CHAPTER 40. ENTRY OF UNAUTHORIZED ALIEN COMPANIES
IC 27-1-40
Chapter 40. Entry of Unauthorized Alien Companies
IC 27-1-40-1
"Trusteed surplus"
Sec. 1. As used in this chapter, "trusteed surplus" means theaggregate value of a United States branch's:
(1) surplus and reserve funds required under IC 27-1-6; and
(2) trust assets described in section 4 of this chapter;
plus investment income accrued on the items described insubdivisions (1) and (2) if the investment income is collected by thestate for the trustees, less the aggregate net amount of all of theUnited States branch's reserves and other liabilities in the UnitedStates, as determined under section 6 of this chapter.
As added by P.L.173-2007, SEC.20. Amended by P.L.3-2008,SEC.210.
IC 27-1-40-2
"United States branch"
Sec. 2. As used in this chapter, "United States branch" means:
(1) an entity that is considered, for purposes of this chapter, tobe a domestic company through which insurance business istransacted in the United States by an alien company; and
(2) the alien company's assets and liabilities that are attributableto the insurance business transacted in the United States.
As added by P.L.173-2007, SEC.20.
IC 27-1-40-3
Indiana as state of entry for alien company
Sec. 3. Indiana may serve as a state of entry to enable an aliencompany to transact insurance business in the United States througha United States branch if the United States branch:
(1) qualifies under this title for a certificate of authority as if theUnited States branch were a domestic company organized underthis title; and
(2) establishes a trust account that meets the followingconditions:
(A) The trust account is established under a trust agreementapproved by the commissioner with a United States bank.
(B) The amount in the trust account is at least equal to:
(i) the minimum capital and surplus requirements; or
(ii) the authorized control level risk based capitalrequirements;
whichever is greater, that apply to a domestic company thatpossesses a certificate of authority to transact the same kindof insurance business in Indiana as the United States branchwill transact.
As added by P.L.173-2007, SEC.20.
IC 27-1-40-4 Trust account; requirements; trust agreement
Sec. 4. (a) A trust account established under section 3(2) of thischapter must contain, at all times, an amount equal to the UnitedStates branch's reserves and other liabilities, plus the:
(1) minimum capital and surplus requirement; or
(2) authorized control level risk based capital requirement;
whichever is greater, that applies to a domestic company granted acertificate of authority under this title to transact the same kind ofinsurance business as the United States branch transacts.
(b) One (1) or more trustees must be appointed to administer thetrust.
(c) A trust agreement for a trust account established under section3(2) of this chapter, and amendments to the trust agreement:
(1) must be authenticated in a manner prescribed by thecommissioner; and
(2) are effective only when approved by the commissioner afterthe commissioner finds all of the following:
(A) The trust agreement and amendments are sufficient inform and in conformity with law.
(B) All trustees appointed under subsection (b) are eligibleto serve as trustees.
(C) The trust agreement is adequate to protect the interestsof the beneficiaries of the trust.
(d) The commissioner may withdraw an approval granted undersubsection (c)(2) if, after notice and hearing, the commissionerdetermines that one (1) or more of the conditions required undersubsection (c)(2) for approval no longer exist.
(e) The commissioner may approve modifications of, or variationsin, a trust agreement under subsection (c) if the modifications orvariations are not prejudicial to the interests of Indiana residents,United States policyholders, and creditors of the United Statesbranch.
(f) A trust agreement for a trust account established under section3(2) of this chapter must contain provisions that:
(1) vest legal title to trust assets in the trustees and lawfullyappointed successors of the trustees;
(2) require that all assets deposited in the trust account becontinuously kept in the United States;
(3) provide for appointment of a new trustee in case of avacancy, subject to the approval of the commissioner;
(4) require that the trustees continuously maintain a recordsufficient to identify the assets of the trust account;
(5) require that the trust assets consist of:
(A) cash;
(B) investments of the same kind as the investments inwhich funds of a domestic company may be invested; and
(C) interest accrued on the cash and investments specified inclauses (A) and (B), if collectible by the trustees;
(6) establish that the trust:
(A) is for the exclusive benefit, security, and protection of: (i) United States policyholders of the United Statesbranch; and
(ii) United States creditors of the United States branchafter all obligations to policyholders are paid; and
(B) shall be maintained as long as any liability of the UnitedStates branch arising out of the United States branch'sinsurance transactions in the United States is outstanding;and
(7) establish that trust assets, other than income as specified insubsection (g), may not be withdrawn or permitted by thetrustees to be withdrawn without the approval of thecommissioner, except for any of the following purposes:
(A) To make deposits required by the law of any state for thesecurity or benefit of all policyholders of the United Statesbranch in the United States.
