Filings Made Easy for Life, Health and Licensing

Filings Made Easy for Life, Health and Licensing

Financial Examinations – IT Examinations and Examination Reports

PresentersTony Trevino, CFEChief ExaminerExaminationsTony.Trevino@tdi.state.tx.us

Linda Hytry, CFEAssistant Chief Examiner – AESLinda.Hytry@tdi.state.tx.us

Jamie Walker, CFEAssistant Chief ExaminerJamie.Walker@tdi.state.tx.us

Discussion topics

Overview of Financial Program Overview of Examinations IT Examinations and Examination Tools Examination Reports Questions

Overview of Financial Program

Danny Saenz, CFESenior Associate Commissioner

Financial Program

Godwin OhaechesiCFE

Director - Company Licensing &Registration

Mike BoernerASA, MAAA

Managing Actuary

Doug SlapeCFE, CISA

Chief Financial AnalystFinancial Analysis

Tony TrevinoCPA, CFE

Chief ExaminerExaminations

Angel GarrettCPA, CFE

Director - Rehabilitation and

Liquidation Oversight

Overview of Financial Program, continued

Cradle to Grave Approach Company Licensing and Registration Actuarial Financial Analysis Financial Examinations Rehabilitation and Liquidation Oversight

Overview of Financial Program, continued

Serves as the primary solvency guardian for policyholders

Seeks to detect financial concerns early and take prompt action by applying available statutes, rules and procedures to prevent insolvency and consumer problems

Priorities focus on “firm, fair, effective, and efficient” regulation for all insurance entities, while reducing impediments to competition

Overview of Examinations

David MoskowitzCFE

Assistant Chief Examiner

Market Conduct

Linda Hytry, CFE

Assistant Chief Examiner

AES

Zeke Ramirez, CFE, CPA

Assistant Chief Examiner

Financial - Central

Ignatius Wheeler, CFE

Assistant Chief Examiner

Financial - South

John Villarreal, CFE

Assistant Chief Examiner

Financial - North

Jamie Walker, CFE

Assistant Chief Examiner

Examination Reports

Tony TrevinoCPA, AFE

Chief Examiner

Examinations Key Processes On-site examinations of the books, records, and

operations of insurance companies and other entities

Financial examinations

Market conduct examinations

Analysis of annual operations reports filed by premium finance companies

Examinations Key Processes continued

Target examinations “as needed” in response to potential regulatory concerns

Other entities subject to examination include:Guaranty Fund AssociationsPremium Finance CompaniesReinsurance IntermediariesManaging General Agents

Examinations Coordination with Other States

Lead State Allocation of work-load

Clear understanding regarding each state’s role and needs

Sharing of work papers and findings

Examinations Coordination with Other States continued

Characteristics of Lead States: State with the largest number of domestic insurance

companies in the group

State with large or largest premium volume or exposure

Domiciliary state of top-tiered insurance company

Risk Focused Examinations

Provides clearer methodology for assessing residual risk

Allows the assessment of risk management processes other than those that result in financial statement line item verifications

Texas Policy and Procedures Manual

Procedures and regulations unique to Texas Texas statutes and rules take precedence

IT EXAMINATIONS

IT ExaminationsLinda Hytry

Assistant Chief Examiner

Brian McComackSystems Analyst

(Austin)

Mike MontgomerySystems Analyst

(Austin)

Kurt RuzickaExam Coordinator

(Austin)

Terry SmithSenior IS Examiner

(Dallas)

Tommy FongIS Examiner(Houston)

Turner JonesIS Examiner(Houston)

James BoggsIS Examiner

(Austin)

Sandra MendezIS Examiner

(Austin)

Eric KamedaIS Examiner

(Austin)

VacantIS Examiner

(Dallas)

IS Examiner/System Analyst/Examination Coordinator

Staff Examinations Coordinator IS Examiners (6) System Analysts (2)

Examination Coordinator Initial request for information

part of the pre-planning for an examinationslightly different for large/small companies for information

requested

IS Examiner/System Analyst/Examination Coordinator continued

IS Examiner Support for Financial Examiner IS Control Review ISQ Desk Review

System Analyst Reconciliation of databases (premiums, losses) Sample section utilizing Audit Command Language

(ACL)

Examination Tools ACL

Software Premium/Loss database requests Independent testing and sample selection

TeamMate Electronic work papers Enhance regulatory insurance examinations Central repository for standard examination procedures Work papers can be shared/assessed NAIC Citrix Server for Lead State Examinations

REPORT PROCESSING

Report Contents

Comprised of: Description of company operations Financial statements

Significant Deficiencies: Disclosed in the body of the report Uncorrected deficiencies are accumulated in the

“Summary of Significant Findings”

Report Contents continued

Examination Report Comments Report activities that are contrary to the Insurance

Code, Administrative Code, or SSAP guidance.

Management Letter Comments Disclose items that are not substantive, material, or of

major regulatory concern.

Report Processing

Workpapers transmitted to Austin

One additional review of the report

Signed by the Examiner-in-Charge

Final Report transmitted to the Insurance Company

Company Receives Report

Initiating the Appeal Process Governed by 28 TAC § 7.83

Adoption of the Report 15 days after report is received, if not appealed

Response to Report Deficiencies

QUESTIONS?