CHAPTER Ins 600 CREDIT FOR REINSURANCE
Statutory
Authority: RSA 400-A:15, I; RSA
405:50-a; RSA 405:51
REVISION NOTE:
Document
#6090, effective 9-7-95, made extensive changes to the wording, format,
structure, and numbering of rules in Chapter Ins 600. Document #6090 supersedes all prior filings
for the sections in this chapter. The
prior filings for former Chapter Ins 600 include the following documents:
#4555,
eff 12-29-88
#5649,
eff 7-1-93
PART
Ins 601 CREDIT FOR REINSURANCE
Ins 601.01 Purpose. The purpose of this rule is to set forth
rules and procedural requirements that the commissioner deems necessary to
carry out the provisions of RSA 405:45, RSA 405:46, RSA 405:47, RSA 405:48, RSA
405:49, RSA 405:50, RSA 405:50-a, RSA 405:51, and RSA 405:52. The
actions and information required by this rule are declared to be necessary and
appropriate in the public interest and for the protection of the ceding
insurers in this state.
Source. (See Revision Note at chapter heading for Ins
600) #6090, eff 9-7-95, EXPIRED: 9-7-03
New. #8240, eff 1-3-05; ss by #8827, eff 3-1-07;
ss by #10449, eff 11-1-13; ss by #13296, eff 11-24-21
Ins 601.02 Credit for Reinsurance - Reinsurer
Licensed in This State. Pursuant to
RSA 405:47, I, the commissioner shall allow credit for reinsurance
ceded by a domestic insurer to an assuming insurer that was licensed in this
state as of any date on which statutory financial statement credit for
reinsurance is claimed.
Source. (See Revision Note at chapter heading for Ins
600) #6090, eff 9-7-95, EXPIRED: 9-7-03
New. #8240, eff 1-3-05; ss by #10449, eff 11-1-13;
ss by #13296, eff 11-24-21
Ins 601.03 Credit for Reinsurance - Accredited
Reinsurers.
(a)
Pursuant to RSA 405:47, II, the commissioner shall allow credit for
reinsurance ceded by a domestic insurer to an assuming insurer that
is accredited as a reinsurer in this state as of the date on which statutory
financial statement credit for reinsurance is claimed. An accredited reinsurer shall:
(1) File a properly executed Form AR-1 (attached
as an exhibit to this rule) as evidence of its submission to this state's
jurisdiction and to this state's authority to examine its books and records;
(2) File with the commissioner a certified copy
of a certificate of authority or other acceptable evidence that it is licensed
to transact insurance or reinsurance in at least one state, or, in the case of
a U.S. branch of an alien assuming insurer, is entered through and licensed to
transact insurance or reinsurance in at least one state;
(3) File annually with the commissioner a copy of
its annual statement filed with the insurance department of its state of
domicile or, in the case of an alien assuming insurer, with the state through
which it is entered and in which it is licensed to transact insurance or
reinsurance, and a copy of its most recent audited financial statement; and
(4) Maintain a surplus as regards policyholders
in an amount not less than $20,000,000, or obtain the affirmative approval of
the commissioner upon a finding that it has adequate financial capacity to meet
its reinsurance obligations and is otherwise qualified to assume reinsurance
from domestic insurers.
(b)
If the commissioner determines that the assuming insurer has failed to
meet or maintain any of these qualifications, the commissioner may upon written
notice and opportunity for hearing, suspend or revoke the accreditation. Credit shall not be allowed a domestic ceding
insurer under this section if the assuming insurer's accreditation has been
revoked by the commissioner, or if the reinsurance was ceded while the assuming
insurer’s accreditation was under suspension by the commissioner.
Source. (See Revision Note at chapter heading for Ins
600) #6090, eff 9-7-95, EXPIRED: 9-7-03
New. #8240, eff 1-3-05; ss by #8827, eff 3-1-07;
ss by #10449, eff 11-1-13; ss by #13296, eff 11-24-21
Ins
601.04 Credit for Reinsurance - Reinsurer
Domiciled in Another State.
(a)
Pursuant to RSA 405:47, III, the commissioner shall allow credit for
reinsurance ceded by a domestic insurer to an assuming insurer that as of any
date on which statutory financial statement credit for reinsurance is claimed:
(1) Is domiciled in (or, in the case of a U.S.
branch of an alien assuming insurer, is entered through) a state that employs
standards regarding credit for reinsurance substantially similar to those
applicable under RSA 405:45, RSA 405:46, RSA 405:47, RSA 405:48, RSA 405:49,
RSA 405:50, and this rule.
(2) Maintains a surplus as regards
policyholders in an amount not less than $20,000,000; and
(3) Files a properly executed Form AR-1 with the
commissioner as evidence of its submission to this state's authority to examine
its books and records.
(b)
The provisions of this section relating to surplus as regards
policyholders shall not apply to reinsurance ceded and assumed pursuant to
pooling arrangements among insurers in the same holding company system. As used in this section, “substantially
similar” standards means credit for reinsurance standards that the commissioner
determines equal or exceed the standards of RSA 405 and this rule.
Source. (See Revision Note at chapter heading for Ins
600) #6090, eff 9-7-95, EXPIRED: 9-7-03
New. #8240, eff 1-3-05; ss by #8827, eff 3-1-07;
ss by #10449, eff 11-1-13; ss by #13296, eff 11-24-21
Ins
601.05 Credit for Reinsurance -Reinsurers
Maintaining Trust Funds.
(a)
Pursuant to RSA 405:47, IV, the commissioner shall allow credit for
reinsurance ceded by a domestic insurer to an assuming insurer which, as
of any date on which statutory financial statement credit for
reinsurance is claimed, and thereafter for so long as credit for reinsurance is
claimed, maintains a trust fund in an amount prescribed below in a
qualified U.S. financial institution as defined in RSA 405:46, III, for the
payment of the valid claims of its U.S. domiciled ceding insurers, their
assigns and successors in interest. The
assuming insurer shall report annually to the commissioner substantially the
same information as that required to be reported on the National Association of
Insurance Commissioners (NAIC) annual statement form by licensed insurers, to
enable the commissioner to determine the sufficiency of the trust fund.
(b)
The following requirements apply to the following categories of assuming
insurer:
(1) The
trust fund for a single assuming insurer shall consist of funds in trust in an
amount not less than the assuming insurer's liabilities attributable to reinsurance
ceded by U.S. domiciled insurers, and in addition, the assuming insurer
shall maintain a trusteed surplus of not less than $20,000,000, except as
provided in subparagraph (2) of this paragraph.
(2) At any time after the assuming insurer has
permanently discontinued underwriting new business secured by the trust for at
least 3 full years, the commissioner with principal regulatory oversight of the
trust may authorize a reduction in the required trusteed surplus, but only
after a finding, based on an assessment of the risk, that the new required
surplus level is adequate for the protection of U.S. ceding insurers,
policyholders and claimants in light of reasonably foreseeable adverse loss
development. The risk assessment may
involve an actuarial review, including an independent analysis of reserves and
cash flows, and shall consider all material risk factors, including when
applicable the lines of business involved, the stability of the incurred loss
estimates and the effect of the surplus requirements on the assuming insurer’s
liquidity or solvency. The minimum
required trusteed surplus may not be reduced to an amount less than 30 percent
of the assuming insurer’s liabilities attributable to reinsurance ceded
by U.S. ceding insurers covered by the trust.
(3) a. The
trust fund for a group including incorporated and individual unincorporated
underwriters shall consist of:
1. For reinsurance ceded under reinsurance
agreements with an inception, amendment, or renewal date on or after January 1,
1993, funds in trust in an amount not less than the respective underwriters’
several liabilities attributable to business ceded by U.S. domiciled ceding
insurers to any underwriter of the group;
2. For reinsurance ceded under reinsurance
agreements with an inception date on or before December 31, 1992, and not
amended or renewed after that date, notwithstanding the other provisions of
this rule, funds in trust in an amount not less than the respective
underwriters’ several insurance and reinsurance liabilities attributable to
business written in the United States; and
3. In addition to these trusts, the group shall
maintain a trusteed surplus of which $100,000,000 shall be held jointly for the
benefit of the U.S. domiciled ceding insurers of any member of the
group for all the years of account.
b. The incorporated members of the group shall
not be engaged in any business other than underwriting as a member of the group
and shall be subject to the same level of regulation and solvency control by
the group’s domiciliary regulator as are the unincorporated members. The group shall, within 90 days after its
financial statements are due to be filed with the group’s domiciliary
regulator, provide to the commissioner:
1. An annual certification by the group’s
domiciliary regulator of the solvency of each underwriter member of the group;
or
2. If a certification is unavailable, a
financial statement, prepared by independent public accountants, of each
underwriter member of the group.
(4) a. The
trust fund for a group of incorporated insurers under common administration,
whose members possess aggregate policyholders surplus of $10,000,000,000
(calculated and reported in substantially the same manner as prescribed by the
annual statement instructions and Accounting
Practices
and Procedures Manual of the NAIC) and which has continuously transacted an insurance business outside the United States
for at least 3 years immediately prior to making application for accreditation,
shall:
1. Consist
of funds in trust in an amount not less than the assuming insurers' several
liabilities attributable to business ceded by U.S. domiciled ceding
insurers to any members of the group pursuant to reinsurance contracts issued
in the name of such group;
2. Maintain a joint trusteed surplus of which
$100,000,000 shall be held jointly for the benefit of U.S. domiciled ceding
insurers of any member of the group; and
3. File a properly executed Form AR-1 as
evidence of the submission to this state's authority to examine the
books and records of any of its members and shall certify that any member examined
will bear the expense of any such examination.
b. Within 90 days after the statements are due
to be filed with the group's domiciliary regulator, the group shall file with
the commissioner an annual certification of each underwriter member’s solvency by
the member's domiciliary regulators, and financial statements, prepared
by independent public accountants, of each underwriter member
of the group.
(c) (1)
Credit for reinsurance shall not be granted unless the form of the trust
and any amendments to the trust have been approved by either the commissioner
of the state where the trust is domiciled or the commissioner of another state
who, pursuant to the terms of the trust instrument, has accepted responsibility
for regulatory oversight of the trust. The
form of the trust and any trust amendments also shall be filed with the
commissioner of every state in which the ceding insurer beneficiaries of
the trust are domiciled. The trust instrument shall provide that:
a. Contested claims shall be 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;
b. Legal title to the assets of the trust shall
be vested in the trustee for the benefit of the grantor's U.S. ceding
insurers, their assigns and successors in interest;
c. The trust shall be subject to examination as
determined by the commissioner;
d. The trust shall remain in effect for as long
as the assuming insurer, or any member or former member of a group of insurers,
shall have outstanding obligations under reinsurance agreements subject to the
trust; and
e. No later than February 28 of each year the
trustee of the trust shall report to the commissioner in writing setting forth
the balance in the trust and listing the trust's investments at the preceding
year end, and shall certify the date of termination of the trust, if so
planned, or certify that the trust shall not expire prior to the following
December 31.
