State Codes and Statutes

Statutes > Vermont > Title-08 > Chapter-101 > 3578

§ 3578. Requirement for annual audited financial reports

(a) Audit required. All insurers licensed to do business in this state shall retain a certified public accountant, qualified under section 3579 of this title, to audit and report annually on the financial position and the results of operations of insurers. The audit shall be conducted in conformance with generally accepted auditing principles and the accountant may use such other procedures illustrated in the Financial Condition Examiner's Handbook promulgated by the National Association of Insurance Commissioners in the performance of the audit required under this section.

(b) Audit report. The audited financial report shall include:

(1) a narrative report of the independent certified public accountant;

(2) the balance sheet reporting admitted assets, liabilities, capital and surplus;

(3) statement of operations;

(4) statement of cash flows;

(5) statement of changes in capital and surplus;

(6) notes to financial statements required by the National Association of Insurance Commissioners' Annual Statement Instructions and the National Association of Insurance Commissioners' Accounting Practices and Procedures Manual. The notes shall include, but are not limited to, a written reconciliation of differences, if any, between the audited statutory financial statements and the annual statement filed pursuant to section 3561 of this title with a written description of the nature of those differences;

(7) a letter signed by the qualified accountant describing his or her background, experience and qualifications;

(8) a summary of ownership and the relationships of the insurer with all affiliated companies; and

(9) financial statements. The financial statements included in the report shall be prepared in a form and using language and groupings substantially the same as those required in the annual statement filed under section 3561 of this title and shall contain comparative data for the year preceding the current audit year.

(c) Filing. The report required under this section shall be filed with the commissioner on or before June 1 for the year ending December 31 immediately preceding. The commissioner may grant an extension of the time for filing for good cause shown. Requests for extensions must be received at least 10 days before the expiration of the filing period and must provide sufficient detail to permit the commissioner to make an informed decision on the request for extension.

(d) Additional reports. The independent certified public accountant shall report to the insurer, in writing, any significant deficiencies in internal controls, within 60 days after filing the annual audited financial statement. The independent certified public accountant shall report to the insurer in writing any determination by the certified public accountant that the insurer has materially misstated its financial condition as reported to the commissioner as of the balance sheet date currently under examination or that the insurer does not meet the minimum capital and surplus requirements of this title, within five business days. Within five days of receipt, the insurer shall file with the commissioner any report prepared by the independent certified public accountant notifying the insurer's board of directors or its audit committee of significant deficiencies in internal controls or of any adverse financial conditions of the insurer, including, but not limited to, any determination by the accountant that the insurer has materially misstated its financial condition as reported to the commissioner or that the insurer does not meet the minimum capital and surplus requirements of this title. The insurer shall provide a description of remedial actions taken or proposed to correct significant deficiencies. The independent certified public accountant shall file the reports required by this subsection directly with the commissioner if the accountant fails to receive written evidence that the insurer has provided the commissioner such reports within 10 days of publication of the report to the board or committee. The accountant shall not be liable in any manner to the insurer for any statement made in connection with this subsection, if such statement is made in good faith.

(e) Exemption for small insurers and for hardship. Upon application, the commissioner may exempt from the requirements of this section any insurer with direct premiums written in this state of less than $250,000.00 and less than 500 policyholders or certificate holders of directly written policies nationwide at the end of any calendar year, unless the commissioner finds that the audit is necessary to assure compliance with this title or that the insurer has assumed premiums on contracts or treaties of reinsurance or both of at least $250,000.00. Upon application of an insurer, the commissioner may in his or her discretion, grant an exemption from compliance with this section if the commissioner finds that compliance would cause financial or organizational hardship on the insurer and if the commissioner has no reason to believe that the insurer is financially impaired.

