Current through Reg. 50, No. 13; March 28, 2025
(a)
Except as provided under Insurance Code §
493.002(a-1)
for certain county mutual insurance companies operating under Insurance Code
§
912.056, an insurer
may take credit for reinsurance ceded to an assuming insurer that has been
certified as an assuming insurer in this state pursuant to Insurance Code
§
493.1033 and this
subchapter. The assuming insurer must be certified at all times for which
statutory financial statement credit for reinsurance is claimed by the ceding
insurer.
(b) The credit allowed
will be based on the security held by or on behalf of the ceding insurer in
accordance with a rating assigned to the certified assuming insurer by the
Commissioner. The security must be in a form consistent with the provisions of
Insurance Code §
493.1033(a)(2)
and §
493.1036(d)
and this subchapter.
(c) The amount
of security required in order for full credit to be allowed must correspond
with the following requirements:
(1) The
minimum reduced amounts of security that must be withheld for full credit are
stated in Figure: 28 TAC §
7.621(c)(1):
Attached
Graphic
(2)
Affiliated reinsurance agreements are eligible for the same reduced security
requirements as non-affiliated reinsurance agreements.
(3) A certified assuming insurer may defer
posting security for catastrophe recoverables for a period up to one year from
the date of the first instance of a liability reserve entry by the ceding
company as a result of a loss from a catastrophic occurrence that is recognized
by the Commissioner. The one-year deferral period is contingent on the
certified assuming insurer continuing to pay claims in a timely manner.
Deferral of posting collateral for reinsurance recoverables related to a
catastrophic occurrence under this subsection are permitted for only the
following lines of business as reported on the NAIC annual financial statement:
(B) Line 2: Allied lines;
(C) Line 3: Farmowners multiple
peril;
(D) Line 4: Homeowners
multiple peril;
(E) Line 5:
Commercial multiple peril;
(F) Line
9: Inland marine;
(G) Line 12:
Earthquake; and
(H) Line 21: Auto
physical damage.
(4) A
ceding insurer may take credit for reinsurance under this section only with
respect to a reinsurance agreement entered into or renewed on or after the
effective date that the assuming insurer is certified under this subchapter.
Any reinsurance agreement entered into prior to the effective date of the
assuming insurer's certification that is subsequently amended after the
effective date of the certification of the assuming insurer, or a new
reinsurance agreement, covering any risk for which collateral was provided
previously, will only be subject to this section with respect to losses
incurred and reserves reported from and after the effective date of the
amendment or new agreement.
(5)
Nothing in this section prohibits the parties to a reinsurance agreement from
agreeing to provisions establishing security requirements that exceed the
minimum security requirements established for certified assuming insurers under
this section.