(2) a. Notwithstanding
any other provisions in the trust instrument, if the trust fund is inadequate
because it contains an amount less than the amount required by this subsection
or if the grantor of the trust has been declared insolvent or placed into
receivership, rehabilitation, liquidation or similar proceedings under the laws
of its state or country of domicile, the trustee shall comply with an order of
the commissioner with regulatory oversight over the trust or with an order of a
court of competent jurisdiction directing the trustee to transfer to the
commissioner with regulatory oversight over the trust or other designated
receiver all of the assets of the trust fund.
b. The assets shall be distributed by and claims
shall be filed with and valued by the commissioner with regulatory
oversight over the trust in accordance with the laws of the state in which the
trust is domiciled applicable to the liquidation of domestic insurance
companies.
c. If the commissioner with regulatory oversight
over the trust determines that the assets of the trust fund or any part thereof
are not necessary to satisfy the claims of the U.S. beneficiaries of the trust,
the commissioner with regulatory oversight over the trust shall return the
assets, or any part thereof, to the trustee for distribution in accordance with
the trust agreement.
d. The grantor shall waive any right otherwise
available to it under U.S. law that is inconsistent with this
provision.
(d)
For purposes of this section, the term “liabilities” shall mean the
assuming insurer’s gross liabilities attributable to reinsurance ceded
by U.S. domiciled insurers excluding liabilities that
are otherwise secured by acceptable means, and shall include:
(1) For business ceded by domestic insurers
authorized to write accident and health, and property and casualty insurance:
a. Losses and allocated loss expenses paid by
the ceding insurer, recoverable from the assuming insurer;
b. Reserves for losses reported and outstanding;
c. Reserves for losses incurred by not reported;
d. Reserves for allocated loss expenses; and
e. Unearned premiums.
(2) For business ceded by domestic insurers
authorized to write life, health and annuity insurance:
a. Aggregate reserves for life policies and
contracts net of policy loans and net due and deferred premiums;
b. Aggregate reserves for accident and health
policies;
c. Deposit funds and other liabilities without
life or disability contingencies; and
d. Liabilities for policy and contract claims.
(e)
Assets deposited in trusts established pursuant to RSA 405:47 and this
section shall be valued according to their fair market value and shall consist
only of cash in U.S. dollars, certificates of deposit issued by a U.S.
financial institution as defined in RSA 405:46 II, clean, irrevocable,
unconditional and “evergreen” letters of credit issued or confirmed by a
qualified U.S. financial institution as defined in RSA 405:46 II, and
investments of the type specified in this subsection, but investments in or
issued by any entity controlling, controlled by or under common control with
either the grantor or beneficiary of the trust shall not exceed 5 percent of
total investments. No more than 20 percent of the total of the
investments in the trust may be foreign investments authorized under Ins 601.05
(e)(1)e., (3), (6)b., or (7), and no more than 10 percent of the total of the
investments in the trust may be securities denominated in foreign
currencies. For purposes of applying the preceding sentence, a
depository receipt denominated in U.S. dollars and representing rights
conferred by a foreign security shall be classified as a foreign investment
denominated in a foreign currency. The assets of a trust established
to satisfy the requirements of RSA 405:47 shall be invested only as follows:
(1) Government
obligations that are not in default as to principal or interest, that are valid
and legally authorized and that are issued, assumed or guaranteed by:
a. The United Sates or by any agency or
instrumentality of the United States;
b. A state of the United States;
c. A territory, possession or other governmental
unit of the United States;
d. An agency or instrumentality of a
governmental unit referred to in clauses (e)(1)b. and c. above if
the obligations shall be by law (statutory or otherwise) payable, as to both
principal and interest, from taxes levied or by law required to be levied or
from adequate special revenues pledged or otherwise appropriated or by law
required to be provided for making these payments, but shall not be obligations
eligible for investment under this paragraph if payable solely out of special
assessments on properties benefited by local improvements; or
e. The government of any other country that is a
member of the Organization for Economic Cooperation and Development and whose
government obligations are rated A or higher, or the equivalent, by a rating
agency recognized by the Securities Valuation Office of the NAIC;
(2) Obligations that are issued in the United
States, or that are dollar denominated and issued in a non-U.S. market, by a
solvent U.S. institution (other than an insurance company) or that are assumed
or guaranteed by a solvent U.S. institution (other than an insurance company)
and that are not in default as to principal or interest if the obligations:
a. Are rated A or higher (or the equivalent) by
a securities rating agency recognized by the Securities Valuation Office of the
NAIC, or if not so rated, are similar in structure and other material respects
to other obligations of the same institution that are so rated;
b. Are insured by at least one authorized
insurer (other than the investing insurer or a parent, subsidiary or affiliate
of the investing insurer) licensed to insure obligations in this state and,
after considering the insurance, are rated AAA (or the equivalent) by a
securities rating agency recognized by the Securities Valuation Office of the
NAIC; or
c. Have been designated as Class One or Class
Two by the Securities Valuation Office of the NAIC;
(3) Obligations issued, assumed or guaranteed by
a solvent non-U.S. institution chartered in a country that is a member of the
Organization for Economic Cooperation and Development or obligations of U.S.
corporations issued in a non-U.S. currency, provided that in either case the
obligations are rated A or higher, or the equivalent, by a rating agency
recognized by the Securities Valuation Office of the NAIC;
(4) An investment made pursuant to the provisions
of subparagraph (1), (2), or (3) of this paragraph shall be subject to the
following additional limitations:
a. An investment in or loan upon the obligations
of an institution other than an institution that issues mortgage-related
securities shall not exceed 5 percent of the assets of the trust;
b. An investment in any one mortgage-related
security shall not exceed 5 percent of the assets of the trust;
c. The aggregate total investment in
mortgage-related securities shall not exceed 25 percent of the assets of the
trust; and
d. Preferred or guaranteed shares issued or
guaranteed by a solvent U.S. institution are permissible investments if all of
the institution’s obligations are eligible as investments under (e)(2)a. and
(2)c. above, but shall not exceed 2 percent of the assets of the trust.
(5) As used in this rule:
a. “Mortgage-related security” means an
obligation that is rated AA or higher (or the equivalent) by a securities
rating agency recognized by the Securities Valuation Office of the NAIC and
that either:
1. Represents ownership of one or more
promissory notes or certificates of interest or participation in the notes
(including any rights designed to assure servicing of, or the receipt or
timeliness of receipt by the holders of the notes, certificates, or
participation of amounts payable under, the notes, certificates or
participation), that:
(i) Are directly secured by a first lien on a
single parcel of real estate, including stock allocated to a dwelling unit in a
residential cooperative housing corporation, upon which is located a dwelling
or mixed residential and commercial structure, or on a residential manufactured
home as defined in 42 U.S.C. Section 5402(6), whether the manufactured home is
considered real or personal property under the laws of the state in which it is
located; and
(ii) Were originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance company, or
similar institution that is supervised and examined by a federal or state
housing authority, or by a mortgagee approved by the Secretary of Housing and
Urban Development pursuant to 12 U.S.C. Sections 1709 and 1715-b, or, where the
notes involve a lien on the manufactured home, by an institution or by a
financial institution approved for insurance by the Secretary of Housing and
Urban Development pursuant to 12 U.S.C. Section 1703; or
2. Is secured by one or more promissory notes or
certificates of deposit or participations in the notes (with or without
recourse to the insurer of the notes) and, by its terms, provides for payments
of principal in relation to payments, or reasonable projections of payments, or
notes meeting the requirements of a.1.(i) and a.1.(ii) of this subparagraph;
b. “Promissory note” when used in connection
with a manufactured home, shall also include a loan, advance or credit sale as
evidenced by a retail installment sales contract or other instrument.
(6) Equity interests
a. Investments in common shares or partnership
interests of a solvent U.S. institution are permissible if:
1. Its obligations and preferred shares, if any,
are eligible as investments under this subsection; and
2. The equity interests of the institution
(except an insurance company) are registered on a national securities exchange
as provided in the Securities Exchange Act of 1934, 15 U.S.C. Sections 78a to
78kk, or
otherwise registered pursuant to that Act, and if otherwise registered, price
quotations for them are furnished through a nationwide automated quotations
system approved by the Financial Industry Regulatory Authority, or successor
organization. A trust shall not invest in equity interests under
this paragraph an amount exceeding one percent of the assets of the trust even
though the equity interests are not so registered and are not issued by an
insurance company;
b. Investments in common shares of a solvent
institution organized under the laws of a country that is a member of the
Organization for Economic Cooperation and Development, if:
1. All its obligations are rated A or higher, or
the equivalent, by a rating agency recognized by the Securities Valuation
Office of the NAIC; and
2. The equity interests of the institution are
registered on a securities exchange regulated by the government of a country
that is a member of the Organization for Economic Cooperation and Development;
c. An investment in or loan upon any one
institution’s outstanding equity interests shall not exceed one percent of the
assets of the trust. The cost of an investment in equity interests
made pursuant to this subparagraph, when added to the aggregate cost of other
investments in equity interests then held pursuant to this subparagraph, shall
not exceed 10 percent of the assets in the trust;
(7) Obligations issued, assumed or guaranteed by
a multinational development bank, provided the obligations are rated A or
higher, or the equivalent, by a rating agency recognized by the Securities
Valuation office of the NAIC.
(8) Investment companies
a. Securities of an investment company
registered pursuant to the Investment Company Act of 1940, 15 U.S.C. Section
80a, are permissible investments if the investment company:
1. Invests at least 90 percent of its assets in
the types of securities that qualify as an investment under subparagraphs
(e)(1), (2) and (3) above or invests in securities that are determined by the
commissioner to be substantively similar to the types of securities set forth
in subparagraphs
(e) (1), (2) and (3); or
2. Invests
at least 90 percent of its assets in the types of equity interests that qualify
as an investment under subparagraph (e)(6)a. above;
b. Investments made by a trust in investment
companies under this paragraph shall not exceed the following limitations:
1. An investment in an investment company
qualifying under (8)a.1. above shall not exceed 10 percent of the assets in the
trust and the aggregate amount of investment in qualifying investment companies
shall not exceed 25 percent of the assets in the trust; and
2 Investments in an investment company
qualifying under (8)a.2. above shall not exceed 5 percent of the assets in the
trust and the aggregate amount of investment in qualifying investment companies
shall be included when calculating the permissible aggregate value of equity
interests pursuant to subparagraph (e)(6) a. above.
(9) Letters of Credit
a. In order for a letter of credit to qualify as
an asset of the trust, the trustee shall have the right and the obligation
pursuant to the deed of trust or some other binding agreement (as duly approved
by the commissioner), to immediately draw down the full amount of the letter of
credit and hold the proceeds in trust for the beneficiaries of the trust if the
letter of credit will otherwise expire without being renewed or replaced.
b. The trust agreement shall provide that the
trustee shall be liable for its negligence, willful misconduct or lack of good
faith. The failure of the trustee to
draw against the letter of credit in circumstances where such draw would be
required shall be deemed to be negligence and/or willful misconduct.
(f)
A specific security provided to a ceding insurer by an assuming insurer
pursuant to Ins 601.09 of this rule shall be applied, until exhausted, to the
payment of liabilities of the assuming insurer to the ceding insurer
holding the specific security prior to, and as a condition precedent for,
presentation of a claim by the ceding insurer for payment by a trustee of a
trust established by the assuming insurer pursuant to this section.
Source. (See Revision Note at chapter heading for Ins
600) #6090, eff 9-7-95, EXPIRED: 9-7-03
New. #8240, eff 1-3-05; ss by #8827, eff 3-1-07;
ss by #10449, eff 11-1-13; ss by #13296, eff 11-24-21
Ins 601.06 Credit for Reinsurance – Certified Reinsurers.
