33-3-704. Nonrenewals, cancellations, or revisions of ceded reinsurance agreements.
33-3-704. Nonrenewals, cancellations, or revisions of ceded reinsurance agreements. (1) A nonrenewal, cancellation, or revision of a ceded reinsurance agreement need not be reported pursuant to 33-3-702 if the nonrenewal, cancellation, or revision is not material. For purposes of this part, a material nonrenewal, cancellation, or revision is one that affects:
(a) property and casualty business, including disability business written by a property and casualty insurer, so that:
(i) more than 50% of the insurer's total ceded written premium is affected; or
(ii) more than 50% of the insurer's total ceded indemnity and loss adjustment reserves are affected;
(b) life, annuity, and disability business, so that more than 50% of the total reserve credit taken for business ceded, on an annualized basis, as indicated in the insurer's most recent annual statement is affected;
(c) either property and casualty or life, annuity, and disability business and causes either of the following events that constitutes a material revision that must be reported:
(i) an authorized reinsurer representing more than 10% of a total cession is replaced by one or more unauthorized reinsurers; or
(ii) previously established collateral requirements have been reduced or waived as respects one or more unauthorized reinsurers representing collectively more than 10% of a total cession.
(2) However, a filing is not required if:
(a) with respect to property and casualty business, including disability business written by a property and casualty insurer, the insurer's total ceded written premium represents, on an annualized basis, less than 10% of its total written premium for direct and assumed business; or
(b) with respect to life, annuity, and disability business, the total reserve credit taken for business ceded represents, on an annualized basis, less than 10% of the statutory reserve requirement prior to any cession.
(3) The following information is required to be disclosed in any report of a material nonrenewal, cancellation, or revision of ceded reinsurance agreements:
(a) the effective date of the nonrenewal, cancellation, or revision;
(b) the description of the transaction with an identification of the initiator of the transaction;
(c) the purpose or reason for the transaction; and
(d) if applicable, the identity of the replacement reinsurers.
(4) Insurers are required to report all material nonrenewals, cancellations, or revisions of ceded reinsurance agreements on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers that uses a pooling arrangement or 100% reinsurance agreement that affects the solvency and integrity of the insurer's reserves and the insurer ceded substantially all of its direct and assumed business to the pool. An insurer is considered to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than $1 million total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than 5% of the insurer's capital and surplus.
History: En. Sec. 81, Ch. 379, L. 1995.