2023 New Mexico Statutes › Chapter 59A - Insurance Code › Article 12E - Credit for Reinsurance › Section 59A-12E-9 - Certified reinsurers; ratings; required security.

A. If a certified reinsurer's domiciliary jurisdiction ceases to be a qualified jurisdiction, the superintendent may suspend the certified reinsurer's certification indefinitely, in lieu of revocation.
B. The superintendent shall assign a rating to each certified reinsurer, giving due consideration to the financial strength ratings that have been assigned by rating agencies deemed acceptable to the superintendent pursuant to rule. The superintendent shall publish a list of all certified reinsurers and their ratings.
C. A certified reinsurer shall secure obligations assumed from United States ceding insurers pursuant to this section at a level consistent with its rating, as specified in rules promulgated by the superintendent.
D. 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 superintendent and consistent with the provisions of this section or in a multi-beneficiary trust in accordance with Paragraph (3) of Subsection D and Subsection E of Section 3 [59A-12E-3 NMSA 1978] and Sections 4 [59A-12E-4 NMSA 1978] and 6 [59A-12E-6 NMSA 1978] of the Credit for Reinsurance Act, except as otherwise provided in this section.
E. If a certified reinsurer maintains a trust to fully secure its obligations subject to Paragraph (3) of Subsection D and Subsection E of Section 3 and Sections 4 and 6 of the Credit for Reinsurance Act and chooses to secure its obligations incurred as a certified reinsurer in the form of a multi-beneficiary trust, the certified reinsurer shall maintain separate trust accounts for its obligations incurred pursuant to reinsurance agreements issued or renewed as a certified reinsurer with reduced security as permitted by this section or comparable laws of other United States jurisdictions and for its obligations subject to Paragraph (3) of Subsection D and Subsection E of Section 3 and Sections 4 and 6 of the Credit for Reinsurance Act. It shall be a condition to the grant of certification pursuant to Sections 7 [59A-12E-7 NMSA 1978] through 9 [59A-12E-9 NMSA 1978] of the Credit for Reinsurance Act that the certified reinsurer shall have bound itself, by the language of the trust and agreement with the government agency with principal regulatory oversight of each such trust account, to fund, upon termination of any such trust account, out of the remaining surplus of such trust any deficiency of any other such trust account.
F. The minimum trusteed surplus requirements provided in Paragraph (3) of Subsection D and Subsection E of Section 3 and Sections 4 and 6 of the Credit for Reinsurance Act are not applicable with respect to a multi-beneficiary trust maintained by a certified reinsurer for the purpose of securing obligations incurred pursuant to this section, except that such trust shall maintain a minimum trusteed surplus of ten million dollars ($10,000,000).
G. With respect to obligations incurred by a certified reinsurer pursuant to this section, if the security is insufficient, the superintendent shall reduce the allowable credit by an amount proportionate to the deficiency, and the superintendent may impose further reductions in allowable credit upon finding that there is a material risk that the certified reinsurer's obligations will not be paid in full when due.
H. For purposes of this section, 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 its obligations. As used in this subsection, "terminated" refers to revocation, suspension, voluntary surrender and inactive status.
I. If the superintendent continues to assign a higher rating as permitted by Sections 3 through 15 [59A-12E-15 NMSA 1978] of the Credit for Reinsurance Act, the requirement to secure one hundred percent of its obligations does not apply to a certified reinsurer in inactive status or to a reinsurer whose certification has been suspended.
J. If an applicant for certification has been certified as a reinsurer in an accredited jurisdiction, the superintendent may defer to that jurisdiction's certification and may defer to the rating assigned by that jurisdiction, and such assuming insurer shall be considered to be a certified reinsurer in this state.
K. A certified reinsurer that ceases to assume new business in this state may request to maintain its certification in inactive status in order to continue to qualify for a reduction in security for its in-force business. An inactive certified reinsurer shall continue to comply with all applicable requirements of this section, and the superintendent shall assign a rating that takes into account, if relevant, the reasons why the reinsurer is not assuming new business.
History:
Laws 2022, ch. 35, § 9.
ANNOTATIONS
Compiler's notes.
— Laws 2022, ch. 35, § 9 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.