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[Utah Code Table of Contents]
[TITLE 31a. Table of Contents]
31A-16-101 Scope and purpose of chapter.
(1) This chapter applies to all persons doing an insurance business in Utah.
(2) The purposes of this chapter include:
(a) exercising surveillance over the acquisition of a domestic insurer, to ensure that in the process of making it part of an insurance holding company system, the interests of policyholders, shareholders, and the public are not harmed;
(b) providing the regulatory monitoring of those intercorporate relationships and transactions among affiliates within an insurance holding company system that may affect the solidity of insurers;
(c) controlling the payment of dividends that might affect the solidity of insurers; and
(d) providing, in appropriate cases, recoupment of dividends
paid.
1985
31A-16-103 Acquisition of control of or merger with domestic insurer - Required filings - Content of statement - Alternative filing materials - Criminal background information - Approval by commissioner - Dissenting shareholders - Violations - Jurisdiction, consent to service of process.
(1) (a) A person may not take the actions described in Subsections (1)(b) or (c) unless, at the time any offer, request, or invitation is made or any such agreement is entered into, or prior to the acquisition of securities if no offer or agreement is involved:
(i) the person files with the commissioner a statement containing the information required by this section;
(ii) the person provides a copy of the statement described in Subsection (1)(a)(i) to the insurer; and
(iii) the commissioner approves the offer, request, invitation, agreement or acquisition.
(b) Unless the person complies with Subsection (1)(a), a person other than the issuer may not make a tender offer for, a request or invitation for tenders of, or enter into any agreement to exchange securities, or seek to acquire or acquire in the open market or otherwise, any voting security of a domestic insurer if after the acquisition, the person would directly, indirectly, by conversion, or by exercise of any right to acquire be in control of the insurer.
(c) Unless the person complies with Subsection (1)(a), a person may not enter into an agreement to merge with or otherwise to acquire control of a domestic insurer or any person controlling a domestic insurer.
(d) (i) For purposes of this section a domestic insurer includes any person controlling a domestic insurer unless the person as determined by the commissioner is either directly or through its affiliates primarily engaged in business other than the business of insurance.
(ii) The controlling person described in Subsection (1)(d)(i) shall file with the commissioner a preacquisition notification containing the information required in Subsection (2) 30 calendar days before the proposed effective date of the acquisition.
(iii) For the purposes of this section, "person" does not include any securities broker holding less than 20% of the voting securities of an insurance company or of any person that controls an insurance company in the usual and customary brokers function.
(iv) This section applies to all domestic insurers and other entities licensed under Chapters 5, 7, 8, 9, and 11.
(e) (i) An agreement for acquisition of control or merger as contemplated by this Subsection (1) is not valid or enforceable unless the agreement:
(A) is in writing; and
(B) includes a provision that the agreement is subject to the approval of the commissioner upon the filing of any applicable statement required under this chapter.
(ii) A written agreement for acquisition or control that includes the provision described in Subsection (1)(e)(i) satisfies the requirements of this Subsection (1).
