§ 44-2133 — Transactions within an insurance holding company system; standards

(1) Transactions within an insurance holding company system to which
an insurer subject to registration is a party shall be subject to the following
standards:
(a) The terms shall be fair and reasonable;
(b) Agreements for cost-sharing
services and management shall include such provisions as are required by rules
and regulations which the director may adopt and promulgate;
(c) Charges or fees for services
performed shall be reasonable;
(d) Expenses incurred and
payment received shall be allocated to the insurer in conformity with customary
insurance accounting practices consistently applied;
(e) The books, accounts, and
records of each party to all such transactions shall be so maintained as to
clearly and accurately disclose the nature and details of the transactions,
including such accounting information as is necessary to support the reasonableness
of the charges or fees to the respective parties; and
(f) The insurer's policyholders
surplus following any dividends or distributions to shareholder affiliates
shall be reasonable in relation to the insurer's outstanding liabilities and
adequate to its financial needs.
(2) The following transactions involving a domestic insurer and any
person in its insurance holding company system, including amendments or modifications of affiliate agreements
previously filed pursuant to this section which are subject to any materiality
standards contained in subdivisions (2)(a) through (e) of this section, shall not be entered into unless
the insurer has notified the director in writing of its intention to enter
into such transaction at least thirty days prior thereto or such shorter period
as the director may permit and the director has not disapproved it within
such period. The notice for
amendments or modifications shall include the reasons for the change and the
financial impact on the domestic insurer. Informal notice shall be reported,
within thirty days after a termination of a previously filed agreement, to
the director for determination of the type of filing required, if any:
(a) Sales, purchases, exchanges, loans, or extensions of credit, guarantees,
or investments if such transactions are equal to or exceed (i) with respect
to an insurer other than a life insurer, the lesser of three percent of the
insurer's admitted assets or twenty-five percent of policyholders surplus
as of December 31 next preceding and (ii) with respect to life insurers, three
percent of the insurer's admitted assets as of December 31 next preceding;
(b) Loans or extensions of credit to any person who is not an affiliate,
when the insurer makes such loans or extensions of credit with the agreement
or understanding that the proceeds of such transactions, in whole or in substantial
part, are to be used to make loans or extensions of credit to, to purchase
assets of, or to make investments in any affiliate of the insurer making such
loans or extensions of credit if such transactions are equal to or exceed
(i) with respect to an insurer other than a life insurer, the lesser of three
percent of the insurer's admitted assets or twenty-five percent of policyholders
surplus as of December 31 next preceding and (ii) with respect to life insurers,
three percent of the insurer's admitted assets as of December 31 next preceding;
(c) Reinsurance agreements or modifications thereto, including (i) all reinsurance pooling agreements and (ii)
agreements in which 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 equals or exceeds five percent of the
insurer's policyholders surplus as of December 31 next preceding, including
those agreements which may require as consideration the transfer of assets
from an insurer to a nonaffiliate, if an agreement or understanding exists
between the insurer and nonaffiliate that any portion of such assets will
be transferred to one or more affiliates of the insurer;
(d) All management agreements, service contracts, tax-allocation agreements, and cost-sharing
arrangements; and
(e) Any material transactions, specified by rule and regulation, which
the director determines may adversely affect the interests of the insurer's
policyholders.
Nothing in this section shall be deemed to authorize or permit any transactions
which, in the case of an insurer not a member of the same insurance holding
company system, would be otherwise contrary to law.
(3) A domestic insurer may not enter into transactions which are part
of a plan or series of like transactions with persons within the insurance
holding company system if the purpose of those separate transactions is to
avoid the statutory threshold amount and thus avoid the review that would
occur otherwise. If the director determines that such separate transactions
were entered into over any twelve-month period for such purpose, the director
may exercise his or her authority under sections 44-2143 to 44-2147 .
(4) The director, in reviewing transactions pursuant to subsection (2)
of this section, shall consider whether the transactions comply with the standards
set forth in subsection (1) of this section and whether they may adversely
affect the interests of policyholders.
(5) The director shall be notified within thirty days of any investment
of the domestic insurer in any one corporation if the total investment in
such corporation by the insurance holding company system exceeds ten percent
of such corporation's voting securities.

Legislative History

Source: Laws 1991, LB 236, § 13; Laws 2012, LB887, § 9.