The National Treatment and Coordination (E) Working Group within the National Association of Insurance Commissioners (“NAIC”) issued an Exposure Draft of Form A Best Practices in July.

The NAIC is the nationwide organization of all state insurance commissioners. NAIC maintains responsibilities for establishing model insurance administrative regulations and model statutes for consideration by all of the states.

insurance industry M&ANAIC Form A is defined as a “Statement Regarding the Acquisition of Control of or Merger with a Domestic Insurer.” Form A is one of a set of related documents (Forms B, C, D, E and F). The forms are intended as guides for filing entities, rather than “blank forms” to be completed.

Information currently requested in a Form A filing includes, but is not limited to, the method of acquisition, identity and background of the applicant and associated individuals, the amount and source of funds or other consideration, future plans of the insurer, information on voting securities (including ownership, contracts, and recent purchases), financial statements, and risk management factors.

The Exposure Draft of the NAIC’s Form A Review Best Practices is broken into nine separate categories. Each section is listed below, along with a summary of the NAIC description of selected items addressed within the respective Best Practice category.

  1. Initial review. Applicants are asked to identify parties and regulators involved, and to take steps needed to support the NAIC regulatory review and related hearings.
  1. Background, Identity and Risk Profile of Acquiring Persons. The Ultimate Controlling Parent (UCP) should be determined, and feasibility of new holding company group and chain of control structure should be assessed. SEC disclosures and associated review of audited financial statements are referenced.
  1. Communication and Record Maintenance. Several steps are suggested to keep all party representatives informed as to status of the review.
  1. Transaction Review. This section references items such as document review, fairness opinions, treatment of all classes of target shares, and the regulatory review process.
  1. Purchase Consideration. A determination of the “fairness (equivalency) of total amount to be paid to total value to be received” is the first item listed, followed by related considerations involving the source and types of funds.
  1. Insurer Operations (previously labeled as Target License Qualifications). Determining whether target insurer meets license qualifications upon change of control, and related items are outlined in this section.
  1. Market Impact. Any anti-competitive impact of the acquisition on lines or products is the lead item listed in this section.
  1. Post-Approval Consideration. Notifications of changes, compliance requirements, and waivers are suggested.
  1. Post-Acquisition Considerations. Written details of the final purchase price, confirmation of any capital contribution contemplated, and related considerations are suggested.

Comments on the Form A Review Best Practices exposure draft are due by August 19.

Click on the link to review the full text of the NAIC Form A Best Practices exposure draft.

Bill Hager’s Insurance Policy Expertise as an Insurance Regulator

Mr. Hager served as a regulator for eight years in five positions ((i) Assistant Attorney General assigned to the Iowa Department of Insurance, (ii) First Deputy Commissioner of Insurance, (iii) Iowa Commissioner of Insurance, (iv) Administrative Law Judge, and (v) Executive and Member of the National Association of Insurance Commissioners).

In this capacity Mr. Hager, along with his staff, approved (or disapproved) of the language of insurance policies used by each of the 1,000 property casualty insurance companies doing business in the state of Iowa.

This regulatory action also included the approval of most all policy application forms and policy forms themselves in use today. In addition, he regularly served as an Administrative Law Judge in matters relating directly to insurance policies.

While Iowa Commissioner of Insurance, Mr. Hager also served as a member of the National Association of Insurance Commissioners, (including membership on its Executive Committee).

While with the NAIC, he served, among other things, as:

  • Chair of the Midwest Zone. He was elected to this position by his fellow Insurance Commissioners from this zone (composed of the Midwest states) to provide leadership before the balance of the states.
  • Member of the Executive Committee. As a member of the Executive Committee, in effect the steering committee of the NAIC, he provided leadership organization wide. The Executive Committee had direct oversight of the Property Casualty Committee.
  • Member, Commercial Lines Committee. This Committee exercised national oversight of the functioning of commercial lines insurance.

Click on the link to read more about Mr. Hager’s experience as an insurance expert in Standards of Practice-Regulatory Matters.


Material for this article was taken from a collection of industry sources relating to the subject.

In all of the general statements here, see the state law of the controlling jurisdiction. Every case is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.

This blog is provided for educational purposes only. It is not intended to provide legal advice or an opinion in regard to any topic discussed. The blog should not be used as a substitute for legal advice from a licensed attorney in your state.