(a) Pursuant to RSA 405:47 IV-a., the
commissioner shall allow credit for reinsurance ceded by a domestic insurer to
an assuming insurer that has been certified as a reinsurer in this state at all
times for which statutory financial statement credit for reinsurance is claimed
under this section. The credit allowed
shall be based upon the security held by or on behalf of the ceding insurer in
accordance with a rating assigned to the certified reinsurer by the
commissioner. The security shall be in a
form consistent with the provisions of RSA 405:47 IV-a., 405:50, and Ins
601.10, Ins 601.11, and Ins 601.12 of this rule. The amount of security required in order for
full credit to be allowed shall correspond with the following requirements:
(1) Ratings Security
Required
Secure
– 1 0%
Secure
– 2 10%
Secure
– 3 20%
Secure
–
4 50%
Secure
–
5 75%
Vulnerable
–
6 100%
(2) Affiliated
reinsurance transactions shall receive the same opportunity for reduced
security requirements as all other reinsurance transactions.
(3) The
commissioner shall require the certified reinsurer to post 100 percent, for the
benefit of the ceding insurer or its estate, security upon the entry
of an order of rehabilitation, liquidation or conservation against the ceding
insurer.
(4) In
order to facilitate the prompt payment of claims, a certified reinsurer shall
not be required to post security for catastrophe recoverables for a period of one
year from the date of the first instance of a liability reserve entry
by the ceding company as a result of a loss from a catastrophic occurrence as
recognized by the commissioner. The one year deferral period
is contingent upon the certified reinsurer continuing to pay claims in a timely
manner. Reinsurance recoverables for only the following lines of
business as reported on the NAIC annual financial statement related
specifically to the catastrophic occurrence will be included in the deferral:
a. Line
1: Fire
b. Line
2: Allied Lines
c. Line
3: Farmowners multiple peril
d. Line
4: Homeowners multiple peril
e. Line
5: Commercial multiple peril
f. Line
9: Inland Marine
g. Line
12: Earthquake
h. Line
21: Auto physical damage
(5) Credit
for reinsurance under this section shall apply only to reinsurance contracts
entered into or renewed on or after the effective date of the certification of
the assuming insurer. Any reinsurance contract entered into prior to
the effective date of the certification of the assuming insurer that is
subsequently amended after the effective date of the certification of the
assuming insurer, or a new reinsurance contract, covering any risk for which
collateral was provided previously, shall only be subject to this section with
respect to losses incurred and reserves reported from and after the effective
date of the amendment or new contract.
(6) Nothing in
this section shall prohibit the parties to a reinsurance agreement from
agreeing to provisions establishing security requirements that exceed the
minimum security requirements established for certified reinsurers under this
section.
(b) Certification Procedure.
(1) The
commissioner shall post notice on the insurance department’s website promptly
upon receipt of any application for certification, including
instructions on how members of the public may respond to the
application. The commissioner may not take final action on the
application until at least 30 days after posting the notice required by this
paragraph.
(2) The
commissioner shall issue written notice to an assuming insurer that has made
application and been approved as a certified reinsurer. Included in
such notice shall be the rating assigned the certified reinsurer in accordance with
subsection (a) of this section. The commissioner shall publish a
list of all certified reinsurers and their ratings.
(3) In
order to be eligible for certification, the assuming insurer shall
meet the following requirements:
a. The
assuming insurer shall be domiciled and licensed to transact insurance or
reinsurance in a Qualified Jurisdiction, as determined by the commissioner
pursuant to subsection (c) of this section.
b. The
assuming insurer shall maintain capital and surplus, or its equivalent, of no
less than $250,000,000 calculated in accordance with subparagraph (4)h. of this
subsection. This requirement may also be satisfied by an association
including incorporated and individual unincorporated underwriters having
minimum capital and surplus equivalents (net of liabilities) of at least
$250,000,000 and a central fund containing a balance of at least $250,000,000.
c. The
assuming insurer shall maintain financial strength ratings from 2 or more
rating agencies deemed acceptable to the commissioner. These ratings
shall be based on interactive communication between the rating agency and the
assuming insurer and shall not be based solely on publicly available
information. These financial strength ratings will be one factor used
by the commissioner in determining the rating that is assigned to the assuming
insurer. Acceptable rating agencies include the following:
1. Standard
& Poor’s;
2. Moody’s
Investors Service;
3. Fitch
Ratings;
4. A.M.
Best Company; or
5. Any
other Nationally Recognized Statistical Rating Organization.
d. The
certified reinsurer shall comply with any other requirements reasonably imposed
by the commissioner.
(4) Each
certified reinsurer shall be rated 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 reinsurer may be
evaluated on the basis of its group rating. Factors that may be
considered as part of the evaluation process include, but are not limited to,
the following:
a. The
certified reinsurer’s financial strength rating from an acceptable rating
agency. The maximum rating that a certified reinsurer may be assigned
will correspond to its financial strength rating as outlined in the table
below. The commissioner shall use the lowest financial strength
rating received from an approved rating agency in establishing the maximum
rating of a certified reinsurer. A failure to obtain or maintain at
least 2 financial strength ratings from acceptable rating agencies shall result
in loss of eligibility for certification:
Ratings |
Best |
S&P |
Moody’s |
Fitch |
Secure – 1 |
A++ |
AAA |
Aaa |
AAA |
Secure – 2 |
A+ |
AA+, AA, AA- |
Aa1, Aa2, Aa3 |
AA+, AA, AA- |
Secure – 3 |
A |
A+, A |
A1, A2 |
A+, A |
Secure – 4 |
A- |
A- |
A3 |
A- |
Secure – 5 |
B++, B+ |
BBB+, BBB, BBB- |
Baa1, Baa2, Baa3 |
BBB+, BBB, BBB- |
Vulnerable – 6 |
B,B-C++, C+, C,
C-, D, E, F |
BB+, BB, BB-,
B+, B, B-, CCC, CC, C, D, R |
Ba1, Ba2, Ba3,
B1, B2, B3, Caa, Ca, C |
BB+, BB, BB-,
B+, B, B1, CCC+, CC, CCC-, DD |
b. The
business practices of the certified reinsurer in dealing with its ceding
insurers, including its record of compliance with reinsurance contractual terms
and obligations;
c. For
certified reinsurers domiciled in the U.S., a review of the most recent
applicable NAIC Annual Statement Blank, either Schedule F (for
property/casualty reinsurers) or Schedule S (for life and health reinsurers);
d. For
certified reinsurers not domiciled in the U.S., a review annually of Form CR-F
(for property/casualty reinsurers) or Form CR-S (for life and health
reinsurers) (attached as exhibits to this rule);
e. The
reputation of the certified reinsurer for prompt payment of claims under
reinsurance agreements, based on an analysis of ceding insurers’ Schedule F
reporting 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
administrative supervision or receivership;
f. Regulatory
actions against the certified reinsurer;
g. The
report of the independent auditor on the financial statements of the insurance
enterprise, on the basis described in paragraph h. below;
h. For
certified reinsurers not domiciled in the U.S., audited financial statements,
regulatory filings, and actuarial opinion (as filed with the non-U.S.
jurisdiction supervisor, with a translation into English). Upon the
initial application for certification, the commissioner will consider audited
financial statements for the last [3]2 years filed with its
non-U.S. jurisdiction supervisor;
i. The
liquidation priority of obligations to a ceding insurer in the certified
reinsurer’s domiciliary jurisdiction in the context of an insolvency
proceeding;
j. A
certified reinsurer’s participation in any solvent scheme of arrangement, or
similar procedure, which involves U.S. ceding
insurers. The commissioner shall receive prior notice from a
certified reinsurer that proposes participation by the certified reinsurer in a
solvent scheme of arrangement; and
k. Any
other information deemed relevant by the commissioner.
(5) Based
on the analysis conducted under subparagraph (4)e. above of a certified reinsurer’s
reputation for prompt payment of claims, the commissioner may make appropriate
adjustments in the security the certified reinsurer is required to post to
protect its liabilities to U.S. ceding insurers, provided that the commissioner
shall, at a minimum, increase the security the certified reinsurer is required
to post by one rating level under subparagraph (4)a. above, if the commissioner
finds that:
a. More
than 15 percent of the certified reinsurer’s ceding insurance clients have
overdue reinsurance recoverables on paid losses of 90 days or more which are
not in dispute and which exceed $100,000 for each cedent; or
b. The
aggregate amount of reinsurance recoverables on paid losses which are not in
dispute that are overdue by 90 days or more exceeds $50,000,000.
(6) The
assuming insurer shall submit a properly executed Form CR-1 (attached as an
exhibit to this rule) as evidence of its submission to the jurisdiction of this
state, appointment of the commissioner as an agent for service of process in
this state, and agreement to provide security for 100 percent of the assuming
insurer’s liabilities attributable to reinsurance ceded by U.S. ceding insurers
if it resists enforcement of a final U.S. judgment. The commissioner
shall not certify any assuming insurer that is domiciled in a jurisdiction that
the commissioner has determined does not adequately and promptly enforce
final U.S. judgments or arbitration awards.
(7) The
certified reinsurer shall agree to meet application information filing
requirements as determined by the commissioner, both with respect to an initial
application for certification and on an ongoing basis. All
information submitted by certified reinsurers which are not otherwise public
information subject to disclosure shall be exempted from disclosure under RSA
91-A and shall be withheld from public disclosure. The applicable
information filing requirements are, as follows:
a. Notification
within 10 days of any regulatory actions taken against the certified reinsurer,
any change in the provisions of the domiciliary license or any change in rating
by an approved rating agency, including a statement describing such changes and
the reasons therefore;
b. Annually,
Form CR-F or CR-S, as applicable (per the instructions to be developed as an
exhibit to this model);
c. Annually,
the report of the independent auditor on the financial statements of the
insurance enterprise, on the basis described in subparagraph (7)d. below;
d. Annually,
the most recent audited financial statements, regulatory filings, and actuarial
opinion (as filed with the certified reinsurer’s supervisor, with a translation
into English). Upon the initial certification, audited financial
statements for the last 2 years filed with the certified reinsurer’s
supervisor;
e. At
least annually, an updated list of all disputed and overdue reinsurance claims
regarding reinsurance assumed from U.S. domestic ceding insurers;
f. A
certification from the certified reinsurer’s domestic regulator that a
certified reinsurer is in good standing and maintains capital in excess of the
jurisdiction’s highest regulatory action level; and
g. Any
other information that the commissioner may reasonably require.
