[Rev. 1/10/2014 2:12:57 PM]

[NAC-693A Revised Date: 1-14]

CHAPTER 693A - CORPORATE POWERS AND PROCEDURES OF DOMESTIC STOCK AND MUTUAL INSURERS

DOMESTIC STOCK INSURERS

693A.010         Application of provisions.

693A.110         “Participant” defined.

693A.115         Conversion of mutual into stock insurer: Interpretation of certain statutory terms.

693A.120         Definitions.

693A.130         Proxies, consents and authorizations.

693A.140         Equivalent information.

693A.150         Information to security holders.

693A.160         Proxy and information statements.

693A.170         Filing of solicitations.

693A.180         False or misleading statements.

693A.190         Undated or postdated proxies.

693A.210         Election contests.

693A.220         Solicitations: Filing of information.

693A.230         Solicitations before furnishing of proxy statements: Conditions.

693A.240         Solicitations before furnishing of proxy statements: Filing.

693A.250         Annual reports.

PROXY AND INFORMATION STATEMENTS

693A.310         Proxy and information statements: Required information.

693A.320         Revocability.

693A.330         Dissenters’ rights of appraisal.

693A.340         Identification of source.

693A.350         Certain interests.

693A.360         Voting securities.

693A.370         Nominees and directors.

693A.380         Remuneration and other transactions.

693A.390         Bonus, profit-sharing and other remuneration plans.

693A.400         Pension and retirement plans.

693A.410         Options, warrants and rights.

693A.420         Authorization or issue of securities.

693A.430         Mergers, consolidations and acquisitions.

693A.440         Restatements of accounts.

693A.450         Other information.

693A.460         Amendments to charter and bylaws.

PROXIES

693A.510         Election contests.

ELECTION CONTESTS

693A.520         Insurer name and address.

693A.530         Contestant name and background.

693A.540         Interest of the contestant.

693A.550         Other information.

693A.560         Signature of statements.

MANAGEMENT AND AGENCY CONTRACTS OF CONTROLLED INSURERS

693A.600         Definitions.

693A.610         “Accredited state” defined.

693A.620         “Broker” defined.

693A.630         “Captive insurer” defined.

693A.640         “Control” and “controlled” defined.

693A.650         “Controlling broker” defined.

693A.660         “Controlled insurer” defined.

693A.670         Applicability.

693A.680         Written contract specifying responsibilities of controlling broker and controlled insurer.

693A.690         Responsibilities of controlling broker: Accounting to controlled insurer; remission of money to controlled insurer; holding of money for controlled insurer; maintenance of records for controlled insurer.

693A.700         Standards, rules, procedures, rates and conditions of controlled insurer; rates of commissions, charges and other fees of controlling broker.

693A.710         Conditions for payments of compensation or commissions.

693A.720         Limit on writings of controlling broker: Provision; notification.

693A.730         Reinsurance by controlled insurer; contents of guidelines for underwriting.

693A.740         Audit committee: Establishment, composition; duties.

693A.750         Required filing and reporting by controlled insurer.

693A.760         Notice of relationship between controlling broker and controlled insurer; statement required if business is placed through broker who is not controlling broker.

693A.770         Procedure upon noncompliance with certain provisions.

 

 

DOMESTIC STOCK INSURERS

      NAC 693A.010  Application of provisions. (NRS 679B.130, 693A.080)  The provisions of NAC 693A.010 to 693A.560, inclusive, apply to each domestic stock insurer which has any class of equity security held of record by 100 or more persons, except:

     1.  If 95 percent or more of the equity securities of the insurer are owned or controlled by a parent or an affiliated insurer, and the remaining securities are held of record by fewer than 500 persons.

     2.  A domestic stock insurer which files with the United States Securities and Exchange Commission forms of proxies, consents and authorizations which comply with the requirements to the Securities Exchange Act of 1934 as amended, (15 U.S.C. §§ 77a, et seq.), and applicable regulations, is exempt from the provisions of NAC 693A.010 to 693A.560, inclusive, with respect to any class of securities subject to the jurisdiction of the Securities and Exchange Commission.

     [Comm’r of Insurance, M-4 § 1, eff. 5-13-72]—(NAC A 6-28-96)

      NAC 693A.110  “Participant” defined. (NRS 679B.130)

     1.  As used in NAC 693A.010 to 693A.560, inclusive, “participant” means:

     (a) The insurer;

     (b) Any director of the insurer or nominee for whose election as a director proxies are solicited; and

     (c) Any other person, acting alone or with one or more other persons in organizing, directing or financing the solicitation.

     2.  “Participant” does not include:

     (a) 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;

     (b) Any person or organization retained or employed by a participant to solicit security holders, or any person who merely transmits material soliciting for proxies or performs ministerial or clerical duties;

     (c) Any person employed in the capacity of attorney or accountant or as an advertising, public relations or financial adviser, and whose activities are limited to the performance of his or her duties in the course of that employment;

     (d) Any person regularly employed as an officer or employee of the insurer or any of its subsidiaries or affiliates who is not otherwise a participant; or

     (e) Any officer, director or regular employee of any other participant who is not himself or herself a participant.

     [Comm’r of Insurance, M-4 § 10 subsec. 2, eff. 5-13-72]—(NAC A 6-28-96)

      NAC 693A.115  Conversion of mutual into stock insurer: Interpretation of certain statutory terms. (NRS 679B.130, 693A.530, 693A.655)  As used in NRS 693A.400 to 693A.540, inclusive, the Commissioner will interpret:

     1.  “Domestic stock insurer” to mean a domestic stock insurance company or a stock holding company.

     2.  “Plan of conversion” to include, without limitation, the plan of conversion and any amendments to the articles of incorporation adopted by a resolution of the board of directors of the converting mutual pursuant to subsection 1 of NRS 693A.440.

