CHAPTER 521D
DISCLOSURE OF MATERIAL TRANSACTIONS

  521D.1  Title.
  This chapter shall be known and may be cited as the “Disclosure of Material Transactions Act”.
94 Acts, ch 1176, §16

  521D.2  Report.
  1.  An 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 pursuant to other provisions of this subtitle or pursuant to other requirements. The report shall be filed not later than fifteen days after the end of the calendar year in which the material acquisition or disposition of assets, or material nonrenewal, cancellation, or revision of ceded reinsurance agreements occurs.
  2.  The insurer shall also file a copy of the report required to be filed with the commissioner pursuant to subsection 1, including any exhibits or other attachments filed as part of the report, with the national association of insurance commissioners.
  3.  a.  All reports obtained by or disclosed to the commissioner and the national association of insurance commissioners pursuant to this chapter are confidential and shall not be subject to subpoena and shall not be made public by the commissioner, the national association of insurance commissioners, or any other person without the prior written consent of the insurer to which it pertains, unless the commissioner, after giving such insurer notice and providing an opportunity to be heard, determines that the interest of policyholders, shareholders, or the public will be served by the publication or disclosure of the report, in which event the commissioner may publish or disclose all or any part of the report as deemed appropriate.
  b.  Notwithstanding this subsection, the commissioner or the national association of insurance commissioners may provide the report to the insurance regulatory agencies of other states.
94 Acts, ch 1176, §17; 2012 Acts, ch 1023, §157

Code editor directive applied

  521D.3  Report of acquisition and disposition of assets — information required — scope.
  1.  An acquisition or disposition of assets need not be reported pursuant to section 521D.2 if the acquisition or disposition is not material. For purposes of this chapter, a material acquisition, or the aggregate of any series of related acquisitions, or a disposition, or the aggregate of any series of related dispositions, during any thirty-day period, is one that is nonrecurring, is 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 statutory statement filed with the insurance division of the insurer’s state of domicile.
  2.  For purposes of this chapter, an asset acquisition includes 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. For purposes of this chapter, an asset disposition includes every sale, lease, exchange, merger, consolidation, mortgage, hypothecation, assignment, whether for the benefit of creditors or otherwise, abandonment, destruction, or other disposition.
  3.  A report of a material acquisition or disposition of assets shall include all of the following:
  a.  Date of the transaction.
  b.  Manner of the 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.
  h.  Name or names of the person or persons from whom the assets were acquired or to whom they were disposed.
  4.  An insurer is required to report material acquisitions and dispositions on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers which utilizes a pooling arrangement or one hundred 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 one million dollars 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 of the insurer’s capital and surplus.
94 Acts, ch 1176, §18

  521D.4  Report of nonrenewal, cancellation, revision of ceded reinsurance agreements — information required — scope.
  1.  A nonrenewal, cancellation, or revision of a ceded reinsurance agreement need not be reported pursuant to section 521D.2 if the nonrenewal, cancellation, or revision is not material. For purposes of this chapter, a material nonrenewal, cancellation, or revision of a ceded reinsurance agreement is one that does the following:
  a.  For property and casualty business including accident and health business when written as such, affects more than fifty percent of an insurer’s ceded written premium on an annualized basis as indicated in the insurer’s most recently filed statutory statement.
  b.  For life, annuity, and accident and health business, affects more than fifty percent of the total reserve credit taken for business ceded on an annualized basis as indicated in the insurer’s most recently filed statutory statement.
  2.  Notwithstanding subsection 1, a filing is not required if the insurer’s ceded written premium represents, on an annualized basis, less than ten percent of direct plus assumed written premium, or the total reserve credit taken for business ceded represents, on an annualized basis, less than ten percent of the statutory reserve requirement prior to any cession.
  3.  a.  A report required to be filed pursuant to this chapter is to be filed regardless of who has initiated the nonrenewal, cancellation, or revision of the ceded reinsurance agreement whenever one or more of the following conditions exist:
  (1)  The entire cession has been canceled, nonrenewed, or revised and ceded indemnity and loss adjustment expense reserves, after any nonrenewal, cancellation, or revision, represent less than fifty percent of the comparable 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.
  (3)  Collateral requirements previously established for unauthorized reinsurers have been reduced.
  b.  Subject to the materiality criteria, for purposes of paragraph “a”, subparagraphs (2) and (3), a report shall be filed if the result of the revision affects more than ten percent of the cession.
  4.  A report of a material nonrenewal, cancellation, or revision of a ceded reinsurance agreement required to be filed shall include all of the following:
  a.  The effective date of the nonrenewal, cancellation, or revision.
  b.  The description of the transaction including the identification of the initiator of the transaction.
  c.  The purpose of, or reason for, the transaction.
  d.  The identity of the replacement reinsurers, if applicable.
  5.  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 which utilizes an intercompany pooling agreement or arrangement or a one hundred percent reinsurance agreement under which the ceding company has ceded substantially one hundred percent of its direct and assumed business to a pool. An insurer is deemed to have ceded substantially one hundred percent of its direct and assumed business to a pool if the insurer has less than one million dollars of total direct plus assumed written premiums during a calendar year that are not subject to the pooling agreement or arrangement and the net income of the business not subject to the pooling agreement or arrangement represents less than five percent of the insurer’s capital and surplus. If a group of insurers reports on a consolidated basis, the report shall identify the individual insurers that are members of the group.
94 Acts, ch 1176, §19; 2012 Acts, ch 1023, §133
Subsection 3 amended