Code of Massachusetts Regulations › 211 CMR - DIVISION OF INSURANCE › Title 211 CMR 59.00 - Term and Universal Life Insurance Reserve Financing › Section 59.06 - Requirements Applicable to Covered Policies to Obtain Credit for Reinsurance; Opportunity for Remediation

Current through Register 1525, July 5, 2024
(1)
Requirements
. Subject to the exemptions described in
			 211
			 CMR 59.03 and the provisions of
			 211
			 CMR 59.06(2)  credit for
			 reinsurance shall be allowed with respect to ceded liabilities pertaining to
			 Covered Policies pursuant to M.G.L. c. 175, § 20A(1) or M.G.L. c. 175,
			 § 20A(2) 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 M.G.L. c. 175, §
			 9½ and related regulations and actuarial guidelines, and credit claimed
			 for any reinsurance treaty subject to
			 211 CMR
			 59.00 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
			 211 CMR
			 59.00 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 M.G.L, c.175, §20A(2), 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
			 211
			 CMR 59.06(1)(c), are held by
			 or on behalf of the ceding insurer as security under the reinsurance treaty
			 within the meaning of M.G.L. c.175, § 20A(2); and
(e) Any trust used to satisfy the
			 requirements of
			 211
			 CMR 59.06 shall comply with all of the
			 conditions and qualifications of
			 211
			 CMR 130.13:
Trust Agreements
			 Qualified under
			 211
			 CMR 130.12
except that:
1. Funds consisting of Primary Security or
			 Other Security held in trust, shall for the purposes identified in
			 211
			 CMR 59.05(2), be valued
			 according to the valuation rules set forth in
			 211
			 CMR 59.05(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
			 211
			 CMR 59.06(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
			 211
			 CMR 59.06(1)(c)) below 102%
			 of the level required by
			 211
			 CMR 59.06(1)(c)  at the time
			 of the withdrawal or substitution; and
4. The determination of reserve credit under
			 211
			 CMR 130.13:
Trust Agreements
			 Qualified under
			 211
			 CMR 130.12
shall be determined
			 according to the valuation rules set forth in
			 211
			 CMR 59.05(2), as applicable;
			 and
(f) The reinsurance
			 treaty has been approved by the Commissioner.