Illinois Administrative Code › Title 50 - INSURANCE › Part 1104 - CREDIT FOR REINSURANCE CEDED › Section 1104.40 - Credit for Reinsurance - Reinsurers Maintaining Trust Funds

Current through Register Vol. 48, No. 28, July 12, 2024
a) Pursuant to
			 Section 173.1(1)(C) of the Code, the Director shall allow credit for
			 reinsurance ceded by a domestic insurer to an assuming insurer that, as of the
			 date of the ceding insurer's most recent statutory financial statement,
			 maintains a trust fund in an amount prescribed in subsection (b) in a qualified
			 U.S. financial institution as defined in Section 173.1(3)(B) of the Code, for
			 the payment of the valid claims of its U.S. policyholders and ceding insurers,
			 their assigns and successors in interest. The assuming insurer shall report
			 annually to the Director substantially the same information as that required to
			 be reported on the NAIC annual statement form by licensed insurers, to enable
			 the Director to determine the sufficiency of the trust fund.
b) The following requirements apply to the
			 following categories of assuming insurer:
1)
			 The trust fund for a single assuming insurer shall consist of funds in trust in
			 an amount not less than the assuming insurer's gross liabilities attributable
			 to business written in the U.S., and in addition, a trusteed surplus of not
			 less than $20 million, except as provided in Section 173.1(1)(C)(3)(a-5) of the
			 Code. The assuming insurer shall file a properly executed Form AR-1 Certificate
			 of Assuming Insurer found in Appendix A as evidence of the submission to this
			 State's authority to examine its books and records and shall certify that it
			 will bear the expense of any such examination.
2) Certain Group Trust Fund Requirements
A) The trust fund for a group including
			 incorporated and unincorporated individual 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; and
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 Part, funds in trust in an amount not less than the respective
			 underwriters' several insurance and reinsurance liabilities attributable to
			 business written in the U.S.
B) In addition, the group shall maintain a
			 trusteed surplus of which $100 million shall be held jointly for the benefit of
			 the U.S. ceding insurers of any member of the group for all the years of
			 account. The group shall file a properly executed Form AR-1 Certificate of
			 Assuming Insurer found in Appendix A 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. The group shall make available to the Director annual
			 certifications by the group's domiciliary regulator and its independent public
			 accountants of the solvency of each underwriter member of the group.
C) 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.
3) Insurers
			 Conducting Business Outside the United States
A) The trust fund for a group of incorporated
			 insurers under common administration, whose members possess aggregate
			 policyholders surplus of $10 billion (calculated and reported in substantially
			 the same manner as prescribed by the annual statement instructions and NAIC
			 Accounting Practices and Procedures Manual) and that has continuously
			 transacted an insurance business outside the U.S. for at least 3 years
			 immediately prior to making application for accreditation:
i) shall consist of funds in trust in an
			 amount not less than the assuming insurers' gross liabilities attributable to
			 business ceded by U.S. ceding insurers to any members of the group pursuant to
			 reinsurance contracts issued in the name of the group; and,
ii) shall maintain a joint trusteed surplus
			 of which $100 million shall be held jointly for the benefit of U.S. ceding
			 insurers of any member of the group.
B) The group shall file a properly executed
			 Form AR-1 Certificate of Assuming Insurer found in Appendix A 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.
C)
			 The group shall make available to the Director annual certifications by the
			 members' domiciliary regulators and their independent public accountants of the
			 solvency of each member of the group.