(8) Change
in Rating or Revocation of Certification.
a. In
the case of a downgrade by a rating agency or other disqualifying circumstance,
the commissioner shall upon written notice assign a new rating to the certified
reinsurer in accordance with the requirements of subparagraph (4)a. above.
b. The
commissioner shall have the authority to suspend, revoke, or otherwise modify a
certified reinsurer’s certification at any time if the certified reinsurer
fails to meet its obligations or security requirements under this section, or
if other financial or operating results of the certified reinsurer, or
documented significant delays in payment by the certified reinsurer, lead the
commissioner to reconsider the certified reinsurer’s ability or willingness to
meet its contractual obligations.
c. If
the rating of a certified reinsurer is upgraded by the commissioner, the
certified reinsurer may meet the security requirements applicable to its new
rating on a prospective basis, but the commissioner shall require the certified
reinsurer to post security under the previously applicable security
requirements as to all contracts in force on or before the effective date of
the upgraded rating. If the rating of a certified reinsurer is
downgraded by the commissioner, the commissioner shall require the certified
reinsurer to meet the security requirements applicable to its new rating for
all business in has assumed as a certified reinsurer.
d. Upon
revocation of the certification of a certified reinsurer by the commissioner,
the assuming insurer shall be required to post security in accordance with Ins
601.09 in order for the ceding insurer to continue to take credit for
reinsurance ceded to the assuming insurer. If funds continue to be
held in trust in accordance with Ins 601.05, the commissioner may allow
additional credit equal to the ceding insurer’s pro rata share of such funds,
discounted to reflect the risk of uncollectability and anticipated expenses of
trust administration. Notwithstanding the change of a certified
reinsurer’s rating or revocation of its certification, a domestic insurer that
has ceded reinsurance to that certified reinsurer may not be denied credit for
reinsurance for a period of 3 months for all reinsurance ceded to that
certified reinsurer, unless the reinsurance is found by the commissioner to be
at high risk of uncollectability.
(c) Qualified Jurisdictions.
(1) If,
upon conducting an evaluation under this section with respect to the
reinsurance supervisory system of any non-U.S. assuming insurer, the
commissioner determines that the jurisdiction qualifies to be recognized as a
qualified jurisdiction, the commissioner shall publish notice and evidence of
such recognition in an appropriate manner. The commissioner may
establish a procedure to withdraw recognition of those jurisdictions that are
no longer qualified;
(2) In
order to determine whether the domiciliary jurisdiction of a non-U.S. assuming
insurer is eligible to be recognized as a qualified jurisdiction, the
commissioner shall evaluate the reinsurance supervisory system of the non-U.S.
jurisdiction, both initially and on an ongoing basis, and consider the rights,
benefits and the extent of reciprocal recognition afforded by the non-U.S.
jurisdiction to reinsurers licensed and domiciled in the U.S. The
commissioner shall determine the appropriate approach for evaluating the
qualifications of such jurisdictions, and create and publish a list of
jurisdictions whose reinsurers may be approved by the commissioner as eligible
for certification. A qualified jurisdiction shall agree to share
information and cooperate with the commissioner with respect to all certified
reinsurers domiciled within that jurisdiction. Additional factors to
be considered in determining whether to recognize a qualified jurisdiction, in
the discretion of the commissioner, include but are not limited to the
following:
a. The
framework under which the assuming insurer is regulated;
b. The
structure and authority of the domiciliary regulator with regard to solvency
regulation requirements and financial surveillance;
c. The
substance of financial and operating standards for assuming insurers in the
domiciliary jurisdiction;
d. The
form and substance of financial reports required to be filed or made publicly
available by reinsurers in the domiciliary jurisdiction and the accounting
principles used;
e. The
domiciliary regulator’s willingness to cooperate with U.S. regulators
in general and the commissioner in particular;
f. The
history of performance by assuming insurers in the domiciliary jurisdiction;
g. Any
documented evidence of substantial problems with the enforcement of
final U.S. judgments in the domiciliary jurisdiction. A
jurisdiction will not be considered to be a qualified jurisdiction if the
commissioner has determined that it does not adequately and promptly enforce
final U.S. judgments or arbitration awards.
h. Any
relevant international standards or guidance with respect to mutual recognition
of reinsurance supervision adopted by the International Association of
Insurance Supervisors or successor organization; and
i. Any
other matters deemed relevant by the commissioner.
(3) A
list of qualified jurisdictions shall be published through the NAIC Committee
Process. The commissioner shall consider this list in determining
qualified jurisdictions. If the commissioner approves a jurisdiction
as qualified that does not appear on the list of qualified jurisdictions, the
commissioner shall provide thoroughly documented justification with respect to
the criteria provided under subparagraphs (c)(2)a. to i. above; and
(4) U.S. jurisdictions
that meet the requirements for accreditation under the NAIC financial standards
and accreditation program shall be recognized as qualified jurisdictions.
(d) Recognition of Certification
Issued by an NAIC Accredited Jurisdiction.
(1) If
an applicant for certification has been certified as a reinsurer in an NAIC
accredited jurisdiction, the commissioner has the discretion to defer to that
jurisdiction’s certification, and to defer to the rating assigned by that
jurisdiction, if the assuming insurer submits a properly executed Form CR-1 and
such additional information as the commissioner requires. The
assuming insurer shall be considered to be a certified reinsurer in this State;
(2) Any
change in the certified reinsurer’s status or rating in the other jurisdiction
shall apply automatically in this State as of the date it takes effect in the
other jurisdiction. The certified reinsurer shall notify the
commissioner of any change in its status or rating within 10 days after
receiving notice of the change;
(3) The
commissioner may withdraw recognition of the other jurisdiction’s rating at any
time and assign a new rating in accordance with subparagraph (b)(8) above; and
(4) The
commissioner may withdraw recognition of the other jurisdiction’s certification
at any time, with written notice to the certified reinsurer. Unless
the commissioner suspends or revokes the certified reinsurer’s certification in
accordance with subparagraph (b)(8) above, the certified reinsurer’s
certification shall remain in good standing in this State for a period of 3
months, which shall be extended if additional time is necessary to consider the
assuming insurer’s application for certification in this State.
(e) Mandatory Funding
Clause. In addition to the clauses required under Ins 601.13,
reinsurance contracts entered into or renewed under this section shall include
a proper funding clause, which requires the certified reinsurer to provide and
maintain security in an amount sufficient to avoid the imposition of any
financial statement penalty on the ceding insurer under this section for
reinsurance ceded to the certified reinsurer.
(f) The commissioner shall comply
with all reporting and notification requirements that may be established by the
NAIC with respect to certified reinsurers and qualified jurisdictions.
Source. (See Revision Note at chapter heading for Ins
600) #6090, eff 9-7-95, EXPIRED: 9-7-03
New. #8240, eff 1-3-05; ss by #8827, eff 3-1-07;
ss by #10449, eff 11-1-13 ; ss by #13296, eff 11-24-21
Ins 601.07 Credit for Reinsurance – Reciprocal
Jurisdictions.
(a)
Pursuant to RSA 405:47, IV-b, the commissioner shall allow credit for
reinsurance ceded by a domestic insurer to an assuming insurer that is licensed
to write reinsurance by, and has its head office or is domiciled in, a
Reciprocal Jurisdiction, and which meets the other requirements of this
regulation.
(b)
A “Reciprocal Jurisdiction” is a jurisdiction, as designated by the
commissioner pursuant to paragraph (d) below, that meets one of the following:
(1) A non-U.S. jurisdiction 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 pursuant to
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 U.S. jurisdiction that meets the
requirements for accreditation under the NAIC financial standards and
accreditation program; or
(3) A qualified jurisdiction, as determined by
the commissioner pursuant to RSA 405:47, IV-a(c) and Ins 601.06(c), which is
not otherwise described in subparagraph (1) or (2) above and which the
commissioner determines meets all of the following additional requirements:
a. Provides
that an insurer which has its head office or is domiciled in such qualified
jurisdiction shall receive credit for reinsurance ceded to a U.S.-domiciled
assuming insurer in the same manner as credit for reinsurance is received for
reinsurance assumed by insurers domiciled in such qualified jurisdiction;
b. Does 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 subject to regulation by
the non-U.S. jurisdiction or as a condition to allow the ceding insurer to
recognize credit for such reinsurance;
c. Recognizes the U.S. state regulatory approach
to group supervision and group capital, by providing written confirmation by a
competent regulatory authority, in such qualified jurisdiction, that insurers
and insurance groups that are domiciled or maintain their headquarters in this
state or another jurisdiction accredited by the NAIC shall be 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. Provides written confirmation by a competent regulatory authority in such
qualified jurisdiction that information regarding insurers and their parent,
subsidiary, or affiliated entities, if applicable, shall be provided to the
commissioner in accordance with a memorandum of understanding or similar
document between the commissioner and such qualified jurisdiction, including
but not limited to the International Association of Insurance Supervisors
Multilateral Memorandum of Understanding or other multilateral memoranda of
understanding coordinated by the NAIC.
(c) Credit
shall be allowed when the reinsurance is ceded from an insurer domiciled in
this state to an assuming insurer meeting each of the conditions set forth
below:
(1) The assuming insurer must be licensed to
transact reinsurance by, and have its head office 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
on at least an annual basis as of the preceding December 31 or at the annual
date otherwise statutorily reported to the Reciprocal Jurisdiction, and
confirmed as set forth in subparagraph (7) below according to the methodology
of its domiciliary jurisdiction, in the following amounts:
a. No less than $250,000,000; or
b. If the assuming insurer is an association,
including incorporated and individual unincorporated underwriters:
1. Minimum capital and surplus equivalents (net
of liabilities) or own funds of the equivalent of at least $250,000,000; and
2. 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 head office
or is domiciled in a Reciprocal Jurisdiction as defined in paragraph (b)(1)
above, the ratio specified in the applicable covered agreement;
b. If the assuming insurer is domiciled in a
Reciprocal Jurisdiction as defined in paragraph (b)(2) above, a risk-based
capital (RBC) ratio of 300 percent of the authorized control level, calculated
in accordance with the formula developed by the NAIC; or
c. If the assuming insurer is domiciled in a
Reciprocal Jurisdiction as defined in paragraph (b)(3) above, after
consultation with the Reciprocal Jurisdiction and considering any
recommendations published through the NAIC Committee Process, such solvency or
capital ratio as the commissioner determines to be an effective measure of
solvency;
(4) The assuming insurer must agree to and
provide adequate assurance, in the form of a properly executed Form RJ-1
(attached as an exhibit to this regulation), of its agreement to the following:
a. The assuming insurer must agree to provide
prompt written notice and explanation to the commissioner if it falls below the
minimum requirements set forth in subparagraphs (2) or (3) above, 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 the courts of this state and to the appointment of the
commissioner as agent for service of process:
1. The commissioner may also require that such
consent be provided and included each reinsurance agreement under the
commissioner’s jurisdiction; and
2. Nothing in this provision shall limit or in
any way alter the capacity of parties to a reinsurance agreement to agree to
alternative dispute resolution mechanisms, except to the extent such agreements
are unenforceable under applicable insolvency or delinquency laws;
c. The assuming insurer must consent in writing
to pay all final judgments, wherever enforcement is sought, obtained by a
ceding insurer, that have been declared enforceable in the territory where the
judgment was obtained;
d. Each reinsurance agreement must include a
provision requiring the assuming insurer to provide security in an amount equal
to 100 percent of the assuming insurer’s liabilities attributable to
reinsurance ceded pursuant to that 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, which
involves this state’s ceding insurers, and agrees to notify the ceding insurer
and the commissioner and to provide one hundred percent (100%) security to the
ceding insurer consistent with the terms of the scheme, should the assuming
insurer enter into such a solvent scheme of arrangement. Such security shall be
in a form consistent with the provisions of RSA 405:47, IV-a, RSA 405:50, Ins
601.10, Ins 601.11, and Ins 601.12. For
purposes of this rule, the term “solvent scheme of arrangement” means a foreign
or alien statutory or regulatory compromise procedure subject to requisite
majority creditor approval and judicial sanction in the assuming insurer’s home
jurisdiction either to finally commute liabilities of duly noticed classed
members or creditors of a solvent debtor, or to reorganize or restructure the
debts and obligations of a solvent debtor on a final basis, and which may be
subject to judicial recognition and enforcement of the arrangement by a
governing authority outside the ceding insurer’s home jurisdiction; and
f. The assuming insurer must agree in writing to
meet the applicable information filing requirements as set forth in
subparagraph (5) below;
(5) The assuming insurer or its legal successor
must provide, if requested by the commissioner, on behalf of itself and any
legal predecessors, the following documentation to the commissioner:
a. For the 2 years preceding entry into the
reinsurance agreement and on an annual basis thereafter, the assuming insurer’s
annual audited financial statements, in accordance with the applicable law of
the jurisdiction of its head office or domiciliary jurisdiction, as applicable,
including the external audit report;
b. For the 2 years preceding entry into the
reinsurance agreement, the solvency and financial condition report or actuarial
opinion, if filed with the assuming insurer’s supervisor;
c. Prior to entry into the reinsurance agreement
and not more than semi-annually thereafter, 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. Prior to entry into the reinsurance agreement
and not more than semi-annually thereafter, information regarding 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 criteria set forth in
subparagraph (6) below;
(6) The assuming insurer must maintain a practice
of prompt payment of claims under reinsurance agreements. The lack of prompt
payment will be evidenced if any of the following criteria is met;
a. More
than 15 percent of the reinsurance recoverables from the assuming insurer are overdue and in dispute as
reported to the commissioner;
b. More
than 15 percent of the assuming insurer’s ceding insurers or reinsurers have
overdue reinsurance recoverable on paid losses of 90 days or more which are not
in dispute and which exceed for each ceding insurer $100,000, or as otherwise
specified in a covered agreement; or
c. The
aggregate amount of reinsurance recoverable on paid losses which are not in
dispute, but are overdue by 90 days or more, exceeds $50,000,000, or as
otherwise specified in a covered agreement;
(7) The assuming insurer’s supervisory authority
must confirm to the commissioner on an annual basis that the assuming insurer
complies with the requirements set forth in subparagraphs (2) and (3) above;
and
(8) Nothing in this provision precludes an
assuming insurer from providing the commissioner with information on a
voluntary basis.
