KRS 304.24-415: Report disclosing material acquisitions and dispositions of assets,

nonrenewals, cancellations, or revisions of ceded reinsurance agreements --

Exceptions.

(1) (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 the acquisitions and dispositions of assets or material nonrenewals,

cancellations, or revisions of ceded re insurance agreements have been

submitted to the commissioner for review, approval, or information purposes

pursuant to other provisions of this chapter.

(b) The report required in paragraph (a) of this subsection is due within fifteen

(15) days after the e nd of the calendar month in which any of the foregoing

transactions occur.

(c) One (1) complete copy of the report, including any exhibits or other

attachments, shall be filed with:

1. The insurance department of the insurer's state of domicile; and

2. The National Association of Insurance Commissioners.

(d) All reports obtained by or disclosed to the commissioner pursuant to this

section shall be given confidential treatment and shall not be subject to

subpoena and shall not be made public by the commissio ner, the National

Association of Insurance Commissioners, or any other person, except to

insurance departments of other states, without the prior written consent of the

insurer to which it pertains unless the commissioner, after giving the insurer

who would be affected notice and opportunity to be heard, determines that the

interest of policyholders, shareholders, or the public will be served by

publication, in which event the commissioner may publish all or any part in

the manner the commissioner may deem appropriate.

(2) (a) No acquisitions or dispositions of assets need be reported pursuant to

subsection (1) of this section if the acquisitions or dispositions are not

material. For purposes of this section, a material acquisition, or the aggregate

of any s eries of related acquisitions during any thirty (30) day period, is one

that is nonrecurring and not in the ordinary course of business and involves

more than five percent (5%) of the reporting insurer's total admitted assets as

reported in its most recent statutory statement filed with the insurance

department of the insurer's state of domicile.

(b) 1. Asset acquisitions subject to this section include every purchase, lease

exchange, merger, consolidation, succession, or other acquisition other

than the co nstruction or development of real property by or for the

reporting insurer or the acquisition of materials for such purpose.

2. Asset dispositions subject to this section include every sale, lease,

exchange, merger, consolidation, mortgage, hypothecation, assignment

(whether for the benefit of creditors or otherwise), abandonment,

destruction, or other disposition.

(c) 1. The following information is required to be disclosed in any report of a

material acquisition or disposition of assets:

a. Date of the transaction;

b. Manner of 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;

and

h. Names of the persons from which the assets were acquired or to

whom they were disposed.

2. Insurers are 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

(100%) reinsurance agreement that affects the solvency and int egrity 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 mill ion 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.

(3) (a) No nonrenewals, cancellations, or revisions of ceded reinsurance agreements

need be reported pursuant to subsection (1) of this section if the nonrenewals,

cancellations or revisions are not material. For purposes of this section, a

material nonrenewal, cancellation, or revision is one that affects:

1. 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 i nsurer's total ceded written

premium; or

b. More than fifty percent (50%) of the insurer's total ceded

indemnity and loss adjustment reserves.

2. As respects life, annuity, and accident and health business, more than

fifty percent (50%) of the total reserv e credit taken for business ceded,

on an annualized basis, as indicated in the insurer's most recent annual

statement.

3. As respects either property and casualty or life, annuity, and accident

and health business, either of the following events shall cons titute a

material revision which must be reported:

a. An authorized reinsurer representing more than ten percent (10%)

of a total cession is replaced by one (1) or more unauthorized

reinsurers; or

b. Previously established collateral requirements have been reduced

or waived as respects one (1) or more unauthorized reinsurers

representing collectively more than ten percent (10%) of a total

cession.

(b) No filing shall be required if:

1. 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

2. 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 requirements

prior to any cession.

(c) The following information is required to be disclosed in any report of a

material nonrenewal, cancellation, or revision of ceded reinsurance

agreements:

1. Effective date of the nonrenewal, cancellation, or revision;

2. The description of the transaction with an identification of the initiator

thereof;

3. Purpose of, or reason for, the transaction; and

4. If applicable, the identity of the replacement reinsurers.

(d) Insurers are required to report all material nonrenewals, cancellations, or

revisions of ceded reinsurance agreements on a nonconsolida ted basis unless

the insurer is part of a consolidated group of insurers which 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 substa ntially 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.