| (a) The Commissioner, under Insurance Code §493.108,
concerning Credit Allowed for Certain Eligible Assuming Insurers,
shall allow credit for reinsurance ceded by a domestic insurer to
an assuming insurer that:
(1) is licensed to write reinsurance by a reciprocal
jurisdiction described by subsection (b) of this section;
(2) has its principal office or is domiciled in that
reciprocal jurisdiction; and
(3) meets the other conditions of this section.
(b) A "reciprocal jurisdiction" is a jurisdiction listed
by the Commissioner under subsection (d) of this section, that is:
(1) a jurisdiction located outside of the United States
that is subject to an in-force covered agreement with the United States,
each within its legal authority, or, in the case of a covered agreement
between the United States and the European Union, is a member state
of the European Union. For purposes of this subsection, a "covered
agreement" is an agreement entered into under the Dodd-Frank Wall
Street Reform and Consumer Protection Act, 31 U.S.C. §313 and §314,
that is currently in effect or in a period of provisional application
and addresses the elimination, under specified conditions, of collateral
requirements as a condition for entering into any reinsurance agreement
with a ceding insurer domiciled in this state or for allowing the
ceding insurer to recognize credit for reinsurance;
(2) a jurisdiction located in the United States that
meets the requirements for accreditation under the NAIC financial
standards and accreditation program; or
(3) a qualified jurisdiction listed by the Commissioner,
under Insurance Code §493.1035, concerning Qualified Jurisdictions,
and §7.624 of this title (relating to Qualified Jurisdictions),
that is not described in paragraph (1) or (2) of this subsection and
that the Commissioner determines meets the following additional requirements.
The qualified jurisdiction:
(A) must provide that an insurer that has its principal
office or is domiciled in the qualified jurisdiction will receive
credit for reinsurance ceded to a U.S.-domiciled assuming insurer
in the same manner credit is received for reinsurance assumed by insurers
domiciled in the qualified jurisdiction;
(B) may not require a U.S.-domiciled assuming insurer
to establish or maintain a local presence as a condition for entering
into a reinsurance agreement with any ceding insurer regulated by
the non-U.S. jurisdiction or allowing the ceding insurer to recognize
credit for the reinsurance;
(C) must recognize the U.S. state regulatory approach
to group supervision and group capital by providing written confirmation.
The confirmation must be by a competent regulatory authority in the
qualified jurisdiction and state that insurers and insurance groups
that are domiciled or maintain their principal office in this state
or another jurisdiction accredited by the NAIC are subject only to
worldwide prudential insurance group supervision, including worldwide
group governance, solvency and capital, and reporting, as applicable,
by the Commissioner or the commissioner of the domiciliary state and
will not be subject to group supervision at the level of the worldwide
parent undertaking of the insurance or reinsurance group by the qualified
jurisdiction; and
(D) must provide written confirmation by a competent
regulatory authority in the qualified jurisdiction that information
about insurers and their parents, subsidiaries, or affiliated entities,
if applicable, will be provided to the Commissioner in accordance
with a memorandum of understanding or similar document between the
Commissioner and the qualified jurisdiction, including the International
Association of Insurance Supervisors Multilateral Memorandum of Understanding
or other multilateral memoranda of understanding that the NAIC coordinates.
(c) Credit for reinsurance will be allowed if the reinsurance
is ceded from an insurer domiciled in this state to an assuming insurer
meeting the following conditions.
(1) The assuming insurer must be licensed to transact
reinsurance by, and have its principal office in or be domiciled in,
a reciprocal jurisdiction.
(2) The assuming insurer must have and maintain on
an ongoing basis minimum capital and surplus, or its equivalent, calculated
at least annually as of the preceding December 31 or at the annual
date otherwise statutorily reported to the reciprocal jurisdiction
in the amounts stated in subparagraphs (A) and (B) of this paragraph.
