Current through Register 2024 Notice Reg. No. 38, September 20, 2024
Sections
2303.23,
2303.24,
2303.26,
2303.27 and
2303.28 of this article do not apply
to:
(a) Reinsurance of:
1. Policies that satisfy the criteria for
exemption set forth in Section
2542.5(f) of article
12.3 or Section
2542.5(g) of article
12.3; and which are issued before the later of:
A.
The effective date of Sections
2303.23 through
2303.28 of this article, and
B. The date on which the ceding insurer begins to
apply the provisions of VM-20 to establish the ceded policies' statutory reserves,
but in no event later than January 1, 2020.
2. Portions of policies that satisfy the criteria
for exemption set forth in Section
2542.5(e) of article
12.3 and which are issued before the later of:
A.
The effective date of Sections
2303.23 through
2303.28 of this article, and
B. The date on which the ceding insurer begins to
apply the provisions of VM-20 to establish the ceded policies' statutory reserves,
but in no event later than January 1, 2020.
3. Any universal life policy that meets all of the
following requirements:
A. Secondary guarantee
period, if any, is five (5) years or less,
B. Specified premium for the secondary guarantee
period is not less than the net level reserve premium for the secondary guarantee
period based on the Commissioner's Standard Ordinary (CSO) valuation tables and
valuation interest rate applicable to the issue year of the policy, and
C. The initial surrender charge is not less than
100 percent (100%) of the first year annualized specified premium for the secondary
guarantee period.
4. Credit
life insurance.
5. Any variable life
insurance policy that provides for life insurance, the amount or duration of which
varies according to the investment experience of any separate account or
accounts.
6. Any group life insurance
certificate unless the certificate provides for a stated or implied schedule of
maximum gross premiums required in order to continue coverage in force for a period
in excess of one year.
(b)
Reinsurance ceded to an assuming insurer that meets the applicable requirements of
Code Section 922.4(d).
(c) Reinsurance
ceded to an assuming insurer that meets the applicable requirements of Code Sections
922.4(a) or (b), and that, in addition:
1.
Prepares statutory financial statements in compliance with the NAIC Accounting
Practices and Procedures Manual, without any departures from NAIC statutory
accounting practices and procedures pertaining to the admissibility or valuation of
assets or liabilities that increase the assuming insurer's reported surplus and are
material enough that they need to be disclosed in the financial statement of the
assuming insurer pursuant to Statement of Statutory Accounting Principles No. 1
("SSAP 1"), and
2. Is not in a Company
Action Level Event, Regulatory Action Level Event, Authorized Control Level Event,
or Mandatory Control Level Event as those terms are defined in Article 4.1 of Code
Sections 739et seq. when its RBC is calculated in accordance with
the life risk-based capital report including overview and instructions for
companies, as the same may be amended by the NAIC from time to time, without
deviation.
(d) Reinsurance
ceded to an assuming insurer that meets the applicable requirements of Code Sections
922.4(a) or (b), and that, in addition:
1. Is not
an affiliate, as that term is defined in Code Section 1215(a), of:
A. The insurer ceding the business to the assuming
insurer, or
B. Any insurer that directly
or indirectly ceded the business to that ceding insurer.
2. Prepares statutory financial statements in
compliance with the NAIC Accounting Practices and Procedures Manual;
3. Is both:
A.
Licensed or accredited in at least 10 states (including its state of domicile),
and
B. Not licensed in any state as a
captive, special purpose vehicle, special purpose financial captive, special purpose
life reinsurance company, limited purpose subsidiary, or any other similar licensing
regime, and
4. Is not, or
would not be, below 500% of the Authorized Control Level RBC as that term is defined
in Code Sections 739et seq. when its Risk Based Capital (RBC) is
calculated in accordance with the life risk-based capital report including overview
and instructions for companies, as the same may be amended by the NAIC from time to
time, without deviation, and without recognition of any departures from NAIC
statutory accounting practices and procedures pertaining to the admission or
valuation of assets or liabilities that increase the assuming insurer's reported
surplus.
(e) Reinsurance ceded
to an assuming insurer that meets the requirements of Code Section 922.85(b)(5)(A)
pertaining to insurers meeting the conditions of Code Section 922.425, Code Section
922.85(b)(5)(B) pertaining to certain certified reinsurers, or Code Section
922.85(b)(5)(C), pertaining to reinsurers meeting certain threshold size and
licensing requirements.
(f) Reinsurance
not otherwise exempt under subdivisions (a) through (e) if the commissioner, after
consulting with the NAIC Financial Analysis Working Group (FAWG) or other group of
regulators designated by the NAIC, as applicable, determines under all the facts and
circumstances that all of the following apply:
1.
The risks are clearly outside of the intent and purpose of Sections
2303.23 through
2303.28 of this article (as described
in Section 2303.23 of this article),
2. The risks are included within the scope of
Sections 2303.23 through
2303.28 of this article only as a
technicality, and
3. The application of
Sections 2303.23 through
2303.28 of this article to those risks
is not necessary to provide appropriate protection to policyholders. The
commissioner shall post on the Department's public web site a notice of any decision
made pursuant to this subdivision to exempt a reinsurance treaty from Sections
2303.23 through
2303.28 of this article, as well as the
general basis therefor (including a summary description of the
treaty).
1. New section
filed 11-27-2017; operative 1-1-2018 (Register 2017, No. 48). For prior history, see
Register 2015, No. 13.
2. Change without regulatory effect amending
subsection (e) and NOTE filed 12-28-2020 pursuant to section
100, title 1, California Code of
Regulations (Register 2021, No. 1). Filing deadline specified in Government Code
section
11349.3(a)
extended 60 calendar days pursuant to Executive Order
N-40-20.
Note: Authority cited: Sections
739.9,
922.85,
923 and
10489.94,
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
739,
900,
922.4,
922.425,
922.5,
922.85,
923,
10489.1,
10489.12,
10489.96 and
12921, Insurance
Code.
