Reinsurance ceded to assuming insurer which maintains trust fund for payment of valid claims; exceptions.
1. Except as otherwise provided in subsection 4, credit must be allowed if reinsurance is ceded to an assuming insurer which maintains a trust fund in a qualified financial institution in the United States for the payment of the valid claims of its policyholders and ceding insurers in the United States, their assigns and successors in interest. The assuming insurer shall report annually to the Commissioner information substantially the same as that required to be reported on the National Association of Insurance Commissioners’ form of annual statement by licensed insurers to enable the Commissioner to determine the sufficiency of the trust fund.
2. In the case of a single assuming insurer, the trust must consist of an account in trust equal to the assuming insurer’s liabilities attributable to business written in the United States and the assuming insurer shall maintain a surplus in trust of not less than $20,000,000.
3. In the case of a group of incorporated and individual unincorporated underwriters, the trust must consist of an account in trust equal to the group’s liabilities attributable to business written in the United States and the group shall maintain a surplus in trust of which $100,000,000 must be held jointly for the benefit of ceding insurers in the United States to any member of the group, and the group shall make available to the Commissioner an annual certification of the solvency of each underwriter by the group’s domiciliary regulator and its independent public accountants.
4. If the assuming insurer does not meet the requirements of NRS 681A.110, 681A.160 or 681A.170, credit must not be allowed unless the assuming insurer has agreed to the following conditions set forth in the trust agreement:
(a) Notwithstanding any provision to the contrary in the trust instrument, if the trust fund consists of an amount that is less than the amount required pursuant to this section, or if the grantor of the trust fund is declared to be insolvent or placed into receivership, rehabilitation, liquidation or a similar proceeding in accordance with the laws of the grantor’s state or country of domicile, the trustee of the trust fund must comply with an order of the commissioner of insurance or other appropriate person with regulatory authority over the trust fund in that state or country or a court of competent jurisdiction requiring the trustee to transfer to that commissioner or person all the assets of the trust fund;
(b) The assets of the trust fund must be distributed by and claims filed with and valued by the commissioner of insurance or other appropriate person with regulatory authority over the trust fund in accordance with the laws of the state in which the trust fund is domiciled that are applicable to the liquidation of domestic insurers in that state;
(c) If the commissioner of insurance or other appropriate person with regulatory authority over the trust fund determines that the assets of the trust fund or any portion of the trust fund are not required to satisfy any claim of any ceding insurer of the grantor of the trust fund in the United States, the assets must be returned by that commissioner or person to the trustee of the trust fund for distribution in accordance with the trust agreement; and
(d) The grantor of the trust must waive any right that:
(1) Is otherwise available to him under the laws of the United States; and
(2) Is inconsistent with the provisions of this subsection.
Last modified: February 27, 2006