Source: http://sdlegislature.gov/docs/legsession/2017/Bills/HB1045P.htm
Timestamp: 2017-11-21 08:07:28
Document Index: 738326623

Matched Legal Cases: ['§ 58', '§ 58', '§ 54', '§ 58', '§ 58', '§ 58', '§ 58', '§ 58', '§ 58']

400Y0160 HOUSE BILL NO. 1045
58-14-9. Credit shall be allowed if the reinsurance is ceded to an assuming insurer which
that is accredited as a reinsurer in this state. For a reinsurer to be accredited, it the reinsurer shall:
(5) Demonstrate to the satisfaction of the director that the reinsurer has adequate financial capacity to meet reinsurance obligations and is otherwise qualified to assume reinsurance from domestic insurers. An assuming insurer is deemed to meet this requirement as of the time of the assuming insurer's application if the assuming insurer maintains a surplus as regards policyholders in an amount not less than twenty million dollars and the assuming insurer's accreditation has not been denied by the director within ninety days after submission of the assuming insurer's application.
The director, after reviewing the documents submitted, may approve or disapprove the reinsurer. If no action is taken by the director within ninety days of the insurer's application to provide reinsurance, the reinsurer may provide reinsurance in this state if it maintains a surplus as regards policyholders in an amount which is not less than twenty million dollars. If the director approves the application, the reinsurer may do business in this state if it maintains a surplus as regards policyholders in an amount not less than one million dollars. The director
may set the surplus requirements.
In the case of a single assuming insurer, the trust shall consist of a trust account equal to the assuming insurer's liabilities attributable to business written in the United States and, in
addition, the assuming insurer shall maintain a trust surplus of not less than twenty million dollars.
In the case of a group including incorporated and individual unincorporated underwriters, the trust shall consist of a trust account representing the group's liabilities attributable to business written in the United States and, in addition, the group shall maintain a trust surplus of which one hundred million dollars shall be held jointly for the benefit of United States ceding insurers of any member of the group. The incorporated members of the group may not engage in any business other than underwriting as a member of the group and are subject to the same level of solvency regulation and control by the group's domiciliary regulator as are the unincorporated members. The group shall make available to the director an annual certification of the solvency of each underwriter by the group's domiciliary regulator and its independent public accountants.
At any time after a single assuming insurer has permanently discontinued underwriting new business secured by the trust for at least three years, the director 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 United States 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 thirty percent of the assuming insurer's liabilities attributable to reinsurance ceded by the United States ceding insurers covered by the trust.
A group of incorporated insurers underwriters under this section are those under common administration which comply with the filing requirements contained in § 58-14-11, which that has continuously transacted an insurance business outside the United States for at least three years immediately prior to making application for accreditation, which that submits to this
state's authority to examine its books and records and bears the expense of the examination, and which that has aggregate policyholders' surplus of at least ten billion dollars.
58-14-15. If the assuming insurer is not licensed, certified, or accredited to transact insurance or reinsurance in this state, the credit permitted by §§ 58-14-10 to 58-14-13, inclusive, or 58-14-11 may not be allowed unless the assuming insurer agrees in the reinsurance
Insurance Commissioners (NAIC), including any security deemed exempt from filing as defined by the Purposes and Procedures Manual of the NAIC Investment Analysis Office as adopted by administrative rule, and qualifying as admitted assets; or
(3) Clean, irrevocable, unconditional letters of credit, issued or confirmed by a qualified United States financial institution as defined in section 29 of this Act, effective no later than December thirty-first of the year for which the filing is being made, and in the possession of, or in the trust of, the ceding insurer on or before the filing date of the assuming insurer's annual statement. Letters of credit meeting applicable standards of issuer acceptability as of the dates of 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 the security's expiration, extension, renewal, modification, or amendment, whichever occurs first; or
58-14-17. The director may promulgate rules, pursuant to chapter 1-26, concerning requirements, qualifications, and criteria for receiving credit for reinsurance, surplus amounts, accreditation of a reinsurer, certification of a reinsurer, minimum levels for reinsurer capital and
surplus, financial rating of reinsurers, recognition and appraisal of qualified jurisdictions, trusts and trust agreements, reinsurance contracts, hazardous investments and evidence of submission to this state's authority, and requirements and qualifications for life reinsurance agreements, reserve credits, credits for reinsurance, valuation of assets or reserve credits, the adoption of certain methods and manuals for the valuation of assets, the amount and forms of security supporting reinsurance arrangements, reduction of liability or establishment of assets in a
financial statement, circumstances under which credit will be reduced or eliminated, and treatment of existing agreements.
