Regulation .02 of this chapter is applicable to a person who acts as an insurer in this State, including dental plan organizations, fraternal benefit societies, health maintenance organizations, and nonprofit health service plans. Regulations .03 and .04 of this chapter are applicable to a person who acts as an insurer in this State, including dental plan organizations, fraternal benefit societies, health maintenance organizations, nonprofit health service plans, and accredited reinsurers. In this regulation, “accreditated state” means a state in which its insurance regulatory agency meets the accreditation requirements of the National Association of Insurance Commissioners in accordance with its Financial Regulation Standards and Accreditation Program. Except as provided in §C of this regulation, the Commissioner shall examine each foreign authorized insurer or alien authorized insurer whenever the Commissioner considers advisable and at least once every 5 years. Exception. Instead of conducting an examination of the foreign authorized insurer or the alien authorized insurer, the Commissioner may accept a full report of the last examination made of the insurer and certified by the insurance supervisory official of the state of domicile of a foreign authorized insurer or the state of entry of an alien authorized insurer. On and after January 1, 1994, the Commissioner may accept the report of examination only from an accreditated state whose insurance regulatory agency conducted the examination. If the report of examination is from an insurance regulatory agency of a nonaccreditated state, the Commissioner may accept the report only if the examination: Is performed under the supervision of an insurance regulatory agency of an accreditated state; or Is performed with the participation of one or more examiners who: Are employed by the insurance regulatory agency of an accreditated state, and After a review of the work papers and report of the examination, state under oath that the examination is performed in accordance with the standards and procedures required by the accreditated state of the examiner. This regulation applies to: A person subject to examination under Insurance Article, §2-205, Annotated Code of Maryland; A nonprofit health service plan subject to examination under Insurance Article, §14-125, Annotated Code of Maryland; A fraternal benefit society subject to examination under Insurance Article, §8-461 or 8-462, Annotated Code of Maryland; A fronting reinsurer subject to examination under Insurance Article, §13-116, Annotated Code of Maryland; An accredited reinsurer subject to examinationunder Insurance Article, Title 5, Subtitle 9, Annotated Code of Maryland; A dental plan organization subject to examination under Insurance Article, §14-411, Annotated Code of Maryland; or A health maintenance organization subject to examination under Insurance Article, §2-205(b)(1)(v), Annotated Code of Maryland. The Commissioner, or an examiner designated by the Commissioner, shall conduct an examination authorized under Insurance Article, Annotated Code of Maryland, or Health-General Article, Annotated Code of Maryland, in accordance with the Examiners' Handbook adopted by the National Association of Insurance Commissioners and any other guidelines or procedures considered necessary by the Commissioner. Time Period for Completion and Filing Report. Within 60 days after the completion of an examination conducted under Insurance Article, Annotated Code of Maryland, or Health-General Article, Annotated Code of Maryland, each examiner in charge of the examination shall prepare for filing with the Commissioner a verified written report of the examination. At least 30 days before filing the report in the office of the Commissioner, the Commissioner shall give a copy of the report to the person that was examined. If the person requests a hearing, in writing, within the 30-day period, the Commissioner shall grant a hearing on the report. A person who is required under Insurance Article, Annotated Code of Maryland, or Health-General Article, Annotated Code of Maryland, to file an annual financial statement, interim financial statement, audited financial report, or annual actuarial opinion shall prepare the documents in accordance with the Annual Statement Instructions and the Accounting Practices and Procedures Manual adopted by the National Association of Insurance Commissioners. Health-General Article, §§19-717 and 19-718; Insurance Article, §§2-109, 2-205, 2-207, 2-208, 2-209, 3-303, 3-318, 3-319, 4-116, 5-201, 5-903, 5-904, 8-461, 8-462, 13-116, 14-125, and 14-411; Annotated Code of Maryland Effective date: Regulations .01—.04 adopted as an emergency provision effective June 17, 1993 (20:14 Md. R. 1164); adopted permanently effective October 11, 1993 (20:20 Md. R. 1570) Chapter recodified from COMAR 09.30.58 to COMAR 31.04.01 effective September 7, 1998 (25:18 Md. R. 1439) Regulation .01B amended effective June 20, 2016 (43:12 Md. R. 668) Regulation .03A amended effective June 20, 2016 (43:12 Md. R. 668) The purpose of this chapter is to ensure protection of the public interest by providing for the evaluation of the suitability of certain individuals who exercise control of any substantial portion of certain entities that do insurance business in the State, including an insurer, health maintenance organization, managed care organization, fraternal benefit society, nonprofit health service plan, and dental plan organization. This chapter does not apply to workers’ compensation self-insurance groups organized pursuant to Insurance Article, Title 25, Subtitle 3, Annotated Code of Maryland. In this chapter, the following terms have the meanings indicated. Terms Defined. “Affiant” means an individual who certifies to the accuracy of statements made in a biographical affidavit. “Applicant” means a person who submits a biographical affidavit pursuant to Regulation .03A of this chapter. “Approved independent third party” means an independent third party as defined in §B(12) of this regulation that is on the currently approved independent third party list published by the NAIC on the Uniform Certificate of Authority website. “Background report” means documentation provided by an approved independent third party that complies with NAIC’s “Best Practices for NAIC Background Investigations” and details information verified or discovered in the course of the background investigation, or both. “Biographical affidavit” means the current NAIC Form 11, “Biographical Affidavit”, of the NAIC Uniform Certificate of Authority Application and must include a completed, state-specific “Disclosure and Authorization Concerning Background” form. “Certificate of authority” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland. “Control” has the meaning stated in Insurance Article, §7-101, Annotated Code of Maryland. “Dental plan organization” has the meaning stated in Insurance Article, §14-401(c), Annotated Code of Maryland. “Entity” includes an insurer, health maintenance organization, managed care organization, fraternal benefit society, nonprofit health service plan, and dental plan organization. “Fraternal benefit society” has the meaning stated in Insurance Article, §8-402(a), Annotated Code of Maryland. “Health maintenance organization” has the meaning stated in Health-General Article, §19-701(g), Annotated Code of Maryland. “Independent third party” means a consumer reporting agency regulated by the Federal Trade Commission and, therefore, subject to the Fair Credit Reporting Act: That is able to verify information contained in the biographical affidavit through the use of domestic and international resources; Whose officers, directors, or both, have stock ownership amounting to 1 percent or less of the applicant’s outstanding stock, unless the Commissioner grants written approval of an entity in which the officers, directors, or both, have more than 1 percent stock ownership; and That is at all times compliant with the “NAIC Background Investigation Guidelines” and Regulations .06 and .07 of this chapter relevant to the preparation of the background report and its submission to the Commissioner. “Insurer” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland. “Managed care organization” has the meaning stated in Health-General Article, §15-101(e), Annotated Code of Maryland. “NAIC” means the National Association of Insurance Commissioners. “Nonprofit health service plan” has the meaning stated in Insurance Article, §14-102, Annotated Code of Maryland. “Person” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland. “Principal management” means any person, regardless of title, who exercises control of any substantial portion of the general business of the insurer and may include the: Chairman of the board; President; Vice president; Secretary; Treasurer; Controller or comptroller; Actuary; Directors; and Members of the executive committee. “Provider sponsored organization” has the meaning stated in Health-General Article, §19-7A-01(f), Annotated Code of Maryland. “Uniform Certificate of Authority Expansion Application” means the NAIC’s uniform process, adopted by the Commissioner, for use by an entity that wishes to expand its operations into one or more states. “Uniform Certificate of Authority Primary Application” means the NAIC’s uniform process, adopted by the Commissioner, for use in the formation of a new insurer to be domiciled in Maryland in order to obtain a certificate of authority, or for a foreign entity to use in making application to redomesticate to Maryland from another state. Biographical affidavits shall be submitted on the individuals required by the applicable filing when: An entity files an application for a certificate of authority using the NAIC Uniform Certificate of Authority Primary Application; A foreign entity files an application for a certificate of authority using the Uniform Certificate of Authority Expansion Application; A foreign entity files an application to redomesticate to Maryland using the Uniform Certificate of Authority Primary Application; A person files a registration statement pursuant to Insurance Article, §7-603, Annotated Code of Maryland; and Any person seeking to acquire control of an insurer or other entity files a statement pursuant to Insurance Article, §7-304, Annotated Code of Maryland. Upon written request of the Commissioner and within 30 days of such a request, a foreign entity holding a current certificate of authority in this State that had a change in principal management shall provide a biographical affidavit for the affiant listed in the request. For any change in principal management of a domestic entity, a person shall submit a biographical affidavit for the affiant within 30 days of the date of change. Form. Each biographical affidavit required by this chapter shall be submitted to the Commissioner and the approved independent third party in a legible format, in the most recent form made available by the NAIC. Contents. The biographical affidavit requires an affiant to provide information, including the affiant’s employment history, education, personal information, and character. Date. Biographical affidavits must be certified by the affiant, notarized, and dated no earlier than 1 year prior to the date of submission of the application or statement, or management change. NAIC Disclosure and Authorization Concerning Background Form. Consent to Release Information. By completing the NAIC “Disclosure and Authorization Concerning Background” form, the affiant consents to: The release of the information in the biographical affidavit to the approved independent third party; The background investigation conducted by the approved independent third party; and The approved independent third party’s release of the results of its background report to the Commissioner. An affiant may revoke the authorization at any time by delivering a written revocation to the applicant. The applicant shall, upon an affiant’s action pursuant to §D(2) of this regulation, forward such revocation promptly to any approved independent third party that either prepared or is preparing a background report under the “NAIC Disclosure and Authorization Concerning Background” form. The applicant is responsible for selecting an independent third party to perform the verification of the information contained in all submitted biographical affidavits. When selecting the independent third party, the applicant: Must select an approved independent third party; and Is responsible for ensuring that the independent third party it selects is able to perform a complete investigation in the applicable jurisdictions. The applicant is responsible for the payment of the services provided by the approved independent third party for the preparation and submission of the background report to the Commissioner. Contents. A background report shall conform to the NAIC Background Investigation Guidelines and the Best Practices for NAIC Background Investigations for the preparation and content of the response from an approved independent third party. Submission Requirements. The background report shall be prepared by an approved independent third party. Background reports must be submitted directly to the Commissioner by the approved independent third party. The applicant is responsible for ensuring that the background report has been provided to the Commissioner. The information contained in the biographical affidavit, the background report, and any other information deemed relevant by the Commissioner will be reviewed by the Commissioner to evaluate the suitability, competency, character, and integrity of the affiant. The review will also evaluate whether discrepancies or inconsistencies exist between information disclosed in the biographical affidavit and the background report and whether follow-up action should be taken. Health-General Article, §§15-102.6, 19-705, 19-708, 19-7A-03, and 19-7A-04;Insurance Article, §§2-109, 2-205(c), 4-108, 4-113(a)(7)—(9), 7-304, 7-603, 8-412, 8-417, 14-109(3), and 14-405; Annotated Code of Maryland Effective date: June 12, 1969 Regulation .03 amended effective October 23, 1995 (22:21 Md. R. 1615) Regulation .07 adopted and Appendix A repealed effective October 23, 1995 (22:21 Md. R. 1615) Chapter recodified from COMAR 09.30.03 to COMAR 31.04.02 effective September 7, 1998 (25:18 Md. R. 1439) Chapter revised effective November 5, 2007 (34:22 Md. R. 1979) Chapter revised effective October 1, 2016 (43:18 Md. R. 1018) This chapter is considered necessary as an aid to the effectuation of the provisions of Insurance Article, §§2-112 and 4-115, Annotated Code of Maryland. This chapter is applicable to all domestic insurers. An insurer's home office or executive office is the location at which significant aspects of the insurer's business operations are performed, and at which the insurer's books and records are prepared and maintained on a day-to-day basis and where a full-scope financial examination shall be made. Insurance Article, §§2-109, 2-112, 4-113(a)(7)—(9), and 4-115, Annotated Code of Maryland Effective date: March 16, 1992 (19:5 Md. R. 576) Regulation .03 amended effective December 18, 1995 (22:25 Md. R. 1961) Chapter recodified from COMAR 09.30.62 to COMAR 31.04.03 effective September 7, 1998 (25:18 Md. R. 1439) Annual Statements. Each domestic and foreign insurance company, health maintenance organization, dental plan organization, and nonprofit health service plan that has been issued a certificate of authority by the Administration is required to annually file an annual statement with the Administration in paper or electronic format as specified in Regulation .02 of this chapter. Unless the Commissioner extends the time for good cause, the annual statements shall be filed: For insurance companies and nonprofit health service plans, on or before March 1 of each year; For health maintenance organizations: On or before March 1 of each year; or If approved by the Commissioner, within 60 days after the end of their fiscal year; and For dental plan organizations, April 1 of each year. The annual statements shall be: Prepared in accordance with the Annual Statement Instructions and Accounting Practices and Procedures Manual adopted by the National Association of Insurance Commissioners (NAIC); Supplemented by such related filings as shall be required by the Annual Statement Instructions. A domestic company’s annual statement shall be prepared under oath and signed by at least two executive officers. The executive officers authorized to sign the oath shall include: The president, vice-president, or chief financial officer; and The secretary, treasurer, CEO, or other officer approved by the Commissioner. A foreign company’s annual statement shall be prepared and executed in accordance with the laws and regulations of the company’s home state. Quarterly Statements. Each domestic insurance company, health maintenance organization, dental plan organization and nonprofit health service plan that has been issued a certificate of authority by the Administration is required to file quarterly statements with the Administration. Unless the Commissioner extends the time for good cause, the quarterly statements shall be filed: For insurance companies, dental plan organizations and nonprofit health service plans, on or before May 15, August 15, and November 15 of each year; and For health maintenance organizations, May 15, August 15, and November 15 of each year, or if approved by the Commissioner, 45 days after the end of each quarter other than the quarter in which its fiscal year ends. The quarterly statements shall be prepared in accordance with the Annual Statement Instructions and Accounting Practices and Procedures Manual adopted by the NAIC. A domestic company’s quarterly statement shall be prepared under oath and signed by at least two executive officers. The executive officers authorized to sign the oath shall include: The president, vice-president, or chief financial officer; and The secretary, treasurer, CEO, or other officer approved by the Commissioner. A foreign company’s quarterly statement shall be prepared and executed in accordance with the laws and regulations of the company’s home state. Annual Audited Financial Statements. Each domestic and foreign insurance company, health maintenance organization, dental plan organization, and nonprofit health service plan that has been issued a certificate of authority by the Administration to engage in business in this State is required to annually file annual audited financial statements with the Administration. Unless the Commissioner extends the time for good cause, the annual audited financial statements shall be filed: For insurance companies, on or before June 1 of each year; For nonprofit health service plans, on or before March 1 of each year; For dental plan organizations, on or before April 1 of each year; and For health maintenance organizations, June 1 of each year, or if approved by the Commissioner, within 150 days after the date their fiscal year ends. Definition. In this regulation, the following term has the meaning indicated. “Required related annual filings” means, but is not limited to, the Statement of Actuarial Opinion, Risk-Based Capital Report, and Management's Discussion and Analysis. Filings. The filings required by §§C and D of this regulation shall be made in accordance with the Annual Statement Instructions adopted by the NAIC. Domestic Companies. Each domestic insurance company, health maintenance organization, dental plan organization, and nonprofit health service plan that is required to file an annual statement and required related annual filings, quarterly statements, and annual audited financial statements, as well as all amendments and addenda to these filings, shall make those filings on paper with the Administration. Each domestic insurance company, health maintenance organization, dental plan organization, and nonprofit health service plan shall also file its annual statements, required related annual filings, quarterly statements, and annual audited financial statements, as well as all amendments and addenda to these filings, in both a paper and an electronic format with the NAIC. Foreign Companies Each foreign insurance company, health maintenance organization, dental plan organization, and nonprofit health service plan that has been issued a certificate of authority by the Administration shall file its annual statements, required related annual filings, and annual audited financial statements, as well as all amendments and addenda to these filings, in an electronic format with the NAIC. Foreign companies shall file the documents required by §D(1) of this regulation with the NAIC on or before the due dates specified in Maryland law. These filings shall be considered to have been filed with the Administration when they are received by the NAIC. The Administration shall use the dates the documents are received by the NAIC in order to determine compliance with Maryland filing requirements, and for imposing any fines or penalties specified in Maryland law for failing to file these documents on or before their due dates. Each foreign insurance company, health maintenance organization, dental plan organization, and nonprofit health service plan that has been issued a certificate of authority by the Administration shall annually, on or before the filing due dates specified in this regulation, provide the administration with an annual statement jurat page, signed by appropriate officers of the company, and affirming that the electronic filing made by the company with the NAIC is, except for formatting differences, an exact copy of the Annual Statement. Health-General Article, §§19-705, 19-717, and 19-728; Insurance Article, §§2-109(a)(1), 4-116, 14-121, 14-411(a), and 14-413; Annotated Code of Maryland Effective date: December 31, 1953 Amended effective May 1, 1968 Regulation .02 adopted as an emergency provision effective October 26, 1993 (20:23 Md. R. 1799); adopted permanently effective January 31, 1994 (21:2 Md. R. 98) Chapter recodified from COMAR 09.30.09 to COMAR 31.04.04 effective September 7, 1998 (25:18 Md. R. 1439) Regulations .01 and .02 repealed and new Regulations .01 and .02 adopted effective February 26, 2007 (34:4 Md. R. 403) Regulation .01 amended effective October 1, 2019 (46:13 Md. R. 590) An application of a foreign stock or mutual insurance company for a license to transact the insurance business in Maryland may not be considered until it has met the requirements of either §B or C of this regulation. The foreign stock or mutual insurance company shall have continuously, actively, and successfully transacted the business of insurance for at least 2 years immediately before the making of the application. However, the Commissioner may waive the 2-year requirement, if the Commissioner considers it in the public interest. In the case of reorganization, merger, or consolidation of stock or mutual insurance companies, the surviving company or new company may, in the discretion of the Commissioner, be considered as having the age of the eldest company which is a party to the reorganization, merger, or consolidation for the purpose of complying with the requirements of this regulation. In the case of a foreign stock company making application within the 2-year period in §B of this regulation, the company shall have a capital of at least $3,000,000 and a surplus of at least $4,000,000 (in excess of its capital stock), and, in the case of a foreign mutual company making application within the 2-year period in §B of this regulation, a surplus of at least $7,000,000 if the company's assets are invested substantially in accordance with the Insurance Laws of Maryland governing investments, and will be maintained on the same basis. Insurance Article, §§2-109, 4-102, 4-103, and 4-104, Annotated Code of Maryland Effective date: June 22, 1966 Amended effective May 1, 1968 Regulation .01 amended effective October 23, 1995 (22:21 Md. R. 1615) Chapter recodified from COMAR 09.30.05 to COMAR 31.04.05 effective September 7, 1998 (25:18 Md. R. 1439) In order to assure disclosure of possible conflict of interests, foreign and domestic companies shall be able to answer in the affirmative the following interrogatory which is contained in the “General Interrogatories” section of the National Association of Insurance Commissioners (NAIC) annual statement: “Has the reporting entity an established procedure for disclosure to its board of directors or trustees of any material interest or affiliation on the part of any of its officers, directors, trustees, or responsible employees which is in, or is likely to, conflict with the official duties of such persons?” All companies, both foreign and domestic, shall have ready for convenient inspection by examiners from this Administration both of the following: A board of directors' or trustees' resolution or bylaw setting forth the company's policy as to disclosure of a possible conflict of interest; Questionnaires completed and signed annually by officers, directors, trustees, and responsible employees. The following two samples meet Insurance Administration requirements and should be followed closely by domestic companies, though they may pass additional board of directors' or trustees' resolutions or bylaws or require additional information on their questionnaires. Foreign companies will be allowed sufficient latitude in the forms they use, so that they will not be obliged to use a special form merely to satisfy Maryland requirements. However, they should be substantially equivalent or more than equivalent in their breadth of coverage and the strictness of their requirements. The variances should not have the effect of lessening or weakening the requirements of the samples. Be It Resolved That all Officers, Directors, Trustees and Employees of the Company in their transactions with others are expected to act in the best interests of the Company and not for their own advantage. Resolved Further, That this policy requires that— Officers, Directors, Trustees and Responsible Employees and members of their families must have no relationships nor engage in any activities that might impair their independence of judgment concerning Company business of such Officers, Directors, Trustees or Responsible Employees. They must have no personal financial interests that might impair their independence of judgment or influence their decisions or actions on Company business in the direction of such personal financial interests. They must not accept gifts, benefits, or unusual hospitality that might tend to influence them in the performance of their duties. If any possible conflict of interest exists, the individual concerned must disclose the facts by completing the attached questionnaire and returning it to the secretary of the Company or an officer of the Company superior to the Secretary. Resolved Further, That the officer of the Company to whom the questionnaires are returned must refer any conflict, disclosed to him, to the Board for review and appropriate action on or before ___________ 20__, and that a similar questionnaire shall be completed and returned in each succeeding year. Do you or does any member of your family have any relationships or engage in any activities that might impair your independence of judgment concerning Company business? Do you or does any member of your family have any personal financial interests that might impair your independence of judgment or influence your decisions or actions concerning Company business in the direction of such personal financial interests? Have you accepted gifts, benefits, or unusual hospitality that might tend in any way to impair your independence of judgment or affect your decisions or actions concerning Company business? Insurance Article, §§2-109, 4-113(a)(7)—(9), and 4-116, Annotated Code of Maryland Effective date: January 30, 1968 Amended effective May 1, 1968 Chapter recodified from COMAR 09.30.08 to COMAR 31.04.06 effective September 7, 1998 (25:18 Md. R. 1439) Regulation .01 amended effective June 20, 2016 (43:12 Md. R. 668) Regulation .03 amended effective February 12, 2007 (34:3 Md. R. 303) This chapter does not apply to any insurer if 95 percent or more of its equity securities is owned or controlled by a parent or an affiliated insurer and the remaining securities are held of record by less than 500 persons. A domestic stock insurer which files with the Securities and Exchange Commission with respect to any class of securities forms of proxies, consents, and authorizations complying with the requirements of the Securities Exchange Act of 1934, as amended, and its applicable regulations, is exempt from the provisions of this chapter with respect to that class of securities. A domestic stock insurer that has any class of equity securities held of record by 300 or more persons, or any director, officer, or employee of that insurer, or any other person, may not solicit, or permit the use of the person's name to solicit, by mail or otherwise, any proxy, consent, or authorization in respect to any class of equity securities in contravention of this regulation and Schedules A and B in Regulations .14 and .15 of this chapter. Unless proxies, consents, or authorizations with respect to any class of equity securities of a domestic insurer subject to §B of this regulation are solicited by or on behalf of the management of the insurer from the holders of record of the securities in accordance with this chapter and its schedules prior to any annual or other meeting of the security holders, the insurer shall file with the Commissioner and transmit to every security holder who is entitled to vote in regard to any matter to be acted upon at the meeting and from whom a proxy is not solicited a written information statement containing the information specified in Schedule C of Regulation .16 of this chapter. In this chapter, the following terms have the meanings indicated. Terms Defined. “Affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. “Associate” means: A corporation or organization (other than the issuer or a majority owned subsidiary of the issuer) of which the person is an officer or partner or is, directly or indirectly, the beneficial owner of 10 percent or more of any class of equity securities; A trust or other estate in which the person has a substantial beneficial interest or as to which the person serves as trustee or in a similar fiduciary capacity; and A relative or spouse of that person, or any relative of the spouse, who has the same home as the person or who is a director or officer of the issuer or any of its parents or subsidiaries. “Beneficial owner” means a person who, directly or indirectly, through a contract, arrangement, understanding, relationship, or otherwise, has or shares: Voting power including the power to vote, or the power to direct voting of, a security; or Investment power which includes the power to dispose of, or to direct the disposition of, the security. “Control” (including the terms “controlling”, “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise. “Issuer” means the issuer of the securities in respect of which a proxy is solicited. “Last fiscal year” means the last fiscal year of the issuer ending before the date of the meeting for which proxies are to be solicited. “Officer” means the president, secretary, treasurer, any vice president in charge of a principal business function (such as sales, administration, or finance), and any other individual who performs similar policy-making functions for the insurer. “Parent” means an affiliate controlling the person directly or indirectly through one or more intermediaries. “Person” means an individual, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization, or a government or political subdivision of a government. “Proxy statement” means the statement required by Regulation .04 of this chapter, whether or not contained in a single document. Solicitation. “Solicitation” means: A request for a proxy, whether or not accompanied by or included in a form of proxy; A request to execute or not to execute, or to revoke, a proxy; or The furnishing of a form of proxy or other communication to security holders under circumstances reasonably calculated to result in the procurement, withholding, or revocation of a proxy. “Solicitation” does not apply, however, to: The furnishing of a form of proxy to a security holder upon the unsolicited request of the security holder; The performance by the issuer of acts required by Regulation .08 of this chapter; or The performance by any person of ministerial acts on behalf of a person soliciting a proxy. “Trust” includes only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security. Regulation .10 of this chapter applies to every solicitation that is subject to Regulation .01 of this chapter. Regulations .02—.09 and Regulation .11 of this chapter apply to every solicitation that is subject to Regulation .01 except the following: A solicitation made otherwise than on behalf of the issuer where the total number of persons solicited is not more than ten; A solicitation by a person with respect to securities carried in the person's name or in the name of the person's nominee (otherwise than as voting trustee), or held in the person's custody, if the person: Receives no commission or remuneration for the solicitation, directly or indirectly, other than reimbursement of reasonable expenses; Furnishes promptly to the solicited person a copy of all soliciting material with respect to the same subject matter or meeting received from all persons who shall furnish copies for that purpose and who shall, if requested, defray the reasonable expenses to be incurred in forwarding the material; and In addition, does no more than impartially instruct the person solicited to forward a proxy to the person, if any, to whom the person solicited desires to give a proxy, or impartially request from the person solicited instructions as to the authority to be conferred by the proxy and state that a proxy will be given if no instructions are received by a certain date; A solicitation by a person with respect to securities of which it is the beneficial owner; A solicitation through the medium of a newspaper advertisement which informs security holders of a source from which they may obtain copies of a proxy statement, form of proxy, and any other soliciting material, and does no more than: Name the issuer; State the reason for the advertisement; and Identify the proposal or proposals to be acted upon by security holders; and Any solicitation which the Commissioner finds for good cause should be exempted from this chapter or any part of this chapter. A solicitation subject to this chapter may not be made unless each person solicited is concurrently furnished or has previously been furnished with a written proxy statement containing the information specified in Schedule A. Annual Report. If the solicitation is made on behalf of the issuer and relates to an annual meeting