                                 CODE OF VIRGINIA

MATERIAL TRANSACTION DISCLOSURES (§ 38.2-1301.1)

A. Every insurer domiciled in this Commonwealth shall file a report with the
Commission 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 Commission for review, approval or information purposes pursuant to other
provisions of Title 38.2 or the rules and regulations of the Commission.

   1. The report required by this subsection is due within fifteen days after the
   end of the calendar month in which any of the foregoing transactions occur.

   2. One complete copy of the report, including any exhibits or other
   attachments filed as part thereof, shall be filed with the National
   Association of Insurance Commissioners unless the insurer has applied for and
   has been granted an exemption from this requirement by the Commission.

B. All reports obtained by or disclosed to the Commission pursuant to this
section, shall be given confidential treatment, shall not be subject to
subpoena, and shall not be made public by the Commission, the National
Association of Insurance Commissioners, or any other person without the prior
written consent of the insurer to which it pertains unless the Commission, 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 Commission
may publish all or any part thereof in such manner as it may deem appropriate.
Notwithstanding the foregoing, the Commission may at its discretion disclose
such reports to (i) a regulatory official of any state or country; (ii) the
National Association of Insurance Commissioners, its affiliate or its
subsidiary; or (iii) a law-enforcement authority of any state or country. Any
such disclosure by the Commission shall not constitute a waiver of
confidentiality of any such report.

C. No acquisitions or dispositions of assets need be reported pursuant to
subsection A if the acquisitions or dispositions are not material. For purposes
of this section, 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&#8217;s total admitted assets as
reported in its most recent statutory statement filed with the Commission.

   1. Asset acquisitions subject to this section 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 include every sale, lease,
   exchange, merger, consolidation, mortgage, pledge or hypothecation,
   assignment, whether for the benefit of creditors or otherwise, abandonment,
   destruction, or other disposition.

   3. 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. Name of all persons from whom the assets were acquired or to whom they
   were disposed.

   4. 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 100 percent reinsurance
   agreement that affects the solvency and integrity of the insurer&#8217;s
   reserves and such 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&#8217;s capital and surplus.

D. No nonrenewals, cancellations or revisions of ceded reinsurance agreements
need be reported pursuant to 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 for property and casualty business,
including accident and health business when written as such, more than fifty
percent of an insurer&#8217;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&#8217;s most recently filed statutory statement; however, no filing is
required if the insurer&#8217;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.

   1. Subject to the foregoing criteria, a report is to 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:
   				a. The entire cession has been cancelled, 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;
   				b. An authorized or accredited reinsurer has been replaced on an existing
   cession by an unauthorizing reinsurer; or
   				c. 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, for purposes of the foregoing
   subdivisions b and c, a report shall be filed if the result of the revision
   affects more than ten percent of the cession.

   2. The following information is required to 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 thereof;
   				c. Purpose of, or reason for, the transaction; and
   				d. If applicable, the identity of the replacement reinsurers.

   3. 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 100 percent reinsurance agreement that affects the
   solvency and integrity of the insurer&#8217;s reserves and such 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&#8217;s
   capital and surplus.

HISTORY: 1994, c. 308; 2001, c. 519.