31A-5-703 - Nonrenewals, cancellations, or revisions of ceded reinsurance agreements.
31A-5-703. Nonrenewals, cancellations, or revisions of ceded reinsuranceagreements.
(1) (a) A nonrenewal, cancellation, or revision of ceded reinsurance agreements is notsubject to the reporting requirements of Section 31A-5-701 if:
(i) the nonrenewal, cancellation, or revision is not material; or
(ii) with respect to a property and casualty business, the insurer's total ceded writtenpremium, on an annualized basis, is less than 10% of its total written premium for direct andassumed business; or
(iii) with respect to a life, annuity, and accident and health business, the total reservecredit taken for business ceded, on an annualized basis, is less than 10% of the statutory reserverequirement prior to a cession.
(b) For purposes of this part, a material nonrenewal, cancellation, or revision is one thataffects:
(i) with respect to a property and casualty business:
(A) more than 50% of the insurer's total ceded written premium; or
(B) more than 50% of the insurer's total ceded indemnity and loss adjustment reserves;
(ii) with respect to a life, annuity, and accident and health business, more than 50% of thetotal reserve credit taken for business ceded, on an annualized basis, as indicated in the insurer'smost recent annual statement; or
(iii) with respect to either property and casualty or life, annuity, or accident and healthbusiness:
(A) an authorized reinsurer representing more than 10% of a total cession is replaced byone or more unauthorized reinsurers; or
(B) previously established collateral requirements have been reduced or waived asrespects one or more unauthorized reinsurers representing collectively more than 10% of a totalcession.
(2) (a) The following information is required to be disclosed in any report filed pursuantto Section 31A-5-701 of a material nonrenewal, cancellation, or revision of a ceded reinsuranceagreement:
(i) the effective date of the nonrenewal, cancellation, or revision;
(ii) the description of the transaction with an identification of the initiator of thetransaction;
(iii) the purpose of, or reason for the transaction; and
(iv) if applicable, the identity of the replacement reinsurers.
(b) (i) Insurers are required to report all material nonrenewals, cancellations, or revisionsof ceded reinsurance agreements on a nonconsolidated basis unless the insurer:
(A) 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
(B) ceded substantially all of its direct and assumed business to the pool.
(ii) An insurer is considered to have ceded substantially all of its direct and assumedbusiness to a pool if:
(A) the insurer has less than $1,000,000 total direct plus assumed written premiumsduring a calendar year that are not subject to a pooling arrangement; and
(B) the net income of the business not subject to the pooling arrangement represents lessthan 5% of the insurer's capital and surplus.
Amended by Chapter 116, 2001 General Session