Code of Massachusetts Regulations › 211 CMR - DIVISION OF INSURANCE › Title 211 CMR 130.00 - Credit For Reinsurance › Section 130.07 - Credit for Reinsurance - Certified Reinsurers

Current through Register 1525, July 5, 2024
(1) Pursuant to M.G.L. c. 175, §
			 20A(1)(E), the commissioner shall allow credit for reinsurance ceded by a
			 domestic insurer to an assuming insurer that has been certified as a reinsurer
			 in the Commonwealth at all times for which statutory financial statement credit
			 for reinsurance is claimed under 211 CMR 130.07(1). 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. The security shall be in a form consistent with the provisions of
			 M.G.L. c. 175, § 20A(1)(E) or (2) and
			 211 CMR
			 130.13,
			 130.14 or
			 130.15. The
			 amount of security required in order for full credit to be allowed shall
			 correspond with the following requirements:
(a)
Ratings
Security Required
Secure - 1
0%
Secure - 2
10%
Secure - 3
20%
Secure - 4
50%
Secure - 5
75%
Vulnerable - 6
100%
(b) Affiliated
			 reinsurance transactions shall receive the same opportunity for reduced
			 security requirements as all other reinsurance transactions.
(c) The commissioner shall require the
			 certified reinsurer to post 100%, for the benefit of the ceding insurer or its
			 estate, security upon the entry of an order of rehabilitation, liquidation or
			 conservation against the ceding insurer.
(d) In order to facilitate the prompt payment
			 of claims, a certified reinsurer shall not be required to post security for
			 catastrophe recoverables for a period of 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 commissioner. The one
			 year deferral period is contingent upon the certified reinsurer continuing to
			 pay claims in a timely manner. 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:
1. Line 1: Fire;
2. Line 2: Allied Lines;
3. Line 3: Farmowners multiple
			 peril;
4. Line 4: Homeowners
			 multiple peril;
5. Line 5:
			 Commercial multiple peril;
6. Line
			 9: Inland Marine;
7. Line 12:
			 Earthquake; and
8. Line 21: Auto
			 physical damage.
(e)
			 Credit for reinsurance under 211 CMR 130.07 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 211 CMR 130.07
			 with respect to losses incurred and reserves reported from and after the
			 effective date of the amendment or new contract.
(f) Nothing in 211 CMR 130.07(1) 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 211 CMR
			 130.07(1).