Hawaii Administrative Rules › Title 16 - DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS › Chapter 168 - CREDIT FOR REINSURANCE › Section 16-168-6 - Credit for reinsurance; reinsurers maintaining trust funds

Current through June, 2024
(a) Pursuant to section
			 431:4A-101(d),
			 HRS, the commissioner shall allow credit for reinsurance ceded by a domestic
			 insurer to an assuming insurer which, as of the date of the ceding insurer's
			 statutory financial statement, maintains a trust fund in an amount prescribed
			 below in a qualified United States financial institution as defined in section
			 431:4A-103(b),
			 HRS, for the payment of the valid claims of its United States policyholders and
			 ceding insurers, their assigns, and successors in interest. The assuming
			 insurer shall report annually to the commissioner substantially the same
			 information as that required to be reported on the National Association of
			 Insurance Commissioners ("NAIC") annual statement form by licensed insurers, to
			 enable the commissioner 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 liabilities attributable to business written in the United States,
			 and, in addition, a trusteed surplus of not less than $20,000,000, except as
			 provided in paragraph (2) of this subsection.
(2) At any time after the assuming insurer
			 has permanently discontinued underwriting new business secured by the trust for
			 at least three full years, the commissioner with principal regulatory oversight
			 of the trust may authorize a reduction in the required trusteed surplus, but
			 only after a finding, based on an assessment of the risk, that the new required
			 surplus level is adequate for the protection of U.S. ceding insurers,
			 policyholders, and claimants in light of reasonably foreseeable adverse loss
			 development. The risk assessment may involve an actuarial review, including an
			 independent analysis of reserves and cash flows, and shall consider all
			 material risk factors, including when applicable, the lines of business
			 involved, the stability of the incurred loss estimates, and the effect of the
			 surplus requirements on the assuming insurer's liquidity or solvency. The
			 minimum required trusteed surplus may not be reduced to an amount less than
			 thirty per cent of the assuming insurer's liabilities attributable to
			 reinsurance ceded by U.S. ceding insurers covered by the trust.
(3) Notwithstanding the other provisions of
			 this chapter, the trust fund for a group of individual unincorporated
			 underwriters shall consist of funds in trust in an amount not less than the:
(A) Respective underwriters' several
			 liabilities attributable to business ceded by United States domiciled ceding
			 insurers to any underwriter of the group for reinsurance ceded under
			 reinsurance agreements with an inception, amendment, or renewal date on or
			 after January 1, 1993; or
(B)
			 Several insurance and reinsurance liabilities attributable to business written
			 in the United States for reinsurance ceded under reinsurance agreements with an
			 inception date on or before December 31, 1992 and not amended or renewed after
			 that date.
In addition, the group shall maintain a trusteed surplus of
				which $100,000,000 shall be held jointly for the benefit of the United States
				domiciled ceding insurers of any member of the group for all the years of
				account. 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. The group [shall make available],
				within ninety days after its financial statements are due to be filed with the
				group's domiciliary regulator, shall provide to the commissioner an annual
				certification by the group's domiciliary regulator of the solvency of each
				underwriter member of the group, or, if a certification is unavailable, a
				financial statement prepared by independent public accountants of each
				underwriter member of the group.
(4) The trust fund for a group of
			 incorporated insurers under common administration, whose members possess
			 aggregate policyholders surplus of $10,000,000,000 (calculated and reported in
			 substantially the same manner as prescribed by the annual statement
			 instructions and Accounting Practices and Procedures Manual of the National
			 Association of Insurance Commissioners) and which has continuously transacted
			 an insurance business outside the United States for at least three years
			 immediately prior to making application for accreditation, shall consist of
			 funds in trust in an amount not less than the assuming insurers' liabilities
			 attributable to business ceded by United States ceding insurers to any members
			 of the group pursuant to reinsurance contracts issued in the name of such
			 group. In addition, the group shall maintain a joint trusteed surplus of which
			 $100,000,000 shall be held jointly for the benefit of United States ceding
			 insurers of any member of the group. The group shall file a properly executed
			 Form AR-1 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, within
			 ninety days after its financial statements are due to be filed with the group's
			 domiciliary regulator, shall provide to the commissioner an annual
			 certification by the members' domiciliary regulators of the solvency of each
			 underwriter member of the group and [their] financial statements prepared by
			 independent public accountants of each underwriter member of the
			 group.