New Jersey Administrative Code
Title 11 - INSURANCE
Chapter 2 - INSURANCE GROUP
Subchapter 28 - CREDIT FOR REINSURANCE
Section 11:2-28.2 - Definitions
The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:
"Annual statement" means a statement showing an insurer's financial condition at the close of business on December 31 of the preceding year and its business for that year in the form adopted by the NAIC, prepared in accordance with the annual statement instructions and the Accounting Practices and Procedures Manual adopted by the NAIC and all applicable provisions of law.
"Assuming insurer" or "reinsurer" means any person which engages in the activity of insuring part or all of an insurance risk from an originating or ceding insurer.
"Authorized officer" means the president of the company whose signature is attested to by the secretary of the company or any such equivalent officers or individuals.
"Beneficiary":
1. As used in 11:2-28.9 means the entity for whose sole benefit the trust has been established and any successor of the beneficiary by operation of law. Where a court of competent jurisdiction appoints a successor in interest to the named beneficiary, then the named beneficiary includes and is limited to the court appointed domiciliary receiver, conservator, rehabilitator or liquidator; or
2. As used in 11:2-28.1 0 means the domestic insurer for whose benefit the letter of credit has been established and any successor of the beneficiary by operation of law. Where a court of competent jurisdiction appoints a successor in interest to the named beneficiary, then the named beneficiary includes and is limited to the court appointed domiciliary receiver, conservator, rehabilitator or liquidator.
"Ceding insurer" means an insurer which procures indemnification for itself from an assuming insurer with respect to all or part of an insurance risk associated with one or more policies which it issued should losses be sustained.
"Certificate of eligibility" means a certificate issued by the Commissioner evidencing the authority of an unauthorized insurer to transact the business of surplus lines insurance in this State.
"Clean and unconditional letter of credit" or "clean and unconditional confirmation" means a letter of credit or confirmation which:
1. Makes no reference to any other agreement, document or entity;
2. Provides that a beneficiary need only draw a sight draft under the letter of credit or confirmation and present it to promptly obtain funds and that no other document need be presented; and
3. Indicates that it is not subject to any conditions or qualifications outside of the letter of credit.
"Commissioner" means the Commissioner of the New Jersey Department of Banking and Insurance.
"Date of the ceding insurer's statutory financial statement" means the period ending date for which the statutory financial statement is rendered.
"Delinquency proceeding" means, for the purpose of this subchapter, any proceeding commenced against a reinsurer for the purpose of liquidating, rehabilitating, reorganizing or conserving such reinsurer.
"Department" means the New Jersey Department of Banking and Insurance.
"Domestic insurer" means an insurer formed under the laws of the State of New Jersey.
"Eligible surplus lines insurer" means an unauthorized insurer which is issued a certificate of eligibility to transact the business of insurance in this State and in which insurance coverage is placed or may be placed pursuant to N.J.S.A. 17:22-6.4 0 et seq.
"Evergreen" means a provision in a letter of credit or its confirmation which prevents the expiration of the letter of credit or its confirmation without due advance written notice to the beneficiary from the issuing or confirming bank or trust company.
"Grantor" as used in connection with the establishment of a trust agreement means the entity that has established a trust for the sole benefit of the beneficiary. When established in conjunction with a reinsurance agreement, the grantor is the unlicensed, unaccredited assuming insurer.
"Insurer" means any corporation, association, partnership, reciprocal exchange, interinsurer, Lloyd's insurer, fraternal benefit society or other person engaged in the business of insurance pursuant to 17:17-1 et seq. or N.J.S.A. 17B-17-1 et seq.; any medical service corporation operating pursuant to 17:48A-1 et seq.; any hospital service corporation operating pursuant to 17:48-1 et seq.; any health service corporation operating pursuant to 17:48E-1 et seq.; or any dental service corporation operating pursuant to 17:48C-1 et seq.
"NAIC" means the National Association of Insurance Commissioners.
"Net assets" means an insurer's total admitted assets less its total reserves and other liabilities.
"Obligations" as used in connection with the establishment of a trust agreement means:
1. Reinsured losses and allocated loss expenses paid by the ceding company, but not recovered from the assuming insurer;
2. Reserves for reinsured losses reported and outstanding;
3. Reserves for reinsured losses incurred but not reported; and
4. Reserves for allocated reinsured loss expenses and unearned premiums.
"Qualified United States financial institution":
1. As used at 11:2-28.8(b)3 and 28.10 means an institution that:
i. Is organized or, in the case of a branch or agency office of a foreign banking organization in the United States, licensed, under the laws of the United States or any state thereof;
ii. Is regulated, supervised and examined by federal or state authorities having regulatory authority over banks and trust companies; and
iii. Has been determined by either the Commissioner, or the Securities Valuation Office of the NAIC, to meet such standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the Commissioner; or
2. As used elsewhere in this subchapter means an institution that:
i. Is organized or, in the case of a branch or agency office of a foreign banking organization in the United States, licensed, under the laws of the United States or any state thereof and has been granted authority to operate with fiduciary powers; and
ii. Is regulated, supervised and examined by federal or state authorities having regulatory authority over banks and trust companies.
"Reinsurance" means a contractual arrangement, as evidenced by a written agreement, whereby an insurer, for some consideration, agrees to indemnify a ceding insurer, for all or part of a loss which the ceding insurer may incur under one or more policies that the ceding insurer has or will issue.
"Reinsurance intermediary" means a reinsurance intermediary-broker or a reinsurance intermediary-manager.
"Reinsurance intermediary-broker" means a person, other than an officer or employee of the ceding insurer, which solicits, negotiates or places reinsurance cessions or retrocessions on behalf of a ceding insurer without the authority or power to bind reinsurance on behalf of that insurer unless expressly provided in a broker of record letter.
"Reinsurance intermediary-manager" means a person which has authority to bind or manages all or part of the assumed reinsurance business of a reinsurer, including the management of a separate division, department or underwriting office, and acts as an agent for that reinsurer whether known as a reinsurance intermediary-manager, manager or other similar term, except that the following persons shall not be considered a reinsurance intermediary-manager, with respect to that reinsurer, for the purposes of this subchapter:
1. An employee of the reinsurer;
2. A United States manager of a United States branch of an alien reinsurer;
3. An underwriting manager which, pursuant to contract, manages all or part of the reinsurance operations of the reinsurer, is under common control with the reinsurer, subject to 17:27A-1 et seq., and whose compensation is not solely based on the volume of premiums written;
4. The manager of a group, association, pool or organization of insurers which engage in joint underwriting or joint reinsurance and who are subject to examination by the insurance commissioner or other similar regulatory officer of the state in which the manager's principal business office is located;
5. A licensed attorney-at-law who negotiates contracts or provides general financial counsel provided no commission or brokerage fee is provided.
"Substantially similar standards" means standards on credit for reinsurance which the Commissioner determines are equal to or exceed the standards of this subchapter.
"Surplus as regards policyholders" means the net assets of the insurer or assuming insurer.
