Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 7 - CORPORATE AND FINANCIAL REGULATION › Subchapter F - REINSURANCE › Section 7.621 - Certified Assuming Insurers

Current through Reg. 49, No. 28; July 12, 2024
(a) Except
				  as provided under Insurance Code §493.002(a-1) for certain county mutual
				  insurance companies operating under Insurance Code §912.056, an insurer
				  may take credit for reinsurance ceded to an assuming insurer that has been
				  certified as an assuming insurer in this state pursuant to Insurance Code
				  §493.1033 and this subchapter. The assuming insurer must be certified at
				  all times for which statutory financial statement credit for reinsurance is
				  claimed by the ceding insurer.
(b)
				  The credit allowed will be based on the security held by or on behalf of the
				  ceding insurer in accordance with a rating assigned to the certified assuming
				  insurer by the Commissioner. The security must be in a form consistent with the
				  provisions of Insurance Code §493.1033(a)(2) and §493.1036(d) and
				  this subchapter.
(c) The amount of
				  security required in order for full credit to be allowed must correspond with
				  the following requirements:
(1) The minimum
				  reduced amounts of security that must be withheld for full credit are stated in
				  Figure: 28 TAC §7.621(c)(1):
Attached
					 Graphic
(2)
				  Affiliated reinsurance agreements are eligible for the same reduced security
				  requirements as non-affiliated reinsurance agreements.
(3) A certified assuming insurer may defer
				  posting security for catastrophe recoverables for a period up to one year from
				  the date of the first instance of a liability reserve entry by the ceding
				  company as a result of a loss from a catastrophic occurrence that is recognized
				  by the Commissioner. The one-year deferral period is contingent on the
				  certified assuming insurer continuing to pay claims in a timely manner.
				  Deferral of posting collateral for reinsurance recoverables related to a
				  catastrophic occurrence under this subsection are permitted for only the
				  following lines of business as reported on the NAIC annual financial statement:
(A) Line 1: Fire;
(B) Line 2: Allied lines;
(C) Line 3: Farmowners multiple
				  peril;
(D) Line 4: Homeowners
				  multiple peril;
(E) Line 5:
				  Commercial multiple peril;
(F) Line
				  9: Inland marine;
(G) Line 12:
				  Earthquake; and
(H) Line 21: Auto
				  physical damage.
(4) A
				  ceding insurer may take credit for reinsurance under this section only with
				  respect to a reinsurance agreement entered into or renewed on or after the
				  effective date that the assuming insurer is certified under this subchapter.
				  Any reinsurance agreement entered into prior to the effective date of the
				  assuming insurer's certification that is subsequently amended after the
				  effective date of the certification of the assuming insurer, or a new
				  reinsurance agreement, covering any risk for which collateral was provided
				  previously, will only be subject to this section with respect to losses
				  incurred and reserves reported from and after the effective date of the
				  amendment or new agreement.
(5)
				  Nothing in this section prohibits the parties to a reinsurance agreement from
				  agreeing to provisions establishing security requirements that exceed the
				  minimum security requirements established for certified assuming insurers under
				  this section.