Indemnity Reinsurance, Sale, Transfer or Assumption
As provided in the Reinsurance Oversight Regulations (Cal. Code Regs., tit. 10, § 2303.15(d)), a sale, cession, assumption or purchase that equals or exceeds either 75% of an insurer's total premium or 75% of its total liabilities, calculated before the subject transaction, shall constitute "substantially its entire property or business" for purposes of California Insurance Code section 1011(c).
Bulletin 2011-2 exempts non-domestic licensees from the requirements of California Insurance Code section 1011(c) for indemnity reinsurance transactions. California domestic insurers may use the Indemnity Reinsurance Application to obtain the Commissioner's consent to an indemnity reinsurance transaction meeting the 75% threshold.Following are links to the forms and information necessary to obtain the Commissioner's consent to an indemnity reinsurance transaction. Additional information may be requested by the Department during the course of review.
Indemnity Reinsurance Application(Use this format to prepare the Application.) In addition to the documents specified within the Application form, please attach:
- A completed Property & Casualty Reinsurance Checklist or Life Reinsurance Checklist.
- A completed form AR-2, Designation of Agent for Service of Process and Consent to Jurisdiction, executed by each party which is not admitted in California and is not an Accredited Reinsurer, Certified Reinsurer, or an insurer with an Approved U.S. Trust in California. It is not sufficient to include in the reinsurance agreement a provision that at the time the ceding insurer claims a breach of the agreement that the reinsurer will agree to service of process and consent to jurisdiction.
- A completed Indemnity Reinsurance Application Checklist.
Sale, Transfer or Assumption
A transaction which directly or indirectly results in the sale, transfer or assumption of business is not reinsurance; therefore, all admitted insurers are subject to the 1011(c) sanctions for entering into such a transaction meeting the 75% threshold without first obtaining the Commissioner's consent.Please submit a cover letter explaining the transaction, a copy of the proposed agreement, a copy of the proposed assumption certificate, and a resolution of the board of directors of each party authorizing the transaction. Additional information may be requested by the Department during the course of review.
Reference Materials: Code, Regulations and Bulletin
Following are links to relevant law:
- California Insurance Code sections 1011 and 1011.5
- Reinsurance Oversight Regulations, sections 2303.15(c), (d), (e), (h) and section 2303.22(g)
NOTE: The Reinsurance Oversight Regulations (Cal. Code Regs., tit. 10, § 2303 et seq.) should be carefully reviewed to make sure that the transaction meets the requirements for financial statement credit.
Submit the Application in duplicate with a cover letter to:
California Department of InsuranceAttach a check for the filing fee. Review the Fee Schedule to determine the appropriate fee (See MERGER, REINSURANCE, ASSUMPTION, CONSOLIDATION and TRANSFORMATION, Section 1011.5)
Corporate and Regulatory Affairs Bureau
45 Fremont Street, 24th Floor
San Francisco, CA 94105
If you have any questions about the 1011(c) application process, please contact the Department's Corporate and Regulatory Affairs Bureau at the above address, by email, or by calling 415-538-4035.