Summary:

 Senate Bill 277 (SB 277):  The Bill amends the Insurance Holding Company Law (Article 37 of Chapter 59A NMSA 1978) by introducing new definitions, clarifying supervision of internationally active insurance groups, and adding requirements for annual group capital calculations and liquidity stress tests. 

Legislation Overview:

 Senate Bill 277 (SB 277):  Section 1 (Amends §59A-37-2 NMSA 1978); Definitions Modified and Added New Definitions:
•	"Association" – Refers to the National Association of Insurance Commissioners (NAIC).
•	"Commissioner" – Includes an insurance regulatory department of another state or the chief regulator (or the regulator’s deputy) of another state.
•	"Group-wide supervisor" – The regulatory official authorized to conduct and coordinate group-wide supervision activities for an internationally active insurance group.
•	"Internationally active insurance group" – An insurance holding company system that includes at least one insurer registered in New Mexico and meets certain size and international premium criteria (writes in at least three countries, at least 10% of premiums outside the U.S., and meets specified asset or gross premium thresholds).
•	"Large life insurance company" – A life insurer meeting specific criteria (as defined by the NAIC) for application of certain liquidity stress tests.
•	"Liquidity stress test framework" – The NAIC publication (or successor) that details how large life insurance companies must perform and file liquidity stress tests.
•	"Scope criteria" – The thresholds and bases the NAIC uses to determine whether a particular insurer must file a liquidity stress test for a given data year.
Existing Definitions Amended:
•	"Acquire"/"Acquisition" – Clarifies that these terms refer to coming into possession or control of another entity.
•	"Control" – No longer tied solely to a presumption at 10% ownership; clarifies that the superintendent may determine control exists even absent that presumption.
•	"Enterprise risk" – Retains the concept of activities or events in an insurance holding company system that can have a material adverse effect on the financial condition or liquidity of the insurer.
•	"Person", "Securityholder", "Subsidiary", "Voting security" – Minor adjustments or renumbering for internal consistency.
Section 2 (Amends §59A-37-30 NMSA 1978):
•	Enterprise Risk Filing - Requires the ultimate controlling person of every insurer subject to registration to file an annual enterprise risk report.
•	Previously, the statute referred to “the person who predominantly controls an insurer”; now it clarifies it is the ultimate controlling person.
•	The report must be submitted to the “lead state” in accordance with NAIC guidance in its Financial Analysis Handbook.
Section 3 (Amends §59A-37-32 NMSA 1978) - Supervisory Colleges and Group-wide Supervision:
•	Authorizes the superintendent to participate in supervisory colleges for domestic insurers that are part of an insurance holding company system with international operations.
Clarifies the superintendent’s ability to act as a group-wide supervisor for an internationally active insurance group—or to acknowledge another commissioner as the group-wide supervisor—based on factors such as:
•	The domicile of the top-tier insurer(s).
•	Where the largest amount of premiums, assets, or liabilities are located.
Location of key management offices:
•	Existence of another comparable regulatory system and reciprocal cooperation.
•	Emphasizes cooperation with other state, federal, or international regulatory agencies to assess risk exposures, management, and governance in large insurance groups.
•	Preserves the New Mexico superintendent’s authority over insurance entities domiciled in New Mexico but acknowledges that a single group-wide supervisor may be designated for an internationally active insurance group.
Section 4 (New Section – “Group Capital Calculation”) - Annual Group Capital Calculation Report:
•	Requires the ultimate controlling person of an insurer subject to registration to file an annual group capital calculation in accordance with NAIC instructions, unless it qualifies for an exemption.
Exemptions:
•	Single-insurer systems writing only in their domestic state and assuming no business from other insurers.
•	Insurance holding company systems subject to Federal Reserve Board group capital requirements (though the superintendent may still request the calculation if it is not otherwise shared).
•	Non-U.S. group-wide supervisor in a reciprocal jurisdiction that recognizes U.S. group supervision/capital.
•	Non-U.S. group-wide supervisor that accepts the worldwide capital assessment for U.S. insurers in that jurisdiction.
Lead State Discretion
•	The lead state may require a group capital calculation even for certain non-U.S.-based holding company systems if necessary for solvency monitoring or ensuring a competitive insurance market.
Additional Limited Exemptions
•	The superintendent may allow limited group capital reports in specific circumstances if criteria specified in regulation are met.
Section 5 (New Section – “Liquidity Stress Test”) – Applicability:
•	Targets “large life insurance companies” (as determined by NAIC scope criteria) that are subject to registration under the Insurance Code.
Annual Filing Requirement
•	Requires insurers to file the results of liquidity stress tests annually, using the instructions and reporting templates adopted by the NAIC in its Financial Analysis Handbook.
Scope Criteria
•	An insurer meeting the NAIC’s scope criteria for a given data year is “scoped in” and must conduct the liquidity stress test.
•	An insurer that does not meet the scope criteria is “scoped out” unless the superintendent, in consultation with the NAIC’s Financial Stability Task Force (or successor), determines otherwise.
NAIC Framework Changes
•	Any changes to the NAIC liquidity stress test framework or to the data year become effective January 1 of the year following their adoption.
Key Takeaways
Strengthened Regulatory Oversight:
•	This proposed bill aligns New Mexico’s Insurance Holding Company Law with NAIC model updates, enhancing oversight of large, complex insurance groups—especially those that operate internationally.
Group Capital Calculation
•	Requires annual group capital reports to help regulators monitor the overall financial health of an insurance holding company system, identifying systemic vulnerabilities and protecting policyholders.
Liquidity Stress Testing
•	Large life insurers must perform annual liquidity stress tests under NAIC protocols to evaluate their ability to withstand cash-flow pressures in adverse market conditions.
Group-wide Supervision
•	Clarifies the superintendent’s authority to act as, or defer to, a single group-wide supervisor for internationally active insurance groups, promoting coordinated supervision across multiple jurisdictions.
Exemptions and Flexibility
•	Recognizes certain exemptions (e.g., for smaller single-state insurers or those under equivalent group capital regimes) and allows the superintendent to grant or revoke exemptions as needed.
Overall, Senate Bill 277 modernizes and strengthens the regulatory framework for insurance holding companies, ensuring that regulators have the tools to evaluate enterprise-wide risks, oversee multinational insurance groups, and promote the solvency and stability of insurers doing business in New Mexico.
 

