Sec. 14. (a) An asset or a reduction from liability for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of section 8, 9, 10, 11, 11.5, 12, 13, 13.3, 13.6, or 13.8 of this chapter shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer.
(b) The reduction permitted under subsection (a) shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with the assuming insurer as security for the payment of obligations under the reinsurance contract. The security must be held:
(1) in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer; or
(2) in the case of a trust, in a qualified United States financial institution (as defined in section 6 of this chapter).
(c) The security described under subsection (b) may be in the following forms:
(1) Cash.
(2) Securities listed by the Securities Valuation Office, including securities that are considered exempt from filing (as defined by the Purposes and Procedures Manual of the NAIC Investment Analysis Office) and qualifying as admitted assets.
(3) Clean, irrevocable, unconditional letters of credit:
(A) issued or confirmed by a qualified United States financial institution (as defined in section 5 of this chapter);
(B) effective not later than December 31 in the year for which the filing is being made; and
(C) in the possession of or in trust for the ceding insurer on or before the filing date of the ceding insurer's annual statement.
Letters of credit that meet applicable standards of issuer acceptability as of the dates of their issuance (or confirmation) shall, notwithstanding the issuing (or confirming) institution's subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until the earlier of their expiration, extension, renewal, modification, or amendment.
(4) Any other form of security acceptable to the commissioner.
As added by P.L.116-1994, SEC.54. Amended by P.L.2-1995, SEC.105; P.L.81-2012, SEC.35; P.L.124-2018, SEC.71; P.L.136-2018, SEC.183.
Copyright ©2024 LegalFix. All rights reserved. LegalFix is not a law firm, is not licensed to practice law, and does not provide legal advice, services, or representation. The information on this website is an overview of the legal plans you can purchase—or that may be provided by your employer as an employee benefit or by your credit union or other membership group as a membership benefit.
LegalFix provides its members with easy access to affordable legal services through a network of independent law firms. LegalFix, its corporate entity, and its officers, directors, employees, agents, and contractors do not provide legal advice, services, or representation—directly or indirectly.
The articles and information on the site are not legal advice and should not be relied upon—they are for information purposes only. You should become a LegalFix member to get legal services from one of our network law firms.
You should not disclose confidential or potentially incriminating information to LegalFix—you should only communicate such information to your network law firm.
The benefits and legal services described in the LegalFix legal plans are not always available in all states or with all plans. See the legal plan Benefit Overview and the more comprehensive legal plan contract during checkout for coverage details in your state.
Use of this website, the purchase of legal plans, and access to the LegalFix networks of law firms are subject to the LegalFix Terms of Service and Privacy Policy.