02-031 C.M.R. ch. 735, § 4 - Definitions

1. "Actuarial Method" means the methodology used to determine the Required Level of Primary Security, as described in Section 5.

2. "Covered Policies" means policies, other than Grandfathered Policies and policies exempt under Section 3, of the following policy types:

A. Life insurance policies with guaranteed nonlevel gross premiums and/or guaranteed nonlevel benefits, except for flexible premium universal life insurance policies; or,

B. Flexible premium universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period.

3. "Grandfathered Policies" means policies of the types described in Paragraphs 2(A) and (B) above that were:

A. Issued before January 1, 2015; and

B. Ceded, as of December 31, 2014, as part of a reinsurance treaty that would not have met one of the exemptions set forth in Section 3 had that Section then been in effect.

4. "NAIC" means the National Association of Insurance Commissioners or its successor organization.

5. "Non-Covered Policies" means all policies, including Grandfathered Policies, that do not meet the definition of Covered Policies.

6. "Required Level of Primary Security" means the dollar amount determined by applying the Actuarial Method to the risks ceded with respect to Covered Policies, but not more than the total reserve ceded.

7. "Primary Security" means the following forms of security:

A. Cash meeting the requirements of 24-A M.R.S. §731-B(3)(A);

B. Securities listed by the NAIC Securities Valuation Office meeting the requirements of 24-A M.R.S. §731-B(3)(B), but excluding any synthetic letter of credit, contingent note, credit-linked note or other similar security that operates in a manner similar to a letter of credit, and excluding any securities issued by the ceding insurer or any of its affiliates; and

C. For security held in connection with funds-withheld and modified coinsurance reinsurance treaties:

(1) Commercial loans in good standing of CM3 quality and higher;

(2) Policy Loans; and

(3) Derivatives acquired in the normal course and used to support and hedge liabilities pertaining to the actual risks in the policies ceded pursuant to the reinsurance treaty.

8. "Other Security" means any security acceptable to the Superintendent that does not meet the definition of Primary Security.

9. "Valuation Manual" means the valuation manual recognized by the Superintendent, pursuant to 24-A M.R.S. §959, with all revisions applicable in this State on the financial statement date on which credit for reinsurance is claimed.

10. "VM-20" means "Requirements for Principle-Based Reserves for Life Products," including all relevant definitions, from the Valuation Manual.

Notes

02-031 C.M.R. ch. 735, § 4