Connecticut Administrative Code › Title 38a - Insurance Department › 88 - Credit for Reinsurance › Section 38a-88-4a - Credit for reinsurance - certified reinsurers

Current through July 10, 2024
(a)
(1) The Commissioner shall allow credit for
			 reinsurance ceded by a domestic insurer to an assuming insurer that has been
			 certified as a reinsurer in this state at all times for which statutory
			 financial statement credit for reinsurance is claimed under this section. The
			 credit allowed shall be based upon the security held by or on behalf of the
			 ceding insurer in accordance with a rating assigned to the certified reinsurer
			 by the Commissioner. The security shall be in a form consistent with the
			 provisions of sections 38a-85, 38a-85a and 38a-86 of the Connecticut General
			 Statutes, and sections
			 38a-88-7,
			 38a-88-8,
			 or
			 38a-88-9 of the
			 Regulations of Connecticut State Agencies. The amount of security required in
			 order for full credit to be allowed shall correspond with the following
			 requirements:
Ratings
Security Required
Secure - 1
0%
Secure - 2
10%
Secure - 3
20%
Secure - 4
50%
Secure - 5
75%
Vulnerable - 6
100%
(2)
			 Affiliated reinsurance transactions shall receive the same opportunity for
			 reduced security requirements as all other reinsurance transactions.
(3) The Commissioner shall require the
			 certified reinsurer to post one hundred percent (100%) security, for the
			 benefit of the ceding insurer or its estate, upon the entry of an order of
			 rehabilitation, liquidation or conservation against the ceding
			 insurer.
(4) In order to facilitate
			 the prompt payment of claims, a certified reinsurer shall not be required to
			 post security for catastrophe recoverables for a period of one year from the
			 date of the first instance of a liability reserve entry by the ceding insurer
			 as a result of a loss from a catastrophic occurrence as recognized by the
			 Commissioner. The one year deferral period is contingent upon the certified
			 reinsurer continuing to pay claims in a timely manner in compliance with its
			 contractual obligations as set forth in the reinsurance agreement under which
			 the claims are ceded. Reinsurance recoverables for only the following lines of
			 business as reported on the NAIC annual financial statement related
			 specifically to the catastrophic occurrence will be included in the deferral:
(A) Line 1: Fire
(B) Line 2: Allied Lines
(C) Line 3: Farmowners multiple
			 peril
(D) Line 4: Homeowners
			 multiple peril
(E) Line 5:
			 Commercial multiple peril
(F) Line
			 9: Inland Marine
(G) Line 12:
			 Earthquake
(H) Line 21: Auto
			 physical damage
(5)
			 Credit for reinsurance under this section shall apply only to reinsurance
			 contracts entered into or renewed on or after the effective date of the
			 certification of the assuming insurer. Any reinsurance contract entered into
			 prior to the effective date of the certification of the assuming insurer that
			 is subsequently amended after the effective date of the certification of the
			 assuming insurer, or a new reinsurance contract, covering any risk for which
			 collateral was provided previously, shall only be subject to this section with
			 respect to losses incurred and reserves reported from and after the effective
			 date of the amendment or new contract.
(6) Nothing in this section shall prohibit
			 the parties to a reinsurance agreement from agreeing to provisions establishing
			 security requirements that exceed the minimum security requirements established
			 for certified reinsurers under this section.