Administrative Rules of Montana › Department 6 - STATE AUDITOR › Chapter 6.6 - INSURANCE DEPARTMENT › Subchapter 6.6.38 - Credit for Reinsurance › Rule 6.6.3850 - CERTIFIED ASSUMING INSURERS - LEGAL ENTITY SECURITY RATING

Current through Register Vol. 13, July 5, 2024
(1) Each certified reinsurer shall be rated
				on a legal entity basis, with due consideration being given to the group rating
				where appropriate, except that an association including incorporated and
				individual unincorporated underwriters that has been approved to do business as
				a single certified reinsurer may be evaluated on the basis of its group rating.
				Factors that may be considered as part of the evaluation process include, but
				are not limited to, the following:
(a) the
				certified reinsurer's financial strength rating from an acceptable rating
				agency. The maximum rating that a certified reinsurer may be assigned will
				correspond to its financial strength rating as outlined in the table below. The
				commissioner shall use the lowest financial strength rating received from an
				approved rating agency in establishing the maximum rating of a certified
				reinsurer. A failure to obtain or maintain at least two financial strength
				ratings from acceptable rating agencies will result in loss of eligibility for
				certification:
Ratings
Best
S&P
Moody's
Fitch
Secure - 1
A++
AAA
Aaa
AAA
Secure - 2
A+
AA+, AA, AA-
Aa1, Aa2, Aa3
AA+, AA, AA-
Secure - 3
A
A+, A
A1, A2
A+, A
Secure - 4
A-
A-
A3
A-
Secure - 5
B++, B+
BBB+, BBB, BBB-
Baa1, Baa2, Baa3
BBB+, BBB, BBB-
Vulnerable - 6
B, B-, C++, C+, C, C-, D, E, F
BB+, BB, BB-, B+, B, B-, CCC, CC, C, D, R
Ba1, Ba2, Ba3, B1, B2, B3, Caa, Ca, C
BB+, BB, BB-, B+, B, B-, CCC+, CC, CCC-, DD
(b)
				the business practices of the certified reinsurer in dealing with its ceding
				insurers, including its record of compliance with reinsurance contractual terms
				and obligations;
(c) for certified
				reinsurers domiciled in the United States, a review of the most recent
				applicable NAIC Annual Statement Blank, either Schedule F (for
				property/casualty reinsurers) or Schedule S (for life and health or disability
				reinsurers);
(d) for certified
				reinsurers not domiciled in the United States, a review annually of Form CR-F
				(for property/casualty reinsurers) or Form CR-S (for life and health or
				disability reinsurers). The forms are found on the web site maintained by the
				commissioner;
(e) the reputation of
				the certified reinsurer for prompt payment of claims under reinsurance
				agreements, based on an analysis of ceding insurers' Schedule F reporting of
				overdue reinsurance recoverables, including the proportion of obligations that
				are more than 90 days past due or are in dispute, with specific attention given
				to obligations payable to companies that are in administrative supervision or
				receivership;
(f) regulatory
				actions against the certified reinsurer;
(g) reports of an independent auditor on the
				financial statements of the assuming insurer, audited financial statement,
				regulatory filings, and actuarial opinions (as filed with the assuming
				insurer's supervisor);
(h) for
				certified reinsurers not domiciled in the United States, audited financial
				statements, regulatory filings, and actuarial opinion (as filed with the
				non-United States jurisdiction supervisor, with a translation into English).
				Upon the initial application for certification, the commissioner will consider
				audited financial statements for the last two years filed with its non-United
				States jurisdiction supervisor;
(i)
				the liquidation priority of obligations to a ceding insurer in the certified
				reinsurer's domiciliary jurisdiction in the context of an insolvency
				proceeding;
(j) a certified
				reinsurer's participation in any solvent scheme of arrangement, or similar
				procedure, which involves United States ceding insurers. The commissioner shall
				receive prior notice from a certified reinsurer that proposes participation by
				the certified reinsurer in a solvent scheme of arrangement; and
(k) any other information deemed relevant by
				the commissioner.