§ 27-56-3 - Nonrenewals, cancellations or revisions of ceded reinsurance agreements.
SECTION 27-56-3
§ 27-56-3 Nonrenewals, cancellations orrevisions of ceded reinsurance agreements. – (a) Materiality and scope. (1) No nonrenewals, cancellationsor revisions of ceded reinsurance agreements need to be reported pursuant to§ 27-56-1 if the nonrenewals, cancellations or revisions are not material.For the purposes of this chapter, a material nonrenewal, cancellation orrevision is one that affects:
(i) As respects property and casualty business, includingaccident and health business written by a property and casualty insurer:
(A) More than fifty percent (50%) of the insurer's totalceded written premium; or
(B) More than fifty percent (50%) of the insurer's totalceded indemnity and loss adjustment reserves.
(ii) As respects life, annuity, and accident and healthbusiness: more than fifty percent (50%) of the total reserve credit taken forbusiness ceded, on an annualized basis, as indicated in the insurer's mostrecent annual statement.
(iii) As respects either property and casualty or life,annuity, and accident and health business, either of the following events shallconstitute a material revision that must be reported:
(A) An authorized reinsurer representing more than tenpercent (10%) of a total cession is replaced by one or more unauthorizedreinsurers; or
(B) Previously established collateral requirements have beenreduced or waived as respects one or more unauthorized reinsurers representingcollectively more than ten percent (10%) of a total cession.
(2) No filing shall be required if:
(i) As respects property and casualty business, includingaccident and health business written by a property and casualty insurer: theinsurer's total ceded written premium represents, on an annualized basis, lessthan ten percent (10%) of its total written premium for direct and assumedbusiness, or
(ii) As respects life, annuity, and accident and healthbusiness: the total reserve credit taken for business ceded represents, on anannualized basis, less than ten percent (10%) of the statutory reserverequirement prior to any cession.
(b) Information to be reported. (1) Thefollowing information is required to be disclosed in any report of a materialnonrenewal, cancellation or revision of ceded reinsurance agreements:
(i) Effective date of the nonrenewal, cancellation orrevision;
(ii) The description of the transaction with anidentification of the initiator of it;
(iii) Purpose of, or reason for, the transaction; and
(iv) If applicable, the identity of the replacementreinsurers.
(2) Insurers are required to report all material nonrenewals,cancellations or revisions of ceded reinsurance agreements on anon-consolidated basis unless the insurer is part of a consolidated group ofinsurers which utilizes a pooling arrangement or one hundred percent (100%)reinsurance agreement that affects the solvency and integrity of the insurer'sreserves and the insurer ceded substantially all of its direct and assumedbusiness to the pool. An insurer is deemed to have ceded substantially all ofits direct and assumed business to a pool if the insurer has less than onemillion dollars ($1,000,000) total direct plus assumed written premiums duringa calendar year that are not subject to a pooling arrangement and the netincome of the business not subject to the pooling arrangement represents lessthan five percent (5%) of the insurer's capital and surplus.