Alabama Administrative Code › Title 482 - ALABAMA DEPARTMENT OF INSURANCE › Chapter 482-1-156 - CREDIT FOR REINSURANCE › Section 482-1-156-.08 - Credit For Reinsurance - Certified Reinsurer

Current through Register Vol. 42, No. 9, June 28, 2024
(1) Pursuant to Section
			 27-5B-8, 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
			 rule. 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
			 27-5B-8 and
			 27-5B-14, and Rules
			 482-1-156-.11,
			 482-1-156-.12 or
			 482-1-156-.13. The amount of
			 security required in order for full credit to be allowed shall correspond with
			 the following requirements:
(a)
Ratings
Security
							 Required
Secure - 1
0%
Secure - 2
10%
Secure - 3
20%
Secure - 4
50%
Secure - 5
75%
Vulnerable
- 6 100%
(b)
			 Affiliated reinsurance transactions shall receive the same opportunity for
			 reduced security requirements as all other reinsurance transactions.
(c) The commissioner shall require the
			 certified reinsurer to post one hundred percent (100%), for the benefit of the
			 ceding insurer or its estate, security upon the entry of an order of
			 rehabilitation, liquidation or conservation against the ceding
			 insurer.
(d) 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 company
			 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. 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:
1. Line 1:
			 Fire
2. Line 2: Allied
			 Lines
3. Line 3: Farmowners
			 multiple peril
4. Line 4:
			 Homeowners multiple peril
5. Line
			 5: Commercial multiple peril
6.
			 Line 9: Inland Marine
7. Line 12:
			 Earthquake
8. Line 21: Auto
			 physical damage
(e)
			 Credit for reinsurance under this rule 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 rule with
			 respect to losses incurred and reserves reported from and after the effective
			 date of the amendment or new contract.
(f) Nothing in this rule 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 rule.