(f) Audit reports of foreign and alien insurers. Foreign or alien insurers required to file audited financial reports with any state which are found by the commissioner to be substantially similar to the requirements of subdivisions (b)(1) through (6), (8) and (9) of this section, may file with the commissioner a copy of the report filed with the foreign or alien jurisdiction together with any additional reports required of the accountant in lieu of separate compliance with this section. Upon request of the commissioner, a foreign or alien insurer shall file the letter required under subdivision (b)(7) of this section. Nothing in this subsection precludes or limits the commissioner from ordering, conducting or performing examinations of insurers under this title or any regulations promulgated under it.

(g) Consolidated or combined reports. The commissioner may permit an insurer to file audited consolidated or combined financial statements if the insurer is part of a group of insurance companies which utilizes a pooling or 100 percent reinsurance agreement that affects the solvency and integrity of the insurer's reserves, and such insurer cedes all of its direct and assumed business to the pool. In such cases, a columnar consolidating or combining worksheet shall be filed with the report, containing the following information:

(1) amounts shown on the consolidated or combined annual statement;

(2) amounts for each insurer separately stated;

(3) results of noninsurance operations on a combined or individual basis;

(4) explanations of consolidating and eliminating entries; and

(5) reconciliation of any differences between the amounts shown for individual insurers and comparable amounts on their annual statements. (Added 1991, No. 249 (Adj. Sess.), § 10; amended 1993, No. 12, §§ 3, 4, eff. April 26, 1993; 2001, No. 71, § 7, eff. June 16, 2001.)

State Codes and Statutes

Statutes > Vermont > Title-08 > Chapter-101 > 3578

§ 3578. Requirement for annual audited financial reports

(a) Audit required. All insurers licensed to do business in this state shall retain a certified public accountant, qualified under section 3579 of this title, to audit and report annually on the financial position and the results of operations of insurers. The audit shall be conducted in conformance with generally accepted auditing principles and the accountant may use such other procedures illustrated in the Financial Condition Examiner's Handbook promulgated by the National Association of Insurance Commissioners in the performance of the audit required under this section.

(b) Audit report. The audited financial report shall include:

(1) a narrative report of the independent certified public accountant;

(2) the balance sheet reporting admitted assets, liabilities, capital and surplus;

(3) statement of operations;

(4) statement of cash flows;

(5) statement of changes in capital and surplus;

(6) notes to financial statements required by the National Association of Insurance Commissioners' Annual Statement Instructions and the National Association of Insurance Commissioners' Accounting Practices and Procedures Manual. The notes shall include, but are not limited to, a written reconciliation of differences, if any, between the audited statutory financial statements and the annual statement filed pursuant to section 3561 of this title with a written description of the nature of those differences;

(7) a letter signed by the qualified accountant describing his or her background, experience and qualifications;

(8) a summary of ownership and the relationships of the insurer with all affiliated companies; and

(9) financial statements. The financial statements included in the report shall be prepared in a form and using language and groupings substantially the same as those required in the annual statement filed under section 3561 of this title and shall contain comparative data for the year preceding the current audit year.

(c) Filing. The report required under this section shall be filed with the commissioner on or before June 1 for the year ending December 31 immediately preceding. The commissioner may grant an extension of the time for filing for good cause shown. Requests for extensions must be received at least 10 days before the expiration of the filing period and must provide sufficient detail to permit the commissioner to make an informed decision on the request for extension.

(d) Additional reports. The independent certified public accountant shall report to the insurer, in writing, any significant deficiencies in internal controls, within 60 days after filing the annual audited financial statement. The independent certified public accountant shall report to the insurer in writing any determination by the certified public accountant that the insurer has materially misstated its financial condition as reported to the commissioner as of the balance sheet date currently under examination or that the insurer does not meet the minimum capital and surplus requirements of this title, within five business days. Within five days of receipt, the insurer shall file with the commissioner any report prepared by the independent certified public accountant notifying the insurer's board of directors or its audit committee of significant deficiencies in internal controls or of any adverse financial conditions of the insurer, including, but not limited to, any determination by the accountant that the insurer has materially misstated its financial condition as reported to the commissioner or that the insurer does not meet the minimum capital and surplus requirements of this title. The insurer shall provide a description of remedial actions taken or proposed to correct significant deficiencies. The independent certified public accountant shall file the reports required by this subsection directly with the commissioner if the accountant fails to receive written evidence that the insurer has provided the commissioner such reports within 10 days of publication of the report to the board or committee. The accountant shall not be liable in any manner to the insurer for any statement made in connection with this subsection, if such statement is made in good faith.

