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  H.B. No. 3220
 
 
 
 
AN ACT
  relating to the regulation of insurance holding company systems,
  including internationally active insurance groups; authorizing a
  fee.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 823.002, Insurance Code, is amended by
  adding Subdivisions (4-b) and (6-a) to read as follows:
               (4-b)  "Group-wide supervisor" means the regulatory
  official authorized to engage in conducting and coordinating
  group-wide supervision activities who is determined or
  acknowledged by the commissioner under Section 823.0147 to have
  sufficient significant contacts with the internationally active
  insurance group.
               (6-a)  "Internationally active insurance group" means
  an insurance holding company system that:
                     (A)  includes an insurer registered under
  Subchapter B; and
                     (B)  meets the following criteria: 
                           (i)  has premiums written in at least three
  countries;
                           (ii)  has a percentage of gross premiums
  written outside the United States of at least 10 percent of the
  insurance holding company system's total gross written premiums;
  and
                           (iii)  based on a three-year rolling
  average, has total assets of at least $50 billion or total gross
  written premiums of at least $10 billion.
         SECTION 2.  Sections 823.011(a), (d), and (d-1), Insurance
  Code, are amended to read as follows:
         (a)  This section applies only to information, including
  documents and copies of documents, that is:
               (1)  reported or otherwise provided under Subchapter B
  or C or Section 823.201(d) or (e) or Section 823.0147;
               (2)  disclosed to the commissioner under Section
  823.010; or
               (3)  obtained by or disclosed to the commissioner or
  another person in the course of an examination or investigation
  under Subchapter H or Chapter 401.
         (d)  Except as provided by Subsection (e), if the recipient
  of documents or other information described by Subsection (a)
  agrees in writing to maintain the confidential and privileged
  status of the documents or other information, and verifies in
  writing the legal authority to maintain the confidential and
  privileged status of the documents or information, the commissioner
  or another person may disclose the information to any of the
  following entities functioning in an official capacity:
               (1)  a commissioner of insurance or an insurance
  department of another state;
               (2)  an authorized law enforcement official;
               (3)  a district attorney of this state;
               (4)  the attorney general;
               (5)  a grand jury;
               (6)  members of a supervisory college described by
  Section 823.0145;
               (7)  the National Association of Insurance
  Commissioners and its affiliates and subsidiaries; or
               (8)  another state, federal, or international
  regulatory agency.
         (d-1)  The commissioner may receive documents or
  information, including otherwise confidential and privileged
  documents or information, from the entities listed in Subsection
  (d)[,] and shall maintain as confidential or privileged any
  document or information received by the commissioner with notice or
  an understanding that the document or information is confidential
  or privileged under the laws of the jurisdiction of the entity that
  provides the document or information.
         SECTION 3.  Subchapter A, Chapter 823, Insurance Code, is
  amended by adding Section 823.0147 to read as follows:
         Sec. 823.0147.  GROUP-WIDE SUPERVISION OF INTERNATIONALLY
  ACTIVE INSURANCE GROUPS. (a) The commissioner is authorized to act
  as the group-wide supervisor for any internationally active
  insurance group under the provisions of this section.
         (b)  The commissioner may otherwise acknowledge another
  regulatory official as the group-wide supervisor where the
  internationally active insurance group:
               (1)  does not have substantial insurance operations in
  the United States;
               (2)  has substantial insurance operations in the United
  States, but not in this state; or
               (3)  has substantial insurance operations in the United
  States and this state, but the commissioner has determined under
  the factors in Subsections (e) and (k) that the other regulatory
  official is the appropriate group-wide supervisor.
         (c)  An insurance holding company system that does not
  otherwise qualify as an internationally active insurance group may
  request that the commissioner make a determination or
  acknowledgment as to a group-wide supervisor under this section.
         (d)  In cooperation with other state, federal, and
  international regulatory agencies, the commissioner will identify
  a single group-wide supervisor for an internationally active
  insurance group.  The commissioner may determine that the
  commissioner is the appropriate group-wide supervisor for an
  internationally active insurance group that conducts substantial
  insurance operations concentrated in this state. The commissioner
  may acknowledge that a regulatory official from another
  jurisdiction is the appropriate group-wide supervisor for the
  internationally active insurance group.
         (e)  The commissioner shall consider the following factors
