§ 7111. Definitions
As used in this chapter:
(1) “Assuming company” means a Vermont-domiciled company established specifically to acquire
a closed block under a legacy insurance transfer plan approved by the Commissioner.
(2) “Closed block” means a block, line, or group of commercial non-admitted insurance
policies or reinsurance agreements or both:
(A) that a transferring insurer has ceased to offer, write, or sell to new applicants;
(B) for which all policy periods have been fully expired for not less than 60 months;
(C) for which active premiums are no longer being paid; and
(D) that is not workers’ compensation, health, life, or any other personal line of insurance.
(3) “Comment period” means the 60-day period starting on the date notice is issued by
an assuming company under subsection 7112(h) of this chapter. The Commissioner may,
in his or her discretion, extend the comment period for up to an additional 30 days.
(4) “Commissioner” means the Commissioner of Financial Regulation.
(5) “Controlling party” means a person having control of an assuming company or transferring
insurer. “Control” shall have the same meaning as in section 3681 of this title.
(6) “Department” means the Department of Financial Regulation.
(7) “Domicile regulator” means the primary insurance regulatory authority of the domicile
jurisdiction of a transferring insurer.
(8) “Inward reinsurance agreement” means a contract of reinsurance between a transferring
insurer and another insurance company with respect to which a transferring insurer
is a party as the reinsurer.
(9) “Inward reinsurance counterparty” means an insurance company, other than the transferring
insurer, that is a party to an inward reinsurance agreement as the reinsured.
(10) “Legacy insurance transfer” means the transfer of a closed block in accordance with
the requirements of this chapter.
(11) “Legacy insurance transfer plan” or “plan” means a plan that sets forth all provisions
and includes all documentation regarding a legacy insurance transfer required under
subsection 7112(b) of this chapter.
(12) “Non-admitted insurance” means any property and casualty insurance permitted to be
placed directly or through a surplus lines broker with a non-admitted insurer eligible
to accept such insurance.
(13) “Non-admitted insurer” means, with respect to a state, an insurer not licensed to
engage in the business of insurance in such state. The term does not include a risk
retention group or a captive insurance company.
(14) “Outward reinsurance agreement” means a contract of reinsurance between a transferring
insurer and another insurance company with respect to which a transferring insurer
is a party as the reinsured.
(15) “Outward reinsurance counterparty” means an insurance company, other than the transferring
insurer, that is a party to an outward reinsurance agreement as the reinsurer.
(16) “Party” means:
(A) the assuming company;
(B) the transferring insurer;
(C) with respect to any policy to be transferred under a plan, each policyholder;
(D) with respect to any inward reinsurance agreement to be transferred under a plan, each
inward reinsurance counterparty; and
(E) any other person the Commissioner approves as a party with respect to such proceeding.
(17) “Plan summary” means a written statement of the key terms and provisions of a plan
as required under subdivision 7112(b)(19) of this chapter.
(18) “Policy” means a contract of property and casualty insurance that is neither a contract
of reinsurance nor a contract of workers’ compensation, health, life, or any other
personal line of insurance.
(19) “Policyholder” means the person identified as the policyholder or first named in a
policy.
(20) “Reinsurance agreement” means an inward reinsurance agreement or an outward reinsurance
agreement.
(21) “Reinsurance agreement counterparty” means an inward reinsurance agreement counterparty
or an outward reinsurance counterparty.
(22) “Transferring insurer” means a non-admitted insurer that is transferring a closed
block to an assuming company under a legacy insurance transfer plan. (Added 2013, No. 93 (Adj. Sess.), § 3, eff. Feb. 19, 2014.)
§ 7112. Application; fee; plan
(a) An assuming company shall file a plan with the Commissioner and, at the time of filing,
shall pay to the Commissioner the fee described in subdivision 7116(a)(1) of this
chapter.
(b) A plan shall include the following:
(1) A list of all policies and inward reinsurance agreements in the closed block to be
transferred under the plan.
(2) A list of all outward reinsurance agreements attaching to policies or inward reinsurance
agreements in the closed block.
