(a) Statement regarding the acquisition or change of control of a domestic insurer. Submit information concerning the acquisition or change of control of a domestic insurer as specified in subsections (b) - (n) and (p) of this section. Provide the information required in subsections (o) and (p) of this section for a divestiture of control. Separately submit supplemental information, necessary to evaluate the enterprise risk to the insurer under Insurance Code § 823.201(e), as specified in subsections (r) - (z) of this section. An applicant may submit its application and supplemental information on a form made available by the department.(b) Insurers and method of acquisition.(1) State the name of the acquiring person (applicant), the date the application is filed, and the name, title, address, and telephone number of the individual to whom notices and correspondence concerning this statement should be addressed.(2) State the name and address of the domestic insurer to which this application relates and a brief description of how control is to be acquired.(c) Identity and background of the applicant. (1) State the name and address of the applicant seeking to acquire control over the insurer.(2) If the applicant is not an individual, state the nature of its business operations for the past five years or for such lesser period as the person and any predecessors have been in existence and fully describe any business the person intends to commence.(d) Identity and background of individuals associated with the applicant. Furnish only the information requested under Insurance Code § 823.201(b) for the applicant if the person is an individual, or for all persons who are directors, executive officers, or direct or indirect owners of 10 percent or more of the voting securities of the applicant if the applicant is not an individual.
(e) Nature, source, and amount of funds or other consideration. (1) Describe the nature, source, and amount of funds or other consideration used or to be used in effecting the merger or other acquisition of control. If any part is represented or is to be represented by funds or other consideration borrowed or otherwise obtained for the purpose of acquiring, holding, or trading securities, furnish a description of the transaction, the names of the parties, the relationship, if any, between the borrower and the lender, and the amounts borrowed or to be borrowed.(2) If the source of the consideration is a loan made in the lender's ordinary course of business and if the applicant wishes the identity of the lender to remain confidential, the applicant must specifically request that the identity of the lender be kept confidential and not include the identity of the lender with the information required by this section.(f) Future plans for insurer. (1) Describe any plans or proposals which the applicant may have or may contemplate making to cause the insurer to pay dividends or make other distributions, liquidate the insurer, sell any of its assets, merge or consolidate it with any person or persons, make any other material change in its business operations or corporate structure or management, or cause the insurer to enter into material agreements, arrangements, or transactions of any kind with any party.(2) Describe any other arrangement or agreement, oral or written, entered into by any acquiring party or any of its affiliates and the domestic insurer during the immediately preceding 12 months.(g) Voting securities to be acquired. State the number of shares of the insurer's voting securities and the amount or number of shares convertible into voting securities which the applicant, its affiliates, and any person listed in subsection (d) of this section plan to acquire, and the terms of the offer, request, invitation, agreement, or acquisition.(h) Ownership of voting securities. State the amount of each class of any voting security of the insurer which is beneficially owned or concerning which there is a right to acquire beneficial ownership by the applicant, its affiliates, or any person listed in subsection (d) of this section.(i) Contracts, arrangements, or understandings with respect to voting securities of the insurer. Give a full description of any contracts, arrangements, or understandings with respect to any voting security of the insurer in which the applicant, its affiliates, or any persons listed in subsection (d) of this section is involved, including, but not limited to, transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss, guarantees of profits, division of losses or profits, or the giving or withholding of proxies.(j) Recent purchases of voting securities. Describe any purchases of any voting securities of the insurer by the applicant, any of its affiliates, or any person listed in subsection (d) of this section during the 12 calendar months preceding the filing of this statement. Include in the description the dates of purchase, names of the purchasers, and consideration paid or agreed to be paid. State whether any shares so purchased are hypothecated.(k) Recent recommendations to purchase. Provide a copy of any written, or a confirmed description of any oral, recommendations to purchase any voting security of the insurer made by the applicant, any of its affiliates, or any person listed in subsection (d) of this section, or by anyone based on interviews with or at the suggestion of the applicant, any of its affiliates, or any person listed in subsection (d) of this section during the 12 calendar months preceding the filing of this statement.(l) Agreements with broker-dealers. Provide a copy of any written, or a confirmed description of any oral, agreement, arrangement, or understanding made with any broker-dealer as to the solicitation of voting securities of the insurer for tender, and the amount of any fees, commissions, or other compensation to be paid to broker-dealers.(m) Financial statements and exhibits.(1) Under this subsection provide only a list of the financial statements, financial projections, and exhibits submitted under subsection (w) of this section.