North Dakota Administrative Code
Title 45 - Insurance, Commissioner of
Article 45-03 - Regulation of Insurance Companies
Chapter 45-03-26 - Term and Universal Life Insurance Reserve Financing Model Regulation
Section 45-03-26-04 - Exemptions from this chapter
Universal Citation: ND Admin Code ยง 45-03-26-04
Current through Supplement No. 394, October, 2024
This chapter does not apply to the situations described in subsections 1 through 6.
1. Reinsurance of:
a. Policies that satisfy the
criteria for exemption set forth in subsection 6 of section 45-04-12-04 or
subsection 7 of section 45-04-12-04 and which are issued before the later of:
(1) The effective date of this chapter,
and
(2) The date on which the
ceding insurer begins to apply the provisions of VM-20 to establish the ceded
policies' statutory reserves, but in no event later than January 1,
2020;
b. Portions of
policies that satisfy the criteria for exemption set forth in subsection 5 of
section 45-04-12-04 and which are issued before the later of:
(1) The effective date of this chapter,
and
(2) The date on which the
ceding insurer begins to apply the provisions of VM-20 to establish the ceded
policies' statutory reserves, but in no event later than January 1,
2020;
c. Any universal
life policy that meets all of the following requirements:
(1) Secondary guarantee period, if any, is
five years or less;
(2) Specified
premium for the secondary guarantee period is not less than the net level
reserve premium for the secondary guarantee period based on the commissioners
standard ordinary valuation tables and valuation interest rate applicable to
the issue year of the policy; and
(3) The initial surrender charge is not less
than one hundred percent of the first year annualized specified premium for the
secondary guarantee period;
d. Credit life insurance;
e. Any variable life insurance policy that
provides for life insurance, the amount or duration of which varies according
to the investment experience of any separate account or accounts; or
f. Any group life insurance certificate
unless the certificate provides for a stated or implied schedule of maximum
gross premiums required in order to continue coverage in force for a period in
excess of one year;
2. Reinsurance ceded to an assuming insurer that meets the applicable requirements of subsection 5 of North Dakota Century Code section 26.1-31.2-01;
3. Reinsurance ceded to an assuming insurer that meets the applicable requirements of subsection 2, 3, or 4 of North Dakota Century Code section 26.1-31.2-01 and that, in addition:
a. Prepares statutory financial statements in
compliance with the national association of insurance commissioners'
"Accounting Practices and Procedures Manual", without any departures from
national association of insurance commissioners statutory accounting practices
and procedures pertaining to the admissibility or valuation of assets or
liabilities that increase the assuming insurer's reported surplus and are
material enough that they need to be disclosed in the financial statement of
the assuming insurer pursuant to Statement of Statutory Accounting Principles
No. 1; and
b. Is not in a company
action level event, regulatory action level event, authorized control level
event, or mandatory control level event as those terms are defined in North
Dakota Century Code chapter 26.1-03.1 when its risk-based capital is calculated
in accordance with the life risk-based capital report, including overview and
instructions for companies, as the same may be amended by the national
association of insurance commissioners from time to time, without
deviation;
4. Reinsurance ceded to an assuming insurer that meets the applicable requirements of subsection 2, 3, or 4 of North Dakota Century Code section 26.1-31.2-01 and that, in addition:
a. Is not an affiliate, as
that term is defined in subsection 1 of North Dakota Century Code section
26.1-10-01 of:
(1) The insurer ceding the
business to the assuming insurer; or
(2) Any insurer that directly or indirectly
ceded the business to that ceding insurer;
b. Prepares statutory financial statements in
compliance with the national association of insurance commissioners'
"Accounting Practices and Procedures Manual";
c. Is both:
(1) Licensed or accredited in at least ten
states, including its state of domicile; or
(2) Not licensed in any state as a captive,
special purpose vehicle, special purpose financial captive, special purpose
life reinsurance company, limited purpose subsidiary, or any other similar
licensing regime; and
d.
Is not, or would not be, below five hundred percent of the authorized control
level risk-based capital as that term is defined in North Dakota Century Code
chapter 26.1-03.1 when its risk-based capital is calculated in accordance with
the life risk-based capital report, including overview and instructions for
companies, as the same may be amended by the national association of insurance
commissioners from time to time, without deviation, and without recognition of
any departures from national association of insurance commissioners' statutory
accounting practices and procedures pertaining to the admission or valuation of
assets or liabilities that increase the assuming insurer's reported
surplus;
5. Cessions to an assuming insurer that:
a. Meets the
conditions set forth in subsection 7 of North Dakota Century Code section
26.1-31.2-01 or is operating in accordance with provisions substantially
equivalent to subsection 7 of North Dakota Century Code section 26.1-31.2-01 in
a minimum of five other states;
b.
Is certified in this state as set forth in subsection 6 of North Dakota Century
Code section 26.1-31.2-01 or certified in accordance with provisions
substantially equivalent to subsection 6 of North Dakota Century Code section
26.1-31.2-01 in a minimum of five other states; or
c. Maintains at least two hundred fifty
million dollars in capital and surplus when determined in accordance with
national association of insurance commissioners' "Accounting Practices and
Procedures Manual", including all amendments thereto adopted by the national
association of insurance commissioners, excluding the impact of any permitted
or prescribed practices; and is:
(1) Licensed
in at least twenty-six states; or
(2) Licensed in at least ten states, and
licensed or accredited in a total of at least thirty-five states; or
6. Reinsurance not otherwise exempt under subsections 1 through 5 if the commissioner, after consulting with the national association of insurance commissioners' financial analysis working group or other group of regulators designated by the national association of insurance commissioners, as applicable, determines under all the facts and circumstances that all of the following apply:
a. The risks are clearly outside of the
intent and purpose of this chapter as described in section
45-03-26-02;
b. The risks are
included within the scope of this chapter only as a technicality; and
c. The application of this chapter to those
risks is not necessary to provide appropriate protection to policyholders. The
commissioner shall publicly disclose any decision made pursuant to this
subsection to exempt a reinsurance treaty from this chapter, as well as the
general basis therefor, including a summary description of the
treaty.
General Authority: NDCC 26.1-31.2-04
Law Implemented: NDCC 26.1-31.2-01
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