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& Casualty
Company Licensing,
Mergers, Reinsurance,
and Other Transactions
that Impact an
Insurer’s License or

•   Godwin Ohaechesi, Director
•   Susan French, Team Coordinator
•   Tina Martinez-Saucedo, Securities Custodian
•   Chris Osuna, Insurance Specialist
Activities that impact a Company’s License
and/or Charter
•   Overview of the Licensing Process
•   Corporate Transactions
•   Statutory Deposits
•   Company Detail Information
•   Q&A
Overview of the Licensing Process
• CL&R creates and/or licenses/registers stock insurers, Lloyds,
  Reciprocal Exchanges, Stipulated Premium Companies, Mutuals,
  HMOs, MEWAs, SIGs, CCRCs, Group Hospital Service Corps, Title
  Insurers, Mexican Casualty Insurers, Non-Profit Legal Corps, RRGs,
  Surplus Lines Companies, Purchasing Groups.

• Uniform Certificate of Authority
   – UCAA Primary Application
   – UCAA Expansion Application
Corporate Transactions
Corporate Transactions – Where the industry lives! CL&R
processes more than 500 a year.

•   Name Change and Home Office Change
•   Increase or Decrease in Authorized capital/shares
•   Underwriter Substitution and Change of Attorney-in-Fact
•   Add/Delete Line of Business
•   Service Area Expansion/Decrease
•   Merger
•   Assumption Reinsurance
•   Redomestication
•   Withdrawal Plans and Resume Writing Lines of Business
•   Cancellation of License and Dissolution of Charter
Corporate Transactions
Corporate Transactions that impact a domestic insurer’s
Charter - Articles of Incorporation/Association.

•   Name Change
•   Home Office Change
•   Authorized Shares/Par Value
•   Change of Attorney In Fact
•   Adding/Deleting Line of Business (maybe)
 Corporate Transactions
Amending the Articles of Incorporation/Charter, document the

 • Identify the amended article and provide a statement of
   its text as changed.
 • The date of adoption of the amendment by the
 • The number of shares outstanding and entitled to vote.
 • The number of shares that voted for and against the
Corporate Transactions
Amending the Articles of Incorporation/Charter (continued):

•   If the shares of a class are entitled to vote thereon as a class-State the
    designation and number of outstanding shares entitled to vote on each
    class shown. State the number of shares of each such class voted for and
    against the amendment.

•   Board of Directors’ Resolution – The BOD Resolution must set forth the
    proposed amendment and direct that the amendment be submitted to a vote
    at a shareholders’ meeting.

•   Shareholders’ Resolution – Must state the text of the amendment and date
    of adoption by the shareholders and must bear original signatures, or
    submit Written Consent of Shareholders, with original signatures of all
    shareholders entitled to vote.
Corporate Transactions
Name Changes and Home Office Changes (UCAA Corporate
Amendment III and IV)
•   Name Reservation (for name change only)
•   UCAA 1C
•   UCAA 2C
•   Name change endorsements – policyholder notice
•   Filing Fee
•   Domestic Insurers – Submit amended/re-stated Articles of
•   Foreign Insurers – Submit Certified copy of amended Articles of
    Incorporation and By-laws
•   Foreign Insurers – Submit amended service of process documents (UCAA
    Form 12)
 Corporate Transactions
Mergers (Texas domestic insurer is party to the merger)

 •   Articles of Merger – Including the Plan of Merger
 •   Policyholder Notice – Merger Endorsement
 •   Financial impact of the merger
 •   Certified copies of other regulatory approval
 •   Original license or affidavit stating the original is lost
 •   Filing fee
 Corporate Transactions
Mergers (Texas domestic, continued)

 •   Documentation verifying that shareholders for each merging party were properly
     notified and 2/3’s approved the merger. Not applicable if the merging parties are

 •   Documentation verifying if the consummation of merger will create any non-
     admissible assets; designation of the surviving party’s home office; verification if the
     merger will create treasury stock for the survivor.

 •   Documentation verifying that all overhead assessment fees due the Department have
     been filed and paid – situation: Domestic insurer merging into foreign insurer.

