| (a) Certification.
(1) A certification issued under this section is valid
for the following calendar year. To continue the certification, the
certified assuming insurer must reapply on or before July 1 of the
year that the certification expires.
(2) Following receipt of a certification application,
TDI will post on the TDI website notice of the application and instructions
on how the public may respond to or comment on the application. The
notice will remain posted on the website for at least 30 days before
the Commissioner will take final action on the application.
(3) TDI will provide written notice to an assuming
insurer stating whether the assuming insurer's application to be a
certified assuming insurer has been approved. If the application is
approved, the notice will include the certified insurer's assigned
rating. TDI will publish on the TDI website a list of all certified
assuming insurers and their assigned ratings.
(4) To be eligible for certification, the assuming
insurer must:
(A) be domiciled and authorized to transact the business
of insurance or reinsurance in a qualified jurisdiction, as determined
under Insurance Code §493.1035 and §7.624 of this subchapter;
(B) maintain capital and surplus, or its equivalent,
of no less than $250 million calculated in accordance with subsection
(b) of this section. An association including incorporated and individual
unincorporated underwriters may satisfy the requirement by having
minimum capital and surplus equivalents, net of liabilities, of at
least $250 million and a joint central fund containing a balance of
at least $250 million;
(C) maintain financial strength ratings from two or
more NRSROs that the Commissioner has determined to be acceptable.
The NRSRO must base its financial strength rating on interactive communication
between the NRSRO and the assuming insurer and must not be based solely
on publicly available information. The financial strength ratings
will be a factor used by the Commissioner in determining the rating
that the Commissioner assigns to the assuming insurer. Acceptable
NRSROs include the following:
(i) A.M. Best Rating Services, Inc. (Best);
(ii) Fitch Ratings, Inc. (Fitch);
(iii) Kroll Bond Rating Agency, Inc. (Kroll);
(iv) Moody's Investors Service, Inc. (Moody's);
(v) S&P Global Ratings; (S&P) and
(vi) any other NRSRO that the Commissioner determines
to be acceptable under §7.627 of this title;
(D) agree to post 100 percent security for the benefit
of the ceding insurer, or its estate, on the entry of an order of
rehabilitation, liquidation, or conservation, against the ceding insurer;
(E) meet, or agree to, the requirements in Insurance
Code §493.1033 and Form CR-1; and
(F) provide additional information necessary to demonstrate
the creditworthiness of the assuming insurer.
(b) Rating.
(1) The Commissioner will rate each certified assuming
insurer on a legal entity basis with due consideration being given
to the group rating where appropriate, except that an association
including incorporated and individual unincorporated underwriters
that has been approved to do business as a single certified assuming
insurer may be evaluated on the basis of its group rating. In determining
the rating, the Commissioner will consider relevant factors and review
appropriate materials, including:
(A) the certified assuming insurer's financial strength
rating from an acceptable NRSRO. The maximum rating that a certified
assuming insurer may be assigned will correspond to its financial
strength rating level in the security table in Figure: 28 TAC §7.622(b)(1)(A)
of this section and as the security table is amended for additional
NRSROs determined to be acceptable in accordance with §7.627
of this title. The Commissioner must use the lowest financial strength
rating received from an acceptable NRSRO in establishing the maximum
rating of a certified assuming insurer. The financial strength rating
must be dated within 15 months of the certified assuming insurer's
submission. An insurer that fails to obtain or maintain at least two
financial strength ratings from acceptable NRSROs will lose the insurer's
eligibility for certification.
Attached Graphic
(B) the business practices of the certified assuming
insurer in dealing with its ceding insurers, including its record
of compliance with reinsurance agreement terms and obligations;
(C) for certified assuming insurers domiciled in the
United States, the most recent applicable reinsurance schedule filed
with the certified assuming insurer's state of domicile;
(D) for certified assuming insurers not domiciled in
the United States, the most recent Form CR-F, for property and casualty
assuming insurers, or Form CR-S, for life and health assuming insurers,
which are adopted by reference;
(E) the reputation of the certified assuming insurer
for prompt payment of claims under reinsurance agreements, based on
an analysis of ceding insurers' Schedule F reporting of overdue reinsurance
recoverables, including the proportion of obligations that are more
than 90 days past due or are in dispute, with specific attention given
to obligations payable to companies that are in supervision, conservation,
receivership or similar proceeding;
(F) regulatory actions against the certified assuming
insurer;
(G) the report of the independent auditor on the financial
statements of the certified assuming insurer;
(H) for a certified assuming insurer not domiciled
in the United States:
(i) its audited financial statements consisting of
audited United States GAAP basis statements, if available; audited
International Financial Reporting Standards (IFRS) basis statements
with an audited footnote reconciling equity and net income to a United
States GAAP basis; or with the written permission of the Commissioner,
audited IFRS statements with reconciliation to United States GAAP
certified by an officer of the company;
(ii) its actuarial opinion and other regulatory filings
as filed with the non-United States jurisdiction supervisor; and
(iii) with the initial application for certification,
its three prior years' audited financial statements filed with its
non-United States jurisdiction supervisor;
(I) the liquidation priority of obligations to a ceding
insurer in the certified assuming insurer's domiciliary jurisdiction
in the context of an insolvency proceeding;
(J) a certified assuming insurer's participation in
any solvent scheme of arrangement, or similar procedure, which involves
United States ceding insurers. A certified assuming insurer that proposes
participation in a solvent scheme of arrangement must provide the
Commissioner with prior written notice, not less than 30 days prior
to such participation; and
(K) any other information the Commissioner deems relevant.
(2) As directed by the Commissioner, a certified assuming
insurer must adjust the security posted to protect its liabilities
to United States ceding insurers as the Commissioner deems appropriate
based on TDI's analysis of a certified assuming insurer's reputation
for prompt payment of claims under subsection (b)(1)(E) of this section.
Subject to any additional adjustments that the Commissioner may deem
under this paragraph, the certified assuming insurer must, at a minimum,
increase the security posted by one rating level under subsection
(b)(1) of this section if:
(A) more than 15 percent of the certified assuming
insurer's ceding insurance clients have overdue reinsurance recoverables
on paid losses of 90 days or more that are not in dispute and which
exceed $100,000 for each ceding insurer; or
(B) the aggregate amount of reinsurance recoverables
on paid losses that are not in dispute and are overdue by 90 days
or more exceeds $50 million.
(c) Form CR-1 Submission Requirement. The certified
assuming insurer applicant must submit with each certification application,
a properly executed Form CR-1 as evidence of its:
(1) submission to the jurisdiction of any court of
competent jurisdiction in any state of the United States;
(2) appointment of the Commissioner as an agent for
service of process in this state;
(3) agreement to provide security for 100 percent of
the assuming insurer's liabilities attributable to reinsurance ceded
by United States ceding insurers if the assuming insurer resists enforcement
of a final United States judgment. The Commissioner may not certify
any assuming insurer that is domiciled in a jurisdiction that the
Commissioner has determined does not adequately and promptly enforce
final United States judgments or arbitration awards;
Cont'd... |
