Nevada Administrative Code › Chapter 681A - Kinds of Insurance; Reinsurance › Section 681A.Sec. 19 - NEW

Current through June 11, 2024
1. Except as otherwise provided in this
		  subsection, for a covered policy described in subsection 1 of section 8, the
		  actuarial method is the greater of the deterministic reserve or the net premium
		  reserve as set forth in the
Valuation Manual
, regardless of
		  whether the criteria for exemption testing can be met. If the covered policy
		  does not meet the requirements of the stochastic reserve exclusion test as set
		  forth in the
Valuation Manual
, the actuarial method is the
		  greatest of the deterministic reserve, the stochastic reserve or the net
		  premium reserve, as set forth in the
Valuation Manual
. If a
		  covered policy described in this subsection is reinsured in a reinsurance
		  treaty that also contains a covered policy described in subsection 2 of section
		  8, the ceding insurer may elect to use the actuarial method described in
		  subsection 2 for the entire reinsurance agreement. Any actuarial method used
		  pursuant to this subsection must comply with the requirements and restrictions
		  that the
Valuation Manual
imposes on the aggregation of
		  different types of covered policies for purposes of principle-based reserve
		  calculations.
2. For a covered
		  policy described in subsection 2 of section 8, the actuarial method is the
		  greatest of the deterministic reserve, the stochastic reserve or the net
		  premium reserve as set forth in the
Valuation Manual
,
		  regardless of whether the criteria for exemption testing can be met.
3. Except as otherwise provided in subsection
		  4, the actuarial method must be applied on a gross basis to all risks with
		  respect to a covered policy as originally issued or assumed by the ceding
		  insurer.
4. Except as otherwise
		  provided in subsection 5, if a reinsurance treaty cedes less than 100 percent
		  of the risk pertaining to its covered policies, the required level of primary
		  security may be reduced as follows:
(a) If a
		  reinsurance treaty cedes only a quota share of some or all of the risks
		  pertaining to its covered policies, the required level of primary security, as
		  well as any applicable adjustment made pursuant to paragraph (c), may be
		  reduced to a pro rata portion in accordance with the percentage of the risk
		  ceded.
(b) If a reinsurance treaty
		  in a nonexempt arrangement cedes only the risks pertaining to a secondary
		  guarantee, the required level of primary security may be reduced by an amount
		  determined by applying the actuarial method on a gross basis to all risks,
		  except for risks related to the secondary guarantee, pertaining to its covered
		  policies, except that for covered policies for which the ceding insurer did not
		  elect to apply the provisions of the
Valuation Manual
to
		  establish statutory reserves, the required level of primary security may be
		  reduced by the statutory reserve retained by the ceding insurer on such covered
		  policies, where the retained reserve of the covered policies is reflective of
		  any reduction pursuant to the cession of mortality risk on a yearly renewable
		  term basis in an exempt arrangement.
(c) If a portion of the risk associated with
		  the covered policies in a reinsurance treaty is ceded to another reinsurer on a
		  yearly renewable term basis in an exempt arrangement, the required level of
		  primary security may be reduced by the amount determined by applying the
		  actuarial method, including, without limitation, the reinsurance section of the
Valuation Manual
, to the portion of the risks associated with
		  the covered policies ceded in the exempt arrangement, except for the covered
		  policies issued before January 1, 2017, for which the adjustment is not to
		  exceed, where c x is calculated using the same mortality table used in
		  calculating the net premium reserve.