§ 59A-34-46 — Nonrenewals, cancellations or revisions of ceded

New Mexico § 59A-34-46

• Jurisdiction: New Mexico
• Ch. 59A: Insurance Code
• Art. 34: Domestic Stock and Mutual Insurers

Text

reinsurance programs; materiality; scope; reporting requirements. A. No nonrenewal, cancellation or revision of a ceded reinsurance program need be reported pursuant to Section 59A-34-44 NMSA 1978 if the nonrenewal, cancellation or revision is not material. For purposes of this section and Section 59A-34-44 NMSA 1978, a material nonrenewal, cancellation or revision is one that, on an annualized basis as indicated in the insurer's most recently filed financial statement, affects more than fifty percent of an insurer's ceded written premium for property or casualty business, including accident and health business when written by a casualty insurer, or affects more than fifty percent of the total reserve credit taken for business ceded for life, annuity, or accident and health business written by an insurer other than a casualty insurer; but the transaction is not material if the insurer's ceded written premium or the total reserve credit taken for business ceded represents, on an annualized basis, less than ten percent of direct plus assumed written premium or ten percent of the statutory reserve requirement prior to any cession, respectively. B. Notwithstanding the provisions of Subsection A of this section, and without regard to which part has initiated the nonrenewal, cancellation or revision of ceded reinsurance, a report is to be filed whenever: (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 or nonaccredited reinsurer; or (3) previously established collateral requirements for unauthorized or nonaccredited reinsurers have been reduced or waived, either as to an existing reinsurer or reinsurers or to one or more reinsurers newly participating in an existing cession. C. The following information is required to be disclosed in the report of a material nonrenewal, cancellation or revision of a ceded reinsurance program: (1) the effective date of the nonrenewal, cancellation or revision; (2) a description of the transaction with an identification of the initiator thereof; (3) the 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 programs on a non-consolidated 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 all of its direct and assumed business to a pool, and the group reports in accordance with Section 59A-34-44 NMSA 1978 on behalf of the members of the group on a consolidated basis. For purposes of this subsection 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 ($1,000,000) 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 as allowed by this subsection, the report shall identify every insurer that is a member of the group.

Legislative History

1978 Comp., § 59A-34-46, enacted by Laws 1993, ch. 320, § 70.