760 IAC 1-56-9 - Reduction from liability for reinsurance ceded to an unauthorized assuming insurer
Authority: IC 27-1-3-7; IC 27-6-10.1-5
Affected: IC 27-6-10.1
Sec. 9.
(a) Under IC
27-6-10.1-3, the commissioner of the department of insurance shall allow a
reduction from liability for reinsurance ceded by a domestic insurer to an
assuming insurer not meeting the requirements of IC 27-6-10.1-2 in an amount
not exceeding the liabilities carried by the ceding insurer. Such reduction
shall be in the amount of funds held by or on behalf of the ceding insurer,
including funds held in trust for the exclusive benefit of the ceding insurer,
under a reinsurance contract with such assuming insurer as security for the
payment of obligations thereunder. Such security must be held in the United
States subject to withdrawal solely by, and under the exclusive control of, the
ceding insurer or, in the case of a trust, held in a qualified United States
financial institution as defined in IC 27-6-10.1-4.
(b) The security required by subsection (a)
may be in the form of any of the following:
(1) Cash.
(2) Securities listed by the Securities
Valuation Office of the National Association of Insurance Commissioners,
including those deemed exempt from filing as defined by the Purposes and
Procedures Manual of the Securities Valuation Office, and qualifying as
admitted assets.
(3) Clean,
irrevocable, unconditional, and evergreen letters of credit issued or confirmed
by a qualified United States institution, as defined in IC 27-6-10.1-3,
effective no later than December 31 of the year for which filing is being made,
and in the possession of the ceding company on or before the filing date of its
annual statement. Letters of credit meeting applicable standards of issuer
acceptability as of the dates of their issuance (or confirmation) shall,
notwithstanding the issuing (or confirming) institutions' subsequent failure to
meet applicable standards of issuer acceptability, continue to be acceptable as
security until their expiration, extension, renewal, modification, or
amendment, whichever first occurs.
(4) Any other form of security acceptable to
the commissioner of the department of insurance.
(c) An admitted asset or reduction from
liability for reinsurance ceded to an unauthorized assuming insurer under
subsection (b)(1), (b)(2), or (b)(3) shall be allowed only when the
requirements of section 13 of this rule and the applicable portions of section
10, 11, or 12 of this rule are met.
Notes
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