Current through Register Vol. 41, No. 3, September 23, 2024
A.
Credit will not be granted, nor an asset or reduction from liability allowed,
to a ceding insurer for reinsurance effected with assuming insurers meeting the
requirements of
14VAC5-300-60,
14VAC5-300-70,
14VAC5-300-80,
14VAC5-300-90,
14VAC5-300-95,
14VAC5-300-97, or
14VAC5-300-110
or otherwise in compliance with §
38.2-1316.2
of the Act unless the reinsurance agreement:
1. Includes a proper insolvency clause that
stipulates that reinsurance is payable directly to the liquidator or successor
without diminution regardless of the status of the ceding company;
2. Includes a provision whereby the assuming
insurer, if an unauthorized assuming insurer, has submitted to the jurisdiction
of an alternative dispute resolution panel or court of competent jurisdiction
within the United States, has agreed to comply with all requirements necessary
to give such court or panel jurisdiction, has designated an agent upon whom
service of process may be effected, and has agreed to abide by the final
decisions of such court or panel; and
3. Includes a proper reinsurance intermediary
clause, if applicable, that stipulates that the credit risk for the
intermediary is carried by the assuming insurer.
B. If the assuming insurer is not licensed,
accredited, or certified to transact insurance or reinsurance in this
Commonwealth, the credit permitted pursuant to §
38.2-1316.2C
3, C 4, and H shall not be allowed unless the assuming insurer agrees in the
reinsurance agreements:
1.
a. That in the event of the failure of the
assuming insurer to perform its obligations under the terms of the reinsurance
agreement, the assuming insurer, at the request of the ceding insurer, shall
submit to the jurisdiction of any court of competent jurisdiction in any state
of the United States, will comply with all requirements necessary to give the
court jurisdiction, and will abide by the final decision of the court or of any
appellate court in the event of an appeal; and
b. To designate the commission or a
designated attorney as its true and lawful attorney upon whom may be served any
lawful process in any action, suit, or proceeding instituted by or on behalf of
the ceding insurer.
2.
This subsection is not intended to conflict with or override the obligation of
the parties to a reinsurance agreement to arbitrate their disputes, if this
obligation is created in the agreement.
C. If the assuming insurer does not meet the
requirements of §
38.2-1316.2C
1, 2, or 3, the credit permitted by §
38.2-1316.2C
4 or D shall not be allowed unless the assuming insurer agrees in the trust
agreements to the following conditions:
1.
Notwithstanding any other provisions in the trust instrument, if the trust fund
is inadequate because it contains an amount less than the amount required by
§
38.2-1316.2C
4, or if the grantor of the trust has been declared insolvent or placed into
receivership, rehabilitation, liquidation, or similar proceedings under the
laws of its state or country of domicile, the trustee shall comply with an
order of the commissioner with regulatory oversight over the trust or with an
order of a court of competent jurisdiction directing the trustee to transfer to
the commissioner with regulatory oversight all of the assets of the trust
fund.
2. The assets shall be
distributed by and claims shall be filed with and valued by the commissioner
with regulatory oversight in accordance with the laws of the state in which the
trust is domiciled that are applicable to the liquidation of domestic insurance
companies.
3. If the commissioner
with regulatory oversight determines that the assets of the trust fund or any
part thereof are not necessary to satisfy the claims of the United States
ceding insurers of the grantor of the trust, the assets or part thereof shall
be returned by the commissioner with regulatory oversight to the trustee for
distribution in accordance with the trust agreement.
4. The grantor shall waive any right
otherwise available to it under United States law that is inconsistent with
this provision.
NOTICE: Forms used in administering the regulation have been
filed by the agency. The forms are not being published; however, online users
of this issue of the Virginia Register of Regulations may click on the name of
a form with a hyperlink to access it. The forms are also available from the
agency contact or may be viewed at the Office of the Registrar of Regulations,
900 East Main Street, 11th Floor, Richmond, Virginia 23219.
Statutory Authority: §§
12.1-13
and
38.2-1316.2
of the Code of Virginia.
