Chapter 3903: RESERVE VALUATION; REHABILITATION AND LIQUIDATION

3903.01 Reserve valuation - rehabilitation and liquidation definitions.

As used in sections 3903.01 to 3903.59 of the Revised Code:

(A) "Admitted assets" means investment in assets which will be admitted by the superintendent of insurance pursuant to the law of this state.

(B) "Affiliate" has the same meaning as "affiliate of" or "affiliated with," as defined in section 3901.32 of the Revised Code.

(C) "Assets" means all property, real and personal, of every nature and kind whatsoever or any interest therein.

(D) "Ancillary state" means any state other than a domiciliary state.

(E) "Commodity contract" means any of the following:

(1) A contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a board of trade designated as a contract market by the commodity futures trading commission under the "Commodity Exchange Act," 7 U.S.C. 1 et seq., as amended, or a board of trade outside the United States;

(2) An agreement that is subject to regulation under section 19 of the "Commodity Exchange Act," 7 U.S.C. 23 , as amended, and that is commonly known to the commodities trade as a margin account, margin contract, leverage account, or leverage contract;

(3) An agreement or transaction that is subject to regulation under section 4c(b) of the "Commodity Exchange Act," 7 U.S.C. 6c(b) , as amended, and that is commonly known to the commodities trade as a commodity option;

(4) Any combination of agreements or transactions described in division (E) of this section;

(5) Any option to enter into an agreement or transaction described in division (E) of this section.

(F) "Creditor" means a person having any claim, whether matured or unmatured, liquidated or unliquidated, secured or unsecured, absolute, fixed, or contingent.

(G) "Delinquency proceeding" means any proceeding commenced against an insurer for the purpose of liquidating, rehabilitating, reorganizing, or conserving the insurer, and any summary proceeding under section 3903.09 or 3903.10 of the Revised Code. "Formal delinquency proceeding" means any liquidation or rehabilitation proceeding.

(H) "Doing business" includes any of the following acts, whether effected by mail or otherwise:

(1) The issuance or delivery of contracts of insurance to persons resident in this state;

(2) The solicitation of applications for such contracts, or other negotiations preliminary to the execution of such contracts;

(3) The collection of premiums, membership fees, assessments, or other consideration for such contracts;

(4) The transaction of matters subsequent to execution of such contracts and arising out of them;

(5) Operating under a license or certificate of authority, as an insurer, issued by the department of insurance.

(I) "Domiciliary state" means the state in which an insurer is incorporated or organized, or, in the case of an alien insurer, its state of entry.

(J) "Fair consideration" is given for property or obligation when either of the following apply:

(1) When in exchange for such property or obligation, as a fair equivalent therefor, and in good faith, property is conveyed, services are rendered, an obligation is incurred, or an antecedent debt is satisfied;

(2) When such property or obligation is received in good faith to secure a present advance or antecedent debt in an amount not disproportionately small as compared to the value of the property or obligation obtained.

(K) "Foreign country" means any other jurisdiction not in any state.

(L) "Forward contract" has the same meaning as in the federal "Deposit Insurance Act," 64 Stat. 884, 12 U.S.C. 1821(e)(8)(D) , as now and hereafter amended.

(M) "Guaranty association" means the Ohio insurance guaranty association created by section 3955.06 of the Revised Code and any other similar entity hereafter created by the general assembly for the payment of claims of insolvent insurers. "Foreign guaranty association" means any similar entities now in existence in or hereafter created by the legislature of any other state.

(N) "Insolvency" or "insolvent" means:

(1) For an insurer issuing only assessable fire insurance policies either of the following:

(a) The inability to pay any obligation within thirty days after it becomes payable;

(b) If an assessment is made within thirty days after such date, the inability to pay the obligation thirty days following the date specified in the first assessment notice issued after the date of loss.

(2) For any other insurer, that it is unable to pay its obligations when they are due, or when its admitted assets do not exceed its liabilities plus the greater of either of the following:

(a) Any capital and surplus required by law for its organization;

(b) The total par or stated value of its authorized and issued capital stock.

(3) As to any insurer licensed to do business in this state as of the effective date of sections 3903.01 to 3903.59 of the Revised Code that does not meet the standard established under division (N)(2) of this section, the term "insolvency" or "insolvent" means, for a period not to exceed three years from the effective date of sections 3903.01 to 3903.59 of the Revised Code, that it is unable to pay its obligations when they are due or that its admitted assets do not exceed its liabilities plus any required capital contribution ordered by the superintendent under provisions of Title XXXIX of the Revised Code.

(4) For purposes of divisions (N)(2) to (4) of this section, "liabilities" includes, but is not limited to, reserves required by statute or by rules of the superintendent or specific requirements imposed by the superintendent upon a subject company at the time of admission or subsequent thereto.

(O) "Insurer" means any person who has done, purports to do, is doing, or is licensed to do an insurance business, and is or has been subject to the authority of, or to liquidation, rehabilitation, reorganization, supervision, or conservation by, any insurance commissioner, superintendent, or equivalent official. For purposes of sections 3903.01 to 3903.59 of the Revised Code, any other persons included under section 3903.03 of the Revised Code are deemed to be insurers.

(P) "Netting agreement" means:

(1) A contract or agreement, including a master agreement, and any terms and conditions incorporated by reference in such a contract or agreement, that provides for the netting, liquidation, setoff, termination, acceleration, or close out under or in connection with a qualified financial contract, or any present or future payment or delivery obligations or entitlements under a qualified financial contract, including liquidation or close-out values relating to those obligations or entitlements;

(2) A master agreement, together with all schedules, confirmations, definitions, and addenda to the agreement and transactions under the agreement, which shall be treated as one netting agreement, and any bridge agreement for one or more master agreements;

(3) Any security agreement or arrangement, credit support document, or guarantee or reimbursement obligation related to any contract or agreement described in division (P) of this section.

Any contract or agreement described in division (P) of this section relating to agreements or transactions that are not qualified financial contracts shall be deemed to be a netting agreement only with respect to those agreements or transactions that are qualified financial contracts.

(Q) "Preferred claim" means any claim with respect to which the terms of sections 3903.01 to 3903.59 of the Revised Code accord priority of payment from the assets of the insurer.

(R) "Qualified financial contract" means any commodity contract, forward contract, repurchase agreement, securities contract, swap agreement, and any similar agreement that the superintendent may determine by rule or order to be a qualified financial contract for purposes of this chapter.

(S) "Reciprocal state" means any state other than this state in which in substance and effect division (A) of section 3903.18 , and sections 3903.52 , 3903.53 , and 3903.55 to 3903.57 of the Revised Code are in force, in which provisions are in force requiring that the superintendent or equivalent official be the receiver, liquidator, rehabilitator, or conservator of a delinquent insurer, and in which some provision exists for the avoidance of fraudulent conveyances and preferential transfers.

(T) "Repurchase agreement" has the same meaning as in the federal "Deposit Insurance Act," 64 Stat. 884, 12 U.S.C. 1821(e)(8)(D) , as now and hereafter amended.

(U) "Secured claim" means any claim secured by mortgage, trust deed, security agreement, pledge, deposit as security, escrow, or otherwise, but not including special deposit claims or claims against assets. The term also includes claims which have become liens upon specific assets by reason of judicial process.

(V) "Securities contract" has the same meaning as in the federal "Deposit Insurance Act," 64 Stat. 884, 12 U.S.C. 1821(e)(8)(D) , as now and hereafter amended.

(W) "Special deposit claim" means any claim secured by a deposit made pursuant to statute for the security or benefit of a limited class or classes of persons, but not including any claim secured by assets.

(X) "State" has the meaning set forth in division (G) of section 1.59 of the Revised Code.

(Y) "Superintendent" or "superintendent of insurance" means the superintendent of insurance of this state, or, when the context requires, the superintendent or commissioner of insurance, or equivalent official, of another state.

(Z) "Swap agreement" has the same meaning as in the federal "Deposit Insurance Act," 64 Stat. 884, 12 U.S.C. 1821(e)(8)(D) , as now and hereafter amended.

(AA) "Transfer" includes the sale and every other and different mode, direct or indirect, of disposing of or of parting with property or with an interest in property, or with the possession of property or of fixing a lien upon property or upon an interest in property, absolutely or conditionally, voluntarily, or by or without judicial proceedings. The retention of a security title to property delivered to a debtor shall be deemed a transfer suffered by the debtor.

Amended by 129th General AssemblyFile No.28, HB 153, §101.01, eff. 9/29/2011.

Effective Date: 03-07-1983

3903.02 Citing of act - purpose of act.

(A) Sections 3903.01 to 3903.59 of the Revised Code may be cited as "the insurers supervision, rehabilitation, and liquidation act."

(B) Sections 3903.01 to 3903.59 of the Revised Code do not limit the powers granted the superintendent of insurance under any other section of the Revised Code.

(C) Sections 3903.01 to 3903.59 of the Revised Code shall be liberally construed to effect the purpose stated in division (D) of this section.

(D) The purpose of sections 3903.01 to 3903.59 of the Revised Code is the protection of the interests of insureds, claimants, creditors, and the public generally, with minimum interference with the normal prerogatives of the owners and managers of insurers, through all of the following:

(1) Early detection of any potentially dangerous condition in an insurer, and prompt application of appropriate corrective measures;

(2) Improved methods for rehabilitating insurers, involving the cooperation and management expertise of the insurance industry;

(3) Enhanced efficiency and economy of liquidation, through clarification of the law, to minimize legal uncertainty and litigation;

(4) Equitable apportionment of any unavoidable loss;

(5) Lessening the problems of interstate rehabilitation and liquidation by facilitating cooperation between states in the liquidation process, and by extending the scope of personal jurisdiction over debtors of the insurer outside this state;

(6) Regulation of the insurance business by the impact of the law relating to delinquency procedures and substantive rules on the entire insurance business.

Effective Date: 03-07-1983

3903.03 Application of sections.

The proceedings authorized by sections 3903.01 to 3903.59 of the Revised Code may be applied to any one or more of the following:

(A) All insurers who are doing, or have done, an insurance business in this state, and against whom claims arising from that business may exist now or in the future;

(B) All insurers who purport to do an insurance business in this state;

(C) All insurers who have insureds resident in this state;

(D) All other persons organized or in the process of organizing with the intent to do an insurance business in this state;

(E) All other companies, associations, societies, or entities subject to regulation by the superintendent of insurance under Titles XVII [17] and XXXIX [39] of the Revised Code.

Effective Date: 03-07-1983

3903.04 Jurisdiction.

(A) No delinquency proceeding shall be commenced under this chapter by anyone other than the superintendent of insurance of this state. No court has jurisdiction to entertain, hear, or determine any delinquency proceeding commenced by any other person.

(B) No court of this state has jurisdiction to entertain, hear, or determine any complaint praying for the dissolution, liquidation, rehabilitation, sequestration, conservation, or restraining order, preliminary injunction, or permanent injunction, or other relief preliminary to, incidental to, or relating to delinquency proceedings other than in accordance with sections 3903.01 to 3903.59 of the Revised Code.

(C) In addition to other grounds for jurisdiction provided by the law of this state, a court of common pleas has jurisdiction over a person served pursuant to the Civil Rules in an action brought by the conservator, rehabilitator, or liquidator of a domestic insurer or an alien insurer domiciled in this state if any of the following apply:

(1) The person served is obligated to the insurer in any way as an incident to any agency or brokerage arrangement that may exist or has existed between the insurer and the agent or broker, in any action on or incident to the obligation;

(2) The person served is a reinsurer who has at any time written a policy of reinsurance for an insurer against which a rehabilitation or liquidation order is in effect when the action is commenced, or is an agent or broker of or for the reinsurer, in any action on or incident to the reinsurance contract;

(3) The person served is or has been an officer, manager, trustee, organizer, promoter, or person in a position of comparable authority or influence in an insurer against which a rehabilitation or liquidation order is in effect when the action is commenced, in any action resulting from such a relationship with the insurer.

(D) If the court, on motion of any party, finds that any action should as a matter of substantial justice be tried in a forum outside this state, the court may stay further proceedings on the action in this state.

(E) All actions authorized in sections 3903.01 to 3903.59 of the Revised Code shall be brought in the court of common pleas of Franklin county.

Effective Date: 03-07-1983

3903.05 Temporary restraining orders - injunctions.

(A) Upon complaint or motion of any receiver, conservator, rehabilitator, or liquidator appointed in a proceeding under sections 3903.01 to 3903.59 of the Revised Code, any court of general jurisdiction may issue a temporary restraining order, a preliminary injunction, a permanent injunction, or such other orders that the court considers necessary and proper to prevent any one or more of the following:

(1) The transaction of further business;

(2) The transfer of property;

(3) Interference with the receiver, conservator, rehabilitator, or liquidator or with a proceeding under sections 3903.01 to 3903.59 of the Revised Code;

(4) Waste of the insurer's assets;

(5) Dissipation and transfer of bank accounts;

(6) The commencement or further prosecution of any actions or proceedings;

(7) The obtaining of preferences, judgments, attachments, garnishments, or liens against the insurer, its assets, or its policyholders;

(8) The levying of execution against the insurer, its assets, or its policyholders;

(9) The making of any sale or deed for nonpayment of taxes or assessments that would lessen the value of the assets of the insurer;

(10) The withholding from the receiver, conservator, rehabilitator, or liquidator of books, accounts, documents, or other records relating to the business of the insurer;

(11) Any other threatened or contemplated action that might lessen the value of the insurer's assets or prejudice the rights of policyholders, creditors, or shareholders, or the administration of any proceeding under sections 3903.01 to 3903.59 of the Revised Code.

(B) The receivership, conservator, rehabilitator, or liquidator may apply to any court outside of this state for any relief described in division (A) of this section.

Effective Date: 03-07-1983

3903.06 Duty of persons exercising control to cooperate with superintendent.

(A) Any officer, manager, director, trustee, owner, employee, or agent of any insurer, or any other persons with authority over or in charge of any segment of the insurer's affairs, shall cooperate with the superintendent of insurance in any proceeding under sections 3903.01 to 3903.59 of the Revised Code or any investigation preliminary to the proceeding. The term "person" as used in this section includes, but is not limited to, any person who exercises control directly or indirectly over activities of an insurer through any holding company or other affiliate of the insurer. "To cooperate" includes, but is not limited to, a duty to do both of the following:

(1) Reply promptly in writing to any inquiry from the superintendent requesting such a reply;

(2) Make available to the superintendent any books, accounts, documents, or other records or information or property of or pertaining to the insurer and in the person's possession, custody, or control.

(B) No person shall fail to cooperate with the superintendent as required under division (A) of this section.

(C) No person shall obstruct or interfere with the superintendent in the conduct of any delinquency proceeding or any investigation preliminary or incidental thereto or violate an order of the superintendent issued under sections 3903.01 to 3903.59 of the Revised Code.

(D) If the superintendent finds, after proceedings in accordance with Chapter 119. of the Revised Code, that any person has violated division (B) or (C) of this section, the superintendent may do either or both of the following:

(1) Impose a civil penalty not to exceed ten thousand dollars;

(2) Suspend, revoke, or refuse to renew any license or certificate issued to the person under Title XVII [17] or XXXIX [39] of the Revised Code.

(E) Nothing in this section shall be construed to abridge otherwise existing legal rights, including the right to resist a complaint for liquidation or other delinquency proceedings, or other orders.

Effective Date: 03-07-1983

3903.07 Responsibilities of superintendent and deputies.

(A) In any proceeding under sections 3903.01 to 3903.59 of the Revised Code, the superintendent of insurance and his deputies are responsible on their official bonds for the faithful performance of their duties. If the court considers it desirable for the protection of the assets, it may at any time require an additional bond from the superintendent or his deputies, and such bonds shall be paid for out of the assets of the insurer as a cost of administration.

(B) Sections 9.86 and 9.87 of the Revised Code and sections 109.36 to 109.366 of the Revised Code apply, for purposes of any proceeding under sections 3903.01 to 3903.59 of the Revised Code, to the superintendent, any deputy liquidator, any employee of the department of insurance, any employee appointed by the superintendent as liquidator, and any employee who serves under the liquidator.

(C) For the sole purpose of the application of sections 9.86 and 9.87 of the Revised Code and sections 109.36 and 109.366 of the Revised Code, each person described in division (B) of this section is deemed to be an officer or employee as defined in division (A) of section 9.85 of the Revised Code and division (A) of section 109.36 of the Revised Code.

Effective Date: 04-10-1991

3903.08 Effect on pending proceedings.

Every proceeding to rehabilitate or liquidate an insurer commenced under the laws in effect before the effective date of sections 3903.01 to 3903.59 of the Revised Code shall be continued as it would have been continued had these sections not been enacted.

Effective Date: 03-07-1983

3903.09 Correction orders issued by superintendent.

(A) Whenever the superintendent of insurance has reasonable cause to believe, and determines, after a hearing held under division (E) of this section, that any domestic insurer has committed or engaged in, or is about to commit or engage in, any act, practice, or transaction that would subject it to delinquency proceedings under sections 3903.01 to 3903.59 of the Revised Code, he may make and serve upon the insurer and any other persons involved, such orders as are reasonably necessary to correct, eliminate, or remedy such conduct, condition, or ground.

(B) If upon examination or at any other time, the superintendent has reasonable cause to believe that any domestic insurer is in such condition as to render the continuance of its business hazardous to the public or to holders of its policies or certificates of insurance, or if such domestic insurer gives its consent, then the superintendent shall upon his determination do both of the following:

(1) Notify the insurer of the determination;

(2) Furnish to the insurer a written list of the superintendent's requirements to abate the determination.

(C) If the superintendent makes a determination to supervise an insurer subject to an order under division (A) or (B) of this section, he shall notify the insurer that it is under the supervision of the superintendent. During the period of supervision, the superintendent may appoint a supervisor to supervise the insurer. The order appointing a supervisor shall direct the supervisor to enforce orders issued under division (A) or (B) of this section and may also require that the insurer may not do any of the following, during the period of supervision, without the prior approval of the superintendent or his supervisor:

(1) Dispose of, convey, or encumber any of its assets or its business in force;

(2) Withdraw from any of its bank accounts;

(3) Lend any of its funds;

(4) Invest any of its funds;

(5) Transfer any of its property;

(6) Incur any debt, obligation, or liability;

(7) Merge or consolidate with another company;

(8) Enter into any new reinsurance contract or treaty.

(D) Any insurer subject to an order under this section shall comply with the lawful requirements of the superintendent and, if placed under supervision, shall have sixty days from the date the supervision order is served within which to comply with the requirements of the superintendent. In the event of the insurer's failure to comply within such time, the superintendent may commence proceedings under section 3903.12 or 3903.17 of the Revised Code to have a rehabilitator or liquidator appointed, or extend the period of supervision.

(E) The notice of hearing under division (A) of this section and any order issued pursuant to that division shall be served upon the insurer. The notice of hearing shall state the time and place of hearing, and the conduct, condition, or ground upon which the superintendent would base his order. Unless mutually agreed between the superintendent and the insurer, the hearing shall occur not less than ten days nor more than thirty days after notice is served and shall be either in Franklin county or in some other place convenient to the parties to be designated by the superintendent. The superintendent shall hold all hearings under division (A) of this section privately unless the insurer requests a public hearing, in which case the hearing shall be public.

(F)

(1) Any insurer subject to an order under division (B) of this section may request a hearing to review that order. Such a hearing shall be held as provided in division (E) of this section, but the request for a hearing shall not stay the effect of the order.

(2) If the superintendent issues an order under division (B) of this section, the insurer may, at any time, waive a superintendent's hearing and apply for immediate judicial relief by means of any appropriate judicial remedy without first exhausting administrative remedies.

(G) During the period of supervision, the insurer may request the superintendent to review an action taken or proposed to be taken by the supervisor, specifying wherein the action complained of is believed not to be in the best interest of the insurer.

(H) If the superintendent has reasonable cause to believe that a supervision order issued under this section has been violated, he may, unless the order is stayed by a court of competent jurisdiction, request the attorney general to commence and prosecute any appropriate action or proceeding in the name of the state against the person to recover a civil penalty not to exceed ten thousand dollars.

(I) Upon complaint or motion of the superintendent, the court of common pleas may issue a temporary restraining order, a preliminary injunction, a permanent injunction, or such other orders as the court considers necessary and proper to enforce a supervision order.

(J) In the event that any person, subject to sections 3903.01 to 3903.59 of the Revised Code, including those persons described in division (A) of section 3903.06 of the Revised Code, knowingly violates any valid order of the superintendent issued under the provisions of this section and, as a result of such violation, the net worth of the insurer is reduced or the insurer suffers loss it would not otherwise have suffered, the person is personally liable to the insurer for the amount of any such reduction or less. The superintendent or supervisor may bring an action on behalf of the insurer in the court of common pleas to recover the amount of the reduction or less together with any costs.

(K) Without regard to the status of any proceeding instituted under this section, the superintendent may at any time commence proceedings under section 3903.12 or 3903.17 of the Revised Code to have a rehabilitator or liquidator appointed.

Effective Date: 03-07-1983

3903.10 Complaint - court may issue ex parte seizure or other order.

(A) The superintendent of insurance may file in the court of common pleas a complaint alleging, with respect to a domestic insurer all of the following:

(1) That there exist any grounds that would justify a court order for a formal delinquency proceeding against an insurer under sections 3903.01 to 3903.59 of the Revised Code;

(2) That the interests of policyholders, creditors, or the public will be endangered by delay;

(3) The contents of a seizure order or other order considered necessary by the superintendent.

(B) Upon a filing under division (A) of this section, the court may issue forthwith, ex parte and without a hearing, the requested order which shall direct the superintendent to take possession and control of all or a part of the property, books, accounts, documents, and other records of an insurer, and of the premises occupied by it for transaction of its business, and until further order of the court enjoin the insurer and its officers, managers, agents, and employees from disposition of its property and from transaction of its business except with the written consent of the superintendent.

(C) The court shall specify in the order what its duration shall be, which shall be such time as the court considers necessary for the superintendent to ascertain the condition of the insurer. On motion of either party or on its own motion, the court may from time to time hold such hearings as it considers desirable after such notice as it considers appropriate, and may extend, shorten, or modify the terms of the seizure order or other order. The court shall vacate the seizure order or other order if the superintendent fails to commence a formal proceeding under sections 3903.01 to 3903.59 of the Revised Code after having had a reasonable opportunity to do so. An order of rehabilitation or liquidation terminates the seizure order.

(D) Entry of a seizure order or other order under this section does not constitute an anticipatory breach of any contract of the insurer.

(E) An insurer subject to an ex parte order under this section may file a motion in the court at any time after the issuance of such order for a hearing and review of the order. The court shall hold such a hearing and review not more than fifteen days after the motion is filed. The court shall, upon request of the insurer, hold hearings under this division in chambers.

(F) If, at any time after the issuance of such an order, it appears to the court that any person whose interest is or will be substantially affected by the order did not appear at the hearing and has not been served, the court may order that notice be given. An order that notice be given shall not stay the effect of any order previously issued by the court.

Effective Date: 03-07-1983

3903.11 Confidentiality of information - exceptions.

(A) In all proceedings and judicial reviews thereof under sections 3903.09 and 3903.10 of the Revised Code, all records of the insurer, other documents, and all department of insurance files and court records and papers, so far as they pertain to or are a part of the record of the proceedings, shall be and remain confidential and privileged except as is necessary to enforce compliance with those sections, unless and until the court of common pleas, after hearing arguments from the parties in chambers, shall order otherwise, or unless the insurer requests in writing that the matter be made public. Until such court order or such request from the insurer, all papers filed with the clerk of the court shall be held by the clerk in a confidential file.

(B) Notwithstanding division (A) of this section, the superintendent may do either of the following:

(1) Share the documents and information that are the subject of this section with the chief deputy rehabilitator, the chief deputy liquidator, other deputy rehabilitators and liquidators, and any other person employed by, or acting on behalf of, the superintendent pursuant to Chapter 3901. or 3903. of the Revised Code, with other local, state, federal, and international regulatory and law enforcement agencies, with local, state, and federal prosecutors, and with the national association of insurance commissioners and its affiliates and subsidiaries, provided that the recipient agrees to maintain the confidential or privileged status of the confidential or privileged document or information and has authority to do so;

(2) Disclose documents and information that are the subject of this section in the furtherance of any regulatory or legal action brought by or on behalf of the superintendent or the state, resulting from the exercise of the superintendent's official duties.

(C) Notwithstanding divisions (A) and (B) of this section, the superintendent may authorize the national association of insurance commissioners and its affiliates and subsidiaries by agreement to share confidential or privileged documents or information received pursuant to division (B)(1) of this section with local, state, federal, and international regulatory and law enforcement agencies and with local, state, and federal prosecutors, provided that the recipient agrees to maintain the confidential or privileged status of the confidential or privileged document or information and has authority to do so.

(D) Notwithstanding divisions (A) and (B) of this section, the chief deputy rehabilitator, the chief deputy liquidator, and other deputy rehabilitators and liquidators may disclose documents and information that are the subject of this section in the furtherance of any regulatory or legal action brought by or on behalf of the superintendent, the rehabilitator, the liquidator, or the state resulting from the exercise of the superintendent's official duties in any capacity.

(E) Nothing in this section shall prohibit the superintendent from receiving documents or information in accordance with section 3901.045 of the Revised Code.

(F) The superintendent may enter into agreements governing the sharing and use of documents and information consistent with the requirements of this section.

(G)

(1) No waiver of any applicable privilege or claim of confidentiality in the documents and information described in this section shall occur as a result of sharing or receiving documents and information as authorized in divisions (B)(1), (C), and (E) of this section.

(2) The disclosure of documents or information in connection with a regulatory or legal action pursuant to divisions (B)(2) and (D) of this section does not prohibit an insurer or any other person from taking steps to limit the dissemination of the document or information to persons not involved in or the subject of the regulatory or legal action on the basis of any recognized privilege arising under any other section of the Revised Code or the common law.

Effective Date: 06-18-2002

3903.12 Grounds for rehabilitation order.

The superintendent of insurance may file a complaint in the court of common pleas for an order authorizing him to rehabilitate a domestic insurer or an alien insurer domiciled in this state on any one or more of the following grounds:

(A) The insurer is in such condition that the further transaction of business would be hazardous, financially, to its policyholders, creditors, or the public.

(B) There is reasonable cause to believe that there has been embezzlement from the insurer, wrongful sequestration or diversion of the insurer's assets, forgery, or fraud affecting the insurer, or other illegal conduct in, by, or with respect to the insurer that if established would endanger assets in an amount threatening the solvency of the insurer.

(C) The insurer has failed to remove any person who in fact has executive authority in the insurer, whether an officer, manager, general agent, director, trustee, employee, or other person, if the person has been found after notice and hearing by the superintendent to be dishonest or untrustworthy in a way affecting the insurer's business.

(D) Control of the insurer, whether by stock ownership or otherwise, and whether direct or indirect, is in a person or persons found after notice and hearing to be untrustworthy.

(E) Any person who in fact has executive authority in the insurer, whether an officer, manager, general agent, director, trustee, employee, or other person, has refused to be examined under oath by the superintendent concerning its affairs, whether in this state or elsewhere, and after reasonable notice of the fact the insurer has failed promptly and effectively to terminate the employment and status of the person and all his influence on management.

