Code of Maine Rules › 02 - DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION › 031 - BUREAU OF INSURANCE › Chapter 740 - CREDIT FOR REINSURANCE › Section 031-740-6 - Certified reinsurers

Current through 2024-29, July 17, 2024
A.
In
				General.
Pursuant to Title 24A M.R.S.A. §731 B(1)(B-2), the
				Superintendent shall allow credit for reinsurance ceded by a domestic insurer
				to an assuming insurer that has been certified as a reinsurer in this State at
				all times for which statutory financial statement credit for reinsurance is
				claimed under this section.
B.
Security.
The credit allowed 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 Superintendent. The security shall be in a
				form consistent with the requirements of Title
				24-A M.R.S.A. §§
										731-B(1) (B-2) and 731-B(3)
				and either Paragraph (2) of this subsection or Section
				12,
				16, or
				17 of this rule.
(1) The amount of security must equal or
				exceed the following percentage of the reinsured obligations for which credit
				is claimed:
Rating
Security Required
Secure - 1
0%
Secure - 2
10 %
Secure - 3
20%
Secure - 4
50%
Secure - 5
75%
Vulnerable - 6
100%
(2)
				The security may be provided through a multi-beneficiary trust meeting the
				requirements of Section
				11, with the following modifications:
(a) The qualifying assets held in the trust
				must equal or exceed the percentage specified in Paragraph (1) of the aggregate
				obligations secured by the trust, plus a surplus of at least
				$10,000,000.
(b) If the certified
				reinsurer also maintains a multi-beneficiary trust for obligations required to
				be fully secured under Section
				11 or comparable requirements of
				other states, the certified reinsurer shall maintain separate trust accounts
				for its obligations secured under this section or comparable requirements of
				other United States jurisdictions and for its obligations that are required to
				be fully secured. The trust accounts may not be approved as qualifying security
				unless the reinsurer has bound itself, by the language of the trust and by
				agreement with the insurance regulator with principal oversight of each such
				trust account, to apply, upon termination of any such trust account, the
				remaining surplus of that trust to the extent necessary to fund any deficiency
				of any other such trust account.
(3) Affiliated reinsurance transactions shall
				receive the same opportunity for reduced security requirements as all other
				reinsurance transactions.
(4) The
				Superintendent shall require the certified reinsurer to post 100% 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.
(5)I n order to facilitate
				the prompt payment of claims, the Superintendent may permit a certified
				reinsurer to defer posting security for catastrophe recoverables for a period
				of up to 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 Superintendent. The one-year deferral period is
				contingent upon the certified reinsurer continuing to pay claims in a timely
				manner, and applies only to reinsurance recoverables for the following lines of
				business as reported on the NAIC annual financial statement and related
				specifically to the catastrophic occurrence:
(a) Line 1: Fire
(b) Line 2: Allied Lines
(c) Line 3: Farmowners multiple
				peril
(d) Line 4: Homeowners
				multiple peril
(e) Line 5:
				Commercial multiple peril
(f) Line
				9: Inland Marine
(g) Line 12:
				Earthquake
(h) Line 21: Auto
				physical damage
(6)
				Credit for reinsurance under this section shall apply only to reinsurance
				contracts entered into or renewed on or after the effective date of the
				certification of the assuming insurer. Any reinsurance contract entered into
				before the effective date of the certification of the assuming insurer that is
				subsequently amended by the parties after that date to permit reduced
				collateral, or a new reinsurance contract covering any risk for which
				collateral was provided previously, shall only be subject to this section with
				respect to losses incurred and reserves reported on or after the effective date
				of the amendment or new contract.
(7) Nothing in this subsection shall prohibit
				the parties to a reinsurance agreement from agreeing to provisions establishing
				security requirements that exceed the minimum security requirements established
				for certified reinsurers under this subsection.