Section Ins 40.21 - Group capital calculation(1) DISCRETIONARY ANNUAL FILING EXEMPTION. Where an insurance holding company system has previously filed the annual group capital calculation at least once, the lead state commissioner has the discretion to exempt the ultimate controlling person from filing the annual group capital calculation if the lead state commissioner makes a determination based upon that filing that the insurance holding company system meets all of the following criteria: (a) The insurance holding company system has annual direct written and unaffiliated assumed premium including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of less than $1,000,000,000.(b) The insurance holding company system has no insurers within its holding company structure that are domiciled outside of the United States or one of its territories.(c) The insurance holding company system has no banking, depository or other financial entity that is subject to an identified regulatory capital framework within its holding company structure.(d) The insurance holding company system attests that there are no material changes in the transactions between insurers and non-insurers in the group that have occurred since the last filing of the annual group capital.(e) The non-insurers within the insurance holding company system do not pose a material financial risk to the insurer's ability to honor policyholder obligations.(2) DISCRETIONARY LIMITED FILING. Where an insurance holding company system has previously filed the annual group capital calculation at least once, the lead state commissioner has the discretion to accept a limited group capital filing in lieu of the group capital calculation if the insurance holding company system has annual direct written and unaffiliated assumed premium including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of less than $1,000,000,000; and all of the following additional criteria are met:(a) The insurance holding company system has no insurers within its holding company structure that are domiciled outside of the United States or one of its territories.(b) The insurance holding company system does not include a banking, depository or other financial entity that is subject to an identified regulatory capital framework.(c) The insurance holding company system attests that there are no material changes in transactions between insurers and non-insurers in the group that have occurred since the last filing of the report to the lead state commissioner and the non-insurers within the insurance holding company system do not pose a material financial risk to the insurers ability to honor policyholder obligations.(3) PERIODIC FILING REQUEST. For an insurance holding company system that has previously met an exemption with respect to the group capital calculation pursuant to sub. (1) or (2), the lead state commissioner may require at any time the ultimate controlling person to file an annual group capital calculation, completed in accordance with the NAIC group capital calculation instructions, if any of the following criteria are met: (a) Any insurer within the insurance holding company system is in a risk-based capital action level event as set forth in ch. Ins 51, or a similar standard for a non-U.S. insurer.(b) Any insurer within the insurance holding company system meets one or more of the standards of an insurer deemed to be in hazardous financial condition as described in s. 623.11, 645.31, or 645.41, Stats.(c) Any insurer within the insurance holding company system otherwise exhibits qualities of a troubled insurer as determined by the lead state commissioner based on unique circumstances including, but not limited to, the type and volume of business written, ownership and organizational structure, federal agency requests, and international supervisor requests.(4) NON-U.S. JURISDICTION. A non-U.S. jurisdiction is considered to recognize and accept the group capital calculation if it satisfies the following criteria: (a) With respect to s. Ins 40.03 (9) (d) 4.: 1. The non-U.S. jurisdiction recognizes the U.S. state regulatory approach to group supervision and group capital, by providing confirmation by a competent regulatory authority, in such jurisdiction, that insurers and insurance groups whose lead state is accredited by the NAIC under the NAIC accreditation program shall be subject only to worldwide prudential insurance group supervision including worldwide group governance, solvency and capital, and reporting, as applicable, by the lead state and will not be subject to group supervision, including worldwide group governance, solvency and capital, and reporting, at the level of the worldwide parent undertaking of the insurance or reinsurance group by the non-U.S. jurisdiction; or2. Where no U.S. insurance groups operate in the non-U.S. jurisdiction, that non-U.S. jurisdiction indicates formally in writing to the lead state with a copy to the international association of insurance supervisors that the group capital calculation is an acceptable international capital standard. This will serve as the documentation otherwise required in subd. 1.(b) The non-U.S. jurisdiction provides confirmation by a competent regulatory authority in such jurisdiction that information regarding insurers and their parent, subsidiary, or affiliated entities, if applicable, shall be provided to the lead state commissioner in accordance with a memorandum of understanding or similar document between the commissioner and such jurisdiction, including the International Association of Insurance Supervisors Multilateral Memorandum of Understanding or other multilateral memoranda of understanding coordinated by the NAIC. The commissioner shall determine, in consultation with the NAIC committee process, if the requirements of the information sharing agreements are in force.(5) PUBLISHED NON-U.S. JURISDICTIONS. A list of non-U.S. jurisdictions that recognize and accept the group capital calculation will be published through the NAIC committee process.(6) PUBLISHED JURISDICTIONS. A list of jurisdictions that recognize and accept the group capital calculation pursuant to s. Ins 40.03 (9) (d) 4., is published through the NAIC committee process to assist the lead state commissioner in determining which insurers shall file an annual group capital calculation. The list will clarify those situations in which a jurisdiction is exempted from filing under s. Ins 40.03 (9) (d) 4.(7) REQUIREMENTS FOR CERTAIN JURISDICTIONS. To assist with a determination under s. Ins 40.03 (9) (d) 5., the list will identify whether a jurisdiction that is exempted under either s. Ins 40.03 (9) (d) 3., or s. Ins 40.03 (9) (d) 4. requires a group capital filing for any U.S. based insurance group's operations in that non-U.S. jurisdiction.(8) CONFIRMATIONS. For a non-U.S. jurisdiction where no U.S. insurance groups operate, the confirmation provided to meet the requirement of sub. (4) (a) 2., will serve as support for recommendation to be published as a jurisdiction that recognizes and accepts the group capital calculation through the NAIC committee process.(9) LEAD STATE DETERMINATION AND JUSTIFICATION. If the lead state commissioner makes a determination pursuant to s. Ins 40.03 (9) (d) 4. that differs from the NAIC list, the lead state commissioner shall provide thoroughly documented justification to the NAIC and other states.(10) LEAD STATE RECOMMENDATIONS. Upon determination by the lead state commissioner that a non-U.S. jurisdiction no longer meets one or more of the requirements to recognize and accept the group capital calculation, the lead state commissioner may provide a recommendation to the NAIC that the non-U.S. jurisdiction be removed from the list of jurisdictions that recognize and accept the group capital calculation.Wis. Admin. Code Office of the Commissioner of Insurance Ins 40.21
Adopted by, CR 21-106: cr. Register July 2022 No. 799, eff. 8-1-22; correction in (3) (intro.), (b), (8) made under s. 35.17, Stats., Register July 2022 No. 799, eff. 8/1/2022.