of security holders at which directors are to be elected, each proxy statement furnished pursuant to §A of this regulation shall be accompanied or preceded by an annual report to security holders as decided in this section. The report shall contain, in comparative columnar form, such financial statements for the last 2 fiscal years, prepared on a consistent basis, as will in the opinion of the management adequately reflect the financial position of the issuer at the end of each year, and the results of its operations for each year. Consolidated financial statements of the issuer and its subsidiaries shall be included in the report if they are necessary to reflect the financial position and results of operations of the issuer and its subsidiaries, but in that case the individual statements of the issuer may be omitted. The Commissioner may, upon the request of the issuer, permit the omission of financial statements for the earlier of the 2 fiscal years upon a showing of good cause. The financial statements for the last 2 fiscal years required by §B(2) of this regulation shall be prepared in a manner acceptable to the Commissioner. The report shall include, in comparative columnar form, a summary of issuer's operations, or the operations of the issuer and its subsidiaries consolidated, or both as appropriate, for each of the last 5 fiscal years of the issuer (or the life of the issuer and its predecessors, if less). The report shall contain a brief description of the business or businesses done by the issuer and its subsidiaries during the most recent fiscal year which will, in the opinion of management, indicate the general nature and scope of the business of the issuer and its subsidiaries. The report shall identify each of the issuer's directors and officers and shall indicate the principal occupation or employment of each person and the name and principal business of any organization by which the person is so employed. The report shall identify the principal market in which securities of any class entitled to vote at the meeting are traded, stating the range of bid and asked quotations for each quarterly period during the issuer's 2 most recent fiscal years, and shall set forth each dividend paid during the 2-year period. Subject to the foregoing requirements, the report may be in any form considered suitable by management, and the information required by §B(4)—(7) of this regulation may be presented in an appendix or other separate section of the report, if the attention of security holders is called to the presentation. This section does not apply, however, to solicitations made on behalf of the management before the financial statements are available if solicitation is being made at the time in opposition to the management and if the management's proxy statement includes an undertaking in bold face type to furnish the annual report to all persons being solicited, at least 20 days before the date of the meeting. Two copies of the report sent to security holders pursuant to this regulation shall be mailed to the Commissioner not later than the date on which the report was first sent or given to security holders, or the date on which preliminary copies of solicitation material are filed pursuant to Regulation .07 of this chapter, whichever date is later. If the issuer knows that securities of any class entitled to vote at a meeting with respect to which the issuer intends to solicit proxies, consents, or authorizations are held of record by a broker, dealer, bank, or voting trustee, or their nominees, the issuer shall inquire of the record holder at least 10 days before the record date for the meeting of security holders whether other persons are the beneficial owners of the securities and, if so, the number of copies of the proxy and other soliciting material and, in the case of an annual meeting at which directors are to be elected, the number of copies of the annual report to security holders, necessary to supply these materials to beneficial owners. The issuer shall supply the record holder in a timely manner with additional copies assembled in a form and at a place the record holder may reasonably request, in order to address and send one copy to each beneficial owner of securities so held and shall, upon the request of the record holder, pay its reasonable expenses for mailing the materials to security holders to whom the material is sent. Form of Proxy. The form of proxy shall: Indicate in bold face type whether or not the proxy is solicited on behalf of the insurer's board of directors, or, if not, by whom it is solicited; Provide a specifically designated blank space for dating the proxy; and Identify clearly and impartially each matter or group of related matters intended to be acted upon, whether proposed by the issuer or by security holders. Reference need not be made to proposals as to which discretionary authority is conferred pursuant to §C of this regulation. Contents. Means shall be provided in the form of proxy by which the person solicited is afforded an opportunity to specify by ballot a choice between approval or disapproval of, or abstention with respect to, each matter or group of related matters referred to as intended to be acted upon, other than elections to office. A proxy may confer discretionary authority with respect to matters as to which a choice is not specified, if the form of proxy states in bold face type how it is intended to vote the shares represented by the proxy in each case. A form of proxy, which provides both for the election of directors and for action on other specified matters, shall be prepared clearly to provide, by a box or otherwise, a means by which the security holder may withhold authority to vote for any nominee for election as a director. The form of proxy, which is executed by the security holder in a manner as not to withhold authority to vote for the election of all nominees, shall be considered to grant authority for all nominees for which a vote is not withheld, if the form of proxy so states in bold face type. A proxy may confer discretionary authority to vote with respect to any of the following matters: Matters which the persons making the solicitation do not know, a reasonable time before the solicitation, are to be presented at the meeting, if a specific statement to that effect is made in the proxy statement or form of proxy; Approval of the minutes of the prior meeting if the approval does not amount to ratification of the action taken at that meeting; The election of any individual to any office for which a bona fide nominee is named in the proxy statement and the nominee is unable to serve or for good cause will not serve; Any proposal omitted from the proxy statement and form of proxy pursuant to Regulation .09 or .10 of this chapter; and Matters incident to the conduct of the meeting. A proxy may not confer authority to vote for the election of any individual to any office for which a bona fide nominee is not named in the proxy statement, or to vote at any annual meeting, other than the next annual meeting (or any adjournment of it), to be held after the date on which the proxy statement and form of proxy are first sent or given to security holders. A person is not considered to be a bona fide nominee and may not be named the bona fide nominee unless the individual has consented to being named in the proxy statement and to serve if elected. The proxy statement or form of proxy shall provide, subject to reasonable specified conditions, that the securities represented by the proxy will be voted and that, if the person solicited specifies by means of a ballot provided pursuant to §B of this regulation a choice with respect to any matter to be acted upon, the securities will be voted in accordance with specifications so made. The information included in the proxy statement shall be clearly presented, the statements made shall be divided into groups according to subject matter, and the various groups of statements shall be preceded by appropriate headings. All proxy statements shall disclose, under an appropriate caption, the date by which proposals of security holders intended to be presented at the next annual meeting shall be received by the issuer for inclusion in the issuer's proxy statement and form of proxy relating to that meeting. This date shall be calculated in accordance with the provisions of Regulation .09A of this chapter. If the date of the next annual meeting is subsequently advanced by more than 30 calendar days or delayed by more than 90 calendar days from the date of the annual meeting to which the proxy statement relates, the issuer shall, in a timely manner, inform security holders of the change, and the date by which proposals of security holders must be received, by any means reasonably calculated to so inform them. Two preliminary copies of the proxy statement and form of proxy, and any other soliciting material to be furnished to security holders with the proxy (or the information statement pursuant to Schedule C), shall be filed with the Commissioner at least 10 days before the date final copies of the material are first sent or given to security holders, or a shorter period before that date as the Commissioner may authorize upon a showing of good cause. Two preliminary copies of any additional soliciting material relating to the same meeting or subject matter to be furnished to security holders after the proxy statement shall be filed with the Commissioner at least 2 days (exclusive of Saturdays, Sundays, and holidays) before the date copies of the material are first sent or given to security holders, or a shorter period before the date as the Commissioner may authorize upon a showing of good cause. Two definitive copies of the proxy statement, form of proxy, and all other soliciting material (or the information statement), in the form in which the material is furnished to security holders, shall be filed with, or mailed for filing to, the Commissioner not later than the date the material is first sent or given to any security holder. Copies of replies to inquiries from security holders requesting further information, and copies of communications that do no more than request that forms of proxy previously solicited be signed and returned, do not need to be filed pursuant to this regulation. Despite the provisions of §§A and B of this regulation and of Regulation .12E of this chapter, copies of soliciting material in the form of speeches, press releases, and radio or television scripts may, but need not, be filed with the Commissioner before use or publication. Definitive copies, however, shall be filed with or mailed for filing to the Commissioner as required by §C of this regulation not later than the date the material is used or published. The provisions of §§A and B of this regulation and of Regulation .12E of this chapter apply, however, to any reprints or reproductions of all or any part of this material. If any proxy statement, form of proxy, or other material filed pursuant to this regulation is amended or revised, one of the copies of the amended or revised material filed pursuant to this regulation shall be marked to indicate clearly and precisely the changes. If the management of the issuer has made or intends to make any solicitation subject to this chapter, the issuer shall perform the acts in §§B—D of this regulation requested in writing with respect to the same subject matter or meeting by any security holder who is, or security holders who are, entitled to vote at least 1 percent of the votes entitled to be voted on the matter and who shall defray the reasonable expenses to be incurred by the issuer in the performance of the act or acts requested. The issuer shall mail or otherwise furnish to a security holder, as promptly as practicable after the receipt of the request: A statement of the approximate number of record owners and, to the extent known to the issuer, the approximate number of beneficial owners of any class of securities, any of whom have been or are to be solicited on behalf of the management, or any group of whom the security holder shall designate; and An estimate of the cost of mailing a specified proxy statement, form of proxy, or other communication to the owners. Issuer Responsibilities. Copies of any proxy statement, form of proxy, or other communication furnished by the security holder shall be mailed by the issuer to any of the security owners specified in §B(1) of this regulation as the security holder designates. The material furnished by the security holder shall be mailed with reasonable promptness after receipt of the material to be mailed, envelopes or other containers, and postage or payment for postage. The issuer need not, however, mail any material before the first day that solicitation is made on behalf of the issuer. The issuer is not responsible for the proxy statement, form of proxy, or other communication. Instead of performing the acts specified in §§B—C of this regulation, the issuer may, at its option, furnish promptly to a security holder: A reasonably current list of the names and addresses of the record owners and, to the extent known to the issuer, the beneficial owners the security holder designates; and A schedule of the handling and mailing costs if the schedule has been supplied to the issuer. If any holder or holders of an issuer's securities (hereafter referred to as the “proponent”) notifies the issuer in writing not less than 90 days before the issuer's annual meeting of holder's intention to present a lawful proposal for action at an upcoming meeting of the issuer's security holders, and at the time of the notice the proponent is entitled to vote at least 1 percent of the votes entitled to be voted on the proposal, the issuer shall: Set forth the proposal in its proxy statement with the name and address of the proponent; Identify it in its form of proxy; and Provide for the specification of approval or disapproval of the proposal. If the issuer opposes any proposal received from a proponent, it shall also, at the request of the proponent, include in its proxy statement a statement by the proponent of not more than 200 words in support of the proposal. The issuer may omit a proposal and any statement in support from its proxy statement and form of proxy under any of the following circumstances: The proponent has submitted more than one proposal in connection with a particular meeting; The proposal is more than 300 words in length; The proposal or the supporting statement is contrary to any provision of this chapter or the schedules attached, including Regulation .10 of this chapter which prohibits false or misleading statements in proxy soliciting materials; The proposal relates to the enforcement of a personal claim or the redress of a personal grievance against the issuer, its management, or any other person; The proposal deals with a matter not significantly related to the issuer's business, a matter beyond the issuer's power to effectuate, a matter relating to the conduct of the ordinary business operations of the issuer, or an election to office; The proposal is counter to a proposal to be submitted by the issuer at the meeting, the proposal has been rendered moot, or the proposal relates to specific amounts of cash or stock dividends; The proposal is substantially duplicative of a proposal previously submitted to the issuer by another proponent, which proposal will be included in the management's proxy material for the meeting; or Substantially the same proposal has previously been submitted to security holders in the issuer's proxy statement and form of proxy relating to any annual or special meeting of security holders held within the preceding 5 calendar years, and received less than 5 percent of the total number of votes cast at the time of its most recent submission. If the issuer intends to omit any proposal from its proxy statement or forms of proxy, or both, it shall notify the proponent in writing of its intention at least 10 days before the issuer's preliminary proxy material is filed pursuant to Regulation .07A of this chapter. A proxy statement, form of proxy, notice of meeting, information statement, or other communication, written or oral, subject to this regulation may not contain any statement which, at the time and in the light of the circumstances under which it is made: Is false or misleading with respect to any material fact; or Omits to state any material fact necessary: In order to make the statements not false or misleading; or To correct any statement in any earlier communication with respect to the same meeting or subject matter which has become false or misleading. A person making a solicitation that is subject to this chapter may not solicit any undated or postdated proxy, or any proxy that provides that it shall be considered to be dated as of any date after the date on which it is signed by the security holder subject to this chapter. Solicitations to Which this Regulation Applies. This regulation applies to any solicitation by any person or group for the purpose of opposing a solicitation subject to this chapter by any other person or group with respect to the election or removal of directors at any annual or special meeting of security holders. Participant or Participant in a Solicitation. In this regulation, “participant” and “participant in a solicitation” include: The issuer; Any director of the issuer, and any nominee for whose election as a director proxies are solicited; or Any other person, acting alone or with one or more other persons, committees, or groups, in organizing, directing, or financing the solicitation. In this regulation, “participant” and “participant in a solicitation” do not include: A bank, broker, or dealer who, in the ordinary course of business, lends money or executes orders for the purchase or sale of securities, and who is not otherwise a participant; Any person or organization retained or employed by a participant to solicit security holders, or any person who merely transmits proxy soliciting material or performs ministerial or clerical duties; Any person employed in the capacity of attorney, accountant, advertising, public relations, or financial adviser, whose activities are limited to the performance of duties in the course of that employment; Any person regularly employed as an officer or employee of the issuer or any of its subsidiaries or affiliates who is not otherwise a participant; or Any officer or director of, or any person regularly employed by, any other participant, if the officer, director, or employee is not otherwise a participant. Filing of Information Required by Schedule B. A solicitation subject to this section may not be made by any person other than the issuer unless at least 5 business days prior, or a shorter period as the Commissioner may authorize upon a showing of good cause, there has been filed with the Commissioner, by or on behalf of each participant in the solicitation, a statement in duplicate containing the information specified by Schedule B and a copy of any material proposed to be distributed to security holders in furtherance of the solicitation. Within 5 business days after a solicitation subject to this regulation is made by the issuer, or a longer period the Commissioner may authorize upon showing of good cause, there shall be filed with the Commissioner, by or on behalf of each participant in the solicitation other than the issuer, a statement in duplicate containing the information specified by Schedule B. If any solicitation on behalf of the issuer or any other person has been made, or if proxy material is ready for distribution, before a solicitation subject to this regulation in opposition, a statement in duplicate containing the information specified in Schedule B shall be filed with the Commissioner, by or on behalf of each participant in the prior solicitation, other than the issuer, as soon as reasonably practicable after the commencement of the solicitation in opposition. If, after the filing of the statements required by §§A, B, and C of this regulation, additional persons become participants in a solicitation subject to this regulation, there shall be filed with the Commissioner, by or on behalf of these persons, a statement in duplicate containing the information specified by Schedule B, within 3 business days after the person becomes a participant, or a longer period the Commissioner may authorize upon a showing of good cause. If any material change occurs in the facts reported in any statement filed by or on behalf of any participant, an appropriate amendment to the statement shall be filed promptly with the Commissioner. Each statement and amendment filed pursuant to this section shall be part of the public files of the Commissioner. Solicitations Before Furnishing Required Written Proxy Statement. Notwithstanding the provisions of Regulation .04A of this chapter, a solicitation subject to this regulation may be made before furnishing security holders a written proxy statement containing the information specified in Schedule A with respect to the solicitation, if: The statements required by §C of this regulation are filed by or on behalf of each participant in the solicitation; No form of proxy is furnished to security holders before the time the written proxy statement required by Regulation .04A of this chapter is furnished to these persons; however, §D(2) of this regulation does not apply if a proxy statement meeting the requirements of Schedule A has been furnished to security holders; At least the information specified in §C(2) and (3) of this regulation of the statements required by §C of this regulation to be filed by each participant, or an appropriate summary, are included in each communication sent or given to security holders in connection with the solicitation; and A written proxy statement containing the information specified in Schedule A with respect to a solicitation is sent or given to security holders at the earliest practicable date. Solicitations Before Furnishing Required Written Proxy Statement-Filing Requirements. Two copies of any soliciting materials proposed to be sent or given to security holders before the furnishing of the written proxy statement required by Regulation .04A of this chapter shall be filed with the Commissioner in preliminary form at least 5 business days before the date definitive copies of the material are first sent or given to the persons, or a shorter period the Commissioner may authorize upon a showing of good cause. Notwithstanding the provisions of Regulation .04B of this chapter, two copies of any portion of the annual report referred to in Regulation .04B of this chapter which comments upon or refers to any solicitation subject to this regulation, or to any participant in any solicitation, other than the solicitation by the management, shall be filed with the Commissioner as proxy material subject to this chapter. This portion of the report shall be filed with the Commissioner, in preliminary form, at least 5 business days before the date copies of the report are first sent or given to security holders. Notwithstanding the foregoing regulations, the Commissioner may permit the solicitation of proxies, consents, or authorizations, if the manner of solicitation and the form of proxy, proxy statement, and other documents used in the solicitation comply with Regulations .14—.16 of this chapter. Item 1. Revocability of Proxy. State whether or not the person giving the proxy has the power to revoke it. If the right of revocation before the proxy is exercised is limited, or is subject to compliance with any formal procedure, briefly describe the limitation or procedure. Item 2. Dissenters' Rights of Appraisal. Outline briefly any rights of appraisal or similar rights of dissenters with respect to any matter to be acted upon, and indicate any statutory procedure required to be followed by dissenting security holders in order to perfect their rights. When these rights may be exercised only within a limited time after the proposal's date of adoption, the filing of a charter amendment, or other similar act, indicate whether the person solicited will be notified of the date. Item 3. Persons Making the Solicitation. Solicitations not Subject to Regulation .12 of this Chapter. State if the solicitation is made by the issuer. Give the name of any director of the issuer who has informed the issuer in writing that the director intends to oppose an action intended to be taken by the issuer, and indicate the action which the director intends to oppose. If the solicitation is made by someone other than by the issuer, state the names of the persons by whom and on whose behalf it is made. If the solicitation is to be made by other than the use of the mails, describe the methods to be employed. If the solicitation is to be made by specially engaged employees or paid solicitors, state: The material features of any contract or agreement for the solicitation and identify the parties; and The cost or anticipated cost. State the names of the persons who will bear the cost of solicitation, directly or indirectly. Solicitations Subject to Regulation .12 of this Chapter. State who will make the solicitation and describe the methods employed to solicit security holders. If regular employees of the issuer or any other participant in a solicitation have been or are to be employed to solicit security holders, describe the class or classes of employees to be so employed, and the manner and nature of their employment for this purpose. If specially engaged employees, representatives, or other persons have been or are to be employed to solicit security holders, state: The material features of any contract or arrangement for the solicitation, and identify the parties; The cost or anticipated cost; and The approximate number of employees or employees of another person (naming the other person) who will solicit security holders. State the total amount estimated to be spent and the total expenditures to date for, or in connection with, the solicitation of security holders. State who will bear the cost of the solicitation. If reimbursement will be sought from the issuer, state whether the question of reimbursement will be submitted to a vote of security holders. If a solicitation is terminated pursuant to a settlement between the issuer and another participant in the solicitation, describe the terms of the settlement, including the cost or anticipated cost to the issuer. Item 4. Interest of Certain Persons in Matters to be Acted Upon. Solicitations Not Subject to Regulation .12 of this Chapter. Describe briefly any substantial interest, direct or indirect, of each of the following persons in a matter to be acted upon, other than elections to office: If the solicitation is made on behalf of the issuer, each current director or officer of the issuer; If the solicitation is made for other than on the issuer's behalf, any person who would be a participant in a solicitation (except the issuer or an officer, director, or nominee of the issuer); Each nominee for election as a director of the issuer; and Each associate of the foregoing persons. Solicitations Subject to Regulation .12 of this Chapter. Describe briefly any substantial interest, direct or indirect, of each participant (except the issuer) in any matter to be acted upon at the meeting. Include, with respect to each participant, the information required by Items 2A, 2D, 3, 4B, and 4C of Schedule B. Item 5. Voting Securities and Principal Holders of Voting Securities. State, for each class of voting securities of the issuer entitled to be voted at the meeting, the number of shares outstanding and the number of votes to which each class is entitled. Give the date that the record of security holders entitled to vote at the meeting will be determined. If the right to vote is not limited to security holders of record on that date, indicate the conditions under which other security holders may be entitled to vote. If action is to be taken with respect to the election of directors and if the persons solicited have cumulative voting rights: Make a statement that they have these rights; Describe the rights; State the conditions precedent to the exercise of these rights; and Indicate if discretionary authority to cumulate votes is solicited. Furnish the following information as of the most practicable date, in substantially the tabular form indicated, with respect to: A person or group of persons who is known to be the beneficial owner of more than 5 percent of any class of securities; and All directors and nominees, naming them, and directors and officers of the issuer as a group, without naming them. Change in Control. If, to the knowledge of the person on whose behalf the solicitation is made, a change in control of the issuer has occurred since the beginning of its last fiscal year, state: The name of the person or persons who acquired control; The amount and the source of the consideration used by the person or persons; The basis of the control; The date and a description of the transactions that resulted in the change of control; The percentage of voting securities of the issuer now beneficially owned directly or indirectly by the person or persons who acquired control; and The identity of the person or persons from whom control was assumed. Describe any arrangements which may at a later date result in a change of control of the issuer. Item 6. Directors and Executive Officers. If action is to be taken with respect to the election of directors, furnish the following information, in tabular form to the extent practicable, about each person nominated for election as a director and each person whose term of office will continue after the meeting. However, if the solicitation is made on behalf of persons other than the issuer, the information required should only be furnished as to nominees of the persons making the solicitation. Identification of Directors and Officers. List the names and ages of all directors and officers of the issuer and all persons nominated or chosen to become directors or officers. Indicate all positions and offices with the issuer held by each person; state the term of office as director or officer, or both, and any period during which the person served. Briefly describe any arrangement or understanding between the person and any other person or persons (naming the persons) pursuant to which the person was or is to be selected as a director, officer, or nominee. The information regarding officers does not need to be furnished in proxy or information statements if the information is furnished in a separate item in the issuer's annual report to stockholders. Family Relationships. State the nature of a family relationship not more remote than first cousin between a director, officer, or person nominated or chosen by the issuer to become a director or officer. State the nature of any family relationship between any such person and an officer or director of any of the issuer's parent companies, subsidiaries, or other affiliates. Business Experience. State the principal occupations and employment during the past 5 years of each director and each person nominated or chosen to become a director or officer, and the name and principal business of any corporation or other organization in which the occupations and employment were carried on. Directorships. Indicate other directorships held by each director or person nominated or chosen to become a director. Involvement in Certain Legal Proceedings. Describe any legal proceedings that have occurred during the past 5 years or which are pending that are material to an evaluation of the ability or integrity of any director or nominee for director or officer of the issuer. Describe any of the following relationships that exist: If the nominee or director is, or has within the last 2 full fiscal years been, an officer, director, or employee of, or owns, or has within the last 2 fiscal years owned, directly or indirectly, an equity interest in, any firm, corporation, or other business in excess of a 1 percent: That has made payments to the issuer or its subsidiaries during the issuer's last full fiscal year, or that proposes to make payments to the issuer or its subsidiaries during the current fiscal year, in excess of 1 percent of the issuer's consolidated gross revenues for its last full fiscal year; To which the issuer or its subsidiaries were indebted at any time during the issuer's last fiscal year in an aggregate amount in excess of 1 percent of the issuer's total consolidated assets at the end of the fiscal year; To which the issuer or its subsidiaries have made payments during the entity's last fiscal year, or to which the issuer or its subsidiaries propose to make payments during the entity's current fiscal year, in excess of 1 percent of the entity's consolidated gross revenues for its last full fiscal year; In order to determine whether payments made or proposed to be made exceed 1 percent of the consolidated gross revenues of any entity other than the issuer for the entity's last full fiscal year, it is appropriate to rely on information provided by the nominee or director; In calculating payments for property and services, the following may be excluded: Payments where the rates or charges involved in the transaction are determined by competitive bids, or the transaction involves the rendering of services as a public utility at rates or charges fixed in conformity with law or governmental authority; Payments that arise solely from the ownership of securities of the issuer, and no extra or special benefit not shared on a pro rata basis by all holders of the class of securities is received; In calculating indebtedness for purposes of §F(1)(b) above, debt securities that have been publicly offered, admitted to trading on a national securities exchange, or quoted on the automated quotation system of a registered securities association may be excluded; The nominee or director is a member or employee of, or is associated with, a law firm which the issuer has retained in the last 2 full fiscal years or proposes to retain in the current fiscal year where fees paid or anticipated to be paid by the issuer are material to either the law firm, the issuer, or both; The nominee or director is a director, partner, officer, or employee of any investment banking firm that has performed services for the issuer, other than as a participating underwriter in a syndicate in the last 2 full fiscal years or which the issuer proposes to have perform services in the current year; or The nominee or director is a control person of the issuer (other than solely as a director of the issuer). Committees. State whether or not the issuer has standing audit, nominating, and compensation committees of the board of directors, or committees performing similar functions. If the issuer has these committees, however designated, identify each committee member, state the number of committee meetings held by each committee during the last fiscal year, and describe briefly the functions