(F) After demand by the superintendent under section 3901.07 or sections 3903.01 to 3903.59 of the Revised Code, the insurer has failed to promptly make available for examination any of its own property, books, accounts, documents, or other records, or those of any subsidiary or related company within the control of the insurer, or those of any person having executive authority in the insurer so far as they pertain to the insurer.

(G) Without first obtaining the written consent of the superintendent, the insurer has transferred, or attempted to transfer, substantially its entire property or business, or has entered into any transaction the effect of which is to merge, consolidate, or reinsure substantially its entire property or business in or with the property or business of any other person.

(H) The insurer or its property has been or is the subject of an application for the appointment of a receiver, trustee, custodian, conservator or sequestrator, or similar fiduciary of the insurer or its property otherwise than as authorized under the insurance laws of this state, and such appointment has been made or is imminent, and such appointment might oust the courts of this state of jurisdiction or might prejudice orderly delinquency proceedings under sections 3903.01 to 3903.59 of the Revised Code.

(I) Within the previous four years the insurer has willfully violated its charter or articles of incorporation, its bylaws, any insurance law of this state, or any valid order of the superintendent under section 3903.09 of the Revised Code.

(J)

(1) The insurer has failed to pay within sixty days after due date any obligation to any state or any subdivision of this state or any judgment entered in any state, if the court in which such judgment was entered had jurisdiction over the subject matter except that such nonpayment shall not be a ground until sixty days after any good faith effort by the insurer to contest the obligation has been terminated, whether it is before the superintendent or in the courts.

(2) The insurer has systematically attempted to compromise or renegotiate previously agreed settlements with its creditors on the ground that it is financially unable to pay its obligations in full.

(K) The insurer has failed to file its annual report or other financial report required by statute within the time allowed by law and, after written demand by the superintendent, has failed to give an adequate explanation immediately.

(L) The board of directors or the holders of a majority of the shares entitled to vote, or a majority of those individuals entitled to the control of those entities specified in section 3903.03 of the Revised Code request or consent to rehabilitation under sections 3903.01 to 3903.59 of the Revised Code.

Effective Date: 03-07-1983

3903.13 Rehabilitation orders.

(A) An order to rehabilitate the business of a domestic insurer, or an alien insurer domiciled in this state, shall appoint the superintendent of insurance and his successors in office the rehabilitator, and shall direct the rehabilitator forthwith to take possession of the assets of the insurer, and to administer them under the general supervision of the court. The rehabilitator is vested by operation of law with the title to all property, contracts, and rights of action of the company as of the date of the entry of the judgment of the court order directing rehabilitation.

Third persons dealing with the interest of the insurer in real property in a county are charged with notice of the pendency of an action for rehabilitation of the insurer when a complaint for rehabilitation of the insurer is filed in the court of common pleas of that county or when a certified copy of the complaint is filed with the clerk of that county under Civil Rule 3(F).

Third persons dealing with the interest of the insurer in real property in a county are charged with notice of the order for rehabilitation when the judgment ordering rehabilitation is entered in that county or when a certified copy of the judgment is filed in that county under Civil Rule 3(F).

Subject to section 3903.27 of the Revised Code, third persons dealing with the interest of the insurer in other types of property are charged with notice of the pendency of the action for rehabilitation when the complaint is filed in the court of common pleas, or when a certified copy of the complaint is filed under Civil Rule 3(F) with the clerk of the court of common pleas, of the county in which the principal business of the company is conducted or in which its principal office or place of business is located. Such persons are charged with notice of the judgment ordering rehabilitation when the judgment is filed under Civil Rule 58, or a certified copy of the judgment is filed under Civil Rule 3(F), with the clerk of the court of common pleas of the county in which the principal business of the company is conducted or in which its principal office or place of business is located.

(B) Any order issued under this section shall require accounting to the court by the rehabilitator. Accountings shall be at such intervals as the court specifies in its order.

(C) Entry of an order of rehabilitation does not constitute an anticipatory breach of any contracts of the insurer.

Effective Date: 03-07-1983

3903.14 Employment of special deputies.

(A) The superintendent of insurance as rehabilitator may appoint one or more special deputies, who shall have all the powers and responsibilities of the rehabilitator granted under this section, and the superintendent may employ such clerks and assistants as considered necessary. The compensation of the special deputies, clerks, and assistants and all expenses of taking possession of the insurer and of conducting the proceedings shall be fixed by the superintendent, with the approval of the court and shall be paid out of the funds or assets of the insurer. The persons appointed under this section shall serve at the pleasure of the superintendent. In the event that the property of the insurer does not contain sufficient cash or liquid assets to defray the costs incurred, the superintendent may advance the costs so incurred out of any appropriation for the maintenance of the department of insurance. Any amounts so advanced for expenses of administration shall be repaid to the superintendent for the use of the department out of the first available money of the insurer.

(B) The rehabilitator may take such action as the rehabilitator considers necessary or appropriate to reform and revitalize the insurer. The rehabilitator shall have all the powers of the directors, officers, and managers, whose authority shall be suspended, except as they are redelegated by the rehabilitator. The rehabilitator shall have full power to direct and manage, to hire and discharge employees subject to any contract rights they may have, and to deal with the property and business of the insurer.

(C) If it appears to the rehabilitator that there has been criminal or tortious conduct, or breach of any contractual or fiduciary obligation detrimental to the insurer by any officer, manager, agent, director, trustee, broker, employee, or other person, the rehabilitator may pursue all appropriate legal remedies on behalf of the insurer.

(D) If the rehabilitator determines that reorganization, consolidation, conversion, reinsurance, merger, or other transformation of the insurer is appropriate, the rehabilitator shall prepare a plan to effect such changes. Upon application of the rehabilitator for approval of the plan, and after such notice and hearings as the court may prescribe, the court may either approve or disapprove the plan proposed, or may modify it and approve it as modified. Any plan approved under this section shall be, in the judgment of the court, fair and equitable to all parties concerned. If the plan is approved, the rehabilitator shall carry out the plan. In the case of a life insurer, the plan proposed may include the imposition of liens upon the policies of the company, if all rights of shareholders are first relinquished. A plan for a life insurer may also propose imposition of a moratorium upon loan and cash surrender rights under policies, for such period and to such an extent as may be necessary.

(E) In the case of a medicaid health insuring corporation that has posted a bond or deposited securities in accordance with section 1751.271 of the Revised Code, the plan proposed under division (D) of this section may include the use of the proceeds of the bond or securities to first pay the claims of contracted providers for covered health care services provided to medicaid recipients, then next to pay other claimants with any remaining funds, consistent with the priorities set forth in sections 3903.421 and 3903.42 of the Revised Code.

(F) The rehabilitator shall have the power under sections 3903.26 and 3903.27 of the Revised Code to avoid fraudulent transfers.

(G) As used in this section:

(1) "Contracted provider" means a provider with a contract with a medicaid health insuring corporation to provide covered health care services to medicaid recipients.

(2) "Medicaid recipient" means a person enrolled in the medicaid program .

Amended by 130th General Assembly File No. 25, HB 59, §101.01, eff. 9/29/2013.

Effective Date: 03-07-1983; 09-29-2005

3903.15 Stay of actions - statute of limitations - standing.

(A) Any court in this state, before which any action or proceeding in which the insurer is a party or is obligated to defend a party is pending when a rehabilitation order against the insurer is entered, shall stay the action or proceeding for ninety days and such additional time as is necessary for the rehabilitator to obtain proper representation and prepare for further proceedings. The rehabilitator shall take such action respecting the pending litigation as he considers necessary in the interests of justice and for the protection of creditors, policyholders, and the public. The rehabilitator shall immediately consider all litigation pending outside this state and shall petition the courts having jurisdiction over that litigation for stays whenever necessary to protect the estate of the insurer.

(B) No statute of limitations or defense of laches shall run with respect to any action by or against an insurer between the filing of a complaint for appointment of a rehabilitator for that insurer and the order granting or denying that complaint. Any action by or against the insurer that might have been commenced when the complaint was filed may be commenced for at least sixty days after the order of rehabilitation is entered or the complaint is denied.

(C) Any guaranty association or foreign guaranty association covering life or health insurance or annuities shall have standing to appear in any court proceeding concerning the rehabilitation of a life or health insurer if such association is or may become liable to act as a result of the rehabilitation.

Effective Date: 03-07-1983

3903.16 Motion for order of liquidation - order terminating rehabilitation of insurer.

(A) Whenever the superintendent of insurance believes rehabilitation of an insurer would substantially increase the risk of loss to creditors, policyholders, or the public, or would be futile, the superintendent may file a motion in the court of common pleas for an order of liquidation. A motion under this division has the same effect as a complaint under section 3903.17 of the Revised Code. The court shall permit the directors of the insurer to take such actions as are reasonably necessary to defend against the motion and may order payment from the estate of the insurer of such costs and other expenses of defense as justice may require.

(B) The court may at any time, upon motion of the rehabilitator, enter an order terminating rehabilitation of an insurer. The court may also, upon motion of the directors of the insurer, enter an order terminating rehabilitation of the insurer and may order payment from the estate of the insurer of such costs and other expenses of such motion as justice may require. If the court finds that rehabilitation has been accomplished and that grounds for rehabilitation under section 3903.12 of the Revised Code no longer exist, it shall order that the insurer be restored to possession of its property and the control of its business. The court may also make such a finding and issue such an order at any time upon its own motion.

Effective Date: 03-07-1983

3903.17 Basis for liquidation order.

The superintendent of insurance may file a complaint in the court of common pleas for an order directing him to liquidate a domestic insurer or an alien insurer domiciled in this state on the basis of any one or more of the following:

(A) Upon any ground for an order of rehabilitation specified in section 3903.12 of the Revised Code, whether or not there has been a prior order directing the rehabilitation of the insurer;

(B) That the insurer is insolvent;

(C) That the insurer is in such condition that the further transaction of business would be hazardous, financially or otherwise, to its policyholders, its creditors, or the public.

Effective Date: 03-07-1983

3903.18 Liquidation orders.

(A) An order to liquidate the business of a domestic insurer shall appoint the superintendent of insurance and his successors in office as liquidator and shall direct the liquidator forthwith to take possession of the assets of the insurer and to administer them under the general supervision of the court. The liquidator shall be vested by operation of law with the title to all of the property, contracts, and rights of action and all of the books and records of the insurer ordered liquidated, wherever located, as of the entry of the final order of liquidation.

Third persons dealing with the interest of the insurer in real property in a county are charged with notice of the pendency of an action for liquidation of the insurer when a complaint for liquidation of the insurer is filed in the court of common pleas of that county or when a certified copy of the complaint is filed with the clerk of that county under Civil Rule 3(F).

Third persons dealing with the interest of the insurer in real property in a county are charged with notice of the order for liquidation when the judgment ordering liquidation is filed under Civil Rule 58, or a certified copy of the judgment is filed under Civil Rule 3(F), with the clerk of the court of common pleas of that county.

Third persons dealing with the interest of the insurer in other types of property are charged with notice of the pendency of the action for liquidation when the complaint is filed in the court of common pleas, or when a certified copy of the complaint is filed under Civil Rule 3(F) with the clerk of the court of common pleas, of the county in which the principal business of the company is conducted or in which its principal office or place of business is located. Such persons are charged with notice of the judgment ordering liquidation when the judgment is filed under Civil Rule 58, or a certified copy of the judgment is filed under Civil Rule 3(F), with the clerk of the court of common pleas of the county in which the principal business of the company is conducted or in which its principal office or place of business is located.

(B) Upon issuance of the order, the rights and liabilities of any such insurer and of its creditors, policyholders, shareholders, members, and all other persons interested in its estate shall become fixed as of the date of entry of the order of liquidation, except as provided in sections 3903.19 and 3903.37 of the Revised Code.

(C) An order to liquidate the business of an alien insurer domiciled in this state shall be in the same terms and have the same legal effect as an order to liquidate a domestic insurer, except that the assets and the business in the United States shall be the only assets and business included therein.

(D) At the time of filing the complaint for an order of liquidation, or at any time thereafter, the superintendent may file a motion for a judicial declaration of the insurer's insolvency. After providing such notice and hearing as it considers proper, the court may make the declaration.

(E) Any order issued under this section shall require accounting to the court by the liquidator. Accountings shall be at such intervals as the court specifies in its order.

Effective Date: 03-07-1983

3903.19 Effect of liquidation order on policies.

(A) All policies, other than life or health insurance or annuities, in effect at the time of issuance of an order of liquidation shall continue in force only for the lesser of any of the following:

(1) A period of thirty days from the date of entry of the liquidation order;

(2) The expiration of the policy coverage;

(3) The date when the insured has replaced the insurance coverage with equivalent insurance in another insurer or otherwise terminated the policy;

(4) The liquidator has effected a transfer of the policy obligation pursuant to division (A)(8) of section 3903.21 of the Revised Code.

(B) An order of liquidation under section 3903.18 of the Revised Code terminates coverages at the time specified in division (A) of this section for purposes of any other section of the Revised Code.

(C) Policies of life or health insurance or annuities shall continue in force for such period and under such terms as is provided for by any applicable guaranty association or foreign guaranty association.

(D) Policies of life or health insurance or annuities or any period of coverage of such policies not covered by a guaranty association or foreign guaranty association shall terminate under divisions (A) and (B) of this section.

Effective Date: 03-07-1983

3903.20 Dissolution of corporate existence.

The superintendent of insurance may file a motion for an order dissolving the corporate existence of a domestic insurer or the United States branch of an alien insurer domiciled in this state at the time he files a complaint for a liquidation order. The court shall order dissolution of the corporation upon motion by the superintendent upon or after the granting of a liquidation order. If the dissolution has not previously been ordered, it shall be effected by operation of law upon the discharge of the liquidator if the insurer is insolvent but may be ordered by the court upon the discharge of the liquidator if the insurer is under a liquidation order for some other reason.

Effective Date: 03-07-1983

3903.21 Liquidator - powers and duties.

(A) The liquidator may do any of the following:

(1) Appoint one or more special deputies to act for him under sections 3903.01 to 3903.59 of the Revised Code, and determine the deputies' reasonable compensation. Special deputies have all the powers of the liquidator granted by this section. Special deputies shall serve at the pleasure of the liquidator.

(2) Employ employees and agents, actuaries, accountants, appraisers, consultants, and such other personnel as he may consider necessary to assist in the liquidation;

(3) Fix the reasonable compensation of employees and agents, actuaries, accountants, appraisers, and consultants with the approval of the court;

(4) Pay reasonable compensation to persons appointed and defray from the funds or assets of the insurer all expenses of taking possession of, conserving, conducting, liquidating, disposing of, or otherwise dealing with the business and property of the insurer. In the event that the property of the insurer does not contain sufficient cash or liquid assets to defray the costs incurred, the superintendent of insurance may advance the costs so incurred out of any appropriation for the maintenance of the department of insurance. Any amounts so advanced for expenses of administration shall be repaid to the superintendent for the use of the department out of the first available money of the insurer.

(5) Hold hearings, subpoena witnesses to compel their attendance, administer oaths, examine any person under oath, and compel any person to subscribe to his testimony after it has been correctly reduced to writing, and in connection therewith require the production of any books, papers, records, or other documents which he considers relevant to the inquiry;

(6) Collect all debts and moneys due and claims belonging to the insurer, wherever located. For this purpose, the liquidator may do any of the following:

(a) Institute timely action in other jurisdictions, in order to forestall garnishment and attachment proceedings against such debts;

(b) Do such other acts as are necessary or expedient to collect, conserve, or protect its assets or property, including the power to sell, compound, compromise, or assign debts for purposes of collection upon such terms and conditions as he considers best;

(c) Pursue any creditor's remedies available to enforce his claims.

(7) Conduct public and private sales of the property of the insurer;

(8) Use assets of the estate of an insurer under a liquidation order to transfer policy obligations to a solvent assuming insurer, if the transfer can be arranged without prejudice to applicable priorities under section 3903.42 of the Revised Code.

(9) Acquire, hypothecate, encumber, lease, improve, sell, transfer, abandon, or otherwise dispose of or deal with, any property of the insurer at its market value or upon such terms and conditions as are fair and reasonable. The liquidator may execute, acknowledge, and deliver any and all deeds, assignments, releases, and other instruments necessary or proper to effectuate any sale of property or other transaction in connection with the liquidation.

(10) Borrow money on the security of the insurer's assets or without security and to execute and deliver all documents necessary to that transaction for the purpose of facilitating the liquidation;

(11) Enter into such contracts as are necessary to carry out the order to liquidate, and to affirm or disavow any contracts to which the insurer is a party;

(12) Continue to prosecute and to commence in the name of the insurer or in his own name any and all suits and other legal proceedings, in this state or elsewhere, and to abandon the prosecution of claims he considers unprofitable to pursue further. If the insurer is dissolved under section 3903.20 of the Revised Code, he shall have the power to apply to any court in this state or elsewhere for leave to substitute himself for the insurer as plaintiff.

(13) Prosecute any action which may exist in behalf of the creditors, members, policyholders, or shareholders of the insurer against any officer of the insurer or any other person;

(14) Remove any or all records and property of the insurer to the offices of the superintendent or to such other place as may be convenient for the purposes of efficient and orderly execution of the liquidation. Guaranty associations and foreign guaranty associations shall have such reasonable access to the records of the insurer as is necessary for them to carry out their statutory obligations.

(15) Deposit in one or more banks in this state such sums as are required for meeting current administration expenses and dividend distributions;

(16) Invest all sums not currently needed, unless the court orders otherwise;

(17) File any necessary documents for record in the office of any recorder of deeds or record office in this state or elsewhere where property of the insurer is located;

(18) Assert all defenses available to the insurer as against third persons, including, but not limited to, statutes of limitation, statutes of frauds, and the defense of usury. A waiver of any defense by the insurer after a complaint in liquidation has been filed does not bind the liquidator. Whenever a guaranty association or foreign guaranty association has an obligation to defend any suit, the liquidator shall give precedence to such obligation and may defend only in the absence of a defense by such guaranty association.

(19) Exercise and enforce all the rights, remedies, and powers of any creditor, shareholder, policyholder, or member, including any power to avoid any transfer or lien that may be given by the general law and that is not included under sections 3903.26 to 3903.28 of the Revised Code;

(20) Intervene in any proceeding wherever instituted that might lead to the appointment of a receiver, conservator, rehabilitator, liquidator, or trustee, and to act as the receiver, conservator, rehabilitator, liquidator, or trustee whenever the appointment is offered;

(21) Enter into agreements with any receiver, conservator, rehabilitator, liquidator, or superintendent of any other state relating to the rehabilitation, liquidation, conservation, or dissolution of an insurer doing business in both states;

(22) Exercise all powers now held or hereafter conferred upon receivers, conservators, rehabilitators, or liquidators by the laws of this state not inconsistent with the provisions of sections 3903.01 to 3903.59 of the Revised Code;

(23) Apply to the court for permission to sell the insurer as a going concern. If the court determines that the sale of the insurer as a going concern is in the best interest of the estate and that the sale will not diminish the value of the claims of shareholders and creditors, the court shall order that the insurer be discharged from all of its liabilities, that the outstanding shares of the insurer be canceled, that for no additional consideration new shares of the insurer be issued in the name of the liquidator, that the liquidator be vested with the title to the new shares which shares shall be deemed validly issued, fully paid, and nonassessable pursuant to applicable law, and that the liquidator be authorized to sell the shares, together with such tax credits, of the insurer as the liquidator determines to be in the best interests of the estate. The sale may be at public or private sale and under such terms and conditions as the liquidator determines to be in the best interests of the estate. Upon confirmation of the sale by the court, the purchasers of the shares shall be vested with title to those shares, including any tax credits, of the insurer free and clear of all claims and defenses. The proceeds from the sale of the shares shall become a part of the estate in liquidation.

A sale under this division (A)(23) does not affect the rights and liabilities of the insurer and of its creditors, policyholders, shareholders, members, and all other persons interested in its estate as fixed under division (B) of section 3903.18 of the Revised Code. No person is entitled to any priority or preference rights in the proceeds of the sale except as so fixed.

As used in this division (A)(23), "shareholder" has the same meaning as in division (F) of section 1701.01 of the Revised Code and also includes any secured party or other person or holder who has or claims to have any interest of any kind in any shares of the insurer.

This division

(A) (23) applies retrospectively and shall be liberally construed to accomplish its purpose to provide a more expeditious and effective procedure for marshalling the assets of the estate in order to realize the maximum amount possible from the sale of those assets and ensure that the purchasers receive clear and marketable titles.

(B) The enumeration, in this section, of the powers and authority of the liquidator shall not be construed as a limitation upon him, nor shall it exclude in any manner his right to do such other acts not herein specifically enumerated, or otherwise provided for, as may be necessary or appropriate for the accomplishment of or in aid of the purpose of liquidation.

Effective Date: 09-10-1987

3903.22 Notice of liquidation order.

(A) Unless the court otherwise directs, the liquidator shall give or cause to be given notice of the liquidation order as soon as possible to all of the following:

(1) By first class mail and either by telegram or telephone to the superintendent of insurance or equivalent officer of each jurisdiction in which the insurer is doing business;

(2) By first class mail to any guaranty association or foreign guaranty association which is or may become obligated as a result of the liquidation;

(3) By first class mail to all insurance agents of the insurer;

(4) By first class mail to all persons known or reasonably expected to have claims against the insurer including all policyholders, at their last known address as indicated by the records of the insurer;

(5) By publication in a newspaper of general circulation in the county in which the insurer has its principal place of business and in such other locations as the liquidator considers appropriate.

(B) Notice to potential claimants under division (A) of this section shall require claimants to file with the liquidator their claims together with proper proofs thereof under section 3903.36 of the Revised Code, on or before a date the liquidator shall specify in the notice. The liquidator need not require persons claiming cash surrender values or other investment values in life insurance and annuities to file a claim. All claimants shall keep the liquidator informed of any changes of address.

(C) If notice is given in accordance with this section, the distribution of assets of the insurer under sections 3903.01 to 3903.59 of the Revised Code is conclusive with respect to all claimants, whether or not they received notice.

Effective Date: 03-07-1983

3903.23 [Repealed].

Effective Date: 03-07-1983

3903.24 Civil action against liquidator or insurer.

(A) Upon entry of an order appointing a liquidator of a domestic insurer or of an alien insurer domiciled in this state, no civil action shall be commenced against the insurer or liquidator, whether in this state or elsewhere, nor shall any such existing actions be maintained or further prosecuted after the entry of the order. The courts of this state shall give full faith and credit to injunctions against the liquidator or the company or the continuation of existing actions against the liquidator or the company, when such injunctions are included in an order to liquidate an insurer issued pursuant to corresponding provisions in other states. Whenever in the liquidator's judgment, protection of the estate of the insurer necessitates intervention in an action against the insurer that is pending outside this state, he may intervene in the action. The liquidator may defend any action in which he intervenes under this section at the expense of the estate of the insurer.

(B) The liquidator may, upon or after an order for liquidation, within two years or such time in addition to two years as applicable law may permit, commence an action or proceeding on behalf of the estate of the insurer upon any cause of action against which the period of limitation fixed by applicable law has not expired at the time of the filing of the complaint upon which the order is entered. Where, by any agreement, a period of limitation is fixed for commencing a suit or proceeding upon any claim, or for filing any claim, proof of claim, proof of loss, demand, notice, or the like, or where in any proceeding, judicial or otherwise, a period of limitation is fixed, either in the proceeding or by applicable law, for taking any action, filing any claim or pleading, or doing any act, and where in any such case the period had not expired at the date of the filing of the complaint, the liquidator may, for the benefit of the estate, take any such action or do any such act, required of or permitted to the insurer, within a period of one hundred eighty days subsequent to the entry of an order for liquidation, or within such further period as is shown to the satisfaction of the court not to be unfairly prejudicial to the other party.

(C) No statute of limitations or defense of laches shall run with respect to any action against an insurer between the filing of a complaint for liquidation against an insurer and the denial of the complaint. Any action against the insurer that might have been commenced when the complaint was filed may be commenced for at least sixty days after the complaint is denied.

(D) Any guaranty association or foreign guaranty association shall have standing to appear in any court proceeding concerning the liquidation of an insurer if such association is or may become liable to act as a result of the liquidation.

Effective Date: 03-07-1983

3903.25 Duplicate list of insurer's assets.

(A) As soon as practicable after the liquidation order but not later than one hundred twenty days thereafter, the liquidator shall prepare in duplicate a list of the insurer's assets. The list shall be amended or supplemented from time to time as the liquidator may determine. One copy shall be filed in the office of the clerk of the court and one copy shall be retained for the liquidator's files. All amendments and supplements shall be similarly filed.

(B) The liquidator shall reduce the assets to a degree of liquidity that is consistent with the effective execution of the liquidation.

(C) A submission to the court for disbursement of assets in accordance with section 3903.34 of the Revised Code fulfills the requirements of division (A) of this section.

Effective Date: 03-07-1983

3903.26 Transfers and obligations incurred one year prior to proceeding.

(A) Every transfer made or suffered and every obligation incurred by an insurer within one year prior to the filing of a successful complaint for rehabilitation or liquidation under sections 3903.01 to 3903.59 of the Revised Code is fraudulent as to then existing and future creditors if made or incurred without fair consideration, or with actual intent to hinder, delay, or defraud either existing or future creditors. A transfer made or an obligation incurred by an insurer ordered to be rehabilitated or liquidated under sections 3903.01 to 3903.59 of the Revised Code, which is fraudulent under this section, may be avoided by the rehabilitator or liquidator, except as to a person who in good faith is a purchaser, lienor, or obligee for a present fair equivalent value, and except that any purchaser, lienor, or obligee, who in good faith has given a consideration less than fair for such transfer, lien, or obligation, may retain the property, lien, or obligation as security for repayment. The court may, on due notice, order any such transfer or obligation to be preserved for the benefit of the estate, and in that event, the rehabilitator or liquidator shall succeed to and may enforce the rights of the purchaser, lienor, or obligee.

(B)

(1) A transfer of property other than real property is deemed to be made or suffered when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee under division (C) of section 3903.28 of the Revised Code.

(2) A transfer of real property is deemed to be made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the insurer could obtain rights superior to the rights of the transferee.

(3) A transfer which creates an equitable lien is not deemed to be perfected if there are available means by which a legal lien can be created.

(4) Any transfer not perfected prior to the filing of a complaint for rehabilitation or liquidation is deemed to be made immediately before the filing of the complaint.

(5) The provisions of divisions (B)(1) to (5) of this section apply whether or not there are or were creditors who might have obtained any liens or persons who might have become bona fide purchasers.

(C) Any transaction of the insurer with a reinsurer shall be deemed fraudulent and may be avoided by the rehabilitator or liquidator under division (A) of this section if both of the following apply:

(1) The transaction consists of the termination, adjustment, or settlement of a reinsurance contract in which the reinsurer is released from any part of its duty to pay the originally specified share of losses that had occurred prior to the time of the transaction, unless the reinsurer gives a present fair equivalent value for the release;

(2) Any part of the transaction took place within one year prior to the date of filing of the complaint through which the rehabilitation or liquidation was commenced.

