2020 Oklahoma Statutes
Title 36. Insurance
§36-1686. Application procedure.

A. Application Procedure.

1. An Insurance Business Transfer Plan must be filed by the applicant with the Insurance Commissioner for his or her review and approval. The Plan must contain the information set forth below or an explanation as to why the information is not included. The Plan may be supplemented by other information deemed necessary by the Commissioner:

• a.the name, address and telephone number of the transferring insurer and the assuming insurer and their respective direct and indirect controlling persons, if any,
• b.summary of the Insurance Business Transfer Plan,
• c.identification and description of the subject business,
• d.most recent audited financial statements and statutory annual and quarterly reports of the transferring insurer and assuming insurer filed with their domiciliary regulator,
• e.the most recent actuarial report and opinion that quantify the liabilities associated with the subject business,
• f.pro-forma financial statements showing the projected statutory balance sheet, results of operations and cash flows of the assuming insurer for the three (3) years following the proposed transfer and novation,
• g.officers' certificates of the transferring insurer and the assuming insurer attesting that each has obtained all required internal approvals and authorizations regarding the Insurance Business Transfer Plan and completed all necessary and appropriate actions relating thereto,
• h.proposal for Plan implementation and administration, including the form of notice to be provided under the Insurance Business Transfer Plan to any policyholder whose policy is part of the subject business,
• i.full description as to how such notice shall be provided,
• j.description of any reinsurance arrangements that would pass to the assuming insurer under the Insurance Business Transfer Plan,
• k.description of any guarantees or additional reinsurance that will cover the subject business following the transfer and novation,
• l.a statement describing the assuming insurer's proposed investment policies and any contemplated third-party claims management and administration arrangements,
• m.evidence of approval or nonobjection of the transfer from the chief insurance regulator of the state of the transferring insurer's domicile, and
• n.an opinion report from an independent expert, selected by the Commissioner from a list of at least two nominees submitted jointly by the transferring insurer and the assuming insurer, to assist the Commissioner and the court in connection with their review of the proposed transaction. Should the Commissioner, in his or her sole discretion, reject the nominees, he or she may appoint the independent expert. The report shall provide the following:
• (1)a statement of the independent expert's professional qualifications and descriptions of the experience that qualifies him or her as an expert suitable for the engagement,
• (2)whether the independent expert has, or has had, direct or indirect interest in the transferring or assuming insurer or any of their respective affiliates,
• (3)the scope of the report,
• (4)a summary of the terms of the Insurance Business Transfer Plan to the extent relevant to the report,
• (5)a listing and summaries of documents, reports and other material information the independent expert has considered in preparing the report and whether any information requested was not provided,
• (6)the extent to which the independent expert has relied on information provided by and the judgment of others,
• (7)the people on whom the independent expert has relied and why, in his or her opinion, such reliance is reasonable,
• (8)the independent expert's opinion of the likely effects of the Insurance Business Transfer Plan on policyholders and claimants, distinguishing between:
• (a)transferring policyholders and claimants,
• (b)policyholders and claimants of the transferring insurer whose policies will not be transferred, and
• (c)policyholders and claimants of the assuming insurer,
• (9)for each opinion that the independent expert expresses in the report the facts and circumstances supporting the opinion, and
• (10)consideration as to whether the security position of policyholders that are affected by the Insurance Business Transfer are materially adversely affected by the transfer.

2. The independent expert's opinion report as required by subparagraph n of paragraph 1 of this subsection shall include, but not be limited to, a review of the following:

• a.analysis of the transferring insurer's actuarial review of reserves for the subject business to determine the reserve adequacy,
• b.analysis of the financial condition of the transferring and assuming insurers and the effect the transfer will have on the financial condition of each company,
• c.review of the plans or proposals the assuming insurer has with respect to the administration of the policies subject to the proposed transfer,
• d.whether the proposed transfer has a material, adverse impact on the policyholders and claimants of the transferring and the assuming insurers,
• e.analysis of the assuming insurer's corporate governance structure to ensure that there is proper board and management oversight and expertise to manage the subject business, and
• f.any other information that the Commissioner requests in order to review the Insurance Business Transfer.

3. The Commissioner shall have sixty (60) business days from the date of receipt of a complete Insurance Business Transfer Plan to review the Plan to determine if the applicant is authorized to submit it to the court. The Commissioner may extend the sixty-day review period for an additional thirty (30) business days.

4. The Commissioner shall authorize the submission of the Plan to the court unless he or she finds that the Insurance Business Transfer would have a material adverse impact on the interests of policyholders or claimants that are part of the subject business.

5. If the Commissioner determines that the Insurance Business Transfer would have a material adverse impact on the interests of policyholders or claimants that are part of the subject business, he or she shall notify the applicant and specify any modifications, supplements or amendments and any additional information or documentation with respect to the Plan that must be provided to the Commissioner before he or she will allow the applicant to proceed with the court filing.

6. The applicant shall have thirty (30) days from the date the Commissioner notifies him or her, pursuant to paragraph 5 of this subsection, to file an amended Insurance Business Transfer Plan providing the modifications, supplements or amendments and additional information or documentation as requested by the Commissioner. If necessary the applicant may request in writing an extension of time of thirty (30) days. If the applicant does not make an amended filing within the time period provided for in this paragraph, including any extension of time granted by the Commissioner, the Insurance Business Transfer Plan filing will terminate and a subsequent filing by the applicant will be considered a new filing which shall require compliance with all provisions of this act as if the prior filing had never been made.

