58-14-16. Asset or reduction from liability for reinsurance ceded to insurer not meeting requirements of § 58-14-7--Security.
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/sd/title-58/chapter-58-14/58-14-16·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
An asset or a reduction from liability for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of § 58-14-7 shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer. The reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with the assuming insurer as security for the payment of obligations.
The security shall be held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer; or, in the case of a trust, it shall be held in a qualified United States financial institution, as defined in § 58-14-23 . This 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 any security deemed exempt from filing as defined by the Purposes and Procedures Manual of the NAIC Investment Analysis Office as adopted by administrative rule, and qualifying as admitted assets;
(3)Clean, irrevocable, unconditional letters of credit, issued or confirmed by a qualified United States financial institution as defined in § 58-14-16.18 , effective no later than December thirty-first of the year for which the filing is being made, and in the possession of, or in the trust of, the ceding insurer on or before the filing date of the assuming insurer's annual statement. Letters of credit meeting applicable standards of issuer acceptability as of the dates of 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 the security's expiration, extension, renewal, modification, or amendment, whichever occurs first; or
(4)Any other form of security acceptable to the director.