New Jersey Administrative Code › Title 11 - INSURANCE › Chapter 2 - INSURANCE GROUP › Subchapter 28 - CREDIT FOR REINSURANCE › Section 11:2-28.6 - Reinsurer maintaining trust funds

Current through Register Vol. 56, No. 14, July 15, 2024
(a) An insurer shall be permitted to take a credit for reinsurance ceded to an assuming insurer where as of the date of the ceding insurer's statutory financial statement the assuming insurer meets the standards set forth in (a)1 and 2 below, in accordance with the procedures set forth in (a)3 through 8 below:
1. The assuming insurer maintains a trust fund in an amount prescribed in (b) below in a qualified United States financial institution for the payment of the valid claims of its United States policyholders and ceding insurers, their assigns and successors in interest.
2. The assuming insurer files with the Commissioner a letter requesting authorization to provide reinsurance. The letter shall specify: that the reinsurer seeks authorization based on the fact that it maintains trust funds for the benefit of its ceding insurers and United States policyholders; the location of the trust funds; and a list of documents and information submitted therewith and upon which the assuming insurer shall rely in connection with its request for authorization. The reinsurer shall submit to the Commissioner the following:
i. A nonrefundable filing fee made payable to Treasurer, State of New Jersey of $ 1,000 for an initial filing and $ 1,000 for a renewal filing;
ii. A properly executed form AR-1;
iii. A description of which categories of insurance are effected by the cessions;
iv. A certification executed by an authorized officer of the reinsurer which certifies that the reinsurer's condition and method of operations are financially sound and will not render its operations hazardous to the public or its policyholders as determined in accordance with the factors set forth at 11:2-27.3. The officer shall certify:
(1) For a life and health assuming insurer, that:
(A) Its policy reserves are adequate;
(B) It satisfies all minimum capital and surplus requirements in all states in which it is licensed to transact business; and
(C) Its capital and surplus levels are adequate relative to its distribution by type and level of risk of its invested assets and the business being written, together with any and all documents in support thereof;
(2) For a property and casualty assuming insurer, that net premium written to surplus as to policyholders does not exceed a 3:1 premium to surplus ratio and loss and loss adjustment expense reserve liability to surplus does not exceed a 4:1 ratio as of the date of the certified balance sheet from its most recent annual statement; and
(3) To the accuracy of the information required by (b) below;
v. A certified balance sheet from the reinsurer's most recent annual statement; and
vi. A list of the assets of the trust certified by the trustee.
3. The information in (a)1 and 2 above shall be filed with the Commissioner at:
Office of Solvency Regulation
Attention: Reinsurance Trust Fund
New Jersey Department of Banking and Insurance
20 West State Street
PO Box 325
Trenton, New Jersey 08625-0325
4. A reinsurer shall reapply for authorization annually at the address set forth in (a)3 above no later than June 1 of each year.
5. Within 30 days from receipt of the information in (a)1 and 2 above the Commissioner shall notify the filer of any deficiencies in its submission and the filer shall have 30 days to cure such deficiencies.
6. Within 90 days from the date of receipt of the completed filing, the filing shall either be deemed approved or the Commissioner shall transmit a letter to the filer which identifies the reasons upon which he or she has relied to determine that the filer has not met the requirements of this section and that insurers shall be prohibited from reporting credits for reinsurance for insurance ceded to the filer.
7. A reinsurer authorized pursuant to this section shall notify the Commissioner within 30 days of the occurrence of any of the following actions taken against it by any state or jurisdiction:
i. Any limitation on its new or renewal business;
ii. Any delinquency proceedings;
iii. Its certificate of authority is suspended, revoked or nonrenewed in any state or jurisdiction;
iv. An order has been entered or any action has been taken by any state or jurisdiction which requires it to cease writing new or renewal business; or
v. Any action, by any state or jurisdiction, requiring that the reinsurer file a plan or any document to increase its capital, for example, a risk based capital plan.
8. An assuming insurer shall report annually to the Commissioner substantially the same information as that required to be reported on the NAIC annual statement form by licensed insurers to be evaluated by the Commissioner, including, but not limited to: a recent actuarial opinion which certifies to the adequacy of the loss and loss adjustment expense reserve liabilities, and, where applicable, life and health reserve liabilities, in order to determine the sufficiency of the trust fund; and any additional information the Commissioner deems necessary to ensure that the assuming insurer's condition and method of operation are not such as would render its operations hazardous to the public or policyholders in this State.