     (Added to NAC by Comm’r of Insurance by R081-07, eff. 4-17-2008)

      NAC 693A.120  Definitions. (NRS 679B.130)

     1.  The definitions and instructions set out in Schedule SIS adopted by the National Association of Insurance Commissioners are applicable for the purposes of NAC 693A.010 to 693A.560, inclusive.

     2.  As used in NAC 693A.010 to 693A.560, inclusive, “solicitation” means:

     (a) Any request for a proxy, whether or not accompanied by or included in a form of proxy;

     (b) Any request to execute, to refrain from executing or to revoke a proxy; or

     (c) Furnishing a form of proxy or communicating with security holders under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy.

     3.  “Solicitation” does not include:

     (a) Any solicitation by a person in respect to securities of which the person is the beneficial owner;

     (b) Action by a broker or other person in respect to securities carried in his or her name or in the name of his or her nominee in forwarding to the beneficial owner of securities soliciting material received from the insurer;

     (c) Impartially instructing a beneficial owner to forward a proxy to the person, if any, to whom the beneficial owner desires to give a proxy;

     (d) Impartially requesting instructions from the beneficial owner with respect to the authority to be conferred by the proxy and stating that a proxy will be given if the instructions are received by a certain date;

     (e) Furnishing a form of proxy to a security holder upon the unsolicited request of the security holder; and

     (f) The performance by any person of ministerial acts on behalf of a person soliciting a proxy.

     [Comm’r of Insurance, M-4 § 4, eff. 5-13-72]—(NAC A 6-28-96)

      NAC 693A.130  Proxies, consents and authorizations. (NRS 679B.130)  A person shall not solicit or permit the use of his or her name to solicit by mail or otherwise, any proxy, consent or authorization in respect to any class of equity security of the insurer which is held of record by 100 or more persons in contravention of NAC 693A.010 to 693A.560, inclusive.

     [Comm’r of Insurance, M-4 § 2, eff. 5-13-72]—(NAC A 6-28-96)

      NAC 693A.140  Equivalent information. (NRS 679B.130, 693A.100)

     1.  Unless proxies, consents or authorizations in respect of any class of equity security of a domestic insurer are solicited by or on behalf of the management of the insurer from the holders of record in accordance with NAC 693A.010 to 693A.560, inclusive, before any annual or other meeting of the security holders, the insurer shall file with the Commissioner of Insurance and transmit to all security holders of record information substantially equivalent to that which would have been required to be transmitted if a solicitation were made.

     2.  The insurer shall transmit a written statement containing the information specified in subsection 4 of NAC 693A.150 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 on behalf of the management of the insurer. For a class of securities which is in unregistered or bearer form, the statement need be transmitted only to those security holders whose names and addresses are known to the insurer.

     [Comm’r of Insurance, M-4 § 3, eff. 5-13-72]—(NAC A 6-28-96)

      NAC 693A.150  Information to security holders. (NRS 679B.130, 693A.100)

     1.  No solicitation may be made unless each person solicited is concurrently furnished, or has been previously furnished, a written proxy statement containing the information specified in NAC 693A.320 to 693A.460, inclusive.

     2.  If the solicitation is made on behalf of the management of the insurer and relates to an annual meeting of security holders at which directors are to be elected, each proxy statement furnished pursuant to this section must be accompanied or preceded by an annual report in preliminary or final form containing the financial statements referred to in Schedule SIS under the heading “Financial Reporting to Stockholders,” for the last fiscal year. The annual report to security holders may be in any form deemed suitable by the management which conforms to the requirements of this section.

     3.  Two copies of each report sent to the security holders as required by this section must be mailed to the Commissioner of Insurance not later than the date on which such report is first sent or given to security holders, or the date on which preliminary copies of solicitation material are filed with the Commissioner under subsection 1 of NAC 693A.170, whichever is later.

     4.  If no solicitation is being made by the management of the insurer with respect to any annual or other meeting, the insurer shall mail to each security holder of record, at least 20 days before the meeting date, an information statement required by NAC 693A.140, containing the information called for by NAC 693A.330 and 693A.360 to 693A.460, inclusive, which would be applicable to any matter to be acted upon if proxies were to be solicited in connection with the meeting. If the information statement relates to an annual meeting at which directors are to be elected, it must be accompanied by an annual report to security holders in the form required by subsection 2 of this section.

     [Comm’r of Insurance, M-4 § 5, eff. 5-13-72]

      NAC 693A.160  Proxy and information statements. (NRS 679B.130, 693A.100)

     1.  The form of proxy must:

     (a) Contain a statement in boldface type whether or not the proxy is solicited on behalf of the management;

     (b) Provide a specifically designed blank space for dating the proxy; and

     (c) Identify clearly and impartially each matter or group of related matters intended to be acted upon, whether proposed by the management or by security holders.

Ê No reference need be made to proposals for which discretionary authority is conferred by subsection 3 of this section.

     2.  (a) Means must be provided in the proxy for the person solicited to specify by ballot a choice between approval or disapproval of each matter or group of related matters referred to, other than elections to office. A proxy may confer discretionary authority with respect to matters for which a choice is not specified if the form of proxy states in boldface type how it is intended to vote the shares or authorization represented by the proxy in each case.

     (b) A form of proxy which provides both for elections to office and for action on other specified matters must be prepared so as to provide, by a box or otherwise, means by which the security holder may withhold authority to vote for elections to office. Any such form of proxy which is executed by the security holder in a manner which does not withhold authority to vote for elections to office may be deemed to grant such authority if the form of proxy so states in boldface type.

     3.  A proxy may confer discretionary authority with respect to other matters which may come before the meeting, if the persons on whose behalf the solicitation is made are not aware a reasonable time before the solicitation is made that any other matters are to be presented for action at the meeting, and a specific statement to that effect is made in the proxy statement or in the form of proxy.