Effective Date: 03-07-1983

3903.27 Transfers made after filing of complaint.

(A) After a complaint for rehabilitation or liquidation has been filed, a transfer of any of the real property of the insurer made to a person acting in good faith is valid against the rehabilitator or liquidator if made for a present fair equivalent value, or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee has a lien on the property so transferred. The commencement of a proceeding for rehabilitation or liquidation is constructive notice upon the filing of the complaint in the court of common pleas, or upon the filing under Civil Rule 3(F) of a certified copy of the complaint with the clerk of the court of common pleas, of the county in which any real property or tangible property of the insurer is located. The exercise of jurisdiction by a court of the United States or any state to authorize or effect a judicial sale of real property of the insurer within any county in any state shall not be impaired by the pendency of such a proceeding unless the complaint or a certified copy of the complaint is filed in the county prior to the consummation of the judicial sale.

(B) After a complaint for rehabilitation or liquidation has been filed and before either the rehabilitator or liquidator takes possession of the property of the insurer or an order of rehabilitation or liquidation is granted:

(1) A transfer of any of the property of the insurer, other than real property, made to a person acting in good faith shall be valid against the rehabilitator or liquidator if made for a present fair equivalent value, or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred.

(2) A person indebted to the insurer or holding property of the insurer may, if acting in good faith, pay the indebtedness or deliver the property, or any part thereof, to the insurer or upon his order, with the same effect as if the complaint were not pending.

(3) A person having actual knowledge of the pending rehabilitation or liquidation shall be deemed not to act in good faith.

(4) A person asserting the validity of a transfer under this section has the burden of proof. Except as elsewhere provided in this section, no transfer by or on behalf of the insurer after the date of the complaint for rehabilitation or liquidation by any person other than the rehabilitator or liquidator is valid against the rehabilitator or liquidator.

(C) Nothing in sections 3903.01 to 3903.59 of the Revised Code shall be construed to impair the negotiability of currency or negotiable instruments.

Effective Date: 03-07-1983

3903.28 Preferences.

(A)

(1) A preference is a transfer of any of the property of an insurer or of an interest in the property of an insurer to or for the benefit of a creditor, for or on account of an antecedent debt, made or suffered by the insurer within two years before the complaint date that enables the creditor to receive more than the creditor would receive if the insurer was liquidated under this chapter, the transfer had not been made, and the creditor received payment of the debt to the extent provided by the provisions of this chapter.

(2) Any preference may be avoided by the liquidator if any of the following apply:

(a) The insurer was insolvent at the time of the transfer;

(b) The transfer was made within one hundred twenty days before the complaint date;

(c) The creditor receiving it or to be benefited thereby or the creditor's agent acting with reference thereto had, at the time when the transfer was made, reasonable cause to believe that the insurer was insolvent or was about to become insolvent;

(d) The creditor receiving it was any of the following:

(i) An officer or director of the insurer;

(ii) A person, including but not limited to an employee or attorney, who was in fact in a position to effect a level of control over the actions of the insurer comparable to that of an officer or director whether or not the person held such position, but excluding employees of the department of insurance and any person retained or appointed by the department to assist in the examination, supervision, or other regulation or monitoring of the insurer;

(iii) A shareholder holding directly or indirectly more than five per cent of any class of any equity security issued by the insurer ;

(iv) Any other person, firm, corporation, association, or aggregation of persons with whom the insurer did not deal at arm's length.

(3) Where the preference is voidable, the liquidator may recover the property or the value of the property from the initial transferee, and if the property has been transferred or converted, the liquidator may recover the property or the value of the property from any person who has received the property, except that a subsequent bona fide purchaser or lienor has a lien upon the property to the extent of the consideration actually given. Where a preference by way of lien or security title is voidable, such lien or title is preserved for the benefit of the estate, in which event the lien or title shall pass to the liquidator.

(4) The liquidator may not avoid a transfer under this section as provided by the following:

(a) To the extent that the transfer was intended, by both the insurer and the creditor to or for whose benefit the transfer was made, to be a contemporaneous exchange for new value given to the insurer and was in fact a substantially contemporaneous exchange;

(b) To the extent that the transfer was in payment of a debt incurred by the insurer in the ordinary course of business or financial affairs of the insurer and the transferee and the transfer both was made in the ordinary course of business or financial affairs of the insurer and the transferee and was made according to ordinary business terms;

(c) If the transfer was made to or for the benefit of a creditor, to the extent that after the transfer the creditor gave new value to or for the benefit of the insurer not secured by an otherwise unavoidable security interest, on account of which new value the insurer did not make an otherwise unavoidable transfer to or for the benefit of such creditor.

(B)

(1) A transfer of property other than real property is deemed to be made or suffered when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract can become superior to the rights of the transferee.

(2) A transfer of real property is deemed to be made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the insurer can obtain rights superior to the rights of the transferee.

(3) A transfer which creates an equitable lien is not deemed to be perfected if there are available means by which a legal lien can be created.

(4) A transfer not perfected prior to the complaint date is deemed to be made immediately before the complaint date.

(5) The provisions of division (B) of this section apply whether or not there are or were creditors who might have obtained liens or persons who might have become bona fide purchasers.

(C)

(1) A lien obtainable by legal or equitable proceedings upon a simple contract is one arising in the ordinary course of such proceedings upon the entry or docketing of a judgment or decree, or upon attachment, garnishment, execution, or like process, whether before, upon, or after judgment or decree and whether before or upon levy. It does not include liens which under applicable law are given a special priority over other liens which are prior in time.

(2) A lien obtainable by legal or equitable proceedings is superior to the rights of a transferee, or a purchaser may obtain rights superior to the rights of a transferee within the meaning of division (B) of this section, if such consequences follow only from the lien or purchase itself, or from the lien or purchase followed by any step wholly within the control of the respective lienholder or purchaser, with or without the aid of ministerial action by public officials. Such a lien is not, however, superior and such a purchase does not create superior rights for the purpose of division (B) of this section through any acts subsequent to the obtaining of such a lien or subsequent to such a purchase which require the agreement or concurrence of any third party or which require any further judicial action or ruling.

(D) A transfer of property for or on account of a new and contemporaneous consideration that is deemed under division (B) of this section to be made or suffered after the transfer because of delay in perfecting it does not thereby become a transfer for or on account of an antecedent debt if any acts required by the applicable law to be performed in order to perfect the transfer as against liens or bona fide purchasers' rights are performed within twenty-one days or any period expressly allowed by the law, whichever is less. A transfer to secure a future loan, if such a loan is actually made, or a transfer which becomes security for a future loan, has the same effect as a transfer for or on account of a new and contemporaneous consideration.

(E) If any lien deemed voidable under division (A)(2) of this section has been dissolved by the furnishing of a bond or other obligation, the surety on which has been indemnified directly or indirectly by the transfer of or the creation of a lien upon any property of an insurer before the complaint date, the indemnifying transfer or lien is also deemed voidable.

(F) The property affected by any lien deemed voidable under divisions (A) and (E) of this section is discharged from such lien, and that property and any of the indemnifying property transferred to or for the benefit of a surety passes to the liquidator, except that the court may on due notice order any such lien to be preserved for the benefit of the estate and the court may direct that such conveyance be executed as may be proper or adequate to evidence the title of the liquidator.

(G) The Franklin county court of common pleas has jurisdiction of any proceeding initiated by the liquidator filed in the state to hear and determine the rights of any parties under this section. Reasonable notice of any hearing in the proceeding shall be given to all parties in interest, including the obligee of a releasing bond or other like obligation. Where an order is entered for the recovery of indemnifying property in kind or for the avoidance of an indemnifying lien, the court may in the same proceeding ascertain the value of the property or lien, and if the value is less than the amount for which the property is indemnity or than the amount of the lien, the transferee or lienholder may elect to retain the property or lien upon payment of its value, as ascertained by the court, to the liquidator, within such reasonable times as the court shall fix.

(H) The liability of a surety under a releasing bond or other like obligation shall be discharged to the extent of the value of the indemnifying property recovered or the indemnifying lien nullified and avoided by the liquidator, or where the property is retained under division (G) of this section to the extent of the amount paid to the liquidator.

(I) If an insurer shall, directly or indirectly, within one hundred twenty days before the complaint date, or at any time in contemplation of a proceeding to liquidate it, pay money or transfer property to an attorney-at-law for services rendered or to be rendered, the transaction may be examined by the court on its own motion or shall be examined by the court on motion of the liquidator and shall be held valid only to the extent of a reasonable amount to be determined by the court, and the excess may be recovered by the liquidator for the benefit of the estate provided that where the attorney is in a position of influence in the insurer or an affiliate thereof, payment of any money or the transfer of any property to the attorney-at-law for services rendered or to be rendered shall be governed by the provisions of division (A)(2) of this section.

(J) As to every transfer subject to avoidance under this section:

(1) Every person receiving any property from the insurer or the benefit thereof as a preference voidable under division (A) of this section shall be personally liable for the property and shall be bound to account to the liquidator.

(2) The liquidator has the burden of proving that a transfer is voidable under division (A)(2) of this section, and the person against which recovery or voidability is sought has the burden of proving that a transfer is not voidable under division (A)(4) of this section.

(3) The fact that the insurer was under examination, supervision, or other regulatory oversight by the department of insurance, or that the department may have acquiesced in or approved any payments made by the insurer, does not effect or otherwise create a defense to avoidance of a transfer voidable under this section.

(K) Nothing in this division shall be construed to prejudice any other claim by the liquidator against any person.

(L) As used in this section:

(1) "Complaint date" means the date on which a complaint is filed by the superintendent of insurance seeking the liquidation of an insurer, if the complaint results in an order of liquidation. If the insurer is placed in rehabilitation, which rehabilitation is later converted to liquidation, the "complaint date" is the date on which the original complaint seeking rehabilitation was filed.

(2) "New value" means money or money's worth in goods, services, new credit, or the release by a transferee of property previously transferred to the transferee in a transaction that is neither void nor voidable by the liquidator under any applicable law, including the proceeds of the transferred property, but does not include an obligation substituted for an existing obligation.

Effective Date: 04-12-2004

3903.29 Allowance of claims.

(A) No claims of a creditor who has received or acquired a preference, lien, conveyance, transfer, assignment, or encumbrance, voidable under sections 3903.01 to 3903.59 of the Revised Code, shall be allowed unless he surrenders the preference, lien, conveyance, transfer, assignment, or encumbrance. If the avoidance is effected by a proceeding in which a final judgment has been entered, the claim shall not be allowed unless the money is paid or the property is delivered to the liquidator within thirty days from the date of the entering of the final judgment, except that the court having jurisdiction over the liquidation may allow further time if there is an appeal or other continuation of the proceeding.

(B) A claim allowable under division (A) of this section by reason of the avoidance, whether voluntary or involuntary, of a preference, lien, conveyance, transfer, assignment, or encumbrance, may be filed as an excused late filing under section 3903.35 of the Revised Code if filed within thirty days from the date of the avoidance, or within the further time allowed by the court under division (A) of this section.

Effective Date: 03-07-1983

3903.30 Allowance of setoffs and counterclaims.

(A) Mutual debts or mutual credits between the insurer and another person in connection with any action or proceeding under sections 3903.01 to 3903.59 of the Revised Code shall be set off and the balance only shall be allowed or paid, except as provided in division (B) of this section and section 3903.33 of the Revised Code.

(B) No setoff or counterclaim shall be allowed in favor of any person where any of the following apply:

(1) The obligation of the insurer to the person would not at the date of the filing of a complaint for liquidation entitle the person to share as a claimant in the assets of the insurer;

(2) The obligation of the insurer to the person was purchased by or transferred to the person with a view to its being used as a setoff;

(3) The obligation of the person is to pay an assessment levied against the members or subscribers of the insurer, or is to pay a balance upon a subscription to the capital stock of the insurer, or is in any other way in the nature of a capital contribution.

Effective Date: 03-07-1983

3903.301 Protection of rights.

(A) Notwithstanding any other provision under sections 3903.01 to 3903.59 of the Revised Code, no person shall be stayed or prohibited from exercising any of the following rights:

(1) A contractual right to cause the termination, liquidation, acceleration, or close out of obligations under, or in connection with, a netting agreement or qualified financial contract with an insurer because of either of the following:

(a) The insolvency, financial condition, or default of the insurer at any time;

(b) The commencement of a formal delinquency proceeding under sections 3903.01 to 3903.59 of the Revised Code.

(2) Any right under a pledge, security, collateral, reimbursement, or guarantee agreement or arrangement or any similar security arrangement or credit enhancement relating to a netting agreement or qualified financial contract;

(3) Subject to section 3903.30 of the Revised Code, any right to set off or net out any termination value, payment amount, or other transfer obligation arising under or in connection with a qualified financial contract in which the counterparty or its guarantor is organized under the laws of the United States, a state, or a foreign jurisdiction that the securities valuation office of the national association of insurance commissioners approves as eligible for netting.

(B) If a counterparty to a netting agreement or qualified financial contract with an insurer that is subject to a proceeding under sections 3903.01 to 3903.59 of the Revised Code terminates, liquidates, accelerates, or closes out the agreement or contract, damages shall be measured as of the date or dates of the termination, liquidation, acceleration, or close out. The amount of a claim for damages shall be actual direct compensatory damages.

(C) Upon termination of a netting agreement or qualified financial contract, any net or settlement amount that a nondefaulting party owes to an insurer against which an application or petition has been filed under sections 3903.01 to 3903.59 of the Revised Code shall be transferred to, or on the order of, the receiver for the insurer.

This division applies regardless of whether the insurer is the defaulting party and applies notwithstanding any walkaway clause in the netting agreement or qualified financial contract.

For purposes of this division, a limited two-way payment or first method provision in a netting agreement or qualified financial contract with a defaulting insurer shall be deemed to be a full two-way payment or second method provision as against the defaulting insurer.

Any property or amount transferred under this division shall be a general asset of the insurer except to the extent it is subject to a secondary lien or encumbrance, or to rights of netting or setoff.

(D) In transferring a netting agreement or qualified financial contract of an insurer that is subject to a proceeding under sections 3903.01 to 3903.59 of the Revised Code, the receiver shall do either of the following:

(1) Transfer to one party, other than an insurer subject to a proceeding under sections 3903.01 to 3903.59 of the Revised Code, all netting agreements and qualified financial contracts between a counterparty, or any affiliate of the counterparty, and the insurer that is the subject of the proceeding. The transfer shall include all rights and obligations of each party under each netting agreement and qualified financial contract, and all property, including any guarantees or other credit enhancement, securing any claims of the parties under each agreement or contract.

(2) Transfer none of the netting agreements or qualified financial contracts, including the rights, obligations, and property associated with those agreements and contracts as described in division (D)(1) of this section, with respect to the counterparty and any affiliate of the counterparty.

(E) If a receiver transfers a netting agreement or qualified financial contract, the receiver shall use its best efforts to notify any person who is a party to the transferred agreement or contract of the transfer by noon, of the receiver's local time, on the business day following the transfer.

(F)

(1) Notwithstanding any other provision of sections 3903.01 to 3903.59 of the Revised Code and except as otherwise provided in division (F)(2) of this section, a receiver shall not avoid a transfer of money or other property that is made before the commencement of a formal delinquency proceeding under sections 3903.01 to 3903.59 of the Revised Code and that arises under or in connection with either of the following:

(a) A netting agreement or qualified financial contract;

(b) Any pledge, security, collateral, or guarantee agreement or other similar security arrangement or credit support document relating to a netting agreement or qualified financial contract.

(2) A receiver may avoid a transfer under sections 3903.26 to 3903.28 of the Revised Code if the transfer was made with actual intent to hinder, delay, or defraud the insurer, a receiver appointed for the insurer, or existing or future creditors.

(G)

(1) In exercising any right of disaffirmance or repudiation with respect to a netting agreement or qualified financial contract to which an insurer is a party, the receiver for the insurer shall do either of the following:

(a) Disaffirm or repudiate all netting agreements and qualified financial contracts between the insurer and a counterparty or any affiliate of the counterparty;

(b) Disaffirm or repudiate none of those netting agreements or qualified financial contracts with respect to the counterparty or any affiliate of the counterparty.

(2) Notwithstanding any other provision of sections 3903.01 to 3903.59 of the Revised Code, if a counterparty's claim against the estate of the insurer arising from the receiver's disaffirmance or repudiation of a netting agreement or qualified financial contract has not been previously affirmed in the liquidation or immediately preceding conservation or rehabilitation case, that claim shall be considered as if it had arisen before the filing date of the petition for liquidation. If a conservation or rehabilitation proceeding is converted to a liquidation proceeding, that claim shall be considered as if it had arisen before the filing date of the petition for conservation or rehabilitation. The amount of the claim shall be the actual direct compensatory damages determined as of the date of the disaffirmance or repudiation.

(H) All rights of a counterparty under sections 3903.01 to 3903.59 of the Revised Code shall apply to netting agreements and qualified financial contracts entered into on behalf of the general account or separate accounts if the assets of each separate account are available only to counterparties to netting agreements and qualified financial contracts entered into on behalf of that separate account.

(I) This section shall not apply to the affiliates of an insurer that is the subject of a formal delinquency proceeding under sections 3903.01 to 3903.59 of the Revised Code.

(J) As used in this section:

(1) "Actual direct compensatory damages" includes normal and reasonable costs of cover or other reasonable measures of damages utilized in the derivatives, securities, or other market for the contract and agreement claims. "Actual direct compensatory damages" does not include punitive or exemplary damages, damages for lost profit or lost opportunity, or damages for pain and suffering.

(2) "Business day" means any day, excluding Saturday, Sunday, and any day on which the New York stock exchange or the federal reserve bank of New York is closed.

(3) "Contractual right" includes any of the following:

(a) Any right set forth in a rule or bylaw of a derivatives clearing organization, as defined in the "Commodity Exchange Act," 7 U.S.C. 1a(9)(A) , as amended; a multilateral clearing organization; a national securities exchange; a national securities association; a securities clearing agency; a contract market designated under the "Commodity Exchange Act," 7 U.S.C. 1 et seq., as amended; a derivatives transaction execution facility, including a swap execution facility, registered under the "Commodity Exchange Act," 7 U.S.C. 1 et seq., as amended; a security-based swap execution facility registered under the "Securities Exchange Act of 1934," 15 U.S.C. 78a et seq., as amended; or a board of trade, as defined in the "Commodity Exchange Act," 7 U.S.C. 1a(2) ;

(b) Any right set forth in a resolution of the governing board of any entity listed in division (J)(3)(a) of this section;

(c) Any right, regardless of whether evidenced in writing, arising under statutory law, common law, or law merchant, or by reason of normal business practice.

(4) "Receiver" means a receiver, conservator, rehabilitator, or liquidator, as applicable.

(5) "Walkaway clause" means a provision under which a party to a netting agreement or qualified financial contract that, after calculation of a value of a party's position or an amount due to or from one of the parties in accordance with its terms upon termination, liquidation, or acceleration of the netting agreement or qualified financial contract is not obligated to pay or does not have a payment obligation extinguished under the agreement or contract, in whole or in part, solely because the party is a nondefaulting party.

Added by 129th General AssemblyFile No.28, HB 153, §101.01, eff. 9/29/2011.

3903.31 Report of liquidator to court.

(A) As soon as practicable but not more than two years from the date of an order of liquidation under section 3903.18 of the Revised Code of an insurer issuing assessable policies, the liquidator shall make a report to the court setting forth all of the following:

(1) The reasonable value of the assets of the insurer;

(2) The insurer's probable total liabilities;

(3) The probable aggregate amount of the assessment necessary to pay all claims of creditors and expenses in full, including expenses of administration and costs of collecting the assessment;

(4) A recommendation as to whether or not an assessment should be made and in what amount.

(B)

(1) Upon the basis of the report provided in division (A) of this section, including any supplements and amendments thereto, the court may levy one or more assessments against all members of the insurer who are subject to assessment.

(2) Subject to any applicable legal limits on assessability, the aggregate assessment shall be for the amount that the sum of the probable liabilities, the expenses of administration, and the estimated cost of collection of the assessment, exceeds the value of existing assets, with due regard being given to assessments that cannot be collected economically.

(C) After levy of assessment under division (B) of this section, the liquidator shall issue an order directing each member who has not paid the assessment pursuant to the order to show cause why the liquidator should not pursue a judgment therefor.

(D) The liquidator shall give notice of the order to show cause by publication and by first class mail to each member liable thereunder mailed to his last known address as it appears on the insurer's records, at least twenty days before the return day of the order to show cause.

(E)

(1) If a member does not appear and serve duly verified objections under the liquidator on or before the return day of the order to show cause under division (C) of this section, the court shall make an order adjudging the member liable for the amount of the assessment against him, pursuant to division (C) of this section, together with costs, and the liquidator shall have a judgment against the member therefor.

(2) If on or before such return day, the member appears and serves duly verified objections upon the liquidator, the superintendent of insurance may hear and determine the matter or may appoint a referee to hear it and make such order as the facts warrant. In the event that the superintendent determines that such objections do not warrant relief from assessment, the member may, by motion, request the court to review the matter and vacate the order to show cause.

(F) The liquidator may enforce any order or collect any judgment under division (E) of this section by any lawful means.

Effective Date: 03-07-1983

3903.32 Reducing recovery from reinsurer.

The amount recoverable by the liquidator from reinsurers shall not be reduced as a result of delinquency proceedings, regardless of any provision in the reinsurance contract or other agreement. Payment made by a reinsurer directly to an insured or other creditor does not diminish the reinsurer's obligation to the insurer's estate except when the reinsurance contract or other written agreement either provides for direct payment of the reinsurance to the insured or beneficiary of the insurance policy in the event of the insolvency of the ceding insurer or provides for payment to a third party and has received the prior written approval of the superintendent of insurance.

Effective Date: 04-12-2004

3903.33 Payment of unpaid earned premiums.

(A) An agent, broker, premium finance company, or any other person, other than the insured, responsible for the payment of a premium is obligated to pay any unpaid earned premium due the insurer at the time of the declaration of insolvency, as shown on the records of the insurer. The liquidator may recover from such person any part of an unearned commission of such person.

(B) An insured shall be obligated to pay any unpaid earned premium due the insurer at the time of the declaration of insolvency, as shown on the records of the insurer.

Effective Date: 03-07-1983

3903.34 Proposal to disburse assets to guaranty associations - contents - application for approval.

(A) Within one hundred twenty days of a final determination of insolvency of an insurer by a court of this state, the liquidator shall make application to the court for approval of a proposal to disburse assets out of marshalled assets, from time to time as such assets become available, to any guaranty associations or foreign guaranty associations having obligations because of such insolvency. If the liquidator determines that there are insufficient assets to disburse, the application required by this section shall be considered satisfied by a filing by the liquidator stating the reasons for this determination.

(B) Such proposal shall include, but not be limited to, provisions for all of the following:

(1) Reserving amounts for the payment of expenses of administration and the payment of claims of secured creditors, to the extent of the value of the security held, and claims falling within the priorities established in divisions (B) and (D) of section 3903.42 of the Revised Code;

(2) Disbursement of the assets marshalled to date and subsequent disbursement of assets as they become available;

(3) Equitable allocation of disbursements to each of the guaranty associations and foreign guaranty associations entitled thereto;

(4) The securing by the liquidator from each of the associations entitled to disbursements pursuant to this section of an agreement to return to the liquidator such assets, together with income earned on assets previously disbursed, as may be required to pay claims of secured creditors and claims falling within the priorities established in section 3903.42 of the Revised Code in accordance with such priorities. No bond shall be required of any such association.

(5) A full report to be made by each association to the liquidator accounting for all assets so disbursed to the association, all disbursements made therefrom, any interest earned by the association on such assets, and any other matter as the court may direct.

(C) The liquidator's proposal shall provide for disbursements to the associations in amounts estimated at least equal to the claim payments made or to be made by the associations for which such associations could assert a claim against the liquidator, and shall further provide that, if the assets available for disbursement from time to time do not equal or exceed the amount of such claim payments made or to be made by the association, then disbursements shall be in the amount of available assets.

(D) The liquidator's proposal shall, with respect to an insolvent insurer writing life or health insurance or annuities, provide for disbursements of assets to any guaranty association or any foreign guaranty association covering life or health insurance or annuities or to any other entity or organization reinsuring, assuming, or guaranteeing policies or contracts of insurance under the acts creating such associations.

(E) Notice of such application shall be served upon the associations in, and the superintendents or commissioners of insurance or equivalent officers of, each of the states by certified mail as provided in Civil Rule 4.1(E) at least thirty days prior to submission of the application to the court. Action on the application may be taken by the court provided the above required notice has been given and provided further that the liquidator's proposal complies with divisions (B)(1) and (2) of this section.

Effective Date: 12-04-1995

3903.35 Proof of claims to be filed with liquidator.

(A) Proof of all claims shall be filed with the liquidator in the form required by section 3903.36 of the Revised Code on or before the last day for filing specified in the notice required under section 3903.22 of the Revised Code, except that proof of claims for cash surrender values or other investment values in life insurance and annuities need not be filed unless the liquidator expressly so requires.

(B) The liquidator may permit a claimant making a late filing to share in distributions, whether past or future, as if he were not late, to the extent that any such payment will not prejudice the orderly administration of the liquidation, under any of the following circumstances:

(1) The existence of the claim was not known to the claimant and he filed his claim as promptly thereafter as reasonably possible after learning of it;

(2) A transfer to a creditor was avoided under sections 3903.26 to 3903.28 of the Revised Code, or was voluntarily surrendered under section 3903.29 of the Revised Code, and the filing satisfies the conditions of section 3903.29 of the Revised Code;

(3) The valuation, under section 3903.41 of the Revised Code, of security held by a secured creditor shows a deficiency, and the claim is filed within thirty days after the valuation.

(C) The liquidator shall permit late filing claims to share in distributions, whether past or future, as if they were not late, if such claims are claims of a guaranty association or foreign guaranty association for reimbursement of covered claims paid or expenses incurred, or both, subsequent to the last day for filing where such payments were made and expenses incurred as provided by law.

(D) The liquidator may consider any claim filed late which is not covered by division (B) of this section, and permit it to receive distributions which are subsequently declared on any claims of the same or lower priority if the payment does not prejudice the orderly administration of the liquidation. The late-filing claimant shall receive, at each distribution, the same percentage of the amount allowed on his claim as is then being paid to claimants of any lower priority. This shall continue until his claim has been paid in full.

Effective Date: 03-07-1983

3903.36 Proof of claim contents.

(A) Proof of claim shall consist of a statement signed by the claimant that includes all of the following that are applicable:

(1) The particulars of the claim including the consideration given for it;

(2) The identity and amount of the security on the claim;

(3) The payments made on the debt, if any;

(4) That the sum claimed is justly owing and that there is no setoff, counterclaim, or defense to the claim;

(5) Any right of priority of payment or other specific right asserted by the claimants;

(6) A copy of any written instrument which is the foundation of the claim;

(7) The name and address of the claimant and the attorney who represents him, if any.

(B) No claim need be considered or allowed if it does not contain all the information in division (A) of this section which may be applicable. The liquidator may require that a prescribed form be used, and may require that other information and documents be included.

(C) At any time the liquidator may request the claimant to present information or evidence supplementary to that required under division (A) of this section and may take testimony under oath, require production of affidavits or depositions, or otherwise obtain additional information or evidence.

