RS 22:652

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RS 22:652

§652. Reduction from liability for ceded reinsurance

A reduction from liability for the reinsurance ceded by a domestic insurer to an assuming insurer that fails to satisfy the requirements of R.S. 22:651 shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer. Additionally, the commissioner may adopt by regulation pursuant to R.S. 22:661(B) specific additional requirements relating to or setting forth the valuation of assets or reserve credits, the amount and forms of security supporting reinsurance arrangements described in R.S. 22:661(B), or the circumstances pursuant to which credit will be reduced or eliminated.

The reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust in this state for the ceding insurer, under a reinsurance contract with such assuming insurer as security for the payment of obligations thereunder, if such security is held in this state subject to withdrawal solely by, and under the exclusive control of, the ceding insurer, or, in the case of a trust, held in a qualified United States financial institution, as defined in R.S. 22:653(B).

The security may be in the form of:

(1)Cash.

(2)Securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners (NAIC), including those deemed exempt from filing as defined by the Purposes and Procedures Manual of the NAIC Securities Valuation Office, and qualifying as admitted assets.

(3)(a) Clean, irrevocable, unconditional letters of credit, issued or confirmed by a qualified United States financial institution, as defined in R.S. 22:653(A), effective no later than December thirty-first in respect of the year for which filing is being made, and in possession of or in trust for the ceding insurer on or before the filing date of its annual statement.

(b)Letters of credit meeting 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 their expiration, extension, renewal, modification, or amendment, whichever occurs first.

(4)Any other form of security acceptable to the commissioner.

Acts 1991, No. 996, §1, eff. Jan. 1, 1992; Acts 1995, No. 1182, §1; Redesignated from R.S. 22:941.1 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009; Acts 2012, No. 419, §1; Acts 2016, No. 199, §1.

NOTE: Former R.S. 22:652 redesignated as R.S. 22:34 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009.