Administrative Rules of Montana › Department 6 - STATE AUDITOR › Chapter 6.6 - INSURANCE DEPARTMENT › Subchapter 6.6.67 - Valuation of Life Insurance Policies › Rule 6.6.6725 - REQUIREMENTS APPLICABLE TO COVERED POLICIES TO OBTAIN CREDIT FOR REINSURANCE; OPPORTUNITY FOR REMEDIATION

Current through Register Vol. 13, July 5, 2024
(1) Subject to
				the exemptions described in ARM 6.6.6722 and the provisions of (2) below,
				credit for reinsurance shall be allowed with respect to ceded liabilities
				pertaining to covered policies pursuant to
				33-2-1216
				or
				33-2-1217,
				MCA, 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:
(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 Title 33, chapter 2, part 4,
				MCA, and related regulations and actuarial guidelines, and credit claimed for
				any reinsurance treaty subject to ARM 6.6.6720 through 6.6.6727 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 ARM 6.6.6720 through 6.6.6727 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
				33-2-1217,
				MCA, 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 (1)(c) above, are held by or on behalf
				of the ceding insurer as security under the reinsurance treaty within the
				meaning of
				33-2-1217,
				MCA; and
(e) Any trust used to
				satisfy the requirements of this rule shall comply with all of the conditions
				and qualifications of trusts set forth in ARM Title 6, chapter 6, subchapter
				38, except that:
(i) Funds consisting of
				primary security or other security held in trust, shall for the purposes
				identified in ARM 6.6.6724(2), be valued according to the valuation rules set
				forth in ARM 6.6.6724(2), as applicable; and
(ii) 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 (1)(c) above; and
(iii) 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 (1)(c)) below 102% of the level required by (1)(c) at
				the time of the withdrawal or substitution; and
(iv) The determination of reserve credit
				under ARM
				6.6.3862
				shall be determined according to the valuation rules set forth in ARM
				6.6.6724(2), as applicable; and
(f) The reinsurance treaty has been approved
				by the commissioner.