(D) No judgment or order against an insured or the insurer entered after the date of filing of a successful complaint for liquidation, and no judgment or order against an insured or the insurer entered at any time by default or by collusion, need be considered as evidence of liability or of quantum of damages. No judgment or order against an insured or the insurer entered within four months before the filing of the complaint need be considered as evidence of liability or of the quantum of damages.

(E) All claims of a guaranty association or foreign guaranty association shall be in such form and contain such substantiation as may be agreed to by the association and the liquidator.

Effective Date: 03-07-1983

3903.37 Contingent claims- absolute claims.

(A) The claim of a third party which is contingent only on his first obtaining a judgment against the insured shall be considered and allowed as if there were no such contingency.

(B) A claim may be allowed even if contingent, if it is filed in accordance with section 3903.35 of the Revised Code. It may be allowed and may participate in all distributions declared after it is filed to the extent that it does not prejudice the orderly administration of the liquidation.

(C) Claims that are due except for the passage of time shall be treated as absolute claims are treated, except that such claims may be discounted at the legal rate of interest.

(D) Claims made under employment contracts by directors, principal officers, or persons in fact performing similar functions or having similar powers are limited to payment for services rendered prior to the issuance of any order of rehabilitation or liquidation under section 3903.13 or 3903.18 of the Revised Code.

Effective Date: 03-07-1983

3903.38 Third party-party claims.

(A) Whenever any third party asserts a cause of action against an insured of an insurer in liquidation, the third party may file a claim with the liquidator.

(B) Whether or not the third party files a claim, the insured may file a claim on his own behalf in the liquidation. An insured who fails to file a claim by the date for filing claims specified in the order of liquidation or within sixty days after mailing of the notice required by section 3903.22 of the Revised Code, whichever is later, is an unexcused late filer.

(C)

(1) The liquidator shall make recommendations to the court under section 3903.42 of the Revised Code, for the allowance of an insured's claim under division (B) of this section after consideration of the probable outcome of any pending action against the insured on which the claim is based, the probable damages recoverable in the action, and the probable costs and expenses of defense. After allowance by the court, the liquidator shall withhold any dividends payable on the claim, pending the outcome of litigation and negotiation with the insured. Whenever it seems appropriate, he shall reconsider the claim on the basis of additional information and amend his recommendations to the court. The insured shall be afforded the same notice and opportunity to be heard on all changes in the recommendation as in its initial determination. The court may amend its allowance as it thinks appropriate.

(2) As claims against the insured are settled or barred, the insured shall be paid from the amount withheld the same percentage dividend as was paid on other claims of like priority, based on the lesser of either of the following:

(a) The amount actually recovered from the insured by action or paid by agreement, plus the reasonable costs and expenses of defense;

(b) The amount allowed on the claims by the court.

(3) After all claims are settled or barred, any sum remaining from the amount withheld shall revert to the undistributed assets of the insurer. Delay in final payment under this division shall not be a reason for unreasonable delay of final distribution and discharge of the liquidator.

(D) If several claims founded upon one policy are filed, whether by third parties or as claims by the insured under this section, and the aggregate allowed amount of the claims to which the same limit of liability in the policy is applicable exceeds that limit, each claim as allowed shall be reduced in the same proportion so that the total equals the policy limit. Claims by the insured shall be evaluated as in division (C) of this section. If any insured's claim is subsequently reduced under division (C) of this section, the amount thus freed shall be apportioned ratably among the claims which have been reduced under this division.

(E) No claim may be presented under this section if it is or may be covered by any guaranty association or foreign guaranty association.

Effective Date: 03-07-1983

3903.39 Written notice of denial of claim.

(A) When a claim is denied in whole or in part by the liquidator, written notice of the determination shall be given to the claimant or his attorney by first class mail at the address shown in the proof of claim. Within sixty days from the mailing of the notice, the claimant may file objections with the liquidator. If no such filing is made, the claimant may not further object to the determination.

(B) Whenever objections are filed with the liquidator and the liquidator does not alter his denial of the claim as a result of the objections, the liquidator shall ask the court for a hearing as soon as practicable and give notice of the hearing in accordance with the Civil Rules to the claimant or his attorney and to any other persons directly affected, not less than ten nor more than thirty days before the date of the hearing. The matter may be heard by the court or by a court-appointed referee who shall submit findings of fact along with his recommendation.

Effective Date: 03-07-1983

3903.40 Claims secured by undertaking of another person.

Whenever a creditor whose claim against an insurer is secured, in whole or in part, by the undertaking of another person, fails to prove and file that claim, the other person may do so in the creditor's name, and shall be subrogated to the rights of the creditor, whether the claim has been filed by the creditor or by the other person in the creditor's name, to the extent that he discharges the undertaking. In the absence of an agreement with the creditor to the contrary, the other person shall not be entitled to any distribution, however, until the amount paid to the creditor on the undertaking plus the distributions paid on the claim from the insurer's estate to the creditor equals the amount of the entire claim of the creditor. Any excess received by the creditor shall be held by him in trust for such other person. The term "other person," as used in this section, does not apply to a guaranty association or foreign guaranty association.

Effective Date: 03-07-1983

3903.41 Methods of determining value of security held by secured creditor.

(A) The value of any security held by a secured creditor shall be determined in one of the following ways, as the court may direct:

(1) By converting the same into money according to the terms of the agreement pursuant to which the security was delivered to such creditor;

(2) By agreement, arbitration, compromise, or litigation between the creditor and the liquidator.

(B) The determination shall be under the supervision and control of the court with due regard for the recommendation of the liquidator. The amount so determined shall be credited upon the secured claim, and any deficiency shall be treated as an unsecured claim. If the claimant surrenders his security to the liquidator, the entire claim shall be allowed as if unsecured.

Effective Date: 03-07-1983

3903.42 Priority of distribution of claims.

The priority of distribution of claims from the insurer's estate shall be in accordance with the order in which each class of claims is set forth in this section. Every claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class receive any payment. No subclasses shall be established within any class. The order of distribution of claims shall be:

(A) Class 1. The costs and expenses of administration, including but not limited to the following:

(1) The actual and necessary costs of preserving or recovering the assets of the insurer;

(2) Compensation for all services rendered in the liquidation;

(3) Any necessary filing fees;

(4) The fees and mileage payable to witnesses;

(5) Reasonable attorney's fees;

(6) The reasonable expenses of a guaranty association or foreign guaranty association in handling claims.

(B) Class 2. All claims under policies for losses incurred, including third party claims, all claims of contracted providers against a medicaid health insuring corporation for covered health care services provided to medicaid recipients, all claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property that are not under policies, and all claims of a guaranty association or foreign guaranty association. All claims under life insurance and annuity policies, whether for death proceeds, annuity proceeds, or investment values, shall be treated as loss claims. That portion of any loss, indemnification for which is provided by other benefits or advantages recovered by the claimant, shall not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligations of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment by an employer to an employee shall be treated as a gratuity. Claims under nonassessable policies for unearned premium or other premium refunds.

(C) Class 3. Claims of the federal government.

(D) Class 4. Debts due to employees for services performed to the extent that they do not exceed one thousand dollars and represent payment for services performed within one year before the filing of the complaint for liquidation. Officers and directors shall not be entitled to the benefit of this priority. Such priority shall be in lieu of any other similar priority that may be authorized by law as to wages or compensation of employees.

(E) Class 5. Claims of general creditors.

(F) Class 6. Claims of any state or local government. Claims, including those of any state or local governmental body for a penalty or forfeiture, shall be allowed in this class only to the extent of the pecuniary loss sustained from the act, transaction, or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby. The remainder of such claims shall be postponed to the class of claims under division (J) of this section.

(G) Class 7. Claims filed late or any other claims other than claims under divisions (H) , (I), and (J) of this section.

(H) Class 8. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law.

(I) Class 9. Interest at the legal rate compounded annually on all claims in the classes prescribed in divisions (A) to (H) of this section, except for claims of the federal government, from the date of the order for liquidation or the date on which the claim becomes due, whichever is later, until the date on which the interest or dividend is declared, according to the terms of a plan proposed by the liquidator and approved by the court supervising the liquidation. The liquidator, with the approval of the court, may make reasonable approximate computations of interest to be paid under this division.

(J) Class 10. The claims of shareholders or other owners.

If any provision of this section or the application of any provision of this section to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this section, and to this end the provisions are severable.

(K) As used in sections 3903.42 and 3903.421 of the Revised Code, "contracted provider" and "medicaid recipient" have the same meanings as in section 3903.14 of the Revised Code.

Amended by 129th General AssemblyFile No.68, HB 250, §1, eff. 3/22/2012.

Effective Date: 12-04-1995; 09-29-2005

3903.421 Medicaid health insuring corporation bond and securities.

(A) Notwithstanding section 3903.42 of the Revised Code, both of the following apply to medicaid health insuring corporation performance bonds and securities:

(1) Proceeds from the bond issued or securities held pursuant to section 1751.271 of the Revised Code that have been paid to or deposited with the department of insurance shall be considered special deposits for purposes of satisfying claims of contracted providers for covered health care services provided to medicaid recipients;

(2) Contracted providers that have claims against a health insuring corporation for covered health care services provided to medicaid recipients shall be given first priority against the proceeds of the bond or securities held pursuant to section 1751.27 of the Revised Code, to the exclusion of other creditors, except as provided for in this section.

(B) If the amount of the proceeds of the bond or securities are not sufficient to satisfy all of the allowed claims of contracted providers for covered health care services provided to medicaid recipients, payment shall proceed as follows:

(1) Contracted providers shall share in the proceeds of the bond or securities pro rata based on the allowed amount of the providers' claims against the health insuring corporation for covered health care services provided to medicaid recipients;

(2) After payments are made under division (B)(1) of this section, the net unpaid balance of the claims of contracted providers shall be allowed for payment from the general assets of the estate in accordance with the priorities set forth in section 3903.42 of the Revised Code.

(C) If the amount of the proceeds of the bond or securities exceeds the allowed claims of contracted providers for covered health care services provided to medicaid recipients, the excess amount shall be considered a general asset of the health insuring corporation's estate to be distributed to other claimants in accordance with the priorities set forth in section 3903.42 of the Revised Code.

Effective Date: 09-29-2005

3903.43 Review and investigation of claims.

(A) The liquidator shall review all claims duly filed in the liquidation and shall make such further investigation as he considers necessary. He may compound, compromise, or in any other manner negotiate the amount for which claims will be recommended to the court except where the liquidator is required by law to accept claims as settled by any person or organization, including any guaranty association or foreign guaranty association. Unresolved disputes shall be determined under section 3903.39 of the Revised Code. As soon as practicable, he shall present to the court a report of the claims against the insurer with his recommendations. The report shall include the name and address of each claimant and the amount of the claim finally recommended, if any. If the insurer has issued annuities or life insurance policies, the liquidator shall report the persons to whom, according to the records of the insurer, amounts are owed as cash surrender values or other investment value and the amounts owed.

(B) The court may approve, disapprove, or modify the report on claims by the liquidator. Such reports as are not modified by the court within a period of sixty days following submission by the liquidator shall be treated by the liquidator as allowed claims, subject thereafter to later modification or to rulings made by the court pursuant to section 3903.39 of the Revised Code. No claim under a policy of insurance shall be allowed for an amount in excess of the applicable policy limits.

Effective Date: 03-07-1983

3903.44 Court payment of distributions.

Under the direction of the court, the liquidator shall pay distributions in a manner that will assure the proper recognition of priorities and a reasonable balance between the expeditious completion of the liquidation and the protection of unliquidated and undetermined claims, including third party claims. Distribution of assets in kind may be made at valuations set by agreement between the liquidator and the creditor and approved by the court.

Effective Date: 03-07-1983

3903.45 Distribution of unclaimed and withheld funds.

(A) All unclaimed funds subject to distribution remaining in the liquidator's hands when he is ready to apply to the court for discharge, including the amount distributable to any creditor, shareholder, member, or other person who is unknown or cannot be found, shall be distributed in accordance with section 3903.42 of the Revised Code among those claimants to whom it is possible to make immediate payment.

(B) All funds withheld under section 3903.38 of the Revised Code and not distributed shall upon discharge of the liquidator be deposited with the treasurer of state and paid by him in accordance with section 3903.38 of the Revised Code. Any sums remaining which under section 3903.38 of the Revised Code would revert to the undistributed assets of the insurer shall be distributed by the treasurer of state in accordance with section 3903.42 of the Revised Code among those claimants to whom it is possible to make immediate payment unless the superintendent of insurance in his discretion files a motion requesting the court to reopen the liquidation under section 3903.47 of the Revised Code.

Effective Date: 03-07-1983

3903.46 Discharge of liquidator.

(A) When all assets justifying the expense of collection and distribution have been collected and distributed under sections 3903.01 to 3903.59 of the Revised Code, the liquidator shall apply to the court for discharge. The court may grant the discharge and make any other orders, including an order to transfer any remaining funds that are uneconomic to distribute, as may be appropriate.

(B) Any other person may apply to the court at any time for an order under division (A) of this section. If the application is denied, the applicant shall pay the costs and expenses of the liquidator in resisting the application, including a reasonable attorney's fee.

Effective Date: 03-07-1983

3903.47 Motion to reopen proceedings.

After the liquidation proceeding has been terminated and the liquidator discharged, the superintendent of insurance or other interested party may at any time file a motion to reopen the proceedings for good cause, including the discovery of additional assets. If the court is satisfied that there is justification for reopening, it shall so order.

Effective Date: 03-07-1983

3903.48 Court to direct retention or destruction of insurer's records.

Whenever it shall appear to the superintendent of insurance that the records of any insurer in process of liquidation or completely liquidated are no longer useful, he may recommend to the court and the court shall direct what records should be retained for future reference and what should be destroyed.

Effective Date: 03-07-1983

3903.49 Audit of books of proceeding.

The court may cause audits to be made of the books of the superintendent of insurance relating to any proceeding established under sections 3903.01 to 3903.59 of the Revised Code, and a report of each audit shall be filed with the superintendent and with the court. The books, records, and other documents of the proceeding shall be made available to the auditor at any time without notice. The expense of each audit shall be considered a cost of administration of the proceeding.

Effective Date: 03-07-1983

3903.50 Order appointing conservator.

(A) If a domiciliary liquidator has not been appointed, the superintendent of insurance may file a complaint in the court of common pleas for an order directing him to act as conservator to conserve the property of an alien insurer not domiciled in this state or a foreign insurer on any one or more of the following grounds:

(1) Any of the grounds in section 3903.12 of the Revised Code;

(2) That any of its property has been sequestered by official action in its domiciliary state, or in any other state;

(3) That enough of its property has been sequestered in a foreign country to give reasonable cause to fear that the insurer is or may become insolvent;

(4) That its certificate of authority to do business in this state has been revoked or none was ever issued and that there are residents of this state with outstanding claims or outstanding policies.

(B) When an order is sought under division (A) of this section, the court shall cause the insurer to be given such notice and time to respond thereto as is reasonable under the circumstances.

(C) The court may issue the order in whatever terms it considers appropriate. Persons dealing with the property of the insurer are charged with notice of a judgment ordering the supervisor to act as conservator under this section from the time when the judgment is filed under Civil Rule 58, or a certified copy of the judgment is filed under Civil Rule 3(F), with the clerk of the court of common pleas of the county in which the principal business of the company is located or the county in which its principal office or place of business is located.

(D) The conservator may at any time file a motion for and the court may grant an order under section 3903.51 of the Revised Code to liquidate assets of a foreign or alien insurer under conservation, or, if appropriate, for an order under section 3903.53 of the Revised Code to be appointed ancillary receiver.

(E) The conservator may at any time move the court for an order terminating conservation of an insurer. If the court finds that the conservation is no longer necessary, it shall order that the insurer be restored to possession of its property and the control of its business. The court may also make such finding and issue such order at any time upon motion of any interested party, but if such motion is denied all costs shall be assessed against the party.

Effective Date: 03-07-1983

3903.51 Order directing liquidation.

(A) If no domiciliary liquidator has been appointed, the superintendent of insurance may file a complaint in the court of common pleas for an order directing him to liquidate the assets found in this state of a foreign insurer or an alien insurer not domiciled in this state, on any of the following grounds:

(1) Any of the grounds in section 3903.12 or 3903.17 of the Revised Code;

(2) Any of the grounds specified in divisions (A)(2) to (4) of section 3903.50 of the Revised Code.

(B) When an order is sought under division (A) of this section, the court shall cause the insurer to be given such notice and time to respond thereto as is reasonable under the circumstances.

(C) If it shall appear to the court that the best interests of creditors, policyholders, and the public require, the court may issue an order to liquidate in whatever terms it considers appropriate. Persons dealing with the property of the insurer are charged with notice of a judgment ordering liquidation under this section from the time when the judgment is filed under Civil Rule 58, or a certified copy of the judgment is filed under Civil Rule 3(F), with the clerk of the court of common pleas of the county in which the principal business of the company is located or the county in which its principal office or place of business is located.

(D) If a domiciliary liquidator is appointed in a reciprocal state while a liquidation is proceeding under this section, the liquidator appointed under divisions (A) to (C) of this section shall thereafter act as ancillary receiver under section 3903.53 of the Revised Code. If a domiciliary liquidator is appointed in a nonreciprocal state while a liquidation is proceeding under this section, the liquidator appointed under divisions (A) to (C) of this section may file a motion requesting the court for permission to act as ancillary receiver under section 3903.53 of the Revised Code.

(E) On the same grounds as are specified in division (A) of this section, the superintendent may petition any appropriate federal district court to be appointed receiver to liquidate that portion of the insurer's assets and business over which the court will exercise jurisdiction, or any lesser part thereof that the superintendent considers desirable for the protection of the policyholders and creditors in this state.

(F) The court may order the superintendent, when he has liquidated the assets of a foreign or alien insurer under this section, to pay claims of residents of this state against the insurer under such rules as to the liquidation of insurers under sections 3903.01 to 3903.59 of the Revised Code as are otherwise compatible with the provisions of this section.

Effective Date: 03-07-1983

3903.52 Power of domiciliary liquidator.

(A) The domiciliary liquidator of an insurer domiciled in a reciprocal state shall, except as to special deposits and security on secured claims under division (C) of section 3903.53 of the Revised Code, be vested by operation of law with the title to all of the assets, property, contracts, and rights of action, agents' balances, and all of the books, accounts, and other records of the insurer located in this state. The date of vesting shall be the date of the filing of the complaint or petition, if that date is specified by the domiciliary law for the vesting of property in the domiciliary state. Otherwise, the date of vesting shall be the date of entry of the order directing possession to be taken. The domiciliary liquidator shall have the immediate right to recover balances due from agents and to obtain possession of the books, accounts, and other records of the insurer located in this state. He also shall have the right to recover all other assets of the insurer located in this state, subject to section 3903.53 of the Revised Code.

(B) If a domiciliary liquidator is appointed for an insurer not domiciled in a reciprocal state, the superintendent of insurance shall be vested by operation of law with the title to all of the property, contracts, and rights of action, and all of the books, accounts, and other records of the insurer located in this state, at the same time that the domiciliary liquidator is vested with title in the domicile. The superintendent may file a complaint for a conservation or liquidation order under section 3903.50 or 3903.51 of the Revised Code, or for an ancillary receivership under section 3903.53 of the Revised Code, or after approval by the court may transfer title to the domiciliary liquidator, as the interests of justice and the equitable distribution of the assets require.

(C) Claimants residing in this state may file claims with the liquidator or ancillary receiver, if any, in this state or with the domiciliary liquidator, if the domiciliary law permits. The claims must be filed on or before the last date fixed for the filing of claims in the domiciliary liquidation proceedings.

Effective Date: 03-07-1983

3903.53 Appointing ancillary receiver.

(A) If a domiciliary liquidator has been appointed for an insurer not domiciled in this state, the superintendent of insurance may file a complaint in the court of common pleas requesting appointment as ancillary receiver in this state if both of the following apply:

(1) There are sufficient assets of the insurer located in this state to justify the appointment of an ancillary receiver;

(2) The protection of creditors or policyholders in this state so requires.

(B) The court may issue an order appointing an ancillary receiver in whatever terms it shall consider appropriate. Persons dealing with the property of the insurer are charged with notice of the order appointing an ancillary receiver from the time when the judgment ordering the appointment is filed under Civil Rule 58, or a certified copy of the judgment is filed under Civil Rule 3(F), with the clerk of the court of common pleas of the county in which the property is located.

(C) When a domiciliary liquidator has been appointed in a reciprocal state, then the ancillary receiver appointed in this state may, whenever necessary, aid and assist the domiciliary liquidator in recovering assets of the insurer located in this state. The ancillary receiver shall, as soon as practicable, liquidate from their respective securities those special deposit claims and secured claims which are proved and allowed in the ancillary proceedings in this state, and shall pay the necessary expenses of the proceedings. He shall promptly transfer all remaining assets, books, accounts, and records to the domiciliary liquidator. Subject to this section, the ancillary receiver and his deputies shall have the same powers and be subject to the same duties with respect to the administration of assets as a liquidator of an insurer domiciled in this state.

(D) When a domiciliary liquidator has been appointed in this state, ancillary receivers appointed in reciprocal states shall have, as to assets and books, accounts, and other records in their respective states, corresponding rights, duties, and powers to those provided in division (C) of this section for ancillary receivers appointed in this state.

Effective Date: 03-07-1983

3903.54 Discretion of superintendent to commence proceedings.

The superintendent of insurance in his sole discretion may commence proceedings under sections 3903.09 to 3903.11 of the Revised Code at the request of the superintendent or other appropriate insurance official of the domiciliary state of any foreign or alien insurer having property located in this state.

Effective Date: 03-07-1983

3903.55 Foreign claimants.

(A) In a liquidation proceeding begun in this state against an insurer domiciled in this state, claimants residing in foreign countries or in states not reciprocal states must file claims in this state, and claimants residing in reciprocal states may file claims either with the ancillary receivers, if any, in their respective states, or with the domiciliary liquidator. Claims must be filed on or before the last date fixed for the filing of claims in the domiciliary liquidation proceeding.

(B) Claims belonging to claimants residing in reciprocal states may be proved either in the liquidation proceeding in this state as provided in sections 3903.01 to 3903.59 of the Revised Code, or in ancillary proceedings, if any, in the reciprocal states. If notice of the claims and opportunity to appear and be heard is afforded the domiciliary liquidator of this state as provided in division (B) of section 3903.56 of the Revised Code with respect to ancillary proceedings, the final allowance of claims by the courts in ancillary proceedings in reciprocal states shall be conclusive as to amount and as to priority against special deposits or other security located in such ancillary states, but shall not be conclusive with respect to priorities against assets under section 3903.42 of the Revised Code.

Effective Date: 03-07-1983

3903.56 Ohio residents claiming against foreign insurers.

(A) In a liquidation proceeding in a reciprocal state against an insurer domiciled in that state, claimants against the insurer who reside within this state may file claims either with the ancillary receiver, if any, in this state, or with the domiciliary liquidator. Claims must be filed on or before the last dates fixed for the filing of claims in the domiciliary liquidation proceeding.

(B) Claims belonging to claimants residing in this state may be proved either in the domiciliary state under the law of that state, or in ancillary proceedings, if any, in this state. If a claimant elects to prove his claim in this state, he shall file his claim with the liquidator in the manner provided in sections 3903.35 and 3903.36 of the Revised Code. The ancillary receiver shall make his recommendation to the court as under section 3939.43 of the Revised Code. He shall also arrange a date for hearing if necessary under section 3903.39 of the Revised Code and shall give notice to the liquidator in the domiciliary state, either by certified mail or by personal service at least forty days prior to the date set for hearing. If the domiciliary liquidator, within thirty days after the giving of such notice, gives notice in writing to the ancillary receiver and to the claimant, either by certified mail or by personal service, of his intention to contest the claim, he shall be entitled to appear or to be represented in any proceeding in this state involving the adjudication of the claim.

(C) The final allowance of the claim by the courts of this state shall be accepted as conclusive as to amount and as to priority against special deposits or other security located in this state.

Effective Date: 03-07-1983

3903.57 Attachment, garnishment or execution proceedings blocked.

During the pendency in this or any other state of a liquidation proceeding, whether called by that name or not, no action or proceeding in the nature of an attachment, garnishment, or levy of execution shall be commenced or maintained in this state against the delinquent insurer or its assets.

Effective Date: 03-07-1983

3903.58 Distribution order among claimants from reciprocal states.

(A) In a liquidation proceeding in this state involving one or more reciprocal states, the order of distribution of the domiciliary state shall control as to all claims of residents of this and reciprocal states. All claims of residents of reciprocal states shall be given equal priority of payment from assets regardless of where such assets are located.

(B) The owners of special deposit claims against an insurer for which a liquidator is appointed in this or any other state shall be given priority against the special deposits in accordance with the statutes governing the creation and maintenance of the deposits. If there is a deficiency in any deposit, so that the claims secured by it are not fully discharged from it, the claimants may share in the assets, but the sharing shall be deferred until general creditors, and also claimants against other special deposits who have received smaller percentages from their respective special deposits, have been paid percentages of their claims equal to the percentage paid from the special deposit.

(C) The owner of a secured claim against an insurer for which a liquidator has been appointed in this or any other state may surrender his security and file his claim as a general creditor, or the claim may be discharged by resort to the security in accordance with section 3903.41 of the Revised Code, in which case the deficiency, if any, shall be treated as a claim against the assets of the insurer on the same basis as claims of unsecured creditors.

Effective Date: 03-07-1983

3903.59 Failure to transfer assets to Ohio liquidator by ancillary receiver.

If an ancillary receiver in another state or foreign country, whether called by that name or not, fails to transfer to the domiciliary liquidator in this state any assets within the ancillary receiver's control other than special deposits, diminished only by the expenses of the ancillary receivership, if any, the claims filed in the ancillary receivership, other than special deposit claims or secured claims shall be placed in the class of claims under division (H) of section 3903.42 of the Revised Code.

Effective Date: 12-04-1995

3903.71 Unsound company, suspension of authority to do business.

If it appears to the superintendent of insurance upon satisfactory evidence that the affairs of an insurance company, partnership, association, or reciprocal insurance exchange, not organized under the laws of this state, are such that any of the following conditions exist, he shall suspend the authority granted to such company to do business in this state:

(A) It cannot meet the current applicable requirements for incorporation and commencement of the business of insurance in this state;

(B) It has commenced, or has attempted to commence, any voluntary liquidation or dissolution proceeding, or any proceeding to procure the appointment of a receiver, liquidator, rehabilitator, sequestrator, conservator, or similar officer for itself;

(C) It is the subject of liquidation or dissolution proceedings undertaken by another state, or any other proceeding undertaken by another state to procure the appointment of a receiver, liquidator, rehabilitator, sequestrator, conservator, or similar officer;

(D) Its ratio of premium writings to surplus and capital are unreasonable as determined by the superintendent of insurance;

(E) Its further transaction of business would be hazardous to its policyholders, contract holders, or the public as shown by the following conduct, but not necessarily limited to only the following:

(1) Its investments are made so as to make unavailable within a reasonable time sufficient moneys to meet promptly any demand which might in the ordinary course of business be properly made against it;

(2) Any of its officers or directors have embezzled, sequestered, or wrongfully diverted any of its assets;

(3) It has willfully violated its charter or any law of this state.