performed by the committees. If the issuer has a nominating or similar committee, state whether the committee will consider nominees recommended by shareholders. If so, describe the procedures to be followed by shareholders in submitting the recommendations. State the total number of meetings of the board of directors (including regularly scheduled and special meetings) that were held during the last full fiscal year. Name each incumbent director who, during the last full fiscal year, attended fewer than 75 percent of the aggregate of: The total number of meetings of the board of directors (held during the period for which he has been a director); and The total number of meetings held by all committees of the board on which he served (during the periods that he served). If a director has resigned or declined to stand for reelection to the board of directors since the date of the last annual meeting of shareholders because of a disagreement with the issuer on any matter relating to the issuer's operations, policies, or practices, and if the director has furnished the issuer with a letter describing that disagreement and requesting that the matter be disclosed, the issuer shall state the date of resignation or declination to stand for reelection and summarize the director's description of the disagreement. If the issuer believes that the description provided by the director is incorrect or incomplete, it may include a brief statement presenting its views of the disagreement. Classes of Voting Stock. With respect to those classes of voting stock that participated in the election of directors at the most recent meeting where directors were elected: State the percentage of shares present at the meeting and voting or withholding authority to vote in the election of directors; and Disclose, in tabular format, the percentage of total shares cast for and withheld from the vote for or, if applicable, cast against, each nominee, which, respectively, were voted for and withheld from the vote for, or voted against, the nominee. When groups of classes or series of classes vote together in the election of a director or directors, they shall be treated as a single class for the purpose of §J(1)(b). Instructions. Calculate the percentage of shares present at the meeting and voting or withholding authority to vote in the election of directors, referred to in §J(1)(a), by dividing the total shares cast for and withheld from the vote for or, if applicable, voted against, the director for whom the highest aggregate number of shares was cast by the total number of shares outstanding that were eligible to vote as of the record date for the meeting. No information need be given in response to Item 6J unless, with respect to any class of voting stock (or group of classes which voted together), 5 percent or more of the total shares cast for and withheld from the votes for or, if applicable, cast against any nominee were withheld from the vote for or cast against the nominee. If an issuer elects less than the entire board of directors annually, disclosure is required for all directors if 5 percent or more of the total shares cast for and withheld from, the vote for or, if applicable, cast against an incumbent director were withheld from, or cast against, the vote for the director at the meeting where the person was most recently elected. No information shall be given in response to Item 6J if the issuer has previously furnished to its security holders a report of the results of the most recent meeting of security holders where directors were elected which includes: A description of each matter voted upon at the meeting and a statement of the percentage of the shares voting that were voted for and against each matter; and The information that would be called for by this Item 6J. If an issuer has previously furnished the results to its security holders, this fact should be stated in a letter accompanying the filing of preliminary proxy materials with the Commissioner. Item 7. Remuneration of Directors and Officers. Furnish the following information if action is to be taken concerning:(i) the election of directors; (ii) any bonus, profit sharing or other remuneration plan, contract, or arrangement that a director, nominee for election as a director, or officer of the issuer will participate; (iii) a pension or retirement plan where a person will participate; or (iv) the granting or extension to a person of any options, warrants, or rights to purchase securities, other than warrants or rights issued to security holders on a pro rata basis. If the solicitation is made on behalf of persons other than the issuer, the information required need be furnished only as to nominees of the person making the solicitation and associates of the nominees. Current Remuneration. Furnish the information required in the table below, in substantially the tabular form specified, concerning all remuneration of the following persons and groups for services in all capacities to the issuer and its subsidiaries during the issuer's last fiscal year or, in specified instances, certain prior fiscal years: Five Officers or Directors. Name each of the five most highly compensated officers or directors of the issuer who have a total remuneration required to be disclosed in Columns C-1 and C-2 below that would exceed $50,000. All Officers or Directors. All officers and directors of the issuer as a group, stating the number of persons in the group without naming them. Specified Tabular Format. Information to be Included. Columns C-1, C-2, and D of the table should contain with respect to each person or group of persons specified in §A(1) and A(2) of this Item 7 a dollar amount that reflects the total of all items of remuneration described in the heading to that column including, but not necessarily limited to, those items set forth in the subparagraphs of that column. Transactions with Third Parties. Item 7A, among other things, includes transactions between the issuer and a third party when the primary purpose of the transaction is to furnish remuneration to the persons specified in Item 7A. Other transactions between the issuer and third parties in which persons specified in Item 7A have an interest, or may realize a benefit, generally are addressed by other disclosure requirements concerning the interest of management and others in certain transactions. Item 7A does not require disclosure of remuneration paid to a partnership in which any officer or director was a partner; these transactions should be disclosed pursuant to these other disclosure requirements, and not as a note to the remuneration table presented pursuant to Item 7A. Other Permitted Disclosure. The issuer may provide additional disclosure through a footnote to the table, through additional columns or otherwise, describing the components of aggregate remuneration in greater detail as is appropriate. Proposed Remuneration. Briefly describe all remuneration payments proposed to be made in the future, pursuant to any existing plan or arrangement to the persons and groups specified in Item 7A. As to defined benefit or actuarial plans with respect to amounts not included in the table, include a separate table showing the estimated annual benefits payable upon retirement to persons in specified remuneration and years-of-service classifications. Information does not need to be furnished with respect to any group life, health, hospitalization, or medical reimbursement plans that do not discriminate in favor of officers or directors of the issuer and that are available generally to all salaried employees. Remuneration of Directors. Describe any standard or special arrangements, stating amounts, by which directors of the issuer are compensated for services as a director. Options, Warrants, or Rights. Furnish the information required by the following table for all options to purchase securities from the issuer or its subsidiaries that were granted to or exercised by the persons and groups specified in Item 7A since the beginning of the issuer's last fiscal year, and as to all options held by these persons as of the latest practicable date. The amount of options granted since the beginning of the issuer's last full fiscal year; The amount of shares acquired since that date through the exercise of options; The amount of shares of the same class sold during the period; and The amount of shares subject to all unexercised options held as of the most recent practicable date. All figures should be adjusted, if applicable, in accordance with the terms of the options to reflect stock splits and to give effect to share dividends. Other tabular presentations are acceptable if they include the necessary data. Tabular presentation may not be needed if only a very few options have been granted. Total Market Value. If the total market value on the granting dates of the securities called for by all options granted during the period specified does not exceed $10,000 for any officer or director named in answer to Item 7A, or $40,000 for all officers and directors as a group, this item need not be answered with respect to options granted to a person or group. If the total market value on the dates of purchase of all securities purchased through the exercise of options during the period specified does not exceed $10,000 for a person or $40,000 for a group, this item does not need to be answered with respect to options exercised by a person or group. If the total market value as of the latest practicable date of the securities called for by all options held at the time does not exceed $10,000 for a person or $40,000 for a group, this item does not need to be answered with respect to options held as of the specified date by a person or group. The term “options”, as used in §D includes all options, warrants, or rights, other than those issued to security holders as such on a pro rata basis. If the average option price per share is called for, the weighted average price per share shall be given. The extension, regranting, or material amendment of options shall be considered the granting of options within the meaning of this subsection. If the options relate to more than one class of securities, the information shall be given separately for each class. In addition, during the period employees were granted options for shares at an average price per share of $ . Indebtedness of Management. State for each director or officer of the issuer, each nominee for election as a director, and each associate of a director, officer, or nominee who was indebted to the issuer or its subsidiaries at any time since the beginning of the last fiscal year of the registrant: The largest aggregate amount of indebtedness outstanding at any time during the period; The nature of the indebtedness outstanding and the transaction in which it was incurred; The amount outstanding as of the latest practicable date; and The rate of interest paid or charged. Section E does not apply to: Any person whose aggregate indebtedness did not exceed $10,000 or 1 percent of the issuer's total assets, whichever is less, at any time during the period specified; or Indebtedness under an insurance policy. Transactions with Management. Describe briefly any transaction since the beginning of the issuer's last fiscal year, or any presently proposed transactions, to which the issuer or any of its subsidiaries was or is to be a party, in which any of the following persons had or is to have a direct or indirect material interest, naming the person and stating the relationship to the issuer, the nature of the interest in the transaction, and, if practicable, the amount of the interest: A director of officer of the issuer; A nominee for election as a director; A security holder who is known to the issuer to own of record or beneficially more than 10 percent of any class of the issuer's voting securities; and A relative or spouse of any of the foregoing persons, or any relative of the spouse, who has the same home as the person or who is a director or officer of a parent or subsidiary of the issuer. Also, describe briefly any material legal proceedings in which a person is an adverse party to the issuer or any of its subsidiaries, or has an adverse material interest to the issuer or any of its subsidiaries. Information does not need to be given in response to this Item 7F as to any remuneration or other transaction reported in response to Item 7A, B, C, D, or E, or as to any transaction with respect to which information may be omitted pursuant to these items. Information does not need to be given in answer to this Item 7F for any transaction where: The rates or charges involved in the transaction are determined by competitive bids, or at rates or charges fixed in conformity with law or governmental authority; The transaction involves services as a bank depository of funds, transfer agent, registrar, trustee under a trust indenture, or similar services; The amount involved in the transaction or series of similar transactions, including all periodic installments in the case of any lease or other agreement providing for periodic payments or installments, does not exceed $40,000; or The interest of the specified person arises solely from the ownership of securities of the issuer, and the specified person receives no extra or special benefit not shared on a pro rata basis by all holders of securities of the class. It should be noted that this item calls for disclosure of indirect, as well as direct, material interests in transactions. A person who has a position or relationship with a firm, corporation, or other entity, that engages in a transaction with the issuer or its subsidiaries, may have an indirect interest in the transaction by reason of the position or relationship. However, a person shall be considered not to have a material indirect interest in a transaction within the meaning of this Item 7F if: The interest arises only from: The person's position as a director of another corporation or organization (other than a partnership) which is a party to the transaction; The direct or indirect ownership by the person and all other persons specified in Item 7F of less than a 10 percent equity interest in another person (other than a partnership) which is a party to the transaction; or Both the position and ownership; The interest arises only from the person's position as a limited partner in a partnership in which the person and all other persons specified in Item 7F had an interest of less than 10 percent; or The interest of the person arises solely from the holding of an equity interest (including a limited partnership interest but excluding a general partnership interest) or a creditor interest in another person which is a party to the transaction with the issuer or any of its subsidiaries and the transaction is not material to the other person. In describing any transaction involving the purchase or sale of assets by or to the issuer or any of its subsidiaries, other than in the ordinary course of business, state the cost of the assets to the purchaser and, if acquired by the seller within 2 years before the transaction, the cost to the seller. Indicate the principle followed in determining the issuer's purchase or sale price, and the name of the person making the determination. Information shall be furnished in answer to this Item with respect to transactions not excluded above which involve remuneration from the issuer or its subsidiaries, directly or indirectly, to any of the specified persons for services in any capacity unless the interest of these persons arises solely from the ownership individually and in the aggregate of less than 10 percent of any class of equity securities of another corporation furnishing the services to the issuer or its subsidiaries. Instructions: Transactions with Pension or Similar Plans. Describe briefly any transactions since the beginning of the issuer's last fiscal year, or any presently proposed transactions, to which any pension, retirement, savings, or similar plan provided by the issuer, or any of its parents or subsidiaries, was or is to be a part, in which any of the persons specified in Item 7F or the issuer or any of its subsidiaries had or is to have a direct or indirect material interest naming the person and stating the person's relationship to the issuer, the nature of the person's interest in the transaction and, if practicable, the amount of the interest. Information does not need to be given in answer to §G(1) with respect to: Payments to the plan, or payments to beneficiaries, pursuant to the terms of the plan; Payment of remuneration for services not in excess of 5 percent of the aggregate remuneration received by the specified person during the issuer's last fiscal year from the issuer and its subsidiaries; or Any interest of the issuer or any of its subsidiaries that arises solely from its general interest in the success of the plan. Item 7F(3) applies to this Item 7G. Without limiting the general meaning of the term “transaction”, there shall be included in the answer to this item any remuneration received or any loans received or outstanding during the period, or proposed to be received. Instructions: Item 8. Matters Related to Accounting. If the solicitation is made on behalf of the issuer and relates to an annual meeting of security holders at which directors are to be elected, or financial statements are included, furnish the following information: State if the issuer's financial statements are not certified by independent public or certified accountants. State if the board of directors has no audit or similar committee. If the issuer's financial statements are certified by independent public or certified accountants, state that fact and provide the following information: The name of the principal accountant selected or being recommended to shareholders for election, approval, or ratification for the current year. If no accountant has been elected or recommended, so state and briefly describe the reasons. The name of the principal accountant for the fiscal year most recently completed if different from the accountant selected or recommended for the current year, or if no accountant has been elected or recommended for the current year. State if a change or changes in accountants have taken place since the date of the proxy statement for the most recent annual meeting of shareholders. If, in connection with the change, a material disagreement in connection with financial disclosure between the accountant and issuer has occurred, the disagreement shall be described. Before filing the preliminary proxy materials with the Commissioner that contain or amend the description, the issuer shall furnish the description of the disagreement to an accountant with whom the disagreement has occurred. If that accountant believes that the description of the disagreement is incorrect or incomplete, the accountant may include a brief statement, not to exceed 200 words, in the proxy statement presenting the accountant's view of the disagreement. This statement shall be submitted to the issuer within 10 business days of the date the accountant receives the issuer's descriptions. The proxy statement shall indicate whether or not representatives of the principal accountants for the current year and for the most recently completed fiscal year are expected to be present at the stockholders' meeting with the opportunity to make a statement if they desire to do so and whether or not the representatives are expected to be available to respond to appropriate questions. If a change in accountants has taken place since the date of the proxy statement for the most recent annual meeting of shareholders, state whether the change was recommended or approved by: An audit or similar committee of the board of directors, if the issuer has this committee; or The board of directors, if the issuer has no committee. For the fiscal year most recently completed, describe each professional service provided by the principal accountant, state the percentage relationship that the aggregate of the fees for all nonaudit services bear to the audit fees, and, except as provided below, state the percentage relationship that the fee for each nonaudit service bears to the audit fees. Indicate whether, before each professional service provided by the principal accountant was rendered, it was approved by, and the possible effect on the independence of the accountant was considered by: An audit or similar committee of the board of directors; and The board of directors for a service not approved by an audit or similar committee. For purposes of this section, all fees for services provided in connection with the audit function (for example, reviews of quarterly reports) may be computed as part of the audit fees. Indicate which services are reflected in the audit fees computation. If the fee for any non-audit service is less than 3 percent of the audit fees, the percentage relationship does not need to be disclosed. Each service should be specifically described. Broad general categories such as “tax matters” or “management advisory services” are not sufficiently specific. Describe the circumstances and give details of any services provided by the issuer's independent accountant during the latest fiscal year that were furnished at rates or terms that were not customary. Describe any existing direct or indirect understanding or agreement that places a limit on current or future years' audit fees, including fee arrangements that provide fixed limits on fees that are not subject to reconsideration if unexpected issues involving accounting or auditing are encountered. Disclosure of fee estimates is not required. Instructions: Item 9. Bonus, Profit Sharing, and Other Remuneration Plans: Pension and Retirement Plans. If action is to be taken with respect to any bonus, profit sharing, or other remuneration plan, or any pension or retirement plan, furnish the following information: Describe briefly the material features of the plan, identify each class of persons who will participate, indicate the approximate number of persons in each class, and state the basis of the participation; Furnish the information, in addition to that required by this item and Item 7, as may be necessary to describe adequately the provisions already made pursuant to all bonus, profit sharing, pension, retirement, stock option, stock purchase, deferred compensation, or other remuneration or incentive plans, now in effect or in effect within the past 5 years, for: Each director or officer named in answer to Item 7A who may participate in the plan to be acted upon; All present directors and officers of the issuer as a group, if any director or officer may participate in the plan; and All employees, if employees may participate in the plan; If the plan to be acted upon can be amended otherwise than by a vote of stockholders, to increase the cost to the issuer or to alter the allocation of the benefits as between the directors and officers on the one hand and employees on the other, state the nature of the amendments which can be made; With regard to any bonus, profit sharing, or other remuneration plan, on which action is to be taken, furnish the following information: State separately the amounts which would have been distributable under the plan during the last fiscal year of the issuer: To directors and officers; and To employees if the plan had been in effect; State the name and position with the issuer of each person specified in Item 7A who will participate in the plan and the amount each person would have received under the plan for the last fiscal year of the issuer if the plan had been in effect; With regard to any pension or retirement plan on which action is to be taken, furnish the following information: State: The approximate total amount necessary to fund the plan with respect to past services, the period over which the amount is to be paid, and the estimated annual payments necessary to pay the total amount over the period; The estimated annual payment to be made with respect to current services; and The amount of the annual payments to be made for the benefit of Directors and officers, and Employees; State: The name and position with the issuer of each person specified in Item 7A who will be entitled to participate in the plan; The amount which would have been paid or set aside by the issuer and its subsidiaries for the benefit of the person for the last fiscal year of the issuer if the plan had been in effect; and The amount of the annual benefits estimated to be payable to the person in the event of retirement at normal retirement date. If action is to be taken with respect to the amendment or modification of an existing plan, the item shall be answered with respect to the plan as proposed to be amended or modified and shall indicate any material differences from the existing plan. The following instruction applies to §B: Information need only be given with respect to benefits received or set aside within the past 5 years. Information does not need to be included as to payments made for, or benefits to be received from, group life or accident insurance, group hospitalization, or similar group payments or benefits. If action is to be taken with respect to any plan in which directors or officers may participate, the information called for by Item 7D shall be furnished for the last 5 fiscal years of the issuer and any period after the end of the latest fiscal year, in aggregate amounts for the entire period for each person and group. If any named person, or any other director or officer, purchased securities through the exercise of options during the period, state the aggregate amount of securities of that class sold during the period by the named person, and by the named person and other directors and officers as a group. The information called for by this instruction is in lieu of the information since the beginning of the issuer's last fiscal year called for by Item 7D. If employees may participate in the plan to be acted upon, state the aggregate amount of securities called for by all options granted to employees during the 5-year period and, if the options were other than “restricted” or “qualified” stock options or options granted pursuant to an “employee stock purchase plan,” as the quoted terms are defined in Sections 422 through 424 of the Internal Revenue Code, state that fact and the weighted average option price per share. The information called for by this instruction may be furnished in the form of the table set forth in Item 7D. If the plan to be acted upon is set forth in a written document, three copies shall be filed with the Commissioner at the time preliminary copies of the proxy statement and form of proxy are filed. The information called for by §E(1)(c) or (2)(b) of Item 9 does not need to be given as to payments made on an actuarial basis pursuant to any group pension plan that provides for fixed benefits in the event of retirement at a specified age or after a specified number of years of service. Instructions: Item 10. Options, Warrants, or Rights. If action is to be taken with respect to the granting or extension of any options to purchase securities of the issuer or any subsidiary, furnish the following information: State: The title and amount of securities called for or to be called for by the options; The prices, expiration dates, and other material conditions upon which the options may be exercised; The consideration received or to be received by the issuer or subsidiary for the granting or extension of the options; The market value of the securities called for or to be called for by the options as of the latest practicable date; and In the case of options, the federal income tax consequences of the issuance and exercise of the option to the recipient and to the issuer; State: Separately the amount of options received or to be received by the following persons, naming each person: Each director or officer named in answer to Item 7A; Each nominee for election as a director of the issuer; Each associate of the directors, officers, or nominees; and Each other person who received or is to receive 10 percent or more of the options; The total amount of the options received or to be received by all directors and officers of the issuer as a group, without naming them; Furnish the information, in addition to that required by this item and Item 7, necessary to describe adequately the provisions already made pursuant to all bonus, profit sharing, pension, retirement, stock option, stock purchase, deferred compensation, or other remuneration or incentive plans, now in effect or in effect within the past 5 years, for: Each director or officer named in answer to Item 7A who may participate in the plan to be acted upon; All present directors and officers of the issuer as a group, if any director or officer may participate in the plan; and All employees, if employees may participate in the plan. For the purpose of this Item 10, the term option includes any option, warrant, or right. Sections B and C do not apply to warrants or rights to be issued to security holders on a pro rata basis. Instruction 2 to Item 9 also applies to §C of this item. If the options described in answer to this item are issued pursuant to a plan which is set forth in a written document, three copies shall be filed with the Commissioner at the time preliminary copies of the proxy statement and form of proxy are filed. Instructions: Item 11. Authorization or Issuance of Securities Otherwise than for Exchange. If action is to be taken with respect to the authorization or issuance of any securities otherwise than for exchange for outstanding securities of the issuer, furnish the following information: State the title and amount of securities to be authorized or issued; If the securities are other than additional shares of common stock of a class outstanding, furnish a brief summary of the following, if applicable: dividend, voting, liquidation, preemptive and conversion rights, redemption and sinking fund provisions, interest rate, and date of maturity; Describe briefly the transaction in which the securities are to be issued, including a statement as to: The nature and approximate amount of consideration received or to be received by the issuer; and The approximate amount devoted to each purpose, as far as is determinable, for which the net proceeds have been or are to be used; If it is impracticable to describe the transaction in which the securities are to be issued, state the reason, indicate the purpose of the authorization of the securities, and state whether further authorization for the issuance of the securities by a vote of security holders will be solicited before issuance; If the securities are to be issued otherwise than in a general public offering for cash, state the reasons for the proposed authorization or issuance and the general effect upon the rights of existing security holders. Item 12. Modification or Exchange of Securities. If action is to be taken with respect to the modification of any class of securities of the issuer, or the issuance or authorization for issuance of securities of the issuer in exchange for outstanding securities of the issuer, furnish the following information: If outstanding securities are to be modified, state the title and amount. If securities are to be issued in exchange for outstanding securities, state the title and amount of securities to be so issued, the title and amount of outstanding securities to be exchanged, and the basis of the exchange. Describe any material differences between the outstanding securities and the modified or new securities. State the reasons for the proposed modification or exchange and the general effect upon the rights of existing security holders. Furnish a brief statement as to arrears in dividends or as to defaults in principal or interest with respect to the outstanding securities which are to be modified or exchanged and furnish other information appropriate in the particular case to disclose adequately the nature and effect of the proposed action. Outline briefly any other material features of the proposed modification or exchange. If the plan of proposed action is set forth in a written document, file copies it with the Commissioner at the time the preliminary proxy material is filed. Item 13. Mergers, Consolidations, Acquisitions, and Similar Matters. Furnish the following information if action is to be taken with respect to any plan for:(i) the merger or consolidation of the issuer into or with another person or of another person into or with the issuer; (ii) the acquisition by the issuer or any of its security holders of securities of another issuer; (iii) the acquisition by the issuer of another going business or of its assets; (iv) the sale or other transfer of all or any substantial part of the assets of the issuer; or (v) the liquidation or dissolution of the issuer: Outline briefly the material features of the plan. State the reasons for the plan and the general effect of the plan upon the rights of existing security holders. If the plan is set forth in a written document, file three copies with the Commissioner at the time preliminary copies of the proxy statement and form of proxy are filed. Furnish the following information as to the issuer and each person which is to be merged into the issuer, or into or with which the issuer is to be merged or consolidated, or the business or assets that are to be acquired, or which is the issuer of securities to be acquired by the issuer in exchange for all or a substantial part of its assets or to be acquired by security holders of the issuer. What is required is information essential to an investor's appraisal of the action proposed to be taken. Describe briefly the business of the person. State the location and describe the general character of the plants and other important physical properties of the person. The description is to be given from an economic and business standpoint, as distinguished from a legal standpoint. Portfolio or investment assets of an insurer do not need to be disclosed. Furnish a brief statement as to dividends in arrears or defaults in principal or interest in respect of any securities of the issuer or of the person, and as to the effect of the plan on the issuer and the person and other information as may be appropriate in the particular case to disclose adequately the nature and effect of the proposed action. Furnish a tabulation in columnar form showing the existing and the pro forma capitalization. Furnish in columnar form for each of the last 5 fiscal years a historical summary of earnings, and show per share amounts of net earnings, dividends declared for each year, and book value per share at the end of the latest period. Furnish in columnar form for each of the last 5 fiscal years a combined pro forma summary of earnings, as appropriate in the circumstances, indicating the aggregate and pre-share earnings for each year and the pro forma book value per share at the end of the latest period. If the transaction