Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 7 - CORPORATE AND FINANCIAL REGULATION › Subchapter F - REINSURANCE › Section 7.616 - Term and Universal Life Insurance Reserve Financing

Current through Reg. 49, No. 28; July 12, 2024
(a) Definitions. The following words and
				  terms have the following meanings when used in this section unless the context
				  clearly indicates otherwise.
(1) Actuarial
				  method--the methodology used to determine the required level of primary
				  security under subsection (d) of this section.
(2) Covered policy--subject to the exemptions
				  described in subsection (c) of this section, a covered policy, other than a
				  grandfathered policy, that is one of the following policy types:
(A) a life insurance policy with guaranteed
				  nonlevel gross premiums or guaranteed nonlevel benefits, or both, but not a
				  flexible premium universal life insurance policy except as provided by
				  subparagraph (B) of this paragraph; or
(B) a flexible premium universal life
				  insurance policy with provisions allowing a policyholder to keep the policy in
				  force over a secondary guarantee period.
(3) Grandfathered policy--a policy described
				  by paragraph (2)(A) and (B) of this subsection that is:
(A) issued before January 1, 2015;
				  and
(B) ceded, as of December 31,
				  2014, as part of a reinsurance agreement that would not have been exempt under
				  subsection (c) of this section had that subsection been in effect for the
				  reinsurance agreement.
(4) Non-covered policy--a policy that does
				  not meet the definition of covered policy, including grandfathered
				  policy.
(5) Other security--any
				  security, other than primary security, acceptable to the
				  Commissioner.
(6) Primary
				  security--
(A) cash as described by Insurance
				  Code §
												493.104;
(B) securities listed by the Securities
				  Valuation Office as described by Insurance Code §
												493.104,
				  excluding:
(i) any synthetic letters of
				  credit, contingent notes, credit-linked notes, or other similar securities that
				  operate in a manner similar to a letter of credit; and
(ii) any securities issued by the ceding
				  insurer or any of its affiliates; and
(C) for security held in connection with
				  funds-withheld and modified coinsurance reinsurance agreements:
(i) commercial loans in good standing with a
				  risk-based capital risk category of CM3 or higher category;
(ii) policy loans; and
(iii) derivatives acquired in the normal
				  course and used to support and hedge liabilities related to the actual risks in
				  the policies ceded under the reinsurance agreement.
(7) Required level of primary
				  security--the dollar amount determined by applying the actuarial method to the
				  risks ceded with respect to covered policies, but not more than the total
				  reserve ceded.
(8) Valuation
				  manual--the valuation manual defined by Insurance Code §
											425.052 and described
				  by §
											3.9901 of this
				  title (relating to Valuation Manual) in effect for the financial statement date
				  on which credit for reinsurance is claimed.
(9) VM-20--"Requirements for Principle-Based
				  Reserves for Life Products," including all relevant definitions, from the
				  valuation manual.