Rhode Island Code of Regulations › Title 230 - Department of Business Regulation › Chapter 20 - Insurance › Subchapter 45 - Financial Standards and Corporate Operations › Part 3 - Credit for Reinsurance › Section 230-RICR-20-45-3.7 - Credit for Reinsurance - Reinsurers Maintaining Trust Funds

Current through June 14, 2024
A. Pursuant to R.I. Gen. Laws §
										27-1.1-1(e), the
				  Superintendent 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 below in a qualified United States financial institution as defined
				  in R.I. Gen. Laws §
										27-1.1-3(b), for
				  the payment of the valid claims of its United States domiciled ceding insurers,
				  their assigns and successors in interest. The assuming insurer shall report
				  annually to the Superintendent substantially the same information as that
				  required to be reported on the NAIC annual statement form by licensed insurers,
				  to enable the Superintendent to determine the sufficiency of the trust
				  fund.
B. The following requirements
				  apply to the following categories of assuming insurer:
1. 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 twenty million dollars ($20,000,000.00), except as
				  provided in §
											3.7(B)(2)   of this Part.
2. At any time after the assuming insurer has
				  permanently discontinued underwriting new business secured by the trust for at
				  least three full years, the Superintendent 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
				  thirty percent (30%) of the assuming insurer's liabilities attributable to
				  reinsurance ceded by U.S. ceding insurers covered by the trust.
3. The trust fund for a group including
				  incorporated and individual unincorporated underwriters shall consist of:
a. 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;
b. 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,
c. In addition to these trusts, the group
				  shall maintain a trusteed surplus of which one hundred million dollars
				  ($100,000,000.00) 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.
4. 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 ninety (90) days
				  after its financial statements are due to be filed with the group's domiciliary
				  regulator, provide to the Superintendent:
a.
				  An annual certification by the group's domiciliary regulator of the solvency of
				  each underwriter member of the group; or
b. If a certification is unavailable, a
				  financial statement, prepared by independent public accountants, of each
				  underwriter member of the group.
5. The trust fund for a group of incorporated
				  insurers under common administration, whose members possess aggregate
				  policyholders surplus of ten billion dollars ($10,000,000,000.00) (calculated
				  and reported in substantially the same manner as prescribed by the annual
				  statement instructions and Accounting Practices and Procedures Manual of the
				  NAIC) and which has continuously transacted an insurance business outside the
				  United States for at least three (3) years immediately prior to making
				  application for accreditation, shall:
a.
				  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;
b.
				  Maintain a joint trusteed surplus of which one hundred million dollars
				  ($100,000,000.00) shall be held jointly for the benefit of U.S. domiciled
				  ceding insurers of any member of the group; and
c. File a properly executed Form AR-1
				  (promulgated by the Department in a Bulletin issued for that purpose) 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.
6. Within ninety (90) days after the
				  statements are due to be filed with the group's domiciliary regulator, the
				  group shall file with the Superintendent an annual certification of each
				  underwriter member's solvency by the members' domiciliary regulators and
				  financial statements, prepared by independent public accountants, of each
				  underwriter member of the group.