(2) The statement to be filed with the commissioner under Subsection (1) shall be made under oath or affirmation and shall contain the following information:
(a) the name and address of the "acquiring party," which means each person by whom or on whose behalf the merger or other acquisition of control referred to in Subsection (1) is to be effected; and
(i) if the person is an individual:
(A) the person's principal occupation;
(B) a listing of all offices and positions held by the person during the past five years; and
(C) any conviction of crimes other than minor traffic violations during the past ten years; and
(ii) if the person is not an individual:
(A) a report of the nature of its business operations during the past five years or for any lesser period as the person and any of its predecessors has been in existence;
(B) an informative description of the business intended to be done by the person and the person's subsidiaries;
(C) a list of all individuals who are or who have been selected to become directors or executive officers of the person, or individuals who perform, or who will perform functions appropriate to such positions; and
(D) for each individual described in Subsection (2)(a)(ii)(C), the information required by Subsection (2)(a)(i)(A) for each individual;
(b) (i) the source, nature, and amount of the consideration used or to be used in effecting the merger or acquisition of control;
(ii) a description of any transaction in which funds were or are to be obtained for that purpose of effecting the merger or acquisition of control, including any pledge of the insurer's stock or the stock of any of its subsidiaries or controlling affiliates; and
(iii) the identity of persons furnishing the consideration;
(c) fully audited financial information, or other financial information considered acceptable by the commissioner, of the earnings and financial condition of each acquiring party for the preceding five fiscal years of each acquiring party, or for any lesser period the acquiring party and any of its predecessors shall have been in existence, and similar unaudited information prepared within the 90 days prior to the filing of the statement;
(d) any plans or proposals which each acquiring party may have to:
(i) liquidate the insurer;
(ii) sell its assets;
(iii) merge or consolidate the insurer with any person; or
(iv) make any other material change in the insurer's business, corporate structure, or management;
(e) (i) the number of shares of any security referred to in Subsection (1) that each acquiring party proposes to acquire;
(ii) the terms of the offer, request, invitation, agreement, or acquisition referred to in Subsection (1); and
(iii) a statement as to the method by which the fairness of the proposal was arrived at;
(f) the amount of each class of any security referred to in Subsection (1) that:
(i) is beneficially owned; or
(ii) concerning which there is a right to acquire beneficial ownership by each acquiring party;
(g) a full description of any contract, arrangement, or understanding with respect to any security referred to in Subsection (1) in which any acquiring party is involved, including:
(i) the transfer of any of the securities;
(ii) joint ventures;
(iii) loan or option arrangements;
(iv) puts or calls;
(v) guarantees of loans;
(vi) guarantees against loss or guarantees of profits;
(vii) division of losses or profits; or
(viii) the giving or withholding of proxies;
(h) a description of the purchase by any acquiring party of any security referred to in Subsection (1) during the 12 calendar months preceding the filing of the statement including:
(i) the dates of purchase;
(ii) the names of the purchasers; and
(iii) the consideration paid or agreed to be paid for the purchase;
(i) a description of any recommendations to purchase by any acquiring party any security referred to in Subsection (1) made during the 12 calendar months preceding the filing of the statement or any recommendations made by anyone based upon interviews or at the suggestion of the acquiring party;
(j) (i) copies of all tender offers for, requests for, or invitations for tenders of, exchange offers for, and agreements to acquire or exchange any securities referred to in Subsection (1); and
(ii) if distributed, copies of additional soliciting material relating to the transactions described in Subsection (2)(j)(i);
(k) (i) the term of any agreement, contract, or understanding made with, or proposed to be made with, any broker-dealer as to solicitation of securities referred to in Subsection (1) for tender; and
(ii) the amount of any fees, commissions, or other compensation to be paid to broker-dealers with regard to any agreement, contract, or understanding described in Subsection (2)(k)(i); and
(l) any additional information the commissioner requires by rule, which the commissioner determines to be:
(i) necessary or appropriate for the protection of policyholders of the insurer; or
(ii) in the public interest.
(3) The department may request:
(a) (i) criminal background information maintained pursuant to Title 53, Chapter 10, Part 2, from the Bureau of Criminal Identification; and
(ii) complete Federal Bureau of Investigation criminal background checks through the national criminal history system.
(b) Information obtained by the department from the review of criminal history records received under Subsection (3)(a) shall be used by the department for the purpose of:
(i) verifying the information in Subsection (2)(a)(i);
(ii) determining the integrity of persons who would control the operation of an insurer; and
(iii) preventing persons who violate 18 U.S.C. Sections 1033 and 1034 from engaging in the business of insurance in the state.
(c) If the department requests the criminal background information, the department shall:
(i) pay to the Department of Public Safety the costs incurred by the Department of Public Safety in providing the department criminal background information under Subsection (3)(a)(i);
(ii) pay to the Federal Bureau of Investigation the costs incurred by the Federal Bureau of Investigation in providing the department criminal background information under Subsection (3)(a)(ii); and
(iii) charge the person required to file the statement referred to in Subsection (1) a fee equal to the aggregate of Subsections (3)(c)(i) and (ii).
