TN Insurance Bulletin (1993-09-30): Department Procedures for Reviewing Dividend Filings

NED McWHERTER GOVERNOR TO: FR: DA: RE: STATE OF TENNESSEE DEPARTMENT OF COMMERCE AND INSURANCE 500 JAMES ROBERTSON PARKWAY · NASHVILL.E,. TENNESSEE 37243 BULLETIN All Tennessee Domestic Insurers Elaine A. McReynolds ~~ Commissioner September 30, 1993 ELAINE A. McREYNOLDS COMMISSIONER Department Procedures for Reviewing Dividend Filings Pursuant to the Tennessee Holding Company Act, TCA 56-11-101 et seq., the following procedures are hereby adopted for review of dividend filings pursuant to TCA 56-11-205 and 206: 1. Any company dividend filing will be promptly considered, (i.e., within ten (10) days of filing) for the purposes of determining whether a company's surplus as regards policyholders is reasonable in relation to the company's outstanding liabilities and adequate to its needs. Our procedures will include the consideration of the following factors: (a) The size of the company as measured by its assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria; (b) The extent to which the company's business is diversified among the several lines of insurance; (c) The number and size of risks insured in each line of business; (d) The extent of the geographical dispersion of th~ company's insured risk; (e) The nature and extent of the company's reinsurance program; (f) The quality, diversification, and liquidity of the company's investment portfolio; (g) The recent past and projected future trend in the size of the company's surplus as regards policyholders; t' Page -2- (h) The surplus as regards policyholders maintained by comparable companies in respect of the factors enumerated above; (i) The adequacy of the company's reserves; and ( j ) The quality and liquidity of investments in subsidiaries. The department may discount any such investment or treat any investment as a non-admitted asset for purposes of determining the adequacy of surplus as regards policyholders whenever the investment so warrants. (k) The quality of the company's earnings and the extent to which the reported earnings include extraordinary items. ~. . .· ;.·:. ' '