211 CMR, § 59.04

Current through Register 1533, October 25, 2024

Section 59.04 - Definitions

As used in 211 CMR 59.00, the following words mean:

Actuarial Method. The methodology used to determine the Required Level of Primary Security, described in 211 CMR 59.05.

Covered Policies. Subject to the exemptions described in 211 CMR 59.03, Covered Policies are those policies, other than Legacy Policies, of the following policy types:

(a) Life insurance policies with guaranteed non-level gross premiums and/or guaranteed non-level benefits, except for flexible premium universal life insurance policies; or,

(b) Flexible premium universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period.

Legacy Policies. Policies of the types described in the definition of Covered Policies in 211 CMR 59.04 that were:

(a) Issued prior to January 1, 2015; and

(b) Ceded, as of December 31, 2014, as part of a reinsurance treaty that would not have met one of the exemptions set forth in 211 CMR 59.03 had that section then been in effect.

Non-covered Policies. Any policy that does not meet the definition of Covered Policies, including Legacy Policies.

Other Security. Any security acceptable to the Commissioner other than security meeting the definition of Primary Security.

Primary Security. The following forms of security:

(a) Cash meeting the requirements of M.G.L. c. 175, § 20A(2)(A);

(b) Securities listed by the Securities Valuation Office meeting the requirements of M.G.L. c. 175, § 20A(2)(B), but excluding any synthetic letter of credit, contingent note, credit-linked note or other similar security that operates in a manner similar to a letter of credit, and excluding any securities issued by the ceding insurer or any of its affiliates; and

(c) For security held in connection with funds-withheld and modified coinsurance reinsurance treaties:

1. Commercial loans in good standing of CM3 quality and higher;

2. Policy Loans; and

3. Derivatives acquired in the normal course and used to support and hedge liabilities pertaining to the actual risks in the policies ceded pursuant to the reinsurance treaty.

Required Level of Primary Security. The dollar amount determined by applying the Actuarial Method to the risks ceded with respect to Covered Policies, but not more than the total reserve ceded.

Valuation Manual. The valuation manual adopted by the NAIC as described in M.G.L. c. 175, § 91/2, with all amendments adopted by the NAIC that are effective for the financial statement date on which credit for reinsurance is claimed.

VM-20. "Requirements for Principle-based Reserves for Life Products", including all relevant definitions, from the Valuation Manual.

211 CMR, § 59.04

Adopted by Mass Register Issue 1486, eff. 1/6/2023.