3 - Financial Surveillance & Company Licensing

3.1 Mission

The primary mission of the Financial Surveillance and Company Licensing Section is to monitor the financial solvency of insurers participating in the Massachusetts domestic insurance marketplace in order to provide a healthy and competitive insurance market.

3.2 2009 Goals

Monitor the solvency of all insurance companies domiciled in the Commonwealth of Massachusetts. Complete quarterly and annual analysis of all files within the deadlines delineated in the NAIC Accreditation Guidelines. Hold annual meetings with senior company management, Audit Committees, and Boards of Directors.

Maintain Accreditation by the National Association of Insurance Commissioners (NAIC). The NAIC Accreditation program provides a process whereby solvency regulation of multi-state insurance companies can be enhanced and adequately monitored with an emphasis on: adequate solvency laws and regulations in place to protect consumers as well as guarantee funds; effective and efficient financial analysis and examination processes; and, appropriate organizational and personnel practices.

Process license applications - including license amendment applications - from insurance companies seeking to do insurance business in the Commonwealth to provide for a solvent and competitive insurance market.

Oversee transactions such as demutualizations, issuance of surplus notes, mergers & acquisitions, quasi-reorganizations, and additional reserving requirements; along with monitoring corporate governance practices and prudent conservative accounting standards.

3.3 Primary Activities

The Financial Surveillance and Company Licensing staff processes license certifications, analyzes annual statement filings and manages other revenue collections that resulted in approximately $600,000 in revenue in 2009.

Financial Surveillance

The Financial Surveillance Section monitors the solvency of domestic and foreign (domiciled in another state) insurance companies. There are currently 1,493 insurance companies licensed, authorized, or eligible to transact insurance business in the Commonwealth. Included in this number are:

  • Life Insurers
  • Accident and Health Insurers
  • Property & Casualty Insurers
  • Health Maintenance Organizations
  • Fraternal Benefit Societies
  • Title Insurers
  • Risk Retention Groups
  • Self-insurance Groups
  • Surplus Lines Insurers
  • Reinsurers
  • Home Warranty Contract Providers
  • Viatical Settlement Companies

Financial Surveillance also monitors transactions entered into by Massachusetts' domestic insurers.

As of December 31, 2009, there were 94 insurance companies domiciled in Massachusetts. A comprehensive desk audit of each of these companies was completed by an analyst and reviewed by a manager. These desk audits consist of over 20 detailed analyses for each company. The analyses include an in-depth review of the Annual Statement including the investment portfolios, the reinsurance portfolios, reserving analysis, income statement, cash flows statement, and balance sheet. Additionally, the Statement of Actuarial Opinion, the Management's Discussion & Analysis, Holding Company filings and independent CPA Audit are reviewed in great detail. Lastly, each domestic insurer files a quarterly statement similar to the Annual Statement that is reviewed in detail. These various tasks help the Division closely monitor the solvency of the company. The national ratings of each domestic insurer are monitored and tracked as well. Additional emphasis was placed on troubled securities and the performance of the investment portfolios during 2009.

Company Licensing

The Company Licensing staff reviews and processes all applications from insurers seeking to obtain or amend licenses to transact insurance business in the Commonwealth. The Division participates in the NAIC Uniform Certificate of Authority Application process. The UCAA consists of fourteen parts that allow the Division to review the applicant's solvency, management team, and experience in the insurance industry. Information compiled by the NAIC, as well as input from the domestic regulators, also has a part in the review process.

During 2009, the Section issued twenty-nine new insurance company licenses, twenty-one amended insurance company licenses, approved five companies as authorized surplus lines insurers, approved one company as an accredited reinsurer, issued a Certificate of Authority to one home warranty company, one domestic HMO was issued a conditional license, and one domestic P & C Company issued a Certificate of Authority.

New Licenses

Property & Casualty Insurers

Life, Accident & Health Insurers

21ST Century Casualty Company

National Lloyds Insurance Company

Express Scripts Insurance Company

American International Ins. Co. of Delaware

Permanent General Assurance Corporation

HealthSpring Life and Health Insurance Co.

American Strategic Insurance Corp.

Permanent General Assurance Corp. of Ohio

Health Insurers

Catlin Insurance Company Inc.

Plymouth Rock Assurance Casualty Company

CeltiCare Health Plan of Massachusetts, Inc.

Cornhusker Casualty Company

Preserver Insurance Company

Surplus Lines

Cranbrook Insurance Company

Rider Insurance Company

Republic - Vanguard Insurance Company

Essent Guaranty Inc.

Sentinel Insurance Company LTD.

Torus Specialty Insurance Company

GEICO Casualty Company

Starr Indemnity & Liability Company

Hiscox Specialty Insurance Company Inc

GEICO Indemnity Company

State Automobile Mutual Insurance Company

Starr Surplus Lines Insurance Company

LM General Insurance Co.

State Auto Property Casualty Insurance Company

Naxos Insurance Company

Maxum Casualty Insurance Company

Utica National Assurance Company

Home Warranty Companies

Meridian Citizens Mutual Insurance Company

Utica National Ins. Co. of Texas

Home Services USA Repair Management

Mid-Century Insurance Company

Zurich American Insurance Company of Illinois

Accredited Reinsurers

Municipal and Infrastructure Assurance Corp

Maiden Reinsurance Company

Amended Licenses

Property & Casualty Insurers

Aetna Insurance Company of Connecticut

Farmers Insurance Exchange

StarNet Insurance Company

AGCS Marine Insurance Company

First Colonial Insurance Company

Travelers Casualty and Surety Co. of America

American Alternative Insurance Corp.

GEICO General Insurance Company

Truck Insurance Exchange

American Family Home Insurance Company

Hiscox Insurance Company Inc.

Union Mutual Fire Insurance Company

American Sentinel Insurance Company

Navigators Insurance Company

WRM America Indemnity

AXIS Insurance Company

New England Guaranty Insurance Company

Life, Accident & Health Insurers

Berkley Insurance Company

Riverport Insurance Company

Principal National Life Ins. Co.

3.4 Special Activities

There were several new Massachusetts domestic insurers created and licensed during 2009. These included the following:

Plymouth Rock Assurance Casualty Company
Plymouth Rock Assurance Casualty Company received their Certificate of Authority on July 14, 2009

CeltiCare Health Plan of Massachusetts, Inc..
CeltiCare Health Plan of Massachusetts, Inc.., received a conditional HMO License on May 5, 2009.

John Hancock Life & Health Insurance Co.
John Hancock Life & Health Insurance Co. applied to redomesticate from Delaware to Massachusetts. This transaction was approved and the company redomesticated to Massachusetts effective January 1, 2009.

There were several Massachusetts domestic insurers involved in significant transactions during 2009. These included the following:

John Hancock Life Insurance Company
Effective December 31, 2009, John Hancock Life Insurance Company merged into John Hancock Life Insurance Company (U.S.A.).

John Hancock Life Variable Insurance Company
Effective December 31, 2009, John Hancock Variable Life Insurance Company merged into John Hancock Life Insurance Company (U.S.A.).

SPARTA Insurance Company
Effective April 30, 2009, SPARTA Insurance Company redomesticated to Connecticut from Massachusetts.

Eastern Casualty Insurance Company
Eastern Casualty Insurance Company was placed into receivership effective May 12, 2009.

First Allmerica Financial Life Insurance Company
First Allmerica Financial Life Insurance Company was acquired by Commonwealth Annuity and Life Insurance Company in a transaction that was approved by the Division on December 30, 2008. The transaction closed January 2, 2009.