Louisiana Administrative Code › Title 37 - INSURANCE › Part XIII - Regulations › Chapter 35 - Regulation 56-Credit for Reinsurance › Section XIII-3510 - Credit for Reinsurance-Certified Reinsurers

Current through Register Vol. 50, No. 6, June 20, 2024
A. Pursuant to
				R.S.
				22:651(E), the commissioner
				shall allow credit for reinsurance ceded by a domestic insurer to an assuming
				insurer that has been certified as a reinsurer in this stPursuant to
				R.S.
				22:651(E), the commissioner
				shall allow credit for reinsurance ceded by a domestic insurer to an assuming
				insurer that has been certified as a reinsurer in this state at all times for
				which statutory financial statement credit for reinsurance is claimed under
				this section. The credit allowed shall be based upon the security held by or on
				behalf of the ceding insurer in accordance with a rating assigned to the
				certified reinsurer by the commissioner. The security shall be in a form
				consistent with the provisions of
				R.S.
				22:651(E) and 652 and
				§3517 or 3521 of this regulation. The
				amount of security required in order for full credit to be allowed shall
				correspond with the following requirements.
1. Ratings/Security Required
Ratings
Security Required
Secure - 1
0 percent
Secure - 2
10 percent
Secure - 3
20 percent
Secure - 4
50 percent
Secure - 5
75 percent
Vulnerable - 6
100 percent
2.
				Affiliated reinsurance transactions shall receive the same opportunity for
				reduced security requirements as all other reinsurance transactions.
3. The commissioner shall require the
				certified reinsurer to post 100 percent, for the benefit of the ceding insurer
				or its estate, security upon the entry of an order of rehabilitation,
				liquidation or conservation against the ceding insurer.
4. In order to facilitate the prompt payment
				of claims, a certified reinsurer shall not be required to post security for
				catastrophe recoverables for a period of one year from the date of the first
				instance of a liability reserve entry by the ceding company as a result of a
				loss from a catastrophic occurrence as recognized by the commissioner. The one
				year deferral period is contingent upon the certified reinsurer continuing to
				pay claims in a timely manner. Reinsurance recoverables for only the following
				lines of business as reported on the NAIC annual financial statement related
				specifically to the catastrophic occurrence will be included in the deferral:
a. line 1: fire;
b. line 2: allied lines;
c. line 3: farmowners multiple
				peril;
d. line 4: homeowners
				multiple peril;
e. line 5:
				commercial multiple peril;
f. line
				9: inland marine;
g. line 12:
				earthquake;
h. line 21: auto
				physical damage.
5.
				Credit for reinsurance under this Section shall apply only to reinsurance
				contracts entered into or renewed on or after the effective date of the
				certification of the assuming insurer. Any reinsurance contract entered into
				prior to the effective date of the certification of the assuming insurer that
				is subsequently amended after the effective date of the certification of the
				assuming insurer, or a new reinsurance contract, covering any risk for which
				collateral was provided previously, shall only be subject to this section with
				respect to losses incurred and reserves reported from and after the effective
				date of the amendment or new contract.
6. Nothing in this section shall prohibit the
				parties to a reinsurance agreement from agreeing to provisions establishing
				security requirements that exceed the minimum security requirements established
				for certified reinsurers under this Section.