If no demand for a hearing is made by the suspended company within thirty days after suspension, such suspension shall become a revocation of the authority to transact the business of insurance in this state. Any such hearing shall be held in compliance with sections 119.01 to 119.13 of the Revised Code. If during such hearing, satisfactory evidence of any of the enumerated conditions of this section is found to exist, the superintendent shall revoke the authority to transact the business of insurance in this state.

Effective Date: 03-07-1983

3903.72 [Effective Until 9/4/2014] Superintendent to annually value reserves for life insurance policies, annuity and pure endowment contracts.

(A) The superintendent of insurance shall annually value, or cause to be valued, the reserve liabilities, referred to in this section as reserves, for all outstanding life insurance policies and annuity and pure endowment contracts of every life insurance company doing business in this state. The superintendent may certify the amount of such reserves, specifying the mortality tables, rates of interest, and net level premium method and other methods used to calculate reserves. In calculating reserves, the superintendent may use group methods and approximate averages for fractions of a year or otherwise. The valuation of the reserves of a company organized under the laws of a foreign government shall be limited to its United States business.

In lieu of a valuation of the reserves of a foreign company, the superintendent may accept the valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when such valuation complies with the minimum standards required by this section, provided such official accepts the certificate of valuation of the superintendent when such certificate states that the valuation was made in a specified manner and when such valuation complies with the minimum standards required by the law of that state or jurisdiction.

A company, which adopts a standard of valuation producing aggregate reserves greater than those required by this section, may adopt a lower standard of valuation with the approval of the superintendent, but not lower than the minimum provided by this section. However, the holding of additional reserves previously determined by a qualified actuary to be necessary for the actuary to render the opinions required by divisions (B)(1) and (2) of this section shall not be deemed to be the adoption of a higher standard of valuation.

(B)

(1) Every life insurance company doing business in this state shall annually submit to the superintendent the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by rule by the superintendent are computed appropriately, are based on assumptions that satisfy contractual provisions, and are consistent with prior reported amounts. The opinion shall be submitted no later than March 1, 1996, and no later than the first day of March of each year thereafter. The superintendent shall adopt rules establishing the form and content of this opinion, and may require the life insurance company to supply information in addition to that contained in the actuarial opinion.

As used in this section, a "qualified actuary" means a person who is a member in good standing of the American academy of actuaries and who meets the requirements set by rule by the superintendent.

(2)

(a) Every life insurance company, except as exempted by rule adopted by the superintendent, shall also include in the annual opinion required by division (B)(1) of this section an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by rule by the superintendent, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including, but not limited to, the benefits under and the expenses associated with the policies and contracts.

(b) The superintendent may provide by rule for a transition period for establishing any higher reserves that the qualified actuary may consider necessary to render the opinion required by division (B) of this section.

(c) Each opinion required by division (b) of this section shall be supported by a memorandum prepared in form and content as specified by rule by the superintendent.

(d) If a life insurance company fails to provide a supporting memorandum within the period of time specified by rule by the superintendent, or if the superintendent determines that a supporting memorandum fails to meet the standards set out in the rule, or is otherwise unacceptable to the superintendent, the superintendent may employ, at the expense of the insurance company, a qualified actuary to review the opinion and the basis for the opinion and prepare such supporting memorandum as is required by the superintendent.

(3) Every opinion required by division (B) of this section is governed by the following:

(a) The opinion shall be submitted with the annual statement reflecting the valuation of the reserve liabilities.

(b) The opinion shall apply to all business in force including individual and group health insurance plans.

(c) The opinion shall be based on standards adopted from time to time by the actuarial standards board of the American academy of actuaries and on such additional standards as the superintendent may prescribe by rule.

(d) In the case of an opinion required to be submitted by a foreign or alien life insurance company, the superintendent may accept the opinion filed by that company with the insurance regulatory authority of another state if the superintendent determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state.

(e) Except in cases of fraud or willful misconduct, the qualified actuary is not liable for damages in any civil action to any person, other than the insurance company and the superintendent, for any act, error, omission, decision, or conduct with respect to the actuary's opinion.

(f) The superintendent shall establish by rule penalties for an insurance company's or qualified actuary's failure to comply with this section.

(g) The superintendent shall keep as confidential and privileged any memorandum received in support of a qualified actuary's opinion and also any other material provided by the insurance company to the superintendent in connection with the opinion. The memorandum and other materials shall not be made public, and shall not be subject to subpoena other than for the purpose of defending an action required by this section or rules adopted under this section. However, if any portion of a confidential and privileged memorandum is cited by the company in its marketing, is cited before any governmental agency other than a state insurance regulatory authority, or is released by the company to the news media, the entire memorandum shall no longer be confidential and privileged.

(h) Notwithstanding division (B)(3)(g) of this section, the superintendent may do any of the following:

(i) Disclose memoranda and other materials described in this section upon obtaining prior written consent from the insurer to which the memorandum or other materials pertain;

(ii) Disclose memoranda and other materials described in this section to the American academy of actuaries upon receipt of a written request from the academy stating that a memorandum or other material is required for the purpose of professional disciplinary proceedings. A request from the American academy of actuaries shall set forth the procedures to be used by the academy for preserving the confidential and privileged status of the memorandum or other material. If the procedures set forth are not satisfactory to the superintendent, the superintendent shall not release the memorandum or other material to the academy.

(iii) Share memoranda and other materials described in this section with the chief deputy rehabilitator, the chief deputy liquidator, other deputy rehabilitators and liquidators, and any other person employed by, or acting on behalf of, the superintendent pursuant to Chapter 3901. or 3903. of the Revised Code, with other local, state, federal, and international regulatory and law enforcement agencies, with local, state, and federal prosecutors, and with the national association of insurance commissioners and its affiliates and subsidiaries, provided that the recipient agrees to maintain the confidential or privileged status of any confidential or privileged memorandum or other material and has authority to do so;

(iv) Disclose memoranda and other materials described in this section in the furtherance of any regulatory or legal action brought by or on behalf of the superintendent or the state, resulting from the exercise of the superintendent's official duties.

(i) Notwithstanding divisions (B)(3)(g) and (h) of this section, the superintendent may authorize the national association of insurance commissioners and its affiliates and subsidiaries by agreement to share confidential or privileged memoranda and other material received pursuant to division (B)(3)(h)(iii) of this section with local, state, federal, and international regulatory and law enforcement agencies and with local, state, and federal prosecutors, provided that the recipient agrees to maintain the confidential or privileged status of the confidential or privileged memorandum or other material and has authority to do so.

(j) Notwithstanding divisions (B)(3)(g) and (h) of this section, the chief deputy rehabilitator, the chief deputy liquidator, and other deputy rehabilitators and liquidators may disclose memoranda and other material described in this section in the furtherance of any regulatory or legal action brought by or on behalf of the superintendent, the rehabilitator, the liquidator, or the state resulting from the exercise of the superintendent's official duties in any capacity.

(k) Nothing in this section shall prohibit the superintendent from receiving memoranda and other material in accordance with section 3901.045 of the Revised Code.

(l) The superintendent may enter into agreements governing the sharing and use of memoranda and materials consistent with the requirements of this section.

(m)

(i) No waiver of any applicable privilege or claim of confidentiality in the memoranda and materials described in this section shall occur as a result of sharing or receiving memoranda and material as authorized in divisions (B)(3)(h)(ii) and (iii), (B)(3)(i), and (B)(3)(k) of this section.

(ii) The disclosure of any memorandum or material in connection with a regulatory or legal action pursuant to divisions (B)(3)(h)(iv) and (B)(3)(j) of this section does not prohibit an insurer or any other person from taking steps to limit the dissemination of the memorandum or material to persons not involved in or the subject of the regulatory or legal action on the basis of any recognized privilege arising under any other section of the Revised Code or the common law.

(C) Except in the case of policies and contracts to which division (D) of this section applies, the minimum standard for the valuation of reserves shall be the method set forth in section 3915.04 of the Revised Code, using four per cent interest and the American experience table of mortality; provided that in no event shall a company's aggregate reserves for policies and contracts which guarantee nonforfeiture benefits be less than the aggregate reserves calculated in accordance with the standard used in calculating nonforfeiture benefits for such policies and contracts.

Reserves for such policies and contracts may be calculated according to standards which produce aggregate reserves greater than the minimum reserves required by this division.

(D) This division applies to all life insurance policies and annuity and pure endowment contracts issued on and after November 5, 1959, or each earlier date not before July 17, 1947, elected by the company for one or more of such policies or contracts as the date on which it would comply with the provisions of the nonforfeiture law for life insurance provided in section 3915.07 of the Revised Code or with the provisions of this division. The minimum standard for the valuation of all such policies and contracts shall be the commissioners reserve valuation method defined in division (E), (F), (H), or (K) of this section and the following tables and interest rates:

(1) For ordinary life insurance policies, excluding disability and accidental death benefits, issued on the standard basis:

(a) On and after November 5, 1959, or an earlier date, not before July 17, 1947, specified in a written notice by the company to the superintendent of its election to use this table and before division (D)(1)(b) of this section became operative for subsequent policy issues, the commissioners 1941 standard ordinary mortality table and three and one-half per cent interest;

(b) On and after January 1, 1966, or an earlier date, not before November 5, 1959, specified in a written notice by the company to the superintendent of its election to use this table and before division (D)(1)(c) of this section becomes operative for subsequent policy issues, the commissioners 1958 standard ordinary mortality table and three and one-half per cent interest before January 1, 1975; four per cent interest on and after January 1, 1975 and before January 1, 1979; and four and one-half per cent interest on and after January 1, 1979; provided that modified premiums and present values for female risks may be calculated at an age three years younger than the actual age of the insured for policies issued before January 1, 1979, and at an age six years younger for policies issued on and after January 1, 1979.

(c) On and after January 1, 1989, or an earlier date, not before January 1, 1983, specified in a written notice by the company to the superintendent of its election to use this table, the commissioners 1980 standard ordinary mortality table and the applicable valuation interest rate as defined in section 3903.721 of the Revised Code. The company may elect to use the commissioners 1980 standard ordinary mortality table with ten-year select mortality factors for any specified plan of life insurance. The superintendent may approve the use of any ordinary mortality table adopted after 1980 by the national association of insurance commissioners for determining the minimum standard for the valuation of such policies.

(2) For industrial life insurance policies, excluding disability and accidental death benefits, issued on the standard basis:

(a) On and after November 5, 1959, or an earlier date, not before July 17, 1947, specified in a written notice by the company to the superintendent of its election to use this table and before division (D)(2)(b) of this section became operative for subsequent policy issues, the 1941 standard industrial mortality table and three and one-half per cent interest;

(b) On and after January 1, 1968, or an earlier date, not before September 2, 1963, specified in a written notice by the company to the superintendent of its election to use this table, the commissioners 1961 standard industrial mortality table and three and one-half per cent interest before January 1, 1975; four per cent interest on and after January 1, 1975 and before January 1, 1979; four and one-half per cent interest on and after January 1, 1979 and before January 1, 1989, or before an earlier date, not before January 1, 1983, specified in a written notice by the company to the superintendent of its election to issue such policies pursuant to the provisions of the nonforfeiture law for life insurance provided in section 3915.071 of the Revised Code. On and after January 1, 1989, or such earlier date, the interest rate to be used in calculating the minimum reserve for such policies is the applicable valuation interest rate as defined in section 3903.721 of the Revised Code. The superintendent may approve the use of any industrial mortality table adopted after 1980 by the national association of insurance commissioners for determining the minimum standard for the valuation of such policies.

(3) For all individual annuity and pure endowment contracts, excluding disability and accidental death benefits, issued:

(a) On and after November 5, 1959, or an earlier date, not before July 17, 1947, as of which the company elected to comply with this division (D)(3)(a) and before division (D)(3)(b) of this section became operative for subsequent contract issues, the 1937 standard annuity mortality table, or, at the option of the company, the annuity mortality table for 1949, ultimate, or any modification of either table approved by the superintendent and three and one-half per cent interest;

(b) On and after January 1, 1979, or an earlier date, not before January 1, 1975, specified by the company in a written notice to the superintendent of its election to use this table, the 1971 individual annuity mortality table or any modification of that table approved by the superintendent and four per cent interest on and after January 1, 1975 and before January 1, 1979; four and one-half per cent interest on and after January 1, 1979, and before January 1, 1983; and the valuation interest rate as defined in section 3903.721 of the Revised Code on and after January 1, 1983, except that on and after January 1, 1975, and before January 1, 1979, the interest rate is six per cent for single premium immediate contracts and on and after January 1, 1979, and before January 1, 1983, the interest rate is five and one-half per cent for single premium deferred contracts and seven and one-half per cent for single premium immediate contracts. The superintendent may approve the use of any individual annuity mortality table adopted after 1980 by the national association of insurance commissioners, either as adopted or as modified by the superintendent, for determining the minimum standard for the valuation of such contracts.

(4) For all annuity and pure endowment contracts, excluding disability and accidental death benefits, purchased under group annuity and pure endowment contracts:

(a) On and after November 5, 1959, or an earlier date, not before July 17, 1947, as of which the company elected to comply with this division (D)(4)(a) and before division (D)(4)(b) of this section became operative for subsequent contract purchases, the group annuity mortality table for 1951, any modification of this table approved by the superintendent, or either of the tables, or modification of either of them, specified in division (D)(3)(a) of this section for individual annuity and pure endowment contracts and three and one-half per cent interest;

(b) On and after January 1, 1979, or an earlier date, not before January 1, 1975, specified by the company in a written notice to the superintendent of its election to use this table, the 1971 group annuity mortality table, or any modification of that table approved by the superintendent, and six per cent interest on and after January 1, 1975, and before January 1, 1979; seven and one-half per cent interest on and after January 1, 1979, and before January 1, 1983, and the valuation interest rate as defined in section 3903.721 of the Revised Code on and after January 1, 1983. The superintendent may approve the use of any group annuity mortality table adopted after 1980 by the national association of insurance commissioners, either as adopted or as modified by the superintendent, for determining the minimum standard for the valuation of such contracts.

(5) For total and permanent disability benefits in or supplementary to ordinary policies and contracts issued:

(a) On and after July 17, 1947, and before January 1, 1961, the class (3) disability table (1926) and three and one-half per cent interest. This table, for active lives, shall be combined with a mortality table permitted for calculating the reserves for life insurance policies.

(b) On and after January 1, 1961, the tables of period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 disability study of the society of actuaries, with due regard for the type of benefit; except that a company may, at its option, use the class (3) disability table (1926) for policies and contracts issued on and after January 1, 1961, and before January 1, 1966. Any such table, for active lives, shall be combined with a mortality table permitted for calculating the reserves for life insurance policies. The interest rate to be used in calculating minimum reserves for such benefits may not exceed the applicable rate specified in division (D)(1) of this section for ordinary life insurance policies. The superintendent may approve the use of any table of disablement rates and termination rates adopted after 1980 by the national association of insurance commissioners for determining the minimum standard for the valuation of such total and permanent benefits.

(6) For accidental death benefits in or supplementary to policies issued:

(a) On and after July 17, 1947, and before January 1, 1961, the inter-company double indemnity mortality table and three and one-half per cent interest. This table shall be combined with a mortality table permitted for calculating the reserves for life insurance policies.

(b) On and after January 1, 1961, the 1959 accidental death benefits table; except that a company may, at its option, use the inter-company double indemnity mortality table for policies issued on and after January 1, 1961, and before January 1, 1966. Either table shall be combined with a mortality table permitted for calculating the reserves for life insurance policies. The interest rate to be used in calculating the minimum reserves for such benefits may not exceed the applicable rate specified in division (D)(1) of this section for ordinary life insurance policies. The superintendent may approve the use of any accidental death benefits table adopted after 1980 by the national association of insurance commissioners for determining the minimum standard for the valuation of such accidental death benefits.

(7) For group life insurance, life insurance issued on the substandard basis and all other special benefits, such tables as may be approved by the superintendent and interest not to exceed the applicable rate used in division (D)(1) of this section for ordinary life insurance policies.

(E) This division defines the commissioners reserve valuation method for all policies, riders, and supplemental policy provisions, with life insurance or endowment benefits, or both, providing for uniform amounts of life insurance and requiring uniform premiums. Reserves for such policies, riders, and provisions, except as otherwise provided in divisions (F) and (K) of this section, shall be the excess, if any, of the present value on the valuation date of the future guaranteed benefits over the present value on that date of the future modified net premiums. The modified net premium is a uniform percentage of each contract premium specified for the guaranteed benefits such that the present value, at the date of issue, of all modified net premiums shall be equal to the present value, on the date of issue, of the future guaranteed benefits plus the excess of division (E)(1) over division (E)(2) of this section, as follows:

(1) A net level annual premium equal to the present value, at the date of issue, of such benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per annum payable on the first and each subsequent anniversary of the policy on which a premium falls due; provided that such net level annual premium shall not exceed the net level annual premium on the nineteen-year premium whole life plan for insurance of the same amount at an age one year higher than the age at issue of the policy.

(2) A net one-year term premium for such benefits provided for in the first policy year.

(F) This division defines the commissioners reserve valuation method for all life insurance policies issued on or after January 1, 1989, that have a first year premium in excess of the premium for the second policy year and for which excess no comparable benefit is provided in the first year and that provide either an endowment benefit or cash surrender value, or both, in an amount greater than the excess. Reserves for such policies before the assumed ending date shall be the greater of the amount calculated in accordance with division (E) of this section and the reserve calculated in accordance with that division but with the following changes:

(1) The value defined in division (E)(1) of this section shall be reduced by fifteen per cent of the amount of such excess first-year premium;

(2) All present values of benefits and premiums shall be determined without reference to premiums and benefits provided for by the policy after the assumed ending date;

(3) The policy shall be assumed to mature on the assumed ending date in the amount of its endowment benefits and cash surrender value. The assumed ending date is the first policy anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than such excess first-year premium.

On and after the assumed ending date, the reserve for such policies shall be calculated in accordance with division (E) of this section.

(G) Reserves according to the commissioners reserve valuation method for:

(1) All policies, riders, and supplemental policy provisions providing varying amounts of life insurance or requiring payment of varying premiums;

(2) Group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under section 408 of the Internal Revenue Code of 1954, as amended;

(3) Disability and accidental death benefits in all policies and contracts; and

(4) All other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other annuity and pure endowment contracts, shall be calculated by a method consistent with the principles of division (E) of this section.

Extra premiums charged because of impairments or special hazards shall be disregarded in determining modified net premiums.

(H) This division defines the commissioners annuity reserve valuation method for all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under section 408 of the Internal Revenue Code of 1954, as amended.

Reserves for benefits under such contracts, excluding disability and accidental death benefits, shall be the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by such contract at the end of each respective contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future gross considerations required by the terms of the contract that become payable prior to the end of each such respective contract year. The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate, or rates, specified in such contracts for determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the terms of such contracts to determine nonforfeiture values.

(I) In no event shall a company's aggregate reserves for all life insurance policies, to which division (D) of this section applies, excluding disability and accidental death benefits, be less than the aggregate reserves calculated in accordance with the method set forth in divisions (E), (F), (G), (K), and (L) of this section and the mortality table or tables and rate or rates of interest used in calculating nonforfeiture benefits for such policies.

In no event shall the aggregate reserves for all policies, contracts, and benefits be less than the aggregate reserves determined by the qualified actuary to be necessary to render the opinion required by division (B) of this section.

(J) Reserves for any category of policies, contracts, or benefits as established by the superintendent may be calculated, at the option of the company, according to any standards which produce aggregate reserves for such category greater than those calculated according to the minimum standards provided in this section, but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, shall not be higher than the corresponding rate or rates of interest used in calculating any nonforfeiture benefits provided for in such standards.

(K) If in any contract year the valuation net premium calculated by the method used in calculating the reserve for a policy or contract but using the minimum valuation standards of mortality and rate of interest is more than the gross premium for such policy or contract, the minimum reserve required for such policy or contract shall be the greater of either the reserve calculated according to the mortality table, rate of interest, and method actually used for such policy or contract, or the reserve calculated by such method but using the minimum valuation standards of mortality and rate of interest and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium. The minimum valuation standards of mortality and rate of interest referred to in this division are those required by division (D) of this section.

For the purposes of this division, the minimum reserve for any policy to which the provisions of division (F) of this section apply shall be calculated as if the method used in calculating the reserve for such policy were the method defined in division (E) of this section. The minimum reserve for such policy shall be the greater of the reserve calculated in accordance with division (F) of this section and in accordance with this division.

(L) Methods for determining the reserves for plans of life insurance or annuity which are of such a nature that minimum reserves cannot be determined by the methods described in this section shall be promulgated by rule adopted by the superintendent. The reserves to be held under such plans must be appropriate in relation to the benefits and the pattern of premiums for each plan and must be computed by methods which are consistent with the principles of this section. This division applies to any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the company on the basis of an estimate of future experience made at the time of any such determination.

(M) The superintendent shall adopt rules specifying minimum reserve standards for the valuation of individual and group health plans.

Renumbered as § 3903.723 by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

Effective Date: 06-18-2002

3903.72 [Effective 9/4/2014] Definitions for sections 3903.72 to 3903.7211.

(A) The definitions provided in division (B) of this section shall apply after the operative date of the valuation manual.

(B) As used in sections 3903.72 to 3903.7211 of the Revised Code:

(1) "Accident and health insurance" means a contract that incorporates morbidity risk and provides protection against economic loss resulting from accident, sickness, or medical conditions and as may be specified in the valuation manual.

(2) "Appointed actuary" means a qualified actuary who is appointed in accordance with the valuation manual to prepare the actuarial opinion required in section 3903.722 of the Revised Code.

(3) "Company" means an entity that meets either of the following criteria:

(a) The entity has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this state and has at least one such policy in force or on claim.

(b) The entity has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in any state and is required to hold a certificate of authority to write life insurance, accident and health insurance, or deposit-type contracts in this state.

(4) "Deposit-type contract" means a contract that does not incorporate mortality or morbidity risks and as may be specified in the valuation manual.

(5) "Life insurance" means a contract that incorporates mortality risk, including an annuity and pure endowment contract, and as may be specified in the valuation manual.

(6) "Operative date of the valuation manual" means the date specified in division (B) of section 3903.728 of the Revised Code.

(7) "Policyholder behavior" means any action a policyholder, contract holder, or any other person with the right to elect options under a policy or contract, such as a certificate holder, may take under a policy or contract subject to this section including lapse, withdrawal, transfer, deposit, premium payment, loan, annuitization, or benefit elections prescribed by the policy or contract. "Policyholder behavior" does not include events of mortality or morbidity that result in benefits prescribed in the terms of the policy or contract.

(8) "Principle-based valuation" means a reserve valuation that uses one or more methods or one or more assumptions determined by the insurer and that is required to comply with section 3903.729 of the Revised Code.

(9) "Qualified actuary" means an individual who is qualified to sign a statement of actuarial opinion in accordance with the American academy of actuaries qualification standards for actuaries signing such statements and who meets the requirements specified in the valuation manual.

(10) "Superintendent" means superintendent of insurance.

(11) "Tail risk" means a risk that occurs either when the frequency of low probability events is higher than expected under a normal probability distribution or when there are observed events of very significant size or magnitude.

(12) "Valuation manual" means the manual of valuation instructions adopted by the national association of insurance commissioners or as subsequently amended.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3903.721 [Effective Until 9/4/2014] Determination of valuation interest rate.

(A) The valuation interest rate (VIR) required by division (D) of section 3903.72 of the Revised Code is determined:

(1) For all life insurance policies, by adding three per cent to the result of multiplying W (the applicable weighting factor) by R minus three per cent (where R is the lesser of the reference interest rate and nine per cent) and also adding the result of multiplying one-half of the weighting factor by R minus nine per cent (where R is the greater of the reference interest rate and nine per cent), expressed as follows:

VIR = .03 + W (R - .03) + W/2 (R - .09).

Provided that if the valuation interest rate for policies issued in any calendar year determined in accordance with this division does not differ from the valuation interest rate for similar policies issued in the preceding calendar year by at least one-half of one per cent, the valuation interest rate for such policies shall be equal to the valuation interest rate for the preceding calendar year. For any calendar year the valuation interest rate is determined for each preceding calendar year starting with 1980.

(2) For all annuity and guaranteed interest contracts by adding to three per cent the result of multiplying W (the applicable weighting factor) by R minus three per cent (where R is the reference interest rate), expressed as follows:

VIR = .03 + W (R - .03).

Provided that, the life insurance formula stated in division (A)(1) of this section shall apply to all annuity and guaranteed interest contracts with cash settlement options valued on an issue year basis and with guarantee durations in excess of ten years other than single premium immediate annuities and annuity and guaranteed interest contracts.

(3) The results obtained under divisions (A)(1) and (2) of this section shall be rounded to the nearer one-quarter of one per cent.

(B) The weighting factors for life insurance policies change with the guarantee duration is the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under an option to convert to a plan of life insurance with premium rates or nonforfeitures values, or both, guaranteed in the policy. The weighting factors are shown in the following table:

Weighting Factors for Life Insurance

Guarantee Duration (Years) Weighting Factors

10 or less .50

More than 10, but not more than 20 .45

More than 20 .35

(C) The weighting factor for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuity and guaranteed interest contracts with cash settlement options is eighty-hundredths.

(D) Weighting factors for all other annuity and guaranteed interest contracts vary with the type of plan and guarantee duration. The types of plans are as follows:

(1) A plan type A is one in which funds may not be withdrawn or may be withdrawn in only one of three ways:

(a) With an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the company;

(b) Without such adjustment but installments over five or more years;

(c) As an immediate life annuity.

(2) A plan type B is one in which the funds may not be withdrawn before the expiration of the interest rate guarantee unless an adjustment is made to reflect changes in interest rates or asset values since receipt of the funds by the company or unless they are withdrawn in installments over five or more years. At the end of the interest rate guarantee, funds may be withdrawn in a single sum or in installments over less than five years without adjustment.

(3) A plan type C is one in which the funds may be withdrawn before the end of the interest rate guarantee in a single sum or in installments over less than five years without adjustment or subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.

(4) The guarantee duration for an annuity or guaranteed interest contract with cash settlement options is the number of years for which the contract guarantees interest rates in excess of the valuation interest rate for life insurance policies with guarantee duration in excess of twenty years. The guarantee duration for annuity and guaranteed interest contracts without cash settlement options is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence.

(5) Annuity and guaranteed interest contracts with cash settlement options may be valued on an issue year basis or on a change in fund basis. If valued on an issue year basis, the interest rate used to determine the minimum valuation standard for the entire duration is the valuation interest rate for the year of issue or purchase. If valued on a change in fund basis, the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the contract is the valuation interest rate for the year of change in the fund. Annuity and guaranteed interest contracts without cash settlement options must be valued on an issue year basis.

(6) These weighting factors are specified in the applicable table shown below. Table I applies to annuity and guaranteed interest contracts valued on an issue year basis that either guarantee interest on considerations received more than one year after issue or purchase or that have no cash settlement options. Table II applies to annuity and guaranteed interest contracts with cash settlement options valued on an issue year basis that do not guarantee interest on considerations received more than one year after issue or purchase. Tables III and IV are for contracts similar to those in tables I and II, respectively, except that they are valued on a change in fund basis and one-year guarantee refers to one year following the valuation date.

