18 Del. Admin. Code § 1001-2.0

Current through Register Vol. 28, No. 5, November 1, 2024

Section 1001-2.0 - Preamble

2.1 The Delaware Insurance Department recognizes that life insurers routinely enter into reinsurance agreements that yield legitimate relief to the ceding insurer from strain to surplus.

2.2 However, the Department has become aware that some life insurers, in the capacity of ceding insurer, have at times entered into reinsurance agreements, for the principal purpose of producing significant surplus aid for the ceding insurer, which provide little or no indemnification of policy benefits by the reinsurers. In addition, the Department is concerned with reserve credits taken under reinsurance agreements which provide some indemnification of policy benefits where those policy benefits are not included in the gross reserves established by the ceding insurer, such as catastrophic mortality or extraordinary survival. The terms of such agreements referred to herein and described in section 4.0 would violate:

2.2.1 Section 526 (18 Del.C. § 526) relating to financial statements of insurers, thus resulting in distorted financial statements which do not properly reflect the financial condition of the ceding life insurer;

2.2.2 Section 911 (18 Del.C. § 911) relating to reinsurance reserve credits, thus, resulting in a ceding insurer improperly reducing liabilities or establishing assets for reinsurance ceded;

2.2.3 Section 1105 (18 Del.C. § 1105) which prohibits "wash transactions"; and

2.2.4 Section 5911 (18 Del.C. § 5911) relating to creating a situation that may be hazardous to policyholders and the people of this State.

18 Del. Admin. Code § 1001-2.0