The Vermont Statutes Online

Title 8: Banking and Insurance

Chapter 155: Disclosure of Material Transactions

• § 8101. Report of material transactions required

  (a) Every insurer domiciled in this State shall file a report with the Commissioner disclosing material acquisitions and dispositions of assets or material nonrenewals, cancellations, or revisions of ceded reinsurance agreements unless such acquisitions and dispositions of assets or material nonrenewals, cancellations, or revisions of ceded reinsurance agreements have been submitted to the Commissioner for review, approval, or information purposes by the insurer pursuant to other provisions of the insurance laws, regulations, or other requirements.

  (b) The report required in subsection (a) of this section shall be filed within 15 days of the end of the calendar month in which the transaction occurs.

  (c) One complete copy of the report, including any exhibits or other attachments filed as part thereof, shall be filed with the department and with the National Association of Insurance Commissioners.

  (d) All reports obtained by or disclosed to the Commissioner under this chapter shall be confidential and shall not be subject to subpoena nor made public by the Commissioner, the National Association of Insurance Commissioners, or any other person, except to the insurance departments of other states, without the prior written consent of the insurer to which it pertains, unless the Commissioner, after the insurer has had notice and an opportunity to be heard, determines that the interest of policyholders, shareholders, or the public will be served by the publication thereof, in which event the Commissioner may publish all or any part thereof in such manner as he or she may deem appropriate. (Added 1993, No. 235 (Adj. Sess.), § 6, eff. June 21, 1994.)

• § 8102. Acquisitions and dispositions of assets

  (a)(1) For the purposes of this chapter, asset acquisition shall include every purchase, lease, exchange, merger, consolidation, succession, or other acquisition other than the construction or development of real property by or for the reporting insurer or the acquisition of materials for such purpose.

  (2) For the purposes of this chapter, asset disposition shall include every sale, lease, exchange, merger, consolidation, mortgage, hypothecation, assignment (whether for the benefit of creditors or otherwise), abandonment, destruction, or other disposition.

  (b) The following information is required to be disclosed in any report of a material asset acquisition or disposition:

  (1) Date of the transaction.

  (2) Manner of acquisition or disposition.

  (3) Description of the assets involved.

  (4) Nature and amount of the consideration given or received.

  (5) Purpose of, or reason for, the transaction.

  (6) Manner by which the amount of consideration was determined.

  (7) Gain or loss recognized or realized as a result of the transaction.

  (8) Identity of each person from whom the assets were acquired or to whom they were disposed.

  (c) Materiality. No acquisition or disposition of assets need be reported pursuant to section 8101 of this title if the acquisition or disposition is not material. For purposes of this chapter, a material asset acquisition (or the aggregate of any series of related acquisitions during any 30-day period) or asset disposition (or the aggregate of any series of related dispositions during any 30-day period) is one that is nonrecurring, not in the ordinary course of business, and involves more than five percent of the reporting insurer’s total admitted assets as reported in its most recent annual statement filed with the Department under section 3561 of this title.

  (d) Insurers are required to report material asset acquisitions and dispositions on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers which utilizes a pooling arrangement or a 100 percent reinsurance agreement that affects the solvency and integrity of the insurer’s reserves and such 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 of the business not subject to the pooling arrangement is less than five percent of the insurer’s capital and surplus. (Added 1993, No. 235 (Adj. Sess.), § 6, eff. June 21, 1994.)

• § 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.)