establishes a new basis of accounting for assets of any of the persons included, the pro forma summary of earnings shall be furnished only for the most recent fiscal year and interim period, and shall reflect appropriate pro forma adjustments resulting from the new basis of accounting. To the extent material for the exercise of prudent judgment in regard to the matter to be acted upon, furnish the historical and pro forma earnings data specified in §B(5) and (6) above for interim periods of the current and prior fiscal years, if available. Instructions: §B of this Item 13 does not apply if the plan described in answer to §A involves only the issuer and one or more of its totally held subsidiaries. As to each class of securities of the issuer, or of any person specified in §B, which is admitted to dealing on a national securities exchange or with respect to which a market otherwise exists, and that will be materially affected by the plan, state the high and low sale prices (or, in the absence of trading in a particular period, the range of the bid and asked prices) for each quarterly period within 2 years. This information may be omitted if the plan involves merely the liquidation or dissolution of the issuer. Item 14. Financial Statements. If action is to be taken with respect to any matter specified in Items 11, 12, or 13, furnish financial statements of the issuer and its subsidiaries complying with the requirements of Regulation .04B(1), (2) and (3) of the chapter, including schedules of supplementary profit and loss information. The statements may be omitted with respect to a plan described in answer to Item 13 if the plan involves only the issuer and one or more of its totally held subsidiaries. If action is to be taken with respect to any matter specified in Item 13B, furnish for each person specified, other than the issuer, financial statements complying with the requirements of Regulation .04B(1), (2), and (3) of the chapter. The Commissioner may, upon the request of the issuer, permit the omission of any of the statements required where the statements are not necessary for the exercise of prudent judgment in regard to any matter to be acted upon, or may permit the filing in substitution of appropriate statements of comparable character. The Commissioner may also require the filing of other statements in addition to, or in substitution for, the statements required in any case where the statements are necessary or appropriate for an adequate presentation of the financial condition of any person whose financial statements are required, or whose statements are otherwise material for the exercise of prudent judgment in regard to any matter to be acted upon. In the usual case, financial statements are considered material to the exercise of prudent judgment where the matter to be acted upon is authorization or issuance of a material amount of senior securities, but are not considered material where the matter to be acted upon is the authorization or issuance of common stock, otherwise than in an exchange, merger or consolidation, acquisition, or similar transaction. The proxy statement may incorporate by reference any financial statements contained in an annual report sent to security holders with respect to the same meeting as that to which the proxy statement relates, if the financial statements substantially meet the requirements of this item. Item 15. Acquisition or Disposition of Property. If action is to be taken with respect to the acquisition or disposition of any property, furnish the following information: Describe briefly the general character and location of the property. State the nature and amount of consideration to be paid or received by the issuer or any subsidiary. To the extent practicable, outline briefly the facts bearing upon the question of the fairness of the consideration. State the name and address of the transferor or transferee, as the case may be, and the nature of any material relationship of the person to the issuer or an affiliate of the issuer. Outline briefly any other material features of the contract or transaction. Item 16. Restatement of Accounts. If action is to be taken with respect to the restatement of any asset, capital, or surplus account of the issuer, furnish the following information: State the nature of the restatement and the date as of which it is to be effective. Outline briefly the reasons for the restatement and for the selection of the particular effective date. State the name and amount of each account (including any reserve accounts) affected by the restatement and the effect of the restatement on the account. Tabular presentation of the amounts shall be made when appropriate, particularly in the case of recapitalizations. To the extent practicable, state whether and the extent, if any, to which the restatement will, as of the date of the restatement, alter the amount available for distribution to the holders of equity securities. Item 17. Action with Respect to Reports. If action is to be taken with respect to any report of the issuer, or of its directors, officers, or committees, or any minutes of meetings of its stockholders, furnish the following information: State whether or not the action is to constitute approval or disapproval of any of the matters referred to in the reports or minutes; Identify each of the matters which it is intended will be approved or disapproved, and furnish the information required by the appropriate item or items of this schedule with respect to each matter. INFORMATION TO BE INCLUDED IN STATEMENTS FILED BY OR ON BEHALF OF A PARTICIPANT (OTHER THAN THE ISSUER) IN A PROXY SOLICITATION IN AN ELECTION CONTEST Item 1. Issuer. State the name and address of the Issuer. Item 2. Identity and Background. State the following: Your name and business address; Your present principal occupation or employment and the name, principal business, and address of any corporation or other organization in which the employment is carried on. State the following: Your residence address; Information as to all material occupations, positions, offices, or employments during the last 10 years, giving starting and ending dates of each and the name, principal business and address of any business corporation, or other business organization in which each occupation, position, office, or employment was carried on. State whether or not you are or have been a participant in any other proxy contest involving this company or other companies within the past 10 years. If so, identify the principals, the subject matter, and your relationship to the parties, and the outcome. State whether or not, during the past 10 years, you have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) and, if so, give dates, nature of conviction, name and location of court, and penalty imposed or other disposition of the case. A negative answer to this subitem does not need to be included in the proxy statement or other proxy soliciting material. Item 3. Interest in Securities of the Issuer. State the amount of each class of securities of the issuer that you own beneficially, directly or indirectly. State the amount of each class of securities of the issuer that you own of record but not beneficially. State, with respect to all securities of the issuer purchased or sold within the past 2 years, the dates when they were purchased or sold, and the amount purchased or sold on each date. State if any part of the purchase price or market value of any of the securities specified in §C is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding securities. Indicate the amount of the indebtedness as of the latest practicable date. If funds were borrowed or obtained otherwise than pursuant to a margin account or bank loan in the regular course of business of a bank, broker, or dealer, briefly describe the transaction and state the names of the parties. State whether or not you are a party to any contracts, arrangements, or understandings with any person with respect to any securities of the issuer including but not limited to joint ventures, loan or option arrangements, puts or calls guarantees against losses or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. If so, name the persons with whom some contracts, arrangements, or understandings exist, and give the details of it. State the amount of securities of the issuer owned beneficially, directly or indirectly, by each of your associates, and the name and address of each associate. State the amount of each class of securities of any parent, subsidiary, or affiliate of the issuer that you own beneficially, directly or indirectly. Item 4. Further Matters. Describe the time and circumstances under which you became a participant in the solicitation, and state the nature and extent of your activities or proposed activities as a participant. Describe briefly, and if practicable state the approximate amount of any material interest, direct or indirect, of yourself and of each of your associates in any material transactions since the beginning of the company's last fiscal year, or in any material proposed transactions, to which the company or any of its subsidiaries or affiliates was or is to be a party. Arrangement or Understanding. State whether or not you or any of your associates have any arrangement or understanding with any person: With respect to any future employment by the issuer or its subsidiaries or affiliates; or With respect to any future transactions to which the issuer or any of its subsidiaries or affiliates will or may be a party. If so, describe the arrangement or understanding, and state the names of the parties. Item 5. Signature. INFORMATION REQUIRED IN INFORMATION STATEMENT Note: Where any item, other than Item 5, calls for information with respect to any matter to be acted upon at the meeting, the item need be answered only with respect to proposals to be made by the issuer. Item 1. Information Required by Items of Schedule 14A. Furnish the information called for by all of the items of Schedule A (other than Items 1, 3, and 4) that would be applicable to any matter to be acted upon at the meeting if proxies were to be solicited in connection with the meeting. Item 2. Statement That Proxies Are Not Solicited. The following statement shall be set forth on the first page of the information statement in bold face type: WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. Item 3. Date, Time, and Place of Meeting. State the date, time, and place of the meeting of security holders, unless the information is otherwise disclosed in material furnished to security holders with the information statement. Item 4. Interest of Certain Persons in or Opposition to Matters to Be Acted Upon. Describe briefly any substantial interest, direct or indirect, by security holdings or otherwise, of each of the following persons in any matter to be acted upon, other than elections to office: Each person who has been a director or officer of the issuer at any time since the beginning of the last fiscal year; Each nominee for election as a director of the issuer; Each associate of the foregoing persons. Give the name of any director of the issuer who has informed the management in writing that he intends to oppose any action to be taken by the management at the meeting, and indicate the action that he intends to oppose. Item 5. Proposals by Security Holders. If any security holder entitled to vote at the meeting has, not less than 90 days before the issuer's annual meeting, submitted to the issuer a proposal that is accompanied by notice of the issuer's intention to present the proposal, and indicate the disposition proposed to be made of the proposal by the management at the meeting. Insurance Article, §§2-109, 4-113(a)(7)—(9), and 4-115, Annotated Code of Maryland Effective date: May 1, 1968 Amended effective April 30, 1970 Chapter recodified from COMAR 09.30.02 to COMAR 31.04.07 effective September 7, 1998 (25:18 Md. R. 1439) Regulations .01—.13 repealed and new Regulations .01—.16 adopted effective February 12, 2007 (34:3 Md. R. 303) Effective date: March 1, 1966 Amended effective May 1, 1968 Regulation .01 amended effective May 9, 1983 (10:9 Md. R. 790) Chapter recodified from COMAR 09.30.07 to COMAR 31.04.08 effective September 7, 1998 (25:18 Md. R. 1439) Chapter repealed effective January 15, 2007 (34:1 Md. R. 32) In this chapter, the following terms have the meanings indicated. Terms Defined. Agent. “Agent” means: A qualified bank or qualified broker/dealer that maintains an account in its name in a clearing corporation or that is a member of the Federal Reserve System and through which a custodian participates in a clearing corporation; or With respect to securities issued by institutions organized or existing under the laws of a foreign country or securities used to meet the deposit requirements pursuant to the laws of a foreign country as a condition of doing business in the foreign country, a corporation that is organized or existing under the laws of a foreign country and that is legally qualified under those laws to accept custody of securities. “Agent” includes a subcustodian. “Carrier” means: A domestic insurer; A nonprofit health service plan; A dental plan organization; A health maintenance organization; or A managed care organization. Clearing Corporation. “Clearing corporation” means: A corporation, as defined in Commercial Law Article, §8-102(a)(5), Annotated Code of Maryland, that is organized for the purpose of effecting transactions in securities by computerized book-entry; or With respect to securities issued by institutions organized or existing under the laws of a foreign country or securities used to meet the deposit requirements pursuant to the laws of a foreign country as a condition of doing business in the foreign country, a corporation that is organized or existing under the laws of a foreign country and that is legally qualified under those laws to effect transactions in securities by computerized book-entry. “Clearing corporation” includes: Treasury Direct; and The Treasury/Reserve Automated Debt Entry System. “Custodian” means a qualified bank, qualified broker/dealer, or clearing corporation that: Accepts deposits of securities from carriers; and Safeguards, holds, and reports on the securities under a written custodial agreement with the carrier. “Custodied securities” means securities held: By a custodian or its agent; or In a clearing corporation. “Qualified bank” means: A bank, trust company, or federal home loan bank that: At all times during which it acts as a custodian under this chapter is not less than adequately capitalized as determined by the standards adopted by United States banking regulators; Is regulated by either state banking laws or is a member of the Federal Reserve System; and Is legally qualified to accept custody of securities in accordance with this chapter; or With respect to securities issued by institutions organized or existing under the laws of a foreign country or securities used to meet the deposit requirements pursuant to the laws of a foreign country as a condition of doing business in the foreign country, a bank or trust company incorporated or organized under the laws of a country other than the United States that: Is regulated as a bank or trust company by that country's government or an agency of that country's government; At all times during which it acts as a custodian under this chapter is not less than adequately capitalized as determined by the standards adopted by international banking authorities; and Is legally qualified to accept custody of securities. “Qualified broker/dealer” means a securities firm that: Has a tangible net worth of at least $250,000,000 as evidenced by its most recent audited financial statement; Is registered with and subject to the jurisdiction of the Securities and Exchange Commission; and Maintains at all times Securities Investor Protection Corporation excess insurance coverage equal to or greater than the market value of the carriers' securities maintained with the broker/dealer. “Registered form” has the meaning stated in Commercial Law Article, §8-102(a)(13), Annotated Code of Maryland. Security. “Security” has the meaning stated in Commercial Law Article, §8-102(a)(15), Annotated Code of Maryland. “Security” includes: A certificated security as defined by Commercial Law Article, §8-102(a)(4), Annotated Code of Maryland; and An uncertificated security as defined by Commercial Law Article, §8-102(a)(18), Annotated Code of Maryland. “Treasury Direct” means the book-entry securities system: Established pursuant to 5 U.S.C. §301, 12 U.S.C. §391, and 31 U.S.C. Subtitle III, Chapter 31; and Governed by 31 CFR Part 357, Subpart C. “Treasury/Reserve Automated Debt Entry System (TRADES)” means the book-entry securities system: Established pursuant to 5 U.S.C. §301, 12 U.S.C. §391, and 31 U.S.C. Subtitle III, Chapter 31; and Governed by 31 CFR Part 357, Subpart B. Custody Agreement. A carrier may not register securities in the name of a nominee or deposit securities with a custodian unless the carrier provides for the custody of the securities by entering into a written agreement with the custodian that: Is filed with the Commissioner pursuant to §B of this regulation; and Complies with Regulation .03 of this chapter. The agreement shall be: In writing; and Authorized by a resolution of the board of directors of the carrier or of an authorized committee of the board. The securities may be held: By the custodian or its agent; or In a clearing corporation. Filing Agreement with the Commissioner. A carrier that enters into a written agreement with a custodian shall file the agreement with the Commissioner within 30 days after the execution of the agreement. If the Commissioner determines that a written agreement filed after execution does not comply with the requirements in Regulation .03 of this chapter, the carrier shall cure the noncompliance within: 60 days after notification by the Commissioner; or An extended cure period authorized by the Commissioner. If the written agreement is not cured within the time allowed by the Commissioner, the Commissioner may: Take any action authorized by Insurance Article, §4-113, Annotated Code of Maryland; or Require the carrier to report the securities held by the custodian in accordance with the terms of the noncompliant custody agreement as “Assets—Not Admitted”. The terms of a custody agreement shall comply with the requirements of this regulation. Certificated securities held by the custodian shall be held separate from the securities of the custodian and of all of its other customers. Identification of Securities on Custodian's Records. Securities held indirectly by the custodian and securities in a clearing corporation shall be separately identified on the custodian's official records as being owned by the carrier. The records shall identify which custodied securities are held by the custodian or its agent and which securities are in a clearing corporation or in the Federal Reserve book-entry system. If the securities are in a clearing corporation, the records also shall identify: Where the securities are; If in a clearing corporation, the name of the clearing corporation; and If through an agent, the name of the agent. All custodied securities that are in registered form shall be registered: In the name of the carrier or in the name of a nominee of the carrier; In the name of the custodian or a nominee of the custodian; or If in a clearing corporation, in the name of the clearing corporation or a nominee of the clearing corporation. Withdrawal of Securities. Except as provided in §E(2) of this regulation, custodied securities shall be: Held subject to the instructions of the carrier; and Withdrawable on demand of the carrier. Custodied securities used to meet the deposit requirements set forth in Insurance Article, §4-106, Annotated Code of Maryland, shall be under the control of the Commissioner and may not be withdrawn by the carrier without the approval of the Commissioner. The custodian shall: Send or cause to be sent to the carrier a confirmation of all transfers of custodied securities to or from the account of the carrier; and Furnish, not less than monthly, the carrier with reports of holdings of custodied securities at times and containing information reasonably requested by the carrier. Provision of Information to the Commissioner. The custodian shall be authorized and instructed by the carrier to honor any requests made by the Commissioner for information concerning the carrier's custodied securities. The Commissioner may, from time to time, request, and the custodian shall furnish, a detailed listing of the carrier's custodied securities. The custodian also shall provide an affidavit certifying the custodian's safekeeping responsibilities relative to the custodied securities. The custodian's response to a request for information from the Commissioner shall: Be made directly to the Commissioner; and Encompass all of the carrier's custodied securities. The custodian and its agents shall send to the carrier: All reports that they receive from a clearing corporation on their respective systems of internal accounting control; and Reports prepared by outside auditors on the custodian's or its agent's internal accounting control of custodied securities that the carrier reasonably may request. The custodian shall maintain: Records sufficient to demonstrate and verify information relating to custodied securities that may be reported in the carrier's annual statement; and Supporting schedules and information required in an audit of the financial statements of the carrier. On written request from an appropriate officer of the carrier, the custodian shall provide the appropriate affidavits, substantially in a form designated by the Commissioner, with respect to custodied securities. The custodian shall: Secure and maintain insurance protection at levels considered reasonable and customary for the custodian industry covering the custodian's duties and activities as custodian for the carrier's assets; Describe the nature and extent of the insurance protection; and Promptly disclose to the carrier any change in the insurance protection during the term of the custodial agreement. The custodian shall indemnify the carrier for any loss of custodied securities caused by the negligence or dishonesty of the custodian. If there is a loss of custodied securities for which the custodian is obligated to indemnify the carrier under §L of this regulation, the custodian promptly shall replace: The securities or the value of the securities; and The value of any loss of rights or privileges resulting from the loss of securities. The agreement may provide that the custodian is not liable for failure to take an action required under the agreement in the event and to the extent that the taking of the action is prevented or delayed by: War (whether declared or not and including existing wars), revolution, insurrection, riot, or civil commotion; Act of God, accident, fire, or explosion; Stoppage of labor, strikes, or other differences with employees; Laws, regulations, orders, or other acts of any governmental authority; or Any other cause beyond the custodian's reasonable control. Agreement between Custodian and Agent. Except as provided in §O(2) of this regulation, if the custodian gains entry in a clearing corporation through an agent, there shall be an agreement between the custodian and the agent under which the agent is subject to the same liability for loss of custodied securities as the custodian. If the agent is subject to regulation under the laws of a different jurisdiction than the custodian, the Commissioner may accept a standard of liability applicable to the agent that is different from the standard of liability applicable to the custodian. Notice of Termination or Withdrawal. The custodian shall provide written notification to the Commissioner if: The custodial agreement with the carrier has been terminated; or 100 percent of the account assets in any one custody account have been withdrawn. The notification shall be given to the Commissioner within 3 business days after: The receipt by the custodian of the carrier's written notice of termination; or The withdrawal of 100 percent of the account assets. The agreement shall provide that the use of an agent by a custodian does not alter the custodian's obligations under the agreement and that the terms of the agreement may not be modified by the terms of any agreement between the custodian and the agent. Compliance and Certification Required. For an existing custody agreement entered into before the effective date of this chapter, a carrier shall: Bring the existing custody agreement into compliance with the requirements of Regulation .03 of this chapter by the earlier of: The renewal date of the custody agreement; or 12 months after the effective date of this chapter; and Certify to the Commissioner that the existing custody agreement has been brought into compliance with the requirements of Regulation .03 of this chapter by the earlier of: 30 days after the renewal date of the custody agreement; or 12 months after the effective date of this chapter. Form of Certification. The certification required by §A of this regulation shall be: Signed by an officer of the carrier; and In the following form: Name _________________________ Failure to Comply. If the Commissioner determines that an existing custody agreement has not been brought into compliance with the requirements of Regulation .03 of this chapter within 12 months after the effective date of this chapter, the carrier shall cure the noncompliance within: 60 days after notification by the Commissioner; or An extended cure period authorized by the Commissioner. If the custody agreement is not cured within the time allowed by the Commissioner, the Commissioner may: Take any action authorized by Insurance Article, §4-113, Annotated Code of Maryland; or Require the carrier to report the securities held by the custodian in accordance with the terms of the noncompliant custody agreement as “Assets—Not Admitted”. Insurance Article, §§2-109 and 4-115; Health-General Article, §§15-102.3 and 19-728; Annotated Code of Maryland Effective date: May 1, 1968 Amended effective May 15, 1978 Regulation .01 amended effective November 6, 1995 (22:22 Md. R. 1657) Regulations .01 and .02 repealed and new Regulations .01—.03 adopted effective September 22, 1997 (24:19 Md. R. 1339) Chapter recodified from COMAR 09.30.16 to COMAR 31.04.09 effective September 7, 1998 (25:18 Md. R. 1439) Regulations .01—.03, Registration of Securities in the Names of Nominees and the Deposit of Securities in Depository Trust Company, repealed and Regulations .01—.04, Custody Agreements and the Use of Clearing Corporations and Federal Reserve Book-Entry System, adopted effective April 26, 2004 (31:8 Md. R. 648) Regulation .02A amended as an emergency provision effective August 11, 2004 (31:18 Md. R. 1349); amended permanently effective November 8, 2004 (31:22 Md. R. 1598) The purchase and sale of equity securities issued by domestic stock insurance companies or their affiliates by the beneficial owners, directors, or officers of these companies are subject to regulation under these regulations. In respect of “short-swing” purchase and sale, or sale and purchase, of equity securities by persons regulated by Insurance Article, §3-119, Annotated Code of Maryland, the basic purpose is to prevent “insiders” from retaining profits realized on the equity securities, usually stocks, on the basis of information not available to others but Insurance Article, §3-119, Annotated Code of Maryland, is so worded as to apply whether or not in a particular transaction the “insider” has any “inside” information and without consideration of any intention he may have as to holding the security bought or repurchasing the security sold. Any beneficial owners, directors, or officers of the insurer satisfying the requirements of the U.S. Securities & Exchange Commission on insider trading (see SEC reg. 240.16b-1 et seq.) will be considered to have complied with the “insider” provisions and requirements of this chapter and of Insurance Article, §3-119(e), Annotated Code of Maryland. Any transaction of purchase and sale, or sale and purchase, of a security which is effected in connection with the distribution of a substantial block of securities shall be exempt from the provisions of Insurance Article, §3-119(e), Annotated Code of Maryland, to the extent specified in this chapter, as not comprehended within the purpose of Insurance Article, §3-119(e), upon the following conditions: The person effecting the transaction is engaged in the business of distributing securities and is participating in good faith, in the ordinary course of this business, in the distribution of the block of securities; The security involved in the transaction is: A part of the block of securities and is acquired by the person effecting the transaction, with a view to distribution thereof, from the issuer or other person on whose behalf the securities are being distributed or from a person who is participating in good faith in the distribution of the block of securities; or A security purchased in good faith by or for the account of the person effecting the transaction for the purpose of stabilizing the market price of securities of the class being distributed or to cover an over-allotment or other short position created in connection with the distribution: and Other persons not within the purview of Insurance Article, §3-119(e), Annotated Code of Maryland, are participating in the distribution of the block of securities on terms at least as favorable as those on which the person is participating and to an extent at least equal to the aggregate participation of all persons exempted from the provisions of Insurance Article, §3-119(e), by this section of this regulation. However, the performance of the functions of manager of a distributing group and the receipt of a bona fide payment for performing these functions may not preclude an exemption which would otherwise be available under this section of this regulation. The exemption of a transaction pursuant to this regulation with respect to the participation therein of one party thereto may not render the transaction exempt with respect to participation of any other party therein unless the other party also meets the conditions of this regulation. Any acquisition of shares of stock (other than stock acquired upon the exercise of an option, warrant, or right) pursuant to a stock bonus, profit sharing, retirement, incentive, thrift, savings or similar plan, or any acquisition of a qualified or a restricted stock option plan, or a stock option pursuant to an employees' stock purchase plan, by a director or officer of the issuer of the stock or stock option shall be exempt from the operation of Insurance Article, §3-119(e), Annotated Code of Maryland, if the plan meets the following conditions: The plan has been approved, directly or indirectly, by the affirmative votes of the holders of a majority of the securities of the issuer present, or represented, and entitled to vote at a meeting duly held in accordance with the applicable laws of Maryland, or by the written consent of the holders of a majority of the securities of the issuer entitled to vote. However, if the vote or written consent was not solicited substantially in accordance with the proxy rules and regulations prescribed by the National Association of Insurance Commissioners, if any, in effect at the time of the vote or written consent, the issuer shall furnish in writing to the holders of record of the securities entitled to vote for the plan substantially the same information concerning the plan which would be required by the rules and regulations so prescribed and in effect at the time the information is furnished, if proxies to be voted with respect to the approval or disapproval of the plan were then being solicited, on or before the date of the first annual meeting of security holders held subsequent to the later of the date Insurance Article, §3-119, Annotated Code of Maryland, first applies to the issuer, or the acquisition of an equity security for which exemption is claimed. The written information may be furnished by mail to the last known address of the security holders of record within 30 days before the date of mailing. Four copies of the written information shall be filed with, or mailed for filing to, the Insurance Commissioner not later than the date on which it is first sent or given to security holders of the issuer. For the purposes of this section, the term “issuer” includes a predecessor corporation if the plan or obligations to participate thereunder were assumed by the insurer in connection with the succession. If the selection of any director or officer of the issuer to whom stock may be allocated or to whom qualified, restricted, or employee stock purchase plan stock options may be granted pursuant to the plan, or the determination of the number or maximum number of shares of stock which may be allocated to the director or officer or which may be covered by qualified, restricted, or employee stock purchase plan stock options granted to the director or officer, is subject to the discretion of any person, then the discretion shall be exercised only as follows: With respect to the participation of directors: By the board of directors of the issuer, a majority of which board and a majority of the directors acting in the matter are disinterested persons; By, or only in accordance with the recommendation of, a committee of three or more persons having full authority to act in the matter, all of the members of which committee are disinterested persons; or Otherwise in accordance with the plan, if the plan: Specifies the number or maximum number of shares of stock which directors may acquire or which may be subject to qualified, restricted, or employee stock purchase plan stock options granted to directors and the terms upon which, and the times at which, or the periods within which, the stock may be acquired or the options may be acquired and exercised; or Sets forth, by formula or otherwise, effective and determinable limitations with respect to the foregoing based upon earnings of the issuer, dividends paid, compensation received by participants, option prices, market value of shares, outstanding shares or percentages thereof outstanding from time to time, or similar factors. With respect to the participation of officers who are not directors: By the board of directors of the issuer or a committee of three or more directors; or By, or only in accordance with the recommendation of, a committee of three or more persons having full authority to act in the matter, all of the members of which committee are disinterested persons. For the purpose of this section a director or committee member shall be deemed to be a disinterested person only if that person is not at the time the discretion is exercised eligible and has