Hawaii Administrative Rules › Title 16 - DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS › Chapter 187 - TERM AND UNIVERSAL LIFE INSURANCE RESERVE FINANCING › Section 16-187-107 - Requirements applicable to covered policies to obtain credit for reinsurance; opportunity for remediation

Current through June, 2024
(a) Subject to the
			 exemptions described in section 16-187-103 and the provisions of subsection
			 (b), credit for reinsurance shall be allowed with respect to ceded liabilities
			 pertaining to covered policies pursuant to sections
			 431:4A-101
			 and
			 431:4A-102,
			 HRS, if, and only if, in addition to all other requirements imposed by law or
			 regulation, the following requirements are met on a treaty-by-treaty basis:
(1) 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 section
			 431:5-307,
			 HRS, and related regulations and actuarial guidelines, and credit claimed for
			 any reinsurance treaty subject to this regulation does not exceed the
			 proportionate share of those reserves ceded under the contract;
(2) The ceding insurer determines the
			 required level of primary security with respect to each reinsurance treaty
			 subject to this chapter and provides support for its calculation as determined
			 to be acceptable to the commissioner;
(3) 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
			 431:4A-102,
			 HRS, on a funds withheld, trust, or modified coinsurance basis;
(4) 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 paragraph (3), are held by or on
			 behalf of the ceding insurer as security under the reinsurance treaty within
			 the meaning of section
			 431:4A-102,
			 HRS;
(5) Any trust used to satisfy
			 the requirements of this section shall comply with all of the conditions and
			 qualifications of section 16168-11, except that:
(A) Funds consisting of primary security or
			 other security held in trust, shall for the purposes identified in section
			 16187-106, be valued according to the valuation rules set forth in section
			 16-187-106, as applicable; and
(B)
			 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
			 subsection (a)(3);
(C) 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 subsection (a)(3)) below
			 one hundred two percent (102%) of the level required by subsection (a)(3) at
			 the time of the withdrawal or substitution; and
(D) The determination of reserve credit under
			 section
			 16-168-11(d)(3)
			 shall be determined according to the valuation rules set forth in section
			 16-187-106, as applicable; and
(6) The reinsurance treaty has been approved
			 by the commissioner.