26-44-105. Transactions within a holding company system.

(a) Transactions within an insurance holding company system to which an insurer subject to registration is a party shall be subject to the following standards:

(i) The terms shall be fair and reasonable;

(ii) Charges or fees for services performed shall be reasonable;

(iii) Expenses incurred and payment received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied;

(iv) The books, accounts and records of each party to all the transactions shall be so maintained as to clearly and accurately disclose the nature and details of the transactions including any accounting information necessary to support the reasonableness of the charges or fees to the respective parties;

(v) The insurer's surplus as regards policy holders 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 as set forth in W.S. 26-44-108; and

(vi) Agreements for cost sharing services and management shall include provisions as required by regulation issued by the commissioner.

(b) The following transactions involving a domestic insurer and any person in its insurance holding company system, including amendments or modifications of affiliate agreements previously filed pursuant to this section, which are subject to any materiality standards contained in subsection (b) of this section, shall not be entered into unless the insurer has notified the commissioner in writing of its intention to enter into the transaction at least thirty (30) days prior to the transaction or a shorter period as the commissioner may permit and the commissioner has not disapproved it within that period. The notice for amendments or modifications shall include the reasons for the change and the financial impact on the domestic insurer. Informal notice shall be reported, within thirty (30) days after a termination of a previously filed agreement, to the commissioner for determination of the type of filing required, if any. In assessing transactions under this subsection, the commissioner shall consider whether the transactions comply with subsection (a) of this section and whether they may adversely affect the interests of policyholders. The transactions to be considered are:

(i) Sales, purchases, exchanges, loans or extensions of credit, guarantees or investments if on December 31 of the year immediately preceding the transactions are equal to or exceed:

(A) With respect to nonlife insurers, the lesser of three percent (3%) of the insurer's admitted assets or twenty-five percent (25%) of surplus as regards policyholders;

(B) With respect to life insurers, three percent (3%) of the insurer's admitted assets.

(ii) Loans or extensions of credit to any person who is not an affiliate, where the insurer makes the loans or extensions of credit with the agreement or understanding that the proceeds of the transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to purchase assets of, or to make investments in, any affiliate of the insurer making the loans or extensions of credit if on December 31 of the year immediately preceding the transactions are equal to or exceed:

(A) With respect to nonlife insurers, the lesser of three percent (3%) of the insurer's admitted assets or twenty-five percent (25%) of surplus as regards policyholders;

(B) With respect to life insurers, three percent (3%) of the insurer's admitted assets.

(iii) Reinsurance agreements or modifications thereto, including all reinsurance pooling agreements, agreements in which the reinsurance premium or a change in the insurer's liabilities, or the projected reinsurance premium or a change in the insurer's liabilities in any of the next three (3) years, equals or exceeds five percent (5%) of the insurer's surplus as regards policyholders, as of December 31 of the year immediately preceding, including those agreements which may require as consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement or understanding exists between the insurer and nonaffiliate that any portion of the assets will be transferred to one (1) or more affiliates of the insurer;

(iv) All management agreements, service contracts, tax allocation agreements and all cost-sharing arrangements; and

(v) Any material transactions, specified by regulation, which the commissioner determines may adversely affect the interests of the insurer's policyholders.

(c) Nothing in this section shall be deemed to authorize or permit any transaction which, in the case of an insurer not a member of the same insurance holding company system, would be otherwise contrary to law.

(d) A domestic insurer shall not enter into transactions which are part of a plan or series of like transactions with persons within the insurance holding company system if the purpose of those separate transactions is to avoid the notification requirement set forth in subsection (b) of this section and thus the review that would otherwise occur. If the commissioner determines that separate transactions were entered into over any twelve (12) month period for that purpose, the commissioner may exercise his authority under W.S. 26-44-113.

(e) The commissioner shall be notified within thirty (30) days of any investment of the domestic insurer in any one (1) corporation if the total investment in the corporation by the insurance holding company system exceeds ten percent (10%) of the corporation's voting securities.