(2) The financial statements must include the annual financial statements of the applicant for the preceding three fiscal years (or for such lesser period as the applicant and any predecessors have been in existence), and similar unaudited financial information as of a date not earlier than 120 days prior to the filing of the statement, accompanied by affidavit or certification of the chief financial officer of the applicant that the unaudited financial statement is true and correct, as of its date, and that there has been no material change in financial condition, as defined by the Act, from the date of the financial statement to the date of the affidavit or certification. The statements may be prepared on either an individual basis, or, unless the commissioner otherwise requires, on a consolidated basis if the consolidated statements are prepared in the usual course of business. A link to where the information is located can be provided as an alternative to hard copy or electronic attachments with the Form A. This only pertains to files that already have been filed with the department, the National Association of Insurance Commissioners, or another regulatory agency that easily can be accessed electronically.(3) Unless exempted by the commissioner, the annual financial statements of the applicant must be made in accord with generally accepted auditing standards and accompanied by the certificate of an independent certified public accountant that the statements present fairly the financial position of the applicant and the results of its operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the certificate is not available, then the financial statement must be sworn to by the applicant as correctly reflecting its financial condition, and in that case, the commissioner at the commissioner's discretion may require the financial statement to be certified by an independent public accountant.(4) If the applicant is an insurer which is actively engaged in the business of insurance and licensed to do business in this state, it may provide financial statements which conform to the annual statements of the insurer filed with the insurance department of the insurer's domiciliary state and which are in accord with the requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of the domiciliary state.(5) File as exhibits copies of all tender offers for, requests or invitations for, tenders of, exchange offers for, and agreements to acquire or exchange any voting securities of the insurer and (if distributed) of additional soliciting material.(n) Enterprise risk management. Applicant agrees to provide, to the best of its knowledge and belief, the information required by Form F under Insurance Code § 823.0595, as applicable, within 15 days after the end of the month in which the acquisition of control occurs.(o) Notice regarding divestiture of control under Insurance Code § 823.154. (1) Provide the name of the domestic insurer and divesting person (applicant), the date the application is filed, and the name, title, address, and telephone number of the individual to whom notices and correspondence concerning this statement should be addressed.(2) Provide notice that applicant is divesting control of the above named insurance companies and describe how control is being divested and include the percentage of control being divested.(3) Describe and state the name of the person in control of the insurer before and after the divestiture of control.(4) Supplemental information required under Insurance Code § 823.201(e) to evaluate the enterprise risk to the insurer must be submitted separately under subsection (y) of this section.(p) Signature and certification. Signature and certification of the Form A in the following form, except for alien applicants, which must submit a certification acceptable in their jurisdiction: Attached Graphic
(q)Supplemental information to evaluate enterprise risk. Separately submit supplemental information, necessary to evaluate the enterprise risk to the insurer under Insurance Code § 823.201(e), as specified in subsections (r) - (z) of this section, which is confidential under Insurance Code § 823.011.(r) Identity and background of the applicant to evaluate enterprise risk. (1) Fully describe any business that affiliates of the applicant intend to commence.(2) Furnish a chart or listing clearly identifying the interrelationships between the ultimate controlling party, applicant, and all other affiliates of the applicant. Indicate in the chart or listing the percentage of voting securities of each person controlled by the applicant or by any other person. If control of any person is maintained other than by the ownership or control of voting securities, indicate the basis of control. As to each person specified in the chart or listing, indicate the type of organization (e.g., corporation, trust, partnership) and the state or other jurisdiction of domicile. If court proceedings looking toward a reorganization or liquidation are pending with respect to any person, indicate which person, and set forth the title of the court, nature of proceedings, and the date when commenced.(s) Identity and background of individuals associated with the applicant to evaluate enterprise risk. (1) Provide biographical data of the applicant if the person is an individual, or for all persons who are directors, executive officers, or direct or indirect owners of 10 percent or more of the voting securities of the ultimate controlling person and applicant if the ultimate controlling person or applicant is not an individual, in the form of the latest version of the biographical affidavit form published by and available from the National Association of Insurance Commissioners and adopted by reference under § 7.201(a)(1) of this title.