Iowa Administrative Code › Agency 191 - Insurance Division › Regulated Industries › Chapter 112 - Term and Universal Life Insurance Reserve Financing › Rule 191-112.7 - Requirements Applicable to Covered Policies to Obtain Credit for Reinsurance; Opportunity for Remediation

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
				Subject to the exemptions described in rule
				191-112.4 (521B) and the
				provisions of subrule 112.7(2), credit for reinsurance shall be allowed with
				respect to ceded liabilities pertaining to covered policies pursuant to Iowa
				Code sections 521B.102 and
				521B.103
				if, and only if, in addition to all other requirements imposed by law or rules,
				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 Iowa Code section
				508.36 and
				related rules 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; and
b. 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; and
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 Iowa Code section
				521B.103,
				on a funds-withheld, trust, or modified coinsurance basis; and
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 paragraph
				112.7(1)
"c,"
are held by or on behalf of the ceding insurer as
				security under the reinsurance treaty within the meaning of Iowa Code section
				521B.103; and
e. Any trust used to
				satisfy the requirements of rule 191-112.7 (521B) shall comply with all of the
				conditions and qualifications of 191-subrule 5.33(11), except that:
(1) Funds consisting of primary security or
				other security held in trust shall, for the purposes identified in subrule
				112.6(2), be valued according to the valuation rules set forth in subrule
				112.6(2), as applicable; and
(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
				paragraph 112.7(1)
"c";
and
(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 paragraph 112.7(1)
"c"
below 102
				percent of the level required by paragraph 112.7(1)
"c"
at the
				time of the withdrawal or substitution; and
(4) The determination of reserve credit under
				191-subparagraphs 5.33(11)
"d"
(3) to
				5.33(11)
"d"
(5) shall be determined according to the valuation
				rules set forth in subrule 112.6(2), as applicable; and
f. The reinsurance treaty has been approved
				by the commissioner.