Virginia Administrative Code › Title 14 - INSURANCE › Agency 5 - STATE CORPORATION COMMISSION, BUREAU OF INSURANCE › Chapter 300 - RULES GOVERNING CREDIT FOR REINSURANCE › Section 14VAC5-300-95 - Credit for reinsurance; certified reinsurers

Current through Register Vol. 40, No. 24, July 15, 2024
A. Pursuant to §
									38.2-1316.2D
				of the Act, the commission shall allow credit for reinsurance ceded by a
				domestic insurer to an assuming insurer that has been certified as a reinsurer
				in this Commonwealth at all times for which statutory financial statement
				credit for reinsurance is claimed under this section. The credit allowed shall
				be based upon the security held by or on behalf of the ceding insurer in
				accordance with a rating assigned to the certified reinsurer by the commission.
				The security shall be in a form consistent with the provisions of §
									38.2-1316.2D
				and
				14VAC5-300-120,
				14VAC5-300-130,
				or
				14VAC5-300-140.
				The amount of security required in order for full credit to be allowed shall
				correspond with the following requirements:
1. Ratings
Security Required
Secure - 1
0.0%
Secure - 2
10%
Secure - 3
20%
Secure - 4
50%
Secure - 5
75%
Vulnerable - 6
100%
2. Affiliated
				reinsurance transactions shall receive the same opportunity for reduced
				security requirements as all other reinsurance transactions.
3. The commission shall require the certified
				reinsurer to post 100%, for the benefit of the ceding insurer or its estate,
				security upon the entry of an order of rehabilitation, liquidation, or
				conservation against the ceding insurer.
4. In order to facilitate the prompt payment
				of claims, a certified reinsurer shall not be required to post security for
				catastrophe recoverables for a period of 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 likely to result in significant
				insured losses, as recognized by the commission. The one year deferral period
				is contingent upon the certified reinsurer continuing to pay claims in a timely
				manner. Reinsurance recoverables for only the following lines of business as
				reported on the NAIC annual financial statement related specifically to the
				catastrophic occurrence will be included in the deferral:
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
h. Line 21: Auto
				physical damage
5.
				Credit for reinsurance under this section shall apply only to reinsurance
				contracts entered into or renewed on or after the effective date of the
				certification of the assuming insurer. Any reinsurance contract entered into
				prior to the effective date of the certification of the assuming insurer that
				is subsequently amended by mutual agreement of the parties to the reinsurance
				contract after the effective date of the certification of the assuming insurer,
				or a new reinsurance contract, covering any risk for which collateral was
				provided previously, shall 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 contract.
6.
				Nothing in this section shall prohibit the parties to a reinsurance agreement
				from agreeing to provisions establishing security requirements that exceed the
				minimum security requirements established for certified reinsurers under this
				section.