§ 38.2-1330. Standards for transactions with affiliates; adequacy of surplus
A. Material transactions by registered insurers with their affiliates shall be subject to the following standards:
1. The terms shall be fair and reasonable;
2. Charges or fees for services performed shall be reasonable;
3. Expenses incurred and payments received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied;
4. The books, accounts, and records of each party shall disclose clearly and accurately the precise nature and details of the transactions; and
5. The insurer's surplus to policyholders following any dividends or distributions to shareholder affiliates shall be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs.
B. For purposes of this article, in determining whether an insurer's surplus to policyholders is reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs, the following factors, among others, shall be considered:
1. The size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force, and other appropriate criteria;
2. The extent to which the insurer's business is diversified among different classes of insurance;
3. The number and size of risks insured in each class of business;
4. The extent of the geographical dispersion of the insurer's insured risk;
5. The nature and extent of the insurer's reinsurance program;
6. The quality, diversification, and liquidity of the insurer's investment portfolio;
7. The recent past and projected future trend in the size of the insurer's surplus to policyholders;
8. The surplus to policyholders maintained by other comparable insurers;
9. The adequacy of the insurer's reserves;
10. The quality of the insurer's earnings and the extent to which the reported earnings of the insurer include extraordinary items; and
11. The quality and liquidity of investments in subsidiaries. The Commission in its judgment may classify any investment as a nonadmitted asset for the purpose of determining the adequacy of surplus to policyholders.
C. No domestic insurer shall enter into transactions that are part of a plan or series of like transactions with persons within the holding company system if the purpose of those separate transactions is to avoid the statutory threshold amount and thus avoid the review that otherwise would be required.
D. The Commission shall be notified in writing within 30 days of any investment of the domestic insurer in any one corporation if the total investment in such corporation by the insurance holding company system exceeds ten percent of such corporation's voting securities.
(1973, c. 505, § 38.1-178.3; 1986, c. 562; 1987, c. 417; 1992, c. 588; 2006, c. 577.)
Sections: Previous 38.2-1323 38.2-1324 38.2-1325 38.2-1326 38.2-1327 38.2-1328 38.2-1329 38.2-1330 38.2-1330.1 38.2-1331 38.2-1332 38.2-1333 38.2-1334 38.2-1334.1 38.2-1334.2 NextLast modified: April 3, 2009