85R6548 BEE-F
	By: Hancock	S.B. No. 1071

	A BILL TO BE ENTITLED
	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.  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
	I-1, B, or C or Section 823.201(d) or (e);
	(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 to which this section applies
	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 2.  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 3.  Chapter 823, Insurance Code, is amended by
	adding Subchapter I-1 to read as follows:
	SUBCHAPTER I-1. GROUP-WIDE SUPERVISION OF INTERNATIONALLY ACTIVE
	INSURANCE GROUPS
	Sec. 823.421.  DEFINITIONS. In this subchapter:
	(1)  "Foreign regulatory official" means a
	governmental official of another state or country who is authorized
	to regulate an internationally active insurance group in accordance
	with this subchapter.
	(2)  "Group-wide supervisor" means the regulatory
	official designated by the commissioner to have sufficient
	significant contacts with an internationally active insurance
	group to conduct and coordinate group-wide supervision activities
	for the internationally active insurance group under this
	subchapter.
	(3)  "Internationally active insurance group" means an
	insurance holding company system described by Section 823.422 and
	includes an insurer registered under Subchapter B.
	Sec. 823.422.  CLASSIFICATION AS INTERNATIONALLY ACTIVE
	INSURANCE GROUP. (a) For purposes of this subchapter and except as
	provided by Subsection (c), an insurance holding company system is
	an internationally active insurance group if the insurance holding
	company system:
	(1)  writes premiums in at least three countries;
	(2)  writes at least 10 percent of the insurance
	holding company system's total gross written premiums outside the
	United States; and
	(3)  for the period described by Subsection (b):
	(A)  has average total assets of at least $50
	billion; or
	(B)  writes total gross premiums of an average of
	at least $10 billion.
	(b)  The period applicable to Subsection (a)(3) is:
	(1)  the three most recent fiscal years of the
	insurance holding company system that precede the fiscal year in
	which the determination under this section is made; or
	(2)  if the insurance holding company system has been
	in operation for less than the period described by Subdivision (1),
	the period for which the insurance holding company system has been
	in operation.
	(c)  The commissioner may waive a requirement described by
	Subsection (a) in determining an insurance holding company system
	to be an internationally active insurance group if the commissioner
	determines that the insurance holding company system substantially
	satisfies Subsection (a).
	(d)  The commissioner may publish on the department's
	Internet website a list of insurance holding company systems
	classified as internationally active insurance groups under this
	section.
	Sec. 823.423.  DESIGNATION OF GROUP-WIDE SUPERVISOR. (a)
	In cooperation with other state, federal, and international
	regulatory agencies and in consultation with the internationally
	active insurance group, the commissioner shall designate a single
	group-wide supervisor for each group in accordance with this
	subchapter.  The commissioner may not designate a group-wide
	supervisor before the period for additional information under
	Section 823.425 has expired.
	(b)  The commissioner shall designate the commissioner or a
	foreign regulatory official as the group-wide supervisor under
	Subsection (a).
	(c)  At the request of an insurance holding company system
	registered under Subchapter B that does not otherwise meet the
	requirements of an internationally active insurance group under
	Section 823.422, the commissioner may designate a group-wide
	supervisor for the insurance holding company system in accordance
	with this subchapter.
	Sec. 823.424.  INFORMATION FOR DESIGNATION. The
	commissioner may order the production of information in accordance
	with Subchapter H necessary to make a designation under Section
	823.423 from an insurer registered under Subchapter B that is part
	of the internationally active insurance group.
	Sec. 823.425.  NOTICE OF DESIGNATION; ADDITIONAL
	INFORMATION FOR DESIGNATION. (a) In this section, "ultimate
	controlling person" means the person in an internationally active
	insurance group who is not controlled by another person.
	(b)  Before making a designation under Section 823.423, the
	commissioner shall provide written notice that the commissioner is
	making a designation under that section to:
	(1)  each insurer registered under Subchapter B that is
	a member of the insurance holding company system to be designated as
	an internationally active insurance group; and
	(2)  the ultimate controlling person of the insurance
	holding company system.
	(c)  The insurance holding company system to be designated as
	an internationally active insurance group shall provide any
	additional information to the commissioner for a designation under
	Section 823.423 not later than the 30th day after the date the group
	receives the notice described by Subsection (b).
	Sec. 823.426.  DESIGNATION OF COMMISSIONER. (a) The
	commissioner may designate the commissioner as the group-wide
	supervisor for any internationally active insurance group under
	Section 823.423.
	(b)  Except as provided by Section 823.427, the commissioner
	shall designate the commissioner as the group-wide supervisor of an
	internationally active insurance group under Section 823.423 if the
	group conducts substantial insurance operations in this state.
	Sec. 823.427.  DESIGNATION OF FOREIGN REGULATORY OFFICIAL.
