Nevada Administrative Code
Chapter 681A - Kinds of Insurance; Reinsurance
REINSURANCE TRANSACTIONS
Section 681A.350 - Acceptable provisions of reinsurance agreement
Universal Citation: NV Admin Code 681A.350
Current through February 27, 2024
1. A reinsurance agreement, in conjunction with which a letter of credit is obtained, may contain provisions which:
(a)
Require the assuming insurer to provide letters of credit to the ceding insurer
and specify what they are to cover; and
(b) Stipulate that the assuming insurer and
ceding insurer agree that the letter of credit provided by the assuming insurer
pursuant to the provisions of the reinsurance agreement may be drawn upon at
any time, notwithstanding any other provisions in the agreement to the
contrary, and may be used by the ceding insurer or its successors in interest,
without diminution because of insolvency on the part of the ceding insurer or
the assuming insurer, only:
(1) To reimburse
the ceding insurer for the assuming insurer's share of premiums returned to the
owners of policies reinsured under the reinsurance agreement because of
cancellations of such policies;
(2)
To reimburse the ceding insurer for the assuming insurer's share of surrenders
and benefits or losses paid by the ceding insurer under the terms and
provisions of the policies reinsured under the reinsurance agreement;
(3) To fund an account with the ceding
insurer in an amount at least equal to the deduction, for reinsurance ceded,
from the ceding insurer's liabilities for policies ceded under the agreement.
The account must include, but is not limited to, amounts for policy reserves,
claims and losses incurred and unearned premium reserves; and
(4) To pay any other amounts the ceding
insurer claims are due under the reinsurance agreement.
2. This section does not prohibit the ceding insurer and assuming insurer from providing for:
(a) An interest payment, at a rate not in
excess of the prime rate of interest at the time of withdrawal, on the amounts
held pursuant to subparagraph (3) of paragraph (b) of subsection 1.
(b) The return of any amounts drawn down on
the letters of credit in excess of the actual amounts required or, in the case
of subparagraph (4) of paragraph (b) of subsection 1, any amounts that are
subsequently determined not to be due.
Added to NAC by Comm'r of Insurance, eff. 6-28-96
NRS 679B.130, 681A.130
Disclaimer: These regulations may not be the most recent version. Nevada 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.
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