Code of Maine Rules
02 - DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION
031 - BUREAU OF INSURANCE
Chapter 735 - Term and Universal Life Insurance Reserve Financing
Section 031-735-6 - Credit for Reinsurance of Covered Policies; Remediation of Shortfalls

A. The ceding insurer's statutory policy reserves with respect to the Covered Policies are established in full and in accordance with the applicable requirements of 24-A M.R.S. §§ 951 through 962 and related rules and actuarial guidelines, and credit claimed for any reinsurance treaty subject to this rule does not exceed the proportionate share of those reserves ceded under the contract; and

B. The ceding insurer determines the Required Level of Primary Security with respect to each reinsurance treaty subject to this rule and provides support satisfactory to the Superintendent for its calculation; and

C. Funds consisting of Primary Security, in an amount at least equal to the Required Level of Primary Security, are held by or on behalf of the ceding insurer, as security under the reinsurance treaty in compliance with 24-A M.R.S. §731-B(3) and the applicable provisions of 02-031 CMR §§740(12) through (17), on a funds withheld, trust, or modified coinsurance basis; and

D. Funds consisting of Other Security, in an amount at least equal to any portion of the statutory reserves as to which Primary Security is not held pursuant to Paragraph C above, are held by or on behalf of the ceding insurer as security under the reinsurance treaty in compliance with 24-A M.R.S. §731-B(3) and the applicable provisions of 02-031 CMR §§740(12) through (17); and

E. Any trust used to satisfy the requirements of this Section shall comply with all of the conditions and qualifications of 02-031 CMR §§740(12) and (13), except that:

F. The reinsurance treaty has been approved by the Superintendent.

A. The requirements of Subsection 1 must be satisfied as of the date that risks under Covered Policies are ceded (or, if later, as of the effective date of this rule) and on an ongoing basis thereafter. Under no circumstances shall a ceding insurer take or consent to any action or series of actions that would result in a deficiency under Paragraphs 1(C) or (D) with respect to any reinsurance treaty under which Covered Policies have been ceded, and if a ceding insurer becomes aware at any time that such a deficiency exists, it shall use its best efforts to arrange for the deficiency to be eliminated as expeditiously as possible.

B. Before the due date of each Quarterly or Annual Statement, each life insurance company that has ceded reinsurance within the scope of Section 2 shall perform an analysis, on a treaty-by-treaty basis, to determine, as to each reinsurance treaty under which Covered Policies have been ceded, whether as of the end of the immediately preceding calendar quarter (the valuation date) the requirements of Paragraphs 1(C) and (D) were satisfied. The ceding insurer shall establish a liability equal to the excess of the credit for reinsurance taken over the amount of Primary Security actually held pursuant to Paragraph 1(C), unless either:

C. Nothing in Paragraph B above shall be construed to allow a ceding insurer to maintain any deficiency under Paragraphs 1(C) or (D) for any longer than is reasonably necessary to eliminate it.