This rule does not apply to:
1. Reinsurance of:
A. Policies that satisfy the criteria for
exemption set forth in 02-031 CMR §§830(6)(F) or (G); and which are
issued before the effective date of this rule;
B. Portions of policies that satisfy the
criteria for exemption set forth in 02-031 CMR §830(6)(E) and which are
issued before the effective date of this rule;
C. Any universal life policy that meets all
of the following requirements:
(1) The
secondary guarantee period, if any, is five years or less;
(2) Specified premium for the secondary
guarantee period is not less than the net level reserve premium for the
secondary guarantee period based on the Commissioners Standard Ordinary (CSO)
valuation tables and valuation interest rate applicable to the issue year of
the policy; and
(3) The initial
surrender charge is not less than 100% of the first year annualized specified
premium for the secondary guarantee period;
D. Credit life insurance;
E. Any variable life insurance policy that
provides for life insurance, the amount or duration of which varies according
to the investment experience of any separate account or accounts; nor F. Any
group life insurance certificate unless the certificate provides for a stated
or implied schedule of maximum gross premiums required in order to continue
coverage in force for a period in excess of one year.
2. Reinsurance ceded to an assuming insurer
that, at the time the risk is ceded:
A. Is
certified as a reinsurer in this State pursuant to
24-A M.R.S.
§731-B(1)
(B-2):
B. Is eligible for
recognition by reciprocity for credit for reinsurance pursuant to
24-A M.R.S.
§731-B(1)
(B-3);
C. Maintains a
multi-beneficiary trust fund in compliance with
24-A M.R.S.
§731-B(1)(C); or
D. Maintains at least $250,000,000
in capital and surplus as determined in accordance with
24-A M.R.S.
§901-A, excluding the impact of any
permitted or prescribed practices; and is either:
(1) Licensed in at least 26 states;
or
(2) Licensed in at least 10
states and licensed or accredited in a total of at least 35 states.
3. Reinsurance ceded to
an assuming insurer that is licensed as an insurance carrier or accredited as a
reinsurer in this State, or is domiciled and licensed in another state that
employs standards regarding credit for reinsurance, and meets the requirements
of 02-031 CMR
740, Subsection 4(F) and, as applicable, Section 5, 8, or 9, and
that, in addition:
A.
(1) Prepares statutory financial statements
without any departures from NAIC statutory accounting practices and procedures
pertaining to the admissibility or valuation of assets or liabilities that
increase the assuming insurer's reported surplus and are material enough that
they need to be disclosed in the assuming insurer's financial statement
pursuant to Statement of Statutory Accounting Principles No. 1 ("SSAP 1");
and
(2) Is not in a Company Action
Level Event, Regulatory Action Level Event, Authorized Control Level Event, or
Mandatory Control Level Event, as those terms are defined in
24-A M.R.S.
§6451(8), when its
risk-based capital (RBC) is calculated without deviation in accordance with the
life RBC report, including overview and instructions for companies;
or
B. Is not an
affiliate, as defined in
24-A M.R.S. §222(2)(A),
of either the ceding insurer or any insurer that directly or indirectly ceded
the business to that ceding insurer, and:
(1)
Is licensed or accredited in at least 10 states (including its state of
domicile), and is not licensed in any state as a captive, special purpose
vehicle, special purpose financial captive, special purpose life reinsurance
company, limited purpose subsidiary, or any other similar licensing regime;
and
(2) Is not below 500% of the
Authorized Control Level Risk-Based Capital, as that term is defined in
24-A M.R.S.
§6451(8)(C), when its
risk-based capital (RBC) is calculated without deviation in accordance with the
life RBC report, including overview and instructions for companies, without
recognition of any departures from NAIC statutory accounting practices and
procedures pertaining to the admission or valuation of assets or liabilities
that increase the assuming insurer's reported surplus.
4. Reinsurance not
otherwise exempt under Subsections 1 through 3 if the Superintendent, after
consulting with the NAIC Financial Analysis Working Group (FAWG), or other
group of regulators designated by the NAIC for this purpose, determines under
all the facts and circumstances that all of the following apply:
A. The risks are clearly outside of the
intent and purpose of this rule (as described in Section 1 above);
B. The risks are included within the scope of
this rule only as a technicality; and
C. The application of this rule to those
risks is not necessary to provide appropriate protection to policyholders. The
Superintendent shall publicly disclose any decision made pursuant to this
Subsection to exempt a reinsurance treaty from this rule, as well as the
general basis therefor (including a summary description of the treaty).
Drafting Note:
The
exemption set forth in Subsection 3(4) was added to address the possibility of
unforeseen or unique transactions. The NAIC recommended that states adopt this
exemption, and created a guidance process for the states, in recognition that
foreseeing every conceivable type of reinsurance transaction is impossible;
that in rare instances unanticipated transactions might get caught up in this
rule purely as a technicality; and that regulatory relief in those instances
may be appropriate. The example that was given when the NAIC developed this
exemption pertained to bulk reinsurance treaties where the ceding insurer was
exiting the type of business ceded. The exemption should not be used with
respect to so-called "normal course" reinsurance transactions; rather, those
transactions should either fit within one of the standard exemptions set forth
in Subsections 4(1) through 4(3) or meet the substantive requirements of this
rule.
