaries, and any   other professionals and all reasonable travel expenses.          SECTION 4.  Section 823.054(b), Insurance Code, is amended   to read as follows:          (b)  If the amount of a single transaction or the total   amount of all transactions involving sales, purchases, exchanges,   loans or other extensions of credit, or investments is more than   [the lesser of] one-half of one percent of an insurer's admitted   assets [or five percent of an insurer's surplus,] as of December 31   of the year preceding the date of the transaction or transactions,   the transaction or transactions, respectively, are considered to be   material for purposes of this section.          SECTION 5.  (a) Section 823.011, Insurance Code, as amended   by this Act, applies only to information, including documents and   copies of documents, obtained by or reported, disclosed, or   otherwise provided to the commissioner of insurance on or after the   effective date of this Act. Information, including documents and   copies of documents, obtained by or reported, disclosed, or   otherwise provided to the commissioner of insurance before the   effective date of this Act is governed by the law in effect on the   date the transaction occurred, and the former law is continued in   effect for that purpose.          (b)  Section 823.054, Insurance Code, as amended by this Act,   applies only to a transaction that occurs on or after the effective   date of this Act. A transaction that occurs before the effective   date of this Act is governed by the law in effect on the date the   transaction occurred, and the former law is continued in effect for   that purpose.          SECTION 6.  This Act takes effect immediately if it receives   a vote of two-thirds of all the members elected to each house, as   provided by Section 39, Article III, Texas Constitution.  If this   Act does not receive the vote necessary for immediate effect, this   Act takes effect September 1, 2017.