Code of Maine Rules › 02 - DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION › 031 - BUREAU OF INSURANCE › Chapter 735 - Term and Universal Life Insurance Reserve Financing › Section 031-735-6 - Credit for Reinsurance of Covered Policies; Remediation of Shortfalls

Current through 2024-29, July 17, 2024
1.
Requirements.
Credit for
				reinsurance shall be allowed pursuant to
				24-A M.R.S.
				§§731-B(2-B) and
				(3) with respect to ceded liabilities
				pertaining to Covered Policies, other than ceded liabilities exempt from this
				rule pursuant to Section 3, if, and only if, in addition to all other
				applicable legal requirements, including compliance with Subsection 2 of this
				Section, the following requirements are met on a treaty-by-treaty basis:
A. The ceding insurer's statutory policy
				reserves with respect to the Covered Policies are established in full and in
				accordance with the applicable requirements of
				24-A M.R.S. §§
											951 through
				962 and related
				rules and actuarial guidelines, and credit claimed for any reinsurance treaty
				subject to this rule does not exceed the proportionate share of those reserves
				ceded under the contract; and
B.
				The ceding insurer determines the Required Level of Primary Security with
				respect to each reinsurance treaty subject to this rule and provides support
				satisfactory to the Superintendent for its calculation; and
C. Funds consisting of Primary Security, in
				an amount at least equal to the Required Level of Primary Security, are held by
				or on behalf of the ceding insurer, as security under the reinsurance treaty in
				compliance with
				24-A M.R.S.
				§731-B(3) and the
				applicable provisions of 02-031 CMR §§740(12) through (17), on a
				funds withheld, trust, or modified coinsurance basis; and
D. Funds consisting of Other Security, in an
				amount at least equal to any portion of the statutory reserves as to which
				Primary Security is not held pursuant to Paragraph C above, are held by or on
				behalf of the ceding insurer as security under the reinsurance treaty in
				compliance with
				24-A M.R.S.
				§731-B(3) and the
				applicable provisions of 02-031 CMR §§740(12) through (17); and
E. Any trust used to satisfy the
				requirements of this Section shall comply with all of the conditions and
				qualifications of 02-031 CMR §§740(12) and (13), except that:
(1) Funds held in trust shall be valued
				according to the applicable valuation rules set forth in Section 5(2);
				and
(2) Affiliate investment
				limitations do not apply to any security that is not needed to satisfy the
				requirements of Paragraph 6(1)(C); and
(3) The reinsurance treaty must prohibit
				withdrawals or substitutions of trust assets that would leave the fair market
				value of the Primary Security within the trust (when aggregated with Primary
				Security outside the trust that is held by or on behalf of the ceding insurer
				in the manner required by Paragraph 6(1)(C)) below 102% of the level required
				by Paragraph 6(1)(C) at the time of the withdrawal or substitution;
				and
(4) The determination of
				reserve credit under 02-031 CMR §740(12) shall be determined according to
				the applicable valuation rules set forth in Subsection 5(2);
				and
F. The reinsurance
				treaty has been approved by the Superintendent.