DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES  
INSURANCE BUREAU  
DISCLOSURE OF MATERIAL TRANSACTIONS  
(By authority conferred on the commissioner of insurance by section 210 of Act No. 218 of  
the Public Acts of 1956, as amended, being S500.210 of the Michigan Compiled Laws)  
R 500.51 Report of acquisitions and dispositions of assets or material nonrenewals,  
cancellations, or revisions of ceded reinsurance agreements.  
Rule 1. (1) Every insurer domiciled in Michigan 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 reinsurance  
agreements have been submitted to the commissioner for review, approval, or information  
purposes pursuant to other statutory or regulatory requirements.  
(2) The report required in subrule (1) of this rule is due within 15 days after the end of the  
calendar month in which the transactions specified in subrule (1) of this rule occur.  
(3) A complete copy of the report, including any exhibits or other attachments, shall  
also be filed with the national association of insurance commissioners.  
(4) All reports obtained by, or disclosed to, the commissioner pursuant to this rule shall be  
confidential, shall not be subject to subpoena, and shall not be made public by the  
commissioner, the national association of insurance commissioners, or any other person without  
the prior written consent of the insurer to which it pertains, unless the commissioner, after  
giving the insurer that would be affected notice and an opportunity to he heard, determines  
that5 the interest of the policyholders, shareholders, or the public will be served by  
publication, in which event the commissioner may publish all or part of the report in the  
manner the commissioner deems appropriate. Notwithstanding the provisions of this subrule,  
if assurances are provided that the information contained in the report will be kept  
confidential, the commissioner may disclose the information to the insurance regulatory  
agencies of other states.  
(5) Insurers are required to report material acquisitions and dispositions of assets  
and material nonrenewals, cancellations, or revisions of ceded reinsurance arrangements on a  
nonconsolidated basis, unless the insurer is part of a consolidated group of insurers that utilizes  
a pooling arrangement or 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 $1,000,000.00 total direct and assumed  
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 5% of the  
insurer's capital surplus.  
History: 1996 AACS.  
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R 500.52 acquisitions and disposition of assets explained.  
Rule 2. (1) As used in R 500.51, a material acqusition or disposition of assets is one which  
is nonrecurring and not in the ordinary course of business and which involves more than 5%  
of the reporting insurer's total admitted assets, as reported in its most recent statutory  
statement filed with the commissioner. A material acquisition or disposition includes the  
aggregate of any series of related acquisitions or dispositions during any 30-day period.  
(2) Asset acquisitions subject to this rule include every purchase, lease, exchange,  
merger, consolidation, succession, or other acquisition other than the construction or  
development or real property by or for the reporting insurer or the acquisition of materials for  
such purpose.  
(3) Asset dispositions subject to this rule include every assignment, whether for the  
benefit of creditors or otherwise, sale, lease, exchange, merger, consolidation, mortgage,  
hypothecation, abandonment, destruction, or other disposition.  
(4) All of the following information is required to be disclosed in any report of a material  
acquisition or disposition of assets:  
(a) The date of the transaction.  
(b) The manner of acquisition or disposition.  
(c) A description of the asset involved.  
(d) The nature and amount of the consideration given or received.  
(e) The purpose of, or reason for, the transaction.  
(f) The manner by which the amount of consideration was determined.  
(g) The gain or loss recognized or realized as a result of the transaction.  
(h) The name or names of the person or persons from whom the assets were acquired or to  
whom they were disposed.  
History: 1996 AACS.  
R 500.53 Nonrenewals, cancellations, or revisions of ceded reinsurance agreements  
explained.  
Rule 3. (1) As used in R 500.51, a material nonrenewal, cancellation, or revision of ceded  
reinsurance is one that, for property and casualty business, including accident and health  
business written by a property and casualty insurer, affects more than 50% of the health  
insurer's total ceded written premium or more than 50% of the insurer's total ceded indemnity  
and loss adjustment reserves as indicated in the insurer's most recent annual statement or, for  
life, annuity, anc accident and health business, affects more than 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) For either property and casualty business or life, annuity, and accident and health  
business, either of the following events shall constitute a material revision that shall be reported:  
(a) An authorized reinsurer reinsuring more than 10% of the insurer's total ceded written  
premium is replaced by 1 or more unauthorized reinsurers.  
(b) Previously established collateral requirements have been reduced or waived for 1 or  
more unauthorized reinsurers reinsuring collectively more than 10% of the insurer's total  
ceded written premium.  
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(3) Notwithstanding the provisions of subrules (1) and (2) of this rule, a report under R  
500.51 shall not be required of either of the following provisions is complied with, as  
applicable:  
(a) 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 10% of its total written premium for direct and assumed business.  
(b) For life, annuity, and accident and health business, the total reserve credit taken for  
business ceded represents, on an annualized basis, less than 10% of the statutory reserve  
requirement before any cession.  
(4) All of the following information is required to be disclosed in any report of a  
material nonrenewal, cancellation, or revision of ceded reinsurance agreements:  
(a) The effective date of the nonrenewal, cancellation, or revision.  
(b) A description of the transaction, including identification of the initiator of the  
transaction.  
(c) Purpose of, or reason for, the transaction.  
(d) If applicable, the entity of the replacement reinsurers.  
History: 1996 AACS.  
R 500.54 Effective date of rules  
Rule 4. These rules shall take effect on July 1, 1996.  
History: 1996 AACS.  
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;