Satisfaction of this requirement must be confirmed as required by
paragraph (7) of this subsection, according to the methodology of
the assuming insurer's domiciliary jurisdiction. The amounts are:
(A) not less than $250,000,000; or
(B) if the assuming insurer is an association, including
incorporated and individual unincorporated underwriters:
(i) minimum capital and surplus equivalents (net of
liabilities) or own funds of the equivalent of at least $250,000,000;
and
(ii) a central fund containing a balance of the equivalent
of at least $250,000,000.
(3) The assuming insurer must have and maintain on
an ongoing basis a minimum solvency or capital ratio, as applicable,
as follows:
(A) if the assuming insurer has its principal office
or is domiciled in a reciprocal jurisdiction described by subsection
(b)(1) of this section, the ratio specified in the applicable covered
agreement;
(B) if the assuming insurer is domiciled in a reciprocal
jurisdiction described by subsection (b)(2) of this section, a risk-based
capital ratio of 300% of the authorized control level, calculated
with use of the formula developed by the NAIC; or
(C) if the assuming insurer is domiciled in a reciprocal
jurisdiction described by subsection (b)(3) of this section, a solvency
or capital ratio that the Commissioner, after consulting with the
reciprocal jurisdiction and considering any recommendations published
through the NAIC committee process, determines to be an effective
measure of solvency.
(4) The assuming insurer must agree to the following
requirements and provide adequate assurance of its agreement by presenting
a properly executed Form RJ-1, adopted by reference in §7.614
of this title (relating to Posting of Information, Submissions, and
Adoption of Forms by Reference).
(A) The assuming insurer must agree to provide prompt
written notice and explanation to the Commissioner if it fails to
meet the minimum requirements of paragraph (2) or (3) of this subsection,
or if any regulatory action is taken against it for serious noncompliance
with applicable law.
(B) The assuming insurer must consent in writing to
the jurisdiction of this state's courts and the appointment of the
Commissioner as agent for service of process.
(i) The Commissioner may require that the consent be
provided and included in each reinsurance agreement under the Commissioner's
jurisdiction.
(ii) Nothing in this provision limits or in any way
alters the capacity of parties to a reinsurance agreement to agree
to alternative dispute resolution mechanisms, except to the extent
the agreement to an alternative dispute resolution mechanism is unenforceable
under applicable insolvency or delinquency laws.
(C) The assuming insurer must agree in writing to pay
all final judgments, wherever enforcement is sought, obtained by a
ceding insurer, that have been declared enforceable in the jurisdiction
where the judgment was obtained.
(D) Each reinsurance agreement must require the assuming
insurer to provide security in an amount equal to 100% of the assuming
insurer's liabilities attributable to reinsurance ceded under the
relevant agreement if the assuming insurer resists enforcement of
a final judgment that is enforceable under the law of the jurisdiction
in which it was obtained or a properly enforceable arbitration award,
whether obtained by the ceding insurer or by its legal successor on
behalf of its estate, if applicable.
(E) The assuming insurer must confirm that it is not
presently participating in any solvent scheme of arrangement involving
this state's ceding insurers. The assuming insurer must agree to notify
the ceding insurer and the Commissioner and to provide 100% security
to the ceding insurer consistent with the terms of the scheme should
the assuming insurer enter into a solvent scheme of arrangement. The
security must be in a form consistent with the provisions of Insurance
Code §493.104, concerning Credit for Funds Security Reinsurance
Obligations, and §493.105, concerning Acceptability of Certain
Letters of Credit, and §7.609 of this title (relating to Trust
Agreement Requirements) and §7.610 of this title (relating to
Letter of Credit Requirements). In this section, the term "solvent
scheme of arrangement" means a foreign or alien statutory or regulatory
compromise procedure subject to majority creditor approval and judicial
sanction in the assuming insurer's domiciliary jurisdiction that finally
commutes liabilities of duly noticed class members or creditors of
a solvent debtor, or reorganizes or restructures the debts Cont'd... |
