Alabama Administrative Code › Title 482 - ALABAMA DEPARTMENT OF INSURANCE › Chapter 482-1-167 - TERM AND UNIVERSAL LIFE INSURANCE RESERVE FINANCING › Section 482-1-167-.07 - Requirements Applicable To Covered Policies To Obtain Credit For Reinsurance; Opportunity For Remediation

Current through Register Vol. 42, No. 9, June 28, 2024
(1)
			 Requirements. Subject to the exemptions described in Rule
			 482-1-167-.04 and the provisions
			 of paragraph (2) of this rule, credit for reinsurance shall be allowed with
			 respect to ceded liabilities pertaining to Covered Policies pursuant to any of
			 Sections 27-SB-4 through 27-5B-14 if, and only if, in addition to all other
			 requirements imposed by law or regulation, all of the following requirements
			 are met on a treaty-by-treaty basis:
(a) The
			 ceding insurer's statutory policy reserves with respect to the Covered Policies
			 are established in full and in accordance with the applicable requirements of
			 Chapter 36A of Title 27, beginning with Section
			 27-36A-1, and related regulations
			 and actuarial guidelines, and credit claimed for any reinsurance treaty subject
			 to this chapter does not exceed the proportionate share of those reserves ceded
			 under the contract.
(b) The ceding
			 insurer determines the Required Level of Primary Security with respect to each
			 reinsurance treaty subject to this regulation and provides support for its
			 calculation as determined to be acceptable to the commissioner.
(c) Funds consisting of Primary Security, in
			 an amount at least equal to the Required Level of Primary Security, are held by
			 or on behalf of the ceding insurer, as security under the reinsurance treaty
			 within the meaning of Section 27-SB-14, on a funds withheld, trust, or modified
			 coinsurance basis.
(d) Funds
			 consisting of Other Security, in an amount at least equal to any portion of the
			 statutory reserves as to which Primary Security is not held pursuant to
			 subparagraph (c), are held by or on behalf of the ceding insurer as security
			 under the reinsurance treaty within the meaning of Section 27-SB-14.
(e) Any trust used to satisfy the
			 requirements of this rule shall comply with all of the conditions and
			 qualifications of Rule
			 482-1-156-.10, except that:
1. Funds consisting of Primary Security or
			 Other Security held in trust, shall for the purposes identified in paragraph
			 (2) of Rule
			 482-1-167-.06, be valued
			 according to the valuation rules set forth in paragraph (2) of Rule
			 482-1-167-.06, as
			 applicable.
2. There are no
			 affiliate investment limitations with respect to any security held in such
			 trust if such security is not needed to satisfy the requirements of
			 subparagraph (c).
3. The
			 reinsurance treaty must prohibit withdrawals or substitutions of trust assets
			 that would leave the fair market value of the Primary Security within the trust
			 (when aggregated with Primary Security outside the trust that is held by or on
			 behalf of the ceding insurer in the manner required by subparagraph (c) below
			 102% of the level required by subparagraph (c) at the time of the withdrawal or
			 substitution.
4. The determination
			 of reserve credit under paragraph (5) of Rule
			 482-1-156-.12 shall be determined
			 according to the valuation rules set forth in paragraph (2) of Rule
			 482-1-167-.06, as
			 applicable.
(f) The
			 reinsurance treaty has been approved by the commissioner.