(B) To substitute other assets permitted by law and at leastequal in value and quality to the assets withdrawn, upon thespecific written direction of the United States manager of theUnited States branch when the United States manager isempowered and acting under general or specific writtenauthority previously granted or delegated by the aliencompany's board of directors.
(C) To transfer the assets to an official liquidator orrehabilitator under a court order.
(g) A trust agreement for a trust account established under section3(2) of this chapter may provide that income, earnings, dividends, orinterest accumulations of the trust assets may be paid over to theUnited States manager of the United States branch upon request ofthe United States manager if the total amount of trust assetsfollowing the payment to the United States manager is not less thanthe amount required under subsection (a).
(h) A trust agreement for a trust account established under section3(2) of this chapter may provide that written approval of theinsurance supervising official of another state in which:
(1) trust assets are deposited; and
(2) the United States branch is authorized to transact insurancebusiness;
is sufficient, and approval of the commissioner is not required, forwithdrawal of the trust assets in the other state if the amount of totaltrust assets after the withdrawal will not be less than the amountrequired under subsection (a). However, the United States branchshall provide written notice to the commissioner of the nature andextent of the withdrawal.
(i) The commissioner may at any time:
(1) make examinations of the trust assets of a United Statesbranch that holds a certificate of authority under this chapter, atthe expense of the United States branch; and
(2) require the trustees to file a statement, on a form prescribedby the commissioner, certifying the assets of the trust accountand the amounts of the assets. (j) Refusal or neglect of a trustee to comply with this section isgrounds for:
(1) the revocation of the United States branch's certificate ofauthority; or
(2) the liquidation of the United States branch.
As added by P.L.173-2007, SEC.20.
IC 27-1-40-5
Certificate of authority for United States branch; requirements
Sec. 5. (a) The commissioner shall require a United States branchto do the following before granting the United States branch acertificate of authority to transact insurance business as described insection 3(1) of this chapter:
(1) Comply with this chapter and any other requirement of thistitle.
(2) Submit the following:
(A) A copy of the current charter and bylaws of the aliencompany that intends to transact business through the UnitedStates branch and any other documents determined by thecommissioner to be necessary to provide evidence of thekinds of insurance business that the alien company isauthorized to transact. Documents submitted under thisclause must be attested to as accurate by the insurancesupervisory official in the alien company's domiciliaryjurisdiction.
(B) A full statement, subscribed and affirmed as true underpenalty of perjury by two (2) officers or equivalentresponsible representatives of the alien company in a mannerprescribed by the commissioner, of the alien company'sfinancial condition as of the close of the alien company'slatest fiscal year, showing the alien company's:
(i) assets;
(ii) liabilities;
(iii) income disbursements;
(iv) business transacted; and
(v) other facts required to be shown in the alien company'sannual statement reported to the insurance supervisoryofficial in the alien company's domiciliary jurisdiction.
(C) An English translation, if necessary, of any documentsubmitted under this subdivision.
(3) Submit to an examination of the affairs of the alien companythat intends to transact business through the United Statesbranch at the alien company's principal office in the UnitedStates. However, the commissioner may accept a report of theinsurance supervisory official in the alien company'sdomiciliary jurisdiction in lieu of the examination requiredunder this subdivision.
(b) The commissioner may at any time hire, at a United Statesbranch's expense, any independent experts that the commissionerconsiders necessary to implement this chapter with respect to the
United States branch.
As added by P.L.173-2007, SEC.20.
IC 27-1-40-6
United States branch filing requirements
Sec. 6. (a) A United States branch shall file with thecommissioner, not later than March 1, May 15, August 15, andNovember 15 of each year, all of the following:
(1) Statements of the insurance business transacted in theUnited States, the assets held by or for the United States branchin the United States for the protection of policyholders andcreditors in the United States, and the liabilities incurred againstthe assets. All of the following apply to the statements filedunder this subdivision:
(A) The statements must contain information concerningonly the United States branch's assets and insurance businessin the United States.
(B) The statements must be in the same form as statementsrequired of a domestic company that possesses a certificateof authority to transact the same kinds of insurance businessas the United States branch transacts.
(C) The statements must be filed as follows:
(i) Quarterly statements filed not later than May 15,August 15, and November 15 of each year for the firstthree (3) quarters of the calendar year.
(ii) An annual statement, filed not later than March 1 ofeach year.
(2) A trusteed surplus statement, in a form prescribed by thecommissioner, at the end of the period covered by eachstatement described in subdivision (1)(C). In determining thenet amount of the United States branch's liabilities in the UnitedStates to be reported in the statement of trusteed surplus, theUnited States branch shall make adjustments to total liabilitiesreported on the accompanying annual or quarterly statement asfollows:
(A) Add back liabilities used to offset admitted assetsreported in the accompanying quarterly or annual statement.
