H*4492 Session 110 (1993-1994)
H*4492(Rat #0417, Act #0372) General Bill, By J.J. Bailey, R.S. Corning,
J.T. McElveen, Quinn and Scott
Similar(S 975)
A Bill to amend the Code of Laws of South Carolina, 1976, by adding Sections
38-13-400, 38-13-410, and 38-13-420 so as to require every insurer domiciled
in South Carolina to file a report with the Director of the Director of the
Department of Insurance or his designee disclosing material acquisitions and
dispositions of assets or material nonrenewals, cancellations, or revisions of
ceded reinsurance agreements except under certain circumstances, and enact
related and incidental provisions of law, including further exceptions to
reporting; and to amend the 1976 Code by adding Section 38-5-180 so as to
provide that no insurer may operate from a location within South Carolina
unless it is licensed as an insurer under Section 38-5-10, permitted to
operate as an approved reinsurer under Section 38-5-60, or qualified to
operate as an eligible surplus lines insurer under Section 38-45-90.-amended
title
01/13/94 House Introduced and read first time HJ-268
01/13/94 House Referred to Committee on Labor, Commerce and
Industry HJ-269
02/16/94 House Committee report: Favorable with amendment Labor,
Commerce and Industry HJ-15
03/23/94 House Amended HJ-46
03/23/94 House Read second time HJ-47
03/24/94 House Read third time and sent to Senate HJ-12
03/29/94 Senate Introduced and read first time SJ-10
03/29/94 Senate Referred to Committee on Banking and Insurance SJ-10
04/06/94 Senate Committee report: Favorable Banking and Insurance SJ-9
04/07/94 Senate Read second time SJ-20
04/19/94 Senate Read third time and enrolled SJ-12
04/27/94 Ratified R 417
05/02/94 Signed By Governor
05/02/94 Effective date 05/02/94
05/02/94 See act for exception to or explanation of
effective date
05/10/94 Copies available
(A372, R417, H4492)
AN ACT TO AMEND THE CODE OF LAWS OF SOUTH
CAROLINA, 1976, BY ADDING SECTIONS 38-13-400, 38-13-410,
AND 38-13-420 SO AS TO REQUIRE EVERY INSURER DOMICILED
IN SOUTH CAROLINA TO FILE A REPORT WITH THE DIRECTOR
OF THE DEPARTMENT OF INSURANCE OR HIS DESIGNEE
DISCLOSING MATERIAL ACQUISITIONS AND DISPOSITIONS OF
ASSETS OR MATERIAL NONRENEWALS, CANCELLATIONS, OR
REVISIONS OF CEDED REINSURANCE AGREEMENTS EXCEPT
UNDER CERTAIN CIRCUMSTANCES, AND ENACT RELATED AND
INCIDENTAL PROVISIONS OF LAW, INCLUDING FURTHER
EXCEPTIONS TO REPORTING; AND TO AMEND THE 1976 CODE
BY ADDING SECTION 38-5-180 SO AS TO PROVIDE THAT NO
INSURER MAY OPERATE FROM A LOCATION WITHIN SOUTH
CAROLINA UNLESS IT IS LICENSED AS AN INSURER UNDER
SECTION 38-5-10, PERMITTED TO OPERATE AS AN APPROVED
REINSURER UNDER SECTION 8-5-60, OR QUALIFIED TO OPERATE
AS AN ELIGIBLE SURPLUS LINES INSURER UNDER SECTION
38-45-90.
Be it enacted by the General Assembly of the State of South Carolina:
Report disclosing acquisitions, dispositions; etc.
SECTION 1. Chapter 13, Title 38 of the 1976 Code, as last amended by
Section 537 of Act 181 of 1993, is further amended by adding:
"Section 38-13-400. (A) Effective January 1, 1995, every insurer
domiciled in this State shall file a report with the director or his designee
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 director or his designee for review, approval, or
information purposes pursuant to other provisions of the insurance laws,
regulations, or other requirements.
