Delaware Insurance Commissioner Defines Admitted Assets For Purposes Of Holding Company System Registration Act

N/Aee H. Williams, Delaware's Insurance Commissioner, has reminded insurers that Section 5005 of the Insurance Code requires domiciled insurers entering into transactions within a holding company system to give the Department 30 days prior notice of the transaction and to obtain the approval of the Department beforehand. Included amongst these are certain transactions that exceed "3 percent of the insurers admitted assets" for life insurers.

Where a life insurer has assets held in separate accounts, that are included in the total "admitted assets" figure on the insurer's annual statement, the question arises whether the reporting requirements of Section 5005 are triggered when an inter-affiliate transaction does not exceed three percent of the total admitted assets as reported in the annual statement but does exceed three percent of admitted assets in the insurer's general account.

Williams has announced that the Department interprets the term "admitted assets" as used in Section 5005 to include only those admitted assets in the insurer's general account. Assets held in separate accounts, while "admitted" for the purposes of statutory accounting principles, are of course not available to cover the obligations of the general account and are not available to a receiver to cover claims against the insurer's general account in the event of a liquidation.

Insurers therefore need to report and gain prior approval from the Insurance Department whenever a transaction is planned that would equal or exceed three percent of those admitted assets in the insurer's general account.

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