Current through February 24, 2025
(a) Under
AS
21.12.020(a)(6), the
director will allow credit for reinsurance ceded by a domestic insurer to an
assuming insurer that is licensed to write reinsurance by, and has its head
office or is domiciled in, a reciprocal jurisdiction, and that meets the other
requirements of this section.
(b)
In addition to a jurisdiction within the meaning given in
AS
21.12.020(i)(2)(A) and (B)
and designated by the directed under (d) of this section, a reciprocal
jurisdiction includes a qualified jurisdiction as determined by the director
under AS
21.12.020(a)(5)(C) and
3
AAC 21.694(n) - (q) that is not
otherwise described in
AS
21.12.020(i)(2)(A) or (B),
that is designated by the director under (d) of this section and that director
determines meets all of the following additional requirements:
(1) provides that an insurer that has its
head office or is domiciled in a qualified jurisdiction shall receive credit
for reinsurance ceded to a United States domiciled assuming insurer in the same
manner as credit for reinsurance is received for reinsurance assumed by
insurers domiciled in a qualified jurisdiction;
(2) does not require United States domiciled
assuming insurer to establish or maintain a local presence as a condition for
entering into a reinsurance agreement with a ceding insurer subject to
regulation by the non United States. jurisdiction or as a condition to allow
the ceding insurer to recognize credit for the reinsurance;
(3) recognizes the United States regulatory
approach to group supervision and group capital, by providing written
confirmation by a competent regulatory authority, in a qualified jurisdiction,
that insurers and insurance groups that are domiciled or maintain their
headquarters in this state or another jurisdiction accredited by the National
Association of Insurance Commissioners shall be subject only to worldwide
prudential insurance group supervision including worldwide group governance,
solvency and capital, and reporting, as applicable, by the director or the
insurance supervisory official of the domiciliary state and will not be subject
to group supervision at the level of the worldwide parent undertaking of the
insurance or reinsurance group by the qualified jurisdiction; and
(4) provides written confirmation by a
competent regulatory authority m a qualified jurisdiction that information
regarding insurers and their parent, subsidiary, or affiliated entities, if
applicable, shall be provided to the director in accordance with a memorandum
of understanding or similar document between the director and a qualified
jurisdiction, including the International Association of Insurance Supervisors
Multilateral Memorandum of Understanding or other multilateral memoranda of
understanding coordinated by the National Association of Insurance
Commissioner.
(c) Credit
shall be allowed when the reinsurance is ceded from an insurer domiciled in
this state to an assuming insurer meeting each of the following conditions:
(1) the assuming insurer must be licensed to
transact reinsurance by, and have its head office or be domiciled in, a
reciprocal jurisdiction;
(2) the
assuming insurer must have and maintain on an ongoing basis minimum capital and
surplus, or its equivalent, calculated on at least an annual basis as of the
preceding December 31 or at the annual date otherwise statutorily reported to
the reciprocal jurisdiction, and confirmed as set out (7) of this subsection
according to the methodology of its domiciliary jurisdiction, in the following
amounts;
(A) no less than $250,000,000;
or
(B) if the assuming insurer is
an association, including incorporated and individual unincorporated
underwriters;
(i) minimum capital and surplus
equivalents, net of liabilities, or own funds of the equivalent of at least
$250,000,000; and
(ii) a central
fund containing a balance of the equivalent of at least $250,000,000;
(3) the assuming
insurer must have and maintain on an ongoing basis a minimum solvency or
capital ratio, as applicable, as follows:
(A)
if the assuming insurer has its head office or is domiciled in a reciprocal
jurisdiction within the meaning given in
AS
21.12.020(I)(2)(A) ratio
specified in the applicable covered agreement;
(B) if the assuming insurer is domiciled in a
reciprocal jurisdiction within the meaning given in
AS
21.12.020(i)(2)(B), a risk
based capital ratio of 300 percent of the authorized control level, calculated
in accordance with the formula developed by the NAIC; or
(C) if the assuming insurer is domiciled in a
reciprocal jurisdiction within the meaning given in
AS
21.12.020(i)(2)(C) after
consultation with the reciprocal jurisdiction and considering recommendations
published through the NAIC Committee Process of the National Association of
Insurance Commissioner solvency or capital ratio as the director determines to
be an effective measure of solvency;
(4) the assuming insurer must agree to and
provide adequate assurance, in the form of a properly executed Form RJ-1, of
its agreement to the following;
(A) the
assuming insurer must agree to provide prompt written notice and explanation to
the director if it falls below the minimum requirements set out in (2) OR (3)of
