New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on May 4, 2001, representing the position of the New York State Insurance Department.

RE: Filing of Financial Reports by Insurers and by Controlled Insurers of Holding Companies

Questions Presented:

1) Are insurers that are regulated by the New York State Insurance Department (hereinafter "Insurance Department") required to provide financial reports created by certified public accountants?

2) Are holding companies of insurers that are regulated by the Insurance Department required to file financial reports with the Insurance Department?

Conclusions:

1) Generally, licensed insurers are required to provide financial reports created by independent certified public accountants.

2) Holding companies of insurers that are regulated by the Insurance Department are not required to file financial reports with the Insurance Department. However, controlled insurers of holding companies are responsible for furnishing a consolidated balance sheet of the ultimate holding company and each significant person within its holding company system.

Analysis:

Generally, pursuant to N.Y. Ins. Law § 307(b) (McKinney 2000), licensed insurers are required to provide financial reports created by independent certified public accountants, "except an assessment co-operative property/casualty insurance company having direct premiums written in this state of less than two hundred fifty thousand dollars in any calendar year and having less than five hundred policyholders at the end of such calendar year . . . "

Pursuant to N.Y. Comp. Codes R. & Regs. tit. 11 § 80-1.4 (1992) (Regulation 52), controlled insurers of holding companies are responsible for furnishing a consolidated balance sheet of the ultimate holding company and each significant person within its holding company system. Nevertheless, the holding company sometimes provides the Insurance Department with a consolidated balance sheet of itself and each significant person within its holding company system since, as a pragmatic matter, the holding company has that information. See N.Y. Comp. Codes R. & Regs. tit. 11 § 80-1.4 (1992) (Regulation 52), which provides in relevant part:

Every controlled insurer registered or required to register pursuant to Insurance Law, section 1503, shall, within 120 days following the end of its ultimate holding company's fiscal year, and within 120 days following the end of each succeeding fiscal year, furnish to the superintendent a report containing the following:

(c) A consolidated balance sheet of the ultimate holding company and each significant person within the holding company system, as of the end of the holding company's fiscal year, and related consolidated statements of income and surplus for the year then ended. Such financial statements shall be accompanied by the certificate of an independent public accountant to the effect that such financials present fairly the consolidated financial position of the ultimate holding company and such persons, and results of their operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. In lieu of fully consolidated statements, registrant may furnish separate certified financial statements with respect to any person or persons, and certified consolidated or combined statements with respect to any group of persons, within the holding company system. (Emphasis added)

The definitions of emphasized terms from the quote above can be found in N.Y. Ins. Law § 1501 (McKinney 2000) and Regulation 52.

For further information you may contact Senior Attorney Robert Freedman at the New York City Office.