	(a) The commissioner shall designate a foreign regulatory official
	as the group-wide supervisor under Section 823.423 if the foreign
	regulatory official acts as the group-wide supervisor.
	(b)  The commissioner may designate a foreign regulatory
	official as the group-wide supervisor under Section 823.423 if:
	(1)  the foreign regulatory official consents to the
	designation; and
	(2)  the internationally active insurance group:
	(A)  does not have substantial insurance
	operations in this state; or
	(B)  has substantial insurance operations in this
	state, but the commissioner has determined that the foreign
	regulatory official is a more appropriate supervisor in accordance
	with this section.
	(c)  In determining whether a foreign regulatory official is
	a more appropriate group-wide supervisor under Subsection
	(b)(2)(B), the commissioner shall consider:
	(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 a foreign 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 a foreign regulatory official acting or
	seeking to act as the group-wide supervisor provides the
	commissioner with reasonably reciprocal recognition and
	cooperation.
	Sec. 823.428.  CHANGE OF DESIGNATION. The commissioner may
	change the designation of a foreign regulatory official as the
	group-wide supervisor under Section 823.423 in the event of a
	material change 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 an
	internationally active insurance group.
	Sec. 823.429.  POWERS OF COMMISSIONER AS GROUP-WIDE
	SUPERVISOR. (a) This section applies only to an internationally
	active insurance group for which the commissioner is designated as
	the group-wide supervisor.
	(b)  The commissioner may assess the enterprise risks within
	the internationally active insurance group to ensure that:
	(1)  the material financial condition and liquidity
	risks to the members of the group that are engaged in the business
	of insurance are identified by management; and
	(2)  reasonable and effective mitigation measures are
	in place.
	(c)  The commissioner may request from any member of the
	internationally active insurance group information necessary and
	appropriate to assess enterprise risk, including information about
	the members of the group regarding:
	(1)  governance, risk assessment, and management;
	(2)  capital adequacy; and
	(3)  material intercompany transactions.
	(d)  The commissioner may coordinate and, through the
	authority of the regulatory officials of the jurisdictions in which
	members of the internationally active insurance group are
	domiciled, compel development and implementation of reasonable
	measures designed to ensure that the group is able to timely
	recognize and mitigate enterprise risks to members of the group
	that are engaged in the business of insurance.
	(e)  The commissioner may communicate with other state,
	federal, and international regulatory agencies for members of the
	internationally active insurance group and share relevant
	information subject to Section 823.011, through supervisory
	colleges described by Section 823.0145 or otherwise.
	(f)  The commissioner may enter into agreements, including
	an agreement for resolving disputes with other regulatory
	officials, with or obtain documentation related to the
	commissioner's role as group-wide supervisor from:
	(1)  any insurer registered under Subchapter B;
	(2)  any member of the internationally active insurance
	group; and
	(3)  any other state, federal, or international
	agencies regulating members of the internationally active
	insurance group.
	(g)  The commissioner may perform any other group-wide
	supervision activity consistent with this subchapter or considered
	necessary by the commissioner for the administration of this
	subchapter.
	(h)  An agreement entered into or documentation obtained
	under Subsection (f) may not be used as evidence in any proceeding
	to show that any foreign insurer or person within an insurance
	holding company system is doing business in this state or is
	otherwise subject to this state's jurisdiction.
	Sec. 823.430.  POWERS OF COMMISSIONER WHEN FOREIGN
	REGULATORY OFFICIAL IS GROUP-WIDE SUPERVISOR. (a) This section
	applies only to an internationally active insurance group for which
	a foreign regulatory official is designated as the group-wide
	supervisor under Section 823.423.
	(b)  The commissioner may 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 to obtain information
	related to the foreign regulatory official's role as group-wide
	supervisor.
	(c)  If the commissioner designates a foreign regulatory
	official from a jurisdiction that is not accredited by the National
	Association of Insurance Commissioners as the group-wide
	supervisor under Section 823.423, the commissioner may reasonably
	cooperate with regulatory actions taken by the supervisor, through
	supervisory colleges described by Section 823.0145 or otherwise,
	if:
	(1)  the commissioner's cooperation is in compliance
	with the laws of this state; and
	(2)  where applicable, the foreign regulatory official
	also recognizes and cooperates with the commissioner's regulatory
	actions as a group-wide supervisor for other internationally active
	insurance groups.
	(d)  Where recognition and cooperation under Subsection
	(c)(2) is not reasonably reciprocal, the commissioner may refuse
	recognition of and cooperation with the foreign regulatory
	official's regulatory action.
	Sec. 823.431.  EXPENSES OF COMMISSIONER. A registered
	insurer subject to this subchapter shall pay the reasonable
	expenses of the commissioner's participation in the administration
	of this subchapter, including the engagement of attorneys,
	actuaries, and other professionals and reasonable travel expenses.
	SECTION 4.  (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 5.  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.