Actuarial method-The methodology used to
determine the required level of primary security, as described in §
90j.6 (relating to actuarial
method).
Covered policies-
(1) Subject to the exemptions described in
§
90j.5 (relating to exemptions),
policies of either of the following types:
(i)
Life insurance policies with guaranteed nonlevel gross premiums or guaranteed
nonlevel benefits, or both, except for flexible premium universal life
insurance policies;
(ii) 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.
(2) The term does
not include policies issued prior to January 1, 2015, and ceded as of December
31, 2014, as part of a reinsurance treaty that would not have met one of the
exemptions set forth in §
90j.5 had that section then been
in effect.
Non-covered policies-A policy that does not
meet the definition of covered policies.
Other security-A security acceptable to the
Commissioner other than security meeting the definition of primary security.
Primary security-The following forms of
security:
(i) Cash meeting the
requirements of section 319.1(b)(1) of The Insurance Company Law of 1921
(40
P.S. §
442.1(b)(1))
regarding reinsurance credits;
(ii)
Securities listed by the Securities Valuation Office meeting the requirements
of section 319.1(b)(2) of The Insurance Company Law of 1921 regarding
reinsurance credits, 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;
(iii) For security held in connection with
funds-withheld and modified coinsurance reinsurance treaties, including all of
the following:
(A) Commercial loans in good
standing of CM3 quality and higher.
(B) Policy loans.
(C) Derivatives acquired in the normal course
and used to support and hedge liabilities pertaining to the actual risks in the
policies ceded under the reinsurance treaty.
RBC-Risk-based capital-The minimum level of
capital required for an insurer to support its operations and write coverage as
set forth in Article V-A of The Insurance Department Act of 1921 (40 P.S.
§§
221.1-A-221.15-A).
Required level of primary security-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.
VM-20-Requirements for principle-based
reserves for life products, including all relevant definitions, from the
Valuation Manual.
Valuation Manual-The Valuation Manual
adopted by the NAIC as described in section 11B(1) of the standard valuation
law, with all amendments adopted by the NAIC that are effective for the
financial statement date on which credit for reinsurance is claimed, and which
had an operative date of January 1, 2017, under
40 Pa.C.S. §
7104
(relating to notice regarding operative date of valuation manual) with public
notice published at 46 Pa.B. 5867 (September 10, 2016).
