{"data":{"id":"us-ok/okla.-stat.-tit.-36-36-1636","jurisdiction":"us-ok","citation":"Okla. Stat. tit. 36, § 36-1636","heading":"Transactions within an insurance holding company -","body":"Standards.\n\nA. 1. Transactions within an insurance holding company system\n\nto which an insurer subject to registration is a party shall be\n\nsubject to the following standards:\n\na. the terms shall be fair and reasonable,\n\nb. agreements for cost-sharing services and management\n\nshall include such provisions as required by rule and\n\nregulation issued by the Commissioner,\n\nc. charges or fees for services performed shall be\n\nreasonable,\n\nd. expenses incurred and payment received shall be\n\nallocated to the insurer in conformity with customary\n\ninsurance accounting practices consistently applied,\n\ne. the books, accounts and records of each party to all\n\nsuch transactions shall be so maintained as to clearly\n\nand accurately disclose the nature and details of the\n\ntransactions including such accounting information as\n\nis necessary to support the reasonableness of the\n\ncharges or fees to the respective parties,\n\nf. the insurer's surplus as regards policyholders\n\nfollowing any dividends or distributions to\n\nshareholder affiliates shall be reasonable in relation\n\nto the insurer's outstanding liabilities and adequate\n\nto meet its financial needs,\n\ng. if an insurer subject to this act is deemed by the\n\nCommissioner to be in a hazardous financial condition\n\nas defined by Section 1905 of this title and\n\napplicable regulations in Title 365 of the Oklahoma\n\nAdministrative Code or a condition that would be\n\ngrounds for supervision, conservation, or a\n\ndelinquency proceeding, then the Commissioner may\n\nrequire the insurer to secure and maintain from any\n\naffiliate with whom the insurer has services or\n\nmanagement agreements either a deposit, held by the\n\nCommissioner, or a bond, as determined by the insurer\n\nat the insurer's discretion, for the protection of the\n\ninsurer for the duration of the contract(s) or\n\nagreement(s), or the existence of the condition for\n\nwhich the Commissioner required the deposit or the\n\nbond. In determining whether a deposit or a bond is\n\nrequired, the Commissioner should consider whether\n\nconcerns exist with respect to the affiliated person's\n\nability to fulfill the contract(s) or agreement(s) if\n\nthe insurer were to be put into liquidation. Once the\n\ninsurer is deemed to be in a hazardous financial\n\ncondition or a condition that would be grounds for\n\nsupervision, conservation, or a delinquency\n\nproceeding, and a deposit or bond is necessary, the\n\nCommissioner has discretion to determine the amount of\n\nthe deposit or bond, not to exceed the value of the\n\ncontract(s) or agreement(s) in any one (1) year, and\n\nwhether such deposit or bond should be required for a\n\nsingle contract, multiple contracts, or a contract\n\nonly with a specific person(s),\n\nh. all records and data of the insurer held by an\n\naffiliate are and remain the property of the insurer,\n\nare subject to control of the insurer, are\n\nidentifiable, and are segregated or readily capable of\n\nsegregation, at no additional cost to the insurer,\n\nfrom all other persons' records and data. This\n\nincludes all records and data that are otherwise the\n\nproperty of the insurer, in whatever form maintained,\n\nincluding, but not limited to, claims and claim files,\n\npolicyholder lists, application files, litigation\n\nfiles, premium records, rate books, underwriting\n\nmanuals, personnel records, financial records, or\n\nsimilar records within the possession, custody, or\n\ncontrol of the affiliate. At the request of the\n\ninsurer, the affiliate shall provide that the receiver\n\ncan obtain a complete set of all records of any type\n\nthat pertain to the insurer's business; obtain access\n\nto the operating systems on which the data is\n\nmaintained; obtain the software that runs those\n\nsystems either through assumption of licensing\n\nagreements or otherwise; and restrict the use of the\n\ndata by the affiliate if it is not operating the\n\ninsurer's business. The affiliate shall provide a\ntain a complete set