Current through February 27, 2024
1. Except as otherwise provided in subsection
3 or in subsection 2 of section 18, credit for reinsurance is authorized for
ceded liabilities pertaining to covered policies in a reinsurance treaty
pursuant to NRS
681A.140 to
681A.240, inclusive, and NAC
681A.400 to NAC
681A.520, inclusive, if:
(a) The ceding insurer's statutory policy
reserves pertaining to covered policies are established in full and in
accordance with the applicable requirements of this chapter and chapter 681A of
NRS and credit claimed for any reinsurance treaty does not exceed the
proportionate share of such reserves ceded under the contract;
(b) The ceding insurer determines the
required level of primary security with respect to each reinsurance treaty and
provides support for its calculation as determined to be acceptable to the
Commissioner;
(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 as
described in NRS
681A.240 under the reinsurance treaty on a
funds withheld, trust or modified coinsurance basis;
(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), are held by or on
behalf of the ceding insurer as security as described in
NRS
681A.240 under the reinsurance treaty;
and
(e) The reinsurance treaty is
approved by the Commissioner.
2. A trust used to satisfy the requirements
of subsection 1 must comply with all of the requirements of NAC
681A.250 to
681A.380, inclusive, except:
(a) For the purposes identified in subsection
10 of section 19, funds consisting of primary security or other security held
in trust must be valued according to the valuation rules set forth in
subsection 10 of section 19, as applicable;
(b) There are no affiliate investment
limitations with respect to any security held in such trust if such security is
not needed to satisfy the requirements of paragraph (c) of subsection
1;
(c) The reinsurance treaty must
prohibit withdrawals or substitutions of trust assets that would leave the fair
market value of the primary security within the trust below 102 percent of the
level required by paragraph (c) of subsection 1 at the time of the withdrawal
or substitution when aggregated with primary security outside of the trust that
is held by or on behalf of the ceding insurer in the manner required by
paragraph (c) of subsection 1; and
(d) The determination of reserve credit
pursuant to NAC
681A.330 must be determined
according to the valuation rules set forth in subsection 10 of section
19.
3. The requirements
of subsection 1 must be satisfied on or before the date that risks under the
covered policies are ceded and on an ongoing basis thereafter. A ceding insurer
may not take or consent to any action or series of actions that would result in
a deficiency under paragraph (c) or (d) of subsection 1 with respect to any
reinsurance treaty under which covered policies have been ceded. If a ceding
insurer becomes aware that such a deficiency exists, the ceding insurer shall
use its best efforts to arrange for the elimination of the deficiency as
expeditiously as possible.
4.
Before the due date of each quarterly or annual statement, a life insurance
company that has ceded reinsurance shall perform an analysis on each
reinsurance treaty under which covered policies have been ceded to determine
whether, as of the valuation date, the requirements of paragraphs (c) and (d)
of subsection 1 have been satisfied.
5. 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 (c) of
subsection 1, unless:
(a) The requirements of
paragraphs (c) and (d) of subsection 1 were fully satisfied as of the valuation
date of the reinsurance treaty, as determined pursuant to subsection 4;
or
(b) Any deficiency has been
eliminated before the valuation date through the addition of primary security
or other security in such an amount and in such form that would have satisfied
the requirements of paragraphs (c) and (d) of subsection 1 as of the valuation
date.
6. Nothing in
subsection 4 or 5 shall be construed to allow a ceding company to maintain any
deficiency under paragraph (c) or (d) of subsection 1 for longer than is
reasonably necessary to eliminate the deficiency.
Added
to NAC by Comm'r of Insurance by
R187-22A,
eff. 12/14/2022
NRS
679B.130,
681A.130,
681A.145