     4.  The proxy statement or form of proxy must provide, subject to reasonable conditions specified on the statement or form, that:

     (a) The proxy will be voted; and

     (b) Where the person solicited specified by means of a ballot provided to the person pursuant to subsection 2 of this section a choice with respect to any matter to be acted upon, the vote will be in accordance with the specifications so made.

     5.  The information included in the proxy statement or information statement must be clearly presented and the statements made must be divided into groups according to subject matter, with appropriate headings. All printed proxy statements or information statements must be clearly and legibly presented.

     [Comm’r of Insurance, M-4 § 6, eff. 5-13-72]

      NAC 693A.170  Filing of solicitations. (NRS 679B.130, 693A.100)

     1.  Two preliminary copies of the information statement or the proxy statement and form of proxy and any other soliciting material to be furnished to security holders must be filed with the Commissioner at least 10 days before the date on which definitive copies of the material are first sent or given to security holders. The Commissioner may authorize a later cutoff date for filing upon a showing of good cause therefor.

     2.  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 statements must be filed with the Commissioner at least 2 days, exclusive of Saturdays, Sundays or holidays, before the date on which copies of this material are first sent or given to security holders. The Commissioner of Insurance may authorize a later cutoff date for filing upon a showing of good cause therefor.

     3.  Two copies of the information statement or the proxy statement, form of proxy and all other soliciting material, in the form in which this material is furnished to security holders, must be filed with the Commissioner not later than the date on which the material is first sent or given to the security holders.

     4.  Where any information statement or proxy statement, form of proxy or other material filed pursuant to NAC 693A.010 to 693A.560, inclusive, is amended or revised, two of the copies must be marked to show clearly such changes.

     5.  Copies of replies to inquiries from security holders requesting further information and copies of communications which do no more than request that forms of proxy previously solicited be signed and returned need not be filed pursuant to this section.

     6.  Copies of soliciting material in the form of speeches, press releases and radio or television scripts may be filed with the Commissioner before use or publication. Definitive copies must be filed with the Commissioner as required by subsection 3 of this section not later than the date on which the material is used or published. The provisions of subsections 1 and 2 of this section and NAC 693A.240 apply to any reprints or reproductions of all or any part of such material.

     [Comm’r of Insurance, M-4 § 7, eff. 5-13-72]—(NAC A 6-28-96)

      NAC 693A.180  False or misleading statements. (NRS 679B.130, 693A.100)  No proxy statement, form of proxy, notice of meeting, information statement or other written or oral communication which is subject to NAC 693A.010 to 693A.560, inclusive, may contain any statement which, at the time and in the light of the circumstances under which it is made:

     1.  Is false or misleading with respect to any material fact; or

     2.  Omits to state any material fact necessary to:

     (a) Make the statements therein not false or misleading; or

     (b) Correct any statement in any earlier communication with respect to the same meeting or subject matter if that statement has become false or misleading.

     [Comm’r of Insurance, M-4 § 8, eff. 5-13-72]—(NAC A 6-28-96)

      NAC 693A.190  Undated or postdated proxies. (NRS 679B.130)  No person making a solicitation subject to NAC 693A.010 to 693A.560, inclusive, may solicit any undated or postdated proxy, or any proxy which provides that it will be deemed to be dated after the date on which it is signed by the security holder.

     [Comm’r of Insurance, M-4 § 9, eff. 5-13-72]—(NAC A 6-28-96)

      NAC 693A.210  Election contests. (NRS 679B.130)  NAC 693A.210 to 693A.250, inclusive, apply to any solicitation subject to NAC 693A.010 to 693A.560, inclusive, by any person or group for the purpose of opposing another solicitation subject to NAC 693A.010 to 693A.560, inclusive, made by another person or group regarding the election or removal of directors at any annual or special meeting of security holders.

     [Comm’r of Insurance, M-4 § 10 subsec. 1, eff. 5-13-72]—(NAC A 6-28-96)

      NAC 693A.220  Solicitations: Filing of information. (NRS 679B.130, 693A.100)

     1.  No solicitation subject to NAC 693A.210 to 693A.250, inclusive, may be made by any person other than the management of an insurer unless at least 5 business days prior thereto, or a shorter period authorized by the Commissioner of Insurance 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 NAC 693A.520 to 693A.560, inclusive, and a copy of any material proposed to be distributed to security holders in furtherance of the solicitation. Where preliminary copies of any material are filed, distribution to security holders must be deferred until the Commissioner’s comments have been received and complied with.

     2.  Within 5 business days after a solicitation subject to this section is made by the management of an insurer, or a longer period authorized by the Commissioner upon a showing of good cause, there must be filed with the Commissioner by or on behalf of each participant in the solicitation, other than the insurer, and by or on behalf of each person nominated by the management to be a director, a statement in duplicate containing the information required by NAC 693A.520 to 693A.560, inclusive.

     3.  If any solicitation on behalf of management or any other person has been made or if proxy material is ready for distribution before a solicitation subject to NAC 693A.210 to 693A.250, inclusive, in opposition thereto, a statement in duplicate containing the information specified in NAC 693A.520 to 693A.560, inclusive, must be filed with the Commissioner by or on behalf of each participant other than the insurer in the prior solicitation. The information must be filed as soon as reasonably practicable after the commencement of the opposing solicitation.

     4.  If, after the filing of the statements required by subsections 1, 2 and 3 of this section, additional persons become participants in a solicitation subject to this section, there must be filed with the Commissioner by or on behalf of each such person, a statement in duplicate containing the information specified by NAC 693A.520 to 693A.560, inclusive, within 3 business days after the person becomes a participant, unless the Commissioner authorizes a later cutoff date for filing upon a showing of good cause.

     5.  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 must be filed promptly with the Commissioner.