(d)
The commissioner shall timely create and publish a list of Reciprocal
Jurisdictions:
(1) A list of Reciprocal Jurisdictions is
published through the NAIC Committee Process. The commissioner’s list shall
include any Reciprocal Jurisdiction, as defined under paragraphs (b)(1) and
(b)(2) above, and shall consider any other Reciprocal Jurisdiction included on
the NAIC list. The commissioner may approve a jurisdiction that does not appear
on the NAIC list of Reciprocal Jurisdictions as provided by applicable law,
regulation, or in accordance with criteria published through the NAIC Committee
Process; and
(2) The commissioner may remove a jurisdiction
from the list of Reciprocal Jurisdictions upon a determination that the
jurisdiction no longer meets one or more of the requirements of a Reciprocal
Jurisdiction, as provided by applicable law, regulation, or in accordance with
a process published through the NAIC Committee Process, except that the
commissioner shall not remove from the list a Reciprocal Jurisdiction as
defined under paragraphs (b)(1) and (b)(2) above. Upon removal of a Reciprocal
Jurisdiction from this list, credit for reinsurance ceded to an assuming
insurer domiciled in that jurisdiction shall be allowed, if otherwise allowed
pursuant to RSA 405:45-52 or Ins 601.
(e)
The commissioner shall timely create and publish a list of assuming
insurers that have satisfied the conditions set forth in this section and to
which cessions shall be granted credit in accordance with this section:
(1) If an NAIC accredited jurisdiction has
determined that the conditions set forth in paragraph (c) above have been met,
the commissioner has the discretion to defer to that jurisdiction’s
determination, and add such assuming insurer to the list of assuming insurers
to which cessions shall be granted credit in accordance with this subsection.
The commissioner may accept financial documentation filed with another NAIC
accredited jurisdiction or with the NAIC in satisfaction of the requirements of
paragraph (c) above; and
(2) When requesting that the commissioner defer
to another NAIC accredited jurisdiction’s determination, an assuming insurer
must submit a properly executed Form RJ-1 and additional information as the
commissioner may require. A state that has received such a request will notify
other states through the NAIC Committee Process and provide relevant
information with respect to the determination of eligibility.
(f)
If the commissioner determines that an assuming insurer no longer meets
one or more of the requirements under this section, the commissioner may revoke
or suspend the eligibility of the assuming insurer for recognition under this
section:
(1) While an assuming insurer’s eligibility is
suspended, no reinsurance agreement issued, amended or renewed after the
effective date of the suspension qualifies for credit except to the extent that
the assuming insurer’s obligations under the contract are secured in accordance
with Ins 601.09; and
(2) If an assuming insurer’s eligibility is
revoked, no credit for reinsurance may be granted after the effective date of
the revocation with respect to any reinsurance agreements entered into by the
assuming insurer, including reinsurance agreements entered into prior to the
date of revocation, except to the extent that the assuming insurer’s
obligations under the contract are secured in a form acceptable to the
commissioner and consistent with the provisions of Ins 601.09.
(g)
Before denying statement credit or imposing a requirement to post security
with respect to paragraph (f) above or adopting any similar requirement that
will have 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 listed in paragraph
(c) of this section;
(2) Provide the assuming insurer with 30 days
from the initial communication to submit a plan to remedy the defect, and 90
days from the initial 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 90 days or less, as
set out in subparagraph (2) above, if the commissioner determines that no or
insufficient action was taken by the assuming insurer, the commissioner may
impose any of the requirements as set out in this subsection; and
(4) Provide a written explanation to the assuming
insurer of any of the requirements set out in this paragraph.
(h)
If subject to a legal process of
rehabilitation, liquidation or conservation, as applicable, the ceding insurer,
or its representative, may seek and, if determined appropriate by the court in
which the proceedings are pending, may obtain an order requiring that the
assuming insurer post security for all outstanding liabilities.
Source. (See Revision Note at chapter heading for Ins
600) #6090, eff 9-7-95, EXPIRED: 9-7-03
New. #8240, eff 1-3-05; ss by #8827, eff 3-1-07;
ss by #10449, eff 11-1-13 (from Ins 601.06); ss by #13296, eff 11-24-21
Ins 601.08 Credit for Reinsurance Required by Law. Pursuant
to RSA 405:47, V, the commissioner shall allow credit for reinsurance ceded by
a domestic insurer to an assuming insurer not meeting the requirements of RSA
405:47, I, II, III, IV, IV-a, or IV-b, but only as to the insurance of risks
located in jurisdictions where such reinsurance is required by the applicable
law or regulation of that jurisdiction. As used in this section,
"jurisdiction" means state, district or territory of the United
States and any lawful national government.
Source. (See Revision Note at chapter heading for Ins
600) #6090, eff 9-7-95, EXPIRED: 9-7-03
New. #8240, eff 1-3-05; ss by #8827, eff 3-1-07;
ss by #10449, eff 11-1-13 (from Ins 601.07); ss by #13296, eff 11-24-21; ss by
#13296, eff 11-24-21
Ins 601.09 Asset or Reduction From Liability for
Reinsurance Ceded to an Unauthorized Assuming Insurer Not Meeting the
Requirements of Ins 601.02 through Ins 601.08.
(a) Pursuant to RSA 405:50, the commissioner
shall allow a reduction from liability for reinsurance ceded by a domestic
insurer to an assuming insurer not meeting the requirements of RSA 405:47 in an
amount not exceeding the liabilities carried by the ceding
insurer. The reduction shall be in the amount of funds held by or on
behalf of the ceding insurer, including funds held in trust for the
exclusive benefit of the ceding insurer, under a reinsurance contract with such
assuming insurer as security for the payment of obligations under the reinsurance
contract. The security shall be held in the United
States subject to withdrawal solely by, and under the exclusive control
of, the ceding insurer or, in the case of a trust, held in a
qualified United States financial institution as defined in RSA
405:46, III. This security may be in the form of any of the
following:
(1) Cash;
(2) Securities
listed by the Securities Valuation Office of the NAIC, including those deemed
exempt from filing as defined by the Purposes and Procedures Manual of the
Securities Valuation Office, and qualifying as admitted assets;
(3) Clean,
irrevocable, unconditional and "evergreen" letters of credit issued
or confirmed by a qualified United States institution, as defined in RSA
405:46, I, effective no later than December 31 of the year for which filing is
being made, and in the possession of, or in trust for, the ceding insurer on or
before the filing date of its annual statement. Letters of credit
meeting applicable standards of issuer acceptability as of the dates of their
issuance (or confirmation) shall, notwithstanding the issuing (or confirming)
institution's subsequent failure to meet applicable standards of issuer
acceptability, continue to be acceptable as security until their expiration,
extension, renewal, modification or amendment, whichever first occurs; or
(4) Any
other form of security acceptable to the commissioner.
(b) An admitted asset or a reduction
from liability for reinsurance ceded to an unauthorized assuming insurer
pursuant to this section shall be allowed only when the requirements of Ins
601.13 and the applicable portions of Ins 601.10, Ins 601.11 and Ins 601.12 of
this rule have been satisfied.
Source. (See Revision Note at chapter heading for Ins
600) #6090, eff 9-7-95, EXPIRED: 9-7-03
New. #8240, eff 1-3-05; ss by #8827, eff 3-1-07;
ss by #10449, eff 11-1-13 ss by #13296, eff 11-24-21 (formerly Ins 601.08)
Ins 601.10 Trust
Agreements Qualified Under Ins 601.09.
(a) As used in this section:
(1) "Beneficiary"
means the entity for whose sole benefit the trust has been established and any
successor of the beneficiary by operation of law. If a court of law
appoints a successor in interest to the named beneficiary, then the named
beneficiary includes and is limited to the court appointed domiciliary receiver
(including conservator, rehabilitator or liquidator).
(2) "Grantor"
means the entity that has established a trust for the sole benefit of the
beneficiary. When established in conjunction with a reinsurance
agreement, the grantor is the unlicensed, unaccredited assuming insurer.
(3) "Obligations,"
as used in subparagraph (b)(11) of this section means:
a. Reinsured
losses and allocated loss expenses paid by the ceding company, but not
recovered from the assuming insurer;
b. Reserves
for reinsured losses reported and outstanding;
c. Reserves
for reinsured losses incurred but not reported; and
d. Reserves
for allocated reinsured loss expenses and unearned premiums.
(b) Required conditions.
(1) The
trust agreement shall be entered into between the beneficiary, the grantor and
a trustee, which shall be a qualified United States financial
institution as defined in RSA 405:46, III.
(2) The
trust agreement shall create a trust account into which assets shall be
deposited.
(3) All
assets in the trust account shall be held by the trustee at the trustee's
office in the United States.
(4) The
trust agreement shall provide that:
a. The
beneficiary shall have the right to withdraw assets from the trust account at
any time, without notice to the grantor, subject only to written notice from
the beneficiary to the trustee;
b. No
other statement or document is required to be presented to withdraw assets,
except that the beneficiary may be required to acknowledge receipt of withdrawn
assets;
c. It
is not subject to any conditions or qualifications outside of the trust
agreement; and
d. It
shall not contain references to any other agreements or documents except as
provided for in paragraphs (b)(11) and (b)(12) of this section.