(B) Deduct:
(i) unearned premiums on insurance producer balances oruncollected premiums that are not more than ninety (90)days past due;
(ii) losses reinsured by reinsurers authorized to dobusiness in Indiana, less unpaid reinsurance premiums tobe paid to the authorized reinsurers;
(iii) reinsurance recoverables on paid losses fromreinsurers not authorized to do business in Indiana that areincluded as an asset in the annual statement, but only tothe extent that a liability for the unauthorized recoverablesis included in the liabilities report in the trusteed surplusstatement; (iv) special state deposits held for the exclusive benefit ofpolicyholders of a particular state that do not exceed netliabilities reports for the particular state;
(v) secured accrued retrospective premiums;
(vi) if the alien company transacting business through theUnited States branch is a life insurer, the amount of thealien company's policy loans to policyholders in theUnited States, not exceeding the amount of legal reserverequired on each policy, and the net amount of uncollectedand deferred premiums; and
(vii) any other nontrust asset that the commissionerdetermines secures liabilities in a manner substantiallysimilar to the manner in which liabilities are secured bythe unearned premiums, losses reinsured, reinsurancerecoverables, special state deposits, secured accruedretrospective premiums, and policy loans referred to initems (i) through (vi).
(3) Any additional information that relates to the business orassets of the alien company and is required by thecommissioner.
(b) The annual statement and trusteed surplus statement describedin subsection (a) must be signed and verified by the United Statesmanager, the attorney in fact, or an empowered assistant UnitedStates manager, of the United States branch. Items of securities andother property held under a trust agreement must be certified in thetrusteed surplus statement by the United States trustees.
(c) Each report concerning an examination of a United Statesbranch conducted under section 4(i) of this chapter must include atrusteed surplus statement as of the date of examination and a generalstatement of the financial condition of the United States branch.
As added by P.L.173-2007, SEC.20.
IC 27-1-40-7
Issuance and renewal of certificate of authority
Sec. 7. (a) Before issuing a new or renewal certificate of authorityto a United States branch, the commissioner may require satisfactoryproof:
(1) in the charter of the alien company transacting businessthrough the United States branch;
(2) by an agreement evidenced by a certified resolution of thealien company's board of directors; or
(3) otherwise as required by the commissioner;
that the United States branch will not engage in any insurancebusiness not authorized by this chapter and by the alien company'scharter.
(b) The commissioner shall issue a renewal certificate of authorityto a United States branch if the commissioner is satisfied that theUnited States branch is not delinquent in any requirement of this titleand that the United States branch's continued insurance business inIndiana is not contrary to the best interest of the citizens of Indiana. (c) A United States branch may not be:
(1) granted a certificate of authority to transact any kind ofinsurance business in Indiana that is not permitted to betransacted in Indiana by a domestic company granted acertificate of authority under this title; or
(2) authorized to transact an insurance business in Indiana if theUnited States branch transacts, anywhere in the United States,any kind of business other than an insurance business (andbusiness incidental to the kind of insurance business) that theUnited States branch is authorized to transact in Indiana.
(d) A United States branch entering the United States throughIndiana or another state may not be authorized to transact aninsurance business in Indiana if the United States branch fails tosubstantially comply with any requirement of this title that:
(1) applies to a similar domestic company that is organized afterJuly 1, 2007; and
(2) the commissioner determines is necessary to protect theinterest of the policyholders.
(e) Unless the commissioner determines that the kind of insuranceis not contrary to the best interest of the citizens of Indiana, a UnitedStates branch may not transact any kind of insurance business that isnot permitted to be transacted in Indiana by a similar domesticcompany that is organized after July 1, 2007.
(f) A United States branch may not be authorized to transact aninsurance business in Indiana unless the United States branchmaintains correct and complete records of the United States branch'stransactions that are:
(1) open to inspection by any person who has the right toinspect the records; and
(2) maintained at the United States branch's principal office inIndiana.
As added by P.L.173-2007, SEC.20.
IC 27-1-40-8
Insolvency proceedings
Sec. 8. If the commissioner determines from a quarterly or annualstatement, a trusteed surplus statement, or another report that aUnited States branch's trusteed surplus is less than:
(1) the minimum capital and surplus requirements; or
(2) the authorized control level risk based capital requirements;
whichever is greater, that apply to a domestic insurer granted acertificate of authority to transact the same kind of insurancebusiness in Indiana, the commissioner may proceed under IC 27-9against the United States branch as if the United States branch werean insurer in such condition that further transaction by the insurer ofinsurance business in the United States would be hazardous to theinsurer's policyholders, creditors, or residents of the United States.
As added by P.L.173-2007, SEC.20.