     6.  Each statement and amendment thereto filed pursuant to this section is part of the public files of the Commissioner.

     [Comm’r of Insurance, M-4 § 10 subsec. 3, eff. 5-13-72]

      NAC 693A.230  Solicitations before furnishing of proxy statements: Conditions. (NRS 679B.130, 693A.100)  A solicitation subject to NAC 693A.210 to 693A.250, inclusive, may be made before furnishing security holders a written proxy statement containing the information specified in NAC 693A.310 to 693A.460, inclusive, concerning the solicitation if:

     1.  The statements required by NAC 693A.220 are filed by or on behalf of each participant in the solicitation;

     2.  No form of proxy is furnished to security holders before the written proxy statement required by subsection 1 of NAC 693A.150 is furnished. This subsection does not apply if a proxy statement then meeting the requirements of NAC 693A.310 to 693A.460, inclusive, has been furnished to security holders;

     3.  The information required for the statements required by subsections 2 and 3 of NAC 693A.220 to be filed by each participant, or an appropriate summary thereof, are included in each communication sent or given to security holders in connection with the solicitation; and

     4.  A written proxy statement containing the information specified in NAC 693A.310 to 693A.460, inclusive, with respect to a solicitation is sent or given to security holders as soon as possible.

     [Comm’r of Insurance, M-4 § 10 subsec. 4, eff. 5-13-72]

      NAC 693A.240  Solicitations before furnishing of proxy statements: Filing. (NRS 679B.130, 693A.100)  Two copies of any soliciting material proposed to be sent or given to security holders before the furnishing of the written proxy statement required by subsection 1 of NAC 693A.150 must be filed with the Commissioner in preliminary form at least 5 business days before the date on which definitive copies of such material are first sent or given to security holders, or a shorter period authorized by the Commissioner upon a showing of good cause therefor.

     [Comm’r of Insurance, M-4 § 10 subsec. 5, eff. 5-13-72]

      NAC 693A.250  Annual reports. (NRS 679B.130)  Two copies of any portion of the annual report referred to in subsection 2 of NAC 693A.150 which comments upon or refers to any solicitation subject to this section, or to any participant in any such solicitation, other than the solicitation by the management, must be filed with the Commissioner of Insurance, as proxy material subject to NAC 693A.010 to 693A.560, inclusive. This portion of the report must be filed with the Commissioner in preliminary form at least 5 business days before the date on which copies of the report are first sent or given to security holders.

     [Comm’r of Insurance, M-4 § 10 subsec. 6, eff. 5-13-72]—(NAC A 6-28-96)

PROXY AND INFORMATION STATEMENTS

      NAC 693A.310  Proxy and information statements: Required information. (NRS 679B.130)  The statements and other information set forth in NAC 693A.320 to 693A.460, inclusive, are required for proxy statements and statements of information.

     (Comm’r of Insurance, M-4, supplied in codification)

      NAC 693A.320  Revocability. (NRS 679B.130)  Each statement must state whether or not the person giving the proxy has the power to revoke it. If the right to revoke the proxy before it is exercised is limited or is subject to compliance with any formal procedure, a brief description of the limitation or procedure must be included.

     [Comm’r of Insurance, Schedule A item 1, eff. 5-13-72]

      NAC 693A.330  Dissenters’ rights of appraisal. (NRS 679B.130)  A brief outline of the rights of appraisal or similar rights of dissenting holders of security with respect to any matter to be acted upon must be included, indicating any statutory procedure required to be followed by security holders in order to perfect their rights. Where such rights may be exercised only within a limited time after the date of the adoption of a proposal, the filing of a charter amendment, or other similar act, the statement must state whether the person solicited will be notified of the end of the period in which the rights must be exercised.

     [Comm’r of Insurance, Schedule A item 2, eff. 5-13-72]

      NAC 693A.340  Identification of source. (NRS 679B.130)

     1.  If the solicitation is made by the management of the insurer, a statement to that effect, including the name of any director of the insurer who has informed the management in writing that he or she intends to oppose any action intended to be taken by the management and setting forth the action which he or she intends to oppose.

     2.  If the solicitation is made by persons other than the management of the insurer, the names and addresses of the persons by whom and on whose behalf it is made and the names and addresses of the persons by whom the cost of the solicitation has been or will be borne, directly or indirectly.

     3.  If the solicitation is to be made by specially engaged employees or paid solicitors, a statement of:

     (a) The material features of any contract or arrangement for such solicitation and the names of the parties; and

     (b) The cost or anticipated cost of the solicitation.

     [Comm’r of Insurance, Schedule A item 3, eff. 5-13-72]

      NAC 693A.350  Certain interests. (NRS 679B.130)  A brief description of any substantial interest, direct or indirect, in the form of security holdings or otherwise, held by any director, nominee for election as director, officer and, if the solicitation is made other than on behalf of management, each person on whose behalf the solicitation is made. The description is required unless no matters other than elections to office are to be acted upon.

     [Comm’r of Insurance, Schedule A item 4, eff. 5-13-72]

      NAC 693A.360  Voting securities. (NRS 679B.130)

     1.  A statement for each class of voting securities of the insurer which are entitled to be voted at the meeting, showing the number of shares outstanding and the number of votes to which each class is entitled.

     2.  The date on which the record list 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, a statement of the conditions under which other security holders may be entitled to vote.

     3.  If action is to be taken with respect to the election of directors, and if the persons solicited have cumulative voting rights, a statement that they have such rights and the conditions precedent to the exercise thereof.

     [Comm’r of Insurance, Schedule A item 5, eff. 5-13-72]

      NAC 693A.370  Nominees and directors. (NRS 679B.130)  If action is to be taken with respect to the election of directors, the following information must be furnished. With respect to each person nominated for election as a director and each other person whose term of office as a director will continue after the meeting:

     1.  The name of each person, when the person’s term of office or the term of office for which he or she is a nominee will expire, and all other positions and offices with the insurer which the person holds, whether he or she is a nominee for election as director at the meeting.