(5) The
trust agreement shall be established for the sole benefit of the beneficiary.
(6) The
trust agreement shall require the trustee to:
a. Receive
assets and hold all assets in a safe place;
b. Determine
that all assets are in such form that the beneficiary, or the trustee upon
direction by the beneficiary, may whenever necessary negotiate any such assets,
without consent or signature from the grantor or any other person or entity;
c. Furnish
to the grantor and the beneficiary a statement of all assets in the trust
account upon its inception and at intervals no less frequent than the end of
each calendar quarter;
d. Notify
the grantor and the beneficiary within 10 days, of any deposits to or
withdrawals from the trust account;
e. Upon
written demand of the beneficiary, immediately take any and all steps necessary
to transfer absolutely and unequivocally all right, title and interest in the
assets held in the trust account to the beneficiary and deliver physical
custody of the assets to the beneficiary; and
f. Allow
no substitutions or withdrawals of assets from the trust account, except on
written instructions from the beneficiary, except that the trustee may, without
the consent of but with notice to the beneficiary, upon call or maturity of any
trust asset, withdraw such asset upon condition that the proceeds are paid into
the trust account.
(7) The
trust agreement shall provide that at least 30 days, but not more than 45 days,
prior to termination of the trust account, written notification of termination
shall be delivered by the trustee to the beneficiary.
(8) The
trust agreement shall be made subject to and governed by the laws of the state
in which the trust is domiciled.
(9) The
trust agreement shall prohibit invasion of the trust corpus for the purposes of
paying commission to, or reimbursing the expenses of, the
trustee. In order for a letter of credit to qualify as an asset of
the trust, the trustee shall have the right and the obligation pursuant to the
deed of trust or some other binding agreement (as duly approved by the
commissioner), to immediately draw down the full amount of the letter of credit
and hold the proceeds in trust for the beneficiaries of the trust if the letter
of credit will otherwise expire without being renewed or replaced.
(10) The
trust agreement shall provide that the trustee shall be liable for its own
negligence, willful misconduct or lack of good faith. The failure of
the trustee to draw against the letter of credit in circumstances where such
draw would be required shall be deemed to be negligence and/or willful
misconduct.
(11) Notwithstanding
other provisions of this rule, when a trust agreement is established in
conjunction with a reinsurance agreement covering risks other than life,
annuities and accident and health, where it is customary practice to provide a
trust agreement for a specific purpose, the trust agreement may provide that
the ceding insurer shall undertake to use and apply amounts drawn upon the
trust account, without diminution because of the insolvency of the ceding
insurer or the assuming insurer, only for the following purposes:
a. To
pay or reimburse the ceding insurer for the assuming insurer's share under the
specific reinsurance agreement regarding any losses and allocated loss expenses
paid by the ceding insurer, but not recovered from the assuming insurer, or for
unearned premiums due to the ceding insurer if not otherwise paid by the
assuming insurer;
b. To
make payment to the assuming insurer of any amounts held in the trust account
that exceed 102 percent of the actual amount required to fund the assuming
insurer's obligations under the specific reinsurance agreement; or
c. Where
the ceding insurer has received notification of termination of the trust
account and where the assuming insurer's entire obligations under the specific
reinsurance agreement remain unliquidated and undischarged 10 days prior to the
termination date, to withdraw amounts equal to the obligations and deposit
those amounts in a separate account, in the name of the ceding insurer in any
qualified U.S. financial institution as defined in RSA 405:46, III, apart from
its general assets, in trust for such uses and purposes specified in
subparagraphs (11)a. and b. above as may remain executory after such withdrawal
and for any period after the termination date.
(12) Notwithstanding
other provisions of this rule, when a trust agreement is established to meet
the requirements of Ins 601.09 in conjunction with a reinsurance agreement
covering life, annuities or accident and health risks, where it is customary to
provide a trust agreement for a specific purpose, the trust agreement may provide
that the ceding insurer shall undertake to use and apply amounts drawn upon the
trust account, without diminution because of the insolvency of the ceding
insurer or the assuming insurer, only for the following purposes:
a. To
pay or reimburse the ceding insurer for:
1. The
assuming insurer's share under the specific reinsurance agreement of premiums
returned, but not yet recovered from the assuming insurer, to the owners of
policies reinsured under the reinsurance agreement on account of cancellations of
the policies; and
2. The
assuming insurer's share under the specific reinsurance agreement of surrenders
and benefits or losses paid by the ceding insurer, but not yet recovered from
the assuming insurer, under the terms and provisions of the policies reinsured
under the reinsurance agreement;
b. To
pay to the assuming insurer amounts held in the trust account in excess of the
amount necessary to secure the credit or reduction from liability for
reinsurance taken by the ceding insurer; or
c. Where
the ceding insurer has received notification of termination of the trust and
where the assuming insurer's entire obligations under the specific reinsurance
agreement remain unliquidated and undischarged 10 days prior to the termination
date, to withdraw amounts equal to the assuming insurer's share of liabilities,
to the extent that the liabilities have not yet been funded by the assuming
insurer, and deposit those amounts in a separate account, in the name of the
ceding insurer in any qualified U.S. financial institution apart from its
general assets, in trust for the uses and purposes specified in subparagraphs
a. and b. of this paragraph as may remain executory after withdrawal and for
any period after the termination date.
(13) Either
the reinsurance agreement or the trust agreement shall stipulate that assets
deposited in the trust account shall be valued according to their current fair
market value and shall consist only of cash in United States dollars,
certificates of deposited issued by a United States bank and payable in United
States dollars, and investments permitted by the insurance code or any
combination of the above, provided investments in or issued by an entity
controlling, controlled by or under common control with either the grantor or the
beneficiary of the trust shall not exceed 5 percent of total
investments. The agreement may further specify the types of
investments to be deposited. If the reinsurance agreement covers
life, annuities or accident and health risks, then the provisions required by
this paragraph shall be included in the reinsurance agreement.
(c) Permitted conditions.
(1) The
trust agreement may provide that the trustee may resign upon delivery of a
written notice of resignation, effective not less than 90 days after the
beneficiary and grantor receive the notice and that the trustee may be removed
by the grantor by delivery to the trustee and the beneficiary of a written
notice of removal, effective not less than 90 days after the trustee and the
beneficiary receive the notice, provided that no such resignation or removal
shall be effective until a successor trustee has been duly appointed and
approved by the beneficiary and the grantor and all assets in the trust have
been duly transferred to the new trustee.
(2) The
grantor may have the full and unqualified right to vote any shares of stock in
the trust account and to receive from time to time payments of any dividends or
interest upon any shares of stock or obligations included in the trust account. Any
interest or dividends shall be either forwarded promptly upon receipt to the
grantor or deposited in a separate account established in the grantor's name.
(3) The
trustee may be given authority to invest, and accept substitutions of, any
funds in the account, provided that no investment or substitution shall be made
without prior approval of the beneficiary, unless the trust agreement specifies
categories of investments acceptable to the beneficiary and authorizes the
trustee to invest funds and to accept substitutions that the trustee determines
are at least equal in current fair market value to the assets withdrawn and
that are consistent with the restrictions in subparagraph Ins 601.10 (d)(1)b.
below.
(4) The
trust agreement may provide that the beneficiary may at any time designate a
party to which all or part of the trust assets are to be transferred. Transfer
may be conditioned upon the trustee receiving, prior to or simultaneously,
other specified assets.
(5) The
trust agreement may provide that, upon termination of the trust account, all
assets not previously withdrawn by the beneficiary shall, with written approval
by the beneficiary, be delivered over to the grantor.
(d) Additional conditions applicable
to reinsurance agreements:
(1) A
reinsurance agreement may contain provisions that:
a. Require
the assuming insurer to enter into a trust agreement and to establish a trust
account for the benefit of the ceding insurer, and specifying what the
agreement is to cover;
b. Require
the assuming insurer, prior to depositing assets with the trustee, to execute
assignments or endorsements in blank, or to transfer legal title to the trustee
of all shares, obligations or any other assets requiring assignments, in order
that the ceding insurer, or the trustee upon the direction of the ceding
insurer, may whenever necessary negotiate these assets without consent or
signature from the assuming insurer or any other entity;
c. Require
that all settlements of account between the ceding insurer and the assuming
insurer be made in cash or its equivalent; and
d. Stipulate
that the assuming insurer and the ceding insurer agree that the assets in the
trust account, established pursuant to the provisions of the reinsurance
agreement, may be withdrawn by the ceding insurer at any time, notwithstanding
any other provisions in the reinsurance agreement, and shall be utilized and
applied by the ceding insurer or its successors in interest by operation of
law, including without limitation any liquidator, rehabilitator, receiver or
conservator of such company, without diminution because of insolvency on the
part of the ceding insurer or the assuming insurer, only for the following
purposes:
1. To
pay or reimburse the ceding insurer for:
(i) The
assuming insurer's share under the specific reinsurance agreement of premiums
returned, but not yet recovered from the assuming insurer, to the owners of
policies reinsured under the reinsurance agreement because of cancellations of
such policies;
(ii) The
assuming insurer's share of surrenders and benefits or losses paid by the
ceding insurer pursuant to the provisions of the policies reinsured under the
reinsurance agreement; and
(iii) Any
other amounts necessary to secure the credit or reduction from liability for
reinsurance taken by the ceding insurer;
2. To
make payment to the assuming insurer of amounts held in the trust account in
excess of the amount necessary to secure the credit or reduction from liability
for reinsurance taken by the ceding insurer.
(2) The
reinsurance agreement may also contain provisions that:
a. Give
the assuming insurer the right to seek approval from the ceding insurer, which
shall not be unreasonably or arbitrarily withheld, to withdraw from the trust
account all or any part of the trust assets and transfer those assets to the
assuming insurer, provided:
1. The
assuming insurer shall, at the time of withdrawal, replace the withdrawn assets
with other qualified assets having a current fair market value equal to the
market value of the assets withdrawn so as to maintain at all times the deposit
in the required amount, or
2. After
withdrawal and transfer, the current fair market value of the trust account is
no less than 102 percent of the required amount.
b. Provide
for the return of any amount withdrawn in excess of the actual amounts required
for subparagraph Ins 601.10(d)(1)d. above, and for interest
payments at a rate not in excess of the prime rate of interest on the amounts;
c. Permit
the award by any arbitration panel or court of competent jurisdiction of:
1. Interest
at a rate different from that provided in subparagraph Ins 601.10(c)(2)b.
above;
2. Court
or arbitration costs;
3. Attorney's
fees; and
4. Any
other reasonable expenses.
(3) Financial
Reporting. A trust agreement may be used to reduce any liability for
reinsurance ceded to an unauthorized assuming insurer in financial statements
required to be filed with this department in compliance with the provisions of
this rule when established on or before the date of filing of the financial
statement of the ceding insurer. Further, the reduction for the
existence of an acceptable trust account may be up to the current fair market
value of acceptable assets available to be withdrawn from the trust account at
that time, but such reduction shall be no greater than the specific obligations
under the reinsurance agreement that the trust account was established to
secure.
