New Mexico Administrative Code
Title 13 - INSURANCE
Chapter 9 - LIFE INSURANCE AND ANNUITIES
Part 21 - TERM AND UNIVERSAL LIFE INSURANCE RESERVE FINANCING
Section 13.9.21.11 - REQUIREMENTS APPLICABLE TO COVERED POLICIES TO OBTAIN CREDIT FOR REINSURANCE; OPPORTUNITY FOR REMEDIATION

(1) The ceding insurer's statutory policy reserves with respect to the covered policies must be established in full and in accordance with the applicable requirements of Sections 59A-8A-1 through -12 NMSA and related regulations and actuarial guidelines, and credit claimed for any reinsurance treaty subject to this regulation must not exceed the proportionate share of those reserves ceded under the contract.

(2) The ceding insurer must determine the required level of primary security with respect to each reinsurance treaty subject to this regulation and provide support for its calculation as determined to be acceptable to the superintendent.

(3) Funds consisting of primary security, in an amount at least equal to the required level of primary security, must be held by or on behalf of the ceding insurer, as security under the reinsurance treaty within the meaning of Section 59A-12E-16 NMSA 1978, on a funds withheld, trust, or modified coinsurance basis; and

(4) 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 (3) above, must be held by or on behalf of the ceding insurer as security under the reinsurance treaty within the meaning of Section 59A-12E-16 NMSA..

(5) Any trust used to satisfy the requirements of this section shall comply with all of the conditions and qualifications of 13.2.8.19 NMAC through 13.2.8.23 NMAC, except that:

(6) The reinsurance treaty must be approved by the superintendent.

(1) The requirements of Subsection A of 13.9.21.11 NMAC must be satisfied as of the date that risks under covered policies are ceded (if such date is on or after the effective date of this regulation) 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 Paragraph (3) of Subsection A of 13.9.21.11 NMAC or Paragraph (4) of Subsection A of 13.9.21.11 NMAC with respect to any reinsurance treaty under which covered policies have been ceded, and in the event that 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.

(2) Prior to the due date of each Quarterly or Annual Statement, each life insurance company that has ceded reinsurance within the scope of 13.9.21.2 NMAC 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 Paragraph (3) of Subsection A of 13.9.21.11 NMAC and Paragraph (4) of Subsection A of 13.9.21.11 NMAC 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 3 of Subsection A of 13.9.21.11 NMAC, unless either:

(3) Nothing in Paragraph (2) of Subsection B of 13.9.21.11 NMAC shall be construed to allow a ceding company to maintain any deficiency under Paragraphs (3) or (4) of 13.9.21.11 NMAC for any period of time longer than is reasonably necessary to eliminate it.