Code of Maine Rules › 02 - DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION › 031 - BUREAU OF INSURANCE › Chapter 740 - CREDIT FOR REINSURANCE › Section 031-740-11 - Reinsurers maintaining multi-beneficiary trust funds

Current through 2024-29, July 17, 2024
A. Pursuant to Title
				 24-A M.R.S.A.
				§731-B(1)(C), the
				Superintendent shall allow credit for reinsurance ceded by a domestic insurer
				to an assuming insurer that has, at all times for which statutory financial
				statement credit for reinsurance is claimed under this section, maintained a
				trust fund in compliance with this section and other applicable provisions of
				this rule in a qualified United States financial institution (as defined in
				Title
				24-A M.R.S.A.
				§731-B(4-A) ), for the
				payment of the valid claims of its United States ceding insurers, their assigns
				and successors in interest. The assuming insurer shall report annually to the
				Superintendent substantially the same information as that required to be
				reported on the NAIC annual statement form by licensed insurers, to enable the
				Superintendent to determine the sufficiency of the trust fund. In addition to
				other requirements, multi-beneficiary trust funds shall be maintained as
				follows:
(1) The trust for a single assuming
				insurer must consist of a trusteed account in an amount not less than the
				assuming insurer's obligations attributable to reinsurance ceded by United
				States insurers, excluding obligations that are otherwise secured by acceptable
				means, and, in addition, a surplus of at least $20,000,000, except as otherwise
				provided in this paragraph. At any time after the assuming insurer has
				permanently discontinued underwriting new business secured by the trust for at
				least three full years, the insurance regulator with principal oversight of the
				trust may authorize a reduction in the required trusteed surplus, but only
				after a finding, based on an assessment of the risk, that the new required
				surplus level is adequate for the protection of United States ceding insurers,
				policyholders, and claimants in light of reasonably foreseeable adverse loss
				development. The risk assessment may involve an actuarial review, including an
				independent analysis of reserves and cash flows, and shall consider all
				material risk factors, including when applicable the lines of business
				involved, the stability of the incurred loss estimates, and the effect of the
				surplus requirements on the assuming insurer's liquidity or solvency. The
				minimum required trusteed surplus may not be reduced to an amount less than 30%
				of the assuming insurer's obligations attributable to reinsurance ceded by
				United States ceding insurers covered by the trust.
(2) The trust fund for a group including
				incorporated and individual unincorporated underwriters shall be subject to the
				following requirements:
(a) The trust may
				consist in part of accounts restricted to the liabilities of particular
				underwriters, syndicates, or years of account, but no surplus in any such
				account may be offset against a deficit in another account in determining the
				overall sufficiency of the trust. The funds held in trust must collectively
				include the following:
(i) Funds in trust in
				an amount not less than the respective underwriters' several obligations,
				excluding obligations that are otherwise secured by acceptable means,
				attributable to business ceded by United States-domiciled ceding insurers to
				any member of the group under reinsurance agreements with an inception,
				amendment, or renewal date on or after January 1, 1993;
(ii) Funds in trust in an amount not less
				than the respective underwriters' several insurance and reinsurance
				obligations, excluding obligations that are otherwise secured by acceptable
				means, attributable to business written in the United States under reinsurance
				agreements with an inception date on or before December 31, 1992, and not
				amended or renewed after that date, and under any insurance contracts secured
				by the same trust accounts; and
(iii) In addition, a trusteed surplus of at
				least $100,000,000 which must be held jointly for the benefit of United States
				ceding insurers of any member of the group for any year of account.
(b) The incorporated members of
				the group shall not be engaged in any business other than underwriting as a
				member of the group and must be subject to the same level of regulation and
				solvency control by the group's domiciliary regulator as are the unincorporated
				members. The group shall, within 90 days after its financial statements are due
				to be filed with the group's domiciliary regulator, make available to the
				Superintendent:
(i) An annual certification by
				the group's domiciliary regulator of the solvency of each underwriter member of
				the group; or
(ii) If a
				certification is unavailable, a financial statement, prepared by independent
				public accountants, of each underwriter member of the group.