     2.  The present principal occupation or employment and the name and principal business of any corporation or other organization in which the employment is carried on. Similar information as to all of the person’s principal occupations or employments during the last 5 years must be furnished unless the person is now a director and was elected to his or her present term of office by a vote of security holders at a meeting for which proxies were solicited under NAC 693A.010 to 693A.560, inclusive.

     3.  If the person is or has previously been a director of the insurer, the information must include the period or periods during which he or she has served as such.

     4.  The information must state, as of the most recent practicable date, the approximate amount of each class of equity securities of the insurer or any of its parents, subsidiaries or affiliates, other than directors’ qualifying shares, beneficially owned directly or indirectly by him or her. If he or she is not the beneficial owner of any securities, a statement made to that effect. The information must be arranged in tabular form to the extent possible.

     [Comm’r of Insurance, Schedule A item 6, eff. 5-13-72]—(NAC A 6-28-96)

      NAC 693A.380  Remuneration and other transactions. (NRS 679B.130)

     1.  The information reported or required in Item 1 of Schedule SIS* under the hearing “Information Regarding Management and Directors” must be furnished if action is to be taken with respect to:

     (a) The election of directors;

     (b) Any remuneration plan, contract or arrangement in which any director, nominee for election as a director, or officer of the insurer will participate;

     (c) Any pension or retirement plan in which any such person will participate; or

     (d) The granting or extension to any such person of any options, warrants or rights to purchase any securities, other than warrants or rights issued to security holders, as such, on a pro rata basis.

     2.  If the solicitation is made on behalf of persons other than the management, the information to be furnished is that required by Item 1-A of Schedule SIS.

     * A copy of this schedule may be obtained from the Commissioner of Insurance.

     [Comm’r of Insurance, Schedule A item 7, eff. 5-13-72]

      NAC 693A.390  Bonus, profit-sharing and other remuneration plans. (NRS 679B.130)  If action is to be taken with respect to any bonus, profit-sharing or other remuneration plan of the insurer, the following information is required:

     1.  A brief description of the material features of the plan, each class of persons who will participate therein, the approximate number of persons in each class and the basis of participation.

     2.  The amounts which would have been distributable under the plan during the last calendar year to:

     (a) Each person named in NAC 693A.380;

     (b) Directors and officers as a group; and

     (c) All other employees as a group,

Ê if the plan had been in effect during that year.

     3.  If the plan to be acted upon may be amended, other than by a vote of security holders, in a manner which would materially increase the cost thereof to the insurer or materially alter the allocation of the benefits between the groups specified in subsection 2 of this section, the nature of such amendments must be specified.

     [Comm’r of Insurance, Schedule A item 8, eff. 5-13-72]

      NAC 693A.400  Pension and retirement plans. (NRS 679B.130)

     1.  If action is to be taken with respect to any pension or retirement plan of the insurer, the following information is required:

     (a) A brief description of the material features of the plan, each class of persons who will participate therein, the approximate number of persons in each such class, and the basis of participation.

     (b) A statement of:

          (1) The approximate total amount necessary to fund the plan with respect to past services, the period over which such amount is to be paid, and the estimated annual payments necessary to pay the total amount over that period;

          (2) The estimated annual payments to be made with respect to current services; and

          (3) The amount of annual payments to be made for the benefit of:

               (I) Each person named in NAC 693A.380;

               (II) Directors and officers as a group; and

               (III) Employees as a group.

     2.  If the plan to be acted upon may be amended, other than by a vote of security holders, in a manner which would materially increase the cost thereof to the insurer or materially alter the allocation of the benefits between the groups specified in paragraph (b) subparagraph (3) of this section, the nature of the amendments must be specified.

     [Comm’r of Insurance, Schedule A item 9, eff. 5-13-72]

      NAC 693A.410  Options, warrants and rights. (NRS 679B.130)  If action is to be taken with respect to the granting or extension of any warrants, including options or other rights, to purchase securities of the insurer or any subsidiary or affiliate, other than warrants issued to all security holders on a pro rata basis, the following information is required:

     1.  The title and amount of securities called for or to be called for, the prices, expiration dates and other material conditions upon which the warrants may be exercised, the consideration received or to be received by the insurer, subsidiary or affiliate for the granting or extension of the warrants and the market value of the securities called for or to be called for by the warrants, as of the latest practicable date.

     2.  If the amount is known, a separate statement of the total amount of securities called for or to be called for by warrants received or to be received by the following persons, naming each person:

     (a) Each person named in NAC 693A.380; and

     (b) Each other person who will be entitled to acquire 5 percent or more of the securities called for or to be called for by such warrants.

     3.  If the amount is known, a separate statement of the total amount of securities called for or to be called for by such warrants, received or to be received by all directors and officers of the company as a group and all employees, without naming the members of each group.

     [Comm’r of Insurance, Schedule A item 10, eff. 5-13-72]

      NAC 693A.420  Authorization or issue of securities. (NRS 679B.130)

     1.  If action is to be taken with respect to the authorization or issuance of any securities of the insurer, the title, amount and description of the securities to be authorized or issued must be furnished.

     2.  If the securities are other than additional shares of common stock of a class outstanding, a brief summary of dividend, voting, liquidation, preemptive and conversion rights, redemption and sinking fund provisions, interest rate and date of maturity must be furnished if applicable.

     3.  If the securities to be authorized or issued are other than additional shares of common stock of a class outstanding, the Commissioner of Insurance may require financial statements comparable to those contained in the annual report.

     [Comm’r of Insurance, Schedule A item 11, eff. 5-13-72]

      NAC 693A.430  Mergers, consolidations and acquisitions. (NRS 679B.130)

     1.  If action is to be taken with respect to a merger, consolidation, acquisition or similar matter, the following information outlined briefly must be furnished:

     (a) The rights of appraisal or similar rights of dissenters with respect to any matters to be acted upon, and any procedure required to be followed by dissenting security holders in order to perfect such rights.

     (b) The material features of the plan or agreement.

