1. Wednesday, October 13, 2010 Licensing procedures of a Connecticut Domiciled Insurance Company

2. 2 Requirements for the organization and licensure of a Connecticut domiciled health insurance company. –Step 1: Summarize proposed plan of operation –Step 2: Meet with the Department of Insurance –Step 3: Publish a Notice of Intent –Step 4: Obtain a Connecticut Corporation License –Step 5: Apply for Connecticut Certificate of Authority –Step 6: Insurance Department review prior to approval. Timing Q&A AGENDA

3. 3 Requirements to form a Connecticut Domestic Health Insurance Company

4. 4 The proposed business plan should consider the following: Management personnel, Geographic area of operation, The products to be offered, The marketing system (independent agents, company agents, managing general agents), Underwriting standards/guidelines, Loss reserve plans, Claim processing, Reinsurance. CONNECTICUT INSURANCE DEPT Step 1: Develop an executive summary of the proposed plan of operation

5. 5 The proposed business plan should consider the following (continued) : Statutory minimum net worth requirements for a Connecticut domestic health insurer are: $1.0 million to secure initial licensure, Ongoing net worth requirements expect the insurer to maintain policyholders’ surplus (capital plus accumulated surplus) at an amount greater than 200% of the Risk Based Capital authorized control level. CONNECTICUT INSURANCE DEPT Step 1: Develop an executive summary of the proposed plan of operation

6. 6 Definitions Policyholders’ Surplus – the excess of an insurance company's assets above its legal obligations to meet the benefits payable to its policyholders and other liabilities. Risk based capital – a formulaic computation used by regulators to determine (based on various types of risks) the minimum amount of policyholders’ surplus an insurer needs to avoid triggering regulatory action. Authorized control level – the total risk based capital needed by an insurer to avoid being taken into a conservatorship by the Insurance Department. CONNECTICUT INSURANCE DEPT Step 1: Develop an executive summary of the proposed plan of operation

7. 7 Purpose –The management group should be able to develop a business plan that encompasses the major areas of operation. Such a plan would also be required from any potential investors of the company. –The organizational structure (stock or non-stock) of the company should already be determined before applying to the department. –Minimum capital requirements in accordance with Connecticut General Statute (CGS) section 38a-72 ensure adequate claims paying ability. Stock companies –$500,000 Capital; $500,000 Surplus Mutual companies – $1,000,000 Surplus CONNECTICUT INSURANCE DEPT Step 1: Develop an executive summary of the proposed plan of operation

8. 8 Meet with the Insurance Commissioner to discuss the following: Proposed Plan of Operation Proposed Articles of Incorporation; Proposed bylaws. CONNECTICUT INSURANCE DEPT Step 2: Meet with the Department of Insurance Requirements are in compliance with Connecticut General Statute §33-646 - Authorization to form a corporation to transact insurance business

9. 9 Purpose –The introductory meeting allows the Department to perform an initial assessment of the management group and to evaluate the objectives, management, and controls over the proposed corporation. –The source of the funding for the capital and additional working capital is also revealed. CONNECTICUT INSURANCE DEPT Step 2: Meet with the Department of Insurance

10. 10 A Notice of Intent to Form an Insurance Company shall be published by the Applicant twice a week for three successive weeks in the business section of the newspaper approved by the Insurance Commissioner. The proposed text of the Applicant's Notice of Intent would be approved by the Insurance Commissioner. CONNECTICUT INSURANCE DEPT Step 3: Publish a Notice of Intent to Form a Connecticut Domestic Insurance Company

11. 11 The Commissioner will issue a Certificate of Formation after a satisfactory review of the Applicant’s: Notice of Intent to Form an Insurance Company, Proposed Plan of Operation, Articles of Incorporation and Corporate Bylaws. The Applicant files the Articles of Incorporation with the Secretary of State’s office. CONNECTICUT INSURANCE DEPT Step 4: Obtain a Connecticut Corporation License from the Secretary of State

12. 12 The Applicant should file the Uniform Certificate of Authority Primary Application with the Connecticut Insurance Department. Connecticut, as well as all other jurisdictions of the United States, has adopted the forms promulgated by the National Association of Insurance Commissioners (NAIC) to be used in the licensing of new insurance entities. The forms and instructions can be obtained by accessing the NAIC website (www.naic.org). CONNECTICUT INSURANCE DEPT Step 5: Apply to obtain a Connecticut Certificate of Authority (license)

13. 13 The Insurance Department conducts a financial and operational review of the information included in the application. The Insurance Department will perform an onsite organizational examination to verify the validity of the information presented in the application and to confirm that the initial funding requirements are met. CONNECTICUT INSURANCE DEPT Step 6: Insurance Department review prior to approval.

14. 14 The estimated timing for the step 6 license application review process is 90 days, the entire formation and application process may take 7 to 11 months. CONNECTICUT INSURANCE DEPT Timing

15. 15 Questions?

16. 16 Thank You