(4) (a) If the source of the consideration under Subsection (2)(b)(i) is a loan made in the lender's ordinary course of business, the identity of the lender shall remain confidential, if the person filing the statement so requests.
(b) Under Subsection (2)(e), the commissioner may require a statement of the adjusted book value assigned by the acquiring party to each security in arriving at the terms of the offer, with "adjusted book value" meaning each security's proportional interest in the capital and surplus of the insurer with adjustments that reflect:
(i) market conditions;
(ii) business in force; and
(iii) other intangible assets or liabilities of the insurer.
(c) The description required by Subsection (2)(g) shall identify the persons with whom the contracts, arrangements, or understandings have been entered into.
(5) (a) If the person required to file the statement referred to in Subsection (1) is a partnership, limited partnership, syndicate, or other group, the commissioner may require that all the information called for by Subsections (2), (3), or (4) shall be given with respect to each:
(i) partner of the partnership or limited partnership;
(ii) member of the syndicate or group; and
(iii) person who controls the partner or member.
(b) If any partner, member, or person referred to in Subsection (5)(a) is a corporation, or if the person required to file the statement referred to in Subsection (1) is a corporation, the commissioner may require that the information called for by Subsection (2) shall be given with respect to:
(i) the corporation;
(ii) each officer and director of the corporation; and
(iii) each person who is directly or indirectly the beneficial owner of more than 10% of the outstanding voting securities of the corporation.
(6) If any material change occurs in the facts set forth in the statement filed with the commissioner and sent to the insurer pursuant to Subsection (2), an amendment setting forth the change, together with copies of all documents and other material relevant to the change, shall be filed with the commissioner and sent to the insurer within two business days after the filing person learns of such change.
(7) If any offer, request, invitation, agreement, or acquisition referred to in Subsection (1) is proposed to be made by means of a registration statement under the Securities Act of 1933, or under circumstances requiring the disclosure of similar information under the Securities Exchange Act of 1934, or under a state law requiring similar registration or disclosure, a person required to file the statement referred to in Subsection (1) may use copies of any registration or disclosure documents in furnishing the information called for by the statement.
(8) (a) The commissioner shall approve any merger or other acquisition of control referred to in Subsection (1) unless, after a public hearing on the merger or acquisition, the commissioner finds that:
(i) after the change of control, the domestic insurer referred to in Subsection (1) would not be able to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed;
(ii) the effect of the merger or other acquisition of control would substantially lessen competition in insurance in this state or tend to create a monopoly in insurance;
(iii) the financial condition of any acquiring party might:
(A) jeopardize the financial stability of the insurer; or
(B) prejudice the interest of:
(I) its policyholders; or
(II) any remaining securityholders who are unaffiliated with the acquiring party;
(iv) the terms of the offer, request, invitation, agreement, or acquisition referred to in Subsection (1) are unfair and unreasonable to the securityholders of the insurer;
(v) the plans or proposals which the acquiring party has to liquidate the insurer, sell its assets, or consolidate or merge it with any person, or to make any other material change in its business or corporate structure or management, are:
(A) unfair and unreasonable to policyholders of the insurer; and
(B) not in the public interest; or
(vi) the competence, experience, and integrity of those persons who would control the operation of the insurer are such that it would not be in the interest of the policyholders of the insurer and the public to permit the merger or other acquisition of control.
(b) For purposes of Subsection (8)(a)(iv), the offering price for each security may not be considered unfair if the adjusted book values under Subsection (2)(e):
(i) are disclosed to the securityholders; and
(ii) determined by the commissioner to be reasonable.
(9) (a) The public hearing referred to in Subsection (8) shall be held within 30 days after the statement required by Subsection (1) is filed.
(b) (i) At least 20 days notice of the hearing shall be given by the commissioner to the person filing the statement.
(ii) Affected parties may waive the notice required by this Subsection (9)(b).
(iii) Not less than seven days notice of the public hearing shall be given by the person filing the statement to:
(A) the insurer; and
(B) any person designated by the commissioner.
(c) The commissioner shall make a determination within 30 days after the conclusion of the hearing.