not at any time within 1 year prior thereto been eligible for selection as a person to whom stock may be allocated or to whom qualified, restricted, or employee stock purchase plan stock options may be granted pursuant to the plan or any other plan of the issuer or any of its affiliates entitling the participants in the plan to acquire stock or qualified, restricted, or employee stock purchase plan stock options of the issuer or any of its affiliates. The provisions of this section do not apply with respect to any option granted, or other equity security acquired, before the date that Insurance Article, §3-119, Annotated Code of Maryland, first became applicable with respect to any class of equity security of the issuer. As to each participant or as to all participants, the plan effectively limits the aggregate dollar amount or the aggregate number of shares of stock which may be allocated, or which may be subject to qualified, restricted, or employee stock purchase plan stock options granted, pursuant to the plan. The limitations may be established on an annual basis, or for the duration of the plan, whether or not the plan has a fixed termination date and may be determined either by fixed or maximum dollar amounts or fixed or maximum number of shares or by formulas based upon earnings of the issuer, dividends paid, compensation received by participants, option prices, market value of shares, outstanding shares or percentages of shares outstanding from time to time, or similar factors which will result in an effective and determinable limitation. Limitations may be subject to any provisions for adjustment of the plan or of stock allocable or options outstanding thereunder to prevent dilution or enlargement of rights. Unless the context otherwise requires, all terms used in this regulation shall have the same meaning as in Insurance Article, Annotated Code of Maryland. In addition, the following definitions apply: “Plan” includes any plan, whether or not set forth in any formal written document or documents and whether or not approved in its entirety at one time. “Qualified stock option” and “employee stock purchase plan” that are set forth in §§422 and 423 of the Internal Revenue Code of 1954, as amended, are to be applied to those terms when used in this chapter. The term “restricted stock option” as defined in §424(b) of the Internal Revenue Code of 1954, as amended, shall be applied to that term as used in this chapter, provided, however, that for the purposes of this chapter an option which meets all of the conditions of that section other than the date of issuance shall be deemed to be a “restricted stock option.” Any acquisition of an equity security (other than a convertible security or right to purchase a security) by a director or officer of the issuer issuing the security shall be exempt from the operation of Insurance Article, §3-119(e), Annotated Code of Maryland, upon condition that: The equity security is acquired by way of redemption of another security of an issuer substantially all of whose assets other than cash (or government bonds) consist of securities of the issuer of the equity security so acquired, and which: Represented substantially and in practical effect a stated or readily ascertainable amount of the equity security; Had a value which was substantially determined by the value of the equity security; and Conferred upon the holder the right to receive the equity security without the payment of any consideration other than the security redeemed; No security of the same class as the security redeemed was acquired by the director or officer within 6 months before the redemption or is acquired within 6 months after the redemption; The issuer of the equity security acquired has recognized the applicability of §A of this regulation by appropriate corporate action. To the extent specified in §B of this regulation, the Insurance Commissioner hereby exempts as not comprehended within the purposes of Insurance Article, §3-119(e), Annotated Code of Maryland, any transaction or transactions involving the purchase and sale, or sale and purchase, of any equity security if the purchase is pursuant to the exercise of an option or similar right either acquired: More than 6 months before its exercise; or Pursuant to the terms of an employment contract entered into more than 6 months before its exercise. In respect of transactions specified in §A of this regulation, the profits inuring to the issuer may not exceed the difference between the process of the sale and the lowest market price of any security of the same class within 6 months before or after the date of sale. Nothing in this section shall be deemed to enlarge the amount of profit which would inure to the issuer in the absence of this regulation. The Insurance Commissioner also hereby exempts, as not comprehended within the purposes of Insurance Article, §3-119(e), Annotated Code of Maryland, the disposition of a security, purchased in a transaction specified in §A of this regulation pursuant to a plan or agreement for merger or consolidation, or reclassification of the issuer's securities, or for the exchange of its securities for the securities of another person which has acquired its assets, or which is in control, as defined in §368(c) of the Internal Revenue Code of 1954, of a person which has acquired its assets, when the terms of the plan or agreement are binding upon all stockholders of the issuer except to the extent that dissenting stockholders may be entitled, under statutory provisions or provisions contained in the certificate of incorporation, to receive the appraised or fair value of their holdings. The exemptions provided by this regulation may not apply to any transaction made unlawful by Insurance Article, §3-119(f), Annotated Code of Maryland, or by any regulations thereunder. The burden of establishing the market price of a security for the purpose of this regulation shall rest upon the person claiming the exemption. The exemption granted pursuant to this regulation shall apply to any liability under Insurance Article, §3-119(e), Annotated Code of Maryland, existing at or after the effective date of this regulation, but may not be deemed to affect judgments rendered before that date. The following transactions shall be exempt from the provisions of Insurance Article, §3-119(e), Annotated Code of Maryland, as not comprehended within the purpose of that statute: The acquisition of a security of an issuer pursuant to a merger or consolidation, in exchange for a security of a company which, before the merger or consolidation, owned 85 percent or more of the equity securities of all other companies involved in the merger or consolidation except in the case of consolidation the resulting company; The disposition of a security, pursuant to a merger or consolidation of an issuer which, before the merger or consolidation, owned 85 percent or more of the equity securities of all other companies involved in the merger or consolidation except in the case of consolidation, the resulting company; The acquisition of a security of an issuer pursuant to a merger or consolidation, in exchange for a security of a company which, before the merger or consolidation, held over 85 percent of the combined assets of all the companies undergoing merger or consolidation, computed according to their book values before the merger or consolidation as determined by reference to their most recent available financial statements for a 12-month period before the merger or consolidation; or The disposition of a security, pursuant to a merger or consolidation, of an issuer which, before the merger or consolidation, held over 85 percent of the combined assets of all the companies undergoing merger or consolidation, computed according to their book values before the merger or consolidation, as determined by reference to their most recent available financial statements for a 12-month period before the merger or consolidation. A merger within the meaning of this regulation shall include the sale or purchase of substantially all the assets of one issuer by another in exchange for stock which is then distributed to the security holders of the issuer which sold its assets. Notwithstanding the foregoing, if an officer, director, or stockholder shall make any purchase (other than a purchase exempted by this chapter or any other regulation under Insurance Article, §3-119(e), Annotated Code of Maryland, of a security in any company involved in the merger or consolidation and any sale (other than a sale exempted by this chapter or any other regulation under Insurance Article, §3-119(e), Annotated Code of Maryland, of a security in any other company involved in the merger or consolidation within any period of less than 6 months during which the merger or consolidation took place, the exemption provided by this regulation shall be unavailable to the officer, director, or stockholder to the extent of the purchase and sale. Any acquisition or disposition of an equity security involved in the deposit of the security under, or the withdrawal of the security from, a voting trust or deposit agreement, and the acquisition or disposition in connection therewith of the certificate representing the security, shall be exempt from the operation of Insurance Article, §3-119(e), Annotated Code of Maryland, if substantially all of the assets held under the voting trust or deposit agreement immediately after the deposit or immediately before the withdrawal, as the case may be, consisted of equity securities of the same class as the security deposited or withdrawn. However, this regulation does not apply to the extent that there shall have been either: A purchase of an equity security of the class deposited and a sale of any certificate representing an equity security of the class; or A sale of an equity security of the class deposited and a purchase of any certificate representing an equity security of the class (otherwise than in a transaction involved in the deposit or withdrawal or in a transaction exempted by any other section of any regulation under Insurance Article, §3-119(e), Annotated Code of Maryland, within a period of less than 6 months which includes the date of the deposit or withdrawal. Any acquisition or disposition of an equity security involved in the conversion of an equity security which, by its terms or pursuant to the terms of the corporate charter or other governing instruments, is convertible immediately or after a stated period of time into another equity security of the same issuer, shall be exempt from the operation of Insurance Article, §3-119(e), Annotated Code of Maryland. However, this regulation does not apply to the extent that there shall have been either: A purchase of any equity security of the class convertible (including any acquisition of or change in a conversion privilege) and a sale of any equity security of the class issuable upon conversion; or A sale of any equity security of the class convertible and any purchase of any equity security issuable upon conversion (otherwise than in a transaction involved in the conversion or in a transaction exempted by any other section of any regulation under Insurance Article, §3-119(e), Annotated Code of Maryland, within a period of less than 6 months which includes the date of conversion. For the purpose of this regulation an equity security is not deemed to be acquired or disposed of upon conversion of an equity security if the terms of the equity security converted require the payment or entail the receipt, in connection with the conversion, of cash or other property (other than equity securities involved in the conversion) equal in value at the time of conversion to more than 15 percent of the value of the equity security issued upon conversion. For the purpose of this regulation an equity security shall be deemed convertible if it is convertible at the option of the holder or of some other person or by operation of the terms of the security or the governing instrument. Insurance Article, §§2-109 and 3-119, Annotated Code of Maryland Effective date: May 15, 1969 Chapter recodified from COMAR 09.30.38 to COMAR 31.04.10 effective September 7, 1998 (25:18 Md. R. 1439) Effective date: June 9, 1969 Chapter recodified from COMAR 09.30.24 to COMAR 31.04.11 effective September 7, 1998 (25:18 Md. R. 1439) Chapter repealed effective January 15, 2007 (34:1 Md. R. 32) The methodology in Regulation .02 of this chapter shall be used to determine whether an insurer has engaged in accepting business from a person who does not have an appointment from the insurer with such frequency as to constitute a general business practice within the meaning of Insurance Article, §4-113(b)(11), Annotated Code of Maryland. It shall be considered prima facie evidence of a general business practice of violating Insurance Article, §4-113(b)(11), Annotated Code of Maryland, if in any 12-month period it is found that the number of transactions violating Insurance Article, §4-113(b)(11), by foreign insurers for policies issued to Maryland residents, or by domestic insurers for all policies written, equals or exceeds the following: Five transactions with a single person who does not have an appointment from the insurer; or One or more transactions with five or more people who do not have appointments from the insurer. An insurer may overcome the presumption that a general business practice of violating Insurance Article, §4-113(b)(11), Annotated Code of Maryland, exists by presenting evidence to the Commissioner relating to the insurer's intent, the nature of the violations, and any other relevant factors. Insurance Article, §§2-109 and 4-113(b)(11) and (e), Annotated Code of Maryland Effective date: September 1, 1967 Amended effective May 1, 1968 Chapter, Binders—Motor Vehicle Liability Insurance, repealed effective December 26, 1988 (15:26 Md. R. 2982) Regulations .01—.03, Insurer Transactions with Unappointed Persons—General Business Practices, adopted effective March 16, 1992 (19:5 Md. R. 576) Chapter recodified from COMAR 09.30.47 to COMAR 31.04.12 effective September 7, 1998 (25:18 Md. R. 1439) These regulations are applicable to the written contract provisions that are required within an insurance-producer-controlled holding company system involving a controlling insurance producer and a controlled authorized insurer that issues policies covered by the Property and Casualty Insurance Guaranty Corporation. In this chapter, the following terms have the meanings indicated. Terms Defined. “Comparable business” includes the same lines and kinds of insurance, same kinds of risks, similar policy limits, and similar quality of business. “Control”, including the terms “controlling”, “controlled by”, and “under common control with”, has the meaning stated in Insurance Article, §8-101(b), Annotated Code of Maryland. “Insurance holding company system” has the meaning stated in Insurance Article, §7-101(e), Annotated Code of Maryland. “Insurer” means an insurer described in Insurance Article, §8-102, Annotated Code of Maryland. The terms of the contract required under this regulation between a controlling insurance producer and a controlled insurer within an insurance-producer-controlled holding company system shall comply with §B of this regulation. The contract required under this regulation shall provide at a minimum that: The controlled insurer may: Terminate the contract for cause upon written notice to the controlling insurance producer; and Suspend immediately the authority of the controlling insurance producer to write business during the pendency of any dispute regarding the termination; The controlled insurer shall provide the controlling insurance producer with its written underwriting and rate standards, rules and procedures, manuals, and conditions for accepting or rejecting rates; The controlling insurance producer shall: Provide accounts to the controlled insurer detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by or owed to the controlling insurance producer; Hold in a fiduciary capacity all funds collected for the account of the controlled insurer in one or more appropriately identified bank accounts in banks that are members of the Federal Reserve System in compliance with: Any applicable provisions of the Insurance Article, Annotated Code of Maryland, or regulations promulgated under that article, or The requirements of the domiciliary jurisdiction of the controlling insurance producer, if the controlling insurance producer does not engage in business as an insurance producer in this State and is not required to hold a license in the State; Keep a separate identifiable record of business written for the controlled insurer; and Comply with the written underwriting and rates standards, rules and procedures, manuals, and conditions established by the controlled insurer; The controlling insurance producer may not assign the contract in whole or in part; Subject to §B(6) of this regulation, the rates, terms, and purposes of commissions, charges, and other fees of the controlling insurance producer shall be stated; The rates of the commissions, charges, and other fees may not be greater than the rates charged for placing comparable business with the controlled insurer by an insurance producer other than the controlling insurance producer; The written underwriting and rates standards, rules and procedures, manuals, and conditions shall be the same as those applicable to comparable business placed with the controlled insurer by an insurance producer other than the controlling insurance producer; If the contract provides for a sharing of the controlled insurer's profits by the controlling insurance producer, subject to §B(9) of this regulation, the profits may not be paid until at least: 5 years after the premiums are earned on casualty insurance; or 1 year after the premiums are earned on any other insurance; Any profits may not be paid until the adequacy of reserves on remaining claims is verified as provided in Insurance Article, §§8-105(f) and (g), Annotated Code of Maryland; The controlled insurer shall establish a limit on the writing of the controlling insurance producer in relation to the insurer's surplus and total writing; In regard to the limit provided for in §B(10) of this regulation, the controlled insurer: May establish a different limit for each line or subline of business; Shall notify the controlling insurance producer when the applicable limit is approached; and May not accept business from the controlling insurance producer if the limit is reached; In regard to the limit provided for in §B(10) of this regulation, the controlling insurance producer may not place business with the controlled insurer, if it has been notified by the controlled insurer that the limit has been reached. Insurance Article, §§2-109, 4-116(b), 7-605, 7-701—7-704, and 10-126, Title 7, Subtitle 1, and Title 8, Subtitle 1, Annotated Code of Maryland Effective date: Regulations .01—.03 adopted as an emergency provision effective September 15, 1993 (20:20 Md. R. 1557); adopted permanently effective December 20, 1993 (20:25 Md. R. 1945) Chapter recodified from COMAR 09.30.98 to COMAR 31.04.13 effective September 7, 1998 (25:18 Md. R. 1439) Regulation .01 amended effective January 15, 2007 (34:1 Md. R. 32) Regulation .03 amended effective January 15, 2007 (34:1 Md. R. 32) This chapter applies to a member insurer. In this chapter, the following terms have the meanings indicated. Terms Defined. “Corporation” means the Life and Health Insurance Guaranty Corporation. “Health benefit plan” has the meaning stated in Insurance Article, §9-401(g), Annotated Code of Maryland. Member Insurer. “Member insurer” means any person authorized in this State to transact: Direct nongroup life insurance, health insurance, annuities (including structured settlements), and supplemental policies or contracts, or health maintenance organization business to which Title 9, Subtitle 4 of the Insurance Article applies; or Certificates under direct group policies or contracts. “Member insurer” does not include: A fraternal benefit society; A mandatory state pooling plan; A mutual assessment company or any entity that operates on an assessment basis; An insurance exchange; or An organization which is permitted to issue charitable gift annuity agreements. “Resident” means a person who resides in this State at the time a member insurer is determined to be an impaired insurer or an insolvent insurer, and to whom a contractual obligation is owed. “Supplemental contract” means an agreement entered into for the distribution of policy or contract proceeds. A member insurer or insurance producer may not deliver a life insurance policy, a health insurance policy, a health benefit plan (including a health maintenance organization contract or group master certificate), or an annuity contract which at the time of delivery exceeds the limitations imposed under Insurance Article, §9-407(k), Annotated Code of Maryland, or which is not subject to coverage under Insurance Article, §9-403, Annotated Code of Maryland, unless the member insurer or insurance producer before or at the time of delivery provides the policyholder or contract holder the notice described in §B of this regulation. This chapter does not prohibit a member insurer or insurance producer from delivering the notice to policyholders or contract holders who have full protection afforded by the corporation. The notice required in §A of this regulation shall be in at least 12-point type and shall read as follows: Insurance Article, §§2-109 and 9-414, Annotated Code of Maryland Effective date: Regulations .01—.03 adopted as an emergency provision effective February 1, 1996 (23:4 Md. R. 270); adopted permanently effective July 1, 1996 (23:13 Md. R. 943) Regulation .03B amended as an emergency provision effective July 1, 1996 (23:14 Md. R. 1004); amended permanently effective November 4, 1996 (23:22 Md. R. 1496) Chapter recodified from COMAR 09.31.11 to COMAR 31.04.14 effective September 7, 1998 (25:18 Md. R. 1439) Regulation .01 amended effective November 1, 2021 (48:19 Md. R. 803) Regulation .02B amended effective November 1, 2021 (48:19 Md. R. 803) Regulation .03 amended effective May 1, 2007 (34:1 Md. R. 33); November 1, 2021 (48:19 Md. R. 803) Regulation .03B amended effective October 18, 2010 (37:21 Md. R. 1438); July 16, 2015 (42:8 Md. R. 608) The purpose of this chapter is to establish minimum standards for antifraud plans as required by Insurance Article, §27-803, Annotated Code of Maryland. This chapter is applicable to every authorized insurer that conducts business and writes contracts of insurance in Maryland. In this chapter, the following terms have the meanings indicated. Terms Defined. “Administration” means the Maryland Insurance Administration. “Antifraud plan” means antifraud plans as provided for in Insurance Article, §27-803, Annotated Code of Maryland. “Commissioner” means the Insurance Commissioner of Maryland. Insurer. “Insurer” means authorized insurers and includes dental plans, fraternal benefit societies, the Maryland Automobile Insurance Fund, health maintenance organizations, nonprofit health service plans, and third party administrators. “Insurer” does not include reinsurers. Antifraud Plan. This section does not apply to an insurer that has filed an antifraud plan with the Administration, and the plan has been approved by the Commissioner. An insurer authorized to write insurance business that has in force policies or certificates of insurance in this State shall institute, implement, and maintain an insurance antifraud plan. An insurer shall submit an antifraud plan within 90 days of the insurer issuing or delivering a policy or certificate of insurance in the State. Contents of Antifraud Plan. An antifraud plan shall: Contain provisions for educating and training an insurer's employees in the detection of insurance fraud; Provide for methods and procedures concerning the investigation of suspicious claims; and Apply to but not be limited to: Claims fraud, Application fraud, Insurance producer fraud, Third-party administrator fraud, and Internal fraud. Amendments to Antifraud Plans. Within 30 days after modifying or amending an antifraud plan, an insurer shall: Notify the Commissioner in writing; and Provide a copy of the revised antifraud plan showing the amendments. Approval of Antifraud Plans and Amendments. The Commissioner shall review each insurer's antifraud plan and any subsequent amendments to determine compliance with: The requirements of Insurance Article, §27-803, Annotated Code of Maryland; and This chapter. If the Commissioner has not disapproved an antifraud plan or amendment within 30 days of its filing, the plan shall be deemed approved. Under §D(1) of this regulation, if the Commissioner determines that an insurer's antifraud plan and any subsequent amendment is not in compliance, the Commissioner shall disapprove the plan or amendment and send a written notice of disapproval with the reasons for disapproval to the insurer. If the insurer's antifraud plan is disapproved by the Commissioner, the insurer shall submit a new plan to the Commissioner within 60 days after the date the plan was disapproved. This regulation does not apply to third party administrators (TPAs) that only participate in federal programs and are therefore required to file a federal antifraud plan provided that: Such a federal antifraud plan has been filed with the Centers for Medicare & Medicaid Services; The TPA provides the federal antifraud plan at the Commissioner's request; and The TPA files a written attestation stating: The name of the TPA; The name and title of the employee attesting who has authority to bind the TPA; That the TPA is required to file an antifraud plan with the federal government; and The date the TPA filed the antifraud plan with the federal government. Education/Training. An antifraud plan shall contain procedures for the provision of education or training, or both, to the insurer's employees regarding the detection of insurance fraud. Training in the recognition and referral of suspicious claims shall be: Required of new and existing claims personnel, underwriters, auditors, insurance producers, and consumer service personnel; and Offered to independent insurance producers who have appointments with the company. At a minimum, the educational components of antifraud plans shall address the following: Courses of instruction shall be: Designed to address specific aspects of fraud associated with a company's product line, and At least 2 hours in duration; Personnel shall be presented with updated material at the entrance level and at least once every 2 years in conjunction with continuing education standards or as a company policy; A new employee shall receive the regulated education and training regarding the detection of fraud within 6 months of the effective date of employment; and Training programs may be developed and conducted either by internal personnel or by outside contractors. Detection. An antifraud plan shall have provisions regarding the early detection of all areas of fraud including, but not limited to: Embezzlement and internal theft; Underwriting and application fraud; Theft and misappropriation of premiums by insurance producers; Claims fraud; and Application fraud. The antifraud plan shall delineate the methods or approaches, or both, that will be utilized in detecting fraud. An authorized insurer shall: Designate an individual or individuals, or a specific unit, either in-house or outside, to be responsible for coordinating the detection, referral, and investigation of suspected fraudulent activity; Include the designation in the antifraud plan; and Submit amendments to the designation to the Administration. Fraud detection guides shall be prepared, published, and maintained to assist claims personnel, underwriters, and insurance producers in the identification, detection, and handling of suspicious claims. Investigation. An antifraud plan shall contain: Procedures for handling fraud complaints; Procedures that are to be followed when instances of suspected fraud have been detected, evaluated, and found to warrant a full investigation; The requirement that the company representative responsible for the conduct and oversight of fraud investigations assign the matter for investigation; The designation of the individuals responsible for conducting investigations on behalf of the insurer including the individuals responsible for providing the notifications required by §C(1)(g) of this regulation; Guidelines and procedures for conducting investigations and cooperating with the Insurance Fraud Division or other law enforcement agency which is conducting a criminal investigation if in-house staff is utilized; Written considerations as to work product and courtroom testimony; and Guidelines and procedures for notifying the appropriate law enforcement agency, including the Insurance Fraud Division of the Administration. Investigators. A company may maintain an in-house staff of investigators or contract with an outside firm. If an outside firm is used, the firm shall comply with all Maryland licensing laws and regulations to the extent that they are applicable. Auditing. An antifraud plan shall contain procedures regarding the auditing of insurance producers by the company. The auditing procedures shall provide for both routine auditing and random audits. If an irregularity is discovered during an audit, the antifraud plan shall require that the duly authorized company representative who conducts or oversees investigations be notified immediately. Referral for Prosecution. If an insurer, in good faith, has cause to believe that insurance fraud has been or is being committed, the insurer shall report the suspected fraud to the Insurance Fraud Division or to the appropriate federal, State, or local law enforcement authority. The reporting policy shall be in writing and maintained in the offices of the company point of contact for fraud. The written policy shall be open for inspection by market conduct examiners of the Maryland Insurance Administration. An insurer shall maintain appropriate records for the Commissioner to determine the effectiveness of its antifraud plan. A report shall be developed and provided to the Administration on an annual basis regarding the plan's effectiveness and the effectiveness of the investigative and prosecutorial efforts. The report shall be filed with the Administration by March 31 of each year, reporting the previous year's statistics. The report shall be limited to Maryland data. The following information shall be reported: Number of policies in force; Number of claims; Number of suspected fraud cases; Number of suspected fraud cases in which a claim was denied; Number of suspected fraud cases reported to the authorities; Number of suspected fraud cases by product line; Number of suspected fraud cases in which a claim was denied, by product line; Number of cases prosecuted by criminal authorities; and Breakdown by perpetrator, as follows: Insured, Claimant, Insurance producer/employee, Noninsurance professional, by category, and Other. Health-General Article, §19-706(e); Insurance Article, §§2-109, 8-321.1, and 27-803; Annotated Code of Maryland Effective date: Regulations .01—.06 adopted as an emergency provision effective October 1, 1996 (23:21 Md. R. 1465); adopted permanently effective December 30, 1996 (23:26 Md. R. 1859) Chapter recodified from COMAR 09.31.17 to COMAR 31.04.15 effective September 7, 1998 (25:18 Md. R. 1439) Regulation .03B amended effective March 21, 2011 (38:6 Md. R. 397); February 27, 2017 (44:4 Md. R. 255) Regulation .04 amended effective March 21, 2011 (38:6 Md. R. 397) Regulation .04A amended effective April 22, 2019 (46:8 Md. R. 402) Regulation .04A, B amended effective January 15, 2007 (34:1 Md. R. 33) Regulation .05A, B, D amended effective January 15, 2007 (34:1 Md. R. 33) Regulation .06C amended effective January 15, 2007 (34:1 Md. R. 33) This chapter applies to every insurer authorized to issue insurance policies which provide health, life, disability, property, or casualty coverage in this State and to insurers applying to engage in these kinds of insurance businesses in this State. “Underwriting standards” means underwriting manuals, including any amendments or supplements to underwriting manuals, and those generally accepted practices of the insurer contained in written underwriting instructions, guidelines, and rules furnished by the insurer for use by its underwriters and insurance producers as standards for acceptance of risks. The Commissioner may require an insurer to file its underwriting standards, or any portion of its underwriting standards pertaining to specific subjects. The insurer shall provide the Commissioner with the information requested within 30 days after receipt of the Commissioner's request. When responding to the Commissioner, an insurer may request a finding that all or certain portions of its underwriting standards shall be considered confidential commercial information under State Government Article, §10-617(d), Annotated Code of Maryland. An insurer making this request shall state the reasons for considering the material confidential commercial information. The information furnished shall be regarded as confidential until the Commissioner rules otherwise. An insurer shall retain for a period of at least 3 years all records pertaining to the establishment, implementation, and enforcement of its underwriting standards. Insurance Article, §§2-109 and 27-501, Annotated Code of Maryland Effective date: October 16, 1962 Amended effective May 1, 1968 Chapter, Insured Paying Less Than Premium Due Under the Contract, repealed effective March 6, 1989 (16:4 Md. R. 496) Regulations .01—.05, Filing of Underwriting Standards, adopted effective February 18, 1991 (18:3 Md. R. 304) Chapter recodified from COMAR 09.30.30 to COMAR 31.04.16 effective September 7, 1998 (25:18 Md. R. 1439) Regulation .02 amended effective January 15, 2007 (34:1 Md. R. 33) The submission of any form required to be filed under Insurance Article, §§8-433(a), 12-203, 13-110(a), 14-109(3)(iv), 14-110(a)(2)(iii), 14-126, 14-405(b)(8) and (9), or 14-410(c), Annotated Code of Maryland as amended to date, shall be in compliance with the regulations in this chapter, except to the extent that a regulation or portion of a regulation is not applicable to a particular form. In this chapter, the following terms have the meanings indicated. Terms Defined. “Carrier” means: An insurer; A nonprofit health service plan; A dental plan organization; or A fraternal benefit society. “Commissioner” means the Maryland Insurance Commissioner. Contract on an Insert Page Basis. “Contract on an insert page basis” means a contract that is composed of insert pages, with each insert page being identified with a unique form number. “Contract on an insert page basis” does not include a contract that contains an insert that is identified with a unique form number and is longer than one page. Contract