23 CAR § 42-105. Review of insurance business transfer plan

(a) Matters to be considered during the Insurance Commissioner’s review. (1) When reviewing an applicant’s insurance business transfer plan for authorization to submit to the court, the commissioner shall consider, among other things: (A) All assets, liabilities, and cash flow, the nature and composition of the assets proposed to be transferred in support of the plan; and (B) All proposed assets of the transferring and assuming insurers, which consideration must include: (i) An assessment of the risks and quality, including the liquidity and marketability, of the proposed portfolio of the assuming insurer; (ii) Consideration of assets and liability matching; and (iii) The treatment of the material elements of the portfolio based on the statutory accounting practices. (2) After making the considerations described in subdivision (a)(1) of this section, the commissioner shall approve an insurance business transfer plan for submission to the court if the commissioner finds that the following requirements are met: (A) The financial condition of the transferring insurer and the assuming insurer will not jeopardize the financial stability of the transferring insurer or prejudice the interest of its policyholders, contract holders, or reinsurers, in each case, in a manner that is unfair to its policyholders, contract holders, or reinsurers; (B) The terms of the plan of transfer are fair and reasonable to the transferring insurer’s and any assuming insurer’s policyholders, contract holders, or reinsurers; (C) Neither a transferring insurer nor an assuming insurer has plans or proposals to: (i) Liquidate the transferring insurer or any assuming insurer; (ii) Consolidate or merge the transferring insurer or any assuming insurer with a person; or (iii) Make any other material change in the transferring insurer’s or any assuming insurer’s business or corporation structure or management that is: (a) Unfair or unreasonable to the transferring insurer’s or assuming insurers’ policyholders, contract holders, or reinsurers; and (b) Not in the public interest; (D) The competence, experience, and integrity of the persons who would control the operation of a transferring insurer, if it survives the transfer, and any assuming insurer are such that it would be consistent with the interest of the transferring insurers and any assuming insurers’ policyholders, contract holders, or reinsurers and the general public to permit the transfer; (E) The business transfer is not likely to be hazardous or prejudicial to the insurance-buying public; (F) The interest of the policyholders of the transferring insurer that may become policyholders of an assuming insurer will be adequately protected by the assuming insurer; (G) The transferring insurer, if it survives the business transfer, and the assuming insurers will be solvent upon the consummation of the transfer; (H) The assets allocated to the transferring insurer, if it survives the business transfer, and the assuming insurer will not, upon the consummation of the business transfer, be unreasonably small in relation to the business and transactions in which the insurers were engaged or are about to engage; (I) The proposed business transfer is not being made for the purpose of hindering, delaying, or defrauding any policyholders, contract holders, or reinsurers; and (J) If the business transfer plan includes policies of long-term care insurance, as defined in the Long-Term Care Insurance Act of 2005, Arkansas Code § 23-97-301 et seq., the liabilities associated with those policies do not constitute more than a de minimus amount of the insurance liabilities of the transferring insurer, if it survives the business transfer, or to any assuming insurer. (3)(A) A transferring insurer that files an insurance business transfer plan shall pay all expense incurred by the commissioner in connection with proceedings under the section, including expenses for attorneys, actuaries, accountants, and other experts not otherwise a part of the commissioner’s staff as may be reasonably necessary to assist the commissioner in reviewing the proposed plan of business transfer. (B) A transferring insurer may treat the expense in the plan in the same manner as any other liability. (4) If the commissioner approves an insurance business transfer plan, the commissioner shall issue: (A) An order that is accompanied by finding of fact and conclusion of law; and (B) A certificate of authority authorizing the assuming insurer to transact the business of insurance in this state, except that the commissioner may waive this requirement if an assuming insurer will not survive a merger simultaneous with the business transfer in accordance with the insurance business transfer plan. (5) The conditions in this section for freeing one (1) or more of the transferring insurers from the liabilities of the transferring insurer and for eliminating some or all the liabilities of the transferring insurer are deemed to have been satisfied if the commissioner approves the plan of transfer and a circuit court issues a final order. (b) Procedure for review and approval. (1)(A) The commissioner shall have sixty (60) business days from the date of receipt of a complete plan to review the plan to determine if the applicant will be authorized to submit it to the court. (B) The commissioner may extend the sixty-day review period for an additional thirty (30) business days. (2) The commissioner shall authorize the submission of the plan to the court unless he or she finds that the insurance business transfer would have an adverse material impact on the interests of policyholders or claimants that are part of the subject business. (3) The commissioner shall not authorize the submission of the insurance business transfer plan to the court unless the: (A) Assuming insurer: (i) Is licensed in each line of business in each state where the transferring insurer is licensed and policies subject to the proposed transfer were written; or (ii) Demonstrates an extraordinary circumstance preventing it from obtaining such license or licenses; and (B) Commissioner determines that the lack of such license or licenses would not result in an adverse material impact on the interests of policyholders, contract holders, or reinsurers. (4) If the commissioner determines that the insurance business transfer would have an adverse material impact on the interests of policyholders or claimants that are part of the subject business, he or she shall notify the applicant and specify any modifications, supplements, or amendments and any additional information or documentation with respect to the plan that must be provided to the commissioner before he or she will allow the applicant to proceed with the court filing. (5)(A) The applicant shall have thirty (30) days from the date the commissioner notifies him or her in writing to file an amended plan providing the modifications, supplements, or amendments and additional information or documentation as requested by the commissioner. (B) If necessary, the applicant may request in writing an extension of time of thirty (30) days. (C) If the applicant does not make an amended filing within the time period provided for in this subdivision (b)(5), including any extension of time granted by the commissioner, the plan filing will terminate and a subsequent filing by the applicant will be considered a new filing that shall require compliance with all provisions of the Arkansas Insurance Business Transfer Act, Arkansas Code § 23-69-501 et seq., as if the prior filing had never been made. (6) The commissioner’s review period shall recommence when the modification, supplement, amendment, or additional information is received.