West Virginia Code of State Rules › Agency 114 - Insurance Commission › Title 114 - LEGISLATIVE RULE INSURANCE COMMISSIONER › Series 114-40 - Credit For Reinsurance › Section 114-40-5 - Reinsurers Maintaining Trust Funds

Current through Register Vol. XLI, No. 28, July 12, 2024
5.1.
				Pursuant to W. Va. Code §
									33-4-15a(b)(2)(D),
				the commissioner 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 in this
				section in a qualified United States financial institution as defined in W. Va. Code
				§
									33-4-15a(d)(2),
				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 commissioner substantially the same information as that required to be
				reported on the National Association of Insurance Commissioners annual statement
				form by licensed insurers, to enable the commissioner to determine the sufficiency
				of the trust fund.
5.2. The following
				requirements apply to the following categories of assuming insurer:
5.2.a. 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 United States domiciled
				insurers, and in addition, the assuming insurer shall maintain a trusteed surplus of
				not less than $20,000,000, except as provided in subdivision b of this
				subsection;
5.2.b. At any time after the
				assuming insurer has permanently discontinued underwriting new business secured by
				the trust for a least three full years, the commissioner with principal regulatory
				oversight of the trust may authorize at 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 United States 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 United States
				ceding insurers covered by the trust.
5.2.c.
5.2.c.1.
				The trust fund for a group, including incorporated and individual unincorporated
				underwriters, shall consist of:
5.2.c.1.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
				United States domiciled ceding insurers to any underwriter of the group;
5.2.c.1.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 rule, 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
5.2.c.1.C. In addition to these
				trusts, the group shall maintain a trusteed surplus of which $100,000,000 shall be
				held jointly for the benefit of the United States domiciled ceding insurers of any
				member of the group for all the years of account.
5.2.c.2. 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 commissioner:
5.2.c.2.A. An annual certification by the group's
				domiciliary regulator of the solvency of each underwriter member of the group;
				or
5.2.c.2.B. If a certification is
				unavailable, a financial statement, prepared by independent public accountants, of
				each underwriter member of the group.
5.2.d.
5.2.d.1.
				The trust fund for a group of incorporated insurers under common administration,
				whose members possess aggregate policyholders surplus of $10,000,000,000 (calculated
				and reported in substantially the same manner as prescribed by the annual statement
				instructions and Accounting Practices and Procedures Manual of the National
				Association of Insurance Commissioners) 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:
5.2.d.1.A. Consist of funds in trust in an amount
				not less than the assuming insurers' several liabilities attributable to business
				ceded by United States domiciled ceding insurers to any members of the group
				pursuant to reinsurance contracts issued in the name of such group;
5.2.d.1.B. Maintain a joint trusteed surplus of
				which $100,000,000 shall be held jointly for the benefit of United States domiciled
				ceding insurers of any member of the group; and
5.2.d.1.C. File a properly executed Form AR-1, as
				adopted by the National Association of Insurance Commissioners, with the
				commissioner as evidence of the submission to this state's authority to examine the
				books and records, pursuant to W. Va. Code §
												33-2-9,
				of any of its members and shall certify that any member examined shall bear the
				expense of the examination.
5.2.d.2. Within ninety days after the statements
				are due to be filed with the group's domiciliary regulator, the group shall file
				with the commissioner an annual certification of each underwriter member's solvency
				by the member's domiciliary regulators, and financial statements, prepared by
				independent public accountants, of each underwriter member of the
				group.