     (c) The business done by the company to be acquired or whose assets are being acquired.

     (d) If available, the high and low sales prices for each quarterly period within 2 years.

     (e) The percentage of outstanding shares which must approve the transaction before it may be consummated.

     2.  For each company involved in a merger, consolidation or acquisition, the following financial statements must be furnished:

     (a) A comparative balance sheet as of the close of the last 2 fiscal years.

     (b) A comparative statement of operating income and expenses for each of the last 2 fiscal years and, as a continuation of each statement, a statement of earnings per share after related taxes and cash dividends paid per share.

     (c) A pro forma combined balance sheet and income and expenses statement for the last fiscal year giving effect to the necessary adjustments with respect to the resulting company.

     [Comm’r of Insurance, Schedule A item 12, eff. 5-13-72]

      NAC 693A.440  Restatements of accounts. (NRS 679B.130)  If action is to be taken with respect to the restatement of an asset, capital or surplus account of the insurer, the following information must be furnished:

     1.  The nature of the restatement and the date on which it is to become effective.

     2.  A brief outline of the reasons for the restatement and for the selection of the particular effective date.

     3.  The name and amount of each account affected by the restatement and the effect of the restatement thereon.

     [Comm’r of Insurance, Schedule A item 13, eff. 5-13-72]

      NAC 693A.450  Other information. (NRS 679B.130)  If action is to be taken with respect to any matter which is not required to be submitted to a vote of security holders, the statement must state the nature of the matter, the reason for submitting it to a vote of security holders and what action is intended to be taken by the management in the event of a negative vote on the matter by the security holders.

     [Comm’r of Insurance, Schedule A item 14, eff. 5-13-72]

      NAC 693A.460  Amendments to charter and bylaws. (NRS 679B.130)  If action is to be taken with respect to any amendment of the insurer’s charter, bylaws or other documents as to which information is not required by NAC 693A.010 to 693A.560, inclusive, the statement must show the reasons for, and general effect of, the amendment and the vote needed for its approval.

     [Comm’r of Insurance, Schedule A item 15, eff. 5-13-72]—(NAC A 6-28-96)

PROXIES

      NAC 693A.510  Election contests. (NRS 679B.130, 693A.100)  The information set forth in NAC 693A.520 to 693A.560, inclusive, is required for statements filed by or on behalf of a participant other than the insurer, as part of a proxy solicitation for an election contest.

     (Comm’r of Insurance, M-4, supplied in codification)

ELECTION CONTESTS

      NAC 693A.520  Insurer name and address. (NRS 679B.130)  The report required by NAC 693A.510 must contain the name and address of the insurer.

     [Comm’r of Insurance, Schedule B item 1, eff. 5-13-72]

      NAC 693A.530  Contestant name and background. (NRS 679B.130)  A report required by NAC 693A.210 to 693A.250, inclusive, must contain the following information about the contestant:

     1.  Name and business address.

     2.  Present principal occupation or employment and the name, principal business and address of any corporation or other organization in which employment is carried on.

     3.  Residence address of the contestant.

     4.  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.

     5.  Whether or not the contestant is or has been a participant in any other proxy contest involving this company or other companies within the past 10 years. If so, the identity of the principals, the subject matter and relationship to the parties and the outcome.

     6.  Whether or not, during the past 10 years, the contestant has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) and, if so, the dates, nature of conviction, name and location of court, and penalty imposed or other disposition of the case. A negative report of the information required by this subsection need not be included in the proxy statement or other proxy soliciting material.

     [Comm’r of Insurance, Schedule B item 2, eff. 5-13-72]

      NAC 693A.540  Interest of the contestant. (NRS 679B.130)  The contestant shall include as part of his or her statement the following information:

     1.  The amount of each class of securities of the insurer owned beneficially, directly or indirectly.

     2.  The amount of each class of securities of the insurer owned of record but not beneficially.

     3.  With respect to all securities of the insurer purchased or sold within the past 2 years, the dates on which they were purchased or sold and the amount purchased or sold on each such date.

     4.  If any part of the purchase price or market value of any of the securities specified in subsection 3 is represented by money borrowed or otherwise obtained for the purpose of acquiring or holding such securities, a statement of the amount of the indebtedness as of the latest practicable date. If the money was 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, a brief description of the transaction, and the names of the parties.

     5.  Whether or not the contestant is a party to any contracts, arrangements or understandings with any person with respect to any securities of the insurer, 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, the names of persons with whom the contracts, arrangements of understandings exist and the details thereof.

     6.  A statement of the amount of securities of the insurer owned beneficially, directly or indirectly, by each of the associates of the contestant and the name and address of each associate.

     7.  A statement of the amount of each class of securities of any parent, subsidiary or affiliate of the insurer which the contestant owns beneficially, directly or indirectly.

     [Comm’r of Insurance, Schedule B item 3, eff. 5-13-72]

      NAC 693A.550  Other information. (NRS 679B.130)

     1.  A statement of the time and circumstances under which each contestant became a participant in the solicitation and the nature and extent of his or her activities as a participant.

     2.  A brief description of, and where practicable a statement of the approximate amount of, any material interest, direct or indirect, of the contestant and of each of his or her 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.

     3.  A statement showing whether or not the contestant or any of his or her associates have any arrangement or understanding with any person:

     (a) With respect to any future employment by the insurer or its subsidiaries or affiliates; or

     (b) With respect to any future transactions to which the insurer or any of its subsidiaries or affiliates will or may be a party,

Ê and if so, a description of the arrangement or understanding and the names of the parties thereto.

     [Comm’r of Insurance, Schedule B item 4, eff. 5-13-72]

      NAC 693A.560  Signature of statements. (NRS 679B.130)  The statement must be dated and signed in substantially the following manner:

 

I certify that all the information contained in this statement is true, complete and correct, to the best of my knowledge and belief.

 

.................................................................                      ...........................................................