(B) The report required in subsection (A) is due within fifteen days after
the end of the calendar month in which any of the foregoing transactions
occur.
(C) One complete copy of the report, including any exhibits or other
attachments filed as part thereof, must be filed with:
(1) the director or his designee; and
(2) the National Association of Insurance Commissioners.
(D) All reports obtained by or disclosed to the director or his designee
pursuant to this section or Sections 38-13-410 or 38-13-420 must be given
confidential treatment and are not subject to subpoena and shall not be
made public by the director or his designee, 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 director or his designee, after giving the
insurer which would be affected thereby notice and an opportunity to be
heard, determines that the interest of policyholders, shareholders, or the
public will be served by the publication thereof, in which event the director
or his designee may publish all or any part thereof in such manner as the
director or his designee considers appropriate.
Section 38-13-410. (A) No acquisitions or dispositions of assets need
be reported pursuant to Section 38-13-400 if the acquisitions or dispositions
are not material. For purposes of this section and Sections 38-13-400 and
38-13-420, a material acquisition (or the aggregate of any series of related
acquisitions during any thirty-day period) or disposition (or the aggregate
of any series of related dispositions during any thirty-day period) is one that
is nonrecurring and 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 annual statement filed with the insurance
department of the insurer's state of domicile.
(B) (1) Asset acquisitions subject to this section and Sections
38-13-400 and 38-13-420 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) Asset dispositions subject to this section and Sections 38-13-400
and 38-13-420 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 must 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 whom the assets were acquired or to
whom they were disposed.
(2) Insurers shall 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 considered 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.
Section 38-13-420. (A) No nonrenewals, cancellations, or revisions of
ceded reinsurance agreements need be reported pursuant to Section
38-13-400 if the nonrenewals, cancellations, or revisions are not material.
For purposes of this section and Sections 38-13-400 and 38-13-410, a
material nonrenewal, cancellation, or revision is one that affects, for
property and casualty business, including accident and health business
when written as such, more than fifty percent of an insurer's ceded written
premium, or, for life, annuity, and accident and health business, 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 annual
statement; provided, however, that no filing is required 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 before any cession, respectively.
(B) Subject to the criteria outlined in subsection (A) of this section, a
report must be filed without regard to which party has initiated the
nonrenewal, cancellation, or revision of ceded reinsurance 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; or
(3) collateral requirements previously established for unauthorized
reinsurers have been reduced; e.g., the requirement to collateralize incurred
but not reported (IBNR) claim reserves has been waived with respect to one
or more unauthorized reinsurers newly participating in an existing
cession.
Subject to the materiality criteria outlined in subsection (A) of this
section, for purposes of items (2) and (3), a report must be filed if the result
of the revision affects more than ten percent of the cession.
(C) (1) The following information must be disclosed in any report of a
material nonrenewal, cancellation, or revision of ceded reinsurance
agreements:
(a) effective date of the nonrenewal, cancellation, or revision;
(b) the description of the transaction with an identification of the
initiator of the transaction;
(c) purpose of, or reason for, the transaction; and
(d) if applicable, the identity of the replacement reinsurers.
(2) 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 a pooling arrangement or one hundred percent
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 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."
Insurers, operation in State
SECTION 2. The 1976 Code is amended by adding:
"Section 38-5-180. No insurer may operate from a location within
South Carolina unless it is licensed as an insurer as provided in Section
38-5-10, or permitted to operate as an approved reinsurer as provided in
Section 38-5-60, or qualified to operate as an eligible surplus lines insurer
as provided in Section 38-45-90."
Time effective
SECTION 3. Except as otherwise specifically provided in this act, this act
takes effect upon approval by the Governor except that, until July 1, 1995,
the words "director or his designee" in Section 38-13-400 of
the 1976 Code, as contained in Section 1, must be construed to mean the
Chief Insurance Commissioner of South Carolina.
Approved the 2nd day of May, 1994. |