of all records of any type\n\nthat pertain to the insurer's business; obtain access\n\nto the operating systems on which the data is\n\nmaintained; obtain the software that runs those\n\nsystems either through assumption of licensing\n\nagreements or otherwise; and restrict the use of the\n\ndata by the affiliate if it is not operating the\n\ninsurer's business. The affiliate shall provide a\n\nwaiver of any landlord lien or other encumbrance to\n\ngive the insurer access to all records and data in the\n\nevent of the affiliate's default under a lease or\n\nother agreement, and\n\ni. premiums or other funds belonging to the insurer that\n\nare collected by or held by an affiliate are the\n\nexclusive property of the insurer and are subject to\n\nthe control of the insurer. Any right of offset in\n\nthe event an insurer is placed into receivership shall\n\nbe subject to Article 19 of this title regarding\n\nrehabilitation and liquidation of insurers.\n\n2. The following transactions involving a domestic insurer and\n\nany person in its insurance holding company system, including\n\namendments or modifications of affiliate agreements previously filed\n\npursuant to this section, which are subject to any materiality\n\nstandards contained in subparagraphs a through g of this paragraph,\n\nshall not be entered into unless the insurer has notified the\n\nCommissioner in writing of its intention to enter into the\n\ntransaction at least thirty (30) days prior thereto, or such shorter\n\nperiod as the Commissioner may permit, and the Commissioner has not\n\ndisapproved it within that period. The notice for amendments or\n\nmodifications shall include the reasons for the change and the\n\nfinancial impact on the domestic insurer. Informal notice shall be\n\nreported, within thirty (30) days after a termination of a\n\npreviously filed agreement, to the Commissioner for determination of\n\nthe type of filing required, if any:\n\na. sales, purchases, exchanges, loans, extensions of\n\ncredit, or investments, provided the transactions are\n\nequal to or exceed:\n\n(1) with respect to nonlife insurers, the lesser of\n\nthree percent (3%) of the insurer's admitted\n\nassets or twenty-five percent (25%) of surplus as\n\nregards policyholders as of the 31st day of\n\nDecember next preceding, and\n\n(2) with respect to life insurers, three percent (3%)\n\nof the insurer's admitted assets as of the 31st\n\nday of December next preceding,\n\nb. loans or extensions of credit to any person who is not\n\nan affiliate, where the insurer makes loans or\n\nextensions of credit with the agreement or\n\nunderstanding that the proceeds of the transactions,\n\nin whole or in substantial part, are to be used to\n\nmake loans or extensions of credit to, to purchase\n\nassets of, or to make investments in, any affiliate of\n\nthe insurer making the loans or extensions of credit\n\nprovided the transactions are equal to or exceed:\n\n(1) with respect to nonlife insurers, the lesser of\n\nthree percent (3%) of the insurer's admitted\n\nassets or twenty-five percent (25%) of surplus as\n\nregards policyholders as of the 31st day of\n\nDecember next preceding, and\n\n(2) with respect to life insurers, three percent (3%)\n\nof the insurer's admitted assets as of the 31st\n\nday of December next preceding,\n\nc. reinsurance agreements or modifications thereto,\n\nincluding:\n\n(1) all reinsurance pooling agreements, and\n\n(2) agreements in which the reinsurance premium or a\n\nchange in the insurer's liabilities, or the\n\nprojected reinsurance premium or a change in the\n\ninsurer's liabilities in any of the next three\nercent (3%)\n\nof the insurer's admitted assets as of the 31st\n\nday of December next preceding,\n\nc. reinsurance agreements or modifications thereto,\n\nincluding:\n\n(1) all reinsurance pooling agreements, and\n\n(2) agreements in which the reinsurance premium or a\n\nchange in the insurer's liabilities, or the\n\nprojected reinsurance premium or a change in the\n\ninsurer's liabilities in any of the next three\n\n(3) years, equals or exceeds five percent (5%) of\n\nthe insurer's surplus as regards policyholders,\n\nas of the 31st day of December next preceding,\n\nincluding those