The Texas Department of Insurance (TDI) recently adopted amendments to 28 TAC §7.209 (Rule 7.209) relating to the requirements for Form A filings in connection with the acquisition or change of control of Texas domestic insurers. These amendments became effective July 18, 2016, and are the first significant revisions to TDI’s Holding Company Act rules since the Department’s 2013 amendments.
According to TDI, the amendments to Rule 7.209 are primarily intended to clarify that information submitted to the Department as a part of a Form A statement that is required by statute is subject to public inspection. In contrast, information not required by statute that is requested by TDI to evaluate enterprise risk to Texas domestic insurers is confidential and exempt from public disclosure. In other words, the changes to Rule 7.209 recognize the sensitive and proprietary nature of enterprise risk information and the importance of treating such information accordingly under the Texas Public Information Act.
Various other technical amendments to Texas’s Form A requirements were also adopted, including a clarification that both direct and indirect owners of 10% or more of the voting securities of an applicant must furnish certain information requested in connection with the Form A. TDI also adopted new provisions (i) requiring the potential acquiring party to describe its business plans for the insurer as well as the ultimate controlling person’s business plans for the subject holding company system; (ii) increasing the length of time covered by such plans from 24 months (the current requirement) to “the greater of three years or the length of time of debt service required by applicant in its acquisition of control”; and (iii) permitting the filing of business plans in an NAIC Uniform Certificate of Authority Application format. Furthermore, TDI added a provision to Rule 7.209 which requires an independent third party background investigation report from a list a permitted vendors.
The revised Rule 7.209 incorporating TDI’s new amendments can be found here.