on a Sectional Basis. “Contract on a sectional basis” means a contract that is composed of sections, with each section being identified with a unique form number. “Contract on a sectional basis” includes a contract that contains sections that are only one page long. “Form” means: A policy; A contract; A certificate; A rider; An endorsement; or An application. “Guaranteed renewable contract” means a health insurance contract that: Permits the insured to renew the contract by timely payment of premiums: Until 65 years old or until eligibility for Medicare; or In the case of a contract issued after 60 years old, for at least 5 years from its date of issue; and Does not permit the carrier to make any unilateral change in any provision of the contract during the guaranteed renewability period, except that the carrier may make changes in premium rates by class. “Health insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland. “Insured” means an individual covered under a form. “Insurer” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland. “Life insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland. “Noncancellable contract” means a health insurance contract that: Permits the insured to renew the contract by timely payment of premiums: Until 65 years old or eligibility for Medicare; or In the case of a contract issued after 60 years old, for at least 5 years from its date of issue; Does not permit the carrier to make any unilateral change in any provisions of the contract during the period the contract is in force; and Does not permit the carrier to change the premium rate during the period the contract is in force. “Policyholder” means the individual or entity to whom the contract is issued. Duplicate Forms Required For Nonelectronic Form Submissions. A carrier shall submit duplicate copies of each form the carrier intends to use in Maryland to the Commissioner for approval. If the Commissioner approves the form submitted by or on behalf of the carrier, the Commissioner shall: Retain one copy; and Return to the carrier one copy, with an appropriate notation indicating approval. A carrier submitting forms for approval, or premiums for forms pending approval or previously approved, shall print or type in a conspicuous manner immediately below the name of the carrier on the letter of transmittal the carrier's National Association of Insurance Commissioners (NAIC) company code number. A carrier shall submit the following with each form filing: A current transmittal form developed by: The Maryland Insurance Administration; or The National Association of Insurance Commissioners (NAIC); A filing fee in accordance with Insurance Article, §2-112, Annotated Code of Maryland; Except for electronic form filings, a self-addressed stamped envelope; and A cover letter listing the forms submitted for approval by form number, with a brief description of each form filed for approval. Each form shall be identified by a form number which is unique to that form. This number should be printed in the lower lefthand corner of the first page, and no other number should appear in close proximity to the form number. If any loose leaf or alternate pages are submitted in accordance with Insurance Article, §12-203(e), Annotated Code of Maryland, each page shall also be identified by a unique form number. Each form shall be printed in a size and style of type which is easily legible. If any portion of a form is in a language other than English, an English translation shall appear in the same form. Name of Carrier. Each complete form, except riders or endorsements, shall bear on the face the corporate name and either: The address (city and state) of the carrier; or The address of the carrier's office that will administer the form. The name of the carrier shall appear with more prominence on a form than the name of: An affiliate; A producer; An underwriter; A holding company; or A third party administrator. Modifications or Revisions. A carrier may modify or revise a form only through: Some form of press plate, such as imprinting, multigraph, mimeograph, multilith, electronic printer, or rubber stamp; or A computer generated revision. A carrier may not modify or revise a form through handwritten or typed interlineations or deletions. Submission of Forms. Except as provided in §I(2) of this regulation, a carrier shall submit forms for approval with the Commissioner. A third party may submit a form for approval on behalf of a carrier, if the third party includes a written authorization from the carrier to make the form filing. Submission Details. If the submission is new, the carrier shall point out the unique features of the form. Representative Specimen Data. Except for applications filed for approval, a carrier shall complete each form filed for approval with representative specimen data. A carrier shall use the following specimen data for life insurance policies: 35 years old for a policy issued at that age; and The lowest age of issue for juvenile policy forms. Mortality Table or Interest Rate Changes in Life Insurance or Annuity Contracts. If no other change in the contract is being filed at the same time, a carrier may file a change in the nonforfeiture basis for a previously approved contract by filing: Revised pages for any pages in the contract that are affected; and A revised actuarial memorandum demonstrating compliance with minimum nonforfeiture and reserve requirements. Any individual or group policy, group certificate, policy amendment, rider, or endorsement form shall have affixed the signature of a responsible officer of the carrier as part of the form. In the case of a life insurance policy or certificate, the carrier shall furnish a mathematical outline showing, for the specimen age and a specimen duration, computation of the: Net premium; Adjusted premium; Nonforfeiture factor, if different from the adjusted premium for the specimen age used; and Nonforfeiture values. Except for an annuity contract that is listed as exempt under Insurance Article, §16-501, Annotated Code of Maryland, in the case of an annuity contract, the carrier shall furnish: A mathematical outline showing computation of the minimum nonforfeiture amounts; and A numerical demonstration that the minimum paid-up annuity, cash surrender, or death benefits available under the contract are not less than the minimum benefits required under Insurance Article, Title 16, Subtitle 5, Annotated Code of Maryland. Variable Information. Individual Contracts. Except as specified in §A(1)(b) of this regulation, a carrier may not include variable material in an individual contract, or in a form to be used with an individual contract. A carrier may include variable material in an individual contract or in a form to be used with an individual contract in the following portions of the form: The specifications, data, or schedule page; The product marketing name; The address of the carrier; Signatures of officers of the carrier; Descriptions of copayment amounts, deductibles, coinsurance amounts, out-of-pocket limits, annual maximums, or lifetime maximums; Specific dates, such as effective dates and termination dates; and Descriptions of benefit amounts, benefit limits, waiting periods or elimination periods. If an individual contract or a form to be used with an individual contract contains variable material as permitted under §A(1)(b) of this regulation, the carrier shall: Bracket the variable material or otherwise mark the variable material to denote variability; and Include a statement of variability, in duplicate, that discusses how each variable item may change. After an individual contract or a form to be used with an individual contract is approved with variable material, a carrier may not submit a new statement of variability to be used with the previously approved individual contract or form, except for the following: Copayment amounts; Coinsurance amounts; Deductible amounts; Out-of-pocket limits; Annual maximums; Lifetime maximums; Benefit amounts; Benefit limits; Waiting periods; or Elimination periods. A carrier shall include the following with a new statement of variability filing for a previously approved individual contract or form: A cover letter identifying the carrier and the carrier's National Association of Insurance Commissioners company code number; and The form number and date of approval of the form for which new variable material is being submitted. Group Contracts. A carrier may include variable material in a group contract or in a form to be used with a group contract, if the carrier: Brackets the variable material or otherwise marks the variable material to denote variability; and Includes a statement of variability, in duplicate, that discusses how each variable item may change, including all textual variations that are intended. After a group contract or a form to be used with a group contract is approved with variable material, a carrier may not submit a new statement of variability to be used with the previously approved group contract or form, except for the following: Copayment amounts; Coinsurance amounts; Deductible amounts; Out-of-pocket limits; Annual maximums; Lifetime maximums; Benefit amounts; Benefit limits; Waiting periods; or Elimination periods. A carrier shall include the following with a new statement of variability filing for a previously approved group contract or form: A cover letter identifying the carrier and the carrier's National Association of Insurance Commissioners company code number; and The form number and date of approval of the form for which new variable material is being submitted. Contracts with Insert Pages. A carrier may file for approval of a contract on an insert page basis, only if: Each insert page is identified by a unique form number appearing in the lower left corner of the insert page; and The carrier includes the following in the filing submission: A description of how the various insert pages will be combined; A listing of the insert pages that can be substituted for other specific insert pages; and The filing fee required under Insurance Article, §2-112, Annotated Code of Maryland, for each insert page with a unique form number. A carrier may not file for approval of insert pages for use with a previously approved contract, if the previously approved contract was not approved on an insert page basis. If a carrier files for approval of insert pages for a previously approved contract, the submission shall: Identify by form number and date of approval any insert pages that the new insert pages will replace; and Include a copy of the currently approved contract, unless the Commissioner waives the requirement or determines that a copy is not necessary to review the submission. Contracts Comprised of Sections. A carrier may file for approval of a contract on a sectional basis, only if: Each section is identified by a unique form number appearing in the lower left corner of the first page of the section; and The carrier includes the following in the filing submission: A description of how the various sections will be combined; A listing of the sections that can be substituted for other specific sections; and The filing fee required under Insurance Article, §2-112, Annotated Code of Maryland, for each section with a unique form number. A carrier may not file for approval of sections for use with a previously approved contract, if the previously approved contract was not approved on a sectional basis. If a carrier files for approval of sections for a previously approved contract, the submission shall: Identify by form number and date of approval any sections that the new sections will replace; and Include a copy of the currently approved contract, unless the Commissioner waives the requirement or determines that a copy is not necessary to review the submission. The Commissioner shall deem a filing withdrawn by the carrier if the carrier fails to respond to correspondence from the Commissioner regarding the filing within 90 days of the date of the correspondence from the Commissioner. If a carrier resubmits a form for approval after 90 days of the date of the Commissioner's correspondence regarding the filing in which the form was included, the carrier shall: Include a new filing fee for the form and associated premium rates included in the filing; and Include in the filing all the information required in Regulation .03 of this chapter. An application form shall stipulate the plan and amount of insurance and any added optional benefits being applied for. If the carrier uses an application form which contains language substantially as follows, “Except that no change in amount, classification, plan of insurance or benefits shall be effective unless agreed to in writing by the applicant”, with an additional statement that this exception is effective only in certain states, the form shall specifically name Maryland as one of the states in which the exception is effective. If an application inquires about the applicant's participation in “hazardous activities”, the application shall list the activities that are considered to be “hazardous”. If an application inquires about the applicant's use of “other habit-forming drugs”, the application shall list the specific drugs that are considered “habit-forming”. If an application contains questions regarding past or present health conditions: The questions shall be asked to the best of the applicant's knowledge and belief; or The application shall include a statement that all of the answers provided are representations and are not warranties. If an application inquires about a symptom of an applicant, the question shall be asked about a “known symptom” of a physical condition or mental condition. If an application inquires if an applicant has had any indication of a physical condition or mental condition, the question shall be asked about a “known indication” of a physical condition or mental condition. Applications for Individual Insurance. If an application is to be used by more than one carrier, the application shall include check-off boxes to indicate the carrier to which application is being made. Each carrier using the application shall: File the application with the Commissioner for approval; and Receive approval of use of the application from the Commissioner before using it in Maryland. Applications for Group Insurance. A group application may be used by more than one carrier if each carrier using the application shall: File the application with the Commissioner; and Receive approval of the application from the Commissioner before using it in Maryland. If more than one carrier requests approval to use the same application with different group applicants, the application shall include check-off boxes to indicate the carrier to which application is being made. Group Applications for Multiple Carriers. A group application may be designed to be used by: More than one carrier; A carrier and a health maintenance organization; or Multiple carriers and a health maintenance organization. A group application described in §I(3)(a) of this regulation shall clearly identify the coverage underwritten by each carrier or health maintenance organization. If an application is to be completed by more than one individual, the signature box in the application shall clearly indicate that the signature applies only to the portion of the application completed by that individual. A form may not contain any advertising material. A carrier may use a marketing name, registered trademark, or logo in a form, if the logo, registered trademark, or marketing name does not mislead as to the identity of the carrier. A carrier may include text such as “50th Anniversary Year”, “Established over 100 Years”, or “Incorporated 1860” in a form. A statement may not appear in the application with respect to a proxy through which one or more members of the board of directors is authorized to vote in the election of directors. In the case of term policies, the insurer shall indicate in clear, unambiguous language, whether or not coverage is granted if loss occurs on the term expiry date. Some examples of acceptable language are: If death occurs on or before the 5th anniversary of the policy, etc.; If death occurs before but not including, the 5th anniversary of the policy, etc.; This policy shall terminate on the 5th anniversary of the date of issue at 12:00 o'clock noon Standard Time at the place where the insured then resides. In the case of a renewable term life insurance policy (that is, a term policy containing an option on the part of the policyholder to renew for one or more further periods of term insurance), the actual premiums to be charged at each renewal date shall be shown in the policy. In a policy of wholesale or group term life insurance, however, the insurer may reserve the right to change the table of renewal premiums on any policy anniversary on 30 days' notice. If the brief description of a policy indicates that the policy is renewable or convertible, or both, the brief description shall further indicate the term during which the policyholder may exercise the option to renew or convert, or both, unless this option may be exercised during the entire term of the policy or renewal of the policy. In the case of a convertible term life insurance policy issued on a participating basis, if there is a provision for the computation of the cost of change on the basis of difference in premiums (or premiums plus interest), the cost of change also shall provide for adjustment in dividends. If a life insurance policy contains a war or aviation exclusion, or both, a printed or stamped statement shall appear as part of the brief description on the first page of the policy reading “War Restrictions Included”, “Aviation Exclusions Included”, “War and Aviation Restrictions Included”, or any similar language approved by the Commissioner. If a carrier embodies a brief description on the filing back of a form, the brief description shall be identical in language with that embodied on the first page of the form. An application, policy, or contract may not require a warranty of the state of health of the insured or that the good health of the insured be a condition precedent to the policy or contract. In any group life insurance policy, or in any provisions in either a life insurance policy or a certificate relating to additional disability benefits or to additional benefits in the event of death by accident or accidental means: If the insurer desires to exclude self-destruction or self-inflicted injury, or both, regardless whether intentional or unintentional, language such as “self-destruction and/or self-inflicted injury, intentional or unintentional” or “self-destruction and/or self-inflicted injury, voluntary or involuntary”, should be used. If the insurer desires to exclude only suicide or intentional self-inflicted injury, or both, language such as “suicide”, “intentional self-destruction”, “voluntary self-destruction”, “intentional self-inflicted injury”, and/or “voluntary self-inflicted injury” should be used. The insurer, at its option, may also add the language “while sane or insane”. In nonprofit health service plan forms and health insurance forms, including certificates of health insurance issued by fraternal benefit societies, the carrier may not exclude unintentional self-destruction or unintentional self-inflicted injury, but may exclude self-destruction or self-inflicted injury by an insane person. Except as provided in §B of this regulation, a contract shall provide for a refund of premium upon request of the policyholder of pro rata unearned premium for any period during which the insured is not covered if: Coverage terminates for an individual when the individual enters military service; or The contract excludes any coverage while the individual is in military service. The refund of premium requirement described in §A of this regulation does not apply to: A group contract; An individual contract that contains a military exclusion that applies only to loss resulting from military service while in the military service; An individual life insurance contract that provides for automatic reinstatement: Upon discharge from military service; or Within a stated period not exceeding 6 months after discharge; or An individual health insurance or nonprofit health service plan contract, if: The contract is a noncancellable contract or a guaranteed renewable contract; and The contract provides for automatic reinstatement: Upon discharge from military service; or Within a stated period not exceeding 6 months after discharge. Health Insurance Coverage Prohibited in Individual Life Insurance Policies. An ordinary or industrial life insurance policy may not include a health insurance benefit, except for the following types of benefits: Long-term care coverage; Accidental death and dismemberment coverage; Waiver of premium for permanent disability coverage; Acceleration of death benefit for terminal illness or chronic condition; Benefits for a second opinion for health conditions specified in the policy; or Benefits that: Provide a lump-sum benefit for a disease specified in the policy; and Meet the requirements established by the Commissioner under Insurance Article, §15-109, Annotated Code of Maryland. Natural Death Benefit Prohibited in Individual Health Insurance Policies. Except as provided in §B(2) of this regulation, a health insurance policy subject to Insurance Article, Title 15, Subtitle 2, Annotated Code of Maryland, or any supplementary benefit under such a policy, may not provide a natural death benefit. A disability income policy may provide a survivor benefit, provided the survivor benefit does not exceed 3 times the last full monthly disability income benefit. The expression “standard nonforfeiture value method” is acceptable for the description of the method of determining a cash value by deducting from the present value of future benefits, the present value of future nonforfeiture factors or adjusted premiums. When using this expression, it is necessary to state the amount of the nonforfeiture factor for the particular policy. If the nonforfeiture factor is identical with the statutory adjusted premium, the following language is acceptable if applicable: “The cash value under this policy as of any policy anniversary is the amount computed in accordance with the standard nonforfeiture value method using the adjusted premium as defined in the laws of the State in which this policy is delivered”. The Commissioner shall be guided by recommendations made by a subcommittee of the National Association of Insurance Commissioners in those instances where: The question of the computation of minimum cash values for a particular type of policy or type of insurance coverage has been made the subject of a study by the subcommittee of the National Association of Insurance Commissioners; and Maryland does not have a specific regulation covering the question described in §A of this regulation. In a participating life insurance policy or certificate, if dividends may be used to purchase additional term or paid-up insurance, the policy shall specify the basis of the maximum charge for the purchase of this insurance. Life Insurance. If a life insurance form excludes liability for injury or accidental death arising out of: A riot, the exclusion shall be confined to cases in which the insured is participating in the riot; and An altercation, the exclusion shall be confined to cases in which the insured provoked the altercation. Health Insurance. Exclusions or limitations for riots or altercations in health insurance and nonprofit health service plan contracts shall comply with the applicable provisions found in COMAR 31.10.25.05A, COMAR 31.10.28.03A, and COMAR 31.11.10.06A. For health insurance contracts or contracts issued by a nonprofit health service plan, a carrier may not impose a pre-existing condition exclusion that exceeds 1 year if the application does not include medical questions or health history questions. Insurance Article, §§2-109, 8-433(a), 12-203(a)(1)(i) and (2) and (b), 13-110(a), 14-109(3)(iv), 14-110(a)(2)(iii)1, 14-126, 14-405(b)(8) and (9), 14-410(c), 15-904, and 16-504(e), Annotated Code of Maryland Effective date: June 1, 1967 Amended effective May 1, 1968 Regulations .01 and .02I amended effective September 23, 1985 (12:19 Md. R. 1848) Regulation .01 amended effective July 19, 1993 (20:14 Md. R. 1169) Regulation .02A-1 adopted effective July 19, 1993 (20:14 Md. R. 1169) Chapter recodified from COMAR 09.30.45 to COMAR 31.04.17 effective September 7, 1998 (25:18 Md. R. 1439) Chapter revised effective April 25, 2005 (32:8 Md. R. 743) Regulation .03M amended effective October 1, 2019 (46:17 Md. R. 727) Regulation .03O adopted effective June 20, 2016 (43:12 Md. R. 668) Regulation .13A amended effective October 3, 2011 (38:20 Md. R. 1205) These regulations are applicable to a person subject to the notification or registration requirements of the Maryland Insurance Acquisition and Disclosure Act under Insurance Article, Title 7, Annotated Code of Maryland. In this chapter, the following terms have the meanings indicated. Terms Defined. “Affiliate” means a person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another person. “Control”, “controlling”, “controlled by”, or “under common control with” means the direct or indirect possession of the power to direct or cause the direction of the management and policies of a person, through ownership of voting securities or of securities convertible into voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, whether or not the power is exercised or sought to be exercised unless the power is the result of an official position with or corporate office held by the person. Enterprise Risk. “Enterprise risk” means any activity, circumstance, event, or series of events involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect on the financial condition or liquidity of the insurer or its insurance holding company system as a whole. “Enterprise risk” includes anything that would: Cause the insurer’s risk-based capital to fall to or below a company action level under Insurance Article, Title 4, Subtitle 3, Annotated Code of Maryland; or Cause the insurer to be in a hazardous financial condition under Insurance Article, §9-102, Annotated Code of Maryland. “Executive officer” means the chief executive officer, president, chief operating officer, chief financial officer, treasurer, secretary, controller, and any other individual performing functions corresponding to those performed by the foregoing officers under any other title. “Extraordinary dividend” or “extraordinary distribution” has the meaning stated in the Insurance Article, §7-706(b), Annotated Code Maryland. “Form A” means the “Statement Regarding the Acquisition of Control of or Merger with a Domestic Insurer” form filed pursuant to Insurance Article, §7-304, Annotated Code of Maryland, and Regulation .08 of this chapter. “Form B” means the “Insurance Holding Company System Annual Registration Statement” form filed pursuant to Insurance Article, §7-601, Annotated Code of Maryland, and Regulation .09 of this chapter. “Form C” means the “Summary of Changes to Registration Statement” form filed pursuant to Insurance Article, §7-601, Annotated Code of Maryland, and Regulation .10 of this chapter. “Form D” means the “Prior Notice of a Transaction” form filed pursuant to Insurance Article, §7-703, Annotated Code of Maryland, and Regulation .12 of this chapter. “Form E” means the “Pre-Acquisition Notification Form Regarding the Potential Competitive Impact of a Proposed Merger or Acquisition by a Non-Domiciliary Insurer Doing Business in this State or by a Domestic Insurer” form filed pursuant to Insurance Article, §7-303(a) or 7-403(a), Annotated Code of Maryland, and Regulation .07 of this chapter. “Form F” means the “Enterprise Risk Report” form filed pursuant to Insurance Article, §7-603(h)(1), Annotated Code of Maryland, and Regulation .13 of this chapter. “Insurance holding company” means a person that directly or indirectly controls an insurer or controls a person that controls an insurer. “Insurance holding company system” means two or more affiliates, at least one of which is an insurer. “Lead state commissioner” means the lead state insurance commissioner of the insurance holding company system as determined by the procedures in the NAIC Financial Analysis Handbook. “NAIC” means the National Association of Insurance Commissioners. “Ordinary dividend” means any dividend or distribution of cash or other property with a fair market value that when combined with the fair market value of any other dividends or distributions made in the preceding 12 months is not an extraordinary dividend as defined in Insurance Article, §7-706(b), Annotated Code Maryland. “Subsidiary” means an affiliate of a person that, directly or indirectly, through one or more intermediaries, is controlled by that person. “Troubled insurer” means an insurer that is in or moving towards a financial position that subjects its policyholders, claimants and other creditors to greater-than-normal financial risk, including the possibility that the company may not maintain compliance with statutory capital and/or surplus requirements. “Ultimate controlling person” means the person within an insurance holding company system that is not controlled by any other person. The factors set forth in Insurance Article, §7–105(a), Annotated Code of Maryland, are not intended to be an exhaustive list for use in determining whether an insurer’s assets and surplus are reasonable in relation to the insurer’s outstanding liabilities and adequate to meet its financial needs. In applying the factors set forth in Insurance Article, §7–105(a), Annotated Code of Maryland, the Commissioner shall adhere to the following principles: The Commissioner may not deem any single factor as necessarily controlling; The Commissioner shall consider the net effect of the factors, plus other factors deemed by the Commissioner to impact the financial condition of the insurer; In comparing the surplus maintained by other insurers, the Commissioner shall consider the extent to which each of the factors varies from company to company; and In determining the quality and liquidity of investments in subsidiaries, the Commissioner shall consider the individual subsidiary and may discount or disallow its valuation to the extent the individual investments so warrant. A person required to file a statement, form, or notification pursuant to Insurance Article, Title 7, Annotated Code of Maryland, shall file the statement, form, or notification as specified in the instructions provided in this chapter, and in accordance with the format, guidelines, and instructions approved by the Commissioner. The forms are not intended to be blank forms which are to be filled in; rather, the forms are intended to be guides in the preparation of the statements. A filed statement shall contain the number and captions of all items outlined in the form, with text addressing each applicable item or a response in the negative where not applicable. A person filing a statement, form, or notification pursuant to Insurance Article, Title 7, Annotated Code of Maryland, and this chapter shall provide the filing, including exhibits, documents, information, and all other papers filed as part of the submission: Electronically to the Commissioner; or Via personal delivery or mail addressed to The Insurance Commissioner, Maryland Insurance Administration, Attention: Chief Financial Analyst, Examination & Auditing Unit, 200 St. Paul Place, Suite 2700, Baltimore, Maryland 21202. The statement, form, or notification pursuant to §A of this regulation shall: Be prepared in the English language; and State monetary values in U.S. currency. Exhibits, documents, information, and all other papers filed as part of the submission pursuant to §A of this regulation shall: Be easily readable; Be suitable for review and reproduction; Designate debits in credit categories and credits in debit categories so as to be clearly distinguishable on reproductions; Provide a translation into the English language if the exhibit, document, or information is in a foreign language; and Provide conversion into U.S. currency if the monetary values are in a foreign denomination. The person submitting a filing under §B(2) of this regulation: Shall prepare the statements on 8-1/2 x 11 inch paper; May bind at the top or the top left-hand corner of the paper; and May provide the exhibits, documents, information, and all other papers filed as part of the submission, unless specifically prepared for the filing, in their original size paper. A statement, form, or notification filed pursuant to Insurance Article, Title 7, Annotated Code of Maryland, shall be: Signed in the manner prescribed on the form; and Accompanied by a copy of the power of attorney or other authority if the signature of any person is affixed pursuant to a power of attorney or other similar authority. A person filing a statement, form, or notification pursuant to Insurance Article, Title 7, Annotated Code of Maryland, and this chapter may: Incorporate by reference in an answer or partial answer to: Information required in previously submitted or current submissions of other filings of statements, forms, or notifications pursuant to Insurance Article, Title 7, Annotated Code of Maryland; and Information contained in any financial statement, annual report, proxy statement, statement filed with a governmental authority, or any other document provided in previously submitted or current submissions of other filings of statements, forms, or notifications pursuant to Insurance Article, Title 7, Annotated Code of Maryland, provided the document is filed as an exhibit to the submission; and Provide excerpts of documents to be filed as exhibits if the documents are extensive. Exhibits, documents, information, and all other papers filed as part of the submission of a statement, form, or notification filed within 3 years of the current filing pursuant to Insurance Article, Title 7, Annotated Code of Maryland, and this chapter may be omitted as exhibits for the current filing. References to exhibits, documents, information, and all other papers filed as part of the submission of prior filings shall: Clearly and concisely identify the material; and Specifically indicate that such material is to be incorporated by reference for the current filing. Incorporation by reference pursuant to §§A and C of this regulation may not be used if the incorporation would render the submission of a statement, form, or notification pursuant to Insurance Article, Title 7, Annotated Code of Maryland, and this chapter incomplete, vague, or confusing. If it is impractical for a person filing a statement, form, or notification pursuant to Insurance Article, Title 7, Annotated Code of Maryland, to furnish any required information, document, or report at the time it is required to be filed, the person shall file with the Commissioner a separate