|(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:
(A) full name;
(B) physical address for its principal place of business;
(C) mailing address;
(D) NAIC number, United States federal tax identification
number, and International Securities Identification Number, as applicable;
(E) contact individual's name, phone number, and email;
(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)
(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
(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
(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.
|Source Note: The provisions of this §7.607 adopted to be effective August 16, 1990, 15 TexReg 4435; amended to be effective September 30, 1993, 18 TexReg 6329; amended to be effective June 19, 2018, 43 TexReg 3888