California Code of Regulations
Title 10 - Investment
Chapter 5 - Insurance Commissioner
Subchapter 3 - Insurers
Article 3 - Annual Statements
Premiums in Course of Collection
Section 2303.2 - Definitions

Universal Citation: 10 CA Code of Regs 2303.2

Current through Register 2024 Notice Reg. No. 38, September 20, 2024

As used in this article:

(a) "Accredited reinsurer" means an insurer that has been accredited pursuant to Code Section 922.4(b) and Section 2303.4 of this article.

(b) "Actuarial Method"means the methodology used to determine the Required Level of Primary Security, as described in section 2303.26.

(c) "Alien insurer" means an insurer organized under the laws of any jurisdiction other than a State of the United States.

(d) "Approved U.S. trust"or "U.S. trust"means the multiple beneficiary trust established by an insurer or group of insurers to secure obligations under reinsurance agreements, which have been approved pursuant to the provisions of Code Section 922.4(d) and Section 2303.5 of this article.

(e) "Assuming insurer" or "reinsurer" means the insurer to which risk is transferred under a reinsurance agreement.

(f) "Ceding insurer" means the insurer that transfers risk to another insurer under a reinsurance agreement.

(g) "Certified reinsurer" means an insurer that has been certified pursuant to Code Section 922.41.

(h) "Commissioner" means the California Insurance Commissioner.

(i) "Covered Policies"means, subject to the exemptions described in Section 2303.25 of this article, those policies, other than Grandfathered Policies, of the following policy types:

1. Life insurance policies with guaranteed non-level gross premiums and/or guaranteed non-level benefits, except for flexible premium universal life insurance policies; or,

2. Flexible premium universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period.

(j) "Department" means the California Department of Insurance.

(k) "Domestic insurer" means a licensed insurer domiciled in this state.

(l) "Domestic ceding insurer" means a domestic insurer that is a ceding insurer.

(m) "Examine" or "examination" as used in Code Section 730 includes an examination or review of any nature, scope or frequency by the Department of a licensed insurer, regardless of the location of the review or examination.

(n) "Financial statements" mean the statements and reports of an insurer filed with the Commissioner for the purpose of exhibiting the insurer's financial condition and affairs.

(o) "Foreign ceding insurer" means a foreign insurer that is a ceding insurer.

(p) "Foreign insurer" means a licensed insurer domiciled in another state.

(q) "Grandfathered Policies"means policies of the types described in subdivision (i)1. and (i)2. above that were:

1. Issued prior to January 1, 2015; and

2. Ceded, as of December 31, 2014, as part of a reinsurance treaty that would not have met one of the exemptions set forth in Section 2303.25 of this article had that section then been in effect.

(r) "Insurer" includes "reinsurer" unless otherwise apparent from the context.

(s) "Licensed insurer" means an insurer that has been issued a Certificate of Authority permitting it to transact insurance business in this state.

(t) "NAIC" means the National Association of Insurance Commissioners.

(u) "NAIC Accounting Guidance" means the NAIC Accounting Practices and Procedures Manual and the NAIC annual statement blanks and instructions, as amended from time to time, as made applicable to licensed insurers pursuant to Code Section 923.

(v) "Non-Covered Policies"means any policy that does not meet the definition of Covered Policies, including Grandfathered Policies.

(w) "Other Security"means any security acceptable to the Commissioner other than security meeting the definition of Primary Security.

(x) "Primary Security"means the following forms of security:

1. Cash meeting the requirements of Code Section 922.5(a);

2. Securities listed by the Securities Valuation Office meeting the requirements of Code Section 922.5(a), but excluding any synthetic letter of credit, contingent note, credit-linked note or other similar security that operates in a manner similar to a letter of credit, and excluding any securities issued by the ceding insurer or any of its affiliates; and

3. For security held in connection with funds-withheld and modified coinsurance reinsurance treaties:
A. Commercial loans in good standing of CM3 quality and higher;

B. Policy Loans; and

C. Derivatives acquired in the normal course of business and used to support and hedge liabilities pertaining to the actual risks in the policies ceded pursuant to the reinsurance treaty.

(y) "RBC Report" means the Risk Based Capital report required of domestic insurers by Code Section 739.2, and of foreign insurers by their state of domicile.

(z) "Regulatory oversight" means the exercise of any or all powers granted a regulator to monitor or control the operations of an insurer; oversight may be formal, informal or voluntary. As used in this article, regulatory oversight means any of those actions taken by a regulator in response to a hazardous financial condition of an insurer. Regulatory oversight may be preliminary in nature, such as a determination to include a licensee on a regulator's watch list.

(aa) "Reinsurance contract" or "reinsurance agreement" or "reinsurance treaty" means a contract by which an insurer transfers to another insurer all or part of its risk on business it has directly written or assumed.

(bb) "Reinsurance intermediary" or "intermediary" means a licensed reinsurance intermediary-broker or a licensed reinsurance intermediary-manager, as defined in Code Section 1781.2.

(cc) "Required Level of Primary Security"means the dollar amount determined by applying the Actuarial Method to the risks ceded with respect to Covered Policies, but not more than the total reserve ceded.

(dd) "Unauthorized reinsurer" means a reinsurer that is not licensed, accredited, or certified in this state, and that does not maintain an approved U.S. trust.

(ee) "Valuation Manual"means the valuation manual adopted by the NAIC as described in Code Section 10489.96(b)(1), with all amendments adopted that are effective for the financial statement date on which credit for reinsurance is claimed.

(ff) "VM-20"means the"Requirements for Principle-Based Reserves for Life Products,"including all relevant definitions, from the Valuation Manual.

1. New section filed 10-24-2006; operative 11-23-2006 (Register 2006, No. 43).
2. Change without regulatory effect amending subsection (c), adopting new subsection (f), repealing former subsection (w), relettering subsections and amending newly designated subsection (w) and NOTE filed 3-25-2015 pursuant to section 100, title 1, California Code of Regulations (Register 2015, No. 13).
3. Amendment of section and NOTE filed 11-27-2017; operative 1-1-2018 (Register 2017, No. 48).

Note: Authority cited: Sections 720, 730, 736, 739.9, 922.8, 922.85, 923, 924, 1011.5, 1215.9, 1781.12, 10489.94 and 12921, Insurance Code; CalFarm Insurance Company v. Deukmejian, 48 Cal. 3d 805 (1989); and 20th Century Insurance Company v. Garamendi, 8 Cal. 4th 216 (1994). Reference: Sections 700, 701, 717, 717.5, 730, 733, 736, 739, 900, 922.1, 922.2, 922.3, 922.31, 922.4, 922.41, 922.42, 922.43, 922.5, 922.6, 922.7, 922.8, 922.85, 922.9, 923, 924, 925, 925.2, 925.4, 1011, 1011.5, 1215.5(b)(3), 1215.5(f), 1781.10, 10489.1, 10489.12, 10489.96 and 12921, Insurance Code.

Disclaimer: These regulations may not be the most recent version. California may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.