7. The Commissioner's review period in paragraph 3 of this subsection shall recommence when the modification, supplement, amendment or additional information requested in paragraph 5 of this subsection is received.

8. If the Commissioner determines that the Plan may proceed with the court filing, the Commissioner shall confirm that fact in writing to the applicant.

B. Application to the court for approval of the Insurance Business Transfer Plan.

1. Within thirty (30) days after notice from the Commissioner that the applicant may proceed with the court filing, the applicant shall apply to the court for approval of the Insurance Business Transfer Plan. Upon written request by the applicant, the Commissioner may extend the period for filing an application with the court for an additional thirty (30) days.

2. The applicant shall inform the court of the reasons why he or she petitions the court to find no material adverse impact to policyholders or claimants affected by the proposed transfer.

3. The application shall be in the form of a verified petition for implementation of the Insurance Business Transfer Plan in the court. The petition shall include the Insurance Business Transfer Plan and shall identify any documents and witnesses which the applicant intends to present at a hearing regarding the petition.

4. The Commissioner shall be a party to the proceedings before the court concerning the petition and shall be served with copies of all filings pursuant to the Rules for District Courts of Oklahoma. The Commissioner's position in the proceeding shall not be limited by his or her initial review of the Plan.

5. Following the filing of the petition, the applicant shall file a motion for a scheduling order setting a hearing on the petition.

6. Within fifteen (15) days after receipt of the scheduling order, the applicant shall cause notice of the hearing to be provided in accordance with the notice provisions of Section 1685 of this title. Following the date of distribution of the notice, there shall be a sixty-day comment period.

7. The notice to policyholders shall state or provide:

• a.the date and time of the approval hearing,
• b.the name, address and telephone number of the assuming insurer and transferring insurer,
• c.that a policyholder may comment on or object to the transfer and novation,
• d.the procedures and deadline for submitting comments or objections on the Plan,
• e.a summary of any effect that the transfer and novation will have on the policyholder's rights,
• f.a statement that the assuming insurer is authorized, as provided in this section, to assume the subject business and that court approval of the Plan shall extinguish all rights of policyholders under policies that are part of the subject business against the transferring insurer,
• g.that policyholders shall not have the opportunity to opt out of or otherwise reject the transfer and novation,
• h.contact information for the Insurance Department where the policyholder may obtain further information, and
• i.information on how an electronic copy of the Insurance Business Transfer Plan may be accessed. In the event policyholders are unable to readily access electronic copies, the applicant shall provide hard copies by first-class mail.

8. Any person, including by their legal representative, who considers himself, herself or itself to be adversely affected can present evidence or comments to the court at the approval hearing. However, such comment or evidence shall not confer standing on any person. Any person participating in the approval hearing must follow the process established by the court and shall bear his or her own costs and attorney fees.

C. Approval of the Insurance Business Transfer Plan.

1. After the comment period pursuant to paragraph 6 of subsection B of this section has ended the Insurance Business Transfer Plan shall be presented by the applicant for approval by the court.

2. At any time before the court issues an order approving the Insurance Business Transfer Plan, the applicant may withdraw the Insurance Business Transfer Plan without prejudice.

3. If the court finds that the implementation of the Insurance Business Transfer Plan would not materially adversely affect the interests of policyholders or claimants that are part of the subject business, the court shall enter an implementation order. The implementation order shall:

• a.order implementation of the Insurance Business Transfer Plan,
• b.order a statutory novation with respect to all policyholders or reinsureds and their respective policies and reinsurance agreements under the subject business, including the extinguishment of all rights of policyholders under policies that are part of the subject business against the transferring insurer, and providing that the transferring insurer shall have no further rights, obligations, or liabilities with respect to such policies, and that the assuming insurer shall have all such rights, obligations, and liabilities as if it were the original insurer of such policies,
• c.release the transferring insurer from any and all obligations or liabilities under policies that are part of the subject business,
• d.authorize and order the transfer of property or liabilities, including, but not limited to, the ceded reinsurance of transferred policies and contracts on the subject business, notwithstanding any nonassignment provisions in any such reinsurance contracts. The subject business shall vest in and become liabilities of the assuming insurer,
• e.order that the applicant provide notice of the transfer and novation in accordance with the notice provisions in Section 1685 of this title, and
• f.make such other provisions with respect to incidental, consequential and supplementary matters as are necessary to assure the Insurance Business Transfer Plan is fully and effectively carried out.

4. If the court finds that the Insurance Business Transfer Plan should not be approved, the court by its order may:

• a.deny the petition, or
• b.provide the applicant leave to file an amended Insurance Business Transfer Plan and petition.

5. Nothing in this section in any way affects the right of appeal of any party.

D. Implementation of Insurance Business Transfer Plan.

The Commissioner shall have the authority to promulgate rules to effectuate the provisions of the Insurance Business Transfer Act.

E. The review of an application for an Insurance Business Transfer, including any documents, materials, communications or other information submitted to the Commissioner in contemplation of such application, or developed by the Commissioner in connection with such application, shall be treated for purposes of confidentiality as an examination of the financial condition and/or market conduct of the transacting companies under Sections 309.1 through 309.7 of this title.

Added by Laws 2018, c. 232, § 6, eff. Nov. 1, 2018. Amended by Laws 2019, c. 381, § 3, eff. Nov. 1, 2019.