Connecticut Administrative Code › Title 38a - Insurance Department › 88 - Credit for Reinsurance › Section 38a-88-4 - Credit for reinsurance - Reinsurers maintaining trust funds

Current through July 10, 2024
(a) The Commissioner shall allow credit for
			 reinsurance ceded by a domestic insurer to an assuming insurer which, as of any
			 date on which statutory financial statement credit for reinsurance is claimed,
			 and thereafter for so long as credit for reinsurance is claimed, maintains a
			 trust fund in an amount prescribed below in a qualified United States financial
			 institution as defined in section 38a-87 of the Connecticut General Statutes,
			 for the payment of the valid claims of its United States domiciled 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 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 reinsurance ceded by United States
			 domiciled insurers, and in addition, the assuming insurer shall maintain a
			 trusteed surplus of not less than $20,000,000 except as provided in subdivision
			 (2) of this subsection.
(2) For a
			 trust over which the Commissioner has principal regulatory oversight, 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
			 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 United States 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 percent of the assuming insurer's liabilities attributable to
			 reinsurance ceded by United States ceding insurers covered by the
			 trust.
(3)
(A) The trust fund for a group including
			 incorporated and individual unincorporated 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 United States domiciled
			 ceding insurers to any underwriter of the group;
(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
			 sections
			 38a-88-1
			 to
			 38a-88-12,
			 inclusive, of the Regulations of Connecticut State Agencies, funds in trust in
			 an amount not less than the respective underwriters' several insurance and
			 reinsurance liabilities attributable to business written in the United States;
			 and
(iii) In addition to these
			 trusts, 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.
(B) 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, within ninety 90 days after its financial statements are due to be
			 filed with the group's domiciliary regulator, provide to the Commissioner:
(i) An annual certification by the group's
			 domiciliary regulator of the solvency of each underwriter member of the group;
			 or
(ii) If a certification is
			 unavailable, a financial statement, prepared by independent public accountants,
			 of each underwriter member of the group.
(4)
(A) The
			 trust fund for a group of incorporated underwriters 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 NAIC Annual Statement Instructions Manual and NAIC Accounting
			 Practices and Procedures Manual) and which has continuously transacted an
			 insurance business outside the United States for at least three (3) years
			 immediately prior to making application for accreditation, shall:
(i) Consist of funds in trust in an amount
			 not less than the assuming insurers' several liabilities attributable to
			 business ceded by United States domiciled ceding insurers to any members of the
			 group pursuant to reinsurance contracts issued in the name of such
			 group;
(ii) Maintain a joint
			 trusteed surplus of which $100,000,000 shall be held jointly for the benefit of
			 United States domiciled ceding insurers of any member of the group;
			 and
(iii) File a properly executed
			 Form AR-1 (Appendix A of sections
			 38a-88-1
			 to
			 38a-88-12,
			 inclusive, of the Regulations of Connecticut State Agencies) 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.
(B) Within 90 days after the statements are
			 due to be filed with the group's domiciliary regulator, the group shall file
			 with the Commissioner an annual certification of each underwriter member's
			 solvency by the member's domiciliary regulators, and financial statements,
			 prepared by independent public accountants, of each underwriter member of the
			 group.