(4) Existing
Agreements. Notwithstanding the effective date of this rule, any trust
agreement or underlying reinsurance agreement in existence prior to the
effective date of this rule shall continue to be acceptable until 6 months
after the effective date of this rule, at which time the agreements will have
to fully comply with this rule for the trust agreement to be acceptable.
(5) The
failure of any trust agreement to specifically identify the beneficiary as
defined in paragraph (a) of this section shall not be construed to affect any
actions or rights that the commissioner may take or possess pursuant to the
provisions of the laws of this state.
Source. (See Revision Note at chapter heading for Ins
600) #6090, eff 9-7-95, EXPIRED: 9-7-03
New. #8240, eff 1-3-05; ss by #8827, eff 3-1-07;
ss by #10449, eff 11-1-13 (from Ins 601.09); ss by #13296, eff 11-24-21 (formerly Ins 601.09)
Ins 601.11 Letters of Credit
Qualified Under Ins 601.09.
(a) The letter of credit must be clean,
irrevocable and unconditional and issued or confirmed by a
qualified United States financial institution as defined in RSA
405:46, II. The letter of credit shall contain an issue date and
expiration date and shall stipulate that the beneficiary need only draw a sight
draft under the letter of credit and present it to obtain funds and that no
other document need be presented. The letter of credit also shall
indicate that it is not subject to any condition or qualifications outside of
the letter of credit. In addition, the letter of credit itself shall
not contain reference to any other agreements, documents or entities, except as
provided in subparagraph Ins 601.11 (h)(1) below. As used in this
section, "beneficiary" means the domestic insurer for whose benefit
the letter of credit has been established and any successor of the beneficiary
by operation of law. If a court of law appoints a successor in
interest to the named beneficiary, then the named beneficiary includes and is
limited to the court appointed domiciliary receiver (including conservator,
rehabilitator or liquidator).
(b) The heading of the letter of
credit may include a boxed section containing the name of the applicant and
other appropriate notations to provide a reference for the letter of
credit. The boxed section shall be clearly marked to indicate that
such information is for internal identification purposes only.
(c) The letter of credit shall
contain a statement to the effect that the obligation of the qualified United
States financial institution under the letter of credit is in no way
contingent upon reimbursement with respect thereto.
(d) The term of the letter of credit
shall be for at least one year and shall contain an "evergreen
clause" that prevents the expiration of the letter of credit without due
notice from the issuer. The "evergreen clause" shall
provide for a period of no less than 30 days notice prior to expiration date or
nonrenewal.
(e) The letter of credit shall state
whether it is subject to and governed by the laws of this state or the Uniform
Customs and Practice for Documentary Credits of the International Chamber
of Commerce Publication 600 (UCP 600) or International Standby
Practices of the International Chamber of Commerce Publication 590 (ISP98), or any
successor publication, and all drafts drawn thereunder shall be presentable at
an office in the United States of a qualified United States financial
institution.
(f) If the letter of credit is made
subject to the Uniform Customs and Practice for Documentary Credits of the
International Chamber of Commerce Publication 600 (UCP 600) or International
Standby Practices of the International Chamber of Commerce Publication 590
(ISP98), or any successor publication, then the letter of credit shall
specifically address and provide for an extension of time to draw against the
letter of credit in the event that one or more of the occurrences specified in
Article 36 of Publication 600 or any other successor publication, occur.
(g) If the letter of credit is
issued by a financial institution authorized to issue letters of credit, other
than a qualified United States financial institution as described in
paragraph (a) above, then the following additional requirements shall be met:
(1) The
issuing financial institution shall formally designate the confirming
qualified United States financial institution as its agent for the
receipt and payment of the drafts; and
(2) The
"evergreen clause" shall provide for 30 days notice prior to
expiration date for nonrenewal.
(h) Reinsurance agreement
provisions.
(1) The
reinsurance agreement in conjunction with which the letter of credit is
obtained may contain provisions that:
a. Require
the assuming insurer to provide letters of credit to the ceding insurer and
specify what they are to cover;
b. Stipulate
that the assuming insurer and ceding insurer agree that the letter of credit
provided by the assuming insurer pursuant to the provisions of the reinsurance
agreement may be drawn upon at any time, notwithstanding any other provisions
in the agreement, and shall be utilized by the ceding insurer or its successors
in interest only for one or more of the following reasons:
1. To pay or
reimburse the ceding insurer for:
(i) The
assuming insurer's share under the specific reinsurance agreement of premiums
returned, but not yet recovered from the assuming insurers, to the owners of
policies reinsured under the reinsurance agreement on account of cancellations
of such policies;
(ii) The
assuming insurer's share, under the specific reinsurance agreement, of
surrenders and benefits or losses paid by the ceding insurer, but not yet
recovered from the assuming insurers, under the terms and provisions of the
policies reinsured under the reinsurance agreement; and
(iii) Any
other amounts necessary to secure the credit or reduction from liability for
reinsurance taken by the ceding insurer;
2. Where the
letter of credit will expire without renewal or be reduced or replaced by a
letter of credit for a reduced amount and where the assuming insurer's entire
obligations under the specific reinsurance remain unliquidated and undischarged
10 days prior to the termination date, to withdraw amounts equal to the
assuming insurer's share of the liabilities, to the extent that the liabilities
have not yet been funded by the assuming insurer and exceed the amount of any
reduced or replacement letter of credit, and deposit those amounts in a
separate account in the name of the ceding insurer in a qualified U.S.
financial institution apart from its general assets, in trust for such uses and
purposes specified in subparagraph Ins 601.11(h)(1)b.1. as may remain after
withdrawal and for any period after the termination date.
c. All
of the provisions of subparagraph Ins 601.11(h)(1)b.1. shall be applied without
diminution because of insolvency on the part of the ceding insurer or assuming
insurer.
(2) Nothing
contained in subparagraph Ins 601.11(h)(1)b.1. shall preclude the ceding
insurer and assuming insurer from providing for:
a. An
interest payment, at a rate not in excess of the prime rate of interest, on the
amounts held pursuant to subparagraph Ins 601.11(h)(1)b.1.; or
b. The
return of any amounts drawn down on the letters of credit in excess of the
actual amounts required for the above or any amounts that are subsequently
determined not to be due.
Source. (See Revision Note at chapter heading for Ins
600) #6090, eff 9-7-95, EXPIRED: 9-7-03
New. #8240, eff 1-3-05; ss by #8827, eff 3-1-07;
ss by #10449, eff 11-1-13 (from Ins 601.10); ); ss by #13296, eff 11-24-21
(formerly Ins 601.10)
Ins 601.12 Other Security. A
ceding insurer may take credit for unencumbered funds withheld by the ceding
insurer in the United States subject to withdrawal solely by the
ceding insurer and under its exclusive control.
Source. (See Revision Note at chapter heading for Ins
600) #6090, eff 9-7-95, EXPIRED: 9-7-03
New. #8240, eff 1-3-05; ss by #8827, eff 3-1-07;
ss by #10449, eff 11-1-13 (from Ins 601.11); ss by #13296, eff 11-24-21
(formerly Ins 601.11)
Ins 601.13 Reinsurance
Contract.
(a) Credit shall not be granted, nor
an asset or reduction from liability allowed, to a ceding insurer for
reinsurance effected with assuming insurers meeting the requirements
of Ins 601.02, Ins 601.03, Ins 601.04, Ins 601.05, Ins 601.06, and Ins 601.09
or otherwise in compliance with RSA 405:47 after the adoption of this rule
unless the reinsurance agreement:
(1) Includes
a proper insolvency clause, which stipulates that reinsurance is payable directly
to the liquidator or successor without diminution regardless of the
status of the ceding company, pursuant to RSA 405:47, VII(a);
(2)
Includes a provision pursuant to RSA 405:47 whereby the assuming insurer, if an
unauthorized assuming insurer, has submitted to the jurisdiction of an
alternative dispute resolution panel or court of competent jurisdiction within
the United States, has agreed to comply with all requirements necessary to give
the court or panel jurisdiction, has designated an agent upon whom service of
process may be effected, and has agreed to abide by the final decision of the
court or panel; and
Source. #10449, eff 11-1-13 (from Ins 601.12); ss by #13296,
eff 11-24-21 (formerly Ins 601.12)
Ins
601.14 Contracts Affected. All new and renewal
reinsurance transactions entered into after the effective date of
this rule shall conform to the requirements of the chapter and this
rule if credit is to be given to the ceding insurer for such reinsurance.
Source. #10449, eff 11-1-13 (from Ins 601.12); ss by
#13296, eff 11-24-21 (formerly Ins 601.13)
FORM
AR-1
CERTIFICATE
OF ASSUMING INSURER
I,__________________________________________________________________________________
(name
of
officer) (title
of officer)
of_________________________________________________________________________________, (name
of assuming insurer)
the
assuming insurer under a reinsurance agreement with one or more insurers
domiciled in
_________________________________________________,
hereby certify that
(name
of state)
___________________________________________________________("Assuming
Insurer"):
(name
of assuming insurer)
1. Submits
to the jurisdiction of any court of competent jurisdiction in
___________________________________________________________________________________
(ceding
insurer's state of domicile)
for
the adjudication of any issues arising out of the reinsurance agreement, agrees
to comply with all requirements necessary to give such court jurisdiction, and
will abide by the final decision of such court or any appellate court in the
event of an appeal. Nothing in this paragraph constitutes or should
be understood to constitute a waiver of Assuming Insurer's rights to commence
an action in any court of competent jurisdiction in the United States, to
remove an action to a United States District
Court, or to seek a transfer of a case to another court as permitted by the
laws of the United States or of any state in the United States. This
paragraph is not intended to conflict with or override the obligation of the
parties to the reinsurance agreement to arbitrate their disputes if such an
obligation is created in the agreement.
2. Designates
the Insurance Commissioner of _______________________________________________
(ceding
insurer's state of domicile)
as its
lawful attorney upon whom may be served any lawful process in any action, suit
or proceeding arising out of the reinsurance agreement instituted by or on
behalf of the ceding insurer.
3. Submits
to the authority of the Insurance Commissioner of
________________________________________________________
to examine its books and records
(ceding
insurer's state of domicile)
and
agrees to bear the expense of any such examination.
4. Submits
with this form a current list of insurers domiciled in
__________________________________________________________
reinsured by Assuming Insurer
(ceding
insurer's state of domicile)
and
undertakes to submit additions to or deletions from the list to the Insurance
Commissioner at least once per calendar quarter.
Dated:__________________________________________
_______________________________________________
(name of assuming insurer)
By: ___________________________________________
(name of officer)
_______________________________________________
(title of officer)
FORM
CR-1
CERTIFICATE
OF CERTIFIED REINSURER
I, _____________________________________,
_____________________________________________
(name
of
officer) (title
of officer)
of ____________________________________________________, the
assuming insurer
(name
of assuming insurer)
under a reinsurance agreement with one or more insurers domiciled
in ________________________
in order to be considered for approval in this state, hereby
certify that (name of state)
____________________________________________________________(“Assuming
Insurer”):
(name
of assuming insurer)
1. Submits to the jurisdiction of any court of
competent jurisdiction in ________________________
____________________________________
for the adjudication of any issues arising out of the reinsurance agreement,
agrees to comply with all requirements necessary to give such court
jurisdiction, and will abide by the final decision of such court or any
appellate court in the event of an appeal. Nothing in this paragraph
constitutes or should be understood to constitute a waiver of Assuming Insurer’s
rights to commence an action in any court of competent jurisdiction in the
United States, to remove an action to a United States District Court, or to
seek a transfer of a case to another court as permitted by the laws of the
United States or of any state in the United States. This paragraph
is not intended to conflict with or override the obligation of the parties to
the reinsurance agreement to arbitrate their dispute if such an obligation is
created in the agreement.