(d) At the hearing, the person filing the statement, the insurer, any person to whom notice of hearing was sent, and any other person whose interest may be affected by the hearing may:
(i) present evidence;
(ii) examine and cross-examine witnesses; and
(iii) offer oral and written arguments.
(e) (i) A person or insurer described in Subsection (9)(d) may conduct discovery proceedings in the same manner as is presently allowed in the district courts of this state.
(ii) All discovery proceedings shall be concluded not later than three days before the commencement of the public hearing.
(10) At the acquiring person's expense and consent, the commissioner may retain any attorneys, actuaries, accountants, and other experts not otherwise a part of the commissioner's staff, which are reasonably necessary to assist the commissioner in reviewing the proposed acquisition of control.
(11) (a) (i) If a domestic insurer proposes to merge into another insurer, any securityholder electing to exercise a right of dissent may file with the insurer a written request for payment of the adjusted book value given in the statement required by Subsection (1) and approved under Subsection (8), in return for the surrender of the security holder's securities.
(ii) The request described in Subsection (11)(a)(i) shall be filed not later than ten days after the day of the securityholders' meeting where the corporate action is approved.
(b) The dissenting securityholder is entitled to and the insurer is required to pay to the dissenting securityholder the specified value within 60 days of receipt of the dissenting security holder's security.
(c) Persons electing under this Subsection (11) to receive cash for their securities waive the dissenting shareholder and appraisal rights otherwise applicable under Title 16, Chapter 10a, Part 13, Dissenters' Rights.
(d) (i) This Subsection (11) provides an elective procedure for dissenting securityholders to resolve their objections to the plan of merger.
(ii) This section does not restrict the rights of dissenting securityholders under Title 16, Chapter 10a, Utah Revised Business Corporation Act, unless this election is made under this Subsection (11).
(12) (a) All statements, amendments, or other material filed under Subsection (1), and all notices of public hearings held under Subsection (8), shall be mailed by the insurer to its securityholders within five business days after the insurer has received the statements, amendments, other material, or notices.
(b) Mailing expenses shall be paid by the person making the filing. As security for the payment of these expenses, that person shall file with the commissioner an acceptable bond or other deposit in an amount determined by the commissioner.
(13) This section does not apply to any offer, request, invitation, agreement, or acquisition that the commissioner by order exempts from the requirements of this section as:
(a) not having been made or entered into for the purpose of, and not having the effect of, changing or influencing the control of a domestic insurer; or
(b) as otherwise not comprehended within the purposes of this section.
(14) The following are violations of this section:
(a) the failure to file any statement, amendment, or other material required to be filed pursuant to Subsections (1), (2), and (5); or
(b) the effectuation, or any attempt to effectuate, an acquisition of control of or merger with a domestic insurer unless the commissioner has given the commissioner's approval to the acquisition or merger.
(15) (a) The courts of this state are vested with jurisdiction over:
(i) a person who:
(A) files a statement with the commissioner under this section; and
(B) is not resident, domiciled, or authorized to do business in this state; and
(ii) overall actions involving persons described in Subsection (15)(a)(i) arising out of a violation of this section.
(b) A person described in Subsection (15)(a) is considered to have performed acts equivalent to and constituting an appointment of the commissioner by that person, to be that person's lawful attorney upon whom may be served all lawful process in any action, suit, or proceeding arising out of a violation of this section.
(c) A copy of a lawful process described in Subsection (15)(b) shall be:
(i) served on the commissioner; and
(ii) transmitted by registered or certified mail by the
commissioner to the person at that person's last-known address.
2000
31A-16-105 Registration of insurers.
(1) (a) Every insurer which is authorized to do business in this state and which is a member of an insurance holding company system shall register with the commissioner, except a foreign insurer subject to registration requirements and standards adopted by statute or regulation in the jurisdiction of its domicile, if the requirements and standards are substantially similar to those contained in this section, Subsections 31A-16-106 (1)(a) and (2) and either Subsection 31A-16-106 (1)(b) or a statutory provision similar to the following: "Each registered insurer shall keep current the information required to be disclosed in its registration statement by reporting all material changes or additions within 15 days after the end of the month in which it learns of each change or addition."
