Current through Register Vol. 46, No. 39, September 25, 2024
(a) A ceding insurer may elect to take
credit, as an asset or as a deduction from reserves, for reinsurance
recoverable involving life, annuity and accident and health risks from an
assuming insurer not authorized in this State, provided such assuming insurer
complies with provisions of section
125.4(a), (b),
(h), or (i) of this Part. The provisions of
section 125.4(c), (d), (e), (f) and
(g) of this Part are inappropriate for and
shall be inapplicable to reinsurance of life, annuity and accident and health
risks.
(b)
(1) Notwithstanding the provisions of
subdivision (a) of this section or the amounts of funds withheld under a
reinsurance agreement from an unauthorized insurer on behalf of such
reinsurance, credit taken by a ceding insurer for reinsurance ceded to an
unauthorized insurer shall not exceed the aggregate of the net amount of
reserves plus the liability for any unallocated amounts which has been set up
and reported to the ceding insurer as being held by the assuming unauthorized
insurer and by each subsequent retrocessionaire on behalf of such
reinsurance.
(2) Paragraph (1) of
this subdivision shall not apply to situations where the total reserve credit
that may be granted under a reinsurance agreement is based solely upon:
(i) the establishment of a liability by the
ceding insurer for funds withheld under a reinsurance agreement with such
unauthorized reinsurer as security for the payment of obligations thereunder;
and/or
(ii) the establishment of a
trust agreement which complies with Part 126 of this Title (Regulation
114).
(3) Compliance
with paragraphs (1) and (2) of this subdivision shall be on an agreement by
agreement basis.
(4)
(i) The report referred to in paragraph (1)
of this subdivision shall be obtained by the ceding insurer from:
(a) the assuming insurer, if accredited in
this State, or if certified under the provisions of section
125.4(h) of this
Part, or if domiciled in a reciprocal jurisdiction under the provisions of
section 125.4(i) of this
Part, as to the total net reserves held by it and by all retrocessionaires;
or
(b) the assuming insurer and
from each of the retrocessionaires with respect to the net reserves held by
each of them.
(ii) Each
such report shall be in writing, signed by an officer of the assuming insurer
or the retrocessionaire that provided it and obtained by the ceding insurer
prior to the filing date of ceding insurer's annual and quarterly statement.
Such reports shall be maintained by the ceding insurer for three years or until
the conclusion of the next regular examination conducted by the insurance
department of its state of domicile, whichever is later. The superintendent may
approve a plan of compliance submitted by an accredited reinsurer that would
permit a certification to be attached to a reinsurance agreement with a ceding
insurer in lieu of obtaining such reports.
(c) Notwithstanding the provisions of
subdivisions (a) and (b) of this section, credit taken by a ceding insurer for
reinsurance ceded to an unauthorized insurer shall not exceed the amount of the
reserve the ceding insurer would have set up if it had retained the
business.
(d) Notwithstanding the
effective date of this amendment and the provisions of subdivision (b) of this
section, any reserve credit taken under reinsurance agreements executed prior
to the effective date of this Part which had previously been granted by the
department:
(1) will continue to be granted,
provided no new business is ceded under the reinsurance agreement after
December 31, 1988; or
(2) will
continue to be granted through December 31, 1988 after which time credit will
only be granted in accordance with the provisions of this Part.