(3) A list of all policyholders and inward reinsurance counterparties to policies and
inward reinsurance agreements in the closed block to be transferred under the plan.
(4) The identities of the transferring insurer and the assuming company and their respective
controlling parties, if any.
(5) Certificates issued by the domicile regulator of the transferring insurer and, if
applicable, of any controlling party that is a regulated insurance company, in each
case attesting to the good standing of the transferring insurer and the controlling
party under the insurance regulatory laws of the jurisdiction of their respective
domiciles; or, if any such certificate is not obtainable under the laws or practices
of a domicile regulator, a certificate of the transferring insurer or the controlling
party, as applicable, attesting to the foregoing, verified by oath of two of its executive
officers.
(6) A letter of no objection, or the equivalent, from the domicile regulator of the transferring
insurer confirming that the regulator has no objection to the transfer of the closed
block under the plan; or, if any such certificate is not obtainable under the laws
or practices of a domicile regulator, a certificate of the transferring insurer or
the controlling party, as applicable, attesting to the foregoing, verified by oath
of two of its executive officers.
(7) A list of policies and inward reinsurance agreements in the closed block to be transferred
under the plan, if any, that by their terms and conditions prohibit assignment and
assumption of the rights, liabilities, and obligations of the transferring insurer
without the prior written consent of the respective policyholder or inward reinsurance
counterparty, together with a statement describing such terms and conditions of any
such policy or inward reinsurance agreement.
(8) The most recent audited financial statements and annual reports of the transferring
insurer filed with its domicile regulator and such other financial information, if
any, with respect to the transferring insurer or any controlling party of the transferring
insurer, as the Commissioner may reasonably require.
(9) An actuarial study or opinion in a form satisfactory to the Commissioner that quantifies
the liabilities to be transferred to the assuming company under the policies or inward
reinsurance agreements in the closed block.
(10) A statement of the outward reinsurance agreement assets, if any, attaching to any
policy or inward reinsurance agreement in the closed block.
(11) Three years of pro-forma financial statements demonstrating the solvency of the assuming
company.
(12) Officer’s certificates of the transferring insurer and the assuming company attesting
that each has obtained all required internal approvals and authorizations regarding
the plan and completed all necessary and appropriate actions relating to the plan.
(13) The form of notice to be provided under the plan to any policyholder or inward reinsurance
counterparty in connection with any policy or inward reinsurance agreement in the
closed block and how such notice shall be provided.
(14) The form of notice to be provided under the plan to any outward reinsurance counterparty
attaching to any policy or inward reinsurance agreement in the closed block and how
such notice shall be provided.
(15) A statement describing any pending dispute between the transferring insurer and any
policyholder or inward reinsurance counterparty in connection with any policy or inward
reinsurance agreement in the closed block or any disputed claim by a third party with
respect to any policy or inward reinsurance agreement in the closed block.
(16) A statement describing the assuming company’s proposed investment policies, officers,
directors, key employees, and other arrangements regarding matters such as:
(A) any contemplated third-party claims management and administration arrangements;
(B) operations, management, and solvency relating to the closed block; and
(C) a detailed plan for annual or other periodic financial reporting to the Commissioner,
including an annual financial audit with actuarial opinion.
(17) A statement from the assuming company consenting to the jurisdiction of the Commissioner
with regard to ongoing oversight of operations, management, and solvency relating
to the closed block, including the authority of the Commissioner to conduct examinations
under section 7117 of this chapter and to set reasonable standards for oversight of
the assuming company, including oversight standards relating to:
(A) material transactions with affiliates;
(B) adequacy of surplus; and
(C) dividends and other distributions, including limitations on extraordinary dividends.
(18) A statement from the assuming company submitting to the jurisdiction and authority
of the Commissioner of Insurance, or the equivalent regulatory authority, in states
in which policyholders or reinsurance counterparties reside, for the purposes of implementing
each such state’s Unfair Claims Settlement Practices Act, or its equivalent, if any,
in such state’s market conduct statutory framework and confirmation of the delivery
of such statements of submission.
(19) A plan summary that includes all information regarding the plan as reasonably required
by the Commissioner.