(e) Exemption for small insurers and for hardship. Upon application, the commissioner may exempt from the requirements of this section any insurer with direct premiums written in this state of less than $250,000.00 and less than 500 policyholders or certificate holders of directly written policies nationwide at the end of any calendar year, unless the commissioner finds that the audit is necessary to assure compliance with this title or that the insurer has assumed premiums on contracts or treaties of reinsurance or both of at least $250,000.00. Upon application of an insurer, the commissioner may in his or her discretion, grant an exemption from compliance with this section if the commissioner finds that compliance would cause financial or organizational hardship on the insurer and if the commissioner has no reason to believe that the insurer is financially impaired.

(f) Audit reports of foreign and alien insurers. Foreign or alien insurers required to file audited financial reports with any state which are found by the commissioner to be substantially similar to the requirements of subdivisions (b)(1) through (6), (8) and (9) of this section, may file with the commissioner a copy of the report filed with the foreign or alien jurisdiction together with any additional reports required of the accountant in lieu of separate compliance with this section. Upon request of the commissioner, a foreign or alien insurer shall file the letter required under subdivision (b)(7) of this section. Nothing in this subsection precludes or limits the commissioner from ordering, conducting or performing examinations of insurers under this title or any regulations promulgated under it.

(g) Consolidated or combined reports. The commissioner may permit an insurer to file audited consolidated or combined financial statements if the insurer is part of a group of insurance companies which utilizes a pooling or 100 percent reinsurance agreement that affects the solvency and integrity of the insurer's reserves, and such insurer cedes all of its direct and assumed business to the pool. In such cases, a columnar consolidating or combining worksheet shall be filed with the report, containing the following information:

(1) amounts shown on the consolidated or combined annual statement;

(2) amounts for each insurer separately stated;

(3) results of noninsurance operations on a combined or individual basis;

(4) explanations of consolidating and eliminating entries; and

(5) reconciliation of any differences between the amounts shown for individual insurers and comparable amounts on their annual statements. (Added 1991, No. 249 (Adj. Sess.), § 10; amended 1993, No. 12, §§ 3, 4, eff. April 26, 1993; 2001, No. 71, § 7, eff. June 16, 2001.)


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State Codes and Statutes

Statutes > Vermont > Title-08 > Chapter-101 > 3578

§ 3578. Requirement for annual audited financial reports

(a) Audit required. All insurers licensed to do business in this state shall retain a certified public accountant, qualified under section 3579 of this title, to audit and report annually on the financial position and the results of operations of insurers. The audit shall be conducted in conformance with generally accepted auditing principles and the accountant may use such other procedures illustrated in the Financial Condition Examiner's Handbook promulgated by the National Association of Insurance Commissioners in the performance of the audit required under this section.

(b) Audit report. The audited financial report shall include:

(1) a narrative report of the independent certified public accountant;

(2) the balance sheet reporting admitted assets, liabilities, capital and surplus;

(3) statement of operations;

(4) statement of cash flows;

(5) statement of changes in capital and surplus;

(6) notes to financial statements required by the National Association of Insurance Commissioners' Annual Statement Instructions and the National Association of Insurance Commissioners' Accounting Practices and Procedures Manual. The notes shall include, but are not limited to, a written reconciliation of differences, if any, between the audited statutory financial statements and the annual statement filed pursuant to section 3561 of this title with a written description of the nature of those differences;

(7) a letter signed by the qualified accountant describing his or her background, experience and qualifications;

(8) a summary of ownership and the relationships of the insurer with all affiliated companies; and

(9) financial statements. The financial statements included in the report shall be prepared in a form and using language and groupings substantially the same as those required in the annual statement filed under section 3561 of this title and shall contain comparative data for the year preceding the current audit year.

