Section 405:47 Credit Allowed a Domestic Ceding Insurer.
Credit for reinsurance shall be allowed a domestic ceding insurer as either an asset or a reduction from liability on account of reinsurance ceded only when the reinsurer meets the requirements of paragraphs I, II, III, IV, or V. Credit shall be allowed under paragraphs I, II, or III only relating to cessions of those kinds or classes of business which the assuming insurer is licensed or otherwise permitted to write or assume in its state of domicile or, in the case of a U. S. branch of an alien assuming insurer, in the state through which it is entered and licensed to transact insurance or reinsurance. Credit shall be allowed under paragraphs III or IV only if the applicable requirements of paragraph VI have been satisfied.
I. Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is licensed to transact that line of insurance or reinsurance in this state.
II. (a) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is accredited as a reinsurer in this state. An accredited reinsurer is one that:
(1) Files with the commissioner evidence of its submission to this state's jurisdiction.
(2) Submits to this state's authority to examine its books and records.
(3) Is licensed to transact the ceded line of insurance or reinsurance in at least one state, or, in the case of a U.S. branch of an alien assuming insurer, is entered through and licensed to transact insurance or reinsurance in at least one state.
(4) Files annually with the commissioner a copy of its annual statement filed with the insurance department of its state of domicile and a copy of its most recent audited financial statement and:
(A) Maintains a surplus concerning policyholders in an amount not less than $20,000,000 and whose accreditation has not been denied by the commissioner within 90 days of its submission; or
(B) Maintains a surplus concerning policyholders in an amount less than $20,000,000 and whose accreditation has been approved by the commissioner.
(b) Credit shall not be allowed a domestic ceding insurer if the assuming insurer's accreditation has been revoked by the commissioner after notice and hearing.
III. (a) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is domiciled in, or in case of a U.S. branch of an alien assuming insurer that is entered through, a state that employs standards regarding credit for reinsurance substantially similar to those applicable under this subdivision and the assuming insurer or U.S. branch of an alien assuming insurer:
(1) Maintains a surplus concerning policyholders in an amount not less than $20,000,000; and
(2) Submits to the authority of this state to examine its books and records.
(b) The requirement of subparagraph III(a)(1) shall not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.
IV. (a) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that maintains a trust fund in a qualified United States financial institution, as defined in RSA 405:46, VII, for the payment of the valid claims of its United States ceding insurers, their assigns and successors in interest. To enable the commissioner to determine the sufficiency of the trust fund, the assuming insurer shall report annually to the commissioner information substantially the same as that required to be reported on the NAIC Annual Statement form by licensed insurers. The assuming insurer shall submit to examination of its books and records by the commissioner and bear the expense of examination.
(b) (1) Credit for reinsurance shall not be granted under this section unless the form of the trust and any amendments to the trust have been approved by:
(A) The commissioner of the state where the trust is domiciled; or
(B) The commissioner of another state who, pursuant to the terms of the trust instrument, has accepted principal regulatory oversight of the trust.
(2) The form of the trust and any trust amendments also shall be filed with the commissioner of every state in which the ceding insurer beneficiaries of the trust are domiciled. The trust instrument shall provide that contested claims shall be valid and enforceable upon the final order of any court of competent jurisdiction of the United States. The trust shall vest legal title to its assets in its trustees for the benefit of the assuming insurer's U.S. ceding insurers, their assigns and successors in interest. The trust and the assuming insurer shall be subject to examination as determined by the commissioner.
(3) The trust shall remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements subject to the trust. No later than February 28 of each year, the trustee of the trust shall report to the commissioner in writing 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 will not expire prior to the following December 31.
(c) The following requirements apply to the following categories of assuming insurers:
(1) The trust fund for a single assuming insurer shall consist of funds in trust in an amount not less than the assuming insurer's liabilities attributable to reinsurance ceded by U.S. ceding insurers, and, in addition, the assuming insurer shall maintain a trusteed surplus of not less than $20,000,000.