(20) The statement described in subsection (c) of this section regarding the information
and documents submitted as part of or with respect to a plan that are confidential.
(21) Any other information the Commissioner may reasonably require with respect to the
plan in the exercise of his or her discretion.
(c)(1) Information in the plan identifying policyholders and reinsurance counterparties shall
be exempt from public inspection and copying under the Public Records Act.
(2) The plan shall include a statement of the information and documentation included in
the plan that the assuming company or the transferring insurer requests be given confidential
treatment. The Commissioner shall determine whether information designated in the
statement, including any information designated as trade secrets, is exempt from public
inspection and copying under the Public Records Act. If such information is exempt,
it shall not be subject to subpoena and shall not be made public by the Commissioner
or by any other person; provided, however, the Commissioner may in his or her discretion
grant access to such information to public officers having jurisdiction over the regulation
of insurance in any other state or country, to public officers of a foreign or alien
financial regulatory authority, or to state or federal law enforcement officers pursuant
to a validly issued subpoena or search warrant, provided that such officers receiving
the information agree in writing to hold it in a manner consistent with this subsection.
(d) Within 10 business days of the date the application is filed and the fee payable under
subsection (a) of this section is paid in full, the Commissioner shall notify the
assuming company whether the plan is complete. In his or her discretion, the Commissioner
may extend the 10-business-day application review period for an additional 10 business
days. With the written consent of the assuming company, the application review period
may be extended beyond 20 business days.
(e) Upon submission of a plan, the assuming company shall have a continuing obligation
to notify the Commissioner promptly and in a full and accurate manner of any material
change to information in the plan.
(f) If the Commissioner notifies the assuming company that the plan is not complete, the
Commissioner shall specify any modifications, supplements, or amendments to the plan
that are required, and any additional information or documentation with respect to
the plan that must be provided to the Commissioner before the Commissioner issues
the notice referenced in subsection (d) of this section.
(g) If the Commissioner notifies the assuming company that the plan is complete, the Commissioner
shall set a date, time, and place for a hearing on the plan as required under subsection
(m) of this section.
(h) Within 30 days of the date the Commissioner notifies the assuming company under subsection
(g) of this section that the plan is complete, the assuming company shall cause direct
written notice to be provided, in the form and manner specified in the plan, to all
policyholders and reinsurance counterparties listed in the plan. The notice shall:
(1) comply with the plan and the provisions of 3 V.S.A. § 809(b);
(2) include the plan summary;
(3) describe the effect of the plan and the transfer on each policyholder and reinsurance
counterparty and on his or her respective policy or reinsurance agreement, as applicable;
(4) state the right of each policyholder or inward reinsurance counterparty to:
(A) accept or object to the plan, together with a description of the means by which a
policyholder or inward reinsurance counterparty may expressly accept or object to
the plan and the effect of such acceptance or objection;
(B) file written comments on the plan with the Commissioner; and
(C) appear and present evidence on the plan at the hearing;
(5) describe the terms and conditions under which a policyholder or inward reinsurance
counterparty shall be deemed to have accepted the plan;
(6) specify the date, time, and place of the hearing on the plan;
(7) include all other information reasonably required by the Commissioner; and
(8) be published in two newspapers of general nationwide circulation on two separate occasions,
as determined by the Commissioner.
(i) During the comment period:
(1) any party may file written comments on the plan with the Commissioner;
(2) any policyholder or inward reinsurance counterparty may, by delivery of such notice
in accordance with the terms and conditions of the plan and prior to the expiration
of the comment period, provide an express written notice that he or she accepts or
objects to the plan; and
(3) the assuming company shall file with the Commissioner such additional documentation
and information regarding the plan as the Commissioner may reasonably require.
