§33-39-3 Nonrenewals, cancellations or revisions of ceded reinsurance programs.
§33-39-3. Nonrenewals, cancellations or revisions of ceded reinsurance programs.
(a) No nonrenewals, cancellations or revisions of ceded reinsurance programs need be reported pursuant to section one of this article if the nonrenewals, cancellations or revisions are not material. For purposes of this article, a material nonrenewal, cancellation or revision is one that affects for property and casualty business, including accident and health business when written as such, more than fifty percent of an insurer's ceded written premium, or for life, annuity and accident and health business, more than fifty percent of the total reserve credit taken for business ceded, on an annualized basis as indicated in the insurer's most recently filed statutory statement: Provided, That no filing is required if the insurer's ceded written premium or the total reserve credit taken for business ceded represents, on an annualized basis, less than ten percent of direct plus assumed written premium or ten percent of the statutory reserve requirement prior to any cession, respectively.
(b) Subject to the criteria outlined above, a report is to be filed without regard to which party has initiated the nonrenewal, cancellation or revision of ceded reinsurance whenever one or more of the following conditions exist:
(1) The entire cession has been canceled, nonrenewed or revised and ceded indemnity and loss adjustment expense reserves after any nonrenewal, cancellation or revision represent less than fifty percent of the comparable reserves that would have been ceded had the nonrenewal, cancellation or revision not occurred;
(2) An authorized or accredited reinsurer has been replaced on an existing cession by an unauthorized reinsurer; or
(3) Collateral requirements previously established for unauthorized reinsurers have been reduced. For example, the requirement to collateralize incurred but not reported claim reserves has been waived with respect to one or more unauthorized reinsurers newly participating in an existing cession.
(4) Subject to the materiality criteria, for purposes of subdivisions (2) and (3) above, a report shall be filed if the result of the revision affects more than ten percent of the cession.
(c) The following information is required to be disclosed in any report of a material nonrenewal, cancellation or revision of a ceded reinsurance program:
(1) Effective date of the nonrenewal, cancellation or revision;
(2) The description of the transaction with an identification of the initiator thereof;
(3) Purpose of, or reason for, the transaction; and
(4) If applicable, the identity of the replacement reinsurers.
(d) 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 which utilizes a pooling arrangement or a one hundred percent 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 a pool. An insurer is deemed to have ceded "substantially all" of its direct and assumed business to a pool if the insurer has less than one million dollars of total direct plus assumed written premiums during a calendar year that are not subject to the pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than five percent of the insurer's capital and surplus. If a group of insurers reports on a consolidated basis as here allowed, the report shall identify the individual insurers that are members of the group.