31A-17-404.1 - Asset or reduction from liability for reinsurance ceded by a domestic insurer to other assuming insurers.
31A-17-404.1. Asset or reduction from liability for reinsurance ceded by a domesticinsurer to other assuming insurers.
(1) (a) An asset or a reduction from liability for reinsurance ceded by a domestic insurerto an assuming insurer that does not meet the requirements of Section 31A-17-404 is allowed inan amount not exceeding the liabilities carried by the ceding insurer.
(b) A reduction described in Subsection (1)(a) shall be in the amount of funds held by oron behalf of the ceding insurer, including funds held in trust for the ceding insurer:
(i) that are held:
(A) under a reinsurance contract with the assuming insurer; and
(B) as security for the payment of obligations under the reinsurance contract; and
(ii) if the security is held:
(A) in the United States subject to withdrawal solely by, and under the exclusive controlof, the ceding insurer; or
(B) in the case of a trust, in a qualified United States financial institution.
(2) Security described in Subsection (1) may be in the form of:
(a) cash;
(b) a security:
(i) listed by the Securities Valuation Office of the National Association of InsuranceCommissioners; and
(ii) qualifying as an admitted asset;
(c) subject to Subsection (3), a clean, irrevocable, unconditional letter of credit, issued orconfirmed by a qualified United States financial institution:
(i) effective no later than December 31 of the year for which the filing is being made; and
(ii) in the possession of, or in trust for, the ceding company on or before the filing date ofits annual statement; or
(d) another form of security acceptable to the commissioner.
(3) Notwithstanding an issuing or confirming institution's subsequent failure to meet anapplicable standard of acceptability, a letter of credit described in Subsection (2) that meets theapplicable standards of issuer acceptability as of the day on which it is issued or confirmed shallcontinue to be acceptable as security until the sooner of the day on which the letter of creditexpires, is extended, is renewed, is modified, or is amended.
Enacted by Chapter 257, 2008 General Session