South Dakota Administrative Rules › Title 20 - PUBLIC SAFETY › Article 20:06 - INSURANCE › Chapter 20:06:31 - Credit for reinsurance › Section 20:06:31:27 - Certified reinsurers - ratings

Current through Register Vol. 51, page 10, July 15, 2024
Each certified reinsurer shall be rated on a legal entity basis, with due consideration being given to the group rating where appropriate, except that an association including incorporated and individual unincorporated underwriters that has been approved to do business as a single certified reinsurer may be evaluated on the basis of its group rating. Factors that may be considered as part of the evaluation process include:
(1) The certified reinsurer's financial strength rating from an acceptable rating agency. The maximum rating that a certified reinsurer may be assigned will correspond to its financial strength rating as outlined in the table below. The director shall use the lowest financial strength rating received from an approved rating agency in establishing the maximum rating of a certified reinsurer. A failure to obtain or maintain at least two financial strength ratings from acceptable rating agencies will result in loss of eligibility for certification;
Ratings
Best
S&P
Moody's
Fitch
Secure - 1
A++
AAA
Aaa
AAA
Secuire -2
A+
AA+, AA, AA-
Aa1, Aa2, Aa3
AA+, AA, AA-
Secure - 3
A
A+, A
A1, A2
A+, A
Secure - 4
A-
A-
A3
A-
Secure - 5
B++, B+
BBB+, BBB, BBB-
Baa1, Baa2, Baa3
BBB+, BBB, BBB-
Vulnerable - 6
B, B-, C++, C+,
C, C-, D, E, F
BB+, BB, BB-,
B+, B, B-, CCC,
CC, C, D, R
Ba1, Ba2, Ba3,
B1, Bs, B3, Caa,
Ca, C
BB+, BB, BB-,
B+, B, B-,
CCC+, CC, CCC-, DD
(2) The business practices of the certified reinsurer in dealing with its ceding insurers, including its record of compliance with reinsurance contractual terms and obligations;
(3) For certified reinsurers domiciled in the U.S., a review of the most recent applicable National Association of Insurance Commissioners Annual Statement Blank, either Schedule F for property/casualty reinsurers or Schedule S for life and health reinsurers;
(4) For certified reinsurers not domiciled in the U.S., a review annually of Form CR-F, provided by the director, for property/casualty reinsurers or Form CR-S, provided by the director, for life and health reinsurers;
(5) The reputation of the certified reinsurer for prompt payment of claims under reinsurance agreements, based on an analysis of ceding insurers' Schedule F reporting of overdue reinsurance recoverables, including the proportion of obligations that are more than ninety days past due or that are in dispute, with specific attention given to obligations payable to companies that are in administrative supervision or receivership;
(6) Regulatory actions against the certified reinsurer;
(7) The report of the independent auditor on the financial statements of the insurance enterprise, on the basis described in subdivision (8) of this section;
(8) Audited financial statements for certified reinsurers not domiciled in the U.S., regulatory filings, and actuarial opinion as filed with the non-U.S. jurisdiction supervisor, with a translation into English. Upon the initial application for certification, the director will consider audited financial statements for the last two years filed with its nonU.S. jurisdiction's supervisor;
(9) The liquidation priority of obligations to a ceding insurer in the certified reinsurer' s domiciliary jurisdiction in the context of an insolvency proceeding;
(10) A certified reinsurer' s participation in any solvent scheme of arrangement, or similar procedure, which involves U.S. ceding insurers. The director shall receive prior notice from a certified reinsurer that proposes participation by the certified reinsurer in a solvent scheme of arrangement; and
(11) Any other information deemed relevant by the directly.
General Authority:
SDCL  58-14-17.
Law Implemented:
SDCL  58-14-16.1,  58-14-17.