| (B) Before the due date of each quarterly or annual
statement, each life insurance company that has ceded reinsurance
within the scope of subsection (b) of this section must perform an
analysis, on a reinsurance agreement-by-reinsurance agreement basis,
to determine, as to each reinsurance agreement under which covered
policies have been ceded, whether as of the end of the immediately
preceding calendar quarter (the valuation date) the requirements of
paragraph (1)(C) and (D) of this subsection were satisfied. The ceding
insurer must establish a liability equal to the excess of the credit
for reinsurance taken over the amount of primary security actually
held under paragraph (1)(C) of this subsection, unless:
(i) the requirements of paragraph (1)(C) and (D) of
this subsection were fully satisfied as of the valuation date as to
the reinsurance agreement; or
(ii) any deficiency has been eliminated before the
due date of the quarterly or annual statement to which the valuation
date relates through the addition of primary security or other security,
or both, in the amount and in the form that would have caused the
requirements of paragraph (1)(C) and (D) of this subsection to be
fully satisfied as of the valuation date.
(C) Nothing in paragraph (2)(B) of this subsection
may be construed to allow a ceding company to maintain any deficiency
under paragraph (1)(C) and (D) of this subsection longer than is reasonably
necessary to eliminate the deficiency.
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