§ 38.2-1316.2. Credit allowed a domestic ceding insurer
A. Except as provided in § 38.2-1316.4, credit shall be allowed a domestic ceding insurer for reinsurance ceded only when the assuming insurer meets one of the following criteria:
1. Credit shall be allowed when the assuming insurer is licensed to transact insurance in this Commonwealth.
2. Credit shall be allowed when the assuming insurer is accredited as a reinsurer in this Commonwealth. An accredited reinsurer is one which:
a. Files with the Commission evidence of its submission to the Commission's jurisdiction;
b. Submits to the Commission's authority to examine its books and records;
c. Is licensed to transact insurance or reinsurance in at least one state or, in the case of a United States branch of an alien assuming insurer, is entered through and licensed to transact insurance or reinsurance in at least one state; and
d. Files annually with the Commission a copy of its annual statement filed with the insurance department of its state of domicile or entry and a copy of its most recent audited financial statement, and either (i) maintains a surplus to policyholders or, in the case of an alien insurer, a trusteed surplus, in an amount which is not less than $20 million and whose accreditation has not been denied by the Commission within ninety days of its initial submission; or (ii) maintains a surplus to policyholders or, in the case of an alien insurer, a trusteed surplus, in an amount less than $20 million and whose accreditation has been approved by the Commission.
However, no credit shall be allowed for reinsurance ceded to an accredited reinsurer if the assuming insurer's standing as an accredited reinsurer has been denied or revoked by the Commission. Such standing shall not be revoked by the Commission until after the assuming insurer has been given ten days' notice of the reasons for the proposed revocation and an opportunity to introduce evidence and be heard. Any hearing authorized by this subsection may be informal, and the required notice may be waived by the Commission and the insurer. Furthermore, the Commission may require additional reports, exhibits or statements as it determines necessary to secure complete information concerning the condition and affairs of any accredited reinsurer.
3. Credit shall be allowed when the assuming insurer is domiciled and licensed in or, in the case of a United States branch of an alien insurer, is entered through, a state which employs standards regarding credit for reinsurance substantially similar to those applicable under this statute and the assuming insurer or United States branch of an alien assuming insurer:
a. Submits to the authority of the Commission to examine its books and records; and
b. Maintains a surplus to policyholders in an amount not less than $20 million. However, unless specifically required by the Commission, this surplus requirement shall be deemed waived when reinsurance is ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.
4. Credit shall be allowed when the assuming insurer maintains a trust fund in a qualified United States financial institution for the payment of the valid claims of its United States policyholders and ceding insurers, their assigns and successors in interest. The assuming insurer shall report annually to the Commission information substantially the same as that required to be reported on the National Association of Insurance Commissioners (NAIC) Annual Statement form by licensed insurers to enable the Commission to determine the sufficiency of the trust fund.
a. In the case of a single assuming insurer, the trust shall consist of a trusteed account representing the assuming insurer's liabilities attributable to business written in the United States, and in addition, the assuming insurer shall maintain a trusteed surplus amount not less than $20 million.
b. In the case of a group, including incorporated and individual unincorporated underwriters, the trust shall consist of a trusteed account representing the group's liabilities attributable to business written in the United States and in addition, the group shall maintain a trusteed surplus of which $100 million shall be held jointly for the benefit of United States ceding insurers of any member of the group, the incorporated members of which shall not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of solvency regulation and control by the group's domiciliary regulator as are the unincorporated members; and the group shall make available to the Commission an annual certification of the solvency of each underwriter by the group's domiciliary regulator and its independent public accountants.
c. In the case of a group of incorporated insurers under common administration which complies with the filing requirements contained in the previous paragraph, and which has continuously transacted an insurance business outside the United States for at least three years, and submits to the Commission's authority to examine its books and records and bears the expense of the examination, and which has aggregate policyholders' surplus of $10 billion; the trust shall be in an amount equal to the group's several liabilities attributable to business ceded by United States ceding insurers to any member of the group pursuant to reinsurance contracts issued in the name of such group. In addition, the group shall maintain a joint trusteed surplus of which $100 million shall be held jointly for the benefit of United States ceding insurers of any member of the group as additional security for any such liabilities, and each member of the group shall make available to the Commission an annual certification of the member's solvency by the member's domiciliary regulator and its independent public accountant.
B. The trusts described in subdivision 4 of subsection A shall be established in a form acceptable to the Commission.
1. The trust instrument shall provide that contested claims shall be valid and enforceable upon the final order of any court of competent jurisdiction in the United States.
2. The trust shall vest legal title to its assets in the trustees of the trust for its United States policyholders and ceding insurers, their assigns and successors in interest.
3. The trust and the assuming insurer shall be subject to examination as determined by the Commission.
4. The trust described herein must remain in effect for as long as the assuming insurer shall have outstanding obligations due under the reinsurance agreements subject to the trust.
5. No later than February 28 of each year the trustees of the trust shall report to the Commission in writing setting forth the balance of the trust and listing the trust's investments at the preceding year end and shall certify the date of termination of the trust, if so planned, or certify that the trust shall not expire prior to the next following December 31.
(1991, c. 264; 1994, c. 647.)
Sections: Previous 38.2-1312 38.2-1313 38.2-1314 38.2-1315 38.2-1315.1 38.2-1316 38.2-1316.1 38.2-1316.2 38.2-1316.3 38.2-1316.4 38.2-1316.5 38.2-1316.6 38.2-1316.7 38.2-1316.8 38.2-1317 NextLast modified: April 16, 2009