2023 New Mexico Statutes › Chapter 59A - Insurance Code › Article 12E - Credit for Reinsurance › Section 59A-12E-6 - Trust requirements.

A. 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 United States ceding insurers, and, in addition, the assuming insurer shall maintain a trusteed surplus of not less than twenty million dollars ($20,000,000), except as provided in Subsection B of this section.
B. At any time after the assuming insurer has permanently discontinued underwriting new business secured by the trust for at least three full years, the government agency 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 shall not be reduced to an amount less than thirty percent of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers covered by the trust.
C. In the case of a group including incorporated and individual unincorporated underwriters:
(1) for reinsurance ceded pursuant to reinsurance agreements with an inception, amendment or renewal date on or after January 1, 1993, the trust shall consist of a trusteed account in an amount not less than the respective underwriters' several liabilities attributable to business ceded by United-States-domiciled ceding insurers to any underwriter of the group;
(2) for reinsurance ceded pursuant to 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 the Credit for Reinsurance Act, the trust shall consist of a trusteed account in an amount not less than the respective underwriters' several insurance and reinsurance liabilities attributable to business written in the United States;
(3) in addition to the trusts provided for in Paragraphs (1) and (2) of this subsection, the group shall maintain in trust a trusteed surplus of which one hundred million dollars ($100,000,000) shall be held jointly for the benefit of the United-States-domiciled ceding insurers of any member of the group for all years of account;
(4) 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; and
(5) within ninety days after its financial statements are due to be filed with the group's domiciliary regulator, the group shall provide to the superintendent an annual certification by the group's domiciliary regulator of the solvency of each underwriter member; or if a certification is unavailable, financial statements, prepared by independent public accountants, of each underwriter member of the group.
D. In the case of a group of incorporated underwriters under common administration, the group shall:
(1) have continuously transacted an insurance business outside the United States for at least three years immediately prior to making application for accreditation;
(2) maintain aggregate policyholders' surplus of at least ten billion dollars ($10,000,000,000);
(3) maintain a trust fund in an amount not less than the group's several liabilities attributable to business ceded by United-States-domiciled ceding insurers to any member of the group pursuant to reinsurance contracts issued in the name of the group;
(4) maintain a joint trusteed surplus of which one hundred million dollars ($100,000,000) shall be held jointly for the benefit of United-States-domiciled ceding insurers of any member of the group as additional security for these liabilities; and
(5) within ninety days after its financial statements are due to be filed with the group's domiciliary regulator, make available to the superintendent an annual certification of each underwriter member's solvency by the member's domiciliary regulator and financial statements of each underwriter member of the group prepared by its independent public accountant.
History:
Laws 2022, ch. 35, § 6.
ANNOTATIONS
Compiler's notes.
— Laws 2022, ch. 35, § 6 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.