Oregon Administrative Rules › Chapter 836 - DEPARTMENT OF CONSUMER AND BUSINESS SERVICES, INSURANCE REGULATION › Division 12 - CREDIT FOR REINSURANCE › Section 836-012-0041 - Credit for Reinsurance - Reinsurers Maintaining Trust Funds

Current through Register Vol. 63, No. 7, July 1, 2024
(1) Pursuant to ORS
			 731.509(7), the
			 director shall allow credit for reinsurance ceded by a domestic insurer to an
			 assuming insurer which, 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
			 rule in a qualified U.S. financial institution as defined in ORS
			 731.510(1), for
			 the payment of the valid claims of its U.S. domiciled ceding insurers and their
			 assigns and successors in interest. The assuming insurer shall report annually
			 to the director substantially the same information as that required to be
			 reported on the National Association of Insurance Commissioners annual
			 statement form by authorized insurers, to enable the director 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 shall consist of funds in trust in an amount not less than the
			 assuming insurer's liabilities attributable to reinsurance ceded by U.S.
			 domiciled insurers, and in addition, the assuming insurer shall maintain a
			 trusteed surplus of not less than $20,000,000, except as provided in paragraph
			 (b) of this subsection.
(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 U.S. 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 30 percent of the assuming insurer's liabilities attributable to
			 reinsurance ceded by U.S. ceding insurers covered by the trust.
(c)
(A) The
			 trust fund for a group including incorporated and individual unincorporated
			 underwriters shall consist of:
(i) 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 U.S. domiciled ceding insurers to any underwriter of the
			 group;
(ii) 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 regulation, 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
(iii) In addition to these trusts, the group
			 shall maintain a trusteed surplus of which $100,000,000 shall be held jointly
			 for the benefit of the U.S. domiciled ceding insurers of any member of the
			 group for all the years of account.
(B) The incorporated members of the group
			 shall not be engaged in any business other than underwriting as a member of the
			 group and shall be subject to the same level of regulation and solvency control
			 by the group's domiciliary regulator as are the unincorporated members. The
			 group shall, within 90 days after its financial statements are due to be filed
			 with the group's domiciliary regulator, provide to the director:
(i) An annual certification by the group's
			 domiciliary regulator of the solvency of each underwriter member of the group;
			 or
(ii) If a certification is
			 unavailable, a financial statement prepared by independent public accountants,
			 of each underwriter member of the group.
(d)
(A) The
			 trust fund for a group of incorporated insurers under common administration,
			 whose members possess aggregate policyholders surplus of $10,000,000,000,
			 calculated and reported in substantially the same manner as prescribed by the
			 annual statement instructions and the 2019 version of the
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, shall:
(i) Consist of funds in trust in an amount
			 not less than the assuming insurers' several liabilities attributable to
			 business ceded by U.S. domiciled ceding insurers to any members of the group
			 pursuant to reinsurance contracts issued in the name of such group;
(ii) Maintain a joint trusteed surplus of
			 which $100,000,000 shall be held jointly for the benefit of U.S. ceding
			 insurers of any member of the group; and
(iii) File a properly executed Form AR-1
			 (Exhibit 1, OAR 836-012-0000) 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 such
			 examination.
(B) Within
			 90 days after the statements are due to be filed with the group's domiciliary
			 regulator, the group shall file with the director an annual certification of
			 each underwriter member's solvency by the member's domiciliary regulators, and
			 financial statements, prepared by independent public accountants, of each
			 underwriter member of the group.