PURPOSE: This rule aids in the interpretation of sections 354.105, 354.190, 354.435, 354.465, 354.717, 354.720, 374.190, 375.041, 375.400, 376.350, 377.100, 377.380, 378.626, 379.105, 381.241, 383.030 and 384.021, RSMo, and requires domestic insurance companies to disclose material transactions as addenda to the annual and quarterly financial statement filings in order to protect policyholders, claimants, creditors, shareholders and the public.

1. (1) “Insurer domiciled in this state”, “domestic insurer”, and “insurer” shall have the same definition as provided in section 375.012, RSMo.

2. (2) Every insurer domiciled in this state shall file a report with the director 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 reinsurance agreements have been submitted to the director for review, approval or information purposes pursuant to other provisions of the insurance laws or regulations of this state.

   1. (A) The report required in section (2) of this rule is due within fifteen (15) days after the end of the calendar month in which any of the foregoing transactions occur. However, the director may grant an extension of an additional thirty (30) days in which to file the report.
   2. (B) One complete copy of the report, including any exhibits or other attachments, in addition to being filed with the director, shall also be filed with the National Association of Insurance Commissioners.
   3. (C) All reports obtained by or disclosed to the director pursuant to this rule, shall be given confidential treatment and shall not be subject to subpoena and shall not be made public by the director, the National Association of Insurance Commissioners, or any other person, except to insurance departments of other states, without the prior written consent of the reporting insurer. However, if the director, after giving notice and an opportunity to be heard to the reporting insurer determines that the interest of the insurer’s policyholders or shareholders or the public will be served by publication of the report, the director may publish all or any part of the report in any manner the director may deem appropriate.

3. (3) No acquisitions or dispositions of assets need be reported pursuant to section (2) of this rule if the acquisitions or dispositions are not material. For purposes of this rule, a material acquisition (or the aggregate of any series of related acquisitions during any thirty (30)-day period) or disposition (or the aggregate of any series of related dispositions during any thirty (30)-day period) is one that is non-recurring 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 department.

   1. (A) Asset acquisitions subject to this rule 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. (B) Asset dispositions subject to this rule include every sale, lease, exchange, merger, consolidation, mortgage, hypothecation, assignment (whether for the benefit of creditors or otherwise), abandonment, destruction or other disposition.

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

   1. (A) Date of the transaction;
   2. (B) Manner of acquisition or disposition;
   3. (C) Description of the assets involved;
   4. (D) Nature and amount of the consideration given or received;
   5. (E) Purpose of, or reason for, the transaction;
   6. (F) Manner by which the amount of consideration was determined;
   7. (G) Gain or loss recognized or realized as a result of the transaction; and
   8. (H) Name(s) of the person(s) from whom the assets were acquired or to whom they were disposed.
5. (5) Domestic insurers are required to report material acquisitions and dispositions on a non-consolidated 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 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 total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrange- 20 CSR 200-1

ment 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.

1. (6) No nonrenewals, cancellations or revisions of ceded reinsurance agreements need be reported pursuant to section (2) of this rule if the nonrenewals, cancellations or revisions are not material. For purposes of this rule, a material nonrenewal, cancellation or revision is one that affects:

   1. (A) For property and casualty business, including accident and health business written by a property and casualty insurer:

      1. 1. More than fifty percent (50%) of the

insurer's total ceded written premium; or

1. 2. More than fifty percent (50%) of the

insurer's total ceded indemnity and loss adjustment reserves.

1. (B) For 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.

2. (C) For either property and casualty or life, annuity, and accident and health business, either of the following events shall constitute a material revision which must be reported:

   1. 1. An authorized reinsurer representing

more than ten percent (10%) of a total cession is replaced by one (1) or more unauthorized reinsurers; or

1. 2. Previously established collateral

requirements have been reduced or waived respecting one (1) or more unauthorized reinsurers representing collectively more than ten percent (10%) of a total cession.

1. (D) However, no filing shall be required if—

   1. 1. For 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

1. 2. For 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.

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

   1. 1. Effective date of the nonrenewal, can-

cellation or revision;

1. 2. The description of the transaction

with an identification of the transaction’s initiator;

1. 3. Purpose of, or reason for, the trans-

action; and

1. 4. If applicable, the identity of the

replacement reinsurer.

1. (F) Insurers are required to report all material nonrenewals, cancellations or revisions of ceded reinsurance agreements on a non-consolidated basis unless—

   1. 1. The insurer is part of a consolidated

group of insurers which utilizes a pooling arrangement or one hundred percent (100%) reinsurance agreements that affects the solvency and integrity of the insurer's reserves; and

1. 2. 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 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 capital and surplus.

1. (7) This rule shall apply to any transaction entered into after the effective date of this rule.

AUTHORITY: sections 354.120, 354.485, 354.723, 374.045, 375.013 and 381.231, RSMo (1994).* Original rule filed Aug. 1, 1995, effective March 30, 1996. *Original authority: 354.120, RSMo (1973), amended 1983, 1993, 1995; 354.485, RSMo (1983); 354.723, RSMo (1987); 374.045, RSMo (1967), amended 1993, 1995; and 375.013, RSMo (1993), amended 1995.