2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 155 - Disclosure of Material Transactions › § 8103. Nonrenewals, cancellations, or revisions of ceded reinsurance agreements

§ 8103. Nonrenewals, cancellations, or revisions of ceded reinsurance agreements
(a) Scope. Except as provided in subsection (c) of this section, a report as prescribed by section 8101 of this title is required to be filed without regard to which party has initiated the nonrenewal, cancellation, or revision of ceded reinsurance agreements whenever one or more of the following conditions exist:
(1) an entire cession has been canceled, nonrenewed, or revised and ceded indemnity and loss adjustment expense reserves after the nonrenewal, cancellation, or revision are less than 50 percent of the 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 and the revision affects more than 10 percent of the cession; or
(3) collateral requirements previously established for an unauthorized reinsurer have been reduced and the revision affects more than 10 percent of the cession.
(b) The following information is required to be disclosed in any report of a material nonrenewal, cancellation, or revision of a ceded reinsurance agreement:
(1) the effective date of the nonrenewal, cancellation, or revision;
(2) a description of the transaction, including identification of the initiator thereof;
(3) the purpose of, or reason for, the transaction; and
(4) if applicable, the identity of any replacement reinsurers.
(c) Exemptions.
(1) Nonrenewals, cancellations, or revisions of ceded reinsurance agreements are not material and are exempt from the reporting requirements under this chapter if the nonrenewal, cancellation, or revision is one that affects:
(A) less than 50 percent of an insurer’s ceded written premium, for property and casualty business including accident and health when written as property/casualty business, or
(B) less than 50 percent of the total reserve credit taken for life, annuity and accident and health business ceded, on an annualized basis as indicated in the insurer’s most recently filed annual statement.
(2) Provided, however, that no filing is required if:
(A) the insurer’s ceded written premium on an annualized basis, is less than 10 percent of the direct plus assumed written premium prior to any cession; or
(B) the total reserve credit taken for business ceded represents, on an annualized basis, less than 10 percent of the statutory reserve requirement prior to any cession.
(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 that utilizes a pooling arrangement or 100 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 the 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 $1,000,000.00 total direct plus assumed written premiums during the calendar year that are not subject to a pooling arrangement and the net income from business not subject to a pooling arrangement represents less than five percent of the insurer’s capital and surplus. (Added 1993, No. 235 (Adj. Sess.), § 6, eff. June 21, 1994.)