31 Pa. Code § 90j.5 - Exemptions

This chapter does not apply to the following:

(1) Reinsurance of:

(i) Policies that satisfy the criteria for exemption set forth in Chapter 84c (relating to valuation of life insurance policies); and which are issued before the later of:

(A) The effective date of this chapter.

(B) The date on which the ceding insurer begins to apply the provisions of VM-20 to establish the ceded policies' statutory reserves, but in no event later than January 1, 2020.

(ii) Portions of policies that satisfy the criteria for exemption set forth in § 84c.6(e) (relating to minimum valuation standard for policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits (other than universal life policies)) and which are issued before the later of:

(A) The effective date of this chapter.

(B) The date on which the ceding insurer begins to apply the provisions of VM-20 to establish the ceded policies' statutory reserves, but in no event later than January 1, 2020.

(iii) A universal life policy that meets all of the following requirements:

(A) Secondary guarantee period, if any, is 5 years or less.

(B) 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.

(C) The initial surrender charge is not less than 100% of the first year annualized specified premium for the secondary guarantee period.

(iv) Credit life insurance;

(v) A 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;

(vi) A group life insurance certificate unless the certificate provides for a stated or implied schedule of maximum gross premiums required to continue coverage in force for a period of 1 year.

(2) Reinsurance ceded to an assuming insurer that meets the applicable requirements of Chapter 163 (relating to requirements for funds held as security for the payment of obligations of unlicensed, unqualified reinsurers);

(3) Reinsurance ceded to an assuming insurer that meets the applicable requirements of section 319.1(a.2)(2) of The Insurance Company Law of 1921 (40 P.S. § 442.1(a.2)(2)), which satisfies both of the following requirements:

(i) The insurer prepares statutory financial statements in compliance with the NAIC Accounting Practices and Procedures Manual, 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 financial statement of the assuming insurer under Statement of Statutory Accounting Principles No. 1.

(ii) The insurer 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 section 501-A of The Insurance Department Act of 1921 (40 P.S. § 221.1-A), regarding definitions related to risk-based capital requirements, when its RBC is calculated in accordance with the life risk-based capital report including overview and instructions for companies, as the same may be amended by the NAIC from time to time, without deviation.

(4) Reinsurance ceded to an assuming insurer that meets the applicable requirements of section 319.1(a.2) of The Insurance Company Law of 1921, which satisfies the following requirements:

(i) The insurer is not an affiliate, as that term is defined in section 1401 of The Insurance Company Law of 1921 (40 P.S. § 991.1401) regarding definitions of terms related to insurance holding companies, of either the insurer ceding the business to the assuming insurer or any insurer that directly or indirectly ceded the business to that ceding insurer.

(ii) The insurer prepares statutory financial statements in compliance with the NAIC Accounting Practices and Procedures Manual;

(iii) The insurer is licensed or accredited in at least ten states, including its state of domicile;

(iv) The insurer 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;

(v) The insurer is not, or would not be, below 500% of the authorized control level RBC as that term is defined in section 501-A of The Insurance Department Act of 1921 when its RBC is calculated in accordance with the life risk-based capital report including overview and instructions for companies, as the same may be amended by the NAIC from time to time, without deviation, and 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.

(5) Reinsurance ceded to an assuming insurer that meets the requirements of section 319.1(f)(2)(iii) of The Insurance Company Law of 1921;

(6) Reinsurance not otherwise exempt under paragraphs (1)-(5) if the Commissioner determines under all the facts and circumstances, including the work of the NAIC Financial Analysis Working Group or other group of regulators designated by the NAIC, as applicable, that all of the following apply:

(i) The risks are clearly outside of the intent and purpose of this chapter as described in § 90j.3 (relating to purpose).

(ii) The risks are included within the scope of this chapter only as a technicality.

(iii) The application of this chapter to those risks is not necessary to provide appropriate protection to policyholders. The Commissioner shall publicly disclose any decision made under this subsection to exempt a reinsurance treaty from this chapter, including a summary description of the treaty, as well as the general basis for the exemption.

Notes

31 Pa. Code § 90j.5

This section cited in 31 Pa. Code § 90j.1 (relating to definitions); and 31 Pa. Code § 90j.7 (relating to requirements applicable to covered policies to obtain credit for reinsurance; opportunity for remediation).