Section 991.1404a - Group Capital Calculation Exemptions.(a) The commissioner, as the lead state regulator, has the discretion to exempt the ultimate controlling person from filing the annual group capital calculation where the insurance holding company system meets all of the following criteria:(1) 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 one billion dollars ($1,000,000,000).(2) Has no insurers within the insurance holding company system that are domiciled outside of the United States or one of its territories.(3) Has no banking, depository or other financial entity that is subject to an identified regulatory capital framework within the insurance holding company system.(4) Attests that there have been no material changes in the transactions between insurers and noninsurers in the insurance holding company system during the last year.(5) The noninsurers within the insurance holding company system do not pose a material financial risk to the insurer's ability to honor policyholder obligations.(b) The commissioner, as the lead state regulator, 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 premiums, including international direct and assumed premiums, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of less than one billion dollars ($1,000,000,000) and all of the following criteria are met: (1) The insurance holding company system has no insurers that are domiciled outside of the United States or one of its territories.(2) The insurance holding company system does not include a banking, depository or other financial entity that is subject to an identified regulatory capital framework.(3) The insurance holding company system attests that there have been no material changes in transactions between insurers and noninsurers in the group during the last year and the noninsurers within the insurance holding company system do not pose a material financial risk to the insurer's ability to honor policyholder obligations.(c) For an insurance holding company system that has previously met an exemption with respect to the group capital calculation under subsections (a) and (b), the commissioner may at any time require, as the lead state regulator, 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: (1) An insurer within the insurance holding company system is in a company action level event under Article V of the act of May 17, 1921 ( P.L. 789, No.285), known as "The Insurance Department Act of 1921," or a similar standard for an insurer outside the United States.(2) An 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 Article V of "The Insurance Department Act of 1921," and 31 Pa. Code Ch. 160 (relating to standards to define insurers deemed to be in hazardous financial condition).(3) An insurer within the insurance holding company system otherwise exhibits qualities of a troubled insurer as determined by the lead state regulator based on unique circumstances, including the type and volume of business written, ownership and organizational structure, Federal agency requests and international supervisor requests.(d) A jurisdiction outside the United States is considered to recognize and accept the group capital calculation if it satisfies the following criteria:(1) The jurisdiction meets the criteria under section 1404(k.1)(3)(iv) in accordance with the following: (i) The jurisdiction is located outside of the United States and recognizes the United States' state regulatory approach to group supervision and group capital by providing confirmation from a competent regulatory authority in the 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-wide supervision, including worldwide group governance, solvency and capital and reporting, as applicable, by the lead state and will not be subject to group-wide 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 jurisdiction located outside the United States.(ii) If no United-States-based insurance groups operate in the jurisdiction outside the United States, that jurisdiction outside the United States notifies the lead state regulator in writing, with a copy to the IAIS, that the group capital calculation is an acceptable international capital standard. The notification shall serve as the confirmation required under subparagraph (i).(2) The entities located outside the United States' jurisdiction provide confirmation by a competent regulatory authority in the jurisdiction under paragraph (1)(ii) that information regarding insurers and the parent, subsidiary or affiliated entities, if applicable, shall be provided to the lead state regulator in accordance with a memorandum of understanding or similar document between the commissioner and the jurisdiction, including the IAIS 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.(e) A list of jurisdictions outside the United States that recognize and accept the group capital calculation will be published through the NAIC committee process in accordance with the following standards: (1) A list of jurisdictions that recognize and accept the group capital calculation under section 1404(k.1)(3)(iv), shall be published through the NAIC committee process to assist the lead state regulator in determining which insurers shall file an annual group capital calculation. The list must clarify those situations in which a jurisdiction is exempt from filing under section 1404(k.1)(3)(iv). To assist with a determination under section 1404(k.1)(3)(v), the list shall identify whether a jurisdiction that is exempt under section 1404(k.1)(3)(iii) or (iv) requires a group capital filing for any United-States-based insurance group's operations in a jurisdiction outside the United States.(2) For a jurisdiction outside the United States that no United-States-based insurance group operates, the confirmation provided to meet the requirement of subsection (d)(1)(ii) will serve as support for a recommendation to be published as a jurisdiction that recognizes and accepts the group capital calculation through the NAIC committee process.(3) If the commissioner, as the lead state regulator, makes a determination under section 1404(k.1)(3)(iv) that differs from the NAIC list in paragraph (4), the lead state regulator shall provide documented justification to the NAIC and other states.(4) Upon determination that a jurisdiction outside of the United States no longer meets one or more of the requirements to recognize and accept the group capital calculation, the commissioner, as the lead state regulator, may provide a recommendation to the NAIC that the jurisdiction outside the United States be removed from the list of jurisdictions that recognize and accept the group capital calculation.Added by P.L. TBD 2022 No. 93, § 3, eff. 9/9/2022.