agreements which may require as\n\nconsideration the transfer of assets from an\n\ninsurer to a nonaffiliate, if an agreement or\n\nunderstanding exists between the insurer and\n\nnonaffiliate that any portion of the assets will\n\nbe transferred to one or more affiliates of the\n\ninsurer,\n\nd. all management agreements, service contracts, tax\n\nallocation agreements, guarantees and all cost-sharing\n\narrangements,\n\ne. guarantees when made by a domestic insurer; provided,\n\nhowever, that a guarantee which is quantifiable as to\n\namount is not subject to the notice requirements of\n\nthis paragraph unless it exceeds the lesser of one-\n\nhalf of one percent (.5%) of the insurer's admitted\n\nassets or ten percent (10%) of surplus as regards\n\npolicyholders as of the 31st day of December next\n\npreceding. Further, all guarantees which are not\n\nquantifiable as to amount are subject to the notice\n\nrequirements of this paragraph,\n\nf. direct or indirect acquisitions or investments in a\n\nperson that controls the insurer or in an affiliate of\n\nthe insurer in an amount which, together with its\n\npresent holdings in such investments, exceeds two and\n\none-half percent (2.5%) of the insurer's surplus to\n\npolicyholders. Direct or indirect acquisitions or\n\ninvestments in subsidiaries acquired pursuant to\n\nSection 1632 of this title (or authorized under any\n\nother section of this title), or in nonsubsidiary\n\ninsurance affiliates that are subject to the\n\nprovisions of this act, are exempt from this\n\nrequirement, and\n\ng. any material transactions, specified by regulation,\n\nwhich the Commissioner determines may adversely affect\n\nthe interests of the insurer's policyholders.\n\nNothing in this paragraph shall be deemed to authorize or permit\n\nany transactions which, in the case of an insurer not a member of\n\nthe same insurance holding company system, would be otherwise\n\ncontrary to law.\n\n3. A domestic insurer may not enter into transactions which are\n\npart of a plan or series of like transactions with persons within\n\nthe insurance holding company system if the purpose of those\n\nseparate transactions is to avoid the statutory threshold amount and\n\nthus avoid the review that would occur otherwise. If the\n\nCommissioner determines that separate transactions were entered into\n\nover any twelve-month period for that purpose, the Commissioner may\n\nexercise his or her authority under Section 1641 of this title.\n\n4. The Commissioner, in reviewing transactions pursuant to\n\nparagraph 2 of this subsection, shall consider whether the\n\ntransactions comply with the standards set forth in paragraph 1 of\n\nthis subsection and whether they may adversely affect the interests\n\nof policyholders.\n\n5. The Commissioner shall be notified within thirty (30) days\n\nof any investment of the domestic insurer in any one corporation if\n\nthe total investment in the corporation by the insurance holding\n\ncompany system exceeds ten percent (10%) of the corporation's voting\n\nsecurities.\n\n6. a. Any affiliate that is party to an agreement or\n\ncontract with a domestic insurer that is subject to\n\nsubparagraph d of paragraph 2 of this subsection shall\n\nbe subject to the jurisdiction of any supervision,\n\nseizure, conservatorship, or receivership proceedings\n\nagainst the insurer and to the authority of any\n\nsupervisor, conservator, rehabilitator, or liquidator\ntion's voting\n\nsecurities.\n\n6. a. Any affiliate that is party to an agreement or\n\ncontract with a domestic insurer that is subject to\n\nsubparagraph d of paragraph 2 of this subsection shall\n\nbe subject to the jurisdiction of any supervision,\n\nseizure, conservatorship, or receivership proceedings\n\nagainst the insurer and to the authority of any\n\nsupervisor, conservator, rehabilitator, or liquidator\n\nfor the insurer appointed pursuant to Article 18 or 19\n\nof this title regarding rehabilitation and liquidation\n\nof insurers for the purpose of interpreting,\n\nenforcing, and overseeing the affiliate's obligations\n\nunder the agreement or contract to perform services\n\nfor the insurer that are:\n\n(1) an integral part of the insurer's operations,\n\nincluding, but not limited to, management,\n\nadministrative, accounting, data processing,\n\nmarketing, underwriting, claims handling,\n\ninvestment, or any other similar functions, or\n\n(2) essential to the insurer's ability to fulfill its\n\nobligations under insurance policies.