document: Identifying the information, document, or report in question; Stating why the filing thereof at the time required is impractical; and Requesting an extension of time for filing the information, document, or report to a specified date. The request for extension shall be deemed granted unless the Commissioner denies the request in writing and within 30 business days of the receipt of the request. If a domestic insurer, including any person controlling a domestic insurer, is proposing a merger or acquisition pursuant to Insurance Article, §7–303(a), Annotated Code of Maryland, that person shall file with the Commissioner, at least 30 days before a transaction is proposed to become effective, a Form E, in accordance with the format, guidelines, and instructions approved by the Commissioner. The acquiring person in an acquisition subject to Insurance Article, §7-403, Annotated Code of Maryland, shall file with the Commissioner, at least 30 days before the acquisition is proposed to become effective, a Form E, in accordance with the format, guidelines, and instructions approved by the Commissioner. Upon request and in addition to the information provided in §A or B of this regulation, the Commissioner may require the opinion of an economist about the competitive impact of the acquisition or merger in the State, together with a summary of the education and experience of the economist indicating the economist’s ability to make an informed opinion pursuant to Insurance Article, §7–403(c)(2)(ii), Annotated Code of Maryland. A person seeking to acquire control of a domestic insurer pursuant to Insurance Article, §7–304, Annotated Code of Maryland, shall file with the Commissioner and provide a copy to the domestic insurer a Form A at least 60 days before a transaction is proposed to become effective, in accordance with the format, guidelines, and instructions approved by the Commissioner. If any material change occurs in the facts set forth in the statement filed with the Commissioner and provided to the insurer in the Form A, an amendment, together with copies of any documents or other materials necessary to describe the amendment, shall be filed with the Commissioner prior to the Commissioner’s disposition on the application, and provided to the insurer within the earlier of 2 business days after: The change occurs; or The person that filed the statement learns of the change. A person required to file an annual registration statement pursuant to Insurance Article, §7–601, Annotated Code of Maryland, shall file with the Commissioner a Form B, in accordance with the format, guidelines, and instructions approved by the Commissioner. Unless extended by the Commissioner for good cause, the Form B shall be filed within 15 days after the insurer becomes subject to registration and, for each subsequent year, annually on or before May 1. No information need be disclosed pursuant to §A of this regulation if the information is not material. Sales, purchases, exchanges, loans, or extensions of credit, investments, or guarantees involving 1/2 of 1 percent (.5 percent) or less of an insurer’s admitted assets as of the 31st day of the December next preceding may not be deemed material for the purposes of this section. A person required to file an annual registration statement pursuant to Insurance Article, §7–601, Annotated Code of Maryland, and Regulation .09 of this chapter shall file with the Commissioner a Form C, in accordance with the format, guidelines, and instructions approved by the Commissioner, annually on or before May 1. A disclaimer of affiliation or a request for termination of registration claiming that a person does not, or will not upon the taking of some proposed action, control another person (hereinafter referred to as the “subject”) shall contain the following information: The number of authorized, issued, and outstanding voting securities of the subject; With respect to the person whose control is denied and all affiliates of such person, the number and percentage of shares of the subject’s voting securities which are held of record or known to be beneficially owned, and the number of shares concerning which there is a right to acquire, directly or indirectly; All material relationships and bases for affiliation between the subject and the person whose control is denied and all affiliates of such person; and A statement explaining why the person should not be considered to control the subject. A request for termination of registration shall be deemed to have been granted unless the Commissioner, within 30 days after receipt of the request, notifies the registrant otherwise. A person filing notice with the Commissioner of a proposed transaction pursuant to Insurance Article, Title 7, Subtitle 7, Annotated Code of Maryland, shall file a Form D, in accordance with the format, guidelines, and instructions approved by the Commissioner. Pursuant to Insurance Article, §7-702(6), Annotated Code of Maryland, agreements, including but not limited to management agreements, service contracts, tax allocation agreements, or cost-sharing agreements shall include as applicable, the following provisions: Identification of the person providing services and the nature of such services, managerial responsibilities, or services to be performed; The methods to allocate costs; Timely settlement, not less frequently than on a quarterly basis and compliance with the requirements in the NAIC Accounting Practices and Procedure Manual regarding expense allocation; The prohibition of the advancement of funds by the insurer to the affiliate except to pay for services defined in the agreement; The statement that the insurer will maintain oversight for functions provided to the insurer by the affiliate and that the insurer will monitor services annually for quality assurance; The definition of books and records of the insurer to include all books and records developed or maintained under or related to the agreement; The statement that all books and records of the insurer are and remain the property of the insurer and are subject to control of the insurer; The statement that all funds and invested assets of the insurer are the exclusive property of the insurer, held for the benefit of the insurer, and are subject to the control of the insurer; The standards for termination of the agreement with and without cause; The indemnification of the insurer in the event of gross negligence or willful misconduct on the part of the affiliate providing the services; The statement that, if the insurer is placed in receivership or seized by the Commissioner pursuant to Insurance Article, §9-212, Annotated Code of Maryland: All of the rights of the insurer under the agreement extend to the receiver or the Commissioner; and All books and records will immediately be made available to the receiver or the Commissioner, and shall be turned over to the receiver or the Commissioner immediately upon the receiver’s or the Commissioner’s request; The statement that if the insurer is placed in receivership pursuant to Insurance Article, §9-212, Annotated Code of Maryland the affiliate has no automatic right to terminate the agreement; and The statement that the affiliate will continue to maintain any systems, programs, or other infrastructure notwithstanding a seizure by the Commissioner pursuant to Insurance Article, §9-212, Annotated Code of Maryland, and will make them available to the receiver, for so long as the affiliate continues to receive timely payment for services rendered. In determining whether a transaction is fair and reasonable pursuant to Insurance Article, §7-702, Annotated Code of Maryland, the Commissioner may consider: Services received or provided; Whether the services provided by the affiliated entity are: Only being provided to other affiliated entities; or Being provided to both affiliated and nonaffiliated entities; The cost of services received or provided, including: Actual cost; Market cost; Overhead charges; Profit margin; and The allocation method used to share: Costs of services received or provided; and Federal income tax expenses and credits among parties to consolidated federal income tax filing agreements; and Other factors deemed necessary by the Commissioner to determine if the terms of the transaction are fair and reasonable. The ultimate controlling person of an insurer required to file an enterprise risk report under Insurance Article, §7–603(h)(1), Annotated Code of Maryland, shall: Unless extended by the Commissioner for good cause, by July 1 of each year, file with the Commissioner a properly executed Form F in accordance with the format, guidelines, and instructions approved by the Commissioner; and File any other document or information that the Commissioner considers necessary to identify the significant risks within the insurance holding company system that could pose enterprise risk to the insurer. Pursuant to Insurance Article, §7-706, Annotated Code of Maryland, a domestic insurer may not pay an extraordinary dividend or make any other extraordinary distribution to its shareholders unless: The insurer provides notice of the declaration to the Commissioner at least 30 days before the declaration is made; and The Commissioner has approved or not disapproved the declaration within 30 days following the notice. The insurer shall file a written request for approval of extraordinary dividends or any other extraordinary distribution to shareholders and shall include the following in the request: The amount of the proposed dividend or distribution; The date proposed for the payment of the dividend or the distribution; A statement as to whether the dividend is to be in cash or other property and, if in property, a description thereof, its cost, and its fair market value together with an explanation of the basis for valuation; The copy of the calculations determining that the proposed dividend is extraordinary pursuant to the definition in Insurance Article, §7-706(b), Annotated Code of Maryland, which shall include the following information: The amounts, dates, and form of payment of all dividends or distributions of cash or other property stated at fair market value paid within the preceding 12 consecutive months ending on the date fixed for payment of the proposed dividend for which approval is sought; Surplus as regards policyholders (total capital and surplus) as of the 31st day of December of the preceding year; One of the following: If the insurer is a life insurer, the net gain from operations of the insurer not including realized capital gains for the 12-month-period ending December 31 of the preceding year or pro rata distributions of any class of the insurer’s own securities; or If the insurer is not a life insurer, the net investment income not including realized capital gains for the 12-month period ending December 31 of the preceding year or pro rata distributions of any class of the insurer’s own securities; and If the insurer is not a life insurer, the net investment income from the 3 calendar years prior to the preceding calendar year, not including realized capital gains, minus dividends paid to stockholders in the preceding 3 calendar years; A balance sheet and statement of income for the period intervening from the last annual statement filed with the Commissioner and the end of the month preceding the month in which the request for dividend approval is submitted; and A brief statement as to the effect of the proposed dividend upon the insurer’s surplus and the reasonableness of surplus in relation to the insurer’s outstanding liabilities and the adequacy of surplus relative to the insurer’s financial needs. Where an insurance holding company system has previously filed the annual group capital calculation required under Insurance Article, §7–603(i), Annotated Code of Maryland, the lead state commissioner has the discretion to exempt the ultimate controlling person from filing the annual group capital calculation if the lead state commissioner makes a determination based upon that filing that the insurance holding company system: Has annual direct written and unaffiliated assumed premium (including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program) of less than $1,000,000,000; Does not include an insurer that is domiciled outside of the United States or one of its territories; Does not include a banking, depository or other financial entity that is subject to an identified regulatory capital framework; Attests that no material changes in the transactions between insurers and non-insurers in the group have occurred since the last filing of the annual group capital; and Does not include a non-insurer that poses a material financial risk to the insurer’s ability to honor policyholder obligations. Where an insurance holding company system has previously filed the annual group capital calculation required under Insurance Article, §7–603(i), Annotated Code of Maryland, the lead state commissioner may accept a limited group capital filing in lieu of the group capital calculation if the insurance holding company system: Has annual direct written and unaffiliated assumed premium (including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program) of less than $1,000,000,000; Does not include an insurer that is domiciled outside of the United States or one of its territories; Does not include a banking, depository or other financial entity that is subject to an identified regulatory capital framework; Attests that no material changes in the transactions between insurers and non-insurers in the group have occurred since the last filing of the annual group capital; and Does not include a non-insurer that poses a material financial risk to the insurer’s ability to honor policyholder obligations. For an insurance holding company that has previously met an exemption with respect to the group capital calculation pursuant to §A or B of this regulation, the lead state commissioner may require at any time the ultimate controlling person to file an annual group capital calculation, completed in accordance with the group capital calculation instructions adopted by the NAIC, if: Any insurer within the insurance holding company system is in a risk-based capital action or control level event as set forth in Insurance Article, §§4-305 through 4-308, Annotated Code of Maryland, or a similar standard for a non-U.S. insurer; Any insurer within the insurance holding company system meets one or more of the standards of an insurer deemed to be in hazardous financial condition as defined in Insurance Article, §9-102, Annotated Code of Maryland; or Any insurer within the insurance holding company system otherwise exhibits qualities of a troubled insurer, as determined by the lead state commissioner based on unique circumstances including, but not limited to, the type and volume of business written, ownership and organizational structure, federal agency requests, and international supervisor requests. A non-U.S. jurisdiction is considered to “recognize and accept” the group capital calculation, as described in Insurance Article, §7–603(i)(2)(v), Annotated Code of Maryland, if: It satisfies either of the following criteria: The non-U.S. jurisdiction recognizes the U.S. state regulatory approach to group supervision and group capital, by providing confirmation by a competent regulatory authority, in such jurisdiction, that insurers and insurance groups whose lead state is accredited by the NAIC under the NAIC Accreditation Program shall be subject only to worldwide prudential insurance group supervision including worldwide group governance, solvency and capital, and reporting, as applicable, by the lead state and will not be subject to group supervision, including worldwide group governance, solvency and capital, and reporting, at the level of the worldwide parent undertaking of the insurance or reinsurance group by the non-U.S. jurisdiction; or Where no U.S. insurance groups operate in the non-U.S. jurisdiction, that non-U.S. jurisdiction indicates formally in writing to the lead state with a copy to the International Association of Insurance Supervisors that the group capital calculation is an acceptable international capital standard; and The non-U.S. jurisdiction provides confirmation by a competent regulatory authority in such jurisdiction that information regarding insurers and their parent, subsidiary, or affiliated entities, if applicable, shall be provided to the lead state commissioner in accordance with a memorandum of understanding or similar document between the commissioner and such jurisdiction, including but not limited to the International Association of Insurance Supervisors Multilateral Memorandum of Understanding or other multilateral memoranda of understanding coordinated by the NAIC, provided that the Commissioner shall determine in consultation with the NAIC committee process that the requirements of such memorandum are in force. A list will be published through the NAIC committee process that: Identifies non-U.S. jurisdictions that are considered to “recognize and accept” the group capital calculation, as described in Insurance Article, §7–603(i)(2)(v), Annotated Code of Maryland to assist the lead state commissioner in determining which insurers shall file an annual group capital calculation; Clarifies those situations in which a jurisdiction is exempted from filing under Insurance Article, §7–603(i)(2)(iv)-(v), Annotated Code of Maryland; and To assist with a determination under Insurance Article, §7–603(i)(3), Annotated Code of Maryland, identify whether a jurisdiction that is exempted under Insurance Article, §7–603(i)(2)(iii)-(v) , Annotated Code of Maryland requires a group capital filing for any U.S. based insurance group’s operations in that non-U.S. jurisdiction. For a non-U.S. jurisdiction where no U.S. insurance groups operate, the confirmation provided to meet the requirement of §D(1)(b) of this regulation will serve as support for recommendation to be published as a jurisdiction that “recognizes and accepts” the group capital calculation through the NAIC committee process. If the lead state commissioner makes a determination pursuant to Insurance Article, §7–603(i)(2)(v), Annotated Code of Maryland that differs from the NAIC List, the lead state commissioner shall provide thoroughly documented justification to the NAIC and other states. Upon determination by the lead state commissioner that a non-U.S. jurisdiction no longer meets one or more of the requirements to “recognize and accept” the group capital calculation, as described in Insurance Article, §7–603(i)(2)(v), Annotated Code of Maryland, the lead state commissioner may provide a recommendation to the NAIC that the non-U.S. jurisdiction be removed from the list of jurisdictions that “recognize and accepts” the group capital calculation. Insurance Article, §§1-101(jj), 2-109, 2-205, 2-209, and 5-901—5-917 and Title 7, Annotated Code of Maryland Effective date: Regulations .01 and .02 adopted as an emergency provision effective December 8, 1993 (20:26 Md. R. 2024) Regulations .01 and .02 adopted effective March 28, 1994 (21:6 Md. R. 467) Chapter recodified from 09.31.01 to COMAR 31.04.18 effective September 7, 1998 (25:18 Md. R. 1439) Regulation .02 repealed and new Regulation .02 adopted effective November 7, 2016 (43:16 Md. R. 901) Regulation .02B amended effective January 6, 2025 (51:26 Md. R. 1187) Regulations .03—.14 adopted effective November 7, 2016 (43:16 Md. R. 901) Regulation .15 adopted effective January 6, 2025 (51:26 Md. R. 1187) This chapter applies to the submission of any form required to be filed under Insurance Article, §12-203(b), Annotated Code of Maryland. In this chapter, the following terms have the meanings indicated. Terms Defined. “Accidental death policy” means a health insurance policy that limits benefits under it to benefits that are payable upon the accidental death of an insured. “Accidental death and dismemberment policy” means a health insurance policy that limits benefits under it to benefits that are payable upon the accidental death or dismemberment of an insured. “Administration” means the Maryland Insurance Administration. “Annuity” has the meaning defined in Insurance Article, §1-101, Annotated Code of Maryland. Application. “Application” means the form used to apply for insurance. “Application” includes: Group applications and enrollment forms; and Individual applications. Blanket Health Insurance. “Blanket health insurance” has the meaning stated in Insurance Article, §15-305, Annotated Code of Maryland. “Blanket health insurance” does not include a contract or policy for which a covered individual is required to complete an application. “Commissioner” means the Maryland Insurance Commissioner. “Credit life insurance” has the meaning stated in Insurance Article, §13-101, Annotated Code of Maryland. Employer Retrospective Premium Arrangement. “Employer retrospective premium arrangement” means a rider to an employer group health insurance contract that provides that the employer may pay a negotiated reduced premium during the plan year, in accordance with a methodology approved by the Administration, with an adjustment at the end of the plan year based on the actual experience of the employer's group. “Employer retrospective premium arrangement” does not include any rider used with a small employer health benefit plan. Expense Incurred. “Expense incurred” means the benefits payable under the health insurance contract are based on the medical expenses the insured incurs. For the purposes of this chapter, a health insurance contract that includes both expense incurred benefits and indemnity benefits shall be considered to be written on an expense incurred basis. “File and use method” means the method prescribed by the Commissioner which permits an insurer to file forms prescribed in Regulation .05 of this chapter and begin using the form at the earlier of: 30 days after the date the forms are received by the Commissioner, provided the forms are not disapproved by the Commissioner within this 30 day period; or The date the insurer receives notice from the Commissioner that the filing has been accepted. “Final disposition” means approval, disapproval or withdrawal of a form submitted for approval. Form. “Form” means: A policy; A certificate; A contract; A rider; An endorsement; An amendment; or An application. “Form” includes: An insert page to a contract, if the insurer complies with the insert page filing requirements for contractsS on an insert page basis found in COMAR 31.04.17.04B; and A section of a contract, if the insurer complies with the section filing requirements for contracts on a sectional basis found in COMAR 31.04.17.04C. “Health benefit plan” has the meaning stated in Insurance Article, §15-1201, Annotated Code of Maryland. “Health insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland. “Indemnity” means the benefits payable under the health insurance contract are flat amounts that are not related to the expenses the insured incurs, such as a hospital indemnity contract that pays a flat fee for each day the insured is confined in a hospital regardless of the actual expenses the insured incurs during the hospital confinement. “Insurer” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland. “Life insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland. “Long term care insurance” has the meaning stated in Insurance Article, §18-101, Annotated Code of Maryland. “Medical stop-loss insurance” has the meaning stated in Insurance Article, §15-129(a), Annotated Code of Maryland. “Medicare supplement policy” has the meaning stated in Insurance Article, §15-901, Annotated Code of Maryland. “Noncompliant” means a form is not in compliance with Maryland statutes and regulations. “Prior approval method” means the method that insurers use to file forms with the Commissioner in which the forms may not be used in Maryland by the insurer until the forms are approved by the Commissioner. “Small employer” has the meaning stated in Insurance Article, §31-101, Annotated Code of Maryland. “Wholesale life insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland. Except as otherwise provided in this chapter, the filing of forms shall be in compliance with the requirements under: COMAR 31.04.17 for life and health insurance filings; and COMAR 31.10.01 for health insurance filings. An insurer may request that a form filing be accepted under a file and use method. The cover letter included with forms filed under the file and use method shall include the following: A reference line that indicates that the forms are being filed under the file and use method; A list of the forms included in the submission; and For each form listed in the cover letter required under §B(2) of this regulation, a cite to the authority to file the form under Regulation .05 of this chapter. The use of the file and use method shall be limited in accordance with the types of forms specified in Regulation .05 of this chapter. An insurer may not combine in the same submission: Forms filed under the file and use method; and Forms filed under the prior approval method. A request under a file and use method shall include a signed certification from a responsible officer that, to the best of the officer's knowledge and belief, the forms comply with applicable statutes and regulations. A filing made under a file and use method shall be subject to the same filing fee requirements applicable to filings made under a prior approval method. An insurer may issue a form for delivery in Maryland that was filed under the file and use method at the earlier of the following dates: 30 days after the date the form has been received by the Commissioner, provided the Commissioner has not previously disapproved the filing; or The date the insurer receives written notice from the Commissioner that the filing has been accepted under the file and use method. An insurer may not use the file and use method before the insurer has had a certificate of authority to write the same type of coverage in Maryland for at least 12 months. An insurer may not use the file and use method to file a form in Maryland if: The form has previously been disapproved by the Commissioner; The form has been previously filed for approval with the Commissioner under the prior approval method and is still pending final disposition with the Commissioner; or The Commissioner has decided that the form has been previously withdrawn by the insurer in accordance with COMAR 31.04.17.05. The forms listed in §B of this regulation are the only forms that may be used on a file and use basis. The following life insurance, health insurance, and annuity forms may be filed under the file and use method: Group life insurance policies and certificates, except for group credit life insurance policies and certificates; Endorsements, amendments, and riders to be used with group life insurance policies and certificates, except for endorsements, amendments, and riders to be used with group credit life insurance policies and certificates; Wholesale life insurance policies; Endorsements, amendments, and riders to be used with wholesale life insurance policies; Accidental death benefit riders to be used with individual life insurance policies; Waiver of premium riders to be used with individual life insurance policies; Accidental death and dismemberment riders to be used with individual life insurance policies; Riders to be used with individual life insurance policies that provide coverage to the spouse or dependent children of the insured; Guaranteed insurability option riders to be used with individual life insurance policies; Group annuity contracts and certificates, including variable and nonvariable group annuity contracts and certificates; Endorsements, amendments, and riders to be used with group annuity contracts and certificates; Individual retirement account (IRA) endorsements to be used with individual fixed annuity contracts or with individual variable annuity contracts; Tax sheltered annuity (TSA) endorsements to be used with: Individual fixed annuity contracts; or Individual variable annuity contracts; Medical stop-loss insurance; Group accidental death policies and certificates; Group accidental death and dismemberment policies and certificates; Group travel health insurance policies and certificates, except for the following: Any form that includes lost baggage benefits; Any form that includes a trip cancellation benefit that is payable for a reason other than the illness or death of: The insured; A member of the insured's family; or One or more of the insured's travel companions; or Any form that contains any other property or casualty type benefit not included in §B(17)(a) and (b) of this regulation; Group health insurance policies and certificates that: Limit coverage to losses due to accident; and Do not pay benefits on an expense-incurred basis; Employer retrospective premium arrangements; Blanket health insurance policies that limit benefits to accidental death benefits; Blanket health insurance policies that limit benefits to accidental death and dismemberment benefits; Blanket health insurance policies that limit benefits to travel benefits; Blanket health insurance policies that: Limit coverage to losses due to accident; and Do not pay benefits on an expense-incurred basis; and Applications, except applications for: Medicare supplement policies; Long-term care insurance; Individual health benefit plans; and Small employer health benefit plans. If an insurer uses a form which becomes effective under a file and use method and the form is found by the Commissioner to be noncompliant, the Commissioner may: Disapprove the form by: Giving notice of the disapproval; Showing cause for the disapproval; and Stating the effective date of the disapproval in the notice; and Impose a penalty as provided under Insurance Article, §4-113, Annotated Code of Maryland. The Commissioner may remove file and use authority from an insurer upon a finding that the insurer has made inappropriate or noncompliant filings under this method with such frequency as to constitute a business practice. Insurance Article, §§2-109 and 12-203(d)(2), Annotated Code of Maryland Effective date: July 17, 2006 (33:14 Md. R. 1165) Regulation .02B amended effective June 20, 2016 (43:12 Md. R. 668) Regulation .05B amended effective June 20, 2016 (43:12 Md. R. 668) This chapter establishes the process and procedures for market conduct actions. This chapter does not apply to the examination or investigation of: A person's financial condition as described in Insurance Article, Titles 5, 6, 7, and 9, Annotated Code of Maryland, as well as COMAR 31.04, 31.05, and 31.06; or An insurance producer. Nothing in this chapter limits the Commissioner's authority to conduct an analysis, investigation, or examination, or to issue orders pursuant to law. All applicable provisions, including the confidentiality provisions, of Insurance Article, Annotated Code of Maryland, apply to market conduct actions. In this chapter, the following terms have the meanings indicated. Terms Defined. “Analysis” has the meaning stated in Insurance Article, §2-205(a), Annotated Code of Maryland. “Business practices” means the operations, policies, procedures and other activities or administrative methods used by a person to conduct business. “Commissioner” means the Insurance Commissioner of Maryland or the Insurance Commissioner's designee. “Complaint” means a written or documented oral communication expressing dissatisfaction with a person. “Market conduct action” means any of the full range of activities that the Commissioner may initiate to assess the business practices of a person or persons, or the insurance market, including a market conduct analysis, market conduct investigation, or market conduct examination. “Market conduct analysis” means an evaluation conducted whenever the Commissioner considers it advisable to identify or investigate the business practices of one or more persons, or the insurance market, from filed schedules, surveys, required reports, or other sources of information. “Market conduct examination” means an inspection of the accounts, records, documents, or transactions of a person to develop a detailed understanding of the person's business practices to evaluate compliance with State law. “Market conduct investigation” means a process used by the Commissioner to determine if a person has violated State law in that person's business practices. “Person” means an insurer or other entity subject to regulation by the Commissioner and authorized to conduct business in this State. “Proposed market conduct examination report” means the completed market conduct examination report that is required under Regulation .07 of this chapter. Whenever the Commissioner has the authority to conduct an analysis, examination, or investigation of a person's business practices, the Commissioner may conduct a market conduct action. The Commissioner may conduct a market conduct action: Based on a complaint; As authorized by law; Whenever the Commissioner considers it is advisable; or With other states. If the Commissioner determines information is needed from a person to conduct a market conduct action, in accordance with Regulation .05 of this chapter: The Commissioner shall request the information; and The person shall provide the information. The Commissioner may participate in a market conduct action with one or more other states to determine if a Maryland law has been violated by the person subject to the market conduct action. The Commissioner may request accounts, records, documents, files, or other information needed to complete a market conduct action. The Commissioner may include a reference to the applicable law pertaining to the request. The Commissioner may request information through: A survey; An interrogatory; An interview; or Any other procedure identified by the Commissioner. Whenever a person receives a request from the Commissioner for information, the person shall provide the requested information: Within the time specified by the Commissioner, unless an extension has been granted by the Commissioner in accordance with §§G and H of this regulation; and In the manner specified by the Commissioner. When the person submits the information to the Commissioner, the person shall provide written certification, signed by an individual with authority to bind the person providing the response, that the: Information is, to the best of that individual's knowledge, information, and belief, a full, complete, and truthful response to the Commissioner's request; and Individual making the certification has undertaken an adequate inquiry to make the required certification. If the person fails to provide the certification required under §E of this regulation, the absence of this certification: Does not relieve the person responding to a request of the Commissioner of the duty to provide a full, complete, and truthful response to the Commissioner's request; and Shall constitute an