Rhode Island § 27-56-3 - Disclosure of Material Transactions Act

§ 27-56-3. Nonrenewals, cancellations, or revisions of ceded reinsurance agreements.

(a) Materiality and scope.

(1) No nonrenewals, cancellations, or 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, or revision is one that affects:

(i) As respects property and casualty business, including accident and health business written by a property and casualty insurer:

(A) More than fifty percent (50%) of the insurer’s total ceded written premium; or

(B) More than fifty percent (50%) of the insurer’s total ceded indemnity and loss adjustment reserves.

(ii) As respects life, annuity, and accident and health business: more than fifty percent (50%) of the total reserve credit taken for business ceded, on an annualized basis, as indicated in the insurer’s most recent annual statement.

(iii) As respects either property and casualty or life, annuity, and accident and health business, either of the following events shall constitute a material revision that must be reported:

(A) An authorized reinsurer representing more than ten percent (10%) of a total cession is replaced by one or more unauthorized reinsurers; or

(B) Previously established collateral requirements have been reduced or waived as respects one or more unauthorized reinsurers representing collectively more than ten percent (10%) of a total cession.

(2) No filing shall be required if:

(i) As respects property and casualty business, including accident and health business written by a property and casualty insurer: the insurer’s total ceded written premium represents, on an annualized basis, less than ten percent (10%) of its total written premium for direct and assumed business; or

(ii) As respects life, annuity, and accident and health business: the total reserve credit taken for business ceded represents, on an annualized basis, less than ten percent (10%) of the statutory reserve requirement prior to any cession.

(b) Information to be reported.

(1) The following information is required to be disclosed in any report of a material nonrenewal, cancellation, or revision of ceded reinsurance agreements:

(i) Effective date of the nonrenewal, cancellation, or revision;

(ii) The description of the transaction with an identification of the initiator of it;

(iii) Purpose of, or reason for, the transaction; and

(iv) If applicable, the identity of the replacement reinsurers.

(2) Insurers are required to report all material nonrenewals, cancellations, or revisions of ceded reinsurance agreements on a non-consolidated basis unless the insurer is part of a consolidated group of insurers that utilizes a pooling arrangement or one hundred percent (100%) 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 one million dollars ($1,000,000) total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than five percent (5%) of the insurer’s capital and surplus.