(c) Filing. The report required under this section shall be filed with the commissioner on or before June 1 for the year ending December 31 immediately preceding. The commissioner may grant an extension of the time for filing for good cause shown. Requests for extensions must be received at least 10 days before the expiration of the filing period and must provide sufficient detail to permit the commissioner to make an informed decision on the request for extension.

(d) Additional reports. The independent certified public accountant shall report to the insurer, in writing, any significant deficiencies in internal controls, within 60 days after filing the annual audited financial statement. The independent certified public accountant shall report to the insurer in writing any determination by the certified public accountant that the insurer has materially misstated its financial condition as reported to the commissioner as of the balance sheet date currently under examination or that the insurer does not meet the minimum capital and surplus requirements of this title, within five business days. Within five days of receipt, the insurer shall file with the commissioner any report prepared by the independent certified public accountant notifying the insurer's board of directors or its audit committee of significant deficiencies in internal controls or of any adverse financial conditions of the insurer, including, but not limited to, any determination by the accountant that the insurer has materially misstated its financial condition as reported to the commissioner or that the insurer does not meet the minimum capital and surplus requirements of this title. The insurer shall provide a description of remedial actions taken or proposed to correct significant deficiencies. The independent certified public accountant shall file the reports required by this subsection directly with the commissioner if the accountant fails to receive written evidence that the insurer has provided the commissioner such reports within 10 days of publication of the report to the board or committee. The accountant shall not be liable in any manner to the insurer for any statement made in connection with this subsection, if such statement is made in good faith.

(e) Exemption for small insurers and for hardship. Upon application, the commissioner may exempt from the requirements of this section any insurer with direct premiums written in this state of less than $250,000.00 and less than 500 policyholders or certificate holders of directly written policies nationwide at the end of any calendar year, unless the commissioner finds that the audit is necessary to assure compliance with this title or that the insurer has assumed premiums on contracts or treaties of reinsurance or both of at least $250,000.00. Upon application of an insurer, the commissioner may in his or her discretion, grant an exemption from compliance with this section if the commissioner finds that compliance would cause financial or organizational hardship on the insurer and if the commissioner has no reason to believe that the insurer is financially impaired.

(f) Audit reports of foreign and alien insurers. Foreign or alien insurers required to file audited financial reports with any state which are found by the commissioner to be substantially similar to the requirements of subdivisions (b)(1) through (6), (8) and (9) of this section, may file with the commissioner a copy of the report filed with the foreign or alien jurisdiction together with any additional reports required of the accountant in lieu of separate compliance with this section. Upon request of the commissioner, a foreign or alien insurer shall file the letter required under subdivision (b)(7) of this section. Nothing in this subsection precludes or limits the commissioner from ordering, conducting or performing examinations of insurers under this title or any regulations promulgated under it.

(g) Consolidated or combined reports. The commissioner may permit an insurer to file audited consolidated or combined financial statements if the insurer is part of a group of insurance companies which utilizes a pooling or 100 percent reinsurance agreement that affects the solvency and integrity of the insurer's reserves, and such insurer cedes all of its direct and assumed business to the pool. In such cases, a columnar consolidating or combining worksheet shall be filed with the report, containing the following information:

(1) amounts shown on the consolidated or combined annual statement;

(2) amounts for each insurer separately stated;

(3) results of noninsurance operations on a combined or individual basis;

(4) explanations of consolidating and eliminating entries; and

(5) reconciliation of any differences between the amounts shown for individual insurers and comparable amounts on their annual statements. (Added 1991, No. 249 (Adj. Sess.), § 10; amended 1993, No. 12, §§ 3, 4, eff. April 26, 1993; 2001, No. 71, § 7, eff. June 16, 2001.)


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