Mississippi Administrative Code › Title 19 - Department of Insurance › Part 1 - General › Chapter 22 - Credit for Reinsurance › Rule 19-1-22.07 - Credit for Reinsurance - Reinsurers Maintaining Trust Funds

Current through June 25, 2024
A. Pursuant to
Miss. Code
				Ann
. §
									83-19-151(d),
				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
Miss. Code Ann
. §
									83-19-155(b),
				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 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 percent (30%) of the assuming insurer's liabilities
				attributable to reinsurance ceded by U.S. 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 U.S. 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
				this regulation, 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 U.S. 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 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 NAIC) 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 U.S. 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 U.S. domiciled ceding insurers of any member of the group;
				and
(iii) 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.
(b) Within ninety (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.