Indiana Administrative Code › Title 760 - DEPARTMENT OF INSURANCE › Article 1 - GENERAL PROVISIONS › Rule 82 - Term and Universal Life Insurance Reserve Financing › Section 82-17 - Requirements applicable to covered policies to obtain credit for reinsurance; opportunity for remediation

Current through July 10, 2024
Authority: IC 27-6-10.1-5
Affected: IC 27-1-12.8; IC 27-6-10.1-2; IC 27-6-10.1-3; IC
				  27-6-10.1-5
Sec. 17.
(a) Subject
				to the exemptions described in section 15 of this rule and the provisions of
				subsection (b), credit for reinsurance shall be allowed with respect to ceded
				liabilities pertaining to covered policies under IC 27-6-10.1-2 and IC
				27-1-10.1-3 if, in addition to all other requirements imposed by law or rule,
				the following requirements are met on a treaty-by-treaty basis:
(1) 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 IC 27-1-12.8 and related rules
				and actuarial guidelines, and credit claimed for any reinsurance treaty subject
				to this rule does not exceed the proportionate share of those reserves ceded
				under the contract.
(2) The ceding
				insurer determines the required level of primary security with respect to each
				reinsurance treaty subject to this regulation and provides support for its
				calculation as determined to be acceptable to the commissioner.
(3) 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 IC 27-6-10.1-3, on a funds-withheld, trust, or modified
				coinsurance basis.
(4) Funds
				consisting of other security, in an amount at least equal to any portion of the
				statutory reserves to which primary security is not held under subdivision (3),
				are held by or on behalf of the ceding insurer as security under the
				reinsurance treaty within the meaning of IC 27-6-10.1-3.
(5) A trust used to satisfy the requirements
				of this section shall comply with all of the conditions and qualifications of
				760 IAC 1-56-10, except that:
(A) funds consisting of primary security or
				other security held in trust, shall, for the purposes identified in section
				16(b) of this rule, be valued according to the valuation rules set forth in
				section 16(b) of this rule, as applicable; and
(B) there are no affiliate investment
				limitations with respect to security held in the trust if the security is not
				needed to satisfy the requirements of subdivision (3);
(C) 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 subdivision (3) below one hundred two percent (102%)
				of the level required by subdivision (3) at the time of the withdrawal or
				substitution); and
(D) the
				determination of reserve credit under
				760 IAC 1-56-10(d)(3)
				 shall be determined according to the
				valuation rules set forth in section 16(b) of this rule, as
				applicable.
(6) The
				reinsurance treaty has been approved by the commissioner.