Weighting Factors for Annuities and Guaranteed

Interest Contracts

Table I

Issue Year Basis - Interest on Considerations

After First Year

Guaranteed Or No Cash Settlement Options

Guarantee Weighting Factor

Duration for Plan Type

(Years) A B C

5 or less .80 .60 .50

More than 5, but not more than 10 .75 .60 .50

More than 10, but not more than 20 .65 .50 .45

More than 20 .45 .35 .35

Table II

Issue Year Basis - Interest on Considerations

After First Year

NOT Guaranteed And Cash Settlement Options

Guarantee Weighting Factor

Duration for Plan Type

(Years) A B C

5 or less .85 .65 .55

More than 5, but not more than 10 .80 .65 .55

More than 10, but not more than 20 .70 .55 .50

More than 20 .50 .40 .40

Table III

Change in Fund Basis - Interest on Considerations

Guaranteed More Than Twelve Months After

Valuation Date

Guarantee Weighting Factor

Duration for Plan Type

(Years) A B C

5 or less .95 .85 .55

More than 5, but not more than 10 .90 .85 .55

More than 10, but not more than 20 .80 .75 .50

More than 20 .60 .60 .40

Table IV

Change in Fund Basis - Interest on Considerations

NOT Guaranteed More Than Twelve Months After

Valuation Date

Guarantee Weighting Factor

Duration for Plan Type

(Years) A B C

5 or less 1.00.90 .60

More than 5, but not more than 10 .95 .90 .90

More than 10, but not more than 20 .85 .80 .55

More than 20 .65 .65 .45

(E) The reference interest rate is determined by taking the average for the applicable period of time of Moody's corporate bond yield average - monthly average corporates, as published by Moody's Investors Service, Inc.

(1) The reference interest rate for all life insurance is the lesser of such average over the thirty-six month period and such average over the twelve-month period ending on the thirtieth day of June of the calendar year preceding the year of issue.

(2) The reference interest rate for annuity and guaranteed interest contracts with cash settlement options, except single premium immediate annuities and annuity benefits involving life contingencies arising from other annuity and guaranteed interest contracts with cash settlement options, valued on an issue year basis with guarantee durations in excess of ten years, is the lesser of such average over the thirty-six month period and such average over the twelve-month period ending on the thirtieth day of June of the calendar year of issue or purchase.

(3) The reference interest rate for all annuity and guaranteed interest contracts valued on a change in fund basis is such average over the twelve-month period ending on the thirtieth day of June of the calendar year in which a change in the fund occurs.

(4) The reference interest rate for all single premium immediate annuities, annuity benefits involving life contingencies arising from other annuity and guaranteed interest contracts with cash settlement options, and all other annuity and guaranteed interest contracts is such average over the twelve-month period ending on the thirtieth day of June of the calendar year of issue or purchase.

(5) If such corporate bond rate average is no longer published or the national association of insurance commissioners determines that such average is no longer appropriate, the superintendent may approve the use of any alternative method for the determination of the reference interest rate adopted by the commissioners.

Renumbered as § 3903.724 by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

Effective Date: 03-03-1996

3903.721 [Effective 9/4/2014] Valuation of reserves.

(A)

(1) The superintendent shall annually value, or cause to be valued, the reserve liabilities, referred to as reserves, for all outstanding life insurance policies and annuity and pure endowment contracts of every life insurance company doing business in this state issued prior to the operative date of the valuation manual.

In calculating reserves, the superintendent may use group methods and approximate averages for fractions of a year or otherwise. The valuation of the reserves of a company organized under the laws of a foreign government shall be limited to its United States business.

In lieu of the valuation of the reserves required of a foreign or alien company, the superintendent may accept a valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when the valuation complies with the minimum standard provided in sections 3903.72 to 3903.7211 of the Revised Code.

(2) The provisions set forth in sections 3903.723, 3903.724, 3903.725, and 3903.727 of the Revised Code shall apply to all policies and contracts, as appropriate, issued on or after January 1, 1989, and prior to the operative date of the valuation manual. The provisions set forth in sections 3903.726, 3903.728, and 3903.729 of the Revised Code shall not apply to any such policies and contracts.

(3) The minimum standard for the valuation of policies and contracts issued prior to January 1, 1989, shall be that provided by the laws in effect immediately prior to that date.

(B)

(1) For all outstanding life insurance contracts, annuity and pure endowment contracts, deposit-type contracts, and accident and health contracts of every company issued on or after the operative date of the valuation manual, the superintendent shall annually value, or cause to be valued, the reserve liabilities for such contracts according to sections 3903.727, 3903.728, and 3903.729 of the Revised Code. The valuation of the reserves of a company organized under the laws of a foreign government shall be limited to its United States business.

In lieu of the valuation of the reserves required of a foreign or alien company, the superintendent may accept a valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when the valuation complies with the minimum standard provided in sections 3903.72 to 3903.7211 of the Revised Code.

(2) The provisions set forth in sections 3903.728 and 3903.729 of the Revised Code shall apply to all policies and contracts issued on or after the operative date of the valuation manual.

Aded by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3903.7210 [Effective 9/4/2014] Submission of prescribed data.

A company shall submit mortality, morbidity, policyholder behavior, or expense experience and other data as prescribed in the valuation manual for policies it has issued that are in force on or after the operative date of the valuation manual.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3903.7211 [Effective 9/4/2014] Confidential information.

(A) As used in this section:

(1) "Confidential information" means all of the following:

(a) A memorandum in support of an opinion submitted under sections 3903.722 and 3903.726 of the Revised Code and any other documents, materials, and other information, including all working papers, and copies thereof, created, produced, or obtained by or disclosed to the superintendent or any other person in connection with such memorandum.

(b)

(i) Except as provided in division (A)(1)(b)(ii) of this section, all documents, materials, and other information, including all working papers, and copies thereof, created, produced, or obtained by or disclosed to the superintendent or any other person in the course of an examination made under division (F) of section 3903.728 of the Revised Code.

(ii) If an examination report or other material prepared in connection with an examination made under section 3901.07 of the Revised Code is not held as private and confidential information under that section, an examination report or other material prepared in connection with an examination made under division (F) of section 3903.728 of the Revised Code shall not be considered confidential information to the same extent as if such examination report or other material had been prepared under section 3901.07 of the Revised Code.

(c) Any reports, documents, materials, and other information developed by a company in support of, or in connection with, an annual certification by the company under division (B)(2) of section 3903.729 of the Revised Code evaluating the effectiveness of the company's internal controls with respect to a principle-based valuation and any other documents, materials, and other information, including all working papers, and copies thereof, created, produced, or obtained by or disclosed to the superintendent or any other person in connection with such reports, documents, materials, and other information;

(d) Any principle-based valuation report developed under division (B)(3) of section 3903.729 of the Revised Code and any other documents, materials, and other information, including all working papers, and copies thereof, created, produced, or obtained by or disclosed to the superintendent or any other person in connection with such report;

(e) Any documents, materials, data, and other information submitted by a company under section 3903.7210 of the Revised Code, referred to collectively as "experience data," and any other documents, materials, data, and other information, including all working papers, and copies thereof, created or produced in connection with such experience data, in each case that include any potentially company-identifying or personally identifiable information, that is provided to or obtained by the superintendent, which when combined with any experience data is referred to as "experience materials," and any other documents, materials, data, and other information, including all working papers, and copies thereof, created, produced, or obtained by or disclosed to the superintendent or any other person in connection with such experience materials.

(2) "Regulatory agency," "law enforcement agency," and the "national association of insurance commissioners" includes their employees, agents, consultants, and contractors.

(B)

(1) Except as provided in division (B)(2) of this section and as otherwise provided in this section, a company's confidential information is confidential by law and privileged, is not a public record under section 149.43 of the Revised Code, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. Except as otherwise provided in this section, neither the superintendent nor any person who received confidential information while acting under the superintendent's authority shall be permitted or required to testify in any private civil action concerning that confidential information.

(2) The superintendent is authorized to use the confidential information in the furtherance of any regulatory or legal action brought against the company as a part of the superintendent's official duties.

(C)

(1) In order to assist in the performance of the superintendent's duties, the superintendent may share confidential information with all of the following:

(a) Other state, federal, and international regulatory agencies;

(b) The national association of insurance commissioners and its affiliates and subsidiaries;

(c) The actuarial board for counseling and discipline, or its successor, in the case of confidential information specified in divisions (A)(1)(a) and (d) of this section only, upon a request stating that the confidential information is required for the purpose of professional disciplinary proceedings;

(d) State, federal, and international law enforcement officials.

(2) The superintendent may share confidential information as specified in divisions (C)(1)(a) through (d) of this section only if the recipient agrees, and has the legal authority to agree, to maintain the confidentiality and privileged status of such documents, materials, data, and other information in the same manner and to the same extent as required for the superintendent.

(D) The superintendent may receive documents, materials, data, and other information, including otherwise confidential and privileged documents, materials, data, or information, from the national association of insurance commissioners and its affiliates and subsidiaries, from regulatory or law enforcement officials of other foreign or domestic jurisdictions, and from the actuarial board for counseling and discipline or its successor. The superintendent shall maintain as confidential or privileged any document, material, data, or other information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, data, or other information.

(E) The superintendent may enter into agreements governing sharing and use of information consistent with this section.

(F) No waiver of any applicable privilege or claim of confidentiality in the confidential information shall occur as a result of disclosure to the superintendent under this section or as a result of sharing as authorized in division (C) of this section.

(G) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under this section shall be available and enforced in any proceeding in, and in any court of, this state.

(H) Notwithstanding divisions (B) to (G) of this section, any confidential information specified in divisions (A)(1)(a) and (d) of this section are subject to all of the following:

(1) The confidential information may be subject to subpoena for the purpose of defending an action seeking damages from the appointed actuary submitting the related memorandum in support of an opinion submitted under sections 3903.722 and 3903.726 of the Revised Code or principle-based valuation report developed under division (B)(3) of section 3903.729 of the Revised Code by reason of an action required by sections 3903.72 to 3903.7211 of the Revised Code or by rules adopted pursuant to those sections.

(2) The confidential information may otherwise be released by the superintendent with the written consent of the company.

(3) Once any portion of a memorandum in support of an opinion submitted under section 3903.722 and 3903.726 of the Revised Code or a principle-based valuation report developed under division (B)(3) of section 3903.729 of the Revised Code is cited by the company in its marketing or is publicly volunteered to or before a governmental agency other than a state insurance department or is released by the company to the news media, all portions of that memorandum or report shall no longer be confidential.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3903.722 [Effective 9/4/2014] Submission of data prior to operative date of valuation manual.

(A) This section shall apply prior to the operative date of the valuation manual.

(B) Every life insurance company doing business in this state shall annually submit to the superintendent the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by rule by the superintendent are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts, and comply with the applicable laws of this state. The superintendent shall adopt rules establishing the form and content of this opinion, and may require the life insurance company to supply information in addition to that contained in the actuarial opinion.

(C)

(1) Every life insurance company, except as exempted by rule adopted by the superintendent, shall also include in the annual opinion required by division (B) of this section an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by rule by the superintendent, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including the benefits under and the expenses associated with the policies and contracts.

(2) The superintendent may provide by rule for a transition period for establishing any higher reserves that the qualified actuary may consider necessary to render the opinion required by division (C) of this section.

(D) Each opinion required by division (C)(1) of this section shall be governed by the following provisions:

(1) The opinion shall be supported by a memorandum prepared in a form and contain content as specified by rule by the superintendent.

(2) If a life insurance company fails to provide a supporting memorandum within the period of time specified by rule by the superintendent, or if the superintendent determines that a supporting memorandum fails to meet the standards set out in the rule, or is otherwise unacceptable to the superintendent, the superintendent may employ, at the expense of the insurance company, a qualified actuary to review the opinion and the basis for the opinion and prepare such supporting memorandum as is required by the superintendent.

(E) Every opinion required by this section is governed by the following:

(1) The opinion shall be submitted with the annual statement reflecting the valuation of the reserve liabilities for each year ending on or after December 31, 2012.

(2) The opinion shall apply to all business in force including individual and group health insurance plans in form and substance as specified in rules adopted by the superintendent.

(3) The opinion shall be based on standards adopted from time to time by the actuarial standards board of the American academy of actuaries and on such additional standards as the superintendent may prescribe by rule.

(4) In the case of an opinion required to be submitted by a foreign or alien life insurance company, the superintendent may accept the opinion filed by that company with the insurance regulatory authority of another state if the superintendent determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state.

(5) Except in cases of fraud or willful misconduct, the qualified actuary is not liable for damages in any civil action to any person, other than the insurance company and the superintendent, for any act, error, omission, decision, or conduct with respect to the actuary's opinion.

(6) The superintendent shall establish by rule penalties for an insurance company's or qualified actuary's failure to comply with this section.

(7) Except as provided in divisions (E)(9) and (F) of this section, documents, materials, or other information in the possession or control of the department of insurance that are a memorandum in support of the opinion or other material provided by the insurance company to the superintendent in connection with the memorandum shall be confidential by law and privileged, is not a public record under section 149.43 of the Revised Code, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action.

(8) Neither the superintendent nor any person who received documents, materials, or other information while acting under the authority of the superintendent shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to division (F) of this section.

(9) A memorandum in support of the opinion, and any other associated material, may be subject to subpoena for the purpose of defending an action seeking damages from the actuary submitting the memorandum by reason of an action required by this section or by rules adopted by the superintendent.

(10) If any portion of a confidential and privileged memorandum is cited by the company in its marketing, is cited before any governmental agency other than a state insurance regulatory authority, or is released by the company to the news media, the entire memorandum shall no longer be confidential and privileged.

(F) Notwithstanding division (E) of this section, the superintendent may do any of the following:

(1) Disclose memoranda and other materials described in this section upon obtaining prior written consent from the insurer to which the memorandum or other materials pertain;

(2) Disclose memoranda and other materials described in this section to the American academy of actuaries upon receipt of a written request from the academy stating that a memorandum or other material is required for the purpose of professional disciplinary proceedings. A request from the American academy of actuaries shall set forth the procedures to be used by the academy for preserving the confidential and privileged status of the memorandum or other material. If the procedures set forth are not satisfactory to the superintendent, the superintendent shall not release the memorandum or other material to the academy.

(3) Share documents and materials or other information, including the confidential and privileged documents, materials, or information subject to division (E) of this section, with other state, federal, and international regulatory agencies and law enforcement officials and with the national association of insurance commissioners and its affiliates and subsidiaries, provided that the recipient agrees to maintain the confidential or privileged status of any confidential or privileged memorandum or other material and has the legal authority to do so;

(4) Use memoranda and other materials described in this section in the furtherance of any regulatory or legal action brought by or on behalf of the superintendent or the state, resulting from the exercise of the superintendent's official duties.

(G) Notwithstanding divisions (E) and (F) of this section, the superintendent may authorize the national association of insurance commissioners and its affiliates and subsidiaries by agreement to share confidential or privileged memoranda and other material received pursuant to division (F)(3) of this section with local, state, federal, and international regulatory and law enforcement agencies and with local, state, and federal prosecutors, provided that the recipient agrees to maintain the confidential or privileged status of the confidential or privileged memorandum or other material and has authority to do so.

(H) Nothing in this section shall prohibit the superintendent from receiving memoranda and other material in accordance with section 3901.045 of the Revised Code.

(I) The superintendent may enter into agreements governing the sharing and use of memoranda and materials consistent with the requirements of this section.

(J) No waiver of any applicable privilege or claim of confidentiality in the memoranda and materials described in this section shall occur as a result of sharing or receiving memoranda and material as authorized in divisions (F)(2) and (3), (G), and (H) of this section.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3903.723 [Effective 9/4/2014] Minimum standards for the valuation of policies.

(A) Using the mortality, morbidity, and interest rates as provided in divisions (B) to (H) of this section and in sections 3903.724, 3903.725, and 3903.727 of the Revised Code, the minimum standard for the valuation of policies and contracts shall be derived according to the commissioners reserve valuation methods defined in divisions (I) to (L) and (O) of this section and section 3903.727 of the Revised Code for policies and contracts issued on or after January 1, 1989.

(B) For ordinary life insurance policies, excluding disability and accidental death benefits, issued on the standard basis on or after January 1, 1989, the minimum standard for the valuation of policies and contracts shall be derived from the following:

(1) The commissioners 1980 standard ordinary mortality table;

(2) At the election of the company for any one or more specified plans of life insurance, the commissioners 1980 standard ordinary mortality table with ten-year select mortality factors;

(3) Any ordinary mortality table, adopted after 1980 by the national association of insurance commissioners, that is approved by rules adopted by the department of insurance for use in determining the minimum standard of valuation for such policies.

(C) For industrial life insurance policies, excluding disability and accidental death benefits, issued on the standard basis

on or after January 1, 1989, the minimum standard for the valuation of policies shall be derived from the commissioners 1961 standard industrial mortality table or any industrial mortality table adopted after 1980 by the national association of insurance commissioners that is approved by rules adopted by the superintendent for use in determining the minimum standard of valuation for the policies.

(D) For all individual annuity and pure endowment contracts, excluding disability and accidental death benefits

issued on or after January 1, 1989, the minimum standard for the valuation of contracts shall be derived from both of the following:

(1) The valuation interest rates as defined in section 3903.724 of the Revised Code;

(2) The 1971 individual annuity mortality table or any modification of that table approved by the superintendent . The superintendent may approve the use of any individual annuity mortality table adopted after 1980 by the national association of insurance commissioners, either as adopted or as modified by the superintendent, for determining the minimum standard for the valuation of such contracts.

(E) For group annuity and pure endowment contracts, excluding disability and accidental death benefits

in the policies issued on or after January 1, 1989,

the minimum standard for the valuation of contracts shall be derived from both of the following:

(1) The valuation interest rates as defined in section 3903.724 of the Revised Code;

(2) The 1971 group annuity mortality table, or any modification of that table approved by the superintendent. The superintendent may approve the use of any group annuity mortality table adopted after 1980 by the national association of insurance commissioners, either as adopted or as modified by the superintendent, for determining the minimum standard for the valuation of such contracts.

(F) For total and permanent disability benefits in or supplementary to ordinary policies and contracts issued:

(1) On and after January 1, 1989, the minimum standard for the valuation of policies and contracts shall be derived from the tables of period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 disability study of the society of actuaries, with due regard for the type of benefit or any other table of disablement rates and termination rates adopted after 1980 by the national association of insurance commissioners for use in determining the minimum standard for the valuation of those policies.

Any such table shall, for active lives, be combined with a mortality table permitted for calculating the reserves for life insurance policies.

(2) The interest rate to be used in calculating minimum reserves for such benefits shall not exceed the applicable rate specified in section 3903.724 of the Revised Code for ordinary life insurance policies.

(G) For accidental death benefits in or supplementary to policies issued:

(1) On and after January 1, 1989, the minimum standard for the valuation of policies shall be derived from the 1959 accidental death benefits table or any accidental death benefits table adopted after 1980 by the national association of insurance commissioners for use in determining the minimum standard for the valuation of such accidental death benefits that is approved in rules adopted by the superintendent.

The table used shall be combined with a mortality table for calculating the reserves for life insurance policies.

(2) The interest rate to be used in calculating minimum reserves for such benefits shall not exceed the applicable rate specified in section 3903.724 of the Revised Code for ordinary life insurance policies.

(H) For group life insurance, life insurance issued on the substandard basis and all other special benefits, such tables as may be approved by the superintendent .

(I) Except as otherwise provided in divisions (L) and (O) of this section and in section 3903.727 of the Revised Code, reserves according to the commissioners reserve valuation method for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums shall be the excess, if any, of the present value on the valuation date of the future guaranteed benefits over the then present value of any future modified net premiums therefor. The modified net premiums for a policy shall be the uniform percentage of the respective contract premiums for the benefits such that the present value, at the date of issue of the policy, of all modified net premiums shall be equal to the sum of the then present value of the benefits provided for by the policy and the excess of division (I)(1) over division (I)(2) of this section, as follows:

(1) A net level annual premium equal to the present value, at the date of issue, of such benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per annum payable on the first and each subsequent anniversary of the policy on which a premium falls due . However, the net level annual premium shall not exceed the net level annual premium on the nineteen-year premium whole life plan for insurance of the same amount at an age one year higher than the age at issue of the policy.

(2) A net one-year term premium for such benefits provided for in the first policy year.

(J) This division defines the commissioners reserve valuation method for all life insurance policies issued on or after January 1, 1989, that have a first year premium in excess of the premium for the second policy year and for which excess no comparable benefit is provided in the first year and that provide either an endowment benefit or cash surrender value, or a combination, in an amount greater than the excess premium. The reserve according to the commissioners reserve valuation method as of any policy anniversary occurring on or before the assumed ending date defined herein as the first policy anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than the excess premium shall, except as otherwise provided in division (O) of this section, be the greater of either of the following:

(1) The reserve as of the policy anniversary, with the policy anniversary being calculated as described in division (I) of this section;

(2) The reserve as of the policy anniversary calculated as described in division (I) of this section, but with:

(a) The value defined in division (I)(1) of this section being reduced by fifteen per cent of the amount of such excess first-year premium;

(b) All present values of benefits and premiums being determined without reference to premiums and benefits provided for by the policy after the assumed ending date;

(c) The policy being assumed to mature on the assumed ending date as an endowment

;

(d) The cash surrender value provided on the assumed ending date being considered as an endowment benefit.

In making the above comparison, the mortality and interest bases stated in this section and in section 3903.724 of the Revised Code shall be used.

(K) Reserves according to the commissioners reserve valuation method shall be calculated by a method consistent with the principles of divisions (I) and (J) of this section for:

(1) Life insurance policies providing for a varying amount of life insurance or requiring payment of varying premiums;

(2) Group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under section 408 of the Internal Revenue Code of 1954, as amended;

(3) Disability and accidental death benefits in all policies and contracts;

(4) All other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other annuity and pure endowment contracts

.

(L)

(1) This division defines the commissioners annuity reserve valuation method for all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under section 408 of the Internal Revenue Code of 1954, as amended.

(2) Reserves for benefits under such contracts, excluding disability and accidental death benefits, shall be the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by such contract at the end of each respective contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future gross considerations required by the terms of the contract that become payable prior to the end of each such respective contract year. The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate, or rates, specified in such contracts for determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the terms of such contracts to determine nonforfeiture values.

(M)

(1) In no event shall a company's aggregate reserves for all life insurance policies, excluding disability and accidental death benefits issued on or after January 1, 1989, be less than the aggregate reserves calculated in accordance with the method set forth in divisions (I), (J), (K), (L), (O), and (P) of this section and the mortality table or tables and rate or rates of interest used in calculating nonforfeiture benefits for such policies.

(2) In no event shall the aggregate reserves for all policies, contracts, and benefits be less than the aggregate reserves determined by the appointed actuary to be necessary to render the opinion required by section 3903.722 of the Revised Code.

(N)

(1) Reserves for policies and contracts issued prior to January 1, 1989, may be calculated, at the option of the company, according to any standards that produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by the laws in effect immediately prior to that date.

(2) Reserves for any category of policies, contracts, or benefits as established by the superintendent, issued on or after January 1, 1989, may be calculated, at the option of the company, according to any standards that produce aggregate reserves for such category greater than those calculated according to the minimum standards provided in this section, but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, shall not be higher than the corresponding rate or rates of interest used in calculating any nonforfeiture benefits provided for in such standards.

(3) A company, which adopts at any time a standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard provided under sections 3903.72 to 3903.7211 of the Revised Code, may adopt a lower standard of valuation with the approval of the superintendent, but not lower than the minimum provided in these sections. However, for the purposes of this division, the holding of additional reserves previously determined by the appointed actuary to be necessary to render the opinion required by sections 3903.722 and 3903.726 of the Revised Code shall not be considered to be the adoption of a higher standard of valuation.

(O) If in any contract year the gross premium charged by a company on a policy or contract is less than the valuation net premium calculated by the method used in calculating the reserve for a policy or contract but using the minimum valuation standards of mortality and rate of interest , the minimum reserve required for such policy or contract shall be the greater of either the reserve calculated according to the mortality table, rate of interest, and method actually used for such policy or contract, or the reserve calculated by such method but using the minimum valuation standards of mortality and rate of interest and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium. The minimum valuation standards of mortality and rate of interest referred to in this division are those required by divisions (A) to (H) of this section and section 3903.724 of the Revised Code.

For a life insurance policy issued on or after January 1, 1987, for which the gross premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for the excess and that provides an endowment benefit or a cash surrender value or a combination in an amount greater than the excess premium, the provisions of this division shall be applied as if the method used in calculating the reserve for such policy were the method defined in division (I) of this section. The minimum reserve for such policy, at each policy anniversary, shall be the greater of the minimum reserve calculated in accordance with division (J) of this section and in accordance with this division.

(P) In the case of a plan of life insurance that provides for future premium determination, the amounts of which are to be determined by the insurance company based on then estimates of future experience, or in the case of a life insurance or annuity that is of such a nature that the minimum reserves cannot be determined by the methods described in divisions (I), (J), (K), (L), and (O) of this section , the reserves to be held under the plan shall be appropriate in relation to the benefits and the pattern of premiums for that plan and shall be computed by a method that is consistent with the principles of this section as determined by rules adopted by the superintendent.

(Q) The superintendent shall adopt rules specifying minimum reserve standards for the valuation of individual and group health plans.

Renumbered from § 3903.72 and amended by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3903.724 [Effective 9/4/2014] Determination of valuation interest rate.

(A) This section shall determine the calendar year statutory valuation interest rates (VIR) used in determining the minimum standard for the valuation of all of the following:

(1) Life insurance policies issued on or after January 1, 1989;

(2) Individual annuity and pure endowment contracts issued on or after January 1, 1989;

(3) Annuities and pure endowments purchased on or after January 1, 1989, under group annuity and pure endowment contracts;

(4) The net increase, if any, in amounts held under a guaranteed interest contact in a calendar year after January 1, 1989.

(B) The calendar year statutory valuation interest rates shall be calculated as follows and the results rounded to the nearest one-quarter of one per cent:

(1)

(a) For life insurance , by adding three per cent to the result of multiplying W (the applicable weighting factor) by R(sub-1) minus three per cent (where R(sub-1) is the lesser of the reference interest rate and nine per cent) and also adding the result of multiplying one-half of the weighting factor by R(sub-2) minus nine per cent (where R(sub-2) is the greater of the reference interest rate and nine per cent), expressed as follows:

VIR = .03 + W (R(sub-1) - .03) + W/2(R(sub-2) - .09).

(b) Provided that if the calendar year statutory valuation interest rate for a life insurance policy issued in any calendar year determined in accordance with this division does not differ from the calendar year valuation interest rate for similar policies issued in the preceding calendar year by at least one-half of one per cent, the calendar year valuation interest rate for the policy shall be equal to the calendar year valuation interest rate for the preceding calendar year. The calendar year statutory valuation interest rate shall be determined for 1980 and for each subsequent year prior to the operative date of the valuation manual.

(2) For all single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options by adding to three per cent the result of multiplying W (the applicable weighting factor) by R minus three per cent (where R is the reference interest rate), expressed as follows:

VIR = .03 + W (R -.03).

(3) Except as provided in division (B)(2) of this section, for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis, the life insurance formula stated in division (B)(1) of this section shall apply to all annuity and guaranteed interest contracts with guarantee durations in excess of ten years

and the formula for single premium immediate annuities stated in division (B)(2) of this section shall apply to annuities and guaranteed interest contracts with guarantee duration of ten years or less.

