2006 Code of Virginia § 38.2-1301.1 - Material transaction disclosures

38.2-1301.1. Material transaction disclosures.

A. Every insurer domiciled in this Commonwealth shall file a report with theCommission disclosing material acquisitions and dispositions of assets ormaterial nonrenewals, cancellations or revisions of ceded reinsuranceagreements unless such acquisitions and dispositions of assets or materialnonrenewals, cancellations or revisions of ceded reinsurance agreements havebeen submitted to the Commission for review, approval or information purposespursuant to other provisions of Title 38.2 or the rules and regulations ofthe Commission.

1. The report required by this subsection is due within fifteen days afterthe end of the calendar month in which any of the foregoing transactionsoccur.

2. One complete copy of the report, including any exhibits or otherattachments filed as part thereof, shall be filed with the NationalAssociation of Insurance Commissioners unless the insurer has applied for andhas been granted an exemption from this requirement by the Commission.

B. All reports obtained by or disclosed to the Commission pursuant to thissection, shall be given confidential treatment, shall not be subject tosubpoena, and shall not be made public by the Commission, the NationalAssociation of Insurance Commissioners, or any other person without the priorwritten consent of the insurer to which it pertains unless the Commission,after giving the insurer which would be affected thereby, notice and anopportunity to be heard, determines that the interest of policyholders,shareholders, or the public will be served by the publication thereof, inwhich event the Commission may publish all or any part thereof in such manneras it may deem appropriate. Notwithstanding the foregoing, the Commission mayat its discretion disclose such reports to (i) a regulatory official of anystate or country; (ii) the National Association of Insurance Commissioners,its affiliate or its subsidiary; or (iii) a law-enforcement authority of anystate or country. Any such disclosure by the Commission shall not constitutea waiver of confidentiality of any such report.

C. No acquisitions or dispositions of assets need be reported pursuant tosubsection A if the acquisitions or dispositions are not material. Forpurposes of this section, a material acquisition, or the aggregate of anyseries of related acquisitions during any thirty-day period, or disposition,or the aggregate of any series of related dispositions during any thirty-dayperiod, is one that is nonrecurring and not in the ordinary course ofbusiness and involves more than five percent of the reporting insurer's totaladmitted assets as reported in its most recent statutory statement filed withthe Commission.

1. Asset acquisitions subject to this section include every purchase, lease,exchange, merger, consolidation, succession, or other acquisition other thanthe construction or development of real property by or for the reportinginsurer or the acquisition of materials for such purpose.

2. Asset dispositions subject to this section include every sale, lease,exchange, merger, consolidation, mortgage, pledge or hypothecation,assignment, whether for the benefit of creditors or otherwise, abandonment,destruction, or other disposition.

3. The following information is required to be disclosed in any report of amaterial acquisition or disposition of assets:

a. Date of the transaction;

b. Manner of acquisition or disposition;

c. Description of the assets involved;

d. Nature and amount of the consideration given or received;

e. Purpose of, or reason for, the transaction;

f. Manner by which the amount of consideration was determined;

g. Gain or loss recognized or realized as a result of the transaction; and

h. Name of all persons from whom the assets were acquired or to whom theywere disposed.

4. Insurers are required to report material acquisitions and dispositions ona nonconsolidated basis unless the insurer is part of a consolidated group ofinsurers which utilizes a pooling arrangement or 100 percent reinsuranceagreement that affects the solvency and integrity of the insurer's reservesand such insurer ceded substantially all of its direct and assumed businessto the pool. An insurer is deemed to have ceded substantially all of itsdirect and assumed business to a pool if the insurer has less than onemillion dollars total direct plus assumed written premiums during a calendaryear that are not subject to a pooling arrangement and the net income of thebusiness not subject to the pooling arrangement represents less than fivepercent of the insurer's capital and surplus.

D. No nonrenewals, cancellations or revisions of ceded reinsurance agreementsneed be reported pursuant to this section if the nonrenewals, cancellationsor revisions are not material. For purposes of this section, a materialnonrenewal, cancellation or revision is one that affects for property andcasualty business, including accident and health business when written assuch, more than fifty percent of an insurer's ceded written premium, or forlife, annuity and accident and health business, more than fifty percent ofthe total reserve credit taken for business ceded, on an annualized basis asindicated in the insurer's most recently filed statutory statement; however,no filing is required if the insurer's ceded written premium or the totalreserve credit taken for business ceded represents, on an annualized basis,less than ten percent of direct plus assumed written premium or ten percentof the statutory reserve requirement prior to any cession, respectively.

1. Subject to the foregoing criteria, a report is to be filed without regardto which party has initiated the nonrenewal, cancellation or revision ofceded reinsurance whenever one or more of the following conditions exist:

a. The entire cession has been cancelled, nonrenewed or revised and cededindemnity and loss adjustment expense reserves after any nonrenewal,cancellation or revision represent less than fifty percent of the comparablereserves that would have been ceded had the nonrenewal, cancellation orrevision not occurred;

b. An authorized or accredited reinsurer has been replaced on an existingcession by an unauthorizing reinsurer; or

c. Collateral requirements previously established for unauthorized reinsurershave been reduced; e.g., the requirement to collateralize incurred but notreported (IBNR) claim reserves has been waived with respect to one or moreunauthorized reinsurers newly participating in an existing cession.

Subject to the materiality criteria, for purposes of the foregoingsubdivisions b and c, a report shall be filed if the result of the revisionaffects more than ten percent of the cession.

2. The following information is required to be disclosed in any report of amaterial nonrenewal, cancellation or revision of ceded reinsurance agreements:

a. Effective date of the nonrenewal, cancellation or revision;

b. The description of the transaction with an identification of the initiatorthereof;

c. Purpose of, or reason for, the transaction; and

d. If applicable, the identity of the replacement reinsurers.

3. Insurers are required to report all material nonrenewals, cancellations orrevisions of ceded reinsurance agreements on a nonconsolidated basis unlessthe insurer is part of a consolidated group of insurers which utilizes apooling arrangement or 100 percent reinsurance agreement that affects thesolvency and integrity of the insurer's reserves and such insurer cededsubstantially all of its direct and assumed business to the pool. An insureris deemed to have ceded substantially all of its direct and assumed businessto a pool if the insurer has less than one million dollars total direct plusassumed written premiums during a calendar year that are not subject to apooling arrangement and the net income of the business not subject to thepooling arrangement represents less than five percent of the insurer'scapital and surplus.

(1994, c. 308; 2001, c. 519.)