Administrative Rules of Montana › Department 6 - STATE AUDITOR › Chapter 6.6 - INSURANCE DEPARTMENT › Subchapter 6.6.38 - Credit for Reinsurance › Rule 6.6.3849 - CERTIFIED REINSURERS - SECURITY RATING FOR CREDIT

Current through Register Vol. 13, July 5, 2024
(1) The credit
				allowed to a certified assuming insurer pursuant to
				33-2-1216, MCA, 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
				33-2-1216, MCA, and this rule. The
				minimum amount of security required in order for full credit to be allowed
				shall correspond with the following requirements:
(a) Ratings Security Required
Secure - 1
0%
Secure - 2
10%
Secure - 3
20%
Secure - 4
50%
Secure - 5
75%
Vulnerable - 6
100%
(b)
				the commissioner may make appropriate adjustments in the security the certified
				reinsurer is required to post to protect its liabilities to United States
				ceding insurers, provided that the commissioner shall, at a minimum, increase
				the security the certified reinsurer is required to post by one rating level if
				the commissioner finds that:
(i) more than
				15% of the certified reinsurer's ceding insurance clients have overdue
				reinsurance recoverables on paid losses of 90 days or more which are not in
				dispute and which exceed $100,000 for each cedent; or
(ii) the aggregate amount of reinsurance
				recoverables on paid losses which are not in dispute that are overdue by 90
				days or more exceeds $50,000,000.
(c) the commissioner has the authority to
				revise and change the security rating of a certified reinsurer at any time
				pursuant to this rule. If the rating is upgraded by the commissioner, the
				certified reinsurer may meet the security requirements applicable to its new
				rating on a prospective basis, but the commissioner shall require the certified
				reinsurer to post security under the previously applicable security
				requirements as to all contracts in force on or before the effective date of
				the upgraded rating. If the rating of a certified reinsurer is downgraded by
				the commissioner, the commissioner shall require the certified reinsurer to
				meet the security requirements applicable to its new rating for all business it
				has assumed as a certified reinsurer;
(d) the certified reinsurer shall post 100%
				of the security for the benefit of the ceding insurer or its estate upon the
				entry of an order of rehabilitation, liquidation, or conservation against the
				ceding insurer; and
(e) to
				facilitate the prompt payment of claims, a certified reinsurer shall not be
				required to post security for catastrophe recoverables recognized by the
				commissioner 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. The deferral period applies only to the following
				lines of business, as reported on the NAIC annual financial statement related
				specifically to the catastrophic occurrence:
(i) Line 1: Fire;
(ii) Line 2: Allied Lines;
(iii) Line 3: Farmowners multiple peril;
(iv) Line 4: Homeowners multiple
				peril;
(v) Line 5: Commercial
				multiple peril;
(vi) Line 9: Inland
				Marine;
(vii) Line 12: Earthquake;
				and
(viii) Line 21: Auto physical
				damage.