NAIC Discusses Best Practices For Restructuring Mechanisms

Insurers with legacy blocks of business, or with other motivations to enter into block transfers of business or corporate split-offs, should consider a recent regulator call on so-called Insurance Business Transfers (IBTs) and corporate divisions. These are techniques that would allow an insurer to (i) assign a book of insurance policies to another carrier without unanimous affirmative policyholder consent (a so-called IBT) or (ii) to split into multiple distinct entities (a division). Some states have already adopted statutes allowing these types of transactions, which have invited comparison to the United Kingdom's Part VII. IBTs and corporate divisions are subject to state regulatory approval, and in some cases judicial review, following a prescribed process under the respective state statutes.