                                     (Date)                                                         (Signature of participant or

                                                                                                         authorized representative)

 

     [Comm’r of Insurance, Schedule B item 5, eff. 5-13-72]

MANAGEMENT AND AGENCY CONTRACTS OF CONTROLLED INSURERS

      NAC 693A.600  Definitions. (NRS 679B.130, 693A.110)  As used in NAC 693A.600 to 693A.770, inclusive, unless the context otherwise requires, the words and terms defined in NAC 693A.610 to 693A.660, inclusive, have the meanings ascribed to them in those sections.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 693A.610  “Accredited state” defined. (NRS 679B.130, 693A.110)  “Accredited state” means a state in which the agency which regulates insurance in that state has qualified as meeting the minimum financial regulatory standards established by the National Association of Insurance Commissioners.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 693A.620  “Broker” defined. (NRS 679B.130, 693A.110)  “Broker” has the meaning ascribed to it in NRS 683A.321.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96; A by R054-12, 11-1-2012)

      NAC 693A.630  “Captive insurer” defined. (NRS 679B.130, 693A.110)  “Captive insurer” means an insurance company which is owned by:

     1.  A parent organization and whose exclusive purpose is to insure risks of the parent organization and any affiliated companies of the parent organization; or

     2.  More than one insured and whose exclusive purpose is to insure risks of the insureds and members of the insureds, if any, and any affiliates of the insureds or the members of the insureds.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 693A.640  “Control” and “controlled” defined. (NRS 679B.130, 693A.110)  “Control” or “controlled” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a controlled insurer, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services or otherwise, unless the power is the result of an official position with or corporate office held by the controlled insurer, if the person possessing that power placed, in a calendar year, an aggregate amount of gross written premiums on business with the controlled insurer that is equal to or greater than 5 percent of the assets of the controlled insurer that were reported in the controlled insurer’s annual statement filed with the Commissioner as of March 1 preceding.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 693A.650  “Controlling broker” defined. (NRS 679B.130, 693A.110)  “Controlling broker” means a broker who controls an insurer.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 693A.660  “Controlled insurer” defined. (NRS 679B.130, 693A.110)  “Controlled insurer” means a licensed insurer which is domiciled in this State or an insurer which is domiciled in a state that is not an accredited state and which is controlled by a broker. The term does not include:

     1.  Risk retention groups covered by 15 U.S.C. § 3902, 42 U.S.C. § 9673 and chapter 695E of NRS;

     2.  Residual market pools;

     3.  Joint underwriting authorities or associations; and

     4.  Captive insurers.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 693A.670  Applicability. (NRS 679B.130, 693A.110)  The provisions of NAC 693A.600 to 693A.770, inclusive, do not apply if:

     1.  A controlling broker:

     (a) Places insurance only with a controlled insurer, or only with the controlled insurer and an affiliate of the controlled insurer, and receives no compensation based upon the amount of premiums written in connection with that insurance; and

     (b) Accepts insurance only from other nonaffiliated brokers and not directly from insureds; and

     2.  The controlled insurer, except for insurance business written through a residual market plan, accepts insurance business only from a controlling broker or a broker that is a subsidiary of the controlled insurer.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 693A.680  Written contract specifying responsibilities of controlling broker and controlled insurer. (NRS 679B.130, 693A.110)

     1.  A controlled insurer shall not accept insurance business from a controlling broker and a controlling broker shall not place insurance with a controlled insurer unless there is a written contract, which has been approved by the board of directors of the controlled insurer, between the controlling broker and the controlled insurer that specifies the responsibilities of each party.

     2.  Such a contract must contain a provision that allows a controlled insurer, upon written notice to a controlling broker, to terminate the contract for cause. The controlled insurer shall not accept insurance business from the controlling broker during the pendency of any dispute regarding the cause for the termination of the contract.

     3.  A controlling broker shall not assign, in whole or in part, a contract entered into pursuant to subsection 1.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 693A.690  Responsibilities of controlling broker: Accounting to controlled insurer; remission of money to controlled insurer; holding of money for controlled insurer; maintenance of records for controlled insurer. (NRS 679B.130, 693A.110)

     1.  A controlling broker shall provide an accounting to a controlled insurer that sets forth all material transactions executed by the controlling broker that affect the controlled insurer, including information necessary to identify and explain all commissions, charges and other fees already received by the controlling broker or still owing by the controlled insurer to the controlling broker.

     2.  A controlling broker shall remit all money due under the terms of a contract entered into with a controlled insurer to the controlled insurer at least once each month on a date agreed to by the parties. Premiums or installments thereof must be remitted to the controlled insurer no later than 90 days after the effective date of any policy of insurance placed with the controlled insurer pursuant to the contract.

     3.  Except as otherwise provided in this subsection, all money collected by a controlling broker for a controlled insurer must be held by the controlling broker in a fiduciary capacity, in one or more bank accounts established for the controlled insurer in banks that are members of the Federal Reserve System. A controlling broker which is not required to be licensed in this State shall hold money for the controlled insurer in compliance with the requirements of the controlling broker’s domiciliary jurisdiction.

     4.  A controlling broker shall maintain records of all insurance business written for a controlled insurer separate from all other records of the controlling broker.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 693A.700  Standards, rules, procedures, rates and conditions of controlled insurer; rates of commissions, charges and other fees of controlling broker. (NRS 679B.130, 693A.110)

     1.  A controlled insurer shall provide to the controlling broker its underwriting standards, rules, procedures and manuals setting forth the rates to be charged and the conditions for the acceptance or rejection of risks. The controlling broker shall adhere to the standards, rules, procedures, rates and conditions of the controlled insurer. The standards, rules, procedures, rates and conditions of the controlled insurer must be the same as those the insurer applies to comparable business placed with the controlled insurer by a broker other than the controlling broker.