  when making a determination or acknowledgment under Subsection (d):
               (1)  the place of domicile of the insurers within the
  internationally active insurance group that hold the largest share
  of the group's written premiums, assets, or liabilities;
               (2)  the place of domicile of the top-tiered insurers
  in the insurance holding company system of the internationally
  active insurance group;
               (3)  the location of the executive offices or largest
  operational offices of the internationally active insurance group;
               (4)  whether another regulatory official is acting or
  is seeking to act as the group-wide supervisor under a regulatory
  system that the commissioner determines to be:
                     (A)  substantially similar to the system of
  regulation provided under the laws of this state; or
                     (B)  otherwise sufficient in terms of providing
  for group-wide supervision, enterprise risk analysis, and
  cooperation with other regulatory officials; and
               (5)  whether another regulatory official acting or
  seeking to act as the group-wide supervisor provides the
  commissioner with reasonably reciprocal recognition and
  cooperation.
         (f)  A commissioner identified under this section as the
  group-wide supervisor may determine that it is appropriate to
  acknowledge another supervisor to serve as the group-wide
  supervisor. The acknowledgment of the group-wide supervisor shall
  be made after consideration of the factors listed in Subsection
  (e), and shall be made in cooperation with and subject to the
  acknowledgment of other regulatory officials involved with
  supervision of members of the internationally active insurance
  group, and in consultation with the internationally active
  insurance group.
         (g)  Notwithstanding any other provision of law, when
  another regulatory official is acting as the group-wide supervisor
  of an internationally active insurance group, the commissioner
  shall acknowledge that regulatory official as the group-wide
  supervisor.
         (h)  The commissioner shall make a determination or
  acknowledgment as to the appropriate group-wide supervisor for an
  internationally active insurance group under Subsection (d) or (f)
  in the event of a material change in the internationally active
  insurance group that results in:
               (1)  the internationally active insurance group's
  insurers domiciled in this state holding the largest share of the
  group's premiums, assets, or liabilities; or
               (2)  this state being the place of domicile of the
  top-tiered insurers in the insurance holding company system of the
  internationally active insurance group.
         (i)  Under Subchapter H, the commissioner is authorized to
  collect from any insurer registered under Subchapter B all
  information necessary to determine whether the commissioner may act
  as the group-wide supervisor of an internationally active insurance
  group or if the commissioner may acknowledge another regulatory
  official to act as the group-wide supervisor. Prior to issuing a
  determination that an internationally active insurance group is
  subject to group-wide supervision by the commissioner, the
  commissioner shall notify the insurer registered under Subchapter B
  and the ultimate controlling person within the internationally
  active insurance group. The internationally active insurance group
  shall have not less than 30 days to provide the commissioner with
  additional information pertinent to the pending determination. The
  commissioner may publish on the department's website the identity
  of internationally active insurance groups that the commissioner
  has determined are subject to group-wide supervision by the
  commissioner.
         (j)  If the commissioner is the group-wide supervisor for an
  internationally active insurance group, the commissioner is
  authorized to engage in any of the following group-wide supervision
  activities:
               (1)  assess the enterprise risks within the
  internationally active insurance group to ensure that:
                     (A)  the material financial condition and
  liquidity risks to the members of the internationally active
  insurance group that are engaged in the business of insurance are
  identified by management; and
                     (B)  reasonable and effective mitigation measures
  are in place;
               (2)  request, from any member of an internationally
  active insurance group subject to the commissioner's supervision,
  information necessary and appropriate to assess enterprise risk,
  including information about the members of the internationally
  active insurance group regarding:
                     (A)  governance, risk assessment, and management;
                     (B)  capital adequacy; and
                     (C)  material intercompany transactions;
               (3)  coordinate and, through the authority of the
  regulatory officials of the jurisdictions where members of the
  internationally active insurance group are domiciled, compel
  development and implementation of reasonable measures designed to
  ensure that the internationally active insurance group is able to
  timely recognize and mitigate enterprise risks to members of the
  internationally active insurance group that are engaged in the
  business of insurance;