(4) Agree to submit to the jurisdiction of this state, appoint the director as the assuming
insurer's agent for service of process in this state, and agree to provide security for one hundred percent of the assuming insurer's liabilities attributable to reinsurance ceded by the United States ceding insurers if the assuming insurer resists enforcement of a final United States judgment;
(3) Within ninety days after its financial statements are due to be filed with the association's domiciliary regulator, the association shall provide to the director an annual certification by the association's domiciliary regulator of the solvency of each
underwriter member. If the annual certification is unavailable, the association shall file financial statements, prepared by independent public accountants, of each underwriter member of the association.
To determine whether the domiciliary jurisdiction of a non-United States assuming insurer is eligible to be recognized as a qualified jurisdiction, the director shall evaluate the appropriateness and effectiveness of the reinsurance supervisory system of the jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits, and the extent of reciprocal recognition afforded by the non-United States jurisdiction to reinsurers licensed and domiciled in the United States. A qualified jurisdiction shall agree to share information and cooperate with the director with respect to all certified reinsurers domiciled within that jurisdiction. A jurisdiction may not be recognized as qualified jurisdiction if the director has determined the jurisdiction does not adequately and promptly enforce final United States judgments and arbitration awards. Additional factors may be considered at the discretion of the director.
A list of qualified jurisdictions shall be published through the National Association of Insurance Commissioners. The director shall consider the list in determining qualified
jurisdictions. If the director approves a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, the director shall provide a thoroughly documented justification with criteria to be developed in administrative rules promulgated by the director, pursuant to chapter 1-26, to establish criteria for determining the qualifications of the jurisdictions.
In order for a domestic ceding insurer to qualify for full financial statement credit for reinsurance ceded to a certified reinsurer, the certified reinsurer shall maintain security in a form acceptable to the director and consistent with § 54-14-16, or in a multibeneficiary trust in accordance with § 58-14-11, except as otherwise provided in sections 19 to 24, inclusive, of this Act.
If a certified reinsurer maintains a trust to fully secure the certified reinsurer's obligations
subject to § 58-14-11 and chooses to secure the certified reinsurer's obligations incurred as a certified reinsurer in the form of a multibeneficiary trust, the certified reinsurer shall maintain separate trust accounts for the certified reinsurer's obligations incurred under reinsurance agreements issued or renewed as a certified reinsurer with reduced security as permitted by this Act or comparable laws of other United States jurisdictions and for the certified reinsurer's obligations subject to § 58-14-11. It shall be a condition to the grant of certification that the certified reinsurer shall have bound itself, by the language of the trust and agreement with the director with principal regulatory oversight of each trust account, to fund upon termination of any trust account, out of the remaining surplus of the trust any deficiency of any other trust account.
A certified reinsurer whose certification has been terminated for any reason shall be treated as a certified reinsurer required to secure one hundred percent of the certified reinsurer's
obligations. For the purposes of this section, the term, terminated, means revocation, suspension, voluntary surrender, and inactive status. If the director continues to assign a higher rating as permitted by other provisions regarding certification, this requirement does not apply to a certified reinsurer in inactive status or to a reinsurer whose certification has been suspended.
A ceding insurer shall take steps to manage the ceding insurer's reinsurance recoverables proportionate to the ceding insurer's own book of business. A domestic ceding insurer shall notify the director within thirty days after reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, exceeds fifty percent of the domestic ceding insurer's last reported surplus to policyholders, or after the ceding insurer determined that reinsurance recoverables from any single assuming insurer, or group of affiliated assuming
insurers, is likely to exceed this limit. The notification shall demonstrate the exposure is safely managed by the domestic ceding insurer.
If the assuming insurer does not meet the requirements of § 58-14-8, 58-14-9, or 58-14-10,
the credit permitted by § 58-14-11 or section 12 of this Act may not be allowed unless the assuming insurer agrees in the trust agreement to the following conditions:
(1) Notwithstanding any other provisions in the trust instrument, if the trust fund is inadequate because the trust fund contains an amount less than the amount less than the amount required, 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 director with regulatory oversight over the trust or with an order of court of competent jurisdiction directing the trustee to transfer to the director with regulatory oversight all of the assets of the trust fund;
If an accredited or certified reinsurer ceases to meet the requirements for accreditation or
certification, the director may suspend or revoke the reinsurer' s accreditation or certification. The director shall give the reinsurer notice and opportunity for hearing. The suspension or revocation may not take effect until after the director's order on hearing, unless:
The fee for each required document included in any application for accreditation, certification or any annual reinsurance filing, or for approval of or amendments to a trust, required by § 58-14-5, 58-14-8, 58-14-9, 58-14-10, 58-14-11, 58-14-13, 58-14-14, or sections 12 to 14, inclusive, of this Act shall be fifty dollars.