Delaware Administrative Code
Title 18 - Insurance
1000 - Reinsurance
1004 - Term and Universal Life Insurance Reserve Financing
Section 1004-5.0 - Definitions
The following words and terms, when used in this regulation, shall have the following meaning:
"Actuarial method" means the methodology used to determine the required level of primary security, as described in Section 6.0 of this regulation.
"Commissioner" means the Commissioner of the Delaware Department of Insurance.
"Covered policies" means type-1 covered policies and type-2 covered policies.
"Grandfathered policies" means policies of the types that otherwise meet the definitions of "type-1 covered policies" and "type-2 covered policies" but were:
| * | Issued prior to January 1, 2015; and |
| * | 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 4.0 of this regulation had that section then been in effect. |
"NAIC" means the National Association of Insurance Commissioners.
"Net premium reserve" means the reserve amount determined according to the requirements in VM-20, section 3, of the valuation manual.
"Non-covered policies" means any policy that does not meet the definition of covered policies, including grandfathered policies.
"Other security" means any security acceptable to the Commissioner other than security meeting the definition of primary security.
"Primary security" means any of the following forms of security:
| * | Cash meeting the requirements of 18 Del.C. § 912(1); |
| * | Securities listed by the Securities Valuation Office meeting the requirements of 18 Del.C. § 912(2), 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; |
| * | For security held in connection with funds withheld and modified coinsurance reinsurance treaties: |
| * | Commercial loans in good standing of CM3 quality and higher; |
| * | Policy loans; and |
| * | Derivatives acquired in the normal course and used to support and hedge liabilities pertaining to the actual risks in the policies ceded pursuant to the reinsurance treaty. |
"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.
"Type-1 covered policies" means, subject to the exemptions described in Section 4.0 of this regulation, and other than grandfathered policies, life insurance policies with guaranteed nonlevel gross premiums and/or guaranteed nonlevel benefits except for flexible premium universal life insurance policies.
"Type-2 covered policies" means, subject to the exemptions described in Section 4.0 of this regulation, and other than grandfathered policies, flexible premium universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a second guarantee period,
"Valuation manual" means the valuation manual adopted by the NAIC as described in 18 Del.C. § 1121(b)(1), with all amendments adopted by the NAIC that are effective for the financial statement date on which credit for reinsurance is claimed.
"VM-20" means "Requirements for Principle-Based Reserves for life products," including all relevant definitions, from the valuation manual.
