(1) The purpose of this rule is to improve the surveillance of the financial condition of insurers by the department of insurance of the state of Montana by requiring annual examinations by independent certified public accountants of the financial statements reporting the financial position and the results of operations of insurers.

(2) Except as specifically provided herein, every insurer shall be subject to these rules. Insurers having direct premiums written in this state of less than $1,000,000 in any calendar year and less than 1,000 policyholders or certificateholders of directly written policies nationwide at the end of such calendar year shall be exempt from these rules for such year (unless the commissioner makes a specific finding that compliance is necessary for the commissioner to carry out statutory responsibilities) . Insurers having assumed premiums pursuant to contracts and/or treaties of reinsurance of $1,000,000 or more will not be exempt.

(3) Foreign or alien insurers filing audited financial reports in another state, pursuant to such other state's requirement of audited financial reports which has been found by the commissioner to be substantially similar to the requirements herein, are exempt from these rules if:

(a) A copy of the audited financial report, report on significant deficiencies in internal controls, and the accountant's letter of qualifications which are filed with such other state are filed with the commissioner in accordance with the filing dates specified in ARM 6.6.3503, 6.6.3509, and 6.6.3510, respectively (Canadian insurers may submit accountants' reports as filed with the Canadian dominion department of insurance) .

(b) A copy of any notification of adverse financial condition report filed with such other state is filed with the commissioner within the time specified in ARM 6.6.3507. This rule does not prohibit, preclude or in any way limit the commissioner from ordering and/or conducting and/or performing examinations of insurers under the rules, regulations, practices, and procedures of the department.