North Dakota Administrative Code › Title 45 - Insurance, Commissioner of › Article 45-03 - Regulation of Insurance Companies › Chapter 45-03-07.1 - Credit for Reinsurance Model Regulation › Section 45-03-07.1-04 - Credit for reinsurance - Reinsurers maintaining trust funds

Current through Supplement No. 393, July, 2024
1. Pursuant to
				subsection 5 of North Dakota Century Code section 26.1-31.2-01, the
				commissioner shall allow credit for reinsurance ceded by a domestic insurer to
				an assuming insurer that, as of any date on which statutory financial statement
				credit for reinsurance is claimed, and thereafter for so long as credit for
				reinsurance is claimed, maintains a trust fund in an amount prescribed in this
				section in a qualified United States financial institution as defined in
				subsection 2 of North Dakota Century Code section 26.1-31.2-03, for the payment
				of the valid claims of its United States domiciled ceding insurers, their
				assigns and successors in interest. The assuming insurer shall report annually
				to the commissioner 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 to determine
				the sufficiency of the trust fund.
2. The following requirements apply to the
				following categories of assuming insurer:
a.
				The trust fund for a single assuming insurer must consist of funds in trust in
				an amount not less than the assuming insurer's liabilities attributable to
				reinsurance ceded by United States domiciled insurers, and in addition, the
				assuming insurer shall maintain a trusteed surplus of not less than twenty
				million dollars, except as provided in subdivision b.
b. At any time after the assuming insurer has
				permanently discontinued underwriting new business secured by the trust for at
				least three full years, the commissioner 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 United States 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 of the assuming insurer's liabilities attributable to
				reinsurance ceded by United States ceding insurers covered by the
				trust.
c.
(1) The trust fund for a group, including
				incorporated and individual unincorporated underwriters, must consist of:
(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 the United States
				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 chapter, 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; and
(c) In addition to these trusts, the group
				shall maintain a trusteed surplus of which one hundred million dollars must be
				held jointly for the benefit of the United States domiciled ceding insurers of
				any member of the group for all years of account.
(2) The incorporated members of the group may
				not be engaged in any business other than underwriting as a member of the group
				and must be subject to the same level of regulation solvency control by the
				group's domiciliary regulator as are the unincorporated members. The group
				shall, within ninety days after its financial statements are due to be filed
				with the group's domiciliary regulator, provide to the commissioner:
(a) An annual certification by the group's
				domiciliary regulator of the solvency of each underwriter member of the group;
				or
(b) If a certification is
				unavailable, a financial statement prepared by independent public accountants,
				of each underwriter member of the group.
d.
(1) The
				trust fund for a group of incorporated insurers under common administration,
				whose members possess aggregate policyholders surplus of ten billion dollars,
				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, and which has continuously
				transacted an insurance business outside the United States for at least three
				years immediately prior to making application for accreditation, must:
(a) Consist of funds in trust in an amount
				not less than the assuming insurers' several liabilities attributable to
				business ceded by United States domiciled ceding insurers to any members of the
				group pursuant to reinsurance contracts issued in the name of the
				group;
(b) Maintain a joint
				trusteed surplus of which one hundred million dollars shall be held jointly for
				the benefit of United States domiciled ceding insurers of any member of the
				group; and
(c) 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 and shall certify that any
				member examined will bear the expense of any examination.
(2) Within ninety days after the statements
				are due to be filed with the group's domiciliary regulator, the group shall
				file with the commissioner an annual certification of each underwriter member's
				solvency by the members' domiciliary regulators and financial statements,
				prepared by independent public accountants, of each underwriter member of the
				group.