(b) Any insurer which is subject to registration under this section shall register within 15 days after it becomes subject to registration, and annually thereafter by May 1 of each year for the previous calendar year, unless the commissioner for good cause extends the time for registration and then at the end of the extended time period. The commissioner may require any insurer authorized to do business in the state, which is a member of a holding company system, and which is not subject to registration under this section, to furnish a copy of the registration statement, the summary specified in Subsection (3), or any other information filed by the insurer with the insurance regulatory authority of domiciliary jurisdiction.
(2) Every insurer subject to registration shall file the registration statement on a form prescribed by the National Association of Insurance Commissioners, which shall contain the following current information:
(a) the capital structure, general financial condition, and ownership and management of the insurer and any person controlling the insurer;
(b) the identity and relationship of every member of the insurance holding company system;
(c) any of the following agreements in force, and transactions currently outstanding or which have occurred during the last calendar year between the insurer and its affiliates:
(i) loans, other investments, or purchases, sales or exchanges of securities of the affiliates by the insurer or of securities of the insurer by its affiliates;
(ii) purchases, sales, or exchanges of assets;
(iii) transactions not in the ordinary course of business;
(iv) guarantees or undertakings for the benefit of an affiliate which result in an actual contingent exposure of the insurer's assets to liability, other than insurance contracts entered into in the ordinary course of the insurer's business;
(v) all management agreements, service contracts, and all cost-sharing arrangements;
(vi) reinsurance agreements;
(vii) dividends and other distributions to shareholders; and
(ix) consolidated tax allocation agreements;
(d) any pledge of the insurer's stock, including stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system; and
(e) any other matters concerning transactions between registered insurers and any affiliates as may be included in any subsequent registration forms adopted or approved by the commissioner.
(3) All registration statements shall contain a summary outlining all items in the current registration statement representing changes from the prior registration statement.
(4) No information need be disclosed on the registration statement filed pursuant to Subsection (2) if the information is not material for the purposes of this section. Unless the commissioner by rule or order provides otherwise, sales, purchases, exchanges, loans or extensions of credit, investments, or guarantees involving one-half of 1%, or less, of an insurer's admitted assets as of the next preceding December 31 may not be considered material for purposes of this section.
(5) Any person within an insurance holding company system subject to registration shall provide complete and accurate information to an insurer if the information is reasonably necessary to enable the insurer to comply with the provisions of this chapter.
(6) The commissioner shall terminate the registration of any insurer which demonstrates that it no longer is a member of an insurance holding company system.
(7) The commissioner may require or allow two or more affiliated insurers subject to registration under this section to file a consolidated registration statement.
(8) The commissioner may allow an insurer which is authorized to do business in this state, and which is part of an insurance holding company system, to register on behalf of any affiliated insurer which is required to register under Subsection (1) and to file all information and material required to be filed under this section.
(9) The provisions of this section do not apply to any insurer, information, or transaction if, and to the extent that, the commissioner by rule or order exempts the insurer from the provisions of this section.
(10) Any person may file with the commissioner a disclaimer of affiliation with any authorized insurer, or a disclaimer of affiliation may be filed by any insurer or any member of an insurance holding company system. The disclaimer shall fully disclose all material relationships and bases for affiliation between the person and the insurer as well as the basis for disclaiming the affiliation. After a disclaimer has been filed, the insurer shall be relieved of any duty to register or report under this section which may arise out of the insurer's relationship with the person unless and until the commissioner disallows the disclaimer. The commissioner shall disallow a disclaimer only after furnishing all parties in interest with notice and opportunity to be heard, and after making specific findings of fact to support the disallowance.
(11) The failure to file a registration statement or any
summary of the registration statement required by this section
within the time specified for the filing is a violation of
this section.
1992
31A-16-106 Standards and management of an insurer within a holding company system.
