Required Format for Business Plans and Pro Forma Financial Statements for Risk Retention Groups ("RRGs")

BRIAN SANDOVAL Governor STATE OF NEVADA BRUCE H. BRESLOW Director SCOTT J. KIPPER Commissioner DEPARTMENT OF BUSINESS AND INDUSTRY DIVISION OF INSURANCE 1818 East College Pkwy., Suite 103 Carson City, Nevada 89706 (775) 687-0700 • Fax (775) 687-0787 Website: doi.nv.gov E-mail: insinfo@doi.nv.gov Bulletin 14-007 August 5, 2014 Required Format for Business Plans and Pro Forma Financial Statements for Risk Retention Groups (“RRGs”) Nevada Revised Statute (“NRS”) 694C.240 requires a captive insurer, including Nevada domestic RRGs, to file a business plan upon application and upon renewal (3/1 of every year). In order to accomplish compliance with this statutory requirement, to ensure that all areas of the business plan are addressed, and to further enhance the Nevada Division of Insurance’s (“Division”) understanding and regulation of RRGs chartered in this State, the Division provides the attached templates to use for the annual submission of the business plan and pro forma financial statements. BUSINESS PLAN TEMPLATE PAGE 1 State of Nevada Department of Business and Industry DIVISION OF INSURANCE 1818 East College Pkwy., Suite 103 Carson City, Nevada 89706 Annual Business Plan As of December 31, 20XX Enter the RRG Name Here BUSINESS PLAN TEMPLATE PAGE 2 IntroductionƬBackground Describe the overall circumstances that led to the efforts to organize the captive risk retention group (“RRG”) including current and emerging market situations relative to the business the RRG will insure. Explain how transferring risk to the RRG will address the issues and concerns described above. Goals Describe the overall long-term risk transfer benefits and/or profitability to be achieved by the RRG. LegalBusinessDescription List the RRG name, home office location, and principal place of business. CompliancewithLRRA Describe how members of the association are engaged in business activities similar or related with respect to the liability to which they are exposed because of any related, similar or common business, trade, product, service, premise or operation. CoverageandReinsurance Describe coverages, deductibles, limits of coverage, rates and systems of rating classification for each line of insurance the RRG intends to offer. Describe the type(s) of risk and limits that will be ceded or assumed by the RRG and maximum retention for each type of risk. Identify the following: x The product lines currently sold or planned to be sold in the future. x Specialty lines, if any. x Captive business, if any. x The maximum ratio of the largest single net retained risk relative to the RRG’s surplus, within which the RRG intends to operate. ProFormaFinancialStatements Attach in the prescribed form, for at least three years ahead, the pro forma financial statements and assumptions utilized. ManagementTeam List the management staff and provide descriptions of their responsibilities. BoardofDirectors List all the directors and officers of the RRG and describe their anticipated involvement in the oversight of the RRG. BUSINESS PLAN TEMPLATE PAGE 3 RiskManagementProgram Describe the underwriting procedures utilized by the RRG and how they fit into the RRG’s goals and strategy. Outline the risk management program(s), if any, and describe how it will be used to mitigate exposures to loss. How are the results of the risk management program factored into underwriting analysis and evaluation of exposure to loss? InvestmentPolicy Describe the RRG’s investment policy and its risk appetite for market and credit-related risks and how these aspects comply with Nevada statutes pertaining to valuation and investment limitations. GeographicArea List the states in which the RRG has obtained or sought to obtain registration in. ServiceProviders Identify individuals and/or firms that will provide services to support the RRG’s operations and describe the services that will be provided. (Include captive managers, claims administrators, managing general underwriters, managing general agents, reinsurance intermediaries, third-party administrators, investment custodians, investment managers or advisors, etc.) OrganizationalChart Illustrate the RRG’s operations, including any affiliate, subsidiary, or contracted operations and describe the services that will be provided by each. MarketDefinition Define the principal risk-transfer needs of participants in the market segment that will generate business for the RRG. Describe how these participants will benefit from the RRG’s insurance program(s). x Market-penetration strategy x Growth strategy x Strategy for channels of distribution: Who will sell your coverage? x Communication strategy: How are you going to reach your customers? ChangestoBusinessPlansincePriorYear Identify all changes that were made to this Business Plan since the prior annual submission (if any). Please affirm the RRG’s commitment to requesting prior approval from the Nevada Division of Insurance with regard to any material change in the Business Plan, including the addition of any new lines of business, any changes to coverage limits, any expansions to new states, any changes to reinsurance arrangements, and any changes to contracts with service providers.