(j) In the event that, prior to the expiration of the comment period, any policyholder
or inward reinsurance counterparty provides express written notice that he or she
objects to the plan and specifies the policy or agreement with respect to which such
objection is made, the assuming company shall, not later than 15 days after the end
of the comment period, submit to the Commissioner either:
(1) an amended list of policies and reinsurance agreements in the plan, excluding such
policyholder or inward reinsurance counterparty and its respective policy or inward
reinsurance agreement from the plan; or
(2) an express written notice from such policyholder or inward reinsurance counterparty
accepting the plan and consenting to the transfer having the full force and effect
of a statutory novation of its respective policy or reinsurance agreement, as applicable,
and withdrawing and rescinding its prior notice of objection.
(k) Except as provided in subsection 7114(f) of this chapter, any policyholder or inward
reinsurance counterparty that, prior to the expiration of the comment period, has
not provided express written notice objecting to the plan shall be deemed to have
accepted the plan and the transfer shall have the full force and effect of a statutory
novation of his or her respective policy or inward reinsurance agreement, as applicable.
(l) Notwithstanding any provision of this chapter to the contrary, if a policy or inward
reinsurance agreement contains a provision prohibiting the transfer of the policy
or inward reinsurance agreement without the consent of the policyholder or inward
reinsurance counterparty, then such policy or inward reinsurance agreement shall not
be transferred under this chapter unless the applicable policyholder or inward reinsurance
counterparty provides written consent to the proposed transfer.
(m) The hearing on the plan shall be held not later than 60 days after the end of the
comment period. In his or her discretion, the Commissioner may postpone the hearing
for an additional 10 days. With the written consent of the assuming company, the hearing
may be postponed beyond 70 days. Each party participating in the hearing shall bear
his or her own costs and attorney’s fees. (Added 2013, No. 93 (Adj. Sess.), § 3, eff. Feb. 19, 2014; amended 2021, No. 105 (Adj. Sess.), § 263, eff. July 1, 2022.)
§ 7113. Plan review
(a) The Commissioner may retain an actuary to conduct an actuarial study quantifying the
liabilities under insurance policies and reinsurance agreements to be transferred
to the assuming company under the plan and is authorized to retain any other legal,
financial, and examination services from outside the Department necessary to assist
in plan review.
(b) In reviewing the plan, the Commissioner shall take into account all written comments
filed with respect to the plan, all evidence taken at the hearing, and any other factors
the Commissioner reasonably deems relevant with respect to the plan. In all cases,
the Commissioner shall make findings with respect to each of the following:
(1) the solvency of the assuming company before and after the implementation of the proposed
plan;
(2) the adequacy of the assuming company’s proposals described in the statement required
under subdivision 7112(b)(16) of this chapter;
(3) the adequacy of the assuming company’s consent to jurisdiction required under subdivision
7112(b)(17) of this chapter;
(4) the ability of the assuming company to comply with all requirements of the policies
and inward reinsurance agreements, including the capacity of the assuming company
regarding the administration of claims in process on or after the effective date of
the transfer;
(5) whether any outward reinsurance agreement relating to any policy or policies in the
closed block will be adversely affected by the transfer;
(6) whether the plan materially adversely affects the interests of any party or outward
reinsurance counterparty, including the interests of any policyholder or inward reinsurance
counterparty who has accepted or has been deemed to have accepted the plan;
(7) whether policyholders or inward reinsurance counterparties, together with their respective
insurance policies and inward reinsurance agreements, have been excluded from the
plan as required under subsections 7112(j) and (l) of this chapter; and
(8) the fairness of the plan to all parties. (Added 2013, No. 93 (Adj. Sess.), § 3, eff. Feb. 19, 2014.)
§ 7114. Order
(a) Within 30 days of the date the hearing is held on the plan, the Commissioner shall
issue an order setting forth the amount of fees payable by the assuming company under
subdivision 7116(a)(2) of this chapter, payable not later than 14 days after the date
of such order. Upon receipt of such payment, the Commissioner shall within five days
issue an order approving or disapproving the plan in whole or in part. Whenever it
is not practicable to issue an order within 30 days, the Commissioner may extend such
time up to an additional 30 days. If the order approves the plan, the order shall:
(1) include the terms and conditions of the Commissioner’s oversight with regard to ongoing
oversight of the operations, management, and solvency relating to the closed block
and any specific standards that the assuming company will be required to comply with,
including standards relating to:
(A) material transactions with affiliates;
(B) adequacy of surplus; and
(C) dividends and other distributions, including limitations on dividends;
(2) set forth the tax payable by the assuming company under subsection 7116(b) of this
chapter, which tax shall be payable not later than 14 days after the date of such
order;
(3) not be effective until such time as the costs and transfer tax described in this subsection
have been paid in full.
