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of a solvent debtor on a final basis, and which may be subject to
judicial recognition and enforcement by a governing authority outside
the ceding insurer's domiciliary jurisdiction.
(F) The assuming insurer must agree in writing to comply
with paragraph (5) of this subsection.
(5) The assuming insurer or its legal successor on
behalf of itself and any legal predecessors must provide to the Commissioner,
on the Commissioner's request, the following documentation:
(A) for the two years before entering into the reinsurance
agreement and subsequently on an annual basis, the assuming insurer's
annual audited financial statements, including the external audit
report, prepared under the law of the jurisdiction of the assuming
insurer's principal office or domiciliary jurisdiction, as applicable;
(B) for the two years before entering into the reinsurance
agreement, the solvency and financial condition reports or actuarial
opinion, if filed with the assuming insurer's supervisor;
(C) before entering into the reinsurance agreement
and subsequently not more than semiannually, an updated list of all
disputed and overdue reinsurance claims outstanding for 90 days or
more, regarding reinsurance assumed from ceding insurers domiciled
in the United States; and
(D) before entering into the reinsurance agreement
and subsequently not more than semiannually, information about the
assuming insurer's assumed reinsurance by ceding insurer, ceded reinsurance
by the assuming insurer, and reinsurance recoverable on paid and unpaid
losses by the assuming insurer to allow for the evaluation of the
prompt payment criteria under paragraph (6) of this subsection.
(6) The assuming insurer must maintain a practice of
prompt payment of claims under reinsurance agreements. The lack of
prompt payment is evidenced by any of the following criteria:
(A) more than 15% of the reinsurance recoverables from
the assuming insurer is overdue and in dispute as reported to the
Commissioner;
(B) more than 15% of the assuming insurer's ceding
insurers or reinsurers have undisputed reinsurance recoverables on
paid losses that are overdue by 90 days or more and exceed for each
ceding insurer $100,000, or as otherwise specified in a covered agreement;
or
(C) the undisputed aggregate amount of reinsurance
recoverable on paid losses is overdue by 90 days or more and exceeds
$50,000,000, or as otherwise specified in a covered agreement.
(7) The assuming insurer's supervisory authority must
confirm to the Commissioner annually that the assuming insurer complies
with paragraphs (2) and (3) of this subsection.
(8) Nothing in this subsection precludes an assuming
insurer from voluntarily providing the Commissioner with information.
(d) The Commissioner shall timely create and publish
on TDI's website a list of reciprocal jurisdictions.
(1) The Commissioner's list shall include any reciprocal
jurisdiction described by subsection (b)(1) and (2) of this section.
The Commissioner shall consider any other reciprocal jurisdiction
on the list of reciprocal jurisdictions published through the NAIC
committee process. The Commissioner may approve a jurisdiction that
does not appear on the NAIC list of reciprocal jurisdictions as provided
by applicable law or rule or under criteria published through the
NAIC committee process.
(2) The Commissioner may remove a jurisdiction from
the Commissioner's list of reciprocal jurisdictions if the Commissioner
determines that the jurisdiction no longer meets any requirement of
a reciprocal jurisdiction under applicable law, rule, or in accordance
with a process published through the NAIC committee process. However,
the Commissioner may not remove from the Commissioner's list a reciprocal
jurisdiction described by subsection (b)(1) and (2) of this section.
On removal of a reciprocal jurisdiction from the Commissioner's list,
credit for reinsurance ceded to an assuming insurer domiciled in that
jurisdiction must be allowed if otherwise allowed under Insurance
Code Chapter 493 or this subchapter.
(e) The Commissioner shall timely create and publish
on TDI's website a list of assuming insurers that have satisfied the
conditions of this section. Cessions to an assuming insurer on the
list must be granted credit in accordance with this section.
(1) If an NAIC accredited jurisdiction has determined
that an assuming insurer meets the conditions in subsection (c) of
this section, the Commissioner may defer to that jurisdiction's determination,
and add the assuming insurer to the Commissioner's list of assuming
insurers. The Commissioner may accept financial documentation filed
with another NAIC accredited jurisdiction or the NAIC to satisfy the
requirements of subsection (c) of this section.
(2) When an assuming insurer requests that the Commissioner
defer to another NAIC accredited jurisdiction's determination, the
assuming insurer must submit a properly executed Form RJ-1 adopted
by reference in §7.614 of this title and any additional information
the Commissioner requires. If TDI receives a request, TDI will notify
other states through the NAIC committee process and provide relevant
information about the Commissioner's eligibility determination.
(f) If the Commissioner determines that an assuming
insurer no longer meets any requirement under this section, the Commissioner
may revoke or suspend the eligibility of the assuming insurer from
the Commissioner's list of eligible assuming insurers.
(1) While an assuming insurer's eligibility is suspended,
the assuming reinsurer's reinsurance agreements issued, amended, or
renewed after the effective date of the suspension do not qualify
for credit except to the extent that the assuming insurer's obligations
under the agreements are secured in accordance with Insurance Code §493.104
and §7.608(b) of this title (relating to Insurance Ceded to Assuming
Insurers not Authorized in Texas, or Accredited, Trusteed, or Certified
under this Subchapter), §7.610 of this title (relating to Letter
of Credit Requirements), and §7.611 of this title (relating to
Indemnity Reinsurance Agreements--Required Provisions).
(2) If an assuming insurer's eligibility is revoked,
no credit for the assuming reinsurer's reinsurance, including reinsurance
agreements entered into before the date of revocation, may be granted
after the effective date of the revocation except to the extent that
the assuming insurer's obligations under the agreements are secured
in a form acceptable to the Commissioner and consistent with Insurance
Code §493.104 and §§7.608(b), 7.610, and 7.611 of this
title.
(g) Before denying statement credit, imposing a requirement
to post security under subsection (f) of this section, or adopting
any similar requirement that has substantially the same regulatory
impact as security, the Commissioner shall:
(1) communicate with the ceding insurer, the assuming
insurer, and the assuming insurer's supervisory authority that the
assuming insurer no longer satisfies one of the conditions in subsection
(c) of this section;
(2) allow the assuming insurer 30 days after the initial
communication under paragraph (1) of this subsection to submit a plan
to remedy the defect, and 90 days after that communication to remedy
the defect, except in exceptional circumstances in which a shorter
period is necessary for policyholder and other consumer protection;
(3) after the expiration of the 90-day period or, if
applicable, the shorter period for exceptional circumstances described
by paragraph (2) of this subsection, if the Commissioner determines
that the assuming insurer took no or insufficient action to remedy
the defect, the Commissioner may impose any requirement in this subsection;
and
(4) provide a written explanation to the assuming insurer
of any requirement in this subsection.
(h) If a ceding insurer is subject to a legal process
of rehabilitation, liquidation, or conservation, the ceding insurer
or its representative may seek and, if determined appropriate by the
court in which the proceedings are pending, obtain an order requiring
that the assuming insurer post security for all outstanding liabilities.
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