this subsection or if a regulatory action is taken against it for serious
noncompliance with applicable law;
(B) the assuming insurer must consent in
writing to the jurisdiction of the courts of this state and to the appointment
of the director as agent for service of process The director may also require
that consent be provided and included in each reinsurance agreement under the
director's jurisdiction Nothing in this subparagraph limit or alter the
capacity of parties to a reinsurance agreement to agree to alternative dispute
resolution mechanisms, except to the extent the agreements are unenforceable
under applicable insolvency or delinquency laws;
(C) the assuming insurer must consent in
writing to pay all final judgments, wherever enforcement is sought, obtained by
a ceding insurer, that have been declared enforceable in the territory where
the judgment was obtained;
(D) each
reinsurance agreement must include a provision requiring the assuming insurer
to provide security in an amount equal to 100 percent of the assuming insurer's
liabilities attributable to reinsurance ceded under that agreement if the
assuming insurer resists enforcement of a final judgment that is enforceable
under the law of the jurisdiction in which it was obtained or a properly
enforceable arbitration award, whether obtained by the ceding insurer or by its
legal successor on behalf of its estate, if applicable;
(E) the assuming insurer must confirm that it
is not presently participating in a solvent scheme of arrangement, that
involves this state s ceding insurers, and agrees to notify the ceding insurer
and the director and to provide 100 percent security to the ceding insurer
consistent with the terms of the scheme, should the assuming insurer enter into
a solvent scheme of arrangement The security must be be in a form consistent
with the provisions of
AS
21.12.020(a)(5) and (c) 3
AAC .662,3 AAC 21.664,
3
AAC 21.670 and
3
AAC 21.685; In this subparagraph solvent scheme of
arrangement" means a foreign or alien statutory or regulatory compromise
procedure; subject to requisite majority creditor approval and judicial A
sanction in the assuming insurer's home jurisdiction either to finally commute
liabilities of duly noticed classed members or creditors of a solvent debtor,
or to reorganize or restructure the debts and obligations of a solvent debtor
on a final basis and (ii) that may be subject to judicial recognition and
enforcement of the arrangement by a governing authority outside the ceding
insurer's home jurisdiction; and
(F) the assuming insurer must agree in
writing to meet the applicable information filing requirements as set out in
(5) of this subsection;
(5) the assuming insurer or its legal
successor must provide, if requested by the director, on behalf of itself and
its legal predecessors, the following documentation to the director;
(A) for the two years preceding entry into
the reinsurance agreement and on an annual basis thereafter, the assuming
insurer's annual audited financial statements, in accordance with the
applicable law of the jurisdiction of its head office or domiciliary
jurisdiction, as applicable, including the external audit report;
(B) for the two years preceding entry into
the reinsurance agreement, the solvency and financial condition report or
actuarial opinion, if filed with the assuming insurer's supervisor;
(C) before entry into the reinsurance
agreement and not more than semiannually thereafter, an updated list of all
disputed and overdue reinsurance claims outstanding for 90 days or more,
regarding reinsurance assumed from ceding insurers domiciled in the United
States; and
(D) before entry into
the reinsurance agreement and not more than semiannually thereafter,
information regarding the assuming insurer's assumed reinsurance by ceding
insurer, ceded reinsurance by the assuming insurer, and reinsurance recoverable
on paid and unpaid losses by the assuming insurer to allow for the evaluation
of the criteria set out in (6) of this subsection;
(6) the assuming insurer must maintain a
practice of prompt payment of claims under reinsurance agreement the lack of
prompt payment is be evidenced if one or more of following criteria are met:
(A) more than 15 percent of the reinsurance
recoverables from the assuming insurer are overdue and in dispute as reported
to the director;
(B) more than 15
percent of the assuming insurer's ceding insurers or reinsurers have overdue
reinsurance recoverable on paid losses of 90 days or more that are not in
dispute and that exceed for each ceding insurer or reinsurer $100,000, or as
otherwise specified in a covered agreement;
(C) the aggregate amount of reinsurance
recoverable on paid losses that are not in dispute, but are overdue by 90 days
or more, exceeds $50,000,000, or as otherwise specified in a covered
agreement
(7) the
assuming insurer's supervisory authority must confirm to the director on an
annual basis that the assuming insurer complies with the requirements set out
in (2) and (3) of this subsection and
(8) nothing in this subsection precludes an
assuming insurer from providing the director with information on a voluntary
basis.