               (4)  communicate with other state, federal, and
  international regulatory agencies for members within the
  internationally active insurance group and share relevant
  information, subject to the confidentiality provisions of Section
  823.011, through supervisory colleges in Section 823.0145 or
  otherwise;
               (5)  enter into agreements with or obtain documentation
  from any insurer registered under Subchapter B, any member of the
  internationally active insurance group, and any other state,
  federal, and international regulatory agencies for members of the
  internationally active insurance group, providing the basis for or
  otherwise clarifying the commissioner's role as group-wide
  supervisor, including provisions for resolving disputes with other
  regulatory officials, provided that such agreements or
  documentation may not serve as evidence in any proceeding to show
  that any insurer or person within an insurance holding company
  system not domiciled or incorporated in this state is doing
  business in this state or is otherwise subject to jurisdiction in
  this state; and
               (6)  other group-wide supervision activities,
  consistent with the authorities and purposes enumerated above, as
  considered necessary by the commissioner.
         (k)  If the commissioner acknowledges that another
  regulatory official from a jurisdiction that is not accredited by
  the National Association of Insurance Commissioners is the
  group-wide supervisor, the commissioner is authorized to
  reasonably cooperate, through supervisory colleges or otherwise,
  with group-wide supervision undertaken by the group-wide
  supervisor, provided that:
               (1)  the commissioner's cooperation is in compliance
  with the laws of this state; and
               (2)  the regulatory official acknowledged as the
  group-wide supervisor also recognizes and cooperates with the
  commissioner's activities as a group-wide supervisor for other
  internationally active insurance groups where applicable.
         (l)  Where recognition and cooperation are not reasonably
  reciprocal under Subsection (k)(2), the commissioner is authorized
  to refuse recognition and cooperation.
         (m)  The commissioner is authorized to enter into agreements
  with or obtain documentation from any insurer registered under
  Subchapter B, any affiliate of the insurer, and other state,
  federal, and international regulatory agencies for members of the
  internationally active insurance group that provides the basis for
  or otherwise clarifies a regulatory official's role as group-wide
  supervisor.
         (n)  The commissioner may adopt rules necessary for the
  administration of this section.
         (o)  A registered insurer subject to this section shall be
  liable for and shall pay the reasonable expenses of the
  commissioner's participation in the administration of this
  section, including the engagement of attorneys, actuaries, and any
  other professionals and all reasonable travel expenses.
         SECTION 4.  Section 823.054(b), Insurance Code, is amended
  to read as follows:
         (b)  If the amount of a single transaction or the total
  amount of all transactions involving sales, purchases, exchanges,
  loans or other extensions of credit, or investments is more than
  [the lesser of] one-half of one percent of an insurer's admitted
  assets [or five percent of an insurer's surplus,] as of December 31
  of the year preceding the date of the transaction or transactions,
  the transaction or transactions, respectively, are considered to be
  material for purposes of this section.
         SECTION 5.  (a) Section 823.011, Insurance Code, as amended
  by this Act, applies only to information, including documents and
  copies of documents, obtained by or reported, disclosed, or
  otherwise provided to the commissioner of insurance on or after the
  effective date of this Act. Information, including documents and
  copies of documents, obtained by or reported, disclosed, or
  otherwise provided to the commissioner of insurance before the
  effective date of this Act is governed by the law in effect on the
  date the transaction occurred, and the former law is continued in
  effect for that purpose.
         (b)  Section 823.054, Insurance Code, as amended by this Act,
  applies only to a transaction that occurs on or after the effective
  date of this Act. A transaction that occurs before the effective
  date of this Act is governed by the law in effect on the date the
  transaction occurred, and the former law is continued in effect for
  that purpose.
         SECTION 6.  This Act takes effect immediately if it receives
  a vote of two-thirds of all the members elected to each house, as
  provided by Section 39, Article III, Texas Constitution.  If this
  Act does not receive the vote necessary for immediate effect, this
  Act takes effect September 1, 2017.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 3220 was passed by the House on April
  28, 2017, by the following vote:  Yeas 134, Nays 0, 2 present, not
  voting.
 
  ______________________________
  Chief Clerk of the House   
 
 
         I certify that H.B. No. 3220 was passed by the Senate on May
  8, 2017, by the following vote:  Yeas 31, Nays 0.
 
  ______________________________
  Secretary of the Senate    
  APPROVED:  _____________________
                     Date          
   
            _____________________
                   Governor