Compilation of Rules and Regulations of the State of Georgia › Department 120 - OFFICE OF COMMISSIONER OF INSURANCE, SAFETY FIRE COMMISSIONER AND INDUSTRIAL LOAN COMMISSIONER › Chapter 120-2 - RULES OF COMMISSIONER OF INSURANCE › Subject 120-2-78 - CREDIT FOR REINSURANCE › Rule 120-2-78-.07 - Credit for ReinsuranceReinsurers Maintaining Trust Funds

Current through Rules and Regulations filed through June 27, 2024
(1) Pursuant to
				O.C.G.A. §
									33-7-14(a)(4),
				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
				O.C.G.A. §
									33-7-14(c)(2),
				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.
(2) The following requirements apply to the
				following categories of assuming insurer:
(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 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 paragraph (2) of this subsection.
(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 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
				thirty percent (30%) of the assuming insurer's liabilities attributable to
				reinsurance ceded by U.S. ceding insurers covered by the trust.
(c)
(1) The
				trust fund for a group including incorporated and individual unincorporated
				underwriters shall consist of:
(i) 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;
(ii) 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 regulation, 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
(iii) 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.
(2) 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 ninety (90) days after its financial statements are due to
				be filed with the group's domiciliary regulator, provide to the commissioner:
(i) An annual certification by the group's
				domiciliary regulator of the solvency of each underwriter member of the group;
				or
(ii) If a certification is
				unavailable, a financial statement, prepared by independent public accountants,
				of each underwriter member of the group.
(d)
(1) 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 three (3) years immediately
				prior to making application for accreditation, shall:
(i) 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;
(ii) 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
(iii) 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.
(2) Within ninety (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.