(1) (a) Transactions within a holding company system to which an insurer subject to registration is a party are subject to the following standards:
(i) the terms shall be fair and reasonable;
(ii) charges or fees for services performed shall be reasonable;
(iii) expenses incurred and payment received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied;
(iv) the books, accounts, and records of each party to all transactions shall be so maintained as to clearly and accurately disclose the nature and details of the transactions, including the accounting information necessary to support the reasonableness of the charges or fees to the respective parties; and
(v) the insurer's surplus held for policyholders, following any dividends or distributions to shareholder affiliates, shall be reasonable in relation to the insurer's outstanding liabilities and shall be adequate to its financial needs.
(b) The following transactions involving a domestic insurer and any person in its holding company system may not be entered into unless the insurer has notified the commissioner in writing of its intention to enter into the transaction at least 30 days prior to entering into the transaction, or within any shorter period the commissioner may permit, if the commissioner has not disapproved the transaction within the period:
(i) sales, purchases, exchanges, loans or extensions of credit, guarantees, or investments if the transactions are equal to, or exceed as of the next preceding December 31:
(A) for nonlife insurers, the lesser of 3% of the insurer's admitted assets or 25% of surplus held for policyholders;
(B) for life insurers, 3% of the insurer's admitted assets;
(ii) loans or extensions of credit made to any person who is not an affiliate, if the insurer makes the loans or extensions of credit with the agreement or understanding that the proceeds of the 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 the loans or extensions of credit if the transactions are equal to, or exceed as of the next preceding December 31:
(A) for nonlife insurers, the lesser of 3% of the insurer's admitted assets or 25% of surplus held for policyholders;
(B) for life insurers, 3% of the insurer's admitted assets;
(iii) reinsurance agreements or modifications to reinsurance agreements in which the reinsurance premium or a change in the insurer's liabilities equals or exceeds 5% of the insurer's surplus held for policyholders, as of the next preceding December 31, 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 the nonaffiliate that any portion of the assets will be transferred to one or more affiliates of the insurer;
(iv) all management agreements, service contracts, and all cost-sharing arrangements;
(v) any material transactions, specified by rule, which the commissioner determines may adversely affect the interests of the insurer's policyholders; and
(vi) this subsection may not be interpreted to authorize or permit any transactions which would be otherwise contrary to law in the case of an insurer not a member of the same holding company system.
(c) A domestic insurer may not enter into transactions which are part of a plan or series of like transactions with persons within the holding company system if the purpose of the separate transactions is to avoid the statutory threshold amount and thus to avoid the review by the commissioner that would occur otherwise. If the commissioner determines that the separate transactions were entered into over any 12 month period for such a purpose, he may exercise his authority under Section 31A-16-110 .
(d) The commissioner, in reviewing transactions pursuant to Subsection (b), shall consider whether the transactions comply with the standards set forth in Subsection (a) and whether they may adversely affect the interests of policyholders.
(e) The commissioner shall be notified within 30 days of any investment of the domestic insurer in any one corporation, if the total investment in the corporation by the insurance holding company system exceeds 10% of the corporation's voting securities.
(2) (a) A domestic insurer may not pay any extraordinary dividend or make any other extraordinary distribution to its shareholders until:
(i) 30 days after the commissioner has received notice of the declaration of the dividend and has not within the 30-day period disapproved the payment; or
(ii) the commissioner has approved the payment within the 30-day period.
(b) For purposes of this subsection, an extraordinary dividend or distribution includes any dividend or distribution of cash or other property, fair market value of which, together with that of other dividends or distributions made within the preceding 12 months, exceeds the lesser of:
(i) 10% of the insurer's surplus held for policyholders as of the next preceding December 31; or
(ii) the net gain from operations of the insurer, if the insurer is a life insurer, or the net income, if the insurer is not a life insurer, not including realized capital gains, for the 12-month period ending the next preceding December 31;
(iii) an extraordinary dividend does not include pro rata distributions of any class of the insurer's own securities.
(c) In determining whether a dividend or distribution is extraordinary, an insurer other than a life insurer may carry forward net income from the previous two calendar years that has not already been paid out as dividends. This carry-forward shall be computed by taking the net income from the second and third preceding calendar years, not including realized capital gains, less dividends paid in the second and immediate preceding calendar years.