(b) The Commissioner shall not approve a plan unless the Commissioner finds that the assuming
company has:
(1) sufficient assets to meet its liabilities;
(2) sufficient procedures in place for the handling of claims;
(3) consented to sufficient regulatory oversight by the Department; and
(4) excluded from the plan any policy or agreement required to be excluded under subsections
7112(j) and (l) of this chapter.
(c) An order issued under subsection (a) of this section approving the plan shall have
the full force and effect of a statutory novation with respect to all policyholders
and reinsurance counterparties and their respective policies and reinsurance agreements
under the plan and shall provide that the transferring insurer shall have no further
rights, obligations, or liabilities with respect to such policies and reinsurance
agreements, and that the assuming company shall have all such rights, obligations,
and liabilities as if it, instead of the transferring insurer, were the original party
to such policies and reinsurance agreements.
(d) The Commissioner may issue any other orders he or she reasonably deems necessary to
fully implement an order issued under subsection (a) of this section.
(e) No order issued under subsection (a) or (d) of this section shall be construed to
modify or amend the terms of a policy or reinsurance agreement, other than with respect
to matters specifically subject to modification or amendment under this chapter.
(f) If a policyholder or inward reinsurance counterparty provides express written notice
that he or she objects to the plan after the comment period has expired, and provides
evidence reasonably satisfactory to the Commissioner that he or she was not provided
notice of the plan in the form and manner previously approved by the Commissioner,
or if an outward reinsurance counterparty or other party provides express written
notice that he or she objects to a plan, the Commissioner may not approve the plan
with respect to such party unless the Commissioner determines that the plan:
(1) does not materially adversely affect the objecting party; and
(2) otherwise complies with the requirements of this chapter.
(g) At any time before the Commissioner issues the order described in subsection (a) of
this section, the assuming company may file an amendment to the plan, subject to the
Commissioner’s approval.
(h) At any time before the Commissioner issues the order described in subsection (a) of
this section, the assuming company may withdraw the plan without prejudice. Upon such
withdrawal, however, the Commissioner shall issue an order setting forth the amount
of fees payable by the assuming company under subdivision 7116(a)(2) of this chapter,
payable not later than 14 days after the date of such order. (Added 2013, No. 93 (Adj. Sess.), § 3, eff. Feb. 19, 2014.)
§ 7115. Jurisdiction; appeals
(a) The Commissioner shall have exclusive regulatory jurisdiction with respect to the
review and approval or denial of any plan.
(b) Any party aggrieved by a final order of the Commissioner may appeal that order to
the Vermont Supreme Court under 3 V.S.A. § 815. (Added 2013, No. 93 (Adj. Sess.), § 3, eff. Feb. 19, 2014.)
§ 7116. Fee; costs; transfer tax
(a) To cover the costs of processing and reviewing a plan under this chapter, the assuming
company shall pay to the Commissioner the following nonrefundable fees at the times
set forth in subsections 7112(a) and 7114(a) of this chapter:
(1) an administrative fee in the amount of $30,000.00; and
(2) the reasonable costs of persons retained by the Commissioner under subsection 7113(a)
of this chapter.
(b) When a plan is approved, the assuming company shall pay the Commissioner a transfer
tax equal to the sum of:
(1) one percent of the first $100,000,000.00 of the gross liabilities transferred, including
direct and assumed unpaid claims, losses, and loss adjustment expenses with no reductions
for amounts ceded; and
(2) 0.5 percent of the gross liabilities transferred that exceed $100,000,000.00, including
direct and assumed unpaid claims, losses, and loss adjustment expenses with no reductions
for amounts ceded.