(4) For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single premium immediate annuities stated in division (B)(2) of this section shall apply.

(5) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the formula for single premium immediate annuities stated in division (B)(2) of this section shall apply.

(C) For life insurance , the guarantee duration is the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under an option to convert to a plan of life insurance with premium rates or nonforfeiture values, or both, guaranteed in the policy.

(D) The weighting factors for the formulas prescribed in division (B) of this section are shown in the following table:

Weighting Factors for Life Insurance

Guarantee Duration

Weighting

(Years)

Factors

10 or less

.50

More than 10, but not more than 20

.45

More than 20

.35

(E) The weighting factor for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuity and guaranteed interest contracts with cash settlement options is .80.

(F) Weighting factors for all other annuity and guaranteed interest contracts vary with the type of plan and guarantee duration. The types of plans are as follows:

(1) A plan type A is one in which funds may not be withdrawn or may be withdrawn in only one of three ways:

(a) With an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the company;

(b) Without such adjustment but in installments over five or more years;

(c) As an immediate life annuity.

(2) A plan type B is one in which the funds may not be withdrawn before the expiration of the interest rate guarantee unless an adjustment is made to reflect changes in interest rates or asset values since receipt of the funds by the company or unless they are withdrawn in installments over five or more years. At the end of the interest rate guarantee, funds may be withdrawn in a single sum or in installments over less than five years without adjustment.

(3) A plan type C is one in which the funds may be withdrawn before the end of the interest rate guarantee in a single sum or in installments over less than five years without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the company or subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.

(4) The guarantee duration for an annuity or guaranteed interest contract with cash settlement options is the number of years for which the contract guarantees interest rates in excess of the calendar year valuation interest rate for life insurance policies with guarantee duration in excess of twenty years. The guarantee duration for annuity and guaranteed interest contracts without cash settlement options is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence.

(5) Annuity and guaranteed interest contracts with cash settlement options may be valued on an issue year basis or on a change in fund basis. Annuity and guaranteed interest contracts without cash settlement options must be valued on an issue year basis. As used in this division, an issue year basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract, and the change in fund basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.

(6) Weighting factors for other annuities and for guaranteed interest contracts, except as stated in division (E) of this section, are specified below.

(a) For annuity and guaranteed interest contracts valued on an issue year basis :

Weighting Factors for Annuities and Guaranteed

Interest Contracts

Weighting Factor for

Plan Type

Guarantee Duration (Years)

A

B

C

5 or less

.80

.60

.50

More than 5, but not more than 10

.75

.60

.50

More than 10, but not more than 20

.65

.50

.45

More than 20

.45

.35

.35

(b) For annuities and guaranteed interest contracts valued on a change in fund basis, the factors shown in division (F)(6)(a) of this section increased by the following amounts:

(i) For plan type A, .15;

(ii) For plan type B, .25;

(iii) For plan type C, .05.

(c) For annuities and guaranteed interest contracts valued on an issue year basis, other than those with no cash settlement options, that do not guarantee interest on considerations received more than one year after issue or purchase and for annuities and guaranteed interest contracts valued on a change in fund basis that do not guarantee interest rates on considerations received more than twelve months beyond the valuation date, the factors shown in item (F)(6)(a) or derived in item (F)(6)(b) increased by .05 for all plan types.

(G) The reference interest rate is determined by comparing the monthly average of the composite yield of the monthly average on seasoned corporate bonds, as published by Moody's investors service, inc. for the applicable time period, as prescribed below:

(1) The reference interest rate for all life insurance is the lesser of such average over the thirty-six month period and such average over the twelve-month period ending on the thirtieth day of June of the calendar year preceding the year of issue.

(2) The reference interest rate for annuity and guaranteed interest contracts with cash settlement options, except single premium immediate annuities and annuity benefits involving life contingencies arising from other annuity and guaranteed interest contracts with cash settlement options, valued on an issue year basis with guarantee durations in excess of ten years, is the lesser of such average over the thirty-six month period and such average over the twelve-month period ending on the thirtieth day of June of the calendar year of issue or purchase.

(3) The reference interest rate for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in division (G)(6) of this section, with guarantee duration of ten years or less, such average over the twelve-month period ending on the thirtieth day of June of the calendar year of issue or purchase.

(4) The reference interest rate for other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, such average over the twelve-month period ending on the thirtieth day of June of the calendar year of issue or purchase.

(5) The reference interest rate for all other annuity and guaranteed interest contracts with cash settlement options valued on a change in fund basis is such average over the twelve-month period ending on the thirtieth day of June of the calendar year in which a change in the fund occurs.

(6) The reference interest rate for all single premium immediate annuities and annuity benefits involving life contingencies arising from other annuity and guaranteed interest contracts with cash settlement options is such average over the twelve-month period ending on the thirtieth day of June of the calendar year of issue or purchase.

(7) If such corporate bond rate average is no longer published or the national association of insurance commissioners determines that such average is no longer appropriate, the superintendent may by rule approve the use of any alternative method for the determination of the reference interest rate adopted by the commissioners.

Renumbered from § 3903.721 and amended by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3903.725 [Effective 9/4/2014] Valuation for individual annuity and pure endowment contracts.

For individual annuity and pure endowment contracts issued on or after January 1, 1989, and for annuities and pure endowments purchased on or after January 1, 1989, under group annuity and pure endowment contracts, the minimum standard of valuation shall be the commissioners reserve valuation methods defined in divisions (I), (J), (K), and (L) of section 3903.723 of the Revised Code, interest rates defined in section 3903.724 of the Revised Code, and the following tables:

(A) For individual single premium immediate annuity contracts issued on or after January 1, 1989, excluding any disability and accidental death benefits in those contracts, the 1971 individual annuity mortality table or any individual annuity mortality table adopted after 1980 by the national association of insurance commissioners that is approved in rules adopted by the superintendent for use in determining the minimum standard of valuation for these contracts, or any modification of these tables approved by the superintendent;

(B) For individual annuity and pure endowment contracts issued on or after January 1, 1989, other than single premium immediate annuity contracts, excluding any disability and accidental death benefits in those contracts, the 1971 individual annuity mortality table or any individual annuity mortality table adopted after 1980 by the national association of insurance commissioners that is adopted in rules by the superintendent for use in determining the minimum standard of valuation for those contracts, or any modification of these tables approved by the superintendent;

(C) For annuities and pure endowments purchased on or after January 1, 1989, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under those contracts, the 1971 group annuity mortality table, or any group annuity mortality table adopted after 1980 by the national association of insurance commissioners that is approved in rules adopted by the superintendent for use in determining the minimum standard of valuation for annuities and pure endowments, or any modification of these tables approved by the superintendent.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3903.726 [Effective 9/4/2014] Submissions prior to operative date of valuation manual.

(A) This section shall apply on and after the operative date of the valuation manual.

(B) Every company with an outstanding life insurance contract, accident and health insurance contract, or deposit-type contract in this state that is subject to rules adopted by the superintendent shall annually submit the opinion of an appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts, and comply with applicable laws of this state. The valuation manual shall prescribe the specifics of this opinion.

(C) Every company with an outstanding life insurance contract, accident and health insurance contract, or deposit-type contract in this state that is subject to rules adopted by the superintendent, except as exempted in the valuation manual, shall also annually include in the opinion required by division (B) of this section, an opinion of the same appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified in the valuation manual, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including the benefits under and expenses associated with the policies and contracts.

(D) Each opinion required by divisions (B) and (C) of this section shall be governed by the following provisions:

(1) The opinion shall be in form and substance as specified in the valuation manual and acceptable to the superintendent.

(2) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after the operative date of the valuation manual.

(3) The opinion shall apply to all policies and contracts subject to division (C) of this section, plus other actuarial liabilities as may be specified in the valuation manual.

(4) The opinion shall be based on standards adopted from time to time by the actuarial standards board or its successor, and on such additional standards as may be prescribed in the valuation manual.

(5) In the case of an opinion required to be submitted by a foreign or alien company, the superintendent may accept the opinion filed by that company with the insurance supervisory official of another state if the superintendent determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state.

(6) Except in cases of fraud or willful misconduct, the appointed actuary shall not be liable for damages to any person, other than the insurance company and the superintendent, for any act, error, omission, decision, or conduct with respect to the appointed actuary's opinion.

(7) Disciplinary action by the superintendent against the company or the appointed actuary shall be defined in rules adopted by the superintendent.

(E) In addition to the requirements specified in division (D) of this section, each opinion required by division (C) of this section shall be governed by the following provisions:

(1) A memorandum, in form and substance as specified in the valuation manual, and acceptable to the superintendent, shall be prepared to support each actuarial opinion.

(2) If the insurance company fails to provide a supporting memorandum at the request of the superintendent within a period specified in the valuation manual or the superintendent determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the valuation manual or is otherwise unacceptable to the superintendent, the superintendent may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the superintendent.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3903.727 [Effective 9/4/2014] Valuation for accident and health insurance contracts.

For accident and health insurance contracts issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the minimum standard of valuation required under division (B) of section 3903.721 of the Revised Code. For disability, accident and sickness, accident and health insurance contracts issued on or after January 1, 1989, and prior to the operative date of the valuation manual, the minimum standard of valuation is the standard adopted in rules by the superintendent.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3903.728 [Effective 9/4/2014] Policies issued on or after the operative date of the valuation manual.

(A) For policies issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the minimum standard of valuation required under division (B) of section 3903.721 of the Revised Code, except as provided under divisions (E) and (G) of this section.

(B) The operative date of the valuation manual is January 1 of the first calendar year following the first July 1 as of which all of the following have occurred:

(1) The valuation manual has been adopted by the national association of insurance commissioners by an affirmative vote of at least forty-two members, or three-fourths of the members voting, whichever is greater.

(2) The standard valuation law, as amended by the national association of insurance commissioners in 2009, or legislation including substantially similar terms and provisions, has been enacted by states representing greater than seventy-five per cent of the direct premiums written as reported in one or more of the following annual statements submitted for 2008: life, accident, and health annual statements; health annual statements; or fraternal annual statements.

(3) The standard valuation law, as amended by the national association of insurance commissioners in 2009, or legislation including substantially similar terms and provisions, has been enacted by at least forty-two of the following fifty-five jurisdictions: the fifty states of the United States, American Samoa, the American Virgin Islands, the District of Columbia, Guam, and Puerto Rico.

(C) Unless a change in the valuation manual specifies a later effective date, changes to the valuation manual shall be effective on January 1 following the date when all of the following have occurred:

(1) The change to the valuation manual has been adopted by the national association of insurance commissioners by an affirmative vote representing both of the following:

(a) At least three-fourths of the members of the national association of insurance commissioners voting, but not less than a majority of the total membership;

(b) Members of the national association of insurance commissioners representing jurisdictions totaling greater than seventy-five per cent of the direct premiums written as reported in one or more of the following annual statements most recently available prior to the vote in division (C)(1)(a) of this section: life, accident, and health annual statements; health annual statements; or fraternal annual statements.

(D) The valuation manual shall specify all of the following:

(1) Minimum valuation standards for and definitions of the policies or contracts subject to division (B) of section 3903.721 of the Revised Code. The minimum valuation standards shall be:

(a) The commissioners reserve valuation method for life insurance contracts, other than annuity contracts, subject to division (B) of section 3903.721 of the Revised Code;

(b) The commissioners annuity reserve valuation method for annuity contracts subject to division (B) of section 3903.721 of the Revised Code;

(c) Minimum reserves for all other policies or contracts subject to division (B) of section 3903.721 of the Revised Code.

(2) Which policies or contracts or types of policies or contracts are subject to the requirements of a principle-based valuation in division (A) of section 3903.729 of the Revised Code and the minimum valuation standards consistent with those requirements.

(3) For policies and contracts subject to a principle-based valuation under section 3903.729 of the Revised Code:

(a) Requirements for the format of reports to the superintendent under division (B)(3) of section 3903.729 of the Revised Code that shall include information necessary to determine if the valuation is appropriate and in compliance with sections 3903.72 to 3903.7211 of the Revised Code.

(b) Assumptions for risks over which the company does not have significant control or influence.

(c) Procedures for corporate governance and oversight of the actuarial function, and a process for appropriate waiver or modification of such procedures.

(4) For policies not subject to a principle-based valuation under section 3903.729 of the Revised Code, the minimum valuation standard, which shall be or do either of the following:

(a) Be consistent with the minimum standard of valuation prior to the operative date of the valuation manual;

(b) Develop reserves that quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring.

(5) Other requirements, including those relating to reserve methods, models for measuring risk, generation of economic scenarios, assumptions, margins, use of company experience, risk measurement, disclosure, certifications, reports, actuarial opinions and memorandums, transition rules, and internal controls;

(6) The data and form of the data required under section 3903.7210 of the Revised Code, with whom the data must be submitted, and other requirements specified by the superintendent, which may include data analyses and reporting of analyses.

(E) In the absence of a specific valuation requirement or if a specific valuation requirement in the valuation manual is not, in the opinion of the superintendent, in compliance with sections 3903.72 to 3903.7211 of the Revised Code, then the company shall, with respect to such requirements, comply with minimum valuation standards prescribed in rules adopted by the superintendent.

(F) The superintendent may engage a qualified actuary, at the expense of the company, to perform an actuarial examination of the company and opine on the appropriateness of any reserve assumption or method used by the company, or to review and opine on a company's compliance with any requirement set forth in sections 3903.72 to 3903.7211 of the Revised Code. The superintendent may rely upon the opinion, regarding provisions contained within sections 3903.72 to 3903.7211 of the Revised Code, of a qualified actuary engaged by the insurance commissioner of another state, district, or territory of the United States. As used in this division, the term "engage" includes employment and contracting.

(G) The superintendent may require a company to change any assumption or method that in the opinion of the superintendent is necessary in order to comply with the requirements of the valuation manual or sections 3903.72 to 3903.7211 of the Revised Code, and the company shall adjust the reserves as required by the superintendent. The superintendent may take other disciplinary action as permitted under applicable laws.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3903.729 [Effective 9/4/2014] Established reserves; principle-based valuation.

(A) A company shall establish reserves using a principle-based valuation that meets the following conditions for policies or contracts as specified in the valuation manual:

(1) The principle-based valuation shall quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring during the lifetime of the contracts.

(2) The principle-based valuation shall reflect conditions, for policies or contracts with significant tail risk, appropriately adverse to quantify the tail risk.

(3) The principle-based valuation shall incorporate assumptions, risk analysis methods, and financial models and management techniques that are consistent with, but not necessarily identical to, those utilized within the company's overall risk assessment process, while recognizing potential differences in financial reporting structures and any prescribed assumptions or methods.

(4) The principle-based valuation shall incorporate assumptions that are derived in one of the following manners:

(a) The assumption is prescribed in the valuation manual.

(b) For assumptions that are not prescribed, the assumptions shall:

(i) Be established utilizing the company's available experience, to the extent it is relevant and statistically credible;

(ii) To the extent company data is not available, relevant, or statistically credible, be established utilizing other relevant statistically credible experience.

(5) The principle-based valuation shall provide margins for uncertainty including adverse deviation and estimation error, such that the greater the uncertainty the larger the margin and resulting reserve.

(B) A company using a principle-based valuation for one or more policies or contracts subject to this section as specified in the valuation manual shall do all of the following:

(1) Establish procedures for corporate governance and oversight of the actuarial valuation function consistent with those described in the valuation manual;

(2) Provide to the superintendent and the company's board of directors an annual certification of the effectiveness of the internal controls with respect to the principle-based valuation. Such controls shall be designed to assure that all material risks inherent in the liabilities and associated assets subject to such valuation are included in the valuation, and that valuations are made in accordance with the valuation manual. The certification shall be based on the controls in place as of the end of the preceding calendar year.

(3) Develop, and file with the superintendent upon request, a principle-based valuation report that complies with standards prescribed in the valuation manual.

Added by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

3903.73 Deposit of securities with treasurer of state.

All securities deposited with the superintendent of insurance shall be deposited by him with the treasurer of state, and the treasurer of state shall not deliver such securities or coupons attached thereto, except upon the written order of the superintendent. No security shall be accepted for deposit by the superintendent unless it is of par value and market value of one thousand dollars or more.

Effective Date: 03-07-1983

3903.74 Sale and distribution of securities of defaulting companies.

If any company, corporation, or association required by law to make a deposit with the superintendent of insurance, or other state officer, to secure the contracts or such company, corporation, or association, or for any other purpose, fails to pay any of its liabilities upon such contracts, or other obligations, according to the terms thereof after the liability thereon has been determined, or if such company, corporation, or association, having ceased to do business with this state, leaves unpaid any such liability or has become insolvent, the attorney general, on behalf of the superintendent, or such other officer, and upon the application of any person entitled to participate in such deposit, or the proceeds arising therefrom, shall commence a civil action in the court of common pleas of Franklin county, making the company, corporation, or association a party defendant, to determine the rights of all parties claiming any interest in such deposit, to subject the deposit to the payment or satisfaction of all liabilities, and to distribute such fund among the persons entitled thereto.

Effective Date: 03-07-1983

3903.75 Notice to claimants.

Upon the filing of the petition authorized by section 3903.74 of the Revised Code, the superintendent of insurance, or other officer, shall publish for six consecutive weeks in three papers of general circulation within the state, one of which is published at the seat of government, a notice containing a succinct statement of the object and prayer of the petition in such action, and the time within which persons claiming to have an interest in such fund are required to answer.

Effective Date: 03-07-1983

3903.76 Court procedure.

The clerk of court of common pleas of Franklin county shall forward a copy of the notice required by section 3903.75 of the Revised Code to the last known address of such company, corporation, or association. The Civil Rules shall govern such proceedings, and, upon the hearing of the cause, such order, judgment, or decree shall be entered by the court of common pleas of Franklin county as is just and equitable.

Effective Date: 03-07-1983

3903.77 .

(A) Every property and casualty insurance company doing business in this state, except as exempted by the superintendent of insurance, annually, shall cause to be prepared by a qualified actuary, appointed by the company, the following documents:

(1) An actuarial opinion that certifies to the reasonableness of the insurance company's reserves and that shall be entitled a "statement of actuarial opinion";

(2) A summary that shall be in support of the statement of actuarial opinion and that shall be entitled an "actuarial opinion summary." An insurance company licensed but not domiciled in this state need not include the actuarial opinion summary in its submissions to the superintendent but shall make the summary available to the superintendent upon request.

(B) The insurance company annually shall submit the documents prepared pursuant to division (A) of this section to the superintendent in accordance with the national association of insurance commissioners' property and casualty annual statement instructions.

(C)

(1) Every property and casualty insurance company doing business in this state shall prepare an actuarial report and underlying work papers to support the statement of actuarial opinion and the actuarial opinion summary required under division (A) of this section in accordance with the national association of insurance commissioners' property and casualty statement instructions. The insurance company shall make the actuarial report and underlying work papers available to the superintendent upon request.

(2) If an insurance company fails to provide the actuarial report or work papers at the request of the superintendent pursuant to division (C)(1) of this section or the superintendent determines that the actuarial report or work papers provided are unacceptable, the superintendent may contract with a qualified actuary at the expense of the insurance company to review the statement of actuarial opinion provided by the insurance company pursuant to division (A) of this section and the basis for that opinion and to preparean actuarial report and work papers.

(D) Except in cases of fraud or willful misconduct on the part of the actuary, no actuary appointed by an insurance company to prepare the statement of actuarial opinion and actuarial opinion summary required under division (A) of this section is liable for damages to any person except the insurance company and the superintendent for any act, error, omission, decision, or conduct with respect to the actuary's opinion.

(E) The statement of actuarial opinion required under division (A) of this section is a public document and a public record as defined in section 149.43 of the Revised Code. However, the actuarial opinion summary, actuarial report, work papers, and any documents, materials or other information provided in support of the statement of actuarial opinion are privileged and confidential, are not a public record, and are not subject to subpoena or to discovery, and are not admissible in evidence in any private civil action.

Neither the superintendent nor any person who receives documents, materials, or other information required to be kept confidential under this division while acting under the authority of the superintendent shall testify in any private civil action concerning any documents, materials, or other information required to be kept confidential under this division.

This section shall not be construed to limit the superintendent's authority to release documents to the actuarial board for counseling and discipline so long as the documents are necessary for the purpose of professional disciplinary proceedings and the actuarial board for counseling and discipline establishes procedures satisfactory to the superintendent for preserving the confidentiality of the documents. Neither shall this section be construed to limit the superintendent's authority to use documents, materials, nor other information in furtherance of any regulatory or legal action brought as part of the superintendent's official duties.

(F) In order to assist in the performance of the superintendent's duties, the superintendent may do all of the following:

(1) Share documents, materials, or other information, including any documents, materials, or other information required to be kept confidential under division (E) of this section, with other state, federal, and international regulatory and law enforcement agencies and with the national association of insurance commissioners including its affiliates and subsidiaries if the recipient agrees to maintain the confidentiality and privileged status of the document, material, or other information and has the legal authority to maintain confidentiality;

(2) Receive documents, materials, or other information, includingotherwise confidential and privileged documents, materials, and information from other state, federal, and international regulatory and law enforcement agencies and from the national association of insurance commissioners including its affiliates and subsidiaries. The superintendent shall maintain the confidentiality and privileged status of any document, material, or other information received with notice of confidential and privileged status under the laws of the jurisdiction that is the source of the document, material, or information.

(3) Enter into agreements consistent with divisions (E) and (F) of this section for the sharing and use of information.

(G) No waiver of any privilege or claim of confidentiality of documents, materials, or other information shall occur as a result of any disclosure to the superintendent under this section or as a result of any sharing of documents, materials, or other information authorized by the superintendent under division (G) of this section.

(H) As used in this section, "qualified actuary" means a person who is a member in good standing of the American academy of actuaries and who meets the requirements identified in the national association of insurance commissioners' property and casualty statement instructions.

Added by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2010.

3903.81 Risk-based capital for insurers model act definitions.

As used in sections 3903.81 to 3903.93 of the Revised Code:

(A) "Adjusted RBC report" means an RBC report that has been adjusted by the superintendent of insurance in accordance with division (C) of section 3903.82 of the Revised Code.

(B) "Authorized control level RBC" means the number determined under the risk-based capital formula in accordance with the RBC instructions.

(C) "Company action level RBC" means the product of 2.0 and an insurer's authorized control level RBC.

(D) "Corrective order" means an order issued by the superintendent of insurance in accordance with division (B)(3) of section 3903.84 of the Revised Code specifying corrective actions that the superintendent has determined are required.

(E) "Domestic insurer" means any insurance company organized under Chapter 3907. or 3925. of the Revised Code.

(F) "Foreign insurer" means any insurance company licensed under section 3909.01 or 3927.01 of the Revised Code.

(G) "Life or health insurer" means any insurance company licensed under section 3907.08 or 3909.01 of the Revised Code, a company possessing a certificate of authority pursuant to section 3929.01 of the Revised Code that writes only accident and health insurance, or a fraternal benefit society licensed under Chapter 3921. of the Revised Code.

(H) "Mandatory control level RBC" means the product of .70 and an insurer's authorized control level RBC.

(I) "NAIC" means the national association of insurance commissioners.

(J) "Negative trend" means a negative trend over a period of time for a life or health insurer as determined in accordance with the trend test calculation included in the RBC instructions.

(K) "Property and casualty insurer" means any insurance company that has a certificate of authority pursuant to section 3929.01 of the Revised Code. "Property and casualty insurer" does not include monoline mortgage guarantee insurers, financial guarantee insurers, or title insurers.

(L) "RBC" means risk-based capital.

(M) "RBC instructions" means the RBC report, including risk-based capital instructions, as adopted by the NAIC and as amended by the NAIC from time to time in accordance with the procedures adopted by the NAIC. "RBC instructions" shall also include any modifications adopted by the superintendent, as the superintendent considers to be necessary.

(N) "RBC level" means an insurer's company action level RBC, regulatory action level RBC, authorized control level RBC, or mandatory control level RBC.

(O) "RBC plan" means a comprehensive financial plan containing the elements specified in division (B) of section 3903.83 of the Revised Code.

(P) "Revised RBC plan" means an RBC plan rejected by the superintendent of insurance and then revised by an insurer with or without incorporating the superintendent of insurance's recommendation.

(Q) "RBC report" means the report required by section 3903.82 of the Revised Code.

(R) "Regulatory action level RBC" means the product of 1.5 and an insurer's authorized control level RBC.

(S) "Total adjusted capital" means the sum of both of the following:

(1) An insurer's statutory capital and surplus as determined in accordance with the statutory accounting applicable to the annual statements prepared on a form adopted under section 3901.77 of the Revised Code, as required to be filed by sections 3907.19 , 3909.06 , and 3929.30 of the Revised Code;

(2) Such other items, if any, as the RBC instructions may provide.

Amended by 129th General AssemblyFile No.124, HB 341, §1, eff. 1/1/2013.

Amended by 128th General AssemblyFile No.18, HB 300, §1, eff. 5/26/2010.

Effective Date: 09-01-2002

3903.82 Annual report.

(A) Each domestic insurer shall, on or prior to the first day of March of every year, prepare and submit to the superintendent of insurance a report on its RBC levels as of the end of the calendar year just ended, in a form and containing such information as is required by the RBC instructions. In addition, every domestic insurer shall file its RBC report as follows:

(1) With the NAIC, in accordance with the RBC instructions;

(2) With the insurance regulatory authority of any other state in which the insurer is authorized to do business, if the insurance regulatory authority of that state has sent a written request to the insurer for the RBC report. The insurer shall file an RBC report in that state no later than the later of:

(a) Fifteen days after the insurer's receipt of the insurance regulatory authority's request for the RBC report;

(b) Prior to the first day of March.

(B)

(1) A life or health insurer's RBC levels shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall take the following risks into account, and may adjust for the covariance between these risks:

(a) Asset risk;

(b) Insurance risk;

(c) Interest rate risk;

(d) All other business risks and such other relevant risks as are set forth in the RBC instructions.

(2) A property and casualty insurer's RBC levels shall be determined in accordance with the formula set forth in the RBC instructions, applying the factors in the manner set forth in the RBC instructions. The formula shall take the following risks into account, and may adjust for the covariance between these risks:

(a) Asset risk;

(b) Credit risk;

(c) Underwriting risk;

(d) All other business risks and such other relevant risks as are set forth in the RBC instructions.

(C) If a domestic insurer files an RBC report that is inaccurate in the judgment of the superintendent, the superintendent shall adjust the RBC report to correct the inaccuracy and then shall provide a copy of the adjusted RBC report to the insurer. The superintendent shall also provide the insurer with a statement of the reasons for any adjustment.

(D) In enacting sections 3903.81 to 3903.93 of the Revised Code, the general assembly finds all of the following:

(1) An excess of capital over the amount produced by the risk-based capital requirements of sections 3903.81 to 3903.93 of the Revised Code, and the formulas, schedules, and instructions referenced in sections 3903.81 to 3903.93 of the Revised Code, is desirable in the business of insurance.

(2) Insurers, accordingly, should seek to maintain capital above the RBC levels required under sections 3903.81 to 3903.93 of the Revised Code.

