Indiana Administrative Code › Title 760 - DEPARTMENT OF INSURANCE › Article 1 - GENERAL PROVISIONS › Rule 56 - Credit for Reinsurance › Section 56-7 - Reinsurers maintaining trust funds

Current through July 10, 2024
Authority: IC
				  27-1-3-7;
				  IC 27-6-10.1-5
Affected: IC 27-6-10.1
Sec. 7.
(a) Under IC
				27-6-10.1-2, the commissioner of the department of insurance shall allow credit
				for reinsurance ceded by a domestic insurer to an assuming insurer that, as of
				the date of the ceding insurer's statutory financial statement, maintains a
				trust fund in an amount prescribed in this section in a qualified United States
				financial institution, as defined in IC 27-6-10.1-4, for the payment of the
				valid claims of its United States policyholders and ceding insurers, their
				assigns, and successors in interest. The assuming insurer shall report annually
				to the commissioner of the department of insurance substantially the same
				information as that required to be reported on the National Association of
				Insurance Commissioners' annual statement form by licensed insurers to enable
				the commissioner of the department of insurance 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 business written in the United States
				and, in addition, a trusteed surplus of not less than twenty million dollars
				($20,000,000), except as provided in subdivision (2).
(2) At any time after the assuming insurer
				has permanently discontinued underwriting new business secured by the trust for
				at least three (3) full years, the commissioner of the department of insurance
				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 U.S. 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 thirty percent (30%) of the assuming insurer's liabilities
				attributable to reinsurance ceded by U.S. ceding insurers covered by the
				trust.
(3) The trust fund for a
				group, including incorporated and individual unincorporated underwriters, shall
				consist of the following:
(A) 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
				U.S. domiciled ceding insurers to any underwriter of the group.
(B) 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 rule, 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.
In addition, the group shall maintain a trusteed surplus of
				  which one hundred million dollars ($100,000,000) shall be held jointly for the
				  benefit of the United States ceding insurers of any member of the group for all
				  the years of account. 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 solvency regulation and control by the
				  group's domiciliary regulator as are the unincorporated members. The group
				  shall, within ninety (90) days after its financial statements are due to be
				  filed with the group's domiciliary regulator, provide to the commissioner an
				  annual certification by the group's domiciliary regulator of the solvency of
				  each underwriter member of the group or if a certification is unavailable, a
				  financial statement, prepared by independent public accountants, of each
				  underwriter member of the group.
(4) The trust fund for a group of
				incorporated insurers under common administration, whose members possess
				aggregate policyholders surplus of ten billion dollars ($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 National Association of Insurance Commissioners (NAIC)) and that has
				continuously transacted an insurance business outside the United States for at
				least three (3) years immediately prior to making application for
				accreditation, shall consist of funds in trust in an amount not less than the
				assuming insurer's liabilities attributable to business ceded by United States
				ceding insurers to any members of the group pursuant to reinsurance contracts
				issued in the name of such group and, in addition, the group shall maintain a
				joint trusteed surplus of which one hundred million dollars ($100,000,000)
				shall be held jointly for the benefit of United States ceding insurers of any
				member of the group. The group shall do the following:
(A) File a properly executed Form AR-1 as
				evidence of the submission to this state's authority to examine the books and
				records of any of its members.
(B)
				Certify that any member examined will bear the expense of any such
				examination.
(C) Make available to
				the commissioner of the department of insurance annual certifications by the
				members' domiciliary regulators and their independent public accountants of the
				solvency of each member of the group within ninety (90) days after its
				financial statements are due to be filed with the group's domiciliary
				regulator.