Ohio § 3901.34

§ 3901.34.

(A) Transactions within an insurance holding company system to which an insurer subject

to registration is a party shall be subject to the following standards: (1) The terms shall be fair and reasonable. (2) Charges or fees for services performed shall be reasonable. (3) Expenses incurred and payment received shall be allocated to the insurer in conformity

with customary insurance accounting practices that are consistently applied. (4) The books, accounts, and records of each party shall be so maintained as to clearly

and accurately disclose the precise nature and details of the transactions including

such accounting information as is necessary to support the reasonableness of the charges

or fees to the respective parties. (5) The insurer's surplus as regards policyholders following any dividends or distributions

to shareholder affiliates shall be reasonable in relation to the insurer's outstanding

liabilities and adequate to its financial needs. (6) Agreements for cost-sharing services and management services shall include such provisions

as required by the superintendent of insurance in rule or regulation; (7) If an insurer subject to sections 3901.32 to 3901.37 of the Revised Code is deemed by the superintendent to be in a hazardous financial condition or a condition

that would be grounds for supervision, conservation, or a delinquency proceeding,

then the superintendent may require the insurer to secure and maintain either a deposit,

held by the superintendent, or a bond, as determined by the insurer at the insurer's

discretion, for the protection of the insurer for the duration of the contract or

agreement, or the existence of the condition for which the superintendent required

the deposit or the bond. (8) In determining whether a deposit or a bond is required, the superintendent may consider

whether concerns exist with respect to the affiliated person's ability to fulfill

the contract or agreement if the insurer were to be put into liquidation.  Once the insurer is deemed to be in a hazardous financial condition or a condition

that would be grounds for supervision, conservation or a delinquency proceeding, and

a deposit or bond is necessary, the superintendent has discretion to determine the

amount of the deposit or bond, not to exceed the value of the contract or agreement

in any one year, and whether such deposit or bond shall be required for a single contract,

multiple contracts, or a contract only with a specific person or persons; (9)(a) All records and data of the insurer held by an affiliate are and remain the property

of the insurer, are subject to control of the insurer, are identifiable, and are segregated

or readily capable of segregation, at no additional cost to the insurer, from all

other persons' records and data.  This includes all records and data that are otherwise the property of the insurer,

in whatever form maintained, including: (i) Claims and claim files; (ii) Policyholder lists; (iii) Application files; (iv) Litigation files; (v) Premium records; (vi) Rate books; (vii) Underwriting manuals; (viii) Personnel records; (ix) Financial records or similar records within the possession, custody, or control of

the affiliate. (b) At the request of the insurer, the affiliate shall provide that the receiver can: (i) Obtain a complete set of all records of any type that pertain to the insurer's business; (ii) Obtain access to the operating systems on which the data is maintained; (iii) Obtain the software that runs those systems either through assumption of licensing

agreements or otherwise; (iv) Restrict the use of the data by the affiliate if it is not operating the insurer's

business. (c) The affiliate shall provide a waiver of any landlord lien or other encumbrance to

give the insurer access to all records and data in the event of the affiliate's default

under a lease or other agreement. (10) Premiums or other funds belonging to the insurer that are collected by or held by

an affiliate are the exclusive property of the insurer and are subject to the control

of the insurer.  Any right of offset in the event an insurer is placed into receivership is subject

to Chapter 3903. of the Revised Code. (B) For the purposes of this section, in determining whether an insurer's surplus as

regards policyholders is reasonable in relation to the insurer's outstanding liabilities

and adequate to its financial needs, the following factors, among others, may be considered: (1) The size of the insurer as measured by its assets, capital, surplus, reserves, premium

writings, insurance in force, and other appropriate criteria; (2) The extent to which the insurer's business is diversified among the several lines

of insurance; (3) The number and size of risks insured in each line of business; (4) The extent of the geographical dispersion of the insurer's insured risks; (5) The nature and extent of the insurer's reinsurance program; (6) The quality, diversification, and liquidity of the insurer's investment portfolio; (7) The recent past and projected future trend in the size of the insurer's surplus as

regards policyholders; (8) The adequacy of the insurer's reserves; (9) The quality and liquidity of investments in subsidiaries.  The superintendent may discount any such investment or treat any investment as a

nonadmitted asset for purposes of determining the adequacy of surplus as regards policyholders

whenever the investment so warrants. (10) The quality of the insurer's earnings and the extent to which the reported earnings

include extraordinary items; (11) The surplus as regards policyholders maintained by other comparable insurers in respect

of the factors enumerated in this division. (C) No insurer subject to registration under section 3901.33 of the Revised Code shall pay any extraordinary dividend or make any other extraordinary distribution

to its shareholders and the declaration of any such dividend or distribution shall

be conditional and shall confer no rights upon shareholders until thirty days after

the superintendent has received notice of the declaration thereof and has not within

the thirty-day period disapproved the dividend or distribution, or the superintendent

has approved the dividend or distribution within the thirty-day period. Prior to paying any dividend or distribution, the insurer shall notify the superintendent

on a form provided by the superintendent for informational purposes within five business

days following its declaration of any dividend or distribution and at least ten calendar

days prior to payment of such dividend or distribution, such ten-calendar-day period

to be measured from the date of the superintendent's receipt of the notice. For the purposes of this section, an extraordinary dividend or distribution includes

any dividend or distribution of cash or other property, whose fair market value, together

with that of other dividends or distributions made within the preceding twelve months,

exceeds the greater of ten per cent of the insurer's surplus as regards policyholders

as of the thirty-first day of December next preceding, or the net income of the insurer

for the twelve-month period ending the thirty-first day of December next preceding,

but shall not include pro rata distributions of any class of the insurer's own securities. Any dividend or distribution paid from other than earned surplus shall be considered

an extraordinary dividend or extraordinary distribution.  For the purposes of this section, “ earned surplus ” means an amount equal to an insurer's unassigned funds as set forth in its most

recent statutory financial statement submitted to the superintendent, including net

unrealized capital gains and losses or revaluation of assets.