Louisiana Administrative Code › Title 37 - INSURANCE › Part XIII - Regulations › Chapter 35 - Regulation 56-Credit for Reinsurance › Section XIII-3509 - Credit for Reinsurance-Reinsurers Maintaining Trust Funds

Current through Register Vol. 50, No. 6, June 20, 2024
A. Pursuant to
				R.S.
				22:651(D), the commissioner
				shall allow credit for reinsurance ceded by a domestic insurer to an assuming
				insurer which, as of any date on which statutory financial statement credit for
				reinsurance is claimed, and thereafter for so long as credit for reinsurance is
				claimed, maintains a trust fund in an amount prescribed below in a qualified
				United States financial institution as defined in
				R.S.
				22:653(B), for the payment
				of the valid claims of its United States domiciled ceding insurers, their
				assigns and successors in interest. The assuming insurer shall report annually
				to the commissioner substantially the same information as that required to be
				reported on the National Association of Insurance Commissioners (NAIC) annual
				statement form by authorized insurers, to enable the commissioner to determine
				the sufficiency of the trust fund.
B. The following requirements apply to the
				following categories of assuming insurer.
1.
				The trust fund for a single assuming insurer shall consist of funds in trust in
				an amount not less than the assuming insurer's liabilities attributable to
				reinsurance ceded by United States domiciled insurers, and in addition, the
				assuming insurer shall maintain a trusteed surplus of not less than
				$20,000,000, except as provided in §3509. B.2
2. At any time after the assuming insurer has
				permanently discontinued underwriting new business secured by the trust for at
				least three full years, the commissioner with principal regulatory 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
				percent of the assuming insurer's liabilities attributable to reinsurance ceded
				by United States ceding insurers covered by the trust.
3. In the case of a group including
				incorporated and individual unincorporated underwriters:
a. the trust fund shall consist of:
i. for reinsurance ceded under reinsurance
				agreements with an inception, amendment or renewal date on or after January 1,
				1993, funds in trust in an amount not less than the respective underwriters'
				several liabilities attributable to business ceded by United States domiciled
				ceding insurers to any underwriter of the group;
ii. for reinsurance ceded under reinsurance
				agreements with an inception date on or before December 31, 1992, and not
				amended or renewed after that date, notwithstanding the other provisions of
				this regulation, funds in trust in an amount not less than the respective
				underwriters' several insurance and reinsurance liabilities attributable to
				business written in the United States; and
iii. in addition to these trusts, the group
				shall maintain a trusteed surplus of which $100,000,000 shall be held jointly
				for the benefit of the United States domiciled ceding insurers of any member of
				the group for all the years 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 shall 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, provide to the commissioner:
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.
4. In the case of a group of incorporated
				insurers under common administration, whose members possess aggregate
				policyholders surplus of $10,000,000,000 (calculated and reported in
				substantially the same manner as prescribed by the annual statement
				instructions and
Accounting Practices and Procedures Manual
of
				the NAIC) and which has continuously transacted an insurance business outside
				the United States for at least three years immediately prior to making
				application for accreditation.
a. The trust
				fund shall:
i. consist of funds in trust in
				an amount not less than the assuming insurers' several liabilities attributable
				to business ceded by United States domiciled ceding insurers to any members of
				the group pursuant to reinsurance contracts issued in the name of such
				group;
ii. maintain a joint
				trusteed surplus of which $100,000,000 shall be held jointly for the benefit of
				United States domiciled ceding insurers of any member of the group;
				and
iii. file a properly executed
				Form AR-1 (§3527.B) as evidence of the submission to the authority of the
				commissioner to examine the books and records of any of its members and shall
				certify that any member examined will bear the expense of any such
				examination.
b. Within
				90 days after the statements are due to be filed with the group's domiciliary
				regulator, the group shall file with the commissioner an annual certification
				of each underwriter member's solvency by the member's domiciliary regulators,
				and financial statements, prepared by independent public accountants, of each
				underwriter member of the group.