Current through Reg. 50, No. 13; March 28, 2025
(a) Credit for
ceded insurance. Pursuant to Insurance Code §
493.102(a)(3),
a ceding insurer may be allowed credit for insurance risk of loss ceded to an
assuming insurer that maintains a trust fund in a qualified United States
financial institution for the payment of the valid claims of its United States
policyholders and ceding insurers, their assigns, and successors in interest.
Initially on establishing the trust and not later than March 1 of each
subsequent year the assuming insurer must report to TDI information
substantially the same as that required to be reported on the NAIC annual
statement form by authorized insurers to enable TDI to determine the
sufficiency of the trust fund, and the following information:
(1) the assuming insurer's:
(B) physical address for its principal place
of business;
(D) NAIC number, United
States federal tax identification number, and International Securities
Identification Number, as applicable; and
(E) contact individual's name, phone number,
and email; and
(2) the
trustee report required under Insurance Code §
493.155(a)
and subsection (c)(5) of this section.
(b) Three types of trusteed assuming
insurers.
(1) A single assuming insurer must
have a trust fund consisting of a trusteed account representing the assuming
insurer's liabilities attributable to business written in the United States
and, in addition, include a trusteed surplus of not less than $20 million,
except as provided in Insurance Code §
493.152(a)(2) and
(a-1).
(2) A group of individual unincorporated
underwriters must have a trust fund consisting of a trusteed account
representing the group's liabilities attributable to business written in the
United States and, include a trusteed surplus of not less than $100 million.
The group must make available to TDI an annual certification by the group's
domiciliary regulator and its independent public accountants of the solvency of
each underwriter.
(3) A group of
incorporated insurers under common administration which has continuously
transacted an insurance business for at least three years, which is under the
supervision of the Department of Trade and Industry of the United Kingdom, and
which has aggregate policyholders' surplus of $10 billion, must consist of a
trusteed account representing the group's several liabilities attributable to
business written in the United States pursuant to reinsurance agreements issued
in the name of the group and include a trusteed surplus of not less than $100
million that must be held jointly for the benefit of United States insurers
ceding business to any member of the group. Each member of the group must make
available to TDI an annual certification by the member's domiciliary regulator
and its independent public accountants of the solvency of each
member.
(c) Form of
trust. Each trust must be established in a form approved by TDI or the chief
insurance regulatory official of another state who, under the trust agreement
has principal oversight over the trust. A copy of the trust and any amendments
to the trust must be submitted to TDI and the chief insurance regulatory
official of each state in which the ceding insurer beneficiaries of the trust
are domiciled. If the Commissioner has principal regulatory oversight over the
trust, the form of the trust must provide as follows:
(1) Contested claims are valid and
enforceable out of funds in trust to the extent remaining unsatisfied 30 days
after entry of the final order of any court of competent jurisdiction in the
United States.
(2) Legal title to
the assets of the trust must be vested in the trustees for the benefit of the
grantor's United States policyholders and ceding insurers, their assigns, and
successors in interest.
(3) The
trust and the assuming insurer are subject to examination as determined by
TDI.
(4) The trust must remain in
effect for as long as the assuming insurer has outstanding obligations due
under the reinsurance agreements subject to the trust.
(5) Not later than February 28 of each year,
the trustees of the trust must report to TDI in writing and set forth the
balance of the trust, list the trust's investments at the preceding year end,
certify the date of termination of the trust, if so planned, or certify that
the trust will not expire prior to the next following December 31.
(6) The grantor of the trust must notify TDI
of any amendment to the trust within 10 business days of adoption of the
amendment. If the Commissioner determines subsequent to receipt of this notice
that the amendment is not acceptable and the amendment is not brought into
compliance with Insurance Code and TDI rules, the trusteed status of the
assuming insurer will be automatically revoked. TDI will provide notice by
certified mail to the most recent address of the trusteed assuming insurer
according to TDI records. The trusteed assuming insurer may request a public
hearing to show compliance and seek reinstatement within 20 days of
notification.
