Code of Maryland Regulations › Title 31 - MARYLAND INSURANCE ADMINISTRATION › Subtitle 05 - ASSETS, LIABILITIES, RESERVES, AND INVESTMENTS OF INSURERS › Chapter 31.05.08 - Credit for Reinsurance › Section 31.05.08.24 - Credit for Reinsurance - Certified Reinsurers

Current through Register Vol. 51, No. 14, July 12, 2024
A. The Commissioner 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 regulation.
B. 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 Commissioner.
C. The security shall be in a form consistent with Insurance Article, §§
									5-911 and  5-914, Annotated Code of Maryland, and this chapter.
D. The amount of security required in order for full credit to be allowed shall correspond with the following requirements:
(1) Certification Ratings.
Certification Ratings
Security Required
Secure -1
0%
Secure - 2
10%
Secure - 3
20%
Secure - 4
50%
Secure - 5
75%
Vulnerable - 6
100%
(2) Affiliated reinsurance transactions shall receive the same opportunity for reduced security requirements as all other reinsurance transactions.
(3) The Commissioner shall require the certified reinsurer to post 100 percent 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.
(4) Catastrophic Occurrence.
(a) A certified reinsurer may defer posting security for catastrophe recoverables for a period of up to 1 year from the date of the first instance of a liability reserve entry by the ceding company as a result of a catastrophic occurrence that is likely to result in significant insured losses as recognized by the Commissioner.
(b) The deferral period is contingent upon the certified reinsurer continuing to pay claims in a timely manner as determined by the Commissioner.
(c) Reinsurance recoverables for only the following lines of business as reported on the NAIC annual financial statement related specifically to the catastrophic occurrence will be included in the deferral:
Line 1
Fire
Line 2
Allied Lines
Line 3
Farmowners multiple peril
Line 4
Homeowners multiple peril
Line 5
Commercial multiple peril
Line 9
Inland Marine
Line 12
Earthquake
Line 21
Auto physical damage
(5) Credit for reinsurance under this regulation 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 prior to the effective date of the certification of the assuming insurer that is subsequently amended after the effective date of the certification of the assuming insurer or a new reinsurance contract, covering any risk for which collateral was provided previously, shall only be subject to this regulation with respect to losses incurred and reserves reported on or after the effective date of the amendment or new contract.
(6) Nothing in this section shall prohibit the parties to a reinsurance contract from agreeing to provisions establishing security requirements that exceed the minimum security requirements established for certified reinsurers under this section.