\n\nb. The Commissioner may require that an agreement or\n\ncontract pursuant to subparagraph d of paragraph 2 of\n\nthis subsection for the provision of services\n\ndescribed in divisions (1) and (2) of subparagraph a\n\nof this paragraph specify the affiliate consents to\n\nthe jurisdiction as set forth in this paragraph.\n\nB. No domestic insurer shall pay any extraordinary dividend or\n\nmake any other extraordinary distribution to its shareholders until\n\nthirty (30) days after the Commissioner has received notice of the\n\ndeclaration thereof and has not within that period disapproved the\n\npayment, or until the Commissioner has approved the payment within\n\nthe thirty-day period. For purposes of this section, an\n\nextraordinary dividend or distribution includes any dividend or\n\ndistribution of cash or other property whose fair market value\n\ntogether with that of other dividends or distributions made within\n\nthe preceding twelve (12) months exceeds the greater of:\n\n1. Ten percent (10%) of the insurer's surplus as regards\n\npolicyholders as of the 31st day of December next preceding; or\n\n2. The net gain from operations of the insurer, if the insurer\n\nis a life insurer, or the net income, if the insurer is not a life\n\ninsurer, not including realized capital gains, for the twelve-month\n\nperiod ending the 31st day of December next preceding, but shall not\n\ninclude pro rata distributions of any class of the insurer's own\n\nsecurities.\n\nIn determining whether a dividend or distribution is\n\nextraordinary, an insurer other than a life insurer may carry\n\nforward net income from the previous two (2) calendar years that has\n\nnot already been paid out as dividends. This carry-forward shall be\n\ncomputed by taking the net income from the second and third\n\npreceding calendar years, not including realized capital gains, less\n\ndividends paid in the second and immediate preceding calendar years.\n\nNotwithstanding any other provision of law, an insurer may\n\ndeclare an extraordinary dividend or distribution which is\n\nconditional upon the Commissioner's approval, and the declaration\n\nshall confer no rights upon shareholders until (1) the Commissioner\n\nhas approved the payment of the dividend or distribution or (2) the\n\nCommissioner has not disapproved payment within the thirty-day\n\nperiod.\n\nC. 1. Notwithstanding the control of a domestic insurer by any\n\nperson, the officers and directors of the insurer shall not thereby\n\nbe relieved of any obligation or liability to which they would\n\notherwise be subject by law, and the insurer shall be managed so as\n\nto assure its separate operating identity consistent with this act.\n\n2. Nothing in this section shall preclude a domestic insurer\n\nfrom having or sharing a common management or cooperative or joint\n\nuse of personnel, property or services with one or more other\n\npersons under arrangements meeting the standards of paragraph 1 of\n\nsubsection A of this section.\nand the insurer shall be managed so as\n\nto assure its separate operating identity consistent with this act.\n\n2. Nothing in this section shall preclude a domestic insurer\n\nfrom having or sharing a common management or cooperative or joint\n\nuse of personnel, property or services with one or more other\n\npersons under arrangements meeting the standards of paragraph 1 of\n\nsubsection A of this section.\n\n3. Not less than one-third (1/3) of the directors of a domestic\n\ninsurer, and not less than one-third (1/3) of the members of each\n\ncommittee of the board of directors of any domestic insurer, shall\n\nbe persons who are not officers or employees of the insurer or of\n\nany entity controlling, controlled by, or under common control with\n\nthe insurer and who are not beneficial owners of a controlling\n\ninterest in the voting stock of the insurer or entity. At least one\n\nsuch person must be included in any quorum for the transaction of\n\nbusiness at any meeting of the board of directors or any committee\n\nthereof.