(d) The director
will timely create and publish a list of reciprocal jurisdictions considering
the following:
(1) the director's list will
include reciprocal jurisdiction within the meaning given in
AS
21.12.020(I)(2)(A) and (B)
and will consider other reciprocal jurisdiction included on the National
Association of Insurance Commissioner list of reciprocal jurisdiction. The
director may approve a jurisdiction that does not appear on the list of
reciprocal jurisdictions as provided by applicable law, regulation, or in
accordance with criteria published through the Committee Process of the
National Association of Insurance Commissioner and
(2) the director may remove a jurisdiction
from the list of reciprocal jurisdictions upon a determination that the
jurisdiction no longer meets one or more of the requirements of a reciprocal
jurisdiction, as provided by applicable law, regulation, or in accordance with
a process published through the of the National Association of Insurance
Commissioner Committee Process, except that the director will not remove from
the list a reciprocal jurisdiction within the meaning given in
AS
21.12.020(i)(2)(A) and (B)
upon removal of a reciprocal jurisdiction from this list credit for reinsurance
ceded to an assuming insurer domiciled in that jurisdiction will be allowed, if
otherwise allowed under
AS
21.12.020 or
3
AAC 21.060-
3
AAC 21.675.
(e) The director shall timely create and
publish a list of assuming insurers that have satisfied the following
conditions set out in this section and to which cessions will be granted credit
in accordance with this section:
(1) if a
jurisdiction accredited by the National Association of Insurance Commissioners
(NAIC) has determined that the conditions set out in (c) of this section have
been met, the director may defer to that jurisdiction's determination and add
an assuming insurer to the list of assuming insurers to which cessions shall be
granted credit in accordance with this subsection, if
(A) the director accepts financial documentation filed with the
NAIC or another jurisdiction accredited by the NAIC in satisfaction of the
requirements of (c) of this section; or
(B) upon initial eligibility, the assuming insurer submits the
information to the director required under
AS
21.12.020(a)(6)(D) and
complies with any additional requirements that the director may impose by
regulations adopted under AS 44.62 (Administrative Procedure Act), except to
the extent that they conflict with an applicable covered agreement;
and
(2) when requesting
that the director defer to another NAIC accredited jurisdiction's
determination, an assuming insurer must submit a properly executed Form RJ-1
and additional information as the director may require; the director will
notify other states through the of the National Association of Insurance
Commissioner Committee process and provide relevant information with respect to
the determination of eligibility.
(f) If the director determines that an
assuming insurer no longer meets one or more of the requirements under this
section, the director may revoke or suspend the eligibility of the assuming
insurer for recognition under
AS
21.12.020(a)(6) and under
this section In accordance with
AS
21.12.020(h),a(1) While an
assuming insurer's eligibility is suspended, a reinsurance agreement issued,
amended, or renewed after the effective date of the suspension does not qualify
for credit except to the extent that the assuming insurer's obligations under
the contract are secured in accordance with
AS
21.12.020(c) and 3 AAC
21.66; and (2) an assuming insurer's eligibility is revoked, a credit for
reinsurance may not be granted after the effective date of the revocation with
respect to any reinsurance agreement entered into by the assuming insurer,
including a reinsurance agreement entered into before the date of revocation,
except to the extent that the assuming insurer's obligations under the contract
are secured in a form acceptable to the director and consistent with
AS
21.12.020(c) and
3
AAC 21.662.
(g) Before denying statement credit or
imposing a requirement to post security with respect to (f) of this section, or
adopting similar requirements that will have substantially the same regulatory
effect as security, the director
(1) will
communicate with the ceding insurer, the assuming insurer, and the assuming A
insurer's supervisory authority that the assuming insurer no longer satisfies
one of the conditions listed in (c) of this section;
(2) provide the assuming insurer with 30 days
from the date of initial communication to submit a plan to remedy the defect,
and 90 days from the date of the initial communication to remedy the ./I
defect, except in exceptional circumstances in which a shorter period is
necessary for policyholder and other consumer protections;
(3) May impose the requirements as set out in
this subsection after the expiration of 90 days or less, as set out in (2) of
this subsection, if the director determines that no or insufficient action was
taken by the assuming insurer and
(4) provide a written explanation to the
assuming insurer of the requirements set A out in this
subsection.
(h) If
subject to a legal process of rehabilitation, liquidation, or conservation, as
applicable, the ceding insurer, or its representative, may seek and, if
determined appropriate by the court in which the proceedings are pending, may
obtain an order requiring that the assuming liabilities.
(i) Nothing in
AS
21.12.020(h) limits or in
any way alters the capacity of parties to any reinsurance agreement to
renegotiate the agreement.
Authority:AS
21.06.090
AS
21.12.020