2. Designates the
Insurance Commissioner of ____________________________________________
(ceding
insurer’s state of domicile)
as its lawful attorney upon
whom may be served any lawful process in any action, suit or proceeding arising
out of the reinsurance agreement instituted by or on behalf of the ceding
insurer.
3. Agrees to
provide security in an amount equal to 100% of liabilities attributable
to U.S. ceding insurers if it resists enforcement of a final U.S. judgment
or properly enforceable arbitration award.
4. Agrees to
provide notification within 10 days of any regulatory actions taken against it,
any change in the provisions of its domiciliary license or any change in its
rating by an approved rating agency, including a statement describing such
changes and the reasons therefore.
5. Agrees to
annually file information comparable to relevant provisions of the NAIC
financial statement for use by insurance markets in accordance with Ins 600.
6. Agrees to
annually file the report of the independent auditor on the financial statements
of the insurance enterprise.
7. Agrees to
annually file audited financial statements, regulatory filings, and actuarial
opinion in accordance with Ins 600.
8. Agrees to
annually file an updated list of all disputed and overdue reinsurance claims
regarding reinsurance assumed from U.S. domestic ceding insurers.
9. Is in good
standing as an insurer or reinsurer with the supervisor of its domiciliary
jurisdiction.
Dated: ___________________________
____________________________________________
(name of assuming
insurer)
BY:
________________________________________
(name of officer)
___________________________________________
(title of officer)
FORM RJ-1
CERTIFICATE OF REINSURER
DOMICILED IN RECIPROCAL JURISDICTION
I, _____________________________________________,
_________________________________
(name
of officer) (title of officer)
of
_____________________________________________________________________________,
(name
of assuming insurer)
the assuming insurer under a reinsurance agreement with one or more
insurers domiciled in
_____________________________________, in order to be considered for
approval in this state,
(name of state)
hereby certify that ____________________________________________
(“Assuming Insurer”): (name of assuming insurer)
1.
Submits to the jurisdiction of any court of competent
jurisdiction in New Hampshire for the adjudication of any issues arising out of
the reinsurance agreement, agrees to comply with all requirements necessary to
give such court jurisdiction, and will abide by the final decision of such
court or any appellate court in the event of an appeal. The assuming insurer agrees that it will
include such consent in each reinsurance agreement, if requested by the
commissioner. Nothing in this paragraph constitutes or should be understood to
constitute a waiver of assuming insurer’s rights to commence an action in any
court of competent jurisdiction in the United States, to remove an action to a
United States District Court, or to seek a transfer of a case to another court
as permitted by the laws of the United States or of any state in the United
States. This paragraph is not intended to conflict with or override the
obligation of the parties to the reinsurance agreement to arbitrate their
disputes if such an obligation is created in the agreement, except to the extent
such agreements are unenforceable under applicable insolvency or delinquency
laws.
2.
Designates the Insurance Commissioner of New
Hampshire as its lawful attorney in and for New Hampshire upon whom may be
served any lawful process in any action, suit or proceeding in this state
arising out of the reinsurance agreement instituted by or on behalf of the
ceding insurer.
3.
Agrees to pay all final judgments, wherever
enforcement is sought, obtained by a ceding insurer, that have been declared
enforceable in the territory where the judgment was obtained.
4.
Agrees to provide prompt written notice and
explanation if it falls below the minimum capital and surplus or capital or
surplus ratio, or if any regulatory action is taken against it for serious
noncompliance with applicable law.
5.
Confirms that it is not presently participating in
any solvent scheme of arrangement, which involves insurers domiciled in New
Hampshire. If the assuming insurer
enters into such an arrangement, the assuming insurer agrees to notify the
ceding insurer and the commissioner, and to provide 100% security to the ceding
insurer consistent with the terms of the scheme.
6.
Agrees that in each reinsurance agreement it will
provide security in an amount equal to 100% of the assuming insurer’s liabilities
attributable to reinsurance ceded pursuant to that agreement if the assuming
insurer resists enforcement of a final U.S. judgment, that is enforceable under
the law of the territory in which it was obtained, or a properly enforceable
arbitration award whether obtained by the ceding insurer or by its resolution
estate, if applicable.
7.
Agrees to provide the documentation in accordance
with Ins 601.07(c), if requested by the commissioner.
Dated:___________________________________________
_________________________________________________
(name of
assuming insurer)
BY: _____________________________________________
(name of
officer)
_________________________________________________
(title of officer)
Form
CR-F – PART 1
Assumed
Reinsurance as of December 31, Current Year (000 Omitted)
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Reinsurance On |
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1 Company Code or ID Number |
2 |
3 Name of Reinsured |
4 Domiciliary Jurisdiction |
5 Assume Premium |
6 Paid Losses and Loss Adjustment Expenses |
7 Known Case Losses and LAE |
8 Cols. 6+7 |
9 Contingent Commission Payable |
10 Assume Premiums Receivable |
11 Unearned Premium |
12 Funds Held By or Deposited With Reinsured
Companies |
13 Letters of Credit Posted |
14 Amount of Assets Pledged or Compensating Balances
to Secure Letters of Credit |
15 Amount of Assets
Pledged or Collateral
Held in Trust |
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9999999 Totals |
Form
CR-F – PART 2
Ceded
Reinsurance as of December 31, Current Year (000 Omitted)
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Reinsurance
Recoverable On |
Reinsurance
Payable |
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1 Company
Code or ID Number |
2 |
3 Name
of Reinsurer |
4 Domiciliary
Jurisdiction |
5 Reinsurance
Contracts Ceding 70% or More of Direct Premiums Written |
6 Reinsurance
Premiums Ceded |
7 Paid
Losses |
8 Paid
LAE |
9 Known
Case Loss Reserves |
10 Known
Case LAE Reserves |
11 IBNR
Loss Reserves |
12 IBNR
LAE Reserves |
13 Unearned
Premiums |
14 Contingent
Commissions |
15 Cols.
7 through 14 Totals |
16 Ceded
Balances Payable |
17 Other
Amounts Due to Reinsurers |
18 Net
Amount Recoverable From Reinsurance Cols. 15 – [16 + 17] |
19 Funds
Held by Company Under Reinsurance Treaties |
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9999999
Totals |
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Form
CR-S – PART 1 – SECTION 1
Reinsurance
Assumed Life Insurance, Annuities, Deposit Funds and Other Liabilities
Without
Life or Disability Contingencies, and Related Benefits Listed by Reinsured
Company as of December 31, Current Year
1 Company Code or ID Number |
2 |
3 Effective
Date |
4 Name
of Reinsured |
5 Location |
6 Type
of Reinsurance Assume |
7 Amount
of In Force at End of Year |
8 Reserve |
9 Premiums |
10 Reinsurance
Payable on Paid and Unpaid Losses |
11 Modified
Coinsurance Reserve |
12 Funds
Withheld Under Coinsurance |
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Totals |
Form
CR-S – PART 1 – SECTION 2
Reinsurance
Assumed Accident and Health Insurance Listed by Reinsured Company as of December
31, Current Year
1 Company Code or ID Number |
2 |
3 Effective
Date |
4 Name
of Reinsured |
5 Domiciliary Jurisdiction |
6 Type
of Reinsurance Assumed |
7 Premiums |
8 Unearned Premiums |
9 Reserve
Liability Other Than for Unearned Premiums |
10 Reinsurance
Payable on Paid and Unpaid Losses |
11 Modified
Coinsurance Reserve |
12 Funds
Withheld Under Coinsurance |
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Totals |
Form
CR-S – PART 2
Reinsurance
Recoverable on Paid and Unpaid Losses Listed by Reinsuring Company as of
December 31, Current Year
1 Company Code or
ID Number |
2 |
3 Effective Date |
4 Name of Company |
5 Location |
6 Paid Losses |
7 Unpaid Losses |
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Totals
– Life, Annuity and Accident and Health |
Form
CR-S – PART 3 – SECTION 1
Reinsurance
Ceded Life Insurance, Annuities, Deposit Funds and Other Liabilities
Without
Life or Disability Contingencies, and Related Benefits Listed by Reinsuring
Company as of December 31, Current Year
1 Company Code or
ID Number |
2 |
3 Effective Date |
4 Name of Company |
5 Location |
6 Type
of Reinsurance Ceded |
7 Amount in Force
at End of Year |
Reserve Credit Taken |
10 Premiums |
Outstanding
Surplus Relief |
13 Modified
Coinsurance Reserve |
14 Funds Withheld
Under Coinsurance |
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8 Current Year |
9 Prior Year |
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11 Current Year |
12 Prior Year |
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Totals |
Form
CR-S – PART 3 – SECTION 2
Reinsurance
Ceded Accident and Health Insurance Listed by Reinsuring Company as of December
31, Current Year
1 Company Code or
ID Number |
2 |
3 Effective Date |
4 Name of Company |
5 Location |
6 Type |
7 Premiums |
8 Unearned Premium
(Estimated) |
9 Reserve Credit
Taken Other than for Unearned Premiums |
Outstanding
Surplus Relief |
12 Modified
Coinsurance Reserve |
13 Funds Withheld
under Coinsurance |
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10 Current Year |
11 Prior Year |
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Totals |
APPENDIX
Rule |
Statute |
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Ins
601.01 |
RSA
400-A:15, I; RSA 405:45-52, inclusive |
Ins
601.02 |
RSA
400-A:15, I; RSA 405:47, I; RSA 405:50-a |
Ins
601.03 |
RSA
400-A:15, I; RSA 405:47, II; RSA 405:50-a |
Ins
601.04 |
RSA
400-A:15, I; RSA 405:47, III; RSA 405:50-a |
Ins
601.05 |
RSA
400-A:15, I; RSA 405:47, IV; RSA 405:50-a |
Ins
601.06 |
RSA
400-A:15, I; RSA 405:47, IV-a; RSA 405:50-a |
Ins
601.07 |
RSA
400-A:15, I; RSA 405:47, IV-a; RSA 405:47, IV-b; RSA
405:50; RSA 405:50-a |
Ins
601.08 |
RSA
400-A:15, I; RSA 405:46, III; RSA 405:48; RSA 405:50-a |
Ins
601.09 |
RSA
400-A:15, I; RSA 405:47; RSA 405:50-a |
Ins
601.10 |
RSA
400-A:15, I; RSA 405:46, II & VI; RSA 405:50-a |
Ins
601.11 |
RSA
400-A:15, I; RSA 405:50, IV; RSA 405:50-a |
Ins
601.12 |
RSA
400-A:15, I; RSA 405:47; RSA 405:49; RSA 405:50-a |
Ins
601.13 |
RSA
400-A:15, I; RSA 405:47; RSA 405:49; RSA 405:50-a |
Ins
601.14 |
RSA
400-A:15, I; RSA 405:47; RSA 405:49; RSA 405:50-a |
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