(c) All fees and payments received by the Department under subsection (a) of this section
and 10 percent of the transfer tax under subsection (b) of this section shall be credited
to the Insurance Regulatory and Supervision Fund under section 80 of this title. The remaining 90 percent of the transfer tax shall be deposited directly into the
General Fund and reserved in the General Fund Balance Reserve established under 32 V.S.A. § 308c. (Added 2013, No. 93 (Adj. Sess.), § 3, eff. Feb. 19, 2014; amended 2013, No. 179 (Adj. Sess.), § E.228, eff. Feb. 19, 2014.)
§ 7117. Examinations
(a) The Commissioner has the authority to order any assuming company to produce any records,
books, and papers in the possession of the assuming company or its affiliates necessary
to ascertain the financial condition or legality of conduct of the assuming company.
(b) The Commissioner shall exercise his or her authority under subsection (a) of this
section only if he or she has reason to believe the interests of the assuming company’s
policyholders may be adversely affected under the plan.
(c) The Commissioner may retain, at the assuming company’s expense, attorneys, actuaries,
accountants, and other experts not otherwise a part of the Commissioner’s staff reasonably
necessary to assist with an examination under this section. Any persons so retained
shall be under the direction and control of the Commissioner and shall act in a purely
advisory capacity.
(d) Each assuming company that produces records, books, and papers for examination under
this section shall pay the expense of such examination. (Added 2013, No. 93 (Adj. Sess.), § 3, eff. Feb. 19, 2014.)
§ 7118. Applicable laws
(a) Chapter 157 (transfer and novation of insurance contracts) of this title shall not
apply to any legacy insurance transfer under this chapter.
(b) In the event of any conflict between a provision of this chapter and any other provision
of this title, such provision of this chapter shall control.
(c) A proposed legacy insurance transfer shall be a “contested case” under 3 V.S.A. chapter 25, except that a “party” shall be limited as defined in subdivision 7111(16) of this
chapter. (Added 2013, No. 93 (Adj. Sess.), § 3, eff. Feb. 19, 2014.)
§ 7119. Assuming company; Board; principal place of business; registered agent
No assuming company shall be a party to a legacy insurance transfer under this chapter
unless:
(1) its board of directors or committee of managers holds at least one meeting each year
in this State;
(2) it maintains its principal place of business in this State; and
(3) it appoints a registered agent to accept service of process and to otherwise act on
its behalf in this State, provided that whenever such registered agent cannot with
reasonable diligence be found at the registered office of the assuming company, the
Secretary of State shall be an agent of such assuming company upon whom any process,
notice, or demand may be served. (Added 2013, No. 93 (Adj. Sess.), § 3, eff. Feb. 19, 2014.)
§ 7120. Posting of plans on website
The Commissioner shall require that all plans filed with the Department are posted
on the Department’s website, along with any other notice or other information the
Commissioner deems appropriate, excluding any information designated as confidential
under subsection 7112(c) of this chapter. (Added 2013, No. 93 (Adj. Sess.), § 3, eff. Feb. 19, 2014.)
§ 7121. Regulation of assuming companies and service providers
(a) An assuming company shall be subject to all rules adopted by the Commissioner under
this chapter and also shall be subject to:
(1) chapter 145 (supervision, rehabilitation, and liquidation of insurers) of this title;
(2) the market conduct and unfair trade practices provisions of chapter 129 (insurance
trade practices) of this title, as deemed applicable by the Commissioner; and
(3) in addition to the initial transfer tax required under subsection 7116(b) of this
chapter, an annual renewal fee of $300.00.
(b) An assuming company shall not be subject to the requirements of chapter 101, subchapter
9 (Property and Casualty Insurance Guaranty Association) of this title.
(c) The Commissioner may adopt rules regarding the provision of services to an assuming
company by persons other than any director, officer, or employee of the assuming company
with respect to the administration of policies and reinsurance agreements assumed
by the assuming company under a legacy insurance transfer, including licensing or
other requirements.
(d) The Commissioner may adopt any other rules necessary or appropriate to carry out the
provisions of this chapter. (Added 2013, No. 93 (Adj. Sess.), § 3, eff. Feb. 19, 2014.)