Current Law:

 59A-37-2. Definitions. 
As used in the Insurance Holding Company Law:  
A. "acquire" means to come into possession or control of, and "acquisition" means 
any agreement, arrangement or activity the consummation of which results in a person acquiring directly or indirectly the control of another person and includes the acquisition of voting securities or assets, bulk reinsurance and mergers;  
B. "affiliate" means a person that directly or indirectly is controlled by, is under 
common control with or controls another person;  
C. "control" means the possession of the power to direct or cause the direction of 
the management and policies of a person, whether directly or indirectly, through the ownership of voting securities, through licensing or franchise agreements, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by an individual. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote or holds proxies representing ten or more percent 
of the voting securities of any other person. This presumption may be rebutted by a showing, in the manner provided by Section 59A-37-19 NMSA 1978, that control does not in fact exist. The superintendent may determine, after furnishing all persons in interest notice and an opportunity to be heard, that control exists in fact, notwithstanding the absence of a presumption to that effect, provided the determination is based on specific findings of fact in its support;  
D. "enterprise risk" means an activity, a circumstance, an event or a series of events involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its whole insurance holding company system and includes a situation that would cause a company action level event as defined in Section 59A-5A-4 NMSA 1978 or would cause the insurer to be in a hazardous financial condition as defined in Section 59A-4124 NMSA 1978;  
E. "health maintenance organization" means a person that undertakes to provide or arrange for the delivery of basic health care services to enrollees on a prepaid basis; provided that "prepaid basis" may include the payment of copayments and deductibles by enrollees;  
F. "insurance holding company" is a person that controls an insurer; "insurance 
holding company system" means a combination of two or more affiliated persons, at least one of which is an insurer;  
G. "insurer" means a person that undertakes, under contract, to indemnify a person against loss, damage or liability arising from an unknown or contingent future event. The term does not include agencies, authorities or instrumentalities of the United States, its possessions or territories, the commonwealth of Puerto Rico, the District of Columbia, a state or any of its political subdivisions or a fraternal benefit society;  
H. "person" means an individual, corporation, association, partnership, joint stock 
company, trust, unincorporated organization or any similar entity or combination of entities;  
I. "securityholder" means the owner of any security of a person, including common stock, preferred stock, debt obligations and any other security convertible into or evidencing the right to acquire any of the foregoing;  
J. "subsidiary" means an affiliate of a person controlled by the person either directly or indirectly through one or more intermediaries; and  
K. "voting security" means a certificate evidencing the ownership or indebtedness of a person, to which is attached a right to vote on the management or policymaking of that person and includes any security convertible into or evidencing a right to acquire such a voting security.



 

Amendments:

 Amended March 12, 2025, in STBTC

STBTCa/SB 277:  Amendment changes to SB 277 are as follows:
 1.  On page 4, line 24, strike "person" and insert in lieu thereof "company".
 2.  On page 4, line 25, after the comma, strike the remainder of the line and on page 5, strike line 1 and strike line 2 up to the semicolon and insert in lieu thereof "with assets that exceed a threshold of one billion dollars ($1,000,000,000) in value, that issues a policy to guarantee payment to one or more named
 beneficiaries when an insured person dies".
 3.  On page 13, line 7, strike the closing quotation mark and between lines 7 and 8, insert:
 "G.  Nothing in this section shall be construed to contradict the provisions of Section 59A-37-24 NMSA 1978."".
 4.  On page 14, line 24, strike the closing quotation mark and between lines 24 and 25, insert:
 "H.  Nothing in this section shall be construed to contradict the provisions of Section 59A-37-24 NMSA 1978.""