(d) Notwithstanding any other provision of law, an insurer may declare an extraordinary dividend or distribution, which is conditioned upon the commissioner's approval of the dividend or distribution, and the declaration shall confer no rights upon shareholders until:
(i) the commissioner has approved the payment of the dividend or distribution; or
(ii) the commissioner has not disapproved the payment within the 30-day period referred to in Subsection (2)(a).
(3) (a) Notwithstanding the control of a domestic insurer by any person, the officers and directors of the insurer may not be relieved of any obligation or liability to which they would otherwise be subject by law, and the insurer shall be managed so as to assure its separate operating identity consistent with this chapter.
(b) Nothing in this section precludes a domestic insurer
from having or sharing a common management or cooperative
or joint use of personnel, property, or services with one
or more other persons under arrangements meeting the standards
of Subsection (1)(a).
1992
31A-16-108 Examination of registered insurers.
(1) Subject to the limitation contained in this section and the powers which the commissioner has under Chapter 2 relating to the examination of insurers, the commissioner has the power to order any insurer registered under Section 31A-16-105 to produce the records, books, or other informational papers in the possession of the insurer or its affiliates which the commissioner considers necessary to ascertain the financial condition or legality of conduct of the insurer. If an insurer fails to comply with this order, the commissioner may examine the affiliates to obtain the information.
(2) The commissioner shall exercise his power under Subsection (1) only if the examination of the insurer under Chapter 2 is inadequate, or the interests of the policyholders of the insurer may be adversely affected if the commissioner fails to exercise his power.
(3) The commissioner may retain, at the registered insurer's expense, attorneys, actuaries, accountants, and other experts not otherwise a part of the commissioner's staff, if they are necessary to assist in the conduct of the examination under Subsection (1). Any persons so retained are under the direction and control of the commissioner and shall act in a purely advisory capacity.
(4) Each registered insurer who produces records, books,
and papers under Subsection (1) for examination is liable
for and shall pay the expense of the examination under Section
31A-2-205
.
1985
31A-16-109 Confidentiality of information obtained by commissioner.
All information, documents, and copies of these which
are obtained by or disclosed to the commissioner or any other
person in the course of an examination or investigation made
under Section
31A-16-108
, and all information reported under Section
31A-16-105
, is confidential. It is not subject to subpoena
and may not be made public by the commissioner or any other
person, except it may be provided to the insurance departments
of other states, without the prior written consent of the
insurer to which it pertains. The confidentiality of this
section does not apply if the commissioner, after giving
the insurer and its affiliates who would be affected by the
disclosure, proper notice and an opportunity to be heard,
and determines that the interests of policyholders, shareholders,
or the public will be served by the publication of the information.
In this situation, the commissioner may publish all or any
part of the information in any manner he considers appropriate.
1987
31A-16-110 Enjoining violations - Voting securities acquired in violation of law or rule.
(1) Whenever it appears to the commissioner that any insurer or any director, officer, employee, or agent of an insurer has committed or is about to commit a violation of this chapter or any rule or order issued by the commissioner under this chapter, the commissioner may apply to the district court of the county in which the principal office of the insurer is located, or if the insurer has no principal office in this state, then to the Third District Court of Salt Lake County, for an order enjoining the insurer or a director, officer, employee, or agent of the insurer from the violation. The commissioner may also request other equitable relief which the nature of the case and the interest of the insurer's policyholders, creditors, and shareholders or the public require.
(2) No security which is the subject of any agreement or arrangement regarding acquisition, or which is acquired or to be acquired, in contravention of the provisions of this chapter or any rule or order issued by the commissioner under this chapter, may be voted at any shareholders' meeting, or may be counted for quorum purposes. Any action of shareholders requiring the affirmative vote of a percentage of shares may be taken as though those securities were not issued and outstanding. However, no action taken at that shareholders' meeting is invalidated by the voting of those securities, unless the action would materially affect control of the insurer or unless the district court has ordered that voting invalidates the action. If an insurer or the commissioner has reason to believe that any security of the insurer has been or is about to be acquired in contravention of the provisions of this chapter or any rule or order issued by the commissioner under this chapter, the insurer or the commissioner may apply to the Third District Court of Salt Lake County or to the district court for the county in which the insurer has its principal place of business, to enjoin any offer, request, invitation, or agreement of acquisition which is made in contravention of Section 31A-16-103 or any rule or order issued by the commissioner under this chapter to enjoin the voting of that acquired security. This court order may also void any vote of that security if the vote has already been cast at any meeting of shareholders, and the court may grant other equitable relief which the nature of the case and the interests of the insurer's policyholders, creditors, and shareholders or the public require.
