2023 New Mexico Statutes › Chapter 59A - Insurance Code › Article 12E - Credit for Reinsurance › Section 59A-12E-10 - Reciprocal jurisdiction reinsurers.

A. Credit shall be allowed when reinsurance is ceded to an assuming insurer meeting each of the following conditions:
(1) the assuming insurer shall have its head office or be domiciled in, as applicable, and be licensed in a reciprocal jurisdiction;
(2) the assuming insurer shall have and maintain, on an ongoing basis, minimum capital and surplus, or its equivalent, calculated according to the methodology of its domiciliary jurisdiction, in an amount to be set forth in rules promulgated pursuant to Section 17 [59A-12E-17 NMSA 1978] of the Credit for Reinsurance Act; provided that if the assuming insurer is an association, including incorporated and individual unincorporated underwriters, it shall have and maintain, on an ongoing basis, minimum capital and surplus equivalents, net of liabilities, calculated according to the methodology applicable in its domiciliary jurisdiction, and a central fund containing a balance in amounts to be set forth in rules promulgated pursuant to Section 17 of the Credit for Reinsurance Act;
(3) the assuming insurer shall have and maintain, on an ongoing basis, a minimum solvency or capital ratio, as applicable, which will be set forth in rules promulgated pursuant to Section 17 of the Credit for Reinsurance Act; provided that if the assuming insurer is an association, including incorporated and individual unincorporated underwriters, it shall have and maintain, on an ongoing basis, a minimum solvency or capital ratio in the reciprocal jurisdiction where the assuming insurer has its head office or is domiciled, as applicable, and is also licensed;
(4) the assuming insurer shall agree and provide adequate assurance to the superintendent in a form specified by the superintendent pursuant to rule, as follows:
(a) the assuming insurer shall provide prompt written notice and explanation to the superintendent if it falls below the minimum requirements set forth in Paragraphs (2) and (3) of this subsection or if any regulatory action is taken against it for serious noncompliance with applicable law;
(b) the assuming insurer shall consent in writing to the jurisdiction of the courts of this state and to the appointment of the superintendent as agent for service of process; provided that the superintendent may require that consent for service of process be provided to the superintendent and included in each reinsurance agreement; and further provided that nothing in this subparagraph 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 pursuant to applicable insolvency or delinquency laws;
(c) the assuming insurer shall consent in writing to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer or its legal successor, that have been declared enforceable in the jurisdiction where the judgment was obtained;
(d) each reinsurance agreement shall include a provision requiring the assuming insurer to provide security in an amount equal to one hundred 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 pursuant to 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 resolution estate; and
(e) the assuming insurer shall confirm that it is not currently participating in any solvent scheme of arrangement that involves this state's ceding insurers and shall agree to notify the ceding insurer and the superintendent and to provide security in an amount equal to one hundred percent of the assuming insurer's liabilities to the ceding insurer, should the assuming insurer enter into such a solvent scheme of arrangement; provided that such security shall be in a form consistent with the provisions of the Credit for Reinsurance Act and as specified by the superintendent in rule;
(5) the assuming insurer or its legal successor shall provide, if requested by the superintendent, on behalf of itself and any legal predecessors, certain documentation to the superintendent as specified by the superintendent in rule;
(6) the assuming insurer shall maintain a practice of prompt payment of claims pursuant to reinsurance agreements pursuant to criteria set forth in rule; and
(7) the assuming insurer's supervisory authority shall confirm to the superintendent on an annual basis, as of the preceding December 31 or at the annual date otherwise statutorily reported to the reciprocal jurisdiction, that the assuming insurer complies with the requirements set forth in Paragraphs (2) and (3) of this subsection.
B. Nothing in this section precludes an assuming insurer from providing the superintendent with information on a voluntary basis.
History:
Laws 2022, ch. 35, § 10.
ANNOTATIONS
Compiler's notes.
— Laws 2022, ch. 35, § 10 was not enacted as part of the Insurance Code, but was compiled there for the convenience of the user.
Emergency clauses.
— Laws 2022, ch. 35, § 20 contained an emergency clause and was approved March 2, 2022.