\n\n4. The board of directors of a domestic insurer shall establish\n\none or more committees comprised solely of directors who are not\n\nofficers or employees of the insurer or of any entity controlling,\n\ncontrolled by, or under common control with the insurer and who are\n\nnot beneficial owners of a controlling interest in the voting stock\n\nof the insurer or any such entity. The committee or committees\n\nshall have responsibility for nominating candidates for director for\n\nelection by shareholders or policyholders, evaluating the\n\nperformance of officers deemed to be principal officers of the\n\ninsurer and recommending to the board of directors the selection and\n\ncompensation of the principal officers.\n\n5. The provisions of paragraphs 3 and 4 of this subsection\n\nshall not apply to a domestic insurer if the person controlling the\n\ninsurer, such as an insurer, a mutual insurance holding company, or\n\na publicly held corporation, has a board of directors and committees\n\nthereof that meet the requirements of paragraphs 3 and 4 of this\n\nsubsection with respect to such controlling entity.\n\n6. An insurer may make application to the Commissioner for a\n\nwaiver from the requirements of this subsection, if the insurer's\n\nannual direct written and assumed premium, excluding premiums\n\nreinsured with the Federal Crop Insurance Corporation and Federal\n\nFlood Program, is less than Three Hundred Million Dollars\n\n($300,000,000.00). An insurer may also make application to the\n\nCommissioner for a waiver from the requirements of this subsection\n\nbased upon unique circumstances. The Commissioner may consider\n\nvarious factors including, but not limited to, the type of business\n\nentity, volume of business written, availability of qualified board\n\nmembers, or the ownership or organizational structure of the entity.\n\nD. For purposes of this act, in determining whether an\n\ninsurer's surplus as regards policyholders is reasonable in relation\n\nto the insurer's outstanding liabilities and adequate to meet its\n\nfinancial needs, the following factors, among others, shall be\n\nconsidered:\n\n1. The size of the insurer as measured by its assets, capital\n\nand surplus, reserves, premium writings, insurance in force and\n\nother appropriate criteria;\n\n2. The extent to which the insurer's business is diversified\n\namong several lines of insurance;\n\n3. The number and size of risks insured in each line of\n\nbusiness;\n\n4. The extent of the geographical dispersion of the insurer's\n\ninsured risks;\n\n5. The nature and extent of the insurer's reinsurance program;\n\n6. The quality, diversification and liquidity of the insurer's\n\ninvestment portfolio;\n\n7. The recent past and projected future trend in the size of\n\nthe insurer's investment portfolio;\n\n8. The surplus as regards policyholders maintained by other\n\ncomparable insurers;\n\n9. The adequacy of the insurer's reserves; and\n\n10. The quality and liquidity of investments in affiliates.\ns reinsurance program;\n\n6. The quality, diversification and liquidity of the insurer's\n\ninvestment portfolio;\n\n7. The recent past and projected future trend in the size of\n\nthe insurer's investment portfolio;\n\n8. The surplus as regards policyholders maintained by other\n\ncomparable insurers;\n\n9. The adequacy of the insurer's reserves; and\n\n10. The quality and liquidity of investments in affiliates.\n\nThe Commissioner may treat any such investment as a disallowed asset\n\nfor purposes of determining the adequacy of surplus as regards\n\npolicyholders whenever in the judgment of the Commissioner the\n\ninvestment so warrants.","path":["OK Code","Title 36"],"source_url":"https://www.oklegislature.gov/OK_Statutes/CompleteTitles/os36.pdf","current_through":"2026-08-14","vintage":"open-us-law v2026.08, retrieved 2026-09-14","retrieved_at":"2026-09-14T18:32:36Z","sha256":"f0991cebce21d25dd2deaef1539f31c171e11ace56a07558bdafe3965d60764b","source_id":"us-ok","stale":false,"prev":"us-ok/okla.-stat.-tit.-36-36-1635","next":"us-ok/okla.-stat.-tit.-36-36-1637"},"notice":"GroundRules: Original legal text. Not legal advice."}