(2) In the case of a group including incorporated and individual unincorporated underwriters:
(A) For reinsurance ceded under reinsurance agreements with an inception, amendment, or renewal date on or after August 1, 1995, the trust shall consist of a trusteed account in an amount not less than the group's several liabilities attributable to business ceded by U.S. domiciled ceding insurers to any member of the group;
(B) For reinsurance ceded under reinsurance agreements with an inception date on or before July 31, 1995, and not amended or renewed after that date, notwithstanding the other provisions of this chapter, the trust shall consist of a trusteed account in an amount not less than the group's several insurance and reinsurance liabilities attributable to business written in the United States; and
(C) In addition to these trusts, the group shall maintain in trust a trusteed surplus of which $100,000,000 shall be held jointly for the benefit of the U.S. domiciled ceding insurers of any member of the group for all years of account; and
(3) The incorporated members of the group 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 regulation and solvency control by the group's domiciliary regulator as are the unincorporated members.
(4) Within 90 days after its financial statements are due to be filed with the group's domiciliary regulator, the group shall provide to the commissioner an annual certification by the group's domiciliary regulator of the solvency of each underwriter member; or if a certification is unavailable, financial statements, prepared by independent public accountants, of each underwriter member of the group.
(d) In the case of a group of incorporated underwriters under common administration, the group shall:
(1) Have continuously transacted an insurance business outside the United States for at least 3 years immediately prior to making application for accreditation;
(2) Maintain aggregate policyholders' surplus of at least $10,000,000,000;
(3) Maintain a trust fund in an amount not less than the group's several liabilities attributable to business ceded by U.S. domiciled ceding insurers to any member of the group pursuant to reinsurance contracts issued in the name of the group;
(4) In addition, maintain a joint trusteed surplus of which $100,000,000 shall be held jointly for the benefit of U.S. domiciled ceding insurers of any member of the group as additional security for these liabilities; and
(5) Within 90 days after financial statements are due to be filed with the group's domiciliary regulator, make available to the commissioner an annual certification of each underwriter member's solvency by the member's domiciliary regulator and financial statements of each underwriter member of the group prepared by its independent public accountant.
V. Credit shall be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of paragraphs I, II, III or IV, but only with respect to the insurance of risks located in the jurisdictions where the reinsurance is required by applicable law or regulation of that jurisdiction.
VI. If the assuming insurer is not licensed or accredited to transact insurance or reinsurance in this state, then the credit permitted by paragraphs III and IV shall not be allowed unless the assuming insurer agrees in the reinsurance agreements:
(a) That in the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance agreement the assuming insurer, at the request of the ceding insurer:
(1) Shall submit to the jurisdiction of any court of competent jurisdiction in any state of the United States;
(2) Shall comply with all requirements necessary to give such court jurisdiction; and
(3) Shall abide by the final decision of such court or of any appellate court in the event of an appeal.
(b) To designate the commissioner or a designated attorney as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the ceding company.
(c) This paragraph shall not conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if this obligation is created in the agreement.
(d) Before any unauthorized reinsurer files or causes to be filed any pleading in any court action or an appearance in response to any court action or administrative proceeding, such reinsurer shall either:
(1) Deposit with the clerk of the court in which such action, suit, or proceeding is pending, or with the commissioner in administrative proceedings, cash or securities or bond with good and sufficient sureties to be approved by the court, or the commissioner, in an amount to be fixed by the court or the commissioner sufficient to secure the payment of any final judgment which may be rendered in such court proceeding or in such administrative proceeding; or
(2) Procure a license to transact reinsurance business in this state.
(e) The court in any action, suit, or proceeding or the commissioner in any administrative proceeding referred to in subparagraph (d), may, in its or his or her discretion, order such postponement as may be necessary to afford the reinsurer reasonable opportunity to comply with subparagraph (d) and to defend such court action or administrative proceeding.
Source. 2004, 186:1, eff. July 31, 2004.