BEFORE THE STATE AUDITOR AND COMMISSIONER OF INSURANCE

                                                OF THE STATE OF MONTANA

 

In the matter of the amendment of ARM 6.6.3504 and 6.6.3506 pertaining to Annual Audited Reports and Establishing Accounting Practices and Procedures to be Used in Annual Statements, ARM 6.6.6501, 6.6.6502, 6.6.6503, 6.6.6504, 6.6.6505, 6.6.6508, and 6.6.6509, pertaining to Actuarial Opinion, ARM 6.6.6811 pertaining to Annual Audit; and the repeal of ARM 6.6.6506, 6.6.6507, and 6.6.6510 pertaining to Required Opinions, Statement of Actuarial Opinion Not Including an Asset Adequacy Analysis, and Additional Considerations for Analysis

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NOTICE OF AMENDMENT AND REPEAL

 

TO:  All Concerned Persons

 

            1.  On October 23, 2008, the State Auditor and Commissioner of Insurance published MAR Notice No. 6-182 regarding the public hearing on the proposed amendment and repeal of the above-stated rules at page 2201 of the 2008 Montana Administrative Register, issue number 20.

 

2.  On December 1, 2008, the State Auditor and Commissioner of Insurance held a public hearing to consider the proposed amendment and repeal of the above-stated rules.  

 

3.  The department has amended ARM 6.6.3506, 6.6.6501, 6.6.6502, 6.6.6503, 6.6.6504, 6.6.6505, 6.6.6508, 6.6.6509, and 6.6.6811 exactly as proposed.

 

            4.  The department has amended ARM 6.6.3504 as proposed with the following changes from the original proposal.  New matter underlined, deleted matter interlined.

 

6.6.3504  CONTENTS OF ANNUAL AUDITED FINANCIAL REPORT

(1) through (2)(e) remain as proposed.

(f)  notes to financial statements.  These notes shall be those required by the appropriate 2007 2008 NAIC annual statement instructions and the March 2007 2008 NAIC Accounting Practices and Procedures Manual, which are adopted and incorporated by reference, and may be obtained by writing to the NAIC Executive Headquarters, 2301 McGee Street, Suite 800, Kansas City, MO 64108-2662.  The notes shall include reconciliation of differences, if any, between the audited statutory financial statements and the annual statement filed pursuant to 33-2-701, 33-4-313, 33-7-118, 33-30-107, and 33-31-211, MCA, with a written description of the nature of these differences.

            (3) remains as proposed.

 

5.  The department has repealed ARM 6.6.6506, 6.6.6507, and 6.6.6510 exactly as proposed.

 

6.  No comments were heard at the hearing, but written comments were received before the comment deadline.  The department has thoroughly considered the comments.  A summary of the comments received, and the department's responses are as follows:

 

COMMENT NO. 1:  The representative for the American Council of Life Insurers (ACLI) states that the dates referencing the most current version of the annual statement instructions and the accounting practices and procedures manual are already out of date. 

 

RESPONSE:  The State Auditor's Office (SAO) is changing the date references to 2008 for the annual statement instructions and for the manual.  The Secretary of State's rule filing procedures do not allow the SAO to remove the dates or to file a date in a rule that is prospective.

 

COMMENT NO. 2:  The ACLI representative comments that the proposed amendments to ARM 6.6.3506 adopt some but not all of the additional provisions in the NAIC current model law provisions.  The proposed rule does not incorporate sections C and G-L of the current NAIC model rule.

 

RESPONSE:  At this time, the SAO is only adopting the provisions that are required for accreditation of its examination department.  There is only one domestic insurer in Montana that writes more than $100,000,000 in premium. SAO will adopt those model rules at a later time, if necessary.

 

COMMENT NO. 3:  The ACLI representative comments that ARM 6.6.6811(4)(c) allows the commissioner to waive the annual report for a captive insurer (but not a risk retention group) if "the company received its license within six months of the end of the audit year..." ACLI asks for clarification as to why this is necessary.

 

RESPONSE:  This provision gives the commissioner the discretion to waive the annual report if the insurer was recently licensed and the commissioner, in his discretion, believes that the circumstances do not warrant an additional report to be filed, and it allows the commissioner to waive the report for conditions not covered in (4)(a) and (b).

 

 

 

 

/s/  Christina L. Goe                                      /s/  Janice S. VanRiper                               

Christina L. Goe                                            Janice S. VanRiper

Rule Reviewer                                               Deputy State Auditor

 

Certified to the Secretary of State December 15, 2008.