(3) Upon the application of the insurer or the commissioner,
if a person has acquired or is proposing to acquire any voting
securities in violation of this chapter or of any rule or
order issued by the commissioner under this chapter, the
Third District Court of Salt Lake County or the district
court for the county in which the insurer has its principal
place of business may, upon the notice which the court deems
appropriate, seize or sequester any voting securities of
the insurer owned directly or indirectly by that person,
and issue orders with respect to that person and those securities
which the court considers appropriate to effectuate the provisions
of this chapter. For the purposes of this chapter, the situs
of the ownership of the securities of domestic insurers is
considered to be in this state.
1986
31A-16-111 Required sale of improperly acquired stock - Penalties.
(1) If the commissioner finds that the acquiring person has not substantially complied with the requirements of this chapter in acquiring control of a domestic insurer, the commissioner may require the acquiring person to sell the acquiring person's stock of the domestic insurer in the manner specified in Subsection (2).
(2) (a) The commissioner shall effect the sale required by Subsection (1) in the manner which, under the particular circumstances, appears most likely to result in the payment of the full market value for the stock by persons who have the collective competence, experience, financial resources, and integrity to obtain approval under Subsection 31A-16-103 (8).
(b) Sales made under this section are subject to approval by the Third Judicial District Court for Salt Lake County, which court has the authority to effect the terms of the sale.
(3) The proceeds from sales made under this section shall be distributed first to the person required by this section to sell the stock, but only up to the amount originally paid by the person for the securities. Additional sale proceeds shall be paid to the General Fund.
(4) The person required to sell and persons related to or affiliated with the seller may not purchase the stock at the sale conducted under this section.
(5) (a) A director or officer of an insurance holding company system violates this chapter if the director or officer knowingly:
(i) participates in or assents to a transaction or investment that:
(A) has not been properly reported or submitted pursuant to:
(I) Subsections 31A-16-105 (1) and (2); or
(II) Subsection 31A-16-106 (1)(b); or
(B) otherwise violates this chapter; or
(ii) permits any of the officers or agents of the insurer to engage in a transaction or investment described in Subsection (5)(a)(i).
(b) A director or officer in violation of Subsection (5)(a) shall pay, in the director's or officer's individual capacity, a civil penalty of not more than $20,000 per violation:
(i) upon a finding by the commissioner of a violation; and
(ii) after notice and hearing before the commissioner.
(c) In determining the amount of the civil penalty under Subsection (5)(b), the commissioner shall take into account:
(i) the appropriateness of the penalty with respect to the gravity of the violation;
(ii) the history of previous violations; and
(iii) any other matters that justice requires.
(6) (a) When it appears to the commissioner that any insurer or any director, officer, employee, or agent of the insurer, has committed a willful violation of this chapter, the commissioner may cause criminal proceedings to be instituted:
(i) (A) in the district court for the county in this state in which the principal office of the insurer is located; or
(B) if the insurer has no principal office in this state, in the Third District Court for Salt Lake County; and
(ii) against the insurer or the responsible director, officer, employee, or agent of the insurer.
(b) (i) An insurer that willfully violates this chapter may be fined not more than $20,000.
(ii) Any individual who willfully violates this chapter is guilty of a third degree felony, and upon conviction may be:
(A) fined in that person's individual capacity not more than $5,000;
(B) imprisoned; or
(C) both fined and imprisoned.
(7) This section does not limit the other sanctions applicable
to violations of this title under Section
31A-2-308
.
2000