(3) Additional capital is used and is useful in the insurance business, helping to secure an insurer against various risks inherent in, or affecting, the business of insurance, which risks are not accounted for or are only partially measured by the risk-based capital requirements contained in sections 3903.81 to 3903.93 of the Revised Code.

Effective Date: 03-03-1996

3903.83 [Effective Until 9/4/2014] Duty to submit plan.

(A) For purposes of sections 3903.81 to 3903.93 of the Revised Code, a "company action level event" is any of the following events:

(1) A domestic or foreign insurer's filing of an RBC report that indicates that the insurer's total adjusted capital is greater than or equal to its regulatory action level RBC but less than its company action level RBC;

(2) A life or health insurer's filing of an RBC report that indicates that the insurer's total adjusted capital is greater than or equal to its company action level RBC but less than the product of 2.5 and its authorized control level RBC, and that indicates a negative trend;

(3) A property and casualty insurer's filing of an RBC report that indicates that the insurer's total adjusted capital is greater than or equal to its company action level RBC but less than the product of its authorized control level RBC and 3.0, and that triggers the trend test determined in accordance with the trend test calculation included in the property and casualty RBC instructions;

(4) The notification by the superintendent of insurance to an insurer of an adjustment to the insurer's RBC report, which adjusted RBC report shows the insurer's total adjusted capital within the range described in either division (A)(1) or (2) of this section, provided that the insurer does not challenge the adjusted RBC report under section 3903.87 of the Revised Code;

(5) The superintendent's notification to an insurer, following the hearing required under section 3903.87 of the Revised Code, that the superintendent has rejected the insurer's challenge to an adjusted RBC report showing the insurer's total adjusted capital within the range described in either division (A)(1) or (2) of this section.

(B) In the case of a company action level event, the insurer shall prepare and submit to the superintendent an RBC plan that shall:

(1) Identify the conditions that contributed to the company action level event;

(2) Contain proposals of corrective actions that the insurer intends to take to eliminate the conditions leading to the company action level event;

(3) Provide projections of the insurer's financial results in the current year and at least the four succeeding years, both in the absence of the proposed corrective actions and giving effect to the proposed corrective actions. The projections shall include projections of statutory operating income, net income, capital, and surplus. Projections for both new and renewal business may include separate projections for each major line of business, and may separately identify each significant income, expense, and benefit component of the projection.

(4) Identify the key assumptions impacting the insurer's projections made pursuant to division (B)(3) of this section, and describe the sensitivity of the projections to the assumptions;

(5) Identify the quality of, and problems associated with, the insurer's business, including, but not limited to, its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business, and use of reinsurance.

(C) The RBC plan shall be submitted within forty-five days after a company action level event. However, if an insurer has challenged an adjusted RBC report pursuant to section 3903.87 of the Revised Code, the RBC plan need not be submitted until after the hearing required under section 3903.87 of the Revised Code. If the superintendent rejects the insurer's challenge, the RBC plan shall be submitted within forty-five days after the superintendent's notification to the insurer of the rejection of the challenge.

(D)

(1) Within sixty days after an insurer submits an RBC plan to the superintendent, the superintendent shall either require the insurer to implement the RBC plan or shall notify the insurer that the RBC plan is unsatisfactory in the judgment of the superintendent. If the superintendent has determined that the RBC plan is unsatisfactory, the notification to the insurer shall set forth the reasons for the determination, and may set forth proposed revisions that will render the RBC plan satisfactory in the judgment of the superintendent. Upon such notification from the superintendent, the insurer shall prepare and submit a revised RBC plan, which may incorporate by reference any revisions proposed by the superintendent.

(2) If an insurer challenges, under section 3903.87 of the Revised Code, a notification from the Superintendent that the insurer's RBC plan or a revised RBC plan is unsatisfactory, submission of a revised RBC plan need not be made unless the superintendent rejects the insurer's challenge following the hearing required by section 3903.87 of the Revised Code and then notifies the insurer of this rejection.

(3) An insurer shall submit a revised RBC plan to the superintendent within forty-five days after receiving notification from the superintendent that its RBC plan is unsatisfactory, or, that its challenge to a notification made under division (D)(1) of this section has been rejected, as applicable.

(E) Notwithstanding division (D) of this section, if the superintendent notifies an insurer that its RBC plan or revised RBC plan is unsatisfactory, the superintendent may, at the superintendent's discretion, but subject to the insurer's right to a hearing under section 3903.87 of the Revised Code, specify in the notification that the notification constitutes a regulatory action level event.

(F) Every domestic insurer that submits an RBC plan or revised RBC plan to the superintendent shall file a copy of the RBC plan or revised RBC plan with the insurance regulatory authority of every state in which the insurer is authorized to do business upon receiving the insurance regulatory authority's written request for a copy of the plan, if the state has a confidentiality law with provisions substantially similar to those set forth in divisions (A) and (B) of section 3903.88 of the Revised Code. The insurer shall file the copy in that state no later than the later of:

(1) Fifteen days after receiving the request for a copy of the plan;

(2) The date on which the RBC plan or revised RBC plan is filed pursuant to division (C) or (D) of this section.

Amended by 128th General AssemblyFile No.18, HB 300, §1, eff. 5/26/2010.

Effective Date: 06-18-2002

3903.83 [Effective 9/4/2014] Duty to submit plan.

(A) For purposes of sections 3903.81 to 3903.93 of the Revised Code, a "company action level event" is any of the following events:

(1) A domestic or foreign insurer's filing of an RBC report that indicates that the insurer's total adjusted capital is greater than or equal to its regulatory action level RBC but less than its company action level RBC;

(2) A life or health insurer's filing of an RBC report that indicates that the insurer's total adjusted capital is greater than or equal to its company action level RBC but less than the product of 3.0 and its authorized control level RBC, and that indicates a negative trend;

(3) A property and casualty insurer's filing of an RBC report that indicates that the insurer's total adjusted capital is greater than or equal to its company action level RBC but less than the product of its authorized control level RBC and 3.0, and that triggers the trend test determined in accordance with the trend test calculation included in the property and casualty RBC instructions;

(4) The notification by the superintendent of insurance to an insurer of an adjustment to the insurer's RBC report, which adjusted RBC report shows the insurer's total adjusted capital within the range described in either division (A)(1) or (2) of this section, provided that the insurer does not challenge the adjusted RBC report under section 3903.87 of the Revised Code;

(5) The superintendent's notification to an insurer, following the hearing required under section 3903.87 of the Revised Code, that the superintendent has rejected the insurer's challenge to an adjusted RBC report showing the insurer's total adjusted capital within the range described in either division (A)(1) or (2) of this section.

(B) In the case of a company action level event, the insurer shall prepare and submit to the superintendent an RBC plan that shall:

(1) Identify the conditions that contributed to the company action level event;

(2) Contain proposals of corrective actions that the insurer intends to take to eliminate the conditions leading to the company action level event;

(3) Provide projections of the insurer's financial results in the current year and at least the four succeeding years, both in the absence of the proposed corrective actions and giving effect to the proposed corrective actions. The projections shall include projections of statutory operating income, net income, capital, and surplus. Projections for both new and renewal business may include separate projections for each major line of business, and may separately identify each significant income, expense, and benefit component of the projection.

(4) Identify the key assumptions impacting the insurer's projections made pursuant to division (B)(3) of this section, and describe the sensitivity of the projections to the assumptions;

(5) Identify the quality of, and problems associated with, the insurer's business, including, but not limited to, its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business, and use of reinsurance.

(C) The RBC plan shall be submitted within forty-five days after a company action level event. However, if an insurer has challenged an adjusted RBC report pursuant to section 3903.87 of the Revised Code, the RBC plan need not be submitted until after the hearing required under section 3903.87 of the Revised Code. If the superintendent rejects the insurer's challenge, the RBC plan shall be submitted within forty-five days after the superintendent's notification to the insurer of the rejection of the challenge.

(D)

(1) Within sixty days after an insurer submits an RBC plan to the superintendent, the superintendent shall either require the insurer to implement the RBC plan or shall notify the insurer that the RBC plan is unsatisfactory in the judgment of the superintendent. If the superintendent has determined that the RBC plan is unsatisfactory, the notification to the insurer shall set forth the reasons for the determination, and may set forth proposed revisions that will render the RBC plan satisfactory in the judgment of the superintendent. Upon such notification from the superintendent, the insurer shall prepare and submit a revised RBC plan, which may incorporate by reference any revisions proposed by the superintendent.

(2) If an insurer challenges, under section 3903.87 of the Revised Code, a notification from the Superintendent that the insurer's RBC plan or a revised RBC plan is unsatisfactory, submission of a revised RBC plan need not be made unless the superintendent rejects the insurer's challenge following the hearing required by section 3903.87 of the Revised Code and then notifies the insurer of this rejection.

(3) An insurer shall submit a revised RBC plan to the superintendent within forty-five days after receiving notification from the superintendent that its RBC plan is unsatisfactory, or, that its challenge to a notification made under division (D)(1) of this section has been rejected, as applicable.

(E) Notwithstanding division (D) of this section, if the superintendent notifies an insurer that its RBC plan or revised RBC plan is unsatisfactory, the superintendent may, at the superintendent's discretion, but subject to the insurer's right to a hearing under section 3903.87 of the Revised Code, specify in the notification that the notification constitutes a regulatory action level event.

(F) Every domestic insurer that submits an RBC plan or revised RBC plan to the superintendent shall file a copy of the RBC plan or revised RBC plan with the insurance regulatory authority of every state in which the insurer is authorized to do business upon receiving the insurance regulatory authority's written request for a copy of the plan, if the state has a confidentiality law with provisions substantially similar to those set forth in divisions (A) and (B) of section 3903.88 of the Revised Code. The insurer shall file the copy in that state no later than the later of:

(1) Fifteen days after receiving the request for a copy of the plan;

(2) The date on which the RBC plan or revised RBC plan is filed pursuant to division (C) or (D) of this section.

Amended by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

Amended by 128th General AssemblyFile No.18, HB 300, §1, eff. 5/26/2010.

Effective Date: 06-18-2002

3903.84 Regulatory action level event duties of superintendent and insurer.

(A) For purposes of sections 3903.81 to 3903.93 of the Revised Code, a "regulatory action level event" is any of the following events:

(1) The filing of an RBC report by an insurer that indicates that the insurer's total adjusted capital is greater than or equal to its authorized control level RBC but less than its regulatory action level RBC;

(2) The notification by the superintendent of insurance to an insurer of an adjustment to the insurer's RBC report, which adjusted RBC report shows the insurer's total adjusted capital within the range described in division (A)(1) of this section, provided that the insurer does not challenge the adjusted RBC report under section 3903.87 of the Revised Code;

(3) The notification by the superintendent to an insurer, following the hearing required under section 3903.87 of the Revised Code, that the superintendent has rejected the insurer's challenge to an adjusted RBC report, which report shows the insurer's total adjusted capital within the range described in division (A)(1) of this section;

(4) The failure of an insurer to file an RBC report by the first day of March of every year, unless the insurer has provided an explanation for such failure that is satisfactory to the superintendent and has cured the failure within ten days after the filing date;

(5) The failure of an insurer to submit an RBC plan to the superintendent within the time period set forth in division (C) of section 3903.83 of the Revised Code;

(6) The notification by the superintendent to an insurer of both of the following:

(a) The RBC plan or revised RBC plan submitted by the insurer is unsatisfactory in the judgment of the superintendent;

(b) The superintendent's notification constitutes a regulatory action level event with respect to the insurer, provided that the insurer has not challenged the determination under section 3903.87 of the Revised Code.

(7) The superintendent's notification to an insurer, following the hearing required under section 3903.87 of the Revised Code, that the superintendent has rejected the insurer's challenge to the superintendent's determination under division (A)(6) of this section;

(8) The superintendent's notification to an insurer that the superintendent has determined that the insurer has failed to adhere to its RBC plan or revised RBC plan, and this failure has had a substantial adverse effect on the ability of the insurer to eliminate the conditions leading to the company action level event in accordance with its RBC plan or revised RBC plan, provided that the insurer does not challenge this determination under section 3903.87 of the Revised Code;

(9) The superintendent's notification to an insurer, following the hearing required under section 3903.87 of the Revised Code, that the superintendent has rejected the insurer's challenge to a determination made by the superintendent under division (A)(8) of this section.

(B) In the case of a regulatory action level event the superintendent shall do all of the following:

(1) Require the insurer to prepare and submit an RBC plan, or, if applicable, a revised RBC plan;

(2) Perform such examination or analysis as the superintendent considers necessary of the assets, liabilities, and operations of the insurer, including a review of the insurer's RBC plan or revised RBC plan and the results of any sensitivity tests undertaken pursuant to the RBC instructions;

(3) Issue a corrective order specifying such corrective actions as the superintendent determines are required, based upon the superintendent's examination or analysis under division (B)(2) of this section.

(C)

(1) The RBC plan or revised RBC plan required by division (B)(1) of this section shall be submitted to the superintendent within forty-five days after the regulatory action level event, except by an insurer that files a challenge to an adjusted RBC report or a revised RBC plan pursuant to section 3903.87 of the Revised Code. If the superintendent determines the challenge is frivolous, the time limit for the submission of the RBC plan or revised RBC plan shall not be altered by the filing of the challenge.

(2) If an insurer files a nonfrivolous challenge to an adjusted RBC report or a revised RBC plan, the RBC plan or revised RBC plan required by division (B)(1) of this section shall only be submitted to the superintendent if the superintendent rejects the challenge following the hearing required under section 3903.87 of the Revised Code. the RBC plan or revised RBC plan shall be submitted within forty-five days after the superintendent's notification to the insurer of the superintendent's rejection of the insurer's challenge.

(D) The superintendent may retain actuaries, investment experts, and such other consultants, as may be necessary in the superintendent's judgment, to review an insurer's RBC plan or revised RBC plan, to examine or analyze the assets, liabilities, and operation of the insurer, and to formulate a corrective order for the insurer. The fees, costs, and expenses relating to these consultants shall be borne by the affected insurer.

Effective Date: 03-03-1996

3903.85 Authorized control level event duties of superintendent and insurer.

(A) For purposes of sections 3903.81 to 3903.93 of the Revised Code, an "authorized control level event" is any of the following events:

(1) The filing of an RBC report by an insurer that indicates that the insurer's total adjusted capital is greater than or equal to its mandatory control level RBC but less than its authorized control level RBC;

(2) The notification by the superintendent of insurance to an insurer of an adjustment to the insurer's RBC report, the adjusted RBC report showing the insurer's total adjusted capital within the range described in division (A)(1) of this section, provided that the insurer does not challenge the adjusted RBC report under section 3903.87 of the Revised Code;

(3) The superintendent's notification to an insurer, following the hearing required under section 3903.87 of the Revised Code, that the superintendent has rejected the insurer's challenge to an adjusted RBC report showing the insurer's total adjusted capital within the range described in division (A)(1) of this section;

(4) The failure of an insurer to respond, in a manner satisfactory to the superintendent, to a corrective order issued under division (B)(3) of section 3903.84 of the Revised Code, provided that the insurer has not challenged the corrective order under section 3903.87 of the Revised Code;

(5) The failure of an insurer to respond, in a manner satisfactory to the superintendent, to a corrective order issued under division (B)(3) of section 3903.84 of the Revised Code, subsequent to the superintendent's modification of an earlier order or the superintendent's rejection of the insurer's challenge of the order under section 3903.87 of the Revised Code.

(B) In the case of an authorized control level event, the superintendent shall do the following:

(1) Take the actions required under section 3903.84 of the Revised Code for regulatory action level events;

(2) If the superintendent considers it to be in the best interests of the policyholders and creditors of the insurer and of the public, take such actions as are necessary to place the insurer under regulatory control under sections 3903.01 to 3903.59 of the Revised Code. The authorized control level event shall be deemed sufficient grounds for the superintendent to take action under sections 3903.01 to 3903.59 of the Revised Code. Nothing in sections 3903.81 to 3903.93 of the Revised Code shall impair or restrict the rights, powers, and protections afforded to the superintendent and to insurers under sections 3903.01 to 3903.59 of the Revised Code.

Effective Date: 03-03-1996

3903.86 Mandatory control level event duties of superintendent and insurer.

(A) For purposes of sections 3903.81 to 3903.93 of the Revised Code, a "mandatory control level event" is any of the following events:

(1) The filing of an RBC report by an insurer that indicates that the insurer's total adjusted capital is less than its mandatory control level RBC;

(2) The notification by the superintendent of insurance to an insurer of an adjustment to the insurer's RBC report, which adjusted RBC report shows the insurer's total adjusted capital at less than its mandatory control level RBC, provided the insurer does not challenge the adjusted RBC report under section 3903.87 of the Revised Code;

(3) The superintendent's notification to an insurer, following the hearing required under section 3903.87 of the Revised Code, that the superintendent has rejected the insurer's challenge to an adjusted RBC report.

(B) In the case of a mandatory control level event, the superintendent shall do the following:

(1) With respect to a life or health insurer, take such actions as are necessary to place the insurer under regulatory control under sections 3903.01 to 3903.59 of the Revised Code. The mandatory control level event shall be deemed sufficient grounds for the superintendent to take action under sections 3903.01 to 3903.59 of the Revised Code. Nothing in sections 3903.81 to 3903.93 of the Revised Code shall impair or restrict the rights, powers, and protections afforded to the superintendent and to insurers under sections 3903.01 to 3903.59 of the Revised Code. However, the superintendent may defer action under this division for up to ninety days after the mandatory control level event if the superintendent finds that there is a reasonable expectation the insurer may be able to eliminate the conditions leading to the mandatory control level event within the ninety-day period.

(2) With respect to a property and casualty insurer, take such actions as are necessary to place the insurer under regulatory control under sections 3903.01 to 3903.59 of the Revised Code. In the case of a property and casualty insurer that is writing no business, and that is running-off its existing business, the superintendent may allow the insurer to continue the run-off under the supervision of the superintendent. The mandatory control level event shall be deemed sufficient grounds, however, for the superintendent to take action under sections 3903.01 to 3903.59 of the Revised Code, regardless of whether a property and casualty insurer is running-off its existing business. Nothing in sections 3903.81 to 3903.93 of the Revised Code shall impair or restrict the rights, powers, and protections afforded to the superintendent and to insurers under sections 3903.01 to 3903.59 of the Revised Code. The superintendent may defer action for up to ninety days after the mandatory control level event if the superintendent finds that there is a reasonable expectation the insurer may be able to eliminate the conditions leading to the mandatory control level event within the ninety-day period.

Effective Date: 03-03-1996

3903.87 Right to request hearing.

(A) An insurer has the right to a hearing upon receiving any of the following from the superintendent of insurance:

(1) An adjusted RBC report;

(2) Notification that the insurer's RBC plan or revised RBC plan is unsatisfactory and a statement that the notification constitutes a regulatory action level event for the insurer;

(3) Notification that the superintendent has determined that the insurer has failed to adhere to its RBC plan or revised RBC plan, which failure has a substantial adverse effect on the ability of the insurer to eliminate the conditions leading to a company action level event in accordance with its RBC plan or revised RBC plan;

(4) A corrective order issued under division (B)(3) of section 3903.84 of the Revised Code.

(B) An insurer shall notify the superintendent of its request for a hearing within five days after its receipt of any item listed in division (A) of this section. Upon the superintendent's receipt of the insurer's request for a hearing, the superintendent shall set a date for the hearing, which date shall be no less than ten days and no more than thirty days after the superintendent's receipt of the insurer's request.

(C) An insurer may challenge any determination or action taken by the superintendent under sections 3903.81 to 3903.93 of the Revised Code at the hearing held pursuant to this section. The hearing shall not be a public hearing, unless the insurer requests a public hearing.

Effective Date: 03-03-1996

3903.88 Confidential information.

(A) The superintendent of insurance shall keep all of the following confidential:

(1) An RBC report, to the extent that information contained in the report is not required to be included in an annual statement available to the public;

(2) An RBC plan;

(3) The results of, or a report on, an examination or analysis conducted pursuant to division (B)(2) of section 3903.84 of the Revised Code, and a corrective order issued pursuant to division (B)(3) of section 3903.84 of the Revised Code.

(B) The plans, reports, information, and orders described in division (A) of this section are confidential and privileged and not subject to subpoena.

(C) Notwithstanding divisions (A) and (B) of this section, the superintendent may do any of the following:

(1) Use the plans, reports, information, and orders that are the subject of this section in accordance with the insurance laws of this state;

(2) Share the plans, reports, information, and orders that are the subject of this section with the chief deputy rehabilitator, the chief deputy liquidator, other deputy rehabilitators and liquidators, and any other person employed by, or acting on behalf of, the superintendent pursuant to Chapter 3901. or 3903. of the Revised Code, with other local, state, federal, and international regulatory and law enforcement agencies, with local, state, and federal prosecutors, and with the national association of insurance commissioners and its affiliates and subsidiaries, provided that the recipient agrees to maintain the confidential or privileged status of the confidential or privileged plan, report, information, or order and has authority to do so;

(3) Disclose plans, reports, information, and orders that are the subject of this section in the furtherance of any regulatory or legal action brought by or on behalf of the superintendent or the state, resulting from the exercise of the superintendent's official duties.

(D) Notwithstanding divisions (A), (B), and (C) of this section, the superintendent may authorize the national association of insurance commissioners and its affiliates and subsidiaries by agreement to share confidential or privileged plans, reports, information, and orders received pursuant to division (C)(2) of this section with local, state, federal, and international regulatory and law enforcement agencies and with local, state, and federal prosecutors, provided that the recipient agrees to maintain the confidential or privileged status of the confidential or privileged plan, report, information, or order and has authority to do so.

(E) Notwithstanding divisions (A), (B), and (C) of this section, the chief deputy rehabilitator, the chief deputy liquidator, and other deputy rehabilitators and liquidators may disclose plans, reports, information, and orders that are the subject of this section in the furtherance of any regulatory or legal action brought by or on behalf of the superintendent, the rehabilitator, the liquidator, or the state resulting from the exercise of the superintendent's official duties in any capacity.

(F) Nothing in this section shall prohibit the superintendent from receiving plans, reports, information, and orders in accordance with section 3901.045 of the Revised Code.

(G) The superintendent may enter into agreements governing the sharing and use of plans, reports, information, and orders consistent with the requirements of this section.

(H)

(1) No waiver of any applicable privilege or claim of confidentiality in the plans, reports, information, and orders that are the subject of this section shall occur as a result of sharing or receiving plans, reports, information, and orders as authorized in divisions (C)(2), (D), and (F) of this section.

(2) The disclosure of a plan, report, information, or order in connection with a regulatory or legal action pursuant to divisions (C)(3) and (E) of this section does not prohibit an insurer or any other person from taking steps to limit the dissemination of the plan, report, information, or order to persons not involved in or the subject of the regulatory or legal action on the basis of any recognized privilege arising under any other section of the Revised Code or the common law.

(I) The comparison of an insurer's total adjusted capital to any of its RBC levels shall not be used to rank insurers.

(J) RBC instructions, RBC reports, adjusted RBC reports, RBC plans, and revised RBC plans, shall not be used by the superintendent for ratemaking, considered or introduced as evidence in any rate proceeding, or used by the superintendent to calculate or derive any elements of an appropriate premium level or rate of return for any line of insurance that an insurer or any affiliate is authorized to write.

(K) Except as otherwise required under Title XXXIX [39] of the Revised Code, it is an unfair and deceptive act or practice in the business of insurance for any person, as defined in division (A) of section 3901.19 of the Revised Code, to make, publish, disseminate, circulate, or place before the public, or to cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, in the form of a notice, circular, pamphlet, letter, or poster, or over any radio or television station, or in any other manner, an advertisement, announcement, or statement, written or oral, that contains an assertion, representation, or statement, regarding the RBC levels of any insurer or any component derived in the calculation of the RBC levels.

(L) If any materially false statement is published comparing an insurer's total adjusted capital to its RBC levels, or any inappropriate comparison of any other amount to any of the insurers' RBC levels is published, and the insurer is able to demonstrate to the superintendent with substantial proof the falsity of the statement or the inappropriateness of the comparison, then the insurer may publish with the superintendent's approval an announcement in a written publication to rebut the materially false statement or inappropriate comparison.

Effective Date: 06-18-2002

3903.89 Effectiveness of notice.

Unless otherwise provided, all notices sent to an insurer by the superintendent of insurance that may result in regulatory action under sections 3903.81 to 3903.93 of the Revised Code shall be effective upon dispatch if transmitted by registered or certified mail. Any other notice transmitted shall be effective upon the insurer's receipt of the notice.

Effective Date: 03-03-1996

3903.90 Annual report by foreign insurer.

(A) Each foreign insurer shall submit to the superintendent of insurance, upon receiving the superintendent's written request, an RBC report for the calendar year just ended. The insurer shall submit the RBC report to the superintendent by the later of:

(1) The date a domestic insurer would be required to file an RBC report under section 3903.82 of the Revised Code;

(2) Fifteen days after the superintendent's request is received by the foreign insurer.

(B) Each foreign insurer shall, upon receiving the superintendent's written request, promptly submit to the superintendent a copy of any RBC plan or revised RBC plan filed with the insurance regulatory authority of any other state.

(C) The superintendent may require a foreign insurer to file an RBC plan with the superintendent in the case of a company action level event, regulatory action level event, or authorized control level event involving the foreign insurer, if the insurance regulatory authority of the state of domicile of the foreign insurer fails to require the foreign insurer to file an RBC plan in the manner specified under that state's RBC laws, if any. The failure of a foreign insurer to file an RBC plan or revised RBC plan with the superintendent as required shall be grounds for the superintendent to order the insurer to cease and desist from writing new insurance business in this state.

(D) In the case of a mandatory control level event involving a foreign insurer, if no domiciliary receiver has been appointed for the foreign insurer under the rehabilitation and liquidation laws applicable in the state of domicile of the foreign insurer, the superintendent may make application to the court of common pleas as permitted under sections 3903.50 to 3903.59 of the Revised Code for an order directing the superintendent to liquidate the property of the foreign insurer found in this state. The occurrence of the mandatory control level event shall be deemed sufficient grounds for the superintendent to make application to the court.

Effective Date: 03-03-1996

3903.91 Regulatory officials - immunity.

There shall be no liability on the part of, and no cause of action shall arise against, the superintendent of insurance, or the department of insurance, its employees, or its agents, for any action taken in their performance of the powers and duties under sections 3903.81 to 3903.93 of the Revised Code.

Effective Date: 03-03-1996

3903.92 Requirements for exempting insurer from sections.

The superintendent may exempt any domestic property and casualty insurer from the application of sections 3903.81 to 3903.93 of the Revised Code, if the insurer meets all of the following requirements:

(A) The insurer writes direct business only in this state;

(B) The insurer writes direct annual premiums of three million dollars or less;

(C) The insurer assumes no reinsurance in excess of five per cent of direct premium written.

Effective Date: 03-03-1996

3903.93 Rules.

The superintendent may adopt rules in accordance with Chapter 119. of the Revised Code as are reasonably necessary for the implementation and operation of sections 3903.81 to 3903.93 of the Revised Code.

Effective Date: 03-03-1996

3903.99 Penalty.

Whoever violates division (B) or (C) of section 3903.06 of the Revised Code shall be fined not more than ten thousand dollars or imprisoned for not more than one year, or both.

Effective Date: 03-07-1983