 •   Documentation verifying that all premium taxes have been paid – Situation: Surviving
     party is not licensed in Texas.
 Corporate Transactions
Mergers (foreign insurers) – UCAA Corporate Amendments
Section VII

 • Form 1C, Form 2C
 • Original license or lost license affidavit for non-surviving
 • Respective domiciliary state approvals
 • If necessary, any amended charter documents, business
   plans, etc
Corporate Transactions
Assumption Reinsurance – Not indemnity reinsurance (policy
actually leaves one insurer and transfers to another)

• Total (all the business) vs. Partial (a portion of business)
• Common in the life/health industry
• Assumption Certificates – a structured format for endorsing the
  policy to inform the policyholder of the new insurer
• Settlement Agreement – How much did it cost to acquire the
• Balance Sheet – Reflects the impact of the transfer of business on
  the acquiring party’s surplus
Corporate Transactions
Assumption Reinsurance (foreign insurers)

•   Certified copies of the Reinsurance Agreement
•   Assumption Certificate
•   Settlement Agreement
•   Balance Sheet
Corporate Transactions

Redomestication – Simply put, changing state of domicile, but
the insurer is changing primary regulators

• Foreign to Domestic
• Domestic to Foreign
• Foreign to Foreign
Corporate Transactions
Redomestication (continued) – Foreign to Domestic; UCAA
Primary Application Filing

•   UCAA From 1P – Checklist
•   UCAA Form 2p – Application
•   UCAA Form 3P – Lines of business and business it is currently transacting
•   UCAA Form 7P – Statutory Deposit
•   Business Plan – UCAA Form 8 Questionnaire, narrative supporting answers, and
    UCAA Form 13 Pro-formas
•   Form B
•   Any SEC or GAAP Consolidated Statements
•   Debt to Equity Ratio – Any debt at the holding company level that the insurer is
    expected to service
Corporate Transactions
Redomestication (continued) – Foreign to Domestic; UCAA
Primary Application Filing

•   Any asset custody agreement
•   Re-stated Articles of Incorporation
•   By-laws, compliant with Texas Insurance Code
•   Current Annual Statement
•   Current Quarterly Statement
•   RBC Report
•   CPA Report
•   Exam Report
•   Certificate of Compliance (Form 6)
Corporate Transactions
Redomestication (Continued) – Domestic to Foreign – UCAA
Corporate Amendment Section IV

• UCAA Form 1C
• UCAA Form 2C
• Certified copies of new charter documents
• Service of process UCAA Form 12 – No longer a domestic, as a
  foreign insurer must establish a person/entity in Texas to accept
  legal process
• New state of domicile approval
• Any other relevant amendments, i.e. change in officers, etc.
 Corporate Transactions
Redomestications (continued) – Foreign to Foreign

 •   Pursuant to Texas Insurance Code 983.053, it must be determined that the
     insurer’s proposed redomestication will:
      – Not to be detrimental to its Texas policyholders.
      – Not impair the insurer’s surplus, nor result in a material change in the insurer’s
        lines of business.

 •   Furthermore, 983.053 requires that both supervising regulatory officials of
     the current and proposed State approve the redomestication.
 •   If the redomestication is related to an acquisition, the Form A must be
     approved by the Department, unless certain criteria are met.
Statutory Deposits
Statutory Deposits can be established at point of licensing or during the
existence of the insurer. Substituting securities on deposit/pledged to
TDI are common as most of these securities are CD’s, Muni’s, and
federal bonds.

As such, these type of securities eventually mature or circumstance
require an increase in the amount on deposit or a decrease in the
amount on deposit.

In establishing a deposit, it is recommended that the security have a
maturity date of no less than 1 year. Insurers with statutory deposits
should monitor them closely and file for substitution well in advance (at
least 60 days) prior to the date of maturity.
Statutory Deposits
• Form 120 – Establishing a deposit
• Form 121 - Withdrawing a deposit
• Checklist for Placing Securities on Deposit

CL&R Website
  Company Detail Information
“Procrastination is the art of keeping up with yesterday.”
 – Don Marquis.

  •   Keep us updated, minimizing the time and effort it takes in chasing down
      this information. Do not wait, immediately notify us of:
       – Changes in officers/directors;
       – Changes in mailing address; and
       – Changes in phone numbers/fax numbers.
             This is information that we maintain for the public, the industry, and
           other regulators. Its accuracy is critical.

  •   Please reply to Company Licensing Detail Sheet requests ASAP.
       – Proposed Rule for Company Information
       – Exploring opportunity for insurers to update their profile in an automated
         web based format
Company Licensing & Registration is dedicated to licensing financially
viable Texas insurance market entrants and regulating certain corporate
activities with customer-service oriented processes and interactions.

•   Godwin Ohaechesi, 512-322-5076
•   Susan French, 512-305-7203
•   Chris Osuna, 512-305-7209
•   Tina Martinez-Saucedo, 512-322-4374

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