(2) The applicant, if the person is an individual, or for persons who are the chair of the board, chief executive officer, president, chief financial officer, treasurer, and controller of the ultimate controlling person and applicant if the ultimate controlling person and applicant are not individuals, must comply with the fingerprint requirements of Chapter 1, Subchapter D of this title, and provide an independent third party background investigation report from a list of vendors furnished by the National Association of Insurance Commissioners or as acceptable to the commissioner.(t) Nature, source, and amount of funds or other consideration to evaluate enterprise risk. (1) Provide copies of all agreements, promissory notes, and security arrangements as described in subsection (e)(1) of this section.(2) Explain the criteria used in determining the nature and amount of the consideration.(u) Future plans for insurer to evaluate enterprise risk. (1) Describe any financial or employment guarantees given to present and contemplated management as part of the plans or proposals submitted under subsection (f)(1) of this section.(2) Describe applicant's business plans for the domestic insurer and the ultimate controlling person's business plans for the holding company system covering the period equal to the greater of three years or the length of time of debt service required by applicant in its acquisition of control including, but not limited to, change of location, change of name, change in capital or surplus, reinsurance activity, type of business to be written, and anticipated premium volume. Applicant may provide the business plan on the National Association of Insurance Commissioners Uniform Certificate of Authority Application.(3) For the domestic insurer, provide the full name of each individual proposed to be an executive officer or director of the domestic insurer and the full name of each individual who will be responsible for major areas of operations of the domestic insurer, including, but not limited to, supervision of agents, underwriting, advertising, production of business through agents and through reinsurance, policyholder services, premium accounting, claims processing and litigation, reinsurance cessions, investments, and financial accounting and reporting. For each position, evidence of the individual's ability and experience to perform same by providing biographical data in the form of the latest version of the biographical affidavit form published by and available from the National Association of Insurance Commissioners and adopted by reference under § 7.201(a)(1) of this title.(v) Voting securities to be acquired. Provide a statement of the method by which the fairness of the proposal to acquire the voting securities was determined under subsection (g) of this section to evaluate enterprise risk.(w) Financial statements and exhibits to evaluate enterprise risk. (1) Provide the financial projections for the ultimate controlling person, applicant, and domestic insurer for a period equal to the greater of three years or the length of time of debt service required by the applicant in its acquisition of control and any additional document or papers required by regulation, except that financial projections are not required for individuals and the commissioner may provide for a lesser period for publicly-traded companies.(2) Provide the financial statements of the ultimate controlling person if the ultimate controlling person is not a publicly-traded company. The financial statements of the ultimate controlling person of the applicant as described in subsection (m)(2) and (3) of this section must include their annual financial statements.(3) Unless exempted by the commissioner, if the applicant is an individual person, the applicant must provide a reviewed financial statement accompanied by the certificate of an independent public accountant that the accountant is not aware of any material modifications that should be made to the accompanying financial statement for it to be in conformity with generally accepted accounting principles. Applicant must provide a balance sheet as of a date not earlier than 120 days prior to the filing of the statement and balance sheets for the second and third fiscal years preceding the filing of the statement accompanied by affidavit or certification that each balance sheet is true and correct as of its date.(4) File as exhibits copies of all proposed employment, consultation, advisory, or management contracts concerning the insurer.(5) In addition to the other material required to be filed by this section, a person described in § 7.205(a) of this title must file, as an exhibit, annual reports to the stockholders of the insurer and the applicant for the last two fiscal years.(x) Cybersecurity information to evaluate enterprise risk. Describe the cybersecurity plan, including systems, policies and procedures, reviews, incident responses, trainings, and strategies of the ultimate controlling person and applicant, and future cybersecurity plans for the insurer.(y) Notice regarding divestiture of control to evaluate enterprise risk. (1) State the name and address of the recipient(s) of the divestiture of control.(2) Provide copies of any sales contracts and an organizational chart before and after the divestiture of control.(z) Signature and certification. Signature and certification of the supplemental information in the following form, except for alien applicants, which must submit a certification acceptable in their jurisdiction: Attached Graphic
28 Tex. Admin. Code § 7.209
The provisions of this §7.209 adopted to be effective January 1, 1976; amended to be effective November 30, 1984, 9 TexReg 5926; amended to be effective April 29, 1988, 13 TexReg 1761; amended to be effective April 13, 1992, 17 TexReg 2273; amended to be effective July 14, 1994, 19 TexReg 5098; amended to be effective May 15, 1996, 21 TexReg 3798; amended to be effective May 5, 2002, 27 TexReg 3559; amended to be effective October 23, 2006, 31 TexReg 8682; amended to be effective May 26, 2013, 38 TexReg 3033; Amended by Texas Register, Volume 41, Number 29, July 15, 2016, TexReg 5177, eff. 7/18/2016