Texas Insurance Code - Not Codified - Article 21.49-8. Disclosure Of Material Transactions Report
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Art. 21.49-8. DISCLOSURE OF MATERIAL TRANSACTIONS REPORT.
Article repealed effective April 1, 2007
Application; Exemption
Sec. 1. (a) Except as provided by Subsection (b) of this
section, this article applies to the following domestic insurers
and commercially domiciled insurers:
(1) a capital stock company;
(2) a mutual company;
(3) a title insurance company;
(4) a fraternal benefit society;
(5) a Lloyd's plan company;
(6) a reciprocal or interinsurance exchange;
(7) a group hospital service corporation;
(8) a health maintenance organization;
(9) a risk retention group;
(10) a nonprofit legal service corporation; and
(11) a nonprofit hospital, medical, or dental service
corporation.
(b) A domestic insurer listed under Subsection (a) of this
section that does business only in this state is exempt from the
application of this article until the insurer obtains authority to
conduct the business of insurance in another state.
Report
Sec. 2. (a) Unless the material acquisition and disposition
of assets and the nonrenewal, cancellation, or revisions of
material ceded reinsurance agreements have been submitted to the
commissioner for review, approval, or information under other
provisions of this code or other laws, regulations, or
requirements, each insurer shall file a report with the
commissioner that discloses:
(1) material acquisitions and dispositions of assets; or
(2) material nonrenewals, cancellations, or revisions of
ceded reinsurance agreements.
(b) The report required under Subsection (a) of this section
must be filed not later than the 15th day after the last day of the
calendar month in which any of the affected transactions occur.
(c) The insurer also shall file one complete copy of the
report, including any necessary exhibits or other attachments, with
the department.
(d) A report obtained by or disclosed to the commissioner
under this article is confidential and is not subject to a subpoena,
other than a grand jury subpoena. The report may not be disclosed
by the commissioner, the National Association of Insurance
Commissioners, or any other person, except to the insurance
department of another state or another authorized governmental
agency, without the prior written consent of the affected insurer,
unless the commissioner, after notice to the affected insurer and
an opportunity for a hearing, determines that the interest of
policyholders, shareholders, or the public will be served by the
publication of the report. If the commissioner does so determine,
the department may disclose a report to the public and may publish
all or any part of the report in any manner considered appropriate
by the commissioner.
Acquisitions and Dispositions of Assets
Sec. 3. (a) An insurer is not required to report an
acquisition or disposition of assets under Section 2 of this
article if the acquisition or disposition is not material. For
purposes of this article, an acquisition, or the aggregate of a
series of related acquisitions during a 30-day period, or a
disposition, or the aggregate of a series of related dispositions
during a 30-day period, is material if it:
(1) is not recurring;
(2) is not in the ordinary course of business; and
(3) involves more than five percent of the reporting
insurer's total admitted assets as reported in its most recent
statutory statement filed with the department.
(b) An asset acquisition subject to this article includes
each 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 that purpose.
(c) An asset disposition subject to this article includes
each sale, lease, exchange, merger, consolidation, mortgage,
hypothecation, assignment, whether for the benefit of creditors or
otherwise, abandonment, destruction, or other disposition.
(d) The following information must be disclosed in a report
of a material acquisition or disposition of assets:
(1) the date of the transaction;
(2) the manner of acquisition or disposition;
(3) a description of the assets involved;
(4) the nature and amount of the consideration given or
received;
(5) the purpose of or reason for the transaction;
(6) the manner by which the amount of consideration was
determined;
(7) the gain or loss recognized or realized as a result of
the transaction; and
(8) the name of each person from whom the assets were
acquired or to whom they were disposed.
(e) An insurer shall report material acquisitions and
dispositions on a nonconsolidated basis unless the insurer:
(1) is part of a consolidated group of insurers that uses a
pooling arrangement or a 100 percent reinsurance agreement that
affects the solvency and integrity of the insurer's reserves; and
(2) ceded substantially all of its direct and assumed
business to the pooling arrangement.
(f) For purposes of Subsection (e), an insurer is considered
to have ceded substantially all of its direct and assumed business
to a pooling arrangement if:
(1) the insurer has, during a calendar year, less than $1
million total direct and assumed written premiums that are not
subject to a pooling arrangement; and
(2) the net income of the business not subject to the
pooling arrangement represents less than five percent of the
insurer's capital and surplus.
Nonrenewals, Cancellations, or Revisions of Ceded Insurance
Sec. 4. (a) An insurer is not required to report a nonrenewal,
cancellation, or revision of a ceded reinsurance agreement under
Section 2 of this article if the nonrenewal, cancellation, or
revision is not material. For purposes of this article, a
nonrenewal, cancellation, or revision is material if it affects, on
an annual basis, as indicated in the insurer's most recently filed
statutory statement:
(1) for property and casualty business, including accident
and health business when written as property and casualty business,
more than 50 percent of an insurer's ceded written premium; or
(2) for life, annuity, and accident and health business,
more than 50 percent of the total reserve credit taken for business
ceded.
(b) An insurer is not required to report if the insurer's
ceded written premium of the total reserve credit taken for
business ceded represents, on an annual basis, less than:
(1) 10 percent of direct and assumed written premiums; or
(2) 10 percent of the statutory reserve requirement before a
cession.
(c) Subject to the requirements imposed under Subsections
(a) and (b) of this section, an insurer shall file a report without
regard to which party initiated the nonrenewal, cancellation, or
revision of ceded reinsurance when 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 the nonrenewal, cancellation, or revision represent less than
50 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; or
(3) collateral requirements previously established for
unauthorized reinsurers have been reduced in that the requirement
to collateralize incurred but not reported claim reserves has been
waived for one or more unauthorized reinsurers newly participating
in an existing cession.
(d) Subject to the requirement of materiality, for purposes
of Subsections (c)(2) and (3) of this section, an insurer shall file
a report if the result of the revision affects more than 10 percent
of the cession.
(e) An insurer shall disclose the following information in a
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 that identifies the
initiator of the transaction;
(3) the purpose of or reason for the transaction; and
(4) if applicable, the identity of the replacement
reinsurers.
(f) An insurer shall report all material nonrenewals,
cancellations, or revisions of ceded reinsurance agreements on a
nonconsolidated basis unless the insurer:
(1) is part of a consolidated group of insurers that uses a
pooling arrangement or 100 percent reinsurance agreement that
affects the solvency and integrity of the insurer's reserves; and
(2) ceded substantially all of its direct and assumed
business to the pooling arrangement.
(g) For purposes of Subsection (f) of this section, an
insurer is considered to have ceded substantially all of its direct
and assumed business to a pooling arrangement if:
(1) the insurer has, during a calendar year, less than $1
million total direct and assumed written premiums that are not
subject to the pooling arrangement; and
(2) the net income of the business not subject to the
pooling arrangement represents less than five percent of the
insurer's capital and surplus.
Added by Acts 1995, 74th Leg., ch. 614, Sec. 13.
Article: 21.49-3c 21.49-3d 21.49-4 21.49-4a 21.49-5 21.49-6 21.49-7 21.49-8 21.49-11 21.49-13 21.49-14 21.49-15 21.49-15A 21.49-16 21.49-17
Last modified: August 11, 2007
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