(1) After a dividing
insurer approves a plan of division pursuant to section 10-3-1707, the dividing
insurer shall file the plan of division with the commissioner. Within ten business
days after filing the plan of division with the commissioner, the dividing insurer shall
provide notice of the filing to each reinsurer that is a party to a reinsurance contract
allocated in the plan of division.
(2) A division may not become effective until it is approved by the
commissioner in accordance with this section and a certificate of division is filed in
accordance with section 10-3-1710.
(3) Before approving a plan of division, the commissioner shall:
(a) Hold a public hearing in accordance with section 24-4-105, except to the
extent that the procedures set forth in section 24-4-105 conflict with the
procedures set forth in this part 17;
(b) Provide notice of the public hearing required pursuant to subsection (3)(a)
of this section to state insurance regulators and appropriate state guaranty
associations in states in which the dividing insurer is authorized to do business;
(c) Confirm to the commissioner's satisfaction that the dividing insurer has
made reasonable efforts to provide to all policyholders, contract holders,
reinsurers, and other persons with an interest in the proposed plan of division at
least thirty days' prior notice of the public hearing if the commissioner determines
that it would be unreasonable or unfair to not provide such notice to such other
persons. For the purposes of this subsection (3)(c), a notice must:
(I) Provide information regarding the proposed division under consideration
and the location, date, and time of the public hearing; and
(II) If the dividing insurer has the last-known address or last-known email
address of the policyholder, contract holder, reinsurer, or other person on file,
either be mailed to the last-known address of such person or sent via electronic
means to the last-known email address of such person.
(d) Consider any simultaneous merger or acquisition of a resulting insurer as
part of the plan of division;
(e) In the case of a simultaneous merger, apply to the resulting insurer
involved in the simultaneous merger the requirements of this part 17 that are
applicable to the resulting insurer as merged into the surviving entity in the merger
and not to the resulting insurer prior to the merger; and
(f) Consider, among other things, all assets, liabilities, and cash flows, the
nature and composition of the assets proposed to be transferred in support of the
plan of division, and all proposed assets of the resulting insurers, which
consideration must include:
(I) An assessment of the risks and quality, including the liquidity and
marketability, of the proposed portfolio of each resulting insurer;
(II) Consideration of asset and liability matching; and
(III) The treatment of the material elements of the portfolio based on
statutory accounting practices.
(4) After making the considerations described in subsections (3)(d), (3)(e),
and (3)(f) of this section, the commissioner shall approve a plan of division if the
commissioner finds that the following requirements are met:
(a) The financial condition of a dividing insurer, a resulting insurer, or an
acquiring party of a resulting insurer, if any, will not jeopardize the financial
stability of the dividing insurer or prejudice the interests of its policyholders,
contract holders, or reinsurers, in each case, in a manner that is unfair to its
policyholders, contract holders, or reinsurers;
(b) The terms of the plan of division are fair and reasonable to the dividing
insurer's and any resulting insurer's policyholders, contract holders, and reinsurers,
if any;
(c) Neither a dividing insurer, a resulting insurer, nor an acquiring party of a
resulting insurer, if any, has plans or proposals to:
(I) Liquidate the dividing insurer or any resulting insurer;
(II) Sell assets of the dividing insurer or of any resulting insurer;
(III) Consolidate or merge the dividing insurer or any resulting insurer with a
person; or
(IV) Make any other material change in the dividing insurer's or any resulting
insurer's business or corporate structure or management that is unfair or
unreasonable to the dividing insurer's or resulting insurers' policyholders, contract
holders, or reinsurers and not in the public interest;
(d) The competence, experience, and integrity of the persons who would
control the operation of a dividing insurer, if it survives the division, and any
resulting insurer are such that permitting the division would be consistent with the
interest of the dividing insurer's and any resulting insurers' policyholders, contract
holders, and reinsurers, if any, and the general public;
(e) The division is not likely to be hazardous or prejudicial to the insurance-buying public;
(f) The interest of the policyholders of the dividing insurer that may become
policyholders of a resulting insurer will be adequately protected by the resulting
insurer or acquiring party of a resulting insurer, if any;
(g) The dividing insurer, if it survives the division, and any resulting insurers
will be solvent upon the consummation of the division;
(h) The assets allocated to the dividing insurer, if it survives the division, and
to resulting insurers will not, upon the consummation of the division, be
unreasonably small in relation to the business and transactions in which the
insurers were engaged or are about to engage;
(i) The proposed division is not being made for the purpose of hindering,
delaying, or defrauding any policyholders, contract holders, or reinsurers;
(j) Each resulting insurer that will be a member insurer under the Life and
Health Insurance Protection Association Act, article 20 of this title 10, will be
licensed in each line of business in each state where the dividing insurer was
licensed with respect to the insurance policies or annuity contracts issued by the
dividing insurer that are allocated to that resulting insurer as part of the plan of
division; except that the resulting insurer need not be licensed with respect to any
line of business in any state where, at the time of division:
(I) The dividing insurer is not licensed with respect to that line of business; or
(II) The state does not provide guaranty association coverage or similar
coverage with respect to the allocated policies or contracts; and
(k) If the plan of division allocates policies of long-term care insurance, as
defined in section 10-19-103 (5), the liabilities associated with those allocated
policies do not constitute more than a de minimus amount of the insurance
liabilities allocated to the dividing insurer, if it survives the division, or to any
resulting insurer.
(5) A dividing insurer that files a plan of division shall pay all expenses
incurred by the commissioner in connection with proceedings under this section,
including expenses for attorneys, actuaries, accountants, and other experts not
otherwise a part of the commissioner's staff as may be reasonably necessary to
assist the commissioner in reviewing the proposed plan of division. A dividing
insurer may allocate the expenses in the plan of division in the same manner as any
other liability.
(6) The commissioner shall select and retain an independent expert who
shall review the plan of division and issue a report to the commissioner, which
report addresses the following:
(a) The business purposes of the proposed division;
(b) Capital adequacy and risk-based capital, including consideration of the
effects of asset quality, nonadmitted assets, and actuarial stresses to reserve
assumptions;
(c) Cash flow and reserve adequacy testing, including consideration of the
effects of diversification on policy liabilities;
(d) Business plans;
(e) The impact, if any, of concentration of lines of business following the
proposed division; and
(f) Management's competence, experience, and integrity.
(7) If the commissioner approves a plan of division, the commissioner shall
issue:
(a) An order that is accompanied by findings of fact and conclusions of law;
and
(b) A certificate of authority authorizing the resulting insurers to transact the
business of insurance in this state; except that the commissioner may waive this
requirement if a resulting insurer will not survive a merger simultaneous with the
division in accordance with the plan of division.
(8) The conditions in this section for freeing one or more of the resulting
insurers from the liabilities of the dividing insurer and for allocating some or all of
the liabilities of the dividing insurer are deemed to have been satisfied if the
commissioner approves the plan of division in a final order.