Virginia Administrative Code › Title 14 - INSURANCE › Agency 5 - STATE CORPORATION COMMISSION, BUREAU OF INSURANCE › Chapter 318 - RULES GOVERNING TERM AND UNIVERSAL LIFE INSURANCE RESERVE FINANCING › Section 14VAC5-318-60 - Requirements applicable to covered policies to obtain credit for reinsurance; opportunity for remediation

Current through Register Vol. 40, No. 24, July 15, 2024
A.
				Subject to the exemptions described in 14VAC5-318-40 and the provisions of
				subsection B of this section, credit for reinsurance shall be allowed with
				respect to ceded liabilities pertaining to covered policies pursuant to §
									38.2-1316.2 of the Code of
				Virginia, 14VAC5-300-90 C,
				14VAC5-300-100, and
				14VAC5-300-150 B and C, or §
									38.2-1316.4 of the Code of
				Virginia if, and only if, in addition to all other requirements imposed by law
				or regulation, the following requirements are met on a treaty-by-treaty basis:
1. The ceding insurer's statutory policy
				reserves with respect to the covered policies are established in full and in
				accordance with the applicable requirements of Article 10 (§
										38.2-1365 et seq.) of Chapter 13
				of Title 38.2 of the Code of Virginia and related regulations and actuarial
				guidelines, and credit claimed for any reinsurance treaty subject to this
				chapter does not exceed the proportionate share of those reserves ceded under
				the contract;
2. The ceding insurer
				determines the required level of primary security with respect to each
				reinsurance treaty subject to this chapter and provides support for its
				calculation as determined to be acceptable to the commission;
3. Funds consisting of primary security, in
				an amount at least equal to the required level of primary security, are held by
				or on behalf of the ceding insurer, as security under the reinsurance treaty
				within the meaning of §
										38.2-1316.4 of the Code of
				Virginia, on a funds withheld, trust, or modified coinsurance basis;
4. Funds consisting of other security, in an
				amount at least equal to any portion of the statutory reserves as to which
				primary security is not held pursuant to subdivision 3 of this subsection, are
				held by or on behalf of the ceding insurer as security under the reinsurance
				treaty within the meaning of §
										38.2-1316.4 of the Code of
				Virginia;
5. Any trust used to
				satisfy the requirements of this section shall comply with all of the
				conditions and qualifications of
				14VAC5-300-120, except that:
a. Funds consisting of primary security or
				other security held in trust shall for the purposes identified in 14VAC5-318-50
				B be valued according to the valuation rules set forth in 14VAC5-318-50 B, as
				applicable;
b. There are no
				affiliate investment limitations with respect to any security held in such
				trust if such security is not needed to satisfy the requirements of subdivision
				3 of this subsection;
c. The
				reinsurance treaty must prohibit withdrawals or substitutions of trust assets
				that would leave the fair market value of the primary security within the trust
				when aggregated with primary security outside the trust that is held by or on
				behalf of the ceding insurer in the manner required by subdivision 3 of this
				subsection below 102% of the level required by subdivision 3 of this subsection
				at the time of the withdrawal or substitution; and
d. The determination of reserve credit under
				14VAC5-300-120 D shall be
				determined according to the valuation rules set forth in 14VAC5-318-50 B, as
				applicable; and
6. The
				reinsurance treaty has been approved by the commission.