     2.  The contract between the controlling broker and the controlled insurer must specify the rates and terms of the controlling broker’s commissions, charges or other fees and the purposes for those commissions, charges and fees. The rates of the commissions, charges and other fees must not be greater than those applicable to comparable business placed with the controlled insurer by brokers other than the controlling broker.

     3.  As used in this section, “comparable business” includes insurance of the same lines, insurance of the same kinds, risks of the same kinds, limits on policies of insurance that are similar and business of a similar quality to the business between the controlling broker and the controlled insurer.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 693A.710  Conditions for payments of compensation or commissions. (NRS 679B.130, 693A.110)

     1.  If a contract between a controlling broker and a controlled insurer provides that the controlling broker is to be compensated for insurance business placed with the controlled insurer contingent upon the controlled insurer making a profit on that business, the compensation may not be determined or paid:

     (a) If the insurance is liability insurance, for at least 5 years after the premiums on the insurance are earned.

     (b) If the insurance is other than liability insurance, for at least 1 year after the premiums are earned on the insurance.

     2.  Any commissions owed to a controlling broker may not be paid until the adequacy of the controlled insurer’s reserves on remaining claims has been independently verified pursuant to subsection 1 of NAC 693A.750.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 693A.720  Limit on writings of controlling broker: Provision; notification. (NRS 679B.130, 693A.110)

     1.  A contract between a controlling broker and a controlled insurer must provide a limit on the controlling broker’s writings that is within the limit on the controlled insurer’s total writings. A different limit for each line or subline of insurance may be established in the contract.

     2.  A controlled insurer shall notify the controlling broker when the broker is approaching the limit established pursuant to subsection 1. The controlled insurer shall not accept insurance business from the controlling broker if the broker has reached the limit. The controlling broker shall not place insurance business with the controlled insurer if the broker has been notified by the controlled insurer that he or she has reached his or her limit.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 693A.730  Reinsurance by controlled insurer; contents of guidelines for underwriting. (NRS 679B.130, 693A.110)  Except as otherwise provided in this section, a controlling broker may negotiate for but shall not require a controlled insurer to reinsure business that the controlling broker places with the controlled insurer. The controlling broker may require the controlled insurer to enter into contracts for facultative reinsurance pursuant to obligatory facultative agreements if the written contract between the controlling broker and the controlled insurer contains guidelines for underwriting. If the reinsurance has been ceded and assumed, the guidelines for underwriting must include a list of reinsurers with whom obligatory facultative agreements are in effect, the coverages and amounts or percentages that may be reinsured and a schedule of commissions.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 693A.740  Audit committee: Establishment, composition; duties. (NRS 679B.130, 693A.110)

     1.  The board of directors of a controlled insurer shall establish an audit committee composed of directors who are not officers, employees or direct stockholders of the controlled insurer.

     2.  The audit committee shall meet annually with the chief executive officer of the controlled insurer, the independent certified public accountants of the controlled insurer, and an independent casualty actuary or other professional who is an independent specialist on reserves for losses and who is acceptable to the Commissioner, to review and determine if the controlled insurer’s reserves for losses are adequate. The audit committee shall report the results of the determination to the board of directors.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 693A.750  Required filing and reporting by controlled insurer. (NRS 679B.130, 693A.110)

     1.  In addition to any other required certification of reserves for losses, a controlled insurer shall, on April 1 of each year, file with the Commissioner an opinion of an independent actuary or other independent specialist on reserves for losses who is acceptable to the Commissioner, a report of loss ratios for each line of insurance written which attests to the adequacy of reserves established for losses incurred and outstanding as of December 31, preceding, including the losses incurred but not reported on insurance business placed with the controlled insurer by his or her controlling broker.

     2.  The controlled insurer shall report annually to the Commissioner the amount of commissions paid to the controlling broker, the percentage which the amount represents of the net premiums written, and comparable amounts and percentages paid to noncontrolling brokers for placements of the same kinds of insurance.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 693A.760  Notice of relationship between controlling broker and controlled insurer; statement required if business is placed through broker who is not controlling broker. (NRS 679B.130, 693A.110)

     1.  A controlling broker, before the effective date of a policy of insurance, shall deliver written notice to the prospective insured that discloses the relationship between the controlling broker and the controlled insurer.

     2.  If a controlling broker places insurance business through a broker who is not a controlling broker, the controlling broker shall retain in his or her records a signed statement from the other broker indicating that the other broker is aware of the relationship between the controlling broker and the controlled insurer and will notify the insured of the relationship.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)

      NAC 693A.770  Procedure upon noncompliance with certain provisions. (NRS 679B.130, 693A.110)

     1.  If the Commissioner believes that a controlling broker has not complied with a provision of NAC 693A.600 to 693A.770, inclusive, or any order issued pursuant to those sections, the Commissioner may:

     (a) After giving notice and an opportunity to be heard pursuant to NRS 679B.310 to 679B.370, inclusive, order the controlling broker to cease placing insurance business with a controlled insurer.

     (b) Invoke the aid of the courts to enjoin an existing or threatened violation of a provision of NAC 693A.600 to 693A.770, inclusive, or to enforce an order made pursuant to paragraph (a).

     2.  If an order for liquidation or rehabilitation of the controlled insurer has been entered pursuant to chapter 696B of NRS and the Commissioner, acting as domiciliary receiver, believes that the controlling broker has not complied with a provision of NAC 693A.600 to 693A.770, inclusive, or any order issued pursuant to those sections, and the controlled insurer suffered a loss or damage therefrom, the receiver may, on behalf of the controlled insurer and pursuant to NRS 696B.290, maintain a civil action to recover compensatory damages or obtain other appropriate relief against the controlling broker.

     3.  This section does not affect:

     (a) The right of the Commissioner to impose any other penalties provided for in title 57 of NRS; or

     (b) The rights of policyholders, claimants, creditors or other third parties to maintain any civil action against a controlling broker.

     (Added to NAC by Comm’r of Insurance, eff. 6-28-96)