New Mexico Administrative Code › Title 13 - INSURANCE › Chapter 9 - LIFE INSURANCE AND ANNUITIES › Part 21 - TERM AND UNIVERSAL LIFE INSURANCE RESERVE FINANCING › Section 13.9.21.11 - REQUIREMENTS APPLICABLE TO COVERED POLICIES TO OBTAIN CREDIT FOR REINSURANCE; OPPORTUNITY FOR REMEDIATION

Current through Register Vol. 35, No. 13, July 16, 2024
A.
Requirements:
Subject to the exemptions described in
				13.9.21.13 NMAC and the provisions
				of Subsection B of
				13.9.21.11 NMAC, credit for
				reinsurance shall be allowed with respect to ceded liabilities pertaining to
				covered policies pursuant to Sections
				59A-12E-3 through -15 NMSA 1978
				or Section
				59A-12E-16 NMSA 1978 if, and only
				if, in addition to all other requirements imposed by law or regulation, the
				following requirements are met on a treaty-by-treaty basis:
(1) The ceding insurer's statutory policy
				reserves with respect to the covered policies must be established in full and
				in accordance with the applicable requirements of Sections
				59A-8A-1 through -12 NMSA and
				related regulations and actuarial guidelines, and credit claimed for any
				reinsurance treaty subject to this regulation must not exceed the proportionate
				share of those reserves ceded under the contract.
(2) The ceding insurer must determine the
				required level of primary security with respect to each reinsurance treaty
				subject to this regulation and provide support for its calculation as
				determined to be acceptable to the superintendent.
(3) Funds consisting of primary security, in
				an amount at least equal to the required level of primary security, must be
				held by or on behalf of the ceding insurer, as security under the reinsurance
				treaty within the meaning of Section
				59A-12E-16 NMSA 1978, on a funds
				withheld, trust, or modified coinsurance basis; and
(4) 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 (3) above, must be held by
				or on behalf of the ceding insurer as security under the reinsurance treaty
				within the meaning of Section
				59A-12E-16 NMSA..
(5) Any trust used to satisfy the
				requirements of this section shall comply with all of the conditions and
				qualifications of
				13.2.8.19 NMAC through
				13.2.8.23 NMAC, except that:
(a) funds consisting of primary security or
				other security held in trust, shall for the purposes identified in
				13.9.21.10 NMAC, be valued
				according to the valuation rules set forth in that Section, as applicable;
				and
(b) there are no affiliate
				investment limitations with respect to any security held in such trust if such
				security is not needed to satisfy the requirements of Paragraph (3) of
				Subsection A of
				13.9.21.11 NMAC; and
(c) 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 (3) of Subsection A of
				13.9.21.11 NMAC below one hundred
				two percent of the level required by Paragraph (3) of Subsection A of
				13.9.21.11 NMAC at the time of the
				withdrawal or substitution; and
(d)
				The determination of reserve credit under
				13.2.8.22 NMAC shall be determined
				according to the valuation rules set forth in
				13.9.21.10 NMAC, as
				applicable.
(6) The
				reinsurance treaty must be approved by the superintendent.