explicit representation by the person that the response is full, complete, and truthful. A person may submit a written request, stating the reason for the request, to the Commissioner to extend the time for the submission of information: For a market conduct analysis or market conduct investigation, after receipt of the request specified in §D of this regulation; or For a market conduct examination, after receipt of the notice specified in Regulation .06G of this chapter. If the Commissioner receives the request pursuant to §G of this regulation, the Commissioner shall: Grant an extension; or Notify the person that the request to extend the time is denied. The Commissioner shall conduct a market conduct examination in accordance with this regulation. The Commissioner shall notify the person subject to the market conduct examination, in writing, that a market conduct examination has commenced. The Commissioner's notification that a market conduct examination has commenced shall: Specify the lines of insurance, scope, intent, and period covered by the market conduct examination; Provide the name and contact information of the Commissioner; and Provide any other information the Commissioner considers relevant. The person notified under §B of this regulation shall give written notice to the Commissioner of the individual who: Has the authority and responsibility to respond to the Commissioner's request for accounts, records, documents, files, or other information needed in order to complete the market conduct examination; and Will coordinate on behalf of the person the market conduct examination with the Commissioner. Following the notice provided under §§B and C of this regulation, the Commissioner shall conduct a conference with the person in a manner determined by the Commissioner to review: The information the person must provide for the market conduct examination; The administrative aspects of the market conduct examination, including but not limited to, market conduct examination expenses to be paid by the person examined; and Any other information the Commissioner considers relevant. After the completion of the conference required in §E of this regulation, the Commissioner: May provide a written summary of the conference to the person; and Shall provide written notification of the information the person must provide for the market conduct examination in accordance with Regulation .05 of this chapter. The Commissioner shall notify the person subject to a market conduct examination of the date after which the Commissioner may not accept additional information unless an extension has been granted by the Commissioner in accordance with Regulation .05G and H of this chapter. The Commissioner shall conduct an exit conference with the person subject to the market conduct examination in a manner determined by the Commissioner At the discretion of the Commissioner, a report certified by the insurance supervisory official of another state may be accepted in lieu of conducting a market conduct examination. Whenever a market conduct examination is conducted pursuant to Regulation .06 of this chapter, the Commissioner shall: Provide the person with a copy of the draft proposed market conduct examination report; Allow the person to submit written comments on the draft proposed market conduct examination report within 30 days after the receipt of the draft proposed market conduct examination report, or the period specified by the Commissioner, whichever is longer; Consider the written comments submitted by the person in finalizing the draft proposed market conduct examination report; and Include the written comments submitted by the person to the draft proposed market conduct examination report as an attachment to the proposed market conduct examination report. After receipt of the draft proposed market conduct examination report, a person may submit a written request, stating the reason for the request, to the Commissioner to extend the time for the submission of written comments. If the Commissioner receives a request pursuant to §B of this regulation, the Commissioner shall: Grant an extension; or Notify the person that the request to extend the time is denied. The Commissioner shall provide the person with a copy of the proposed market conduct examination report. Based on the information reviewed during a market conduct analysis the Commissioner may, in the Commissioner's sole discretion: Broaden the scope and period of the market conduct analysis; Conduct a market conduct investigation or market conduct examination; Issue an order; or Take any other action authorized or reasonably implied by Insurance Article, Annotated Code of Maryland. If the Commissioner conducts a market conduct investigation, the Commissioner may, in the Commissioner's sole discretion, based on the information reviewed during the market conduct investigation: Broaden the scope and period of the market conduct investigation; Conduct a market conduct examination; Issue an order; or Take any other action authorized or reasonably implied by Insurance Article, Annotated Code of Maryland. If the Commissioner conducts a market conduct examination, the Commissioner may, in the Commissioner's sole discretion, based on the information reviewed during the market conduct examination: Conduct a market conduct investigation of a particular matter; Broaden the scope and period of the market conduct examination; Issue an order; or Take any other action authorized or reasonably implied by Insurance Article, Annotated Code of Maryland. If a person subject to this chapter fails to provide the information requested by the Commissioner in accordance with this chapter, the person may be subject to an administrative fine not exceeding $500 per day, in addition to any other penalty available to the Commissioner. A person aggrieved by an order or proposed market conduct examination report may request a hearing in accordance with the provisions of COMAR 31.02.01. Except as otherwise provided by law, a person may not rely on any information not timely provided in accordance with Regulation .06G of this chapter in any hearing held on an order or proposed market conduct examination report. Insurance Article, §§2-109 and 12-203(d)(2), Annotated Code of Maryland Effective date: April 5, 2010 (37:7 Md. R. 576) This chapter applies to the examination of rate filings made pursuant to: Health-General Article, §19-713, Annotated Code of Maryland; Insurance Article, Title 11, Subtitles 2 and 3, and §§12-205 and 14-126(a)(2), Annotated Code of Maryland; and COMAR 31.10.01.02A. This chapter does not apply to the Maryland Automobile Insurance Fund. In this chapter, the following terms have the meanings indicated. Terms Defined. “Actuarial consultant” means a consultant retained by the Commissioner subject to applicable procurement requirements to examine a rate filing. “Advisory organization” has the meaning stated in Insurance Article, §11-101, Annotated Code of Maryland. “Carrier” means an authorized insurer, nonprofit health service plan, or health maintenance organization. “Commissioner” means the Maryland Insurance Commissioner. “Rating organization” has the meaning stated in Insurance Article, §11-101, Annotated Code of Maryland. Whenever the Commissioner considers it advisable, the Commissioner may retain an actuarial consultant to examine a rate filing submitted by an advisory organization, carrier, or rating organization. If the Commissioner retains an actuarial consultant to examine a rate filing submitted by an advisory organization, carrier, or rating organization the Commissioner shall notify the advisory organization, carrier, or rating organization that the Commissioner has retained an actuarial consultant to examine the rate filing. The Commissioner or the actuarial consultant shall make a complete report of the examination in accordance with the provisions of Insurance Article, §2-209, Annotated Code of Maryland. The advisory organization, carrier, or rating organization shall pay the expenses for the actuarial consultant’s examination of a rate filing in accordance with the provisions of Insurance Article, §2-208, Annotated Code of Maryland. Insurance Article, §§2-108, 2-205, 2-208, 11-207(a)(2), 12-205, 14-126(a)(2), and 15-605(c); Health-General Article, §19-713; Annotated Code of Maryland Effective date: May 16, 2011 (38:10 Md. R. 618) This chapter applies to a title insurer, title insurance producer, and title agency. This chapter: Establishes the minimum standards and procedures for conducting a review; and Provides for the filing of a review report with the Commissioner. In this chapter, the following terms have the meanings indicated. Terms Defined. “Accounts” means all accounts associated with the principal agent’s title insurance business. “Appointment” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland. “Certification” means a written statement signed by the principal agent that the information provided to the title insurer during the annual review is, to the best of the principal agent’s knowledge, information, and belief, full, complete, and truthful and that the principal agent has undertaken an adequate inquiry to make the required certification “Claim” has the meaning set forth in COMAR 31.15.07.02B(2). “Commissioner” means the Maryland Insurance Commissioner or the Commissioner’s designee. “Designated responsible licensed producer” means a licensed insurance producer who is: Responsible for the principal agent’s compliance with insurance laws, rules, and regulations; and Listed as a designated or responsible licensed producer on: The principal agent’s uniform business entity application; or The Association/Responsible Individual Designation form filed with the Commissioner. “Escrow” means the act or process of providing closing services or services under an escrow agreement by a title insurer or a principal agent. “Escrow account” means an account that contains or has contained trust money deposits or other money that a person entrusts to a title insurer or a principal agent to hold for the benefit of a buyer or borrower in a real estate transaction or for a beneficial owner, in connection with an escrow, settlement, closing, or title indemnification. “Insurance” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland. “Insurance business” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland. “Insurance producer” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland. “Insurer” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland. “Licensed insurance producer” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland. “Licensee” means a title insurer, title insurance producer, or title insurance agency. “MAHT” means the Maryland Affordable Housing Trust established under the Housing and Community Development Article, §10-102, Annotated Code of Maryland. “Principal agent” means a title insurance producer appointed by the title insurer to act on behalf of the title insurer as described in Insurance Article, §10-121(k)(1)(i), Annotated Code of Maryland. “Report” means the written report required under Insurance Article, §10-121(k), Annotated Code of Maryland, and containing the elements specified by the Commissioner. “Review” means a review of the underwriting, claims, and escrow practices of each principal agent conducted by a title insurer or its designee. “Title agency” has the meaning set forth in Insurance Article, §10-125, Annotated Code of Maryland. “Title insurance” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland. “Title insurance producer” has the meaning set forth in Insurance Article, §10-101, Annotated Code of Maryland. “Title insurer” means an insurer authorized by the Commissioner to conduct title insurance business in the State. “Trust money” has the meaning set forth in Insurance Article, §10-121, Annotated Code of Maryland. “Underwriting standards” has the meaning set forth in COMAR 31.04.16.02. A title insurer: Shall, except as provided in §A(4) of this regulation, conduct a review during each calendar year of the underwriting, claims, and escrow practices of each principal agent; Shall conduct a review during normal business hours; May not be required to provide advance notice to the principal agent of the beginning of a review; and May not be required to conduct a review of a principal agent for the calendar year during which the principal agent is initially appointed, if the appointment is made on or after June 30 of that calendar year. The review required under §A of this regulation shall, at a minimum, include: A determination of whether: The principal agent is in compliance with the title insurer’s underwriting standards in the State; and The principal agent’s escrow accounts have been properly reconciled as of the date of the completed review and contain sufficient funds to disburse the trust money from all settlement files necessary to establish the lien, title or interests insured in accordance with title insurance policies issued by the title insurer conducting the review; A review of the principal agent’s operations to evaluate compliance with the notice requirements under Insurance Article, §22-103, Annotated Code of Maryland, including whether the principal agent: Inserted the name of each proposed insured as required under Insurance Article, §22-103(a)(1), Annotated Code of Maryland; Delivered to the buyer or agent or attorney of the buyer immediately upon receipt of the premium, written notice of the name of each insured under the title insurance policy, the face amount of the title insurance policy, the buyer’s right and opportunity to obtain simultaneous title insurance in the buyer’s favor, written notice of the additional premium that will be required for the purchase of simultaneous title insurance in the buyer’s favor; and Obtained from the buyer a written statement that he or she received the notice referenced in §B(2)(b) of this regulation and a statement that the buyer wants or does not want owner’s title insurance; A review of the title insurance producer’s or agency’s policy issuing and processing operations; To the extent that a title insurer delegates the responsibility to the principal agent to handle any aspect of a claim, a review of whether the principal agent is in compliance with the title insurer’s policies and procedures for handling a claim; Verification that: The principal agent has filed the annual report required under COMAR 31.16.03.06; Only a licensed title insurance producer exercises control over trust money; Premium monies are held separate from other funds or confirmation that the principal agent has received express written consent from the title insurer in the form required by COMAR 31.03.03 to comingle premium monies with the principal agent’s personal fund; and Funds received by the principal agent are accurately accounted for in the books and records of the principal agent; A review of the escrow practices of the principal agent; and Receipt of the written certification of the principal agent which shall contain: The printed name and signature of a designated responsible licensed producer or an attorney of the law firm who is a licensed title insurance producer, if the principal agent is a law firm as defined by Insurance Article, §10-125(a)(3), Annotated Code of Maryland; The date the certification was signed; and The following statement in at least 12-point font: I hereby certify that the information provided to the title insurer or its designee during the review is, to the best of my knowledge, information, and belief, full, complete, and truthful and that I have undertaken an adequate inquiry to make this certification. If the principal agent does not maintain separate bank or trust accounts for each title insurer it represents, the title insurer shall verify that the trust deposits held on its behalf are reasonably ascertainable from the books of account and records of the principal agent. A title insurer may enter into a written contract with a third party to perform a review. A title insurer that enters into a written contract with a third party to perform a review is: Bound by the findings of the third party; and Responsible for any violation of §A, B or C of this regulation, regardless of any delegation. A principal agent’s failure to cooperate with a title insurer at the beginning of or during a review shall constitute a reason to believe that the principal agent has engaged in a prohibited activity under Insurance Article, §10-126, Annotated Code of Maryland, and shall be reported to the Commissioner. A title insurer shall prepare a written report setting forth the results of its annual review, which shall be made available to the Commissioner upon request. A title insurer shall file a report with the Commissioner within 45 calendar days after the completion of the review if the title insurer has reasonable cause to believe that the title insurance producer or agency at any time engaged in any of the prohibited activities set forth in Insurance Article, §10-126, Annotated Code of Maryland. The report shall be submitted regardless of whether the prohibited activities ceased or were remedied prior to, during the course of, or as a result of the review. The report shall be in writing on a form specified by the Commissioner and submitted by electronic means directed by the Commissioner.. The report shall address the following areas: If applicable, a detailed description of the basis for the reasonable cause to believe that the title insurance producer or agency engaged in any of the prohibited activities set forth in Insurance Article, §10-126, Annotated Code of Maryland; The name, Maryland producer license number, and contact information of the principal agent or any insurance producer designated under Insurance Article, §10-106, Annotated Code of Maryland; The name and Maryland producer license number of any insurance producer associated with the principal agent, including the name and license number or numbers of any TIPICs utilized by the agency and confirmation that they are appointed with the insurer; The file number and property address for each file that was reviewed; The principal agent’s escrow accounts and related practices, including a review to ensure that: Only licensed insurance producers exercise control over trust money; Premium monies are held in compliance with COMAR 31.03.03; Funds received by the principal agent are accurately accounted for in the books and records of the principal agent; and The principal agent’s escrow accounts have been properly reconciled as of the date of the completed review and the trust deposits held on its behalf are reasonably ascertainable from the books of account and records of the principal agent; The report shall indicate if there are or have been any escrow or account shortages at any time during the review period; Except for transfers of money between the principal agent’s escrow or trust account and the principal agent’s operating account for the fees due the principal agent, transfers of money between principal agent’s accounts that contain or have contained trust money deposits; Discrepancies between receipts and disbursements, and, if discrepancies are found, a description of the discrepancies in detail and whether the title producer or lender prepared the closing disclosure or HUD-1; Compliance by the principal agent with the annual MAHT report requirement under COMAR 31.16.03.06; Information relating to escrow accounts or settlement, closing, or title indemnification conducted by a principal agent, or title insurance producer acting on behalf of the title insurer; The principal agent’s policy blank inventory; The principal agent’s failure to comply with the title insurer’s financial accounting requirements; and Any additional information requested by the Commissioner. A title insurer is not precluded from providing a more comprehensive description of the review. The report shall contain: The certification from the principal agent required under Regulation .04B(7) of this chapter; and A copy of the express written consent required under Regulation .04B(5)(c) of this chapter, if premium monies are comingled with the principal agent’s personal funds. Except as provided in §B of this regulation, if a title insurer has reason to believe that the principal agent has engaged in, or is engaging in, conduct that is prohibited by Insurance Article, §10-126, Annotated Code of Maryland, the title insurer shall notify the Commissioner in writing, which may be through email, facsimile, or other electronic transmission, within 10 calendar days after obtaining such knowledge or belief, in addition to filing any required a report. A title insurer shall notify the Commissioner in writing, which may be through email, facsimile, or other electronic transmission, within 2 calendar days if a title insurer has reason to believe that a principal agent has converted or misappropriated money received or held in trust in addition to filing any required report. A title insurer’s written notification to the Commissioner under §§A and B of this regulation shall include the following information: The name, physical address, telephone number, and email address of the principal agent or its designated insurance producer who satisfies the qualifications set forth in §10-121(c); The principal agent’s producer license number; The date or dates on which the principal agent failed to cooperate, if applicable; A description of the facts and circumstances of the principal agent’s conduct prohibited by Insurance Article, §10-126, Annotated Code of Maryland, if applicable; and A description of the facts and circumstances giving rise to the title insurer’s reason to believe that a principal agent has converted or misappropriated money received or held in trust. A licensee shall maintain for a period of 5 years after the conclusion of an annual review, and make available to the Commissioner upon request, all documentation collected, prepared, and produced by the licensee during an annual review including, but not limited to, work papers, summaries, daily log notes, and the report. Records required by this regulation may be maintained in paper, photographic, magnetic, mechanical, or electronic media or by any process that accurately reproduces the actual document, if the copy of the record is maintained in a manner that: Is clear and legible; Accurately reproduces the original document in its entirety, including any attachments to the document; Is capable of producing a clear and legible hard copy of the original document; and Preserves evidence of any signature contained on the document. Insurance Article, §§2-108, 2-109, 10-121, and 10-128.1, Annotated Code of Maryland Effective date: December 1, 2014 (41:20 Md. R. 1114) Regulation .02 amended effective August 21, 2023 (50:15 Md. R. 729) Regulation .03B amended effective April 20, 2020 (47:2 Md. R. 62); August 21, 2023 (50:15 Md. R. 729); June 9, 2025 (52:11 Md. R. 534) Regulation .04 amended effective August 21, 2023 (50:15 Md. R. 729) Regulation .04B amended effective June 20, 2016 (43:12 Md. R. 668); April 20, 2020 (47:2 Md. R. 62) Regulation .05 amended effective August 21, 2023 (50:15 Md. R. 729) Regulation .06 amended effective August 21, 2023 (50:15 Md. R. 729) Regulation .07 amended effective August 21, 2023 (50:15 Md. R. 729) Regulation .08A amended effective June 9, 2025 (52:11 Md. R. 534) This chapter is applicable to a person subject to the filing requirements of the Maryland Insurance Corporate Governance Annual Disclosure Act under Insurance Article, Title 4, Subtitle 5, Annotated Code of Maryland. In this chapter, the following terms have the meanings indicated. Terms Defined. “Board” means the insurer’s or insurance group’s Board of Directors. “Commissioner” has the meaning stated in Insurance Article, §1-101(k), Annotated Code of Maryland. “Corporate Governance Annual Disclosure” or “CGAD” has the meaning stated in Insurance Article, §4-501(b), Annotated Code of Maryland. “Insurance group” means those insurers and affiliates included within an insurance holding company system as defined in Insurance Article, §4-501(c), Annotated Code of Maryland. “Insurer” has the meaning stated in Insurance Article, §4-501(d), Annotated Code of Maryland. “Own Risk and Solvency Assessment” or “ORSA” has the meaning stated in Insurance Article, §32-101, Annotated Code of Maryland. Senior Management. “Senior Management” means any corporate officer responsible for reporting information to the Board at regular intervals or providing this information to shareholders and regulators. “Senior Management” includes, for example and without limitation: The Chief Executive Officer; The Chief Financial Officer; The Chief Operations Officer; The Chief Procurement Officer; The Chief Legal Officer; The Chief Information Officer; The Chief Technology Officer; The Chief Revenue Officer; The Chief Visionary Officer; and Any other “C” level executive. An insurer, or the insurance group of which the insurer is a member, required to file a CGAD under Insurance Article, Title 4, Subtitle 5, Annotated Code of Maryland, shall, no later than June 1 of each calendar year, submit to the Commissioner a CGAD that contains the information described in Regulation .04 of this chapter. The CGAD shall include a signature of the insurer’s or insurance group’s Chief Executive Officer or Corporate Secretary attesting to the best of that individual’s belief and knowledge that the insurer or insurance group has implemented the corporate governance practices and that a copy of the CGAD has been provided to the insurer’s Board or its appropriate committee. The insurer or insurance group shall have discretion regarding the appropriate format for providing the information required by these regulations and is permitted to customize the CGAD to provide the most relevant information utilized by the insurer or insurance group necessary to permit the Commissioner to gain an understanding of: The corporate governance structure; Corporate governance policies; and Corporate governance practices. Completing the CGAD. Depending on how an insurer or the insurance group of which the insurer is a member has structured its corporate governance system, the insurer or insurance group submitting a CGAD to the Commissioner may choose to provide information regarding its corporate governance structure at: The ultimate controlling parent level; An intermediate holding company level; or The individual legal entity level. The insurer or insurance group is encouraged to consider the following criteria in determining the level for which information will be provided under §D(1) of this regulation: The level at which the insurer’s or insurance group’s risk appetite is determined; The level at which factors, such as earnings, capital, liquidity, operations, and reputation of the insurer, are overseen collectively, and at which level the supervision of those factors is coordinated and exercised; or The level at which legal liability for failure of general corporate governance duties would be placed. If the insurer or insurance group determines the level of reporting based on the criteria in §D(2) of this regulation, it shall indicate which of the three criteria was used to determine the level of reporting and explain any subsequent changes in the level of reporting. Notwithstanding §A of this regulation, and as outlined in Insurance Article, §4-503, Annotated Code of Maryland, if the CGAD is completed at the insurance group level: It shall be filed with the lead state of the group as determined by the procedures outlined in the most recent financial analysis handbook adopted by the National Association of Insurance Commissioners; and Upon request to the lead state of the group, the chief regulatory official of any state in which the insurance group has a domestic insurer may request a copy of the CGAD and the CGAD shall be provided to that state. An insurer or insurance group may comply with this regulation by referencing other existing documents if the documents provide information that is comparable to the information described in Regulation .04 of this chapter, if the insurer or insurance group: Clearly references the location of the relevant information within the CGAD; and Attaches the referenced document if it is not already filed or available to the regulator. Examples of other existing documents that may be referenced in the CGAD may include, without limitation: An ORSA summary report; Holding Company Form B or F Filings; Securities and Exchange Commission Proxy Statements; Foreign regulatory reporting requirements; or Other similar documents. Each year following the initial filing of the CGAD, the insurer or insurance group shall file an amended version of the previously filed CGAD indicating: Where changes have been made in the information or activities reported by the insurer or insurance group; or If no changes have been made in the information or activities previously reported, that no changes have been made. The insurer or insurance group shall be as descriptive as possible in completing the CGAD. This means that attachments or example documents may be included if they are used in the governance process since these may provide a means to demonstrate the strengths of the insurer’s or insurance group’s governance framework and practices. The CGAD shall describe the insurer’s or insurance group’s corporate governance framework and structure, including the following: The Board and its various committees ultimately responsible for overseeing the insurer or insurance group and the level or levels at which that oversight occurs; The rationale for the current Board size and structure; The duties of the Board and each of its significant committees; How the Board and its significant committees are governed, which may include documents such as bylaws, charters, and informal mandates; and How the Board’s leadership is structured, including a discussion of the roles of Chief Executive Officer and Chairman of the Board within the organization. The insurer or insurance group shall describe the policies and practices of the most senior governing entity and significant committees thereof, including a discussion of the following factors: How the qualifications, expertise, and experience of each Board member meet the needs of the insurer or insurance group; How an appropriate amount of independence is maintained by the Board and its significant committees; The number of meetings held by the Board and its significant committees over the past year as well as information on director attendance; How the insurer or insurance group identifies, nominates, and elects members to the Board and its committees, including, for example: Whether a nomination committee is in place to identify and select individuals for consideration; Whether term limits are placed on directors; How the election and re-election processes function; and Whether a Board diversity policy is in place and, if so, how it functions; and The processes in place for the Board to evaluate its performance and the performance of its committees, as well as any recent measures taken to improve performance, including any Board or committee training programs that have been put in place. The insurer or insurance group shall describe the policies and practices for directing Senior Management, including a description of the following: Any processes or practices, such as suitability standards, used to determine whether officers and key persons in control functions have the appropriate background, experience, and integrity to fulfill their prospective roles, including: Identification of the specific positions for which suitability standards have been developed and a description of the standards employed; and Any changes in an officer’s or key person’s suitability as outlined by the insurer’s or insurance group’s standards and procedures to monitor and evaluate such changes; The insurer’s or insurance group’s code of business conduct and ethics, the discussion of which considers, for example: Compliance with laws, rules, and regulations; and Proactive reporting of any illegal or unethical behavior; The insurer’s or insurance group’s processes for performance evaluation, compensation and corrective action to ensure effective senior management throughout the organization, including a description of the general objective of significant compensation programs and what the programs are designed to reward. The description shall include: Sufficient detail to allow the Commissioner to understand how the organization ensures A discussion of the elements used in determining the organization’s compensation programs, which may include, for example: The Board’s role in overseeing management compensation programs and practices; The various elements of compensation awarded in the insurer’s or insurance group’s compensation programs and how the insurer or insurance group determines and calculates the amount of each element of compensation paid; How compensation programs are related to both company and individual performance over time; Whether the compensation programs include risk adjustments and how those adjustments are incorporated into the programs for employees at different levels; Any clawback provisions built into the programs to recover awards or payments if the performance measures upon which they are based are restated or otherwise adjusted; and Any other factors relevant in understanding how the insurer or insurance group monitors its compensation policies to determine whether its risk management objectives are met by incentivizing its employees; and The insurer’s or insurance group’s plans for Chief Executive Officer and Senior Management succession. The insurer or insurance group shall describe the process by which the Board, its committees, and Senior Management ensure an appropriate amount of oversight to the critical risk areas impacting the insurer’s business activities, including a discussion of: How oversight and management responsibilities are delegated between the Board, its committees, and Senior Management; How the Board is kept informed of the insurer’s strategic plans, the associated risks, and steps that Senior Management is taking to monitor and manage those risk; and A description of how reporting responsibilities are organized to allow the Commissioner to understand the frequency at which information is reported to and reviewed by Senior Management and the Board in the following critical risk areas of the insurer: Risk management processes, which may include reference to an insurer’s ORSA Summary Report pursuant to Insurance Article, §32-105, Annotated Code of Maryland, if applicable; Actuarial function; Investment decision-making processes; Reinsurance decision-making processes; Business strategy or finance decision-making processes; Compliance function; Financial reporting or internal auditing; and Market conduct decision-making processes. Insurance Article, §§4-503 